UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549


FORM 20-F





(Mark One)





o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934





OR




x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended December 31, 2010





OR




o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





OR




o

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





Date of event requiring this shell company report . . . . . . . . . . . . . . . .





Commission file number:  0-29884





R.V.B. HOLDINGS LTD


(Exact name of Registrant as specified in its charter)




Not Applicable


(Translation of Registrant’s Name into English)


Israel


(Jurisdiction of incorporation or organization)


c/o Yigal Arnon & Co., 1 Azrieli Center, Tel Aviv, 67021, Israel


(Address of principal executive offices)




Aviv Tzidon


Chief Executive Officer


+972 (3) 608-7842


+972-3-608-7713


c/o Yigal Arnon & Co., 1 Azrieli Center, Tel Aviv, 67021, Israel


(Name, Telephone, E-mail and/or Facsimile number of Company Contact Person)







Securities registered or to be registered pursuant to Section 12(b) of the Act:




Title of each class

Name of each exchange on which registeredOrdinary shares, par value NIS 1.00 per share

OTC Bulletin Board





Securities registered or to be registered pursuant to Section 12(g) of the Act: None





Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None





Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:





118,900,535 Ordinary Shares, par value NIS 1.00 per share


(As of December 31, 2010)










Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act.





Yes oNo x





If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.





Yes oNo x





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 preceding 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 xNo o





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):




Large accelerated filer o        Accelerated filer o        Non-accelerated filer x




Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:





U.S. GAAP o





International Financial Reporting Standards as issued by the International Accounting Standards Board x





Other o





If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant elected to follow.





Item 17  oItem 18 o








If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).





Yes xNo o




This annual report on Form 20-F is incorporated by reference into the registrant’s Registration Statements on Form S-8, Registration Nos. 333-125879 and 333-140937.










TABLE OF CONTENTS





PageINTRODUCTION

iPART I

1Item 1.
Identity of Directors, Senior Management and Advisors
1Item 2.
Offer Statistics and Expected Timetable
1Item 3.
Key Information
1Item 4.
Information on the Company
8Item 5.
Operating and Financial Review and Prospects
10Item 6.
Directors, Senior Management and Employees
18Item 7.
Major Shareholders and Related Party Transactions
24Item 8.
Financial Information
26Item 9.
Offer and Listing
27Item 10.
Additional Information
28Item 11.
Quantitative and Qualitative Disclosures about Market Risk
38Item 12.
Description of Securities Other than Equity Securities
39PART II

39Item 13.
Defaults, Dividend Arrearages and Delinquencies
39Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
39Item 15 and 15T.
Controls and Procedures
39Item 16.
Reserved
40Item 16A.
Audit Committee Financial Expert
40Item 16B.
Code of Ethics
40Item 16C.
Principal Accountant Fees and Services
40Item 16D.
Exemptions from the Listing Standards for Audit Committees
41Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
41Item 16F.
Change in Registrant’s Certifying Accountant
42Item 16G.
Corporate Governance
42PART III

43Item 17.
Financial Statements
43Item 18.
Financial statements
43Item 19.
Exhibits
43SIGNATURE

44











INTRODUCTION




R.V.B. Holdings Ltd, (RVB) (Formerly B.V.R. Systems (1998) Ltd.), is an Israeli company that was formed in January 1998 to receive all of the assets and liabilities of the defense-related business of BVR Technologies Ltd. in accordance with the terms of a reorganization plan. RVB (then, BVR) commenced operations as an independent company effective as of January 1, 1998. In November 2009, RVB sold substantially all of its assets and liabilities, including the brand name "B.V.R.", to Elbit Systems Ltd. ("Elbit") and, subsequent to the sale, in January 2010 changed its name to R.V.B. Holdings Ltd.  RVB is controlled by Mr. Aviv Tzidon.





The following is the annual report on Form 20-F for the fiscal year ended December 31, 2010 of R.V.B. Holdings Ltd. The terms “we”, “us”, “our”, “the Company” and “RVB”, as used in this annual report,  mean R.V.B. Holdings Ltd. (formerly B.V.R. Systems (1998) Ltd.) unless otherwise indicated.


All references herein to “dollars” or “$” are to United States Dollars, and all references to “Shekels” or “NIS” are to New Israeli Shekels.




FORWARD LOOKING STATEMENTS





In addition to historical information, this annual report on Form 20-F contains forward-looking statements. Some of the statements discussed in "Item 3.D. Risk Factors" and elsewhere in this report contain forward-looking statements. Statements that use the terms “believe”, “anticipate”, “expect”, “plan”, “intend”, “estimate”, “project” and similar expressions in the affirmative and the negative are intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on current assumptions, expectations, estimates and projections with respect to:





·
our ability to identify, evaluate and consummate suitable business opportunities and strategic alternatives;





·             the price and market liquidity of our ordinary shares;





·
the fact that, in the future, we may be deemed to be an "investment company" under the Investment Company Act of 1940 under certain circumstances (including as a result of the investment of assets following the sale of our business), and/or the risk that, in the future, we may be required to take certain actions with respect to the investment of our assets or the distribution of cash to shareholders in order to avoid being deemed an "investment company";





·
our plans with respect to the management of our financial and other assets; and





·             the possibility of future litigation.




Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved.  Factors that could cause actual results to differ from our expectations or projections include the risks and uncertainties relating to our business described in this annual report under "Item 3.D. Risk Factors," "Item 5. Operating and Financial Review and Prospects" and elsewhere in this annual report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof, except as required by applicable law. In addition to the disclosure contained herein, readers should carefully review any disclosure of risks and uncertainties contained in other documents that we file from time to time with the Securities and Exchange Commission (the "SEC").





To the extent that this annual report contains forward-looking statements (as distinct from historical information), we desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and we are therefore including this statement for the express purpose of availing ourselves of the protections of the safe harbor with respect to all forward-looking statements.





i




PART I





ITEM 1.  Identity of Directors, Senior Management and Advisors





Not applicable.





ITEM 2.  Offer Statistics and Expected Timetable





Not applicable.





ITEM 3.  Key Information




A.           Selected Consolidated Financial Data





You should read the following selected consolidated financial data in conjunction with the section of this annual report entitled “Item 5 - Operating and Financial Review and Prospects” and our consolidated financial statements and the notes thereto included elsewhere in this annual report.




The selected data presented below under the captions “Statement of Operations Data,” and “Statements of Financial Position Data” as of and for each of the years in the five-year period ended December 31, 2010, are derived from the audited consolidated financial statements of RVB Holdings Ltd. The consolidated financial statements as of December 31, 2010 and 2009, and for each of the years in the three-year period ended December 31, 2010, are included elsewhere in this annual report. The selected data should be read in conjunction with the consolidated financial statements and the related notes. The 2006 selected data was derived from consolidated financial statements that have been prepared in accordance with Israeli GAAP. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by The International Accounting Standards Board (IFRS).




In November 2009, we sold our business to Elbit Systems Ltd. (Elbit) pursuant to an asset purchase agreement executed on July 19, 2009 (the "Asset Purchase Agreement"), as more fully described below under Item 10.C. "Material Contracts." The sale of our business to Elbit was completed on November 19, 2009 (the "Elbit Transaction"). As, to date, we have not initiated or purchased an operating business since the sale of our business to Elbit, the results of operations relating to the business sold, continue to be reported in our consolidated financial statements in full detail, rather than reported as discontinued operations in accordance with IFRS 5, "Non-current Assets Held for Sale and Discontinued Operations." see Note 1 to our consolidated financial statements included in this annual report.  In addition, as part of the Elbit Transaction, we sold our holdings in our wholly owned subsidiary, BVR S Pacific PTE to Elbit.





You should read the selected consolidated financial data together with the section entitled “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements included elsewhere in this annual report.




Year ended December 312006(In thousands)Statement of Operations Data:In accordance with Israeli GAAPRevenues

$
10,103Cost of revenues


(7,866
)Gross profit


2,237Operating expenses:Research and development


615Selling and marketing


1,430General and administrative


2,155Total operating expenses


4,200Operating loss


(1,963
)Financial expenses, net


(185
)Other expenses, net


-Loss before taxes on  income


(2,148
)Income tax expense


(75
)Net loss for the year


(2,223
)Basic and diluted loss per share


(0.02
)Weighted- average number of ordinary shares of nominalNIS 1.00 par value outstanding (in thousands) used incalculation of the basic and diluted earnings (loss) per share


112,361




1




Year ended December 312006(In thousands)Reconciliation to U.S. GAAP:Net loss under Israeli GAAP


(2,223
)Compensation expense for all stock-based awards using the modifiedprospective method


(596
)Loss under U.S. GAAP


(2,819
)Basic and diluted net loss per share under U.S. GAAP


(0.03
)Weighted average number of ordinary shares outstanding  (in thousands)used in basic loss per share calculation according  to  U.S. GAAP


112,361Weighted average number of ordinary shares outstanding  (in thousands)used in diluted loss per share calculation according  to  U.S. GAAP


112,361




Year ended December 312010


2009


2008


2007(In thousands)Statement of Operations Data:Revenues


-


$
37,113


$
31,566


$
13,106Cost of  revenues


-



(28,293
)


(23,282
)


(10,746
)Inventory write off


-



-



-



(699
)Gross profit


-



8,820



8,284



1,661Operating expenses:Research and development


-



1,499



1,213



959Selling and marketing


-



1,852



2,128



2,240General and administrative


693



4,041



2,773



2,508Total operating expenses


693



7,392



6,114



5,707Other income (Elbit transaction)


867



30,206



-



-Operating profit (loss)


174



31,634



2,170



(4,046
)Financial income


275



28



219



231Financial expenses


(8
)


(2,255
)


(766
)


(249
)Financial income (expenses), net


267



(2,227
)


(547
)


(18
)Profit (loss) before taxes on  income


441



29,407



1,623



(4,064
)Income tax expense


-



-



-



-Net profit  (loss) for the year


441



29,407



1,623



(4,064
)Earnings (loss) per share:Basic earnings (loss) per share (in $)


0.0037



0.25



0.01



(0.03
)Diluted  earnings (loss) per share (in $)


0.0037



0.25



0.01



(0.03
)Weighted- average number of ordinary shares of nominal NIS 1.00 par value outstanding

(in thousands) used in calculation of the basic earnings (loss)  per share


117,971



117,069



116,952



116,861Weighted- average number of ordinary shares of nominal NIS 1.00 par value outstanding

(in thousands) used in calculation of diluted earnings (loss)  per share


117,971



117,098



116,958



116,861





Year ended December 312006(In thousands)Consolidated Statement of Position Data:In accordance with Israeli GAAPCash and cash equivalents

$
3,421Total assets


13,293Short-term bank credit and loans


636Share capital


25,861Shareholders' equity


5,406U.S. GAAP:Total assets


14,604Shareholders' equity

$
5,406





2




Year ended December 312010


2009


2008


2007(In thousands)Consolidated statement of position:Cash and cash equivalents

$
23,094


$
29,886


$
4,249


$
1,520Bank deposit


10,537



-



-



-Total assets


34,421



35,585



21,412



10,160Short-term bank credit and loans


120



120



120



1,086Share capital


26,406



26,157



25,891



25,861Shareholders' equity


33,583



33,142



3,388



1,711


Exchange Rate Information




The following table shows, for each of the months indicated, the high and low exchange rates between the NIS to the U.S. dollar, expressed as NIS per U.S. dollar and based upon the daily representative rate of exchange as published by the Bank of Israel:




Month

High (NIS)


Low (NIS)January 2011


0.283



0.270December 2010


0.282



0.273November 2010


0.279



0.271October 2010


0.280



0.274September 2010


0.273



0.263August 2010


0.266



0.261




The following table shows, for each of the months indicated, the high and low exchange rates between the EURO to the U.S. dollar, expressed as U.S. dollar per EURO and based upon the daily representative rate of exchange as published by the Bank of Israel:




Month

High (EURO)


Low (EURO)January 2011


1.370



1.300December 2010


1.347



1.309November 2010


1.426



1.300October 2010


1.409



1.371September 2010


1.361



1.275August 2010


1.327



1.262




The following table shows, for periods indicated, the average exchange rate between the NIS and EURO to the U.S. dollar, expressed as U.S. dollar per NIS and EURO respectively, calculated based on the average of the representative rate of exchange on the last day of each month during the relevant period as published by the Bank of Israel:




Year

Average (EURO)


Average (NIS)2010


1.321



0.2682009


1.392



0.2552008


1.466



0.2792007


1.369



0.2432006


1.255



0.224





3




On February 11, 2011 the daily representative rate of exchange between the NIS and EURO to the U.S. dollar as published by the Bank of Israel was NIS 3.693, EURO 0.738, respectively to $1.00.


B.           Capitalization and Indebtedness





Not applicable.





C.           Reasons for the Offer and Use of Proceeds





Not applicable.





D.           Risk Factors





Investing in our securities involves significant risk.  You should carefully consider the risks described below as well as the other information contained in this annual report before making an investment decision.  Any of the following risks could materially adversely affect our business, financial condition, results of operations and cash flows. In such case, you may lose all or part of your original investment.





Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or results of operations.





Risks Related to our Business





We sold our business and currently conduct no business activities.  We may not be successful in identifying and evaluating suitable business opportunities or in consummating a business combination.





In November 2009, we sold our advanced defense training and simulation systems business, through the sale of substantially all of our assets and liabilities relating to such business, to Elbit. Since the sale to Elbit, our assets consist mainly of the cash consideration that we received from Elbit. Since the consummation of the sale of our business, we have concentrated on activities relating to the investment of our funds and the remaining aspects relating to the transfer of the business to Elbit, as well as pursuing our current plan of operation, which is to identify and evaluate suitable business opportunities and strategic alternatives, including through the acquisition of all or part of an existing business or otherwise. Other than attempting to locate business opportunities and activities relating to the investment of our funds, we do not currently conduct any operations.





We do not have an agreement or understanding with any third party with respect to the future operations of the Company. We make no assurance that we will be successful in identifying and evaluating suitable business opportunities or in consummating a business combination. We expect to incur expenses in connection with this identification and evaluation process, whether or not such process results in an investment of our funds. While we are actively exploring strategic transactions and opportunities, we have not targeted any particular industry or specific business within an industry in which to pursue such opportunities. We may enter into a business combination with a business entity having no significant operating history or other negative characteristics such as having limited earnings or no potential for immediate earnings, limited assets and negative net worth. We may also pursue a business combination that will not necessarily provide us with significant financial benefits in the short or long term. In the event that we complete a business combination, the success of our operations will be dependent upon the performance of management of the target company, our ability to retain management and numerous other factors, some of which are beyond our control. There is no assurance that we will be able to negotiate a business combination on terms favorable to us, or at all.  We are aware that our controlling shareholder, Aviv Tzidon, has granted to Greenstone Industries Ltd., a public Israeli company, an option to purchase our shares held by him, directly and indirectly, and additional shares he may purchase. Such option is exercisable until March 16, 2011, as reported by Aviv Tzidon and Greenstone Industries Ltd.





4





Even if we identify an entity with whom we believe that it would be beneficial to our shareholders for us to enter into a business combination, due to competition from other entities, we may not succeed in consummating a business combination that will be beneficial to our shareholders.





We expect to encounter competition from entities having a business objective similar to ours, including venture capital funds, private equity funds, special purpose acquisition companies, operating businesses competing for acquisitions, and blank check companies, especially as the prices of potential targets decrease due to the current global financial crisis. Many of these potential acquirers are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Such entities may possess greater technical, human and other resources than we do and our financial resources may be relatively limited as compared to those of many of these competitors.





The current general economic and business condition around the world and any subsequent economic downturn may adversely affect our ability to consummate a business combination, the prospects of any business we may acquire and the trading price of our ordinary shares.





During the past three years, and particularly since September 2008, due to the severity of the crisis affecting financial institutions in the United States and in Europe, the rising costs of various commodities, the lack of growth and economic development in the United States and the developing recession, the general economic and business condition in many countries around the world has worsened, affecting, among other things, credit ratings of borrowers, the perceived and actual credit risks faced by lenders and purchasers of debt securities, the spending habits of consumers, and the ability to procure financing. Although this current crisis may present certain opportunities to companies such as RVB that are seeking prospective business combinations, if this current crisis continues, or any further economic downturns ensue, it may adversely affect: (i) our ability to procure financing required for prospective business combinations; (ii) the value of businesses we acquire; and (iii) our financial condition and results of operations. In addition, this economic downturn also affects the trading prices of securities in various capital markets around the world and may significantly and adversely affect the trading price of our ordinary shares.





When we do select a prospective target business or business in which to invest or with which to complete a business combination, we may be unable to properly ascertain the merits or risks of any particular target business operations.





To the extent we complete a business combination or investment transaction, we may be affected by numerous risks inherent in the business operations of the acquired business or businesses. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors, or that we will have adequate resources to perform a complete due diligence process.





The consummation of a business combination may lead to the dilution of the value of our shares, and may involve the issuance of additional shares of our capital stock or the issuance of debt securities. Issuance of our capital stock would have a dilutive effect over the interests of our shareholders.





In the event we enter into a business combination or similar arrangement, it may involve the allocation of a significant amount of cash held by us as a result of the sale of our business to Elbit. Depending upon the value of the assets acquired in such business combination or investment, the per share value of our ordinary shares may increase or decrease, possibly significantly. In addition, we may need to raise additional financing by issuing our ordinary shares to investors, issuing debt securities or incurring bank or other debt in order to consummate business combinations or acquisitions.  Due to the difficulty of raising capital in the current capital markets environment, it is possible that such ordinary shares or debt securities may be issued at discounts from prevailing market prices. The issuance of additional ordinary shares may significantly reduce your equity interest in RVB and may adversely affect prevailing market prices for our ordinary shares. The incurrence of bank debt or the issuance of debt securities may place restrictions on our ability to operate our business, including leading to default and foreclosure on our assets, subjecting us to restrictive covenants and limiting our ability to obtain additional financing.





5





If we acquire a business or effect a business combination with a company located outside of Israel or the United States, we would be subject to a variety of additional risks that may negatively impact our operations.





We may acquire or effect a business combination with a company located outside of Israel or the United States. In such instance, we would be subject to any special considerations or risks associated with companies operating in the target business’ home jurisdiction, including rules and regulations or currency conversion or corporate withholding taxes on individuals, tariffs and trade barriers, regulations related to customs and import/export matters, longer payment cycles, tax issues, such as tax law changes and variations in tax laws as compared to Israel and the United States, currency fluctuations and exchange controls, challenges in collecting accounts receivable, cultural and language differences, employment regulations, crime, strikes, riots, civil disturbances, terrorist attacks, wars and deterioration of political relations with Israel. We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.





We may be deemed an “investment company” under the Investment Company Act of 1940, which could subject us to material adverse consequences.





As a result of the sale of our business to Elbit, we could be deemed to be an “investment company” under the Investment Company Act of 1940 (the “Investment Company Act”). If we do not enter into a business combination or develop an operating business or limit the nature of our investments and assets and succeed in making strategic “controlling” investments, we may be deemed to be an “investment company.” If we are deemed to be an “investment company” at any point in the future, we will not be permitted to register under the Investment Company Act without an order from the SEC permitting us to register because we are incorporated outside of the United States and, prior to being permitted to register, we would not be permitted to publicly offer or promote our securities in the United States. Such order would subject us to additional commitments and regulatory compliance. In order to avoid falling within the definition of an "investment company" under the act, we may be required to restrict our investments, in the short-term and in the long-term. Such investments might not be as favorable to us as the investments we might make if we were not concerned about being designated as an "investment company".





Risks related to our location in Israel





You may have difficulty enforcing a judgment issued by a court in the United States against us in Israel.





We are organized under the laws of Israel and our headquarters are in Israel. All of our officers and directors reside outside of the United States. Therefore, you may not be able to enforce any judgment obtained in the United States against us or any of such persons. You may not be able to enforce civil actions under United States securities laws if you file a lawsuit in Israel. In addition, if a foreign judgment is enforced by an Israeli court, it will be payable in Israeli currency.





Currency fluctuations may affect the value of our assets and decrease our earnings.





Substantially all of the consideration for the sale of our business to Elbit was paid to us in US dollars.  However, some of our retained assets and liabilities are denominated in NIS.  The devaluation of the US dollar against the NIS may decrease the value of our assets and could impact our business.  We anticipate that a significant portion of our expenses will continue to be denominated in NIS.





6





Provisions of Israeli law may delay, prevent or make difficult an acquisition of RVB, which could prevent a change of control and, therefore, depress the price of our shares.





Israeli corporate law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to transactions effectuating a change of control. Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to some of our shareholders. These provisions of Israeli law may delay, prevent or make difficult an acquisition of RVB, which could prevent a change of control and therefore depress the price of our shares.





We are controlled by Aviv Tzidon who, in the aggregate, beneficially owns, directly and through A.O. Tzidon (1999) Ltd., a company wholly owned by him, approximately 49.74% of our outstanding Ordinary Shares as of February 10, 2011. Therefore, Aviv Tzidon is able to elect the majority of our directors and exercise control over the outcome of matters requiring shareholder’s approval.





As of February 10, 2011, Aviv Tzidon, our Chief Executive Officer and Chairman of the Board of Directors beneficially owned, directly and through A.O. Tzidon (1999) Ltd., a company wholly owned by him an aggregate of 59,142,608 of our ordinary shares representing approximately 49.74% of our currently outstanding ordinary shares; in addition Aviv Tzidon holds options to purchase 1,800,000 Ordinary Shares of RVB, which assuming their exercise, and assuming no other exercise of RVB’s convertible securities, will bring Aviv Tzidon’s holdings to 50.49% of our outstanding Ordinary Shares, as of February 10, 2011. As a result, Aviv Tzidon controls the outcome of various actions that require our shareholder approval.  For example, Aviv Tzidon could elect most of our directors, delay or prevent a transaction in which shareholders might receive a premium over the prevailing market price for their shares and prevent changes in control or management.





If we are considered to be a passive foreign investment company, either presently or in the future, U.S. Holders will be subject to adverse U.S. tax consequences.





We will be a passive foreign investment company, or a PFIC, if 75% or more of our gross income in a taxable year, including our pro rata share of the gross income of any company, U.S. or foreign, in which we are considered to own, directly or indirectly, 25% or more of the shares by value, is passive income. Alternatively, we will be considered a PFIC if at least 50% of our assets in a taxable year, averaged over the year and ordinarily determined based on fair market value, including our pro rata share of the assets of any company in which we are considered to own, directly or indirectly, 25% or more of the shares by value, are held for the production of, or produce, passive income. If we were to be a PFIC, and a U.S. Holder does not make an election to treat us as a “qualified electing fund,” or QEF, or a “mark to market” election, “excess distributions” to a U.S. Holder, and any gain recognized by a U.S. Holder on a disposition of our ordinary shares, would be taxed in an unfavorable way. Among other consequences, our dividends would be taxed at the regular rates applicable to ordinary income, rather than the 15% maximum rate applicable to certain dividends received by an individual from a qualified foreign corporation. The tests for determining PFIC status are applied annually and it is difficult to make accurate predictions of future income and assets, which are relevant to the determination of PFIC status. In addition, under the applicable statutory and regulatory provisions, it is unclear whether we would be permitted to use a gross loss from sales (sales less cost of goods sold) to offset our passive income in the calculation of gross income. In light of the uncertainties described above, we have not obtained an opinion of counsel with respect to our PFIC status and no assurance can be given that we will not be a PFIC in any year. If we determine that we have become a PFIC, we will then notify our U.S. Holders and provide them with the information necessary to comply with the QEF rules. If the IRS determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, however, it might be too late for a U.S. Holder to make a timely QEF election, unless the U.S. Holder qualifies under the applicable Treasury regulations to make a retroactive (late) election. U.S. Holders who hold ordinary shares during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. Holders who made a timely QEF or mark-to-market election.





7





Your rights and responsibilities as a shareholder will be governed by Israeli law and differ in some respects from the rights and responsibilities of shareholders under U.S. law.





We are incorporated under Israeli law. The rights and responsibilities of the holders of our Ordinary Shares are governed by our articles of association and by Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing his power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters. See “Item 10. Additional Information – B. Memorandum and Articles of Association.”





ITEM 4.  Information onthe Company





A.           History and Development of the Company





Our legal and commercial name is R.V.B. Holdings Ltd. Our office is c/o Yigal Arnon & Co., 1 Azrieli Center, Tel Aviv, 67021, Israel, and our telephone number is +972(3)608-7851.





We were incorporated as an Israeli corporation under the name B.V.R. Systems (1998) Ltd., in January 1998 to receive all of the assets and liabilities of the defense-related business of BVR Technologies Ltd., or BVR-T, in accordance with the terms of a reorganization plan. The reorganization plan was consummated, and BVR commenced operations as of January 1, 1998. In January 2010, we changed our name to R.V.B. Holdings Ltd. in connection with the sale of our business to Elbit (as described below). Our corporate governance complies with the Israeli Companies Law, 1999, as amended (the "Companies Law").





On July 19, 2009, we entered into an Asset Purchase Agreement with Elbit Systems Ltd., whereby Elbit acquired substantially all of our assets and business for cash consideration of approximately $34 million and assumed substantially all of our business related liabilities (the "Elbit Transaction").  The shares of our Singapore based wholly-owned subsidiary, BVR S Pacific PTE were included in the assets bought by Elbit.  The sale of our business to Elbit was completed on November 19, 2009.  For more information related to the Elbit Transaction see- Item 10C. Material Contracts.




From October 1998 until March 2001, our ordinary shares traded on the NASDAQ National Market. Between March 2001 and February 2003, our Ordinary Shares traded on the NASDAQ Small Cap Market under the symbol BVRSF.  From February 2003 until March 2010 our shares traded on the Over the Counter Bulletin Board under the symbol BVRSF.OB. Since March 2010, our ordinary shares have traded under the symbol, RVBHF.OB which reflects our name change to R.V.B. Holdings Ltd.





Significant Events





In March 2006, H.S.N. General Managers Holdings L.P. (or "HSN"), an Israeli limited partnership led by Mr. Nir Dor, invested $3.6 million in our share capital in consideration for the issuance of 20,000,000 ordinary shares, representing approximately 17% of our issued share capital, at a price per share of $0.18. In connection with this investment, HSN was issued three separate warrants for the purchase of 6,000,000 of our ordinary shares per each warrant, with exercise prices of $0.36, $0.54 and $1.00 per share, exercisable for a period of three years, with a mandatory exercise mechanism under certain conditions. None of these warrants were exercised and, as of March 2009, all have expired. Pursuant to this investment, Mr. Dor was appointed to serve as a member of our board of directors and shall be entitled to continue to serve on the board, either personally or to nominate a representative on his behalf, for such time as HSN holds at least 9% of our outstanding share capital. As at the date of this report, HSN holds approximately 16.8% of our issued share capital.





8





Capital Expenditures





Our capital expenditures totaled $0 million in the year ended December 31, 2010, $0.2 million in the year ended December 31, 2009 and $0.3 million in the year ended December 31, 2008.




B.           Business Overview





General





Following the closing of the Elbit Transaction and the sale of our operating business to Elbit on November 19, 2009, we ceased substantially all of the operations of our business as conducted prior thereto including those of our subsidiary in Singapore, BVR-S Pacific PTE.  We currently hold substantially all of our assets in cash. Our current plan of operation is to identify and evaluate suitable business opportunities and strategic alternatives, including, through the acquisition of all or part of an existing business, pursuing business combinations or otherwise.  While we are actively exploring strategic transactions and opportunities, we have not targeted any particular industry or specific business within an industry in which to pursue such opportunities.




Government Regulations





Investment Company Act of 1940





As a result of the sale of our business to Elbit, we could fall within the definition of an "investment company" under the Investment Company Act of 1940 or ICA. Regulation under the ICA governs almost every aspect of a registered investment company's operations and can be very onerous. The ICA, among other things, limits an investment company's capital structure, borrowing practices and transactions between an investment company and its affiliates, and restricts the issuance of traditional options, warrants, and incentive compensation arrangements, imposes requirements concerning the composition of an investment company's board of directors and requires shareholder approval of certain policy changes. In addition, contracts made in violation of the ICA are void.





An investment company organized outside of the United States is not permitted to register under the ICA without an order from the SEC permitting it to register.  Prior to being permitted to register, such investment company is not permitted to publicly offer or promote its securities in the United States.





We seek to conduct our operations, including by way of investing our cash, to the extent possible, so as not to become subject to regulation under the ICA. Because currently substantially all of our assets consist of cash we do not believe that we are engaged in “investment company” activities or business.




Shell Company Status





Following the consummation of the Elbit Transaction, we ceased conducting any operating activity and substantially all of our assets currently consist of cash. Accordingly, we may be deemed to be a "shell company", defined by Rule 12b-2 promulgated under the Securities Exchange Act of 1934 as (1) a company that has no or nominal operations; and (2) either: (i) no or nominal assets; (ii) assets consisting solely of cash and cash equivalents; or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.





9





Our characterization as a shell company subjects us to various restrictions and requirements under the U.S. Securities Laws.  In the event we consummate a transaction that causes us to cease being a shell company, we are required to file a report on Form 20-F within four business days of the closing of such transaction.  The Form 20-F is required to include full disclosure with respect to the acquired business and our post-transaction status, including financial statements reflecting the affect of the transaction on our financial position.  This requirement may delay the closing of a prospective business combination or limit our ability to consummate certain business combinations.





During the period in which we are deemed to be a shell company and for a period of sixty days following the filing of the Form 20-F reflecting the change in our status as described above, we may not use any Form S-8 we have on file in order to enable the issuance of our shares and the resale of such shares.  In addition, the provisions of Rule 144 promulgated under the Securities Exchange Act of 1934 may not be used for resale of shares issued by us at the time we were deemed to be a shell company for as long as we are deemed to be a shell company and for a period of one-year thereafter.  These restrictions may limit our ability to compensate future employees and attract new key personnel and may also restrict our ability to raise capital via the private placement of our shares.





C.           Organizational Structure





We currently do not have any subsidiaries. We are controlled by Aviv Tzidon which, in the aggregate, beneficially owns, directly and through A.O. Tzidon (1999) Ltd., a company wholly owned by him, approximately 49.74% of our currently outstanding ordinary shares .




D.           Property, Plant and Equipment





We currently do not have any material fixed assets.




Item 5.  Operating and FinancialReview and Prospects





The following operating and financial review and prospects should be read in conjunction with “Item 3. Key Information – A- Selected Financial Data” and our consolidated financial statements and accompanying notes appearing elsewhere in this annual report. Our financial statements have been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board or IFRS, which differ in certain respects from U.S. Generally Accepted Accounting Principles, or U.S. GAAP.  Following our January 1, 2008 adoption of IFRS, we are no longer required to reconcile our financial statements prepared in accordance with IFRS to U.S. GAAP.





We sold substantially all of our assets to Elbit Systems Ltd. on November 19, 2009.  Our consolidated financial statements reflect the sale of our advanced defense training and simulation systems business to Elbit. As we have not initiated or acquired a new operating business during the year ended December 31, 2009, the results of our operations prior to the consummation of Elbit Transaction are not reported as "discontinued operations" in our consolidated financial statements in accordance with IFRS 5, "Non-current Assets Held for Sale and Discontinued Operations ".  Therefore, the data presented in our consolidated financial statements and in our discussion below are not indicative of our future operating results or financial position.





10





General





Prior to the consummation of the Elbit Transaction, we were engaged in the development, manufacture and marketing of advanced defense training and computer-based simulation systems for military applications.





Most of our revenues were generated in U.S. Dollars, and a significant proportion of our expenses was incurred in U.S. Dollars or was linked to the U.S. Dollar. Consequently, we use the U.S. Dollar as our functional currency. Transactions and balances originally denominated in U.S. Dollars are presented in the financial statements in their original amounts, and non-dollar transactions and balances have been translated into U.S. Dollars using the exchange rates in effect on the date of a transaction or balance.  Our Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB).





We derived a substantial portion of our revenues from government contracts, the majority of which were fixed-price, as opposed to cost-plus type contracts. Under fixed-price contracts, the price is generally not subject to adjustment for costs actually incurred in the performance of the contract.





In most of our projects, we received advance payment at the commencement of the project and progress or milestone payments according to our performance or achievement of specific milestones. In most cases, the advance payments that we received prior to incurring the cost of fulfilling the contract created a positive project cash flow. Our contracts generally contained provisions that allowed for termination or suspension as a result of factors beyond our control, such as a state of war, force majeure, or other circumstances seriously disrupting the public safety, peace or good order of the customer’s country. In the event that a contract under which an advance or progress payment had been paid was canceled, we were required to return such payments or a portion of them to the customer.





We generally attempted to expend funds for projects in accordance with the rate of performance in order to reduce risks of financial exposure resulting from early termination of a contract. Upon such termination, we would, in most cases, be entitled to reimbursement for our incurred contract costs and to payment of a proportionate share of our fee or profit for the work actually performed.





Revenues related to work in progress under long-term contracts are recognized on the basis of the “percentage-of-completion” method. Cost includes direct costs of materials, labor, subcontractor and other direct costs and allocated indirect manufacturing costs. The percentage of completion is measured on the basis of cost (the ratio of the costs incurred to the total estimated costs), which reflect the progress of the contract completion. Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract was able to be estimated reliably, we recognized the contract revenue and expenses in profit or loss in proportion to the percentage of completion of the contract. When the outcome of a construction contract was not able to be estimated reliably, we recognized the contract revenue only to the extent of contract costs incurred that were likely to be recoverable. An expected loss on a contract is recognized immediately in profit or loss.





With respect to the sale of products acquired from third parties as shelf products and where the cost of adaptation thereof for a customer’s specific needs is not material, the related revenue is recognized after completion and delivery.




11




Provision for estimated losses on uncompleted contracts are made in the period in which such losses are first determined in the amount of the estimated loss on the entire contract.





Royalties and commission revenues are generally recognized when the related payments are received by the third party. We determine such revenues through confirmation of payments subject to royalties and commissions directly from the third party.





Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.





Critical Accounting Policies





The preparation of our financial statements, in conformity with IFRS  requires us to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. These are our management’s best estimates based on experience, various facts, external circumstances, reasonable assumption and historical data.  Actual results could differ from those estimates.




Certain specific accounting policies we utilize require higher degrees of judgment than others in their application. These include going concern, revenue recognition on long-term contract work and income taxes. In addition, Note 2 to our Consolidated Financial Statements includes a further discussion of our significant accounting policies regarding revenue recognition.




Revenue Recognition





During the periods covered by the consolidated financial statements prior to the Elbit Transaction, we accounted for our revenues on fixed price long-term contract work on the percentage of completion method.  This method of accounting requires us to calculate project profit to be recognized in each reporting period for each project based upon our predictions of future outcomes which include estimates of the total cost to complete (such as assumptions relative to future labor performance and costs, materials costs and subcontractor charges) and estimates of project schedule and completion date.





At the onset of each contract, we prepared a detailed analysis of our estimated cost to complete the project.  Our project personnel evaluated the estimated costs at the project level.  Significant projects were reviewed in detail by senior management on a quarterly basis.





Our estimates of revenues and expenses on long-term contracts could change periodically in the normal course of business. Such changes would be reflected in results of operations as a change in accounting estimate in the period the revisions are determined. For all the contracts, provisions for estimated losses on uncompleted individual contracts were made in the period in which such losses were first determined, in the amount of the estimated loss on the entire contract





Royalties and commission revenues resulting from the cooperation agreement with Israel Aircraft Industries Ltd. ("IAI") were recognized when the Company received confirmation of payments subject to royalties and commissions from IAI.





Revenue from services rendered was recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion was assessed by reference to surveys of work performed.





12




Income Taxes





Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized.  The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers projected taxable income and tax planning strategies in making this assessment.  In order to fully realize the deferred tax asset, the Company will need to generate future taxable income prior to the expiration of the deferred tax assets governed by the tax code.  Based on the level of historical taxable losses, management believes that it is more likely than not that the Company will not realize the benefits of these deductible differences.





A.           Results of Operations





On November 19, 2009 (the “Closing Date”) after receipt of all required approvals we sold substantially all of our assets and liabilities to Elbit Systems Ltd. (NASDAQ: ESLT) (“Elbit”), for a total cash consideration of approximately $34 million (the “Elbit Transaction”), out of which $4.8 million were held in escrow, see Note 4 to our Consolidated Financial Statements. As a result of the Elbit Transaction, we recorded, in the 2009 statement of operations, a net gain of $30.2 million, after deducting attribute transaction costs in the amount of $ 655 thousand. In addition, transaction related expenses in the amount of $471 thousand were recorded in the General and administrative expenses.


During 2010 Elbit notified us that the purchased projects were not balanced in the amount of $970 thousand and  we disputed Elbit's claims. At the end of 2010 we reached a final settlement with Elbit according to which, a payment of $242 thousand will be transferred to Elbit and $728 thousand will be transferred to us. We've recognized the aforementioned amount of $728 thousand as other income in 2010, due to the fact that we did not recognize this amount as an asset in the balance sheet of 2009.
 
 As of December 31, 2010 all of the Company’s escrow accounts were released back to the Company.





Our operating cycle until the Elbit Transaction was generally twenty four months. As of the date of this report, we are attempting to locate business opportunities and activities in which to invest our funds, but currently we do not conduct any operations. Therefore, in accordance with IFRS the normal operating cycle for the period ended 2010 is twelve months.





Year Ended December 31, 2010 Compared to Year Ended December 31, 2009.





On November 19, 2009 we completed the Elbit Transaction.  Accordingly, it should be noted that during the year ending December 31, 2010 we had no operating activity and as such the comparison of our operating results of the year ended December 31, 2010 to the year ended December 31, 2009 is not applicable.




General and Administrative Expenses.


General and administrative expenses consist primarily of salaries and related costs of welfare and administration, finance and general management personnel, professional fees, office, vehicle and rental expenses. General and administrative expenses in fiscal 2010 were $0.7 million, a decrease of $3.3 million, or 83%, from $4 million in fiscal 2009. The decrease in general and administrative expenses was primarily attributed to the sale of business to Elbit.





Operating Loss


As a result of the foregoing and the income from Elbit Transaction, resulting in a net gain of $0.9 million, we had an operating profit of $0.2 million in fiscal 2010, compared to an operating profit of $31.6 million in fiscal 2009.





13





Financial Expenses, Net.





Financial expenses consist primarily of interest paid on loans, bank charges, losses from foreign exchange erosion of monetary balances and losses from derivatives instruments. Financial income consists primarily of interest earned from short-term deposits and interest on non-current receivables. Financial income, net in fiscal 2010 was approximately $0.3 million compared to expenses of $2.2 million in fiscal 2009. The increase in financial income net is attributed to increase in interest on bank deposits due to the Elbit transaction proceeds.




Year Ended December 31, 2009 compared toYear Ended December 31, 2008


Revenues





Revenues in fiscal 2009 were $37.1 million, an increase of 18% compared to revenues of $31.6 million in fiscal 2008.  The increase was primarily attributed to the increase of the order backlog in 2008 of $29 million and to revenues from royalties in fiscal 2009 which contributed $3.2 million. Revenues from sales of our live and embedded training systems products accounted for 70% and 71% in fiscal 2009 and 2008, respectively. Revenues derived from our virtual and constructive simulator products accounted for 29% and 30% of our revenues in fiscal 2009 and 2008, respectively.  The geographical breakdown of our revenues in fiscal 2009 was as follows: approximately 76% of our revenues were in Asia, 12% in Europe, 11% in Africa and 1% in America.  In fiscal 2008, approximately 89% of our revenues were in Asia, 5% in Europe, 4% in America and 1% in Israel. The fluctuations in the proportion of our revenues attributed to geographic areas are the result of the completion of several contracts, which we had with various countries. Our agreements are multi-year contracts, and we generally recognize revenues on the percentage of completion method, recognizing expenses when incurred.





Gross Profit.





Gross profit in fiscal 2009 was approximately $8.8 million, an increase of $0.5 million from a gross profit of $8.3 million in fiscal 2008. The increase in gross profit was primarily due to the increase of the revenues in fiscal 2009. As a percentage of revenues, gross margins decreased slightly from an overall gross margin of 26% in fiscal 2008 to an overall gross margin of 24% in fiscal 2009. Our gross margin is influenced by various factors, such as the type and size of a project, and the portion of projects performed by subcontractors.





Research and Development Costs.





Research and development expenditures consist primarily of salaries, subcontractors and other personnel related expenses related to design, development and enhancement of our products and, to a lesser extent, depreciation and other expenditures.  Research and development expenses in fiscal 2009 were $1.5 million, an increase of $0.3 million from fiscal 2008. Research and development expenses increased primarily from continuing development of new products and from development ofgeneric infrastructure for future projects.





Selling and Marketing Expenses.





Selling and marketing expenditures consist primarily of costs relating to payroll expenses, sales commissions, subcontractors and consultants, travel expenses, demonstrations, exhibitions and participation in trade shows. Selling and marketing expenditures in fiscal 2009 were $1.9 million, a decrease of $0.2 million, or 13%, from $2.1 million in fiscal 2008 attributed to the fact that there was a decrease in marketing activities in fiscal 2009.





14


General and Administrative Expenses.





General and administrative expenses consist primarily of salaries and related costs of welfare and administration, finance and general management personnel, professional fees, office, vehicle and rental expenses. General and administrative expenses in fiscal 2009 were $4 million, an increase of $1.3 million, or 46%, from $2.8 million in fiscal 2008. The increase in general and administrative expenses was primarily attributed to an increase in the professional fees due to the sale of business to Elbit.





Operating Profit (Loss).





As a result of the foregoing and the income from Elbit Transaction a net gain of $30.2 million, we had an operating profit of $31.6 million in fiscal 2009, compared to an operating profit of $2.2 million in fiscal 2008. As a percentage of revenues, operating profit increased from an operating profit of 7% in fiscal 2008, to an operating profit of 85% in fiscal 2009.





Financial Expenses, Net.





Financial expenses consist primarily of interest paid on loans, bank charges, losses from foreign exchange erosion of monetary balances and losses from derivatives instruments. Financial income consists primarily of interest earned from short-term deposits and interest on non-current receivables. Financial expenses, net in fiscal 2009 were approximately $2.2 million compared to expenses of $0.5 million in fiscal 2008. The increase is attributed to increase in interest on short term loans from bank and others.




Impact of Inflation and Devaluation on Results of Operations, Liabilities and Assets





Prior to the Elbit Transaction, the dollar cost of our operations was influenced by the extent to which inflation in Israel is or is not offset, or is offset on a lagging basis, by the devaluation of the NIS in relation to the dollar.  When the rate of inflation in Israel exceeds the rate of devaluation of the NIS against the dollar, companies experience increases in the dollar cost of their operations in Israel.  Unless offset by a devaluation of the NIS, inflation in Israel has a negative effect on our profitability, as we received payment in dollars or dollar-linked NIS for all of our sales, while we incurred a portion of our expenses in NIS.





The following table presents information about the rate of inflation in Israel, the rate of devaluation of the NIS against the dollar, and the rate of inflation in Israel adjusted for the devaluation:





Year ended

December  31

Israeli inflation % rate


Devaluation of the NIS

rate %


Israeli inflation adjusted for devaluation %2006


(0.1
)


(8.2
)


8.12007


3.4



(9.0
)


12.42008


3.8



(1.1
)


4.92009


3.9



(0.7
)


4.62010


2.7



(6
)


8.7





Devaluation of the NIS in relation to the dollar has the effect of reducing the dollar amount of any of our expenses or liabilities payable in NIS, unless those expenses or payables are linked to the dollar or to another currency.  This devaluation also has the effect of decreasing the dollar value of any asset that consists of NIS or receivables payable in NIS, unless the receivables are linked to the dollar or to another currency.  Conversely, any increase in the value of the NIS in relation to the dollar has the effect of increasing the dollar value of any unlinked NIS assets and the dollar amounts of any unlinked NIS liabilities and expenses.





15





Because exchange rates between the NIS and the dollar fluctuate continuously, exchange rate fluctuations as recently experienced in Israel and, particularly larger periodic devaluations or revaluations, will have an impact on our profitability and period-to-period comparisons of our results. In 2009 and 2010, the devaluation of the dollar against the NIS exceeded the rate of inflation in Israel, and we experienced an increase in the dollar cost of our operations in Israel.





The consideration received from Elbit upon consummation of the Elbit Transaction was denominated in U.S. dollars and has since been deposited in U.S. dollar denominated accounts.  Some of the liabilities we retained were denominated in other currencies (most notably severance payments in Israel).  As a result of the devaluation of the U.S. dollar against the NIS, the value of those liabilities increased.  We currently conduct our business in Israel and a significant portion of our expenses are in NIS.  We therefore expect to continue to be affected by changes in the prevailing NIS/U.S. dollar exchange rate in the future.  Further as we are exploring business opportunities around the world, our investment in prospective businesses may be denominated in non U.S. dollar currencies, and due to the fluctuations in the exchange rates in recent years, we cannot anticipate the impact that the prevailing exchange rate will have on our future investments.





The effects of foreign currency remeasurements are reported in our consolidated financial statements in the statement of operations.





In the past, we entered into currency future contracts and put and call option contracts to reduce our exposure to fluctuations of specific currencies against the dollar, resulting primarily from firm commitments in such currencies. As of December 31, 2010, we had no derivative financial instruments.





Effective Corporate Tax Rate





The statutory Israeli corporate tax rate was 25% in 2010 compared to 26% in 2009,  27% in 2008 and 29% in 2007.





On July 25, 2005 the Knesset passed the Law for the Amendment of the Income Tax Ordinance (No. 147) – 2005, which provides, inter alia, for a gradual reduction in the corporate tax rate to 25% as from the 2010 tax year. On July 14, 2009, the Knesset passed the Economic Efficiency Law (Legislation Amendments for Implementation of the 2009 and 2010 Economic Plan) – 2009, which provided, inter alia, an additional gradual reduction in the corporate tax rate to 18% as from the 2016 tax year. In accordance with the aforementioned amendments, the corporate tax rates applicable as from the 2010 tax year are as follows: In the 2010 tax year – 25%, in the 2011 tax year – 24%, in the 2012 tax year – 23%, in the 2013 tax year – 22%, in the 2014 tax year – 21%, in the 2015 tax year – 20% and as from the 2016 tax year the company tax rate will be 18%.





B.           Liquidity and Capital Resources





Historically we have met our financial requirements primarily through the private sale of equity securities, customer payments and advances and the utilization of bank credit lines.  In addition, we raised capital through equity financings in 2004 and in 2006. In March 3, 2009, we entered into an agreement in principle with Milestones Upgrading Ltd. ("Milestones") for the investment of $3 million in share capital and the grant of a convertible loan of $2 million. Pursuant to the execution of this agreement in principle, the investor provided us with a $1.5 million loan which was considered part of the $2 million loan amount to be granted under the definitive agreement. Milestones did not consummate the investment and in December 2009 we entered into a settlement agreement with Milestones pursuant to which we repaid the loan including interest in a total amount of $1.7 million.  For more information on the Milestones settlement see Item 10C. Material Contracts.





16





On May 28, 2009, we announced that we entered into an agreement with Golan Investments for the investment of $3.5 million in the Company by means of a debenture, of which $2 million was provided to the Company on May 31, 2009 and the balance of $1.5 million was provided on June 21, 2009 (the "Golan Debenture").  In addition to the debenture, Golan Investments received a warrant to purchase three (3) million ordinary shares of the Company at an exercise price of $0.18 per share, which is exercisable for a period of five (5) years and will terminate in May 2014. The debenture became due twelve (12) months from the issue date in the amount of $3.85 million, and provided that it may be extended for additional consideration. Immediately following the Elbit Transaction, we repaid the Golan Debenture, within the initial twelve (12) month term, in the amount of $4.55 million, in accordance with its terms. The warrants granted to Golan Investments for the purchase of three (3) million ordinary shares of the Company remain outstanding as of the date of this report.





Upon consummation of the Elbit Transaction, we fully repaid our short-term debt to banks in the amount of $1.75 million. The total obligation for credit received from banks and for bank guarantees provided in favor of the Company was transferred to Elbit and we were released from all outstanding guarantees for the period following the Elbit transaction.





As of December 31, 2010, we had cash and bank deposits of approximately $33.6 million and a positive working capital of approximately $33.6 million.





Prior to the Elbit Transaction, our operating cash flow was influenced by cash advances from customers’ offset and by cash used in the performance of ongoing projects. Operating activities for the year 2009 and 2008, provided (or used) cash of approximately ($11.5) million and $9.6 million, respectively. For fiscal 2009, cash used from changes in assets and liabilities of ($11.2) million primarily consisted of an increase in trade receivables of ($10.5) million which were sold to Elbit. For fiscal 2008 cash derived from changes in assets and liabilities of $7.3 million consisted primarily of an increase in deferred revenues of $7.9 million and an increase in trade payables of $2.9 million.





Investing activities for fiscal 2010, 2009 and 2008 provided (or used) cash of approximately ($5.8) million, $37 million and ($5.9) million, respectively. Cash flows used in investing activities in fiscal 2010 consisted primarily of $4.6 million proceeds from transaction with Elbit and a release of deposit in escrow, $0.2 million decrease in restricted bank deposits (net of interest received) and $10.5 million deposits in bank.





Cash flows provided of investing activities in fiscal 2009 consisted primarily of proceeds from the transaction with Elbit of $28.8 million and a decrease in restricted bank deposits (net of interest received) and deposits in escrow of $8.6 million. The decrease in restricted bank deposits resulted from the transfer of the entire obligation for credit received from banks and for bank guarantees to Elbit.




Cash flows used in investing activities in fiscal 2008 consisted primarily of the purchase of fixed assets and intangible assets in the amount of $0.4 million and an increase in restricted bank deposits (net of interest received) of $5.6 million.





Financing activities for fiscal 2010, 2009 and 2008 provided (or used) cash of approximately of $0 million, $0.2 million and ($0.9) million respectively.





Cash flows used in financing activities in fiscal 2008 consisted primarily of repayment of short-term bank credit and loan in the total amount of $1 million.





17




C.           Research and Development, Patents and Licenses





Our policy was to devote a significant portion of our personnel and financial resources to developing new products.  Following the sale of our assets to Elbit in November 2009, we conduct no research and development activities.





Our gross research and development expenditures were $0 in 2010, $1.5 million in 2009 and $1.2 million in 2008.





D.           Trend Information





Not applicable.





E.           Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements which have or are reasonably likely to have a material current or future effect on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources of our Company.




F.           Tabular Disclosure of Contractual Obligations





As of December 31, 2010, we had no contractual obligations of the type required to be disclosed in this section.




G.           Safe Harbor





All information included in Item 5.E of this Item is deemed to be a “forward looking statement” as that term is defined in the statutory safe harbors, except for historical facts.  The safe harbor provided in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 shall apply to all forward-looking information provided in Item 5.E and F of this Item.




ITEM 6 - Directors, Senior Managementand Employees





A.           Directors and Senior Management





The following table lists the name, age and position held by our executive officer and directors, as of February 13, 2011:





Name

Age

PositionAviv Tzidon


55

Director, Chairman of the Board of Directors and Chief Executive OfficerNir Dor


47

DirectorJonathan Regev


47

Director*Alicia Rotbard


64

Director*Avraham Toledano


51

DirectorAvraham Zamir


67

Director







* External Director





18





Aviv Tzidon has served as our Chief Executive Officer since November 19, 2009 and has been our director and the Chairman of our Board of Directors since November 2003. Mr. Tzidon was the co-founder of BVR-T and served as its Chief Technology Officer and a director since it commenced operations in 1987.  From October 1998, upon the spin-off of BVR Systems (1998) Ltd. from BVR-T, and until April 2000, Mr. Tzidon served as Chairman of the Board of Directors and Chief Executive Officer of BVR-T.  For three years, Mr. Tzidon worked as an independent consultant for Israel Aircraft Industries.  Mr. Tzidon served as a combat pilot with the Israel Air Force, including reserve service, for approximately 20 years.




Nir Dorhas been our director since March 2006. Mr. Dor currently serves as the chairman of the board of directors of Cargal Carton Industries Ltd., Vice Chairman of the board of directors of Global Factoring Ltd. and serves on the board of directors of The Danone Spring of Eden BV. Mr. Dor served as the chief executive officer of Eden Springs Ltd. between 1999 and 2004. Mr. Dor is a certified public accountant and holds a B.A. in business management and finance from the College of Management of Tel-Aviv University.





Alicia Rotbard has been our external director since July 2008.  Ms. Rotbard founded DOORS Information Systems, Inc. in 1989 and served as its CEO until 2002. Since 1989 she has served as President and CEO of Quality Computers Ltd. and from 1980 to 1985, she served as Deputy General Manager of the Tel-Aviv Stock Exchange, managing its computer department and operations.  Ms. Rotbard holds a B.Sc. in Mathematics and Physics from the Hebrew University of Jerusalem.





Jonathan Regev has been our external director since April 2010. Since 2007, Mr. Regev has served as Chief Executive Officer of Abnet Communications Ltd.  From 2004 until 2006, Mr. Regev served as the CFO of Oblicore Inc.  From 2000 until October 2004, Mr. Regev worked at Amdocs Management Limited in various positions including as COO and CFO of Amdocs' CRM Division. From 1998 until 2000, Mr. Regev worked as the Director of Corporate Treasury, Budget Control and CFO Deputy of Nilit Ltd.; from 1995 - 1997 he worked as the Controller and Director of Corporate Economics of the Strauss Group in Israel; and from 1992 – 1995, Mr. Regev worked as Head of Industrial Control and Economic Department of the Manufacturing Division of Tadiran Electrical Appliances Ltd.  Mr. Regev holds a MA in Economics from Technion – the Israel Institute of Technology and a Bs. in Physics from Tel Aviv University.





Avraham Toledanohas been our director since July 2009. Mr. Toledano is a certified accountant in Israel and was a senior partner at Ernst & Young, Israel until 2005. Mr. Toledano currently serves as Chief Executive Officer of B.R.Y.T. Capital Group Ltd., and serves as a director of B.R.Y.T. Capital Group Ltd., A.T.L.V. Management and Investment Services Ltd., Nama Holdings Ltd. and Simcha Uriely & Sons Engineering and Construction Company Ltd., which is traded on the Tel Aviv Stock Exchange.  Mr. Toledano holds a B.A. in accounting from the College of Management.





Avraham Zamir has served as our director since July 2009.  Mr. Zamir has been an independent consultant for technology companies in Israel and abroad, and a lecturer for academic institutes on negotiations and marketing in different cultures, since 2001.  Between 1987 until 1990, Mr. Zamir served as a projects manager and marketing director of TIL Consulting Company Ltd.; from 1990 until 1991 Mr. Zamir served as a marketing director for defense systems in RADA Electronic Industries Ltd.; and from 1991-2000 Mr. Zamir served as senior vice-president for business development, marketing and sales of RVB.  Mr. Zamir holds a B.Sc. in aeronautical engineering from Technion- the Israel Institute of Technology.





B.           Compensation




Members of our board of directors, other than the chairman of our board of directors and our external directors, do not receive cash compensation for their service on the board of directors or any committee of the board of directors. Our external directors received an aggregate of approximately $35,500 for the year ended December 31, 2010. In addition, the chairman of our board of directors who provided chief executive officer services was paid a total of $164,150 for the year ended December 31, 2010.





19





On June 27, 2010, our board of directors approved the repurchase of Ordinary Shares held by Ilan Gillies, former chief executive officer, and Reuven Shachar, former chief financial officer, which were issued to them upon exercise of options held by them, at an exercise price per share of $0.18, in consideration for the payment of $0.23 per Ordinary Share.  Accordingly, on January 26, 2011, we repurchased 930,000 Ordinary Shares held by Ilan Gillies, former chief executive officer, and Reuven Shachar former chief financial officer, according to the above mentioned conditions, for a consideration of $213,900, of which $167,400 was invested by them in the Company upon exercise of the options.




C.           Board Practices





Our articles of association provide for a board of directors of not less than two and no more than fifteen members.  Each director, with the exception of the external directors, is elected to serve until the next annual general meeting of shareholders and until his or her successor has been elected. Officers serve at the discretion of the board of directors.





Our articles of association provide that any director may, by written notice, appoint another person to serve as a substitute director and may cancel such appointment.  According to the Companies Law, a person may not serve as a substitute director for more than one director and a director may not serve as a substitute director.  Any substitute director will have all of the rights and obligations of the director appointing him or her, except the power to appoint a substitute, unless the instrument appointing him provides otherwise, and the right to remuneration.  Appointment of a substitute director for a member of a committee of the board of directors is only permitted if the substitute is a member of the board of directors and does not regularly serve as a member of such committee. If the committee member being substituted is an external director, such substitute may not be a regular member of such committee and may only be another external director possessing either the same expertise as the external director being substituted or possessing accounting and financial expertise. Unless the time period or scope of any appointment is limited by the appointing director, the appointment is effective for all purposes, but will expire upon the expiration of the appointing director’s term.  To our knowledge, no director currently has appointed any other person as a substitute director.





External Directors





Under the Companies Law, companies incorporated under the laws of Israel whose shares have been offered to the public in or outside of Israel are required to appoint no less than two external directors.  The Companies Law provides that a person may not be appointed as an external director if the person or the person’s relative, partner, employer or any entity under the person’s control, has, as of the date of the person’s appointment to serve as external director, or had, during the two years preceding that date, any affiliation with the company, any entity controlling the company or any entity controlled by the company or by such controlling entity.  The term affiliation includes:





an employment relationship;


a business or professional relationship maintained on a regular basis;


control; and


service as an office holder.





No person can serve as an external director if the person’s position or other business creates, or may create, a conflict of interests with the person’s responsibilities as an external director.  A person shall be qualified to serve as an external director only if he or she possesses accounting and financial expertise or certain professional qualifications. At least one external director must possess accounting and financial expertise and the other external directors are to possess professional qualifications as defined by regulations to the Companies Law.  Financial and accounting expertise require such external director to possess a high level of understanding in business matters, such that he or she can read and understand financial statements in depth and be able to raise issues with respect to the manner in which the financial data is presented therein. A company's board of directors is to determine such candidate's qualifications based on his or her education, experience and skills regarding financial and control matters in companies of similar size and in a similar industry and knowledge of preparation and approval of financial statements under the Companies Law and the Israeli Securities Laws. Until the lapse of two years from termination of office, a company may not engage an external director to serve as an office holder and cannot employ or receive services from that person, either directly or indirectly, including through a corporation controlled by that person.  External directors are to be elected by a majority vote at a shareholders’ meeting, provided that either:




20




The total number of votes for the appointment of the external directors shall include the votes of at least one third of the shares represented at the meeting in person or by proxy, which are not held by controlling shareholders of the company; or





The total number of votes against the appointment of the external directors, among the non-controlling shareholders of the company, shall not exceed 1% of the aggregate voting rights in the company.





When counting the votes of the non-controlling shareholders, abstentions are not to be included.





An external director is entitled to compensation as provided in regulations promulgated under the Companies Law and is otherwise prohibited from receiving any compensation, directly or indirectly, in connection with services provided as an external director. We compensate our two external directors in accordance with regulations promulgated under the Companies Law.





The initial term of an external director is three years and may be extended for an additional three years.  Each committee of a company’s board of directors, which exercises board powers, is required to include at least one external director.  However, the audit committee must include all of the company’s external directors.





At the Company's annual general meeting held on July 10, 2008, the Company appointed Ms. Alicia Rotbard to serve as external director. In April 2010, pursuant to the decision of an extraordinary meeting of shareholders, the Company appointed Jonathan Regev as an external director of the Company.





Exculpation, Insurance and Indemnification of Directors and Officers





Under the Companies Law, an Israeli company may not exempt an office holder from liability with respect to a breach of his duty of loyalty, but may exempt in advance an office holder from his or her liability to the company, in whole or in part, with respect to a breach of his duty of care, provided, that the company is so permitted under its articles of association.





Office Holder Insurance





Our articles of association provide that, subject to the provisions of the law, we may enter into a contract for the insurance of the liability of any of our office holders with respect to:





a breach of his or her duty of care to us or to another person;


a breach of his or her duty of loyalty to us, provided that the office holder acted in good faith and had reasonable cause to assume that his act would not prejudice our interests; or


a financial liability imposed upon him or her in favor of another person concerning an act performed by him or her in their capacity as an office holder.





21





Indemnification of Office Holders





Our articles of association provide that we may indemnify an office holder against:





a financial liability imposed on him or her in favor of another person by any judgment, including a settlement or an arbitrator’s award approved by a court concerning an act performed in his or her capacity as an office holder; and





reasonable litigation expenses, including attorneys’ fees, expended by the office holder or charged to him or her by a court, in proceedings we institute against him or her or instituted on our behalf or by another person, or in a criminal charge from which he or she was acquitted, or a criminal charge in which he or she was convicted for a criminal offense that does not require proof of intent, in each case relating to an act performed in his or her capacity as an office holder.





Limitations on Insurance and Indemnification





The Companies Law provides that a company may not indemnify an office holder nor enter into an insurance contract which would provide coverage for any monetary liability incurred as a result of any of the following:





·
a breach by the office holder of his or her duty of loyalty unless the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;


·
a breach by the office holder of his or her duty of care if the breach was done intentionally or recklessly;


·
any act or omission done with the intent to derive an illegal personal benefit; or


·
any fine levied against the office holder.





In addition, under the Companies Law, indemnification of, and procurement of insurance coverage for, our office holders must be approved by our Audit Committee and our Board of Directors and, in specified circumstances, by our shareholders.





We have obtained liability insurance for our directors and officer.





Audit Committee




Under the Companies Law, the board of directors of a public company must establish an audit committee. The audit committee must consist of at least three directors and must include all of the company’s external directors. The audit committee may not include the chairman of the board, any director employed by the company or providing services to the company on an ongoing basis, a controlling shareholder or any of a controlling shareholder’s relatives. The members of the audit committee are also required to meet the independence requirements established by the SEC in accordance with the requirements of the Sarbanes-Oxley Act.





Our audit committee provides assistance to our Board of Directors in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting and internal control functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding our accounting practices and systems of internal control over financial reporting. The audit committee also oversees the audit efforts of our independent accountants and takes those actions as it deems necessary to satisfy itself that the accountants are independent of management. Under the Companies Law, the audit committee is required to identify deficiencies in the management of the company, including by consulting with the internal auditor or the independent accountants, and recommending remedial actions to the board of directors, and is responsible for reviewing and approving certain related party transactions, as described below. The audit committee may not approve such a related party transaction unless at the time of approval the two external directors were serving as members of the audit committee and at least one of them was present at the meeting at which the approval was granted.





22





Management Consulting Agreement





Upon consummation of the Elbit Transaction, the employment of our senior management was terminated.  Aviv Tzidon was appointed to serve as our Chief Executive Officer, on a consulting basis, as of November 19, 2009, the closing date of the Elbit Transaction, in consideration for a monthly fee of NIS 50,000.  Upon consummation of the Elbit Transaction, the board of directors of the Company resolved to continue to utilize the consulting services of Dekel Tzidon, through his company, Eyepoint Ltd., and extended the term of such services until June 30, 2010 for a fixed fee of twenty thousand U.S. Dollars ($20,000). See Item 7. Related Party Transactions, Agreement with Eyepoint Ltd.





Employee Share Option Plans





On June 27, 2010, our board of directors approved to offer to all our former employees and service providers with outstanding options (which were working in our company until the Elbit transaction was consummated and who have agreed to sign a new contract with Elbit), to repurchase their options at a purchase price equal to $0.23 minus the options exercise price.





In July 2010 we provided to our former employees and service providers an offer to purchase their outstanding options and in September 2010, we repurchased 2,186,000 options for a total consideration of $107,490.





Employees





The following table sets forth for the last three fiscal years, the number of our employees engaged in the specified activities.  Data reported for 2009 reflects the Company's employees as of November 19, 2009, the closing date of the Elbit Transaction:





Year ended December 31,Activity

2010


2009


2008Production & Research and Development


-



111



116Marketing and Sales


-



4



6Administration and Management


-



13



14Total


-



128



136





As of February 10, 2011, we did not employ any employees.  Mr. Aviv Tzidon serves as our Chief Executive Officer on a consulting basis, the terms of which were approved by our shareholders in January 2010.  In connection with the consummation of the Elbit Transaction, we entered into a short-term consulting agreement with Dekel Tzidon which expired on June 30, 2010.





We are subject, like all Israeli employers, to labor laws and regulations in Israel.  These laws principally concern matters like paid annual vacation, paid sick days and other conditions of employment. In addition, Israeli law generally requires severance pay, which may be funded by managers’ insurance described below (or by other funds), upon the retirement or death of an employee or termination of employment, subject to the provisions of the law.  Provisions for severance pay amount to approximately 8.33% of wages.  Furthermore, Israeli employees and employers are required to pay predetermined sums to the National Insurance Institute, which is broadly parallel to the United States Social Security Administration.  These amounts also include payments by the employee for national health insurance.  The total payments to the National Insurance Institute are equal to approximately 16.25% of the wages (up to a specified amount), of which the employee contributes approximately 66% and the employer contributes approximately 34%. As above stated, currently we have no employees.





23





We and any Israeli employees we may employ in the future will be subject to certain provisions of the general collective bargaining agreements between the Histadrut, the General Federation of Labor in Israel, and the Coordination Bureau of Economic Organizations, including the Industrialists Association, by order of the Israel Ministry of Labor and Welfare.




We have engaged a third party outsourcing financial services firm to assist us with the preparation of our annual report, our financial statements and with maintaining  certain internal control and adequate  documentation for our internal controls over financial reporting under the supervision of our Chief Executive Office .




D.           Share Ownership





As of February 10, 2011, Aviv Tzidon beneficially owned an option to purchase 1,800,000 Ordinary Shares, exercisable at a price of $0.18 per share until November 24, 2011. Assuming the exercise of such options and no other exercise of our convertible securities, Mr. Tzidon will hold, directly and through A.O. Tzidon (1999) Ltd., a company wholly owned by him, 50.49% of our then outstanding Ordinary Shares.





Other than Mr. Aviv Tzidon, none of our directors and officers beneficially own more than 1% of our outstanding equity securities.





Item 7 - Major Shareholders and Related Party Transactions





A.           Major Shareholders





The following table sets forth certain information regarding the beneficial ownership of our Ordinary Shares as of, February 10, 2011 by each person or entity known to own beneficially more than 5% of our outstanding Ordinary Shares based on information provided to us by the holders or disclosed in public filings with the Securities and Exchange Commission.





Name

Number of Ordinary

Shares Beneficially Owned(1)

Percentage of

Outstanding Ordinary

Shares(2)Aviv Tzidon, directly and through A.O. Tzidon (1999) Ltd.

1 Azrieli Center

Tel Aviv, 67021, Israel (3).

60,942,608

50.49%H.S.N. General Managers Holdings LP

7 Berkowitz St.

Tel Aviv Israel

20,000,000

16.82%Polar Investments House

Platinum House

21 Ha’arbah St.

Tel Aviv 64731 Israel

6,252,207(4)

5.26%Bank Leumi Le-Israel B.M.

24-32 Yehuda Halevi St.

Tel Aviv 63432 Israel

6,111,111

5.14%




(1)
Except as otherwise noted and pursuant to applicable community property laws, each person named in the table has sole voting and investment power with respect to all ordinary shares listed as owned by such person.  Shares beneficially owned include shares that may be acquired pursuant to options that are exercisable within 60 days of February 10, 2011.




24




(2)
Ordinary Shares deemed beneficially owned by virtue of the right of any person or group to acquire these ordinary shares within 60 days of February 10, 2011 are treated as outstanding only for the purposes of determining the percent owned by such person or group.  The percentage of outstanding Ordinary Shares is based on 118,900,535 Ordinary Shares outstanding as of February 10, 2011.




(3)
Aviv Tzidon and A.O. Tzidon (1999) Ltd.  have entered into an agreement with Greenstone Industries Ltd. (“Greenstone”), a public Israeli company, pursuant to which, in consideration for the provision of a loan by Greenstone to Aviv Tzidon and A.O. Tzidon (1999) Ltd. of $12,500,000, they granted Greenstone an option to purchase, for a period of 90 days commencing as of December 16, 2010, (the “Option Period”), from A.O. Tzidon (1999)  Ltd. and Aviv Tzidon Ordinary Shares of RVB which shall constitute on the date of the exercise of the option not less than 50.14% and not more than 65% of our issued share capital (not taking into account 930,000 of our dormant shares), as shall be determined by A.O. Tzidon (1999) Ltd. and Aviv Tzidon  at their sole discretion (the Greenstone Option”) . To secure the repayment of the loan taken Aviv Tzidon and A.O Tzidon (1999) Ltd. have pledged their shares to the benefit of Greenstone and have transferred their shares in the company to a trustee who holds such shares in trust.  Aviv Tzidon and A.O. Tzidon (1999) Ltd. retain the voting rights in respect of such shares.



On February 6, 2011 A.O. Tzidon (1999) Ltd., and Aviv Tzidon, entered into a Share Purchase Agreement with H.S.N. General Managers Holdings L.P. (“HSN”) pursuant to which subject to the exercise by Greenstone of the Greenstone Option HSN shall sell to A.O. Tzidon (1999) Ltd. and/or Aviv Tzidon 20,000,000 of our Ordinary Shares, at a price per share of $0.215 and an aggregate purchase price of $4,300,000.



In addition, on February 6, 2011, Aviv Tzidon entered into an agreement with Industrial Development Bank of Israel Ltd. (the “Industrial Bank”) pursuant to which Aviv Tzidon undertook to purchase from the Industrial Bank no later than April 14, 2011, 1,111,111 of our Ordinary Shares, at a price per share of $0.20 and an aggregate purchase price of $222,222.2.




(4)
Includes 3,181,807 Ordinary Shares held by Koonras Technologies Ltd., a wholly-owned subsidiary of Polar Investments Ltd.




As of February 8, 2011, there were a total of 3 holders of record of our ordinary shares with addresses in the United States. Such United States holders were, as of such date, the holders of record of 223,375 ordinary shares representing approximately 0.19% of our outstanding share capital. The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held of record by brokers or other nominees (including one U.S. nominee company, CEDE & Co., which held approximately 16.5% of our outstanding ordinary shares as of said date).




B.           Related Party Transactions





Agreement with Aviv Tzidon





On January 4, 2010, our shareholders meeting approved the payment to Aviv Tzidon, the Chairman of our Board of Directors, Chief Executive Officer and controlling shareholder, of a one time bonus of NIS 1,000,000 in his instrumental role in bringing the Elbit Transaction to a successful completion. We have recorded the bonus as an expense in the 2009 financial statements. In addition, our shareholders approved in the same meeting, the appointment of Aviv Tzidon as our chief executive officer in consideration for a gross monthly fee of NIS 50,000. Such bonus payment, appointment as chief executive officer and monthly fee were previously approved by our Audit Committee and Board of Directors in their respective meetings held on November 19, 2009.





25




Agreement with Consult Wise Pte Ltd.





On January 1, 2007, we entered into an agreement with Consult Wise Pte Ltd., a Singaporean company.  Maayan Tzidon, (the brother of Aviv Tzidon, the Chairman of our Board of Directors, Chief Executive Officer and controlling shareholder), holds 50% of the issued and outstanding shares of Consult Wise. Pursuant to this agreement, we agreed to pay Consult Wise $3,500 per month for the provision of marketing services and $3,500 per month to support our operations in Singapore. Consult Wise may receive commissions on purchase orders issued by customers introduced to us pursuant to its marketing services. On April 19, 2009 this agreement was renewed for an additional two year period, retroactively from January 1, 2009 until December 31, 2010.  This agreement was terminated in November 2009, following the Elbit Transaction.





Agreement with Eyepoint Ltd.





On March 1, 2004, the Company entered into a consulting agreement with Eyepoint Ltd., an Israeli company wholly owned by Mr. Dekel Tzidon, who is the brother of Mr. Aviv Tzidon, the Chairman of our Board of Directors, Chief Executive Officer and controlling shareholder. Pursuant to this consulting agreement, Mr. Dekel Tzidon served as our Vice President of Research & Development and Chief Technological Officer. In July 2008, Mr. Dekel Tzidon resigned as our Vice President of Research & Development and Chief Technological Officer but continued to work for us on a part-time basis. As of November 19, 2009, the date the Elbit Transaction was completed Mr. Dekel Tzidon provided consulting services to the Company, on a limited basis, pursuant to a consulting agreement between the Company and  Eyepoint Ltd. which expired on June 30, 2010.




In addition, on January 4, 2010, our shareholders meeting approved a bonus payment of $76,500 to Mr. Dekel Tzidon for his efforts and contribution in bringing the Elbit Transaction to a close. We have recorded the bonus as an expense in 2009 financial statements. Such bonus payment was previously approved by our Audit Committee and Board of Directors in their respective meetings held November 19, 2009.





C.           Interests of Experts and Counsel





Not applicable.




ITEM 8. Financial Information





A.           Consolidated Statements and Other Financial Information





The Financial Statements required by this item are found at the end of this Annual Report, beginning on page F-1.




Legal Proceedings




HarTech Settlement Agreement





In May 2009, we initiated legal action in Tel Aviv District Court against HarTech Systems Limited ("HarTech"), HarTech Technologies Limited, Mr. Ofer Har, and three employees of the HarTech companies (the "Defendants") for infringement of our intellectual property rights relating to our simulation and live training software. Our action sought to enjoin the Defendants from further breach of our intellectual property rights.  Our initial claim requested damages for infringement in the amount of approximately $2.5 million (NIS 10 million) as well as additional costs and injunctive relief.





26





In June 2009, we requested that the court require the Defendants to deposit the source code of the disputed intellectual property in escrow.  The source code was deposited in escrow in exchange for a bank guarantee of approximately $13,000 (NIS 50,000).





In August 2009, HarTech filed a counterclaim seeking recovery for non-payment of fees due under a consulting agreement between the Company and HarTech in the amount of approximately $241,000  (NIS 907,000) as well as damages to the Defendant's reputation, stemming from our lawsuit, in the amount of approximately $660,000 (NIS 2,500,000 ).





In January 2011, we entered into a settlement agreement with HarTech and the Defendants whereby the parties settled all claims against one another, and pursuant to which, HarTech will pay us an aggregate amount of $180,000 in two equal installments, the first to be paid on June 1, 2011 and the second installment no later than June 1, 2012.





Significant Changes





There have been no material changes in our financial position since December 31, 2010 except as otherwise disclosed in this annual report.





Dividend Policy





We have no dividend policy.





ITEM 9.  The Offer and Listing





A. Offer and Listing Details





Our Ordinary Shares are listed and traded on the Over The Counter Bulletin Board under the symbol RVBHF.OB.





The following table sets forth, for the periods indicated, the range of high and low sales prices of our Ordinary Shares:





High


Low2006Year ending December 31, 2006

$
0.28


$
0.152007Year ending December 31, 2007

$
0.24


$
0.142008Year ending December 31, 2008

$
0.20


$
0.112009Year ending December 31, 2009

$
0.26


$
0.052010Year ending December 31, 2010

$
0.18


$
0.052009First Quarter

$
0.15


$
0.09Second Quarter

$
0.20


$
0.12Third Quarter

$
0.23


$
0.18Fourth Quarter

$
0.19


$
0.112010First Quarter

$
0.17


$
0.08Second Quarter

$
0.18


$
0.12Third Quarter

$
0.16


$
0.09Fourth Quarter

$
0.15


$
0.05Most Recent Six MonthsJanuary 2011

$
0.15


$
0.13December 2010

$
0.15


$
0.10November 2010

$
0.15


$
0.08October  2010

$
0.15


$
0.05September 2010

$
0.15


$
0.09August 2010

$
0.16


$
0.13





27





B.           Plan of Distribution





Not applicable.





C.           Markets





Our Ordinary Shares traded on the Nasdaq Capital Market until February, 2003 under the ticker symbol BVRSF.  Our Ordinary Shares were then delisted from the Nasdaq Capital Market after we failed to comply with its required listing standards.  Our Ordinary Shares traded on the Over-the-Counter Bulletin Board under the symbol “BVRSF.OB” from February, 2003 until March 2010.  Following the Elbit Transaction and our name change to R.V.B. Holdings Ltd, we changed our ticker symbol and on March 2, 2010, our Ordinary Shares began trading on the Over-the-Counter Bulletin Board under the symbol "RVBHF.OB".





D.           Selling Shareholders





Not applicable.





E.           Dilution





Not applicable.





F.           Expenses of the Issue





Not applicable.





ITEM 10.  Additional Information





A.           Share Capital





Not applicable.





28




B.           Memorandum and Articles of Association





Objects and Purposes





We are a public company registered under the Israeli Companies Law as R.V.B. Holdings Ltd, registration number 52-004362-1. We adopted new Articles of Association on January 4, 2010.  Pursuant to Article 5 of our Articles of Association, our objective is to engage in any lawful activity.





Transactions Requiring Special Approval





An “office holder” is defined in the Companies Law as a director, general manager, chief business manager, deputy general manager, vice general manager and any person assuming the responsibilities of any of the foregoing positions without regard to such person’s title and any other manager who is directly subject to the general manager.





The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company.  The duty of care requires an office holder to act with the level of care which a reasonable office holder in the same position would have acted under the same circumstances.  The duty of care includes a duty to use reasonable means to obtain:





·
information on the appropriateness of a given act or action to be approved or performed by the officer holder by virtue of his or her position; and





·
all other important information pertaining to such an act or action.





·
The duty of loyalty requires an office holder to act in good faith for the interests of the company and includes a duty to:





·
refrain from any conflict of interest between the performance of the office holder’s duties in the company and his or her personal affairs;





·
refrain from any activity that is competitive with the company;





·
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or herself or for others; and





·
disclose to the company any information or documents relating to a company’s affairs which the office holder has received due to his or her position as an office holder.





Each person listed in the table under “Item 6 – Directors, Senior Management and Employees – A. Directors and Senior Management” is an office holder.





The Companies Law requires that an office holder disclose to the company any personal interest that he or she may have, and all related material information known to him or her, in connection with any existing or proposed transaction by the company.  The disclosure is required to be made promptly and in any event, no later than the board of directors meeting in which the transaction is first discussed.  A personal interest of an office holder includes an interest of a company in which the office holder is, directly or indirectly, a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint at least one director or the general manager.  If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by his or her relative.





29





Under the Companies Law, an extraordinary transaction is a transaction:





·
not in the ordinary course of business;





·
not on market terms; or





·
likely to have a material impact on the company’s profitability, assets or liabilities.





Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve the transaction, unless the company’s articles of association provide otherwise.  A transaction that is adverse to the company’s interest may not be approved.  If the transaction is an extraordinary transaction, then it also must be approved by the audit committee, before the board approval, and under certain circumstances, following board approval, by the shareholders of the company.  A director who has a personal interest in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at this meeting or vote on this matter.  If a majority of the directors has a personal interest in a transaction, these directors are permitted to be present and vote, but shareholder approval is also required.





Under the Companies Law, the disclosure requirements which apply to an office holder also apply to a controlling shareholder of a public company.  A controlling shareholder includes a shareholder that holds 25% or more of the voting rights in a public company if no other shareholder owns more than 50% of the voting rights in the company.  Extraordinary transactions of a public company with a controlling shareholder or in which a controlling shareholder has a personal interest, and the terms of compensation of a controlling shareholder who is an office holder, require the approval of the audit committee, the board of directors and the shareholders of the company.  The shareholder approval must satisfy either of the following criteria:





the majority of the votes for the approval includes the votes of at least one-third of the total votes of shareholders who are present and voting at the meeting and who have no personal interest in the transaction (the votes of abstaining shareholders shall not be included in the number of the said total votes); or





the total number of votes against the approval, among the shareholders who are present at the meeting and who have no personal interest in the transaction shall not exceed 1% of the aggregate voting rights in the company.





For information concerning the direct and indirect personal interests of certain of our office holders and principal shareholders in certain transactions with us, see “Item 7 – Major Shareholders and Related Party Transactions – B. Related Party Transactions.”





Directors’ Compensation





Under the Companies Law, all arrangements as to compensation of office holders who are not directors require approval of the board of directors. Arrangements as to compensation of directors also require audit committee approval, prior to board approval, as well as shareholder approval. Our Articles of Association allow us to compensate members of the board of directors for their services, provided that such compensation has been approved in accordance with the Companies Law.





Directors’ Borrowing Powers





Our Board of Directors may from time to time, in its discretion, cause the Company to borrow or secure the payment of any sum or sums of money for the purposes of the Company. Such borrowing powers may be exercised by a majority of the board in accordance with our Articles of Association.





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Rights attached to our Shares





Dividend Rights. Our Articles of Association provide that our Board of Directors may, from time to time, declare and cause the company to distribute such dividends and/or bonus shares as may appear to the Board of Directors to be justified.  Subject to the rights of the holders of shares with preferential or other special rights that may be authorized in the future, holders of Ordinary Shares are entitled to receive dividends according to their rights and interest in our profits.





Voting Rights. Holders of Ordinary Shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders.  These voting rights may be affected by the grant of any special voting rights to the holders of a class of shares with preferential rights that may be authorized in the future.  The Ordinary Shares do not have cumulative voting rights in the election of directors.  As a result, holders of Ordinary Shares that represent more than 50% of the voting power have the power to elect all the directors to the exclusion of the remaining shareholders.





Liquidation Rights. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of Ordinary Shares in proportion to their respective holdings.  This liquidation right may be affected by the grant of preferential dividends or distribution rights to the holders of a class of shares with preferential rights that may be authorized in the future.





Redemption Provisions. We may, subject to applicable law, issue redeemable preference shares and redeem the same.





Capital Calls. Under our memorandum of association and the Companies Law, the liability of our shareholders is limited to the par value of the shares held by them.





Preemptive, First Refusal and Co-Sale Rights. All outstanding Ordinary Shares are validly issued, fully paid and non-assessable and do not have preemptive rights, rights of first refusal or co-sale rights.





Transfer of Shares. Fully paid Ordinary Shares are issued in registered form and may be transferred pursuant to our Articles of Association, unless such transfer is restricted or prohibited by another instrument and subject to applicable securities laws.





Modification of Rights





Unless otherwise provided by our articles of association, rights attached to any class may be modified or abrogated by a resolution adopted in a general meeting approved by an ordinary majority of the voting power represented at the meeting in person or by proxy and voting thereon, subject to the sanction of a resolution passed by an ordinary majority of the shares of such class present and voting as a separate general meeting of the holders of such class.





Shareholders’ Meetings and Resolutions





The quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person or by proxy, who hold or represent between them at least 25% of the outstanding voting shares, unless otherwise required by applicable rules.  A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place or any time and place as the chairman of the board may designate. At such reconvened meeting the required quorum consists of any two shareholders present in person or by proxy.





Under the Companies Law, each shareholder of record will be provided at least 21 calendar days’ prior notice of any general shareholders meeting.





31





Under the Companies Law and our articles of association, all resolutions of our shareholders require a simple majority of the shares present, in person or by proxy, and voting on the matter, subject to certain exceptions provided for under the Companies Law, such as a merger, which require a majority of at least 75% of the shares present.





Under the Companies Law, each and every shareholder has a duty to act in good faith in exercising his rights and fulfilling his obligations towards us and other shareholders, such as in voting in the general meeting of shareholders on the following matters:





·
any amendment to the articles of association;





·
an increase of our authorized share capital;





·
a merger; or





·
approval of certain actions and transactions that require shareholder approval.





In addition, each and every shareholder has the general duty to refrain from depriving other shareholders of their rights.





Our annual general meetings are held once in every calendar year at such time (within a period of not more than fifteen months after the last preceding annual general meeting) and at such place as determined by our board.  All general meetings other than annual general meetings are called extraordinary general meetings.  Our board may, whenever it thinks fit, convene an extraordinary general meeting at such time and place as it determines, and shall be obligated to do so upon a requisition in writing in accordance with the Companies Law.





Limitation on Owning Securities





The ownership of our Ordinary Shares by nonresidents of Israel is not restricted in any way by our memorandum of association and articles of association or the laws of the State of Israel, except for citizens of countries, which are in a state of war with Israel, who may not be recognized as owners of our Ordinary Shares.





Mergers and Acquisitions under Israeli Law





The Companies Law includes provisions that allow a merger transaction and require that each company that is a party to a merger have the transaction approved by its board of directors and a vote of at least 75% of its shares, at a shareholders’ meeting called on at least 21 days’ prior notice.  For purposes of the shareholders vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the shares held by parties other than the other party to the merger, or by any person who holds 25% or more of the shares of the other party, or the right to appoint 25% or more of the directors of the other party, vote against the merger.  Upon the request of a creditor of either party of the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that as a result of the merger, the surviving company will be unable to satisfy the obligations of any of the parties to the merger.  In addition, a merger may not be completed unless at least 50 days have passed from the time that a proposal for the approval of the merger has been filed with the Israel Registrar of Companies and 30 days have passed from the time that the approval of the merging parties' shareholders has been received.





The Companies Law also provides that an acquisition of shares of a public company must be made by means of a tender offer if as a result of the acquisition the purchaser would become a 25% shareholder of the company and there is no existing 25% or greater shareholder in the company.  If there is no existing 45% or greater shareholder in the company, the Companies Law provides that an acquisition of shares of a public company must be made by means of a tender offer if as a result of the acquisition the purchaser would become a 45% shareholder of the company.  Regulations adopted under the Companies Law provide that these tender offer requirements do not apply to companies whose shares are listed for trading outside of Israel if, according to the laws of the country in which the shares have been offered to the public or in which the shares are listed for trading on an exchange, including the rules and regulations of such exchange, there is either a restriction upon any acquisition of control to any extent, or the acquisition of control to any extent requires the purchaser to make a tender offer to the public.





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If following any acquisition of shares, the acquirer will hold 90% or more of the company’s shares or of a class of shares, the acquisition may not be made other than through a tender offer to acquire all of the shares of such class.  If the shareholders who declined the tender offer hold 5% or less of the company’s outstanding share capital or class of shares, all the shares that the acquirer offered to purchase will be transferred to it.  However, the tendered shareholders may seek to alter the consideration by court order.





C.           Material Contracts





Elbit Transaction





On July 19, 2009, we entered into an Asset Purchase Agreement with Elbit Systems Ltd., whereby Elbit acquired substantially all of our assets and business for a cash consideration of approximately $34 million and to assume substantially all of our business related liabilities.  The purchase price of $34 million was based on the assumption that the purchased projects were balanced, or consistent with the presented stage of execution.





The shares of our Singapore based wholly-owned subsidiary, BVR S Pacific PTE were included in the assets bought by Elbit.





An amount of $1,500,000 was placed in escrow for a period of 120 days following the November 19, 2009 closing date of the Elbit Transaction (the "Closing Date"), at which time the parties would determine the actual adjustment amount, if any, of up to the $1.5 million  held in escrow. In March 2010, the Company received a letter from Elbit which claimed that, according to the terms of the escrow agreement and the Asset Purchase Agreement, Elbit was entitled to a purchase price adjustment of nine hundred seventy thousand five hundred forty U.S. Dollars ($970,540) from the money held in escrow.  We disputed Elbit's claim and on November 21, 2010, entered into an agreement with Elbit pursuant to which we paid Elbit $242,635 as full and final settlement of adjustment of the projects.  The balance of the escrow amount was released to us.





The Asset Purchase Agreement included representations and warranties made by us for the benefit of Elbit, with respect to our structure and various aspects of our business. These representations and warranties generally survived for a period of eighteen (18) months from the November 19, 2009 closing date of the Elbit Transaction.  As a guarantee for such representations and warranties we issued a pledge in favor of Elbit in an amount of $1,500,000, pursuant to a pledge agreement entered into between us and Elbit, executed as of the Closing Date. On November 21, 2010 we entered into an amendment to the Asset Purchase Agreement such that the survival period of the representations of the warranties was amended until November 21, 2010, and the pledge agreement was cancelled and the $1,500,000 pledge to the benefit of Elbit was released.





As at the Closing Date, there were certain assets that were unable to be transferred to Elbit (“Non-transferable Assets and Liabilities”). Therefore we entered into an agreement with Elbit, regarding such Non-transferable Assets and Liabilities which stipulates that until such Non-transferable Assets and Liabilities are able to be transferred to Elbit, we shall provide Elbit with the benefit of each of the non-transferable assets and Elbit shall satisfy or perform any liability, back-to-back with our obligations. Both parties agreed that Elbit shall be responsible for the fulfillment of the undertaking under any contract with respect to non-transferable assets and shall provide the products and/or services, via the Company. As of the date hereof there is one agreement that is subject to this back-to-back agreement.





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The foregoing description of the Asset Purchase Agreement is only a summary and does not purport to be complete and is qualified by reference to the full text of the Asset Purchase Agreement filed by us as Exhibit 4.1 of Item 19, of our annual report on form 20-F for the year ending 2009 incorporated by reference herein.





Agreement with Milestones Upgrading Ltd.





On March 3, 2009, we entered into an agreement in principle with Milestones Upgrading & Industries Company Ltd., or Milestones Upgrading Ltd., for the investment of $3 million in our share capital at a price per share of $0.156, and the grant of a convertible loan in the amount of $2 million (the "Agreement in Principal"). Pursuant to the Agreement in Principle which was executed in March 2009, Milestones Upgrading Ltd. provided us with a loan in the amount of $1.5 million, as part of the $2 million loan to be granted under the definitive agreements. In May 2009, Milestones Upgrading Ltd. informed the Company that it had encountered technical difficulties that may prevent it from actualizing its investment in the Company. As such, Milestones Upgrading Ltd. requested an extension of the negotiation period, as detailed in the Agreement in Principle, in order to ascertain if they would be able to resolve their difficulties.  In a letter sent to Milestones Upgrading Ltd., in May 2009, we advised Milestones Upgrading Ltd. that as Milestones Upgrading Ltd. completed its due diligence review without any comments to us, and as the parties reached a form of definitive agreement acceptable to both parties, we were of the position that a binding agreement was entered into between the parties. Milestones responded to the letter in May 2009 disclaiming our claims.





On May 4, 2009, we filed a motion for a declaratory judgment against Milestones Upgrading Ltd. declaring that: (i) the Agreement in Principal is binding upon Milestones Upgrading Ltd.; (ii) Milestones Upgrading Ltd. is in breach of the Agreement in Principal; and (iii) the $1.5 million loan issued by Milestones Upgrading Ltd. to us is part of the convertible loan which was to be provided under the decisive agreement.





In December 2009, we entered into a settlement agreement with Milestones Upgrading Ltd. pursuant to which we repaid the loan, including interest, in the amount of $1,687,000.





Agreement with Yuval Golan Investments Ltd and Michael Golan Securities Holdings Ltd.





On May 28, 2009, we entered into an agreement with Yuval Golan Investments Ltd. and Michael Golan Securities Holdings Ltd., or collectively Golan Investments, whereby the Company issued a $3.5 million debenture to Golan Investments (the "Golan Agreement").  Pursuant to the terms of the Golan Agreement, Golan Investments provided $2 million to the Company on May 31, 2009, and $1.5 million  on June 21, 2009.  In addition to the debenture, Golan Investments received a warrant to purchase three (3) million ordinary shares of the Company at an exercise price of $0.18, which was exercisable for a period of five (5) years.  The debenture became due twelve (12) months from the issue date in the amount of $3.85 million. The Golan Agreement provided that, in the event that a merger or acquisition of the Company occurred within twelve (12) months of the Effective Date of the Golan Agreement, the debenture became due, in the amount of $4.55 million.  The Golan Agreement further provided that if the Company did not repay the debenture within twelve (12) months from the date of issue, then (a) as of the commencement of the second year of the term of the debenture, the debenture will bear a return rate of 15% per annum; (b) upon a merger or acquisition transaction of the Company during the second year of the term of the debenture, the Company will  repay to Golan Investments an amount of $5,600,000;  and (c) the Company will issue to Golan Investments additional warrants to purchase 6,000,000 Ordinary Shares, at an exercise price per share of $0.18, exercisable for a period of four years commencing as of the date of entitlement.





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The debenture was repaid within the initial twelve (12) months term in the amount of $4.55 million, in November 2009.





For a summary of our other material contracts, see:





“Item 7 – Major Shareholders and Related Party Transactions – B. Related Party Transactions.”




D.           Exchange Controls





Under current Israeli regulations, we may pay dividends or other distributions in respect of our Ordinary Shares either in non-Israeli or Israeli currencies.  If we make these payments in Israeli currency, they will be freely converted into non-Israeli currencies at the rate of exchange prevailing at the time of conversion.  Because exchange rates between the NIS and the dollar continuously fluctuate, a U.S. shareholder will be subject to the risk of currency fluctuations between the date when we declare NIS-denominated dividends and the date we pay them in NIS.  See “Item 3. Key Information— D. Risk Factors.”




Non-residents of Israel may freely hold and trade our securities pursuant to the general permit issued under the Israeli Currency Control Law, 1978.  Neither our memorandum of association nor the laws of the State of Israel restrict the ownership of our Ordinary Shares by non-residents in any way, except with respect to citizens of countries which are in a state of war with Israel.




E.           Taxation





Israeli Tax Considerations and Government Programs





The following is a summary of the current tax structure applicable to companies in Israel, with special reference to its effect on us. The following also contains a discussion of certain Israeli and United States tax consequences to purchasers of our Ordinary Shares and certain Israeli Government programs benefiting us.  To the extent that the discussion is based on new tax legislation that has not been subject to judicial or administrative interpretation, there can be no assurance that the views expressed in the discussion will be accepted by the tax authorities in question.  The discussion is not intended, and should not be construed, as legal or professional tax advice and is not exhaustive of all possible tax considerations.





HOLDERS OF OUR ORDINARY SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE UNITED STATES, ISRAELI OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN, STATE OR LOCAL TAXES.





General Corporate Tax Structure





Israeli companies were generally subject to corporate tax at the rate of 25% of their taxable income in 2010.  The corporate tax was reduced to a rate of 24% in 2011, and will be further reduced to 23% in 2012, 22% in 2013, 21% in 2014, 20% in 2015 and 18% in 2016 and thereafter.








35




Special Provisions Relating to Taxation under Inflationary Conditions




The Income Tax Law (Inflationary Adjustments), 1985 or the Inflationary Adjustments Law, which was, in effect, repealed as of January 1, 2008, represented an attempt to overcome the problems presented to a traditional tax system by an economy undergoing rapid inflation.  The Inflationary Adjustments Law is highly complex.  For all tax years prior to 2008, the features which were material to us were as follows:





(a)
There was a special tax adjustment for the preservation of equity whereby certain corporate assets were classified broadly into fixed (inflation resistant) assets and non-fixed assets.  Where a company’s equity, as defined in such law, exceeded the depreciated cost of fixed assets, a deduction from taxable income that takes into account the effect of the applicable annual rate of inflation on such excess was allowed (up to a ceiling of 70% of taxable income in any single tax year, with the unused portion permitted to be carried forward on a linked basis).  If the depreciated cost of fixed assets exceeded a company’s equity, then such excess multiplied by the applicable annual rate of inflation was added to taxable income.





(b)
Subject to certain limitations, depreciation deductions on fixed assets and losses carried forward were adjusted for inflation based on the increase in the consumer price index.





On February 26, 2008 the Income Tax Law (Inflationary Adjustments) (Amendment No. 20) (Restriction of Period of Application) – 2008 (the Amendment) was passed by the Knesset. According to the Amendment, the Adjustments Law will no longer be applicable subsequent to the 2007 tax year, except for the transitional provisions whose objectives are to prevent distortion of the taxation calculations.





Capital Gains Tax on Sales of Our Ordinary Shares





Israeli law generally imposes on residents and non-residents capital gains tax on the sale of capital assets in Israel, including our ordinary shares, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise.  The law distinguishes between the inflationary surplus and the real gain.  The inflationary surplus is a portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price that is attributable to the increase in the Israeli consumer price index or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale.  The real gain is the excess of the total capital gain over the inflationary surplus.


On January 1, 2006, an amendment to the Israeli tax regime became effective (the “2006 Tax Reform"). The 2006 Tax Reform significantly changed the tax rates applicable to income derived from shares.





According to the 2006 Tax Reform, an individual is subject to a 20% tax rate on real capital gains derived from the sale of shares, as long as the individual is not a "substantial shareholder" (generally a shareholder with 10% or more of the right to profits, right to nominate a director and voting rights) of the company issuing the shares. There will generally be no capital gains tax on the inflationary surplus. A substantial shareholder will be subject to tax at a rate of 25% in respect of real capital gains derived from the sale of shares issued by the company in which he or she is a substantial shareholder. The determination of whether the individual is a substantial shareholder will be made on the date that the securities are sold. In addition, the individual will be deemed to be a substantial shareholder if at any time during the 12 months proceeding this date he had been a substantial shareholder.





Application of the U.S.-Israel Tax Treaty to Capital Gains Tax





Under  Israeli law, the capital gain from the sale of shares by non-Israeli residents is tax exempt in Israel as long as our shares are listed on the Nasdaq Global Market or any other stock exchange recognized by the Israeli Ministry of Finance, and provided certain other conditions are met, the most relevant of which are: (A) the capital gain is not attributed to the foreign resident’s permanent establishment in Israel, (B) the shares were acquired by the foreign resident after the company’s shares had been listed for trading on the foreign exchange, and (C) if the seller is a corporation, less than 25% of its means of control are held by Israeli residents. However, non-Israeli corporations will not be entitled to the foregoing exemptions if an Israeli resident (i) has a controlling interest of 25% or more in such non-Israeli corporation, or (ii) is the beneficiary of or is entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.





36





In addition, under the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, as amended, or the U.S.-Israel Tax Treaty, Israeli capital gains tax will not apply to the sale, exchange or disposition of ordinary shares by a person:





•
who holds such shares as a capital asset;





•
who qualifies as a resident of the United States within the meaning of the U.S.-Israel tax treaty; and





•
who is entitled to claim the benefits available to the person by the U.S.-Israel Tax Treaty.





However, this exemption does not apply, among other cases, if the gain is attributable to a permanent establishment of such person in Israel, or if the holder is a resident of the United States within the meaning of  the U.S.-Israeli Tax Treaty who holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding the sale, exchange or disposition, subject to certain conditions. Under these circumstances, the sale, exchange or disposition would be subject to Israeli tax, to the extent applicable. However, under the U.S.-Israel Tax Treaty, such U.S. resident generally will be permitted to claim a credit for the Israeli taxes paid against the U.S. federal income tax imposed on the sale, exchange or disposition, subject to the limitations under U.S. law applicable to foreign tax credits. The U.S.-Israel Tax Treaty does not relate to U.S. state or local taxes.





Taxation of Dividends





Non residents of Israel are subject to Israeli income tax on the receipt of dividends paid on the ordinary shares at the rate of 20%, or 25% if the dividend recipient is a significant Controlling Shareholder, which tax will be withheld at source, unless the dividends are paid from income derived from an Approved Enterprise during the applicable benefit period, or a different rate is provided in a treaty between Israel and the shareholder’s country of residence. Under the U.S.-Israel Tax Treaty, the maximum tax on dividends paid to a holder of the ordinary shares who is a U.S. Resident will be 25%. However, when dividends are paid from income derived during any period for which the Israeli company is not entitled to the reduced tax rate applicable to an Approved Enterprise under Israel’s Law for the Encouragement of Capital Investments-1959, the maximum tax will be 12.5% if the holder is a company holding shares representing 10% or more of the voting power during the part of the taxable year preceding the date of payment of dividends and during the whole of its prior taxable year, if any, and, if the company has not derived more than 25% of its revenues from passive income. When dividends are paid from income derived during any period for which the Israeli company is entitled to the reduced tax rate applicable to an Approved Enterprise then the tax will be 15%.





F.           Dividends and Paying Agents





Not applicable.





G.           Statements by Experts.





Not applicable.





H.           Documents on Display





We are subject to the informational requirements of the Securities Exchange Act of 1934 (Exchange Act), as amended, applicable to foreign private issuers and fulfill the obligation with respect to such requirements by filing reports with the Securities and Exchange Commission. You may read and copy any document we file with the Securities and Exchange Commission without charge at the Securities and Exchange Commission’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such material may be obtained by mail from the Public Reference Branch of the Securities and Exchange Commission at such address, at prescribed rates. Please call the Securities and Exchange Commission at l-800-SEC-0330 for further information on the public reference room.





37





As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act.  In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the Securities and Exchange Commission as frequently or as promptly as United States companies whose securities are registered under the Exchange Act.  A copy of each report submitted in accordance with applicable United States law is available for public review at our principal executive offices.





I.           Subsidiary Information





Not applicable.





ITEM 11.  Quantitative and Qualitative Disclosures About Market Risk





Market risk represents the risk of changes in the value of a financial instrument caused by fluctuations in interest rates, equity prices and foreign currency exchange rates.





Interest Rate Risk





As we currently have no credit lines we are not presently exposed to interest rate risk.





Equity Price Risk





As of December 31, 2010, we did not have any marketable securities that were recorded at fair value. Hence there was no exposure to equity price risk.





Foreign Currency Exchange Risk





As of December 31, 2010, we had cash in New Israeli Shekels (NIS) or in funds linked thereto in the amount of $430 thousand (out of $23,094 thousands in cash and cash equivalents that we had in total). Market risk is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in the year-end dollar exchange rate. Assuming such increase in the dollar exchange rate, the fair value of our cash and cash equivalents would decrease by $39 thousand. As of December 31, 2010, we had accounts receivable in New Israeli Shekels (NIS) or in funds linked thereto in the amount of $257 thousand. Market risk is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in the year-end dollar exchange rate. Assuming such increase in the dollar exchange rate, the fair value of our accounts receivable would decrease by $23 thousand. As of December 31, 2010, we had other receivables in New Israeli Shekels (NIS) or in funds linked thereto in the amount of $341 thousand. Market risk is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in the year-end dollar exchange rate. Assuming such increase in the dollar exchange rate, the fair value of our accounts receivable would decrease by $31 thousand.As of December 31, 2010, we had accounts payable in New Israeli Shekels (NIS) or in funds linked thereto in the amount of $319 thousand. Market risk is estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in the year-end dollar exchange rate. Assuming such a decrease in the Dollar exchange rate, the fair value of our accounts payable would increase by $29 thousand. As of December 31, 2010, we had other payable in New Israeli Shekels (NIS) or in funds linked thereto in the amount of $87 thousand. Market risk is estimated as the potential increase in fair value resulting from a hypothetical 10% decrease in the year-end dollar exchange rate. Assuming such a decrease in the dollar exchange rate, the fair value of our accounts payable would increase by $8 thousand.




38





ITEM 12.  Description of Securities Other Than Equity Securities





Not applicable.





PART II




ITEM 13.   Defaults, Dividend Arrearages And Delinquencies





Not applicable.




ITEM 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds





Not applicable.




ITEM 15.   Controls and Procedures





Disclosure Controls and Procedures





We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our chief executive officer to allow timely decisions to be made regarding required disclosure.  Our  chief executive officer, conducted an evaluation of our disclosure controls and procedures, as defined under Exchange Act Rule 13a-15(e), as of the end of the period covered by this Annual Report on Form 20-F.  Based upon that evaluation, our chief executive officer has concluded that, as of such date, our disclosure controls and procedures were effective.





Management's Annual Report on Internal Control over Financial Reporting




Our chief executive officer is responsible for establishing and maintaining adequate internal control over financial reporting, as defined under Exchange Act Rules 13a-15(f) and 15d-15(f). The term of our Chief Financial Officer was terminated as of the date of the Elbit Transaction, November 19, 2009.  Since such date, our current Chief Executive Officer has served as the sole officer of the Company.  In conjunction with the Elbit Transaction, we entered into a Services Agreement with Elbit, whereby our former Chief Financial Officer together with former finance and accounting personnel of the Company, who as of the Elbit Transaction became employees of Elbit, continued to provide us with finance and accounting services, including all related internal controls and procedures through June 30, 2010. In 2010 through February 13, 2011 we have engaged a third party outsourcing financial services firm to assist us with the preparation of our annual report, our financial statements and with maintaining certain internal control and an adequate documentation for our internal controls over financial reporting under the supervision of our Chief Executive Officer.
  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (IFRS). Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.




39





The chairman of our audit committee assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this annual report. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Their assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting.  Based on that assessment, our chief executive officer concluded that as of December 31, 2010 the company’s internal control over financial reporting was effective.





Attestation Report of the Registered Public Accounting Firm




This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the Dodd-Frank Act, passed in 2010, which eliminated the requirements for non-accelerated filers.




ITEM 16.     Reserved




ITEM 16A.Audit Committee Financial Expert





Our board of directors has determined that Alicia Rotbard is our audit committee financial expert and is independent as defined by the applicable SEC and Nasdaq regulations.





ITEM 16B.  Code of Ethics





On May 13, 2004, our company adopted a code of ethics, which applies to all employees, officers and directors, including our chief executive officer and our principal accounting officer or controller or other persons performing similar functions.


Copies of our code of ethics are available free of charge at our executive offices upon request.





ITEM 16C.  Principal Accountant Fees and Services





The following table presents fees for professional audit services rendered by Somekh Chaikin, a member firm of KPMG International (Independent Registered Public Accounting Firm) for the audit of the Company’s consolidated annual financial statements for the years ended December 31, 2010 and 2009, and for other services rendered.





2010


2009(In thousands)Audit Fees(1)

$
65


$
143Audit-Related Fees(2)


-



100Tax Fees(3)


-



-All Other Fees


-



-





(1)
Audit fees consist of fees for professional services rendered for the audit of the Company’s Consolidated Financial Statements and review of financial statements and services normally provided by the independent auditor in connection with statutory and regulatory filings or engagements.





(2)
Audit-related fees are fees principally for assurance and related services that are not reported under Audit Fees.





(3)
Tax fees consist of tax compliance fees for the preparation of original and amended tax returns, claims for refunds and tax advice.




40





Pre-approval Policies and procedures




The audit committee approves all audits, audit-related services, tax services and other services provided by Somekh Chaikin. Any services provided by Somekh Chaikin that are not specially included within the scope of the audit must be pre-approved by our audit committee prior to any engagement.




ITEM 16D.  Exemptionsfrom the Listing and Standards of Audit Committees




Not applicable.




ITEM 16E.    Purchases of Equity Securities by the Issuer and Affiliated Purchasers




Purchases of Equity Securities by the Issuer





On June 27, 2010, our board of directors approved the repurchase of Ordinary Shares held by Ilan Gillies, former chief executive officer, and Reuven Shachar, former chief financial officer, which were issued to them upon exercise of options held by them, at an exercise price per share of $0.18, in consideration for the payment of $0.23 per Ordinary Share.





On January 26, 2011, we repurchased 930,000 Ordinary Shares held by Ilan Gillies, former chief executive officer, and Reuven Shachar former chief financial officer, according to the above mentioned conditions, for a consideration of $213,900, of which $167,400 was invested by them in the company upon exercise of the options.




Purchases of Equity Securities by an Affiliated Purchaser




On March 1, 2004, Mr. Aviv Tzidon was granted options to purchase 9,000,000 of our Ordinary Shares, at an exercise price of $0.18 per share, which vested over a period of five years commencing as of November 24, 2003. Once vested, the options are exercisable for a period of three years. As of the date hereof, options to purchase 6,200,000 shares underlying these options expired, 1,800,000 are considered to be beneficially owned by Mr. Tzidon and options to purchase 1,000,000 ordinary shares of the Company were exercised by Mr. Tzidon on November 2009.




On December, 2003, Chun Holdings Ltd. purchased, through a tender offer, 7,142,608 of our Ordinary Shares, at a purchase price per share of $0.18, for an aggregate purchase price of $1,285,669.44. On December 31, 2003, Chun Holdings Ltd. transferred all of its holdings in RVB to its affiliate, Chun Holdings LP ("Chun LP").




On March 3, 2004, Chun LP entered into an agreement to purchase 33,333,333 of our Ordinary Shares, at a purchase price per share of $0.18, for an aggregate purchase price of $6,000,000. In addition, on March 3, 2004, Chun LP, agreed to provide us with a credit line in the amount of $3.2 million, in consideration for a four-year warrant to purchase additional 40,000,000 of our Ordinary Shares, at an exercise price of $0.18 per share. From the warrant to purchase 40,000,000 Ordinary Shares of RVB, Chun LP waived its right to receive a warrant to purchase 10,000,000 of our Ordinary Shares and agreed that such warrant shall be granted to certain other entities. From the remaining warrant to purchase 30,000,000 of our Ordinary Shares, Chun LP transferred to certain of our principal banks, warrants to purchase 1,468,889 of our Ordinary Shares.




41




On August 4, 2004, Chun LP exercised part of its warrant to purchase 11,000,000 of our Ordinary Shares, and on September 26, 2004, it exercised its warrant to purchase an additional 6,666,667 of our Ordinary Shares of the Company for an aggregate purchase price of US$3,180,000, based on an exercise price per share of $0.18.




Based on a Form 13-D filed by Aviv Tzidon on September 16, 2010, on September 8, 2010, Portel Marketing S.A. and Aviv Tzidon, the limited partners of CHUN LP, and Chun LP entered into an agreement (the: “September 2010 Agreement”), pursuant to which Chun LP granted Aviv Tzidon, or a company controlled by Mr. Tzidon, the option to purchase from Chun LP, 58,142,608 of our Ordinary Shares.




Further , based on a Form 13-D filed by Aviv Tzidon on December 20, 2010, on December 16, 2010, A.O. Tzidon (1999) Ltd., a company wholly owned by Aviv Tzidon, exercised the option granted to Aviv Tzidon under the September 2010 Agreement and purchased 58,142,608 Ordinary Shares of the Company from Chun LP.




Item16F.     Change in Registrant’sCertifying Accountant




Not applicable.




Item 16G.    Corporate Governance





As a foreign private issuer we are entitled to follow our home country practice in lieu of compliance with the Nasdaq rule that requires adoption of a formal written charter or board resolution addressing the nominations process. Under the Israeli Companies Law, the nominations process is conducted by the full board of directors, and there is no requirement to adopt a formal written charter or board resolution addressing a company’s nomination process.





As a foreign private issuer we are entitled to follow our home country practice in lieu of compliance with the Nasdaq rule that requires that the compensation of the chief executive officer and all other executive officers of the company be determined, or recommended to the board for determination, either by a majority of the independent directors, or by a compensation committee comprised solely of independent directors. Under the Israeli Companies Law, the compensation of such officers is determined by the full board of directors, and there is no requirement for a recommendation or determination by independent directors or a compensation committee. If the chief executive officer or any other executive officer is also a director, then the Companies Law requires that the terms of compensation of the officer must be approved by the audit committee, board of directors and shareholders of a company and that the officer may not be present when the audit committee or board of directors discusses or acts upon the terms of his or her compensation.





As a foreign private issuer we are entitled to follow our home country practice in lieu of compliance with the Nasdaq rule that requires disclosure of the compensation of our directors and members of our administrative, supervisory or management bodies. Since under the Companies Law such disclosure is not required on an individual basis, the compensation of our executive officers is provided on an aggregate basis.




42





PART III
  ITEM 17.     Financial Statements
 
 The Financial Statements required by this item are found at the end of this Annual Report, beginning on page F-1.
 
 ITEM 18.     Financial Statements
 
 See Item 17.





ITEM 19.      Exhibits





The exhibits filed with or incorporated into this annual report are listed on the index of exhibits below.





Exhibit No.
Description1.1*
Memorandum of Association of Registrant1.2**
Articles of Association4.1***
Asset Purchase Agreement between the Registrant and Elbit Systems Ltd. dated July 19, 2010.12.1
Certification by Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 (as sole officer of the Company).13.1
Certification by Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (as sole officer of the Company).15.1
Consent of Independent Registered Public Accounting firm.




_________________





*
Incorporated by reference to the Registration Statement on Form 20-F (Commission File No. 0-29884).





**           Previously filed with the Registrant's form 6-K dated November 27, 2009 and incorporated by reference herein.




***         Previously filed with the Registrant's form 20-F dated June 29, 2010 and incorporated by reference herein.




43




SIGNATURE




The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.




R.V.B. HOLDINGS LTDBy:
/s/ Aviv TzidonName: Aviv TzidonTitle:   Chief Executive Officer




Date: February 14, 2011




44




R.V.B. Holdings Ltd.



Financial Statements

As of and for the Year Ended

December 31, 2010
 
 
  R.V.B Holdings Ltd.
 Consolidated Financial Statements as of December 31, 2010
  Contents
  PageReport of Independent Registered Public Accounting Firm
F - 3Consolidated Statements of Financial Position
F - 4Consolidated Statements of Income
F - 6Consolidated Statements of Comprehensive Income
F - 7Consolidated Statements of Changes in Equity
F - 8Consolidated Statements of Cash Flows
F - 9Notes to Consolidated Financial Statements
F - 11
 
 F - 2
 Report of Independent Registered Public Accounting Firm to the Board of
 Directors and Shareholders of
 R.V.B. Holdings Ltd.
  We have audited the accompanying consolidated statements of financial position of R.V.B. Holdings Ltd. )hereinafter- “the Company”) as of December 31, 2010 and 2009, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the three-year period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
 
 We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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 management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
 In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of R.V.B. Holdings Ltd. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2010, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
 
 Somekh Chaikin
 Certified Public Accountants (Isr.)
 Member Firm of KPMG International
 
 Tel Aviv, Israel
 
 February 13, 2011
 F - 3
 
 R.V.B Holdings Ltd.
 Consolidated Statements of Financial Position as of December 31
  2010


2009Note


$ thousands


$ thousandsAssetsCurrent assetsCash and cash equivalents


3



23,094



29,886Bank deposit






10,537



-Restricted bank deposits and deposits in escrow


4



-



2,572Trade receivables






434



1,271Other receivables


5



356



356Total current assets






34,421



34,085Long-term deposits in escrow


4



-



1,500Property, plant and equipment


6



-



-Intangible assets


7



-



-Total non-current assets






-



1,500
 Total assets


34,421



35,585
  Aviv TzidonChief Executive Officer

and Chairman of the Board of Directors



Approval date of the financial statements: February 13, 2011
 
 F - 4
 
 R.V.B Holdings Ltd.
 Consolidated Statements of Financial Position as of December 31
  2010


2009Note


$ thousands


$ thousandsLiabilities and Shareholders’ EquityCurrent liabilitiesShort-term loan


8



120



120Trade payables






403



1,305Other payables


9



301



655Due to related parties


16



14



363Total current liabilities






838



2,443Post employment long-term benefits


10



-



-Total liabilities






838



2,443Shareholders’ equity


11Share capital:Ordinary shares, NIS 1.00 par value400,000,000 shares authorized,118,900,535 and 117,970,535 shares issued andoutstanding as of December 31, 2010 and 2009






26,406



26,157Treasury Stock (930,000 Ordinary shares)






(167
)


-Share premium






16,833



16,915Accumulated deficit






(9,489
)


(9,930
)Total shareholders' equity






33,583



33,142Total liabilities and shareholders’ equity






34,421



35,585
  The accompanying notes are an integral part of the consolidated financial statements.
 
 F - 5
  R.V.BHoldings Ltd.
 Consolidated Statements of Income for the Year Ended December 31
  2010


2009


2008Note


$ thousandsRevenues:Sales





-



33,661



29,711Royalties, commissions and others





-



3,452



1,855Total revenues


15A



-



37,113



31,566Cost of revenues


15C



-



28,293



23,282Gross profit






-



8,820



8,284Operating expenses:Research and development






-



1,499



1,213Selling and marketing






-



1,852



2,128General and administrative






693



4,041



2,773Total operating expenses






693



7,392



6,114Profit (loss) before other income, net






(693
)


1,428



2,170Other income (Elbit transaction)






867



30,206



-Operating profit






174



31,634



2,170Financial income






275



28



219Financial expenses






(8
)


(2,255
)


(766
)Financial income (expenses), net


15D



267



(2,227
)


(547
)Profit before taxes on income






441



29,407



1,623Income tax expense


14



-



-



-Net profit for the year






441



29,407



1,623
 Earnings per shareBasic earnings per share


0.0037



0.2512



0.0139Diluted earnings per share


0.0037



0.2512



0.0139Weighted-average number of ordinary sharesof nominal NIS 1.00 par value outstanding(in thousands) used in calculation of the basicearnings per share


117,971



117,069



116,952Weighted-average number of ordinary sharesof nominal NIS 1.00 par value outstanding(in thousands) used in calculation of dilutedearning per share


117,971



117,098



116,958
 
 The accompanying notes are an integral part of the consolidated financial statements.
 
 F - 6
 
 R.V.BHoldings Ltd.
 Consolidated Statements of Comprehensive Income for the Year Ended December 31
  2010


2009


2008Note


$ thousandsProfit for the year





441



29,407



1,623Other comprehensive income:Defined benefit plan actuarial gains (losses)


10



-



15



(107
)Total other comprehensive income (loss)for the period






-



15



(107
)Total comprehensive incomefor the period






441



29,422



1,516
  The accompanying notes are an integral part of the consolidated financial statements.
 
 F - 7
 
 R.V.BHoldings Ltd.
 Consolidated Statements of Changes in Equity
  TotalShare


Treasury


Share


Accumulated


shareholders’capital


shares


premium


deficit


equity$ thousands


$ thousands


$ thousands


$ thousands


$ thousandsBalance as of January 1, 2008


25,861



-



16,954



(41,104
)


1,711Total comprehensiveincome for the year


-



-



-



1,516



1,516Employee stock option compensation


-



-



-



141



141Exercise of options


30



-



(10
)


-



20Balance as of January 1, 2009


25,891



-



16,944



(39,447
)


3,388Total comprehensiveincome for the year


-



-



-



29,422



29,422Employee stock option compensation


-



-



-



95



95Issuance of warrants in respect ofshort-term loans


-



-



57



-



57Exercise of options


266



-



(86
)


-



180Balance as of January 1, 2010


26,157



-



16,915



(9,930
)


33,142Total comprehensiveincome for the year


-



-



-



441



441Own shares acquired


-



(167
)


-



-



(167
)Exercise of options


249



-



(82
)


-



167Balance as of December 31, 2010


26,406



(167
)


16,833



(9,489
)


33,583
  The accompanying notes are an integral part of the consolidated financial statements.
 
 F - 8
 
 R.V.BHoldings Ltd.
 Consolidated Statements of Cash Flows
  Year ended


Year ended


Year endedDecember 31


December 31


December 312010


2009


2008$ thousands


$ thousands


$ thousandsCash flows from operating activitiesNet profit for the year


441



29,407



1,623Adjustment to reconcile net profit to fundsgenerated from operations:Gain from sale of business to Elbit (Appendix A)


(867
)


(30,206
)


-Depreciation and amortization


-



420



523Stock based compensation


-



95



141(867
)


(29,691
)


664Change in trade receivables


796



(10,460
)


(1,012
)Change in other receivables


(13
)


1,846



(2,189
)Change in deferred revenue


-



(6,409
)


7,889Change in trade payables


(896
)


3,794



2,920Change in other payables and due to related parties


(538
)


(397
)


(244
)Change in provisions


-



394



11Change in post employment benefits


-



15



(68
)(651
)


(11,217
)


7,307Net cash provided by (used in) operating activities


(1,077
)


(11,501
)


9,594Cash flows from investing activitiesPurchases of property, plant and equipment


-



(190
)


(291
)Purchases of intangible assets


-



(156
)


(89
)Interest received


-



23



163Increase in short term bank deposit


(10,537
)


-



-Proceeds from sale of business to Elbit including the releaseof amount held in escrow (Appendix A)


4,559



28,780



-Decrease (increase) in restricted bank deposits


241



8,578



(5,653
)Net cash provided by (used in) investing activities


(5,737
)


37,035



(5,870
)Cash flows from financing activitiesBank overdraft and repayment of short term loan


-



-



(966
)Receipt of long-term loans


-



6,750



-Repayment of long-term loans


-



(6,750
)


-Exercise of options


-



180



20Net cash provided by (used in) financing activities


-



180



(946
)Net increase in cash and cash equivalents


(6,814
)


25,714



2,778Cash and cash equivalents as at the beginning of the year


29,886



4,249



1,520Effect of exchange rate fluctuations on cash andcash equivalents


22



(77
)


(49
)Cash and cash equivalents as at the end of the year


23,094



29,886



4,249
 
 The accompanying notes are an integral part of the consolidated financial statements.
  F - 9
  R.V.B Holdings Ltd.
 Consolidated Statements of Cash Flows (cont’d)
 
 Appendix A – Proceeds from Asset Purchase Agreement *
  Year endedDecember 31,2009$ thousandsTrade receivables


12,526Other receivables


273Inventories


1,322Property, plant, equipment and Intangible assets


832Trade payables


(7,248
)Other payables


(32
)Deferred revenue


(4,782
)Provisions


(486
)Restricted bank deposits and deposits held inescrow


(3,831
)Gain from sale of business to Elbit


30,206Net cash provided by transaction


28,780
  During 2010 all of the remaining Company’s escrow accounts, with respect to the Asset Purchase Agreement, in the amount of $4,559 thousand were released and the Company recorded $867 thousand as additional income.
  *   For details please see Note 1 and Note 4.
 
 F - 10
 
 R.V.BHoldings Ltd.
 Notes to the Consolidated Financial Statements
 Note 1 - General
  A.
R.V.B Holdings Ltd. (formerly B.V.R Systems (1998) Ltd.) (the "Company") is an Israeli resident company incorporated in Israel. The Company changed its name on January 12, 2010 as a result of the Elbit transaction described below. From February 2003 until March 2010 the Company's shares traded on the Over the Counter Bulletin Board under the symbol BVRSF.OB. Since March 2010, the Company's ordinary shares have traded under the symbol RVBHF.OB. which reflects its name change to R.V.B. Holdings Ltd. As of the date of this report, the Company’s management is attempting to locate business opportunities and activities relating to investment of the Company funds.
 
 Prior to the Elbit transaction described below, the Company was engaged in developing, manufacturing and marketing advanced training and computer-based simulation systems for military applications. The address of the Company’s registered office is Yigal Arnon & Co., 1 Azrieli Center, Tel Aviv, 67021, Israel.
 
 On November 19, 2009 (the “Closing Date”) after receipt of all required approvals, the Company sold substantially all of its assets, including the Singapore subsidiary, BVR S Pacific PTE, and liabilities to Elbit Systems Ltd. (NASDAQ: ESLT) (“Elbit”), for total cash consideration of approximately $34.27 million (the “Elbit transaction”), out of which $4.8 million were held in escrow as of December 31, 2009, see Note 4. As a result of the Elbit Transaction, the Company recorded in 2009 and 2010, in the statement of income, a net gain of $30.2 million and $0.9 million, respectively.
 
 At the Closing Date, there were certain assets of the Company that were unable to be transferred to Elbit (“non-transferable assets and liabilities”). The Company and Elbit entered into an agreement, regarding such non-transferable assets and liabilities which stipulates that until such non-transferable assets are able to be transferred to Elbit, the Company shall provide Elbit with the benefit of each of the non-transferable assets and Elbit shall satisfy or perform any liability, back-to-back with the obligations of the Company. For the avoidance of doubt, both parties agreed that Elbit shall be responsible for the fulfillment of the undertaking under any contract with respect to non-transferable assets and shall provide the products and/or services, via the Company.
  As of the Closing Date, the net book value of the assets and liabilities sold to Elbit was as follows:
 
 November 192009$ thousandsAssetsCash and cash equivalents


39Trade receivables


12,526Other receivables


273Inventories


1,322Property, plant, equipment and Intangible assets


832Total assets


14,992Trade payables


7,248Other payables


32Provisions


486Deferred revenue


4,782Total liabilities


12,548Net assets sold


2,444
 
 F - 11
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 1 – General (cont'd)
  B.
Aviv Tzidon and A.O. Tzidon (1999) Ltd (together - "Tzidon") have entered into an agreement with Greenstone Industries Ltd. (“Greenstone”), a public Israeli company, pursuant to which, in consideration for the provision of a loan by Greenstone to Tzidon of $12,500,000, they granted Greenstone an option to purchase from Tzidon, for a period of 90 days commencing as of December 16, 2010, ordinary shares of the Company which shall constitute on the date of the exercise of the option not less than 50.14% and not more than 65%, on fully diluted basis of the Company's  issued share capital (not taking into account the Company's treasury stock), as shall be determined by Tzidon at their sole discretion. To secure the repayment of the loan taken, Tzidon have pledged their shares to the benefit of Greenstone and have transferred their shares in the Company to a trustee who holds the shares in trust.
 Note 2 - Significant Accounting Policies
 
 The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The Company adopted IFRSs for the first time in 2008, with the date of transition to IFRSs ("the date of transition") being January 1, 2007. The Company’s operating cycle and was determined to be 12 months. The consolidated financial statements were authorized for issue by the Board of Directors on February 13, 2011.
 
 A.
Financial statements in US dollars
 
 These consolidated financial statements are presented in US dollars ("dollar" or "$"), which is the Company’s functional currency, and have been rounded to the nearest thousand. The dollar is the currency that represents the principal economic environment in which the
 Company operates.
 
 The Company’s transactions and balances denominated in dollars are presented at their original amounts. Transactions denominated in currencies other than dollars are translated into dollars. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. All foreign currency transaction gains and losses are reflected in the statements of operations as financial income or expenses, as appropriate.
 
 B.
Basis of consolidation
 
 The Company sold its only wholly owned subsidiary to Elbit Systems Ltd. on November 19, 2009, as part of the Elbit Transaction. The transactions and balances at the financial statements include transactions of the subsidiary up to the date it was sold to Elbit. All intercompany transactions and balances were eliminated in consolidation.
 
 C.
Basis of measurement
 
 These consolidated financial statements have been prepared on the basis of historical cost.
 
 The value of non-monetary assets and equity items that were measured on the basis of historical cost, has been adjusted for changes in the general purchasing power of the Israeli currency - NIS, based upon changes in the Israeli Consumer Price Index (“CPI”) until December 31, 2003, as until that date the Israeli economy was considered hyperinflationary.
 
 F - 12
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont’d)
 
 D.
Use of estimates and judgments
 
 The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
 
 The preparation of accounting estimates used in the preparation of the Company’s financial statements requires management to make assumptions regarding circumstances and events that involve considerable uncertainty. Management of the Company prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate.
 
 Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
  E.
Financial instruments
 
 (1)
Non-derivative financial assets
 
 Initial recognition of financial assets
 The Company initially recognizes loans and receivables and deposits on the date they are created. All other financial assets acquired in a regular way purchase, are recognized initially on the trade date on which the Company becomes a party to the contractual provisions of the instrument, meaning on the date the Company undertook to purchase or sell the asset. Non-derivative financial instruments comprise trade and other receivables and cash and cash equivalents.
 
 Derecognition of financial assets
 Financial assets are derecognized when the contractual rights of the Company to the cash flows from the asset expire, or the Company transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognized as a separate asset or liability.
 
 F - 13
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont’d)
 
 E.
Financial instruments (cont’d)
 
 (1)
Non-derivative financial assets (cont’d)
 
 Regular way sales of financial assets are recognized on the trade date, meaning on the date the Company undertook to sell the asset.
 
 See (2) hereunder regarding the offset of financial assets and financial liabilities.
 
 The Company classifies its financial assets according to the following categories:
 
 Loans and receivables
 Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses.
  Loans and receivables comprise trade and other receivables.
 
 Cash and Cash Equivalents
 Cash and cash equivalents comprise cash balances available for immediate use and call deposits. Cash equivalents comprise short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value.
 
 Restricted Bank Deposits
 Restricted bank deposits are comprised of cash deposited in banks in respect of bank guarantees granted to the Company's customers as partial collateral for the continued performance of work and advances received from customers. The release of these deposits is based on the progress of the work and is subject to customer approval. The Company recorded liens on these deposits in favor of the banks that granted the guarantees.
 
 (2)
Non-derivative financial liabilities
 
 The Company initially recognizes debt securities issued on the date that they are originated. All other financial liabilities are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
 
 Financial liabilities are derecognized when the obligation of the Company, as specified in the agreement, expires or when it is discharged or cancelled.
 
 Financial liabilities (other than financial liabilities at fair value through profit and loss) are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.
 
 The Company has the following non-derivative financial liabilities: loans and borrowings, and trade and other payables.
 
 Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
  F - 14
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont’d)
 
 E.
Financial instruments (cont’d)
 
 (3)
Share capital
 
 Ordinary shares
 Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity.
 
 Treasury shares
 When share capital recognized as equity is repurchased by the Company, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity.
 
 F.
Transactions with controlling shareholder
 
 Assets and liabilities included in a transaction with a controlling shareholder are measured at fair value on the date of the transaction. As the transaction is on the equity level, the Company includes the difference between the fair value and the consideration from the transaction in its equity.
 
 G.
Property, plant and equipment
 
 Recognition and measurement
 
 Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.
  Cost includes expenditure that is directly attributable to the acquisition of the asset. When major parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
  Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognized net within “other income” in profit or loss.
 
 Depreciation
 
 Depreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.
  The estimated useful lives for the current and comparative periods are as follows:
  %Computers and electronic equipment
20 - 33.3Manufacturing equipment
10 - 15Office furniture and equipment
6 - 15Leasehold improvements
The shorter of the estimated useful livesand the lease term of the related leasehold
 
 Depreciation methods, useful lives and residual values are reviewed at each reporting date.
  F - 15
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont'd)
 
 H.
Revenue recognition
 
 1.
Construction contracts
 
 a.
Contract revenue includes the initial amount agreed in the contract plus any variations in contract work, claims and incentive payments to the extent that it is probable that they will result in revenue and can be measured reliably. As soon as the outcome of a construction contract can be estimated reliably, contract revenue and expenses are recognized in profit or loss in proportion to the percentage of completion of the contract.
 When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognized only to the extent of contract costs incurred that are likely to be recoverable. An expected loss on a contract is recognized immediately in profit or loss.
 
 b.
The percentage of completion is measured on the basis of cost (the ratio of the costs incurred to the total estimated costs), which reflect the progress of the contract completion. Work in progress under long-term contracts is stated at cost less amounts charged to cost of revenues in the income statement and associated with revenue recognized on the basis of the “percentage-of-completion” method. Cost includes direct costs of materials, labor, subcontractor and other direct costs and allocated indirect manufacturing costs.
 
 c.
Estimated profit or loss from long-term contracts may change due to changes in estimates resulting from differences between actual performance and original forecasts. The effect of such changes in estimates is recognized in the income statement at the time of their identification.
 
 d.
The Company provides warranties on sales of systems to certain customers for periods of up to 24 months or the closing date of the Elbit transaction, the earliest. The expenses related to the warranty period are taken into consideration in the direct cost of the contracts, based on management's estimation and in accordance with the Company's prior experience.
 
 2.
Revenue from royalties and commissions
 
 Royalties and commission revenues resulting from the cooperation agreement with Israel Aircraft Industries Ltd. (“IAI”), are recognized when the related payments are received by IAI. The Company determines such revenues by receiving confirmation of payments subject to royalties and commissions from IAI.
 
 3.
Revenue from services
 
 Revenue from services rendered is recognized in profit or loss in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed.
  F - 16
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont'd)
 
 I.
Finance income and expenses
 
 Finance income is comprised of interest income on cash deposits and from changes in the fair value of derivatives. Interest income is recognized as it accrues in profit and loss.
 
 Finance expenses are comprised of interest on loans and bank commission linked to bank guarantee and from changes in the fair value of derivatives.
 
 Foreign currency gain and losses that are recognized in profit or loss are reported on a net basis.
 
 J.
Income taxes expenses
 
 Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
 
 Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
 
 Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiary and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
 
 A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
 
 As such, the Company has not recorded a deferred tax asset in regard to all tax loss carryforwards as well as for other temporary differences (See Note 14B).
 
 K.
Impairment in value of assets
 
 Financial assets
 
 Financial assets not carried at fair value through profit and loss are assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
 
 An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in profit or loss and reflected in a provision for loss against receivables. Interest income on the impaired asset is recognized using the interest rate that was used to discount the future cash flows for the purpose of measuring the impairment loss.
 
 F - 17
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont'd)
 
 K.
Impairment in value of assets (cont’d)
 
 Financial assets (cont’d)
 
 Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognized in profit or loss.
  In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgment as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
  An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. The reversal is recognized in profit or loss.
 
 L.
Provisions
 
 A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The carrying amount of the provision is adjusted each period to reflect the time that has passed and is recognized as a financing expense.
 
 M.
Earnings per share
 
 The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees and others (See Note 12).
 
 N.
Post- employment benefits
 
 1.
Post employment benefits
 
 The Company's liability for post employment benefits for certain employees was covered by a defined contribution plan financed by deposits with insurance companies or with funds managed by a trustee. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit and loss when they are due.
 
 The Company's liability for post employment benefits for all remaining employees was covered by a defined benefit plan  and the actuarial gains and losses resulting from an adjustment of the discount rate or from a difference between actual and expected return on plan assets, are recognized directly in equity and are presented as part of the statement of comprehensive income.
 
 F - 18
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
  Note 2 - Significant Accounting Policies (cont'd)
 
 N.
Post- employment benefits (cont'd)
 
 2.
Short-term benefits
 
 Short-term employee benefit obligations were measured on an undiscounted basis and were expensed as the related service is provided.
 
 3.
Share based payments
 
 The grant date fair value of options granted to employees is recognized as a salary expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the options. The amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. The fair value of stock options is measured using the Black-Scholes model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted-average historic volatility adjusted for changes expected due to publicly available information), weighted-average expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.
 
 O.
Concentration of credit risk
 
 Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
 
 Financial instruments that potentially subject the Company to concentration of credit risk consist mainly of cash and cash equivalents and trade receivables.
  At December 31, 2010 and 2009, the Company had cash and cash equivalents, and restricted bank deposits which were deposited with major Israeli banks. Management believes that the financial institutions that hold the Company's investments are financially sound, and, accordingly, minimal credit risk exists with respect to these investments.
 
 Trade receivables include amounts billed to customers. Management periodically evaluates the collectability of these trade receivables and adjusts the allowance for doubtful accounts to reflect the amounts estimated to be doubtful of collection.
 
 P.
Fair value of financial instruments
 
 The fair market value of the Company's financial instruments, which are cash and cash equivalents, restricted bank deposits, loans from bank, trade receivables, other receivables, short-term debt, trade payables and other payables approximate their carrying value as of December 31, 2010 and 2009, due to their short-term nature.
 
 F - 19
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont'd)
 
 Q.
New standards and interpretations not yet adopted
  ·
IFRS 9 (2010), Financial Instruments (hereinafter – “the Standard”) – This Standard is one of the stages in a comprehensive project to replace IAS 39 Financial Instruments: Recognition and Measurement (hereinafter – IAS 39) and it replaces the requirements included in IAS 39 regarding the classification and measurement of financial assets and financial liabilities.
  In accordance with the Standard, there are two principal categories for measuring financial assets: amortized cost and fair value, with the basis of classification for debt instruments being the entity’s business model for managing financial assets and the contractual cash flow characteristics of the financial asset. In accordance with the Standard, an investment in a debt instrument will be measured at amortized cost if the objective of the entity’s business model is to hold assets in order to collect contractual cash flows and the contractual terms give rise, on specific dates, to cash flows that are solely payments of principal and interest. All other debt assets are measured at fair value through profit or loss. Furthermore, embedded derivatives are no longer separated from hybrid contracts that have a financial asset host. Instead, the entire hybrid contract is assessed for classification using the principles above. In addition, investments in equity instruments are measured at fair value with changes in fair value being recognized in profit or loss. Nevertheless, the Standard allows an entity on the initial recognition of an equity instrument not held for trading to elect irrevocably to present fair value changes in the equity instrument in other comprehensive income where no amount so recognized is ever classified to profit or loss at a later date. Dividends on equity instruments where revaluations are measured through other comprehensive income are recognized in profit or loss unless they clearly constitute a return on an initial investment.
 
 The Standard generally preserves the instructions regarding classification and measurement of financial liabilities that are provided in IAS 39. Nevertheless, unlike IAS 39, IFRS 9 (2010) requires as a rule that the amount of change in the fair value of financial liabilities designated at fair value through profit or loss, other than loan commitments and financial guarantee contracts, attributable to changes in the credit risk of the liability be presented in other comprehensive income, with the remaining amount being included in profit or loss. However, if this requirement aggravates an accounting mismatch in profit or loss, then the whole fair value change is presented in profit or loss. Amounts thus recognized in other comprehensive income may never be reclassified to profit or loss at a later date. The new standard also eliminates the exception that allowed measuring at cost derivative liabilities that are linked to and must be settled by delivery of an unquoted equity instrument whose fair value cannot be reliably measured. Such derivatives are to be measured at fair value.
 
 The Standard is effective for annual periods beginning on or after January 1, 2013 but may be applied earlier, subject to providing disclosure and at the same time adopting other IFRS amendments as specified in the Standard. The Standard is to be applied retrospectively other than in a number of exceptions as indicated in the transitional provisions included in the Standard. In particular, if an entity adopts the Standard for reporting periods beginning before January 1, 2012 it is not required to restate prior periods.
 
 The Company is examining the effect of adopting the Standard on the financial statements.
  F - 20
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 2 - Significant Accounting Policies (cont’d)
 
 Q.
New standards and interpretations not yet adopted (cont’d)
 
 —
IAS 24 (2009) Related Party Disclosures (hereinafter – “the Standard”). The new standard includes changes in the definition of a related party and changes with respect to disclosures required by entities related to government. The Standard is to be applied retrospectively for annual periods beginning on or after January 1, 2011. The Company is in the process of reassessing its relationships with related parties for the purpose of examining the effects of adopting the Standard on its financial statements.
  —
In the framework of Improvements to IFRSs 2010, in May 2010 the IASB published and approved 11 amendments to IFRS and to one interpretation on various accounting issues. Most of the amendments shall apply to periods beginning on or after January 1, 2011 and permit early adoption, subject to the specific conditions of each amendment.
  Presented hereunder are the amendments that have not been early adopted and may be relevant to the Company, and which are expected to have an effect on the financial statements:
 
 *
Amendment to IAS 34 Interim Financial Reporting – Significant events and transactions (hereinafter – “the Amendment”) – The Amendment expanded the list of events and transactions that require disclosure in interim financial statements, such as the recognition of a loss from the impairment of financial assets and changes in the classification of assets as a result of changes in their purpose or use. In addition, the materiality threshold was removed from the minimum disclosure requirements included in the Standard before its amendment. The Amendment is effective for annual periods beginning on or after January 1, 2011. Early application is permitted and is required to be disclosed.
 
 *
Amendment to IAS 1 Presentation of Financial Statements – Presentation of statement of changes in equity (hereinafter – “the Amendment”) – In accordance with the Amendment a reconciliation between the carrying amount at the beginning of the period and the carrying amount at its end for each component of equity is required to be presented in the statement of changes in equity, while separately disclosing changes arising from profit or loss, other comprehensive income and transactions with the owners in their capacity as owners. Such a reconciliation should also be presented for each component of other comprehensive income either in the statement of changes in equity or in the notes. The Amendment is effective for annual periods beginning on or after January 1, 2011. Early application is permitted and is required to be disclosed.
 
 *
Amendment to IFRS 7 Financial Instruments: Disclosures – Clarification of disclosures (hereinafter – “the Amendment”) – The Amendment requires adding an explicit declaration that the interaction between the qualitative and quantitative disclosures enables the users of the financial statements to better assess the company’s exposure to risks arising from financial instruments. Furthermore, the clause stating that quantitative disclosures are not required when the risk is immaterial was removed, and certain disclosure requirements regarding credit risk were amended while others were removed. The Amendment is effective for annual periods beginning on or after January 1, 2011. Early implementation is permitted with disclosure.
 
 F - 21
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 3 - Cash and Cash Equivalents
  December 312010


2009$ thousands


$ thousandsIn dollars


22,664



29,626In New Israel Shekels


430



70In other foreign currencies (Euro and Singapore Dollar)


-



19023,094



29,886
 
 Note 4 - Restricted Bank Deposits and Deposits in Escrow
 
 A.
As discussed in Note 1, as of December 31, 2009 out of the total consideration of $34.27 million received in the Elbit transaction, $4.8 million were to be held in three separate escrow accounts in order to: (i) assure that the purchased projects are balanced (i.e., payments received for each project are consistent with its stage of execution), (ii) pay outstanding invoices of suppliers of the Company that related to the purchased projects and (iii) guarantee its indemnification obligations in connection with the representations and warranties presented during the transaction.
 Of the abovementioned $4.8 million, $970 thousand was not recognized as an asset during 2009 due to the uncertainty of its being received.
 During 2010 the Company reached a final settlement with Elbit for the release of all escrow accounts to the Company excluding $242 thousand that will be transferred to Elbit. As a result of this settlement the Company recorded $728 thousand as additional income from the Elbit transaction during 2010.
  B.
As described in Note 13B a deposit in the amount of $241 thousand was pledged as of December 31, 2009 in respect of an outstanding claim made against the Company. During 2010 the pledge was removed as described in the said note.
  F - 22
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 5 - Other Receivables
  December 312010


2009$ thousands


$ thousandsPrepaid expenses


15



11Receivables from Elbit


341



292Others


-



53356



356
  Note 6 - Property, Plant and Equipment
 
 Computers





Officeand electronic


Manufacturing


furniture and


Leaseholdequipment


equipment


equipment


improvements


Total$ thousands


$ thousands


$ thousands


$ thousands


$ thousandsCostBalance as at January 1, 2009


7,664



1,745



972



276



10,657Additions


175



-



-



20



195Disposals


(7,839
)


(1,745
)


(972
)


(296
)


(10,852
)Balance as at December 31, 2009


-



-



-



-



-DepreciationBalance as at January 1, 2009


7,199



1,743



681



242



9,865Depreciation for the year


263



1



41



19



324Disposals


(7,462
)


(1,744
)


(722
)


(261
)


(10,189
)Balance as at December 31, 2009


-



-



-



-



-Carrying amountsAs at January 1, 2009


465



2



291



34



792As at December 31, 2009


-



-



-



-



-As at December 31, 2010


-



-



-



-



-
 
 On November 19, 2009, all the property, plant and equipment were sold to Elbit (see Note 1).
 
 F - 23
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 7 - Intangible Assets
 
 Capitalizeddevelopment


Computercosts


software


Total$ thousands


$ thousands


$ thousandsCostBalance as at January 1, 2009


292



204



496Additions


-



156



156Disposals


(292
)


(360
)


(652
)Balance as at December 31, 2009


-



-



-Accumulated amortizationBalance as at January 1, 2009


267



120



387Amortization for the year


25



71



96Disposals


(292
)


(191
)


(483
)Balance as at December 31, 2009


-



-



-Carrying amountsAs at January 1, 2009


25



84



109As at December 31, 2009


-



-



-As at December 31, 2010


-



-



-
 
 On November 19, 2009, all the intangible assets were sold to Elbit (see Note 1).
  Note 8 - Short-Term Loan
 
 As of December 31, 2010 and 2009, a loan in the amount of $120 thousand is outstanding, bearing no interest. The loan is payable on demand.
  Note 9 - Other Payables
 
 December 312010


2009$ thousands


$ thousandsGovernment authorities


87



66Acquisition costs


-



331Other accrued expenses


214



258301



655
 
 F - 24
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 10 - Post Employment Benefits
 
 Under Israeli law, the Company is required to make severance payments to dismissed employees and to employees terminating employment under certain other circumstances. The Company's liability for severance pay is fully provided for through insurance policies and by accrual.
  As of the closing date of the Elbit Transaction, the Company was obligated to dismiss all employees and to settle all employees’ benefits as of that date. As of December 31, 2009, the Company terminated the employment of all of its employees and paid to all of its employees benefits except for $77 thousand that were outstanding and classified in other payables. The severance obligation was paid during the first quarter of 2010. The Company utilized all of the plan assets for this purpose. Accordingly as of December 31, 2010, there are no plan assets.
 
 A.
Post-employment benefit plans
 
 (1)
Movement in the present value of the defined benefit obligations
 
 The defined benefit obligation as at January 1, 2009 was $1,384 thousand and during 2009 as result of the Elbit transaction the Company terminated the employment of all of its employees and as a result benefits were paid except for $77 thousand which was classified in other payables that were still outstanding as of December 31, 2009. The $77 thousand severance obligation was paid during the first quarter of 2010.
 
 (2)
Movement in plan assets
 
 The fair value of plan assets as at January 1, 2009 was $1,307 thousand and as of December 31, 2010 and 2009, there are no plan assets as all assets were distributed to employees.
 
 (3)
Expense recognized in operations
 
 Year ended

December 31, 2008$ thousandsCurrent service costs


234Interest costs


84Expected return on plan assets


(42
)276
 
 During 2009, the total net expense for post-employment benefits net of gains on plan assets recognized was of $15 thousand.
 
 The expense is recognized in the following line items in the income statement:
 
 Year endedDecember 312009


2008$ thousands


$ thousandsCost of sales


27



193Selling and marketing expenses


(5
)


29General and administrative expenses


(7
)


5415



276
 
 F - 25
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 10 - Post Employment Benefits (cont’d)
 
 A.
Post-employment benefit plans (cont'd)
 
 (4)
Actuarial gains and losses recognized directly in other comprehensive income
 
 Year ended December 312009


2008$ thousands


$ thousandsCumulative amount as at January 1


86



(21
)Recognized amount during the period


(15
)


107Cumulative amounts as at December 31


71



86
 
 (5)
Actuarial assumptions
 
 Principal actuarial assumptions at the reporting date (expressed as weighted averages):
 
 Year endedDecember 312008$ thousandsDiscount rate as at December 31


3.4Expected return on plan assets as at January 1


6Future salary increases


2
 
 Assumptions regarding future mortality in 2008 are based on published statistics and mortality tables.
 
 The overall expected long-term rate of return on assets is 6%.The expected long-term rate of return is based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based exclusively on historical returns, without adjustments.
 
 B.
Post-employment benefit plans – defined contribution plan
 
 Year endedDecember 312009


2008$ thousands


$ thousandsAmount recognized as expense in respect ofdefined contribution plan


308



277
 
 F - 26
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 11 - Shareholders' Equity
 
 A.
The Company’s ordinary shares are traded in the United States on the Over the Counter Bulletin Board (OTCBB) under the symbol RVBHF.OB.
 
 B.
  Issued and OutstandingDecember 312010


2009Number of sharesBalance at January 1


117,970,535



116,970,535Exercise of share options


930,000



1,000,000Balance at December 31


118,900,535



117,970,535
  Ordinary shares of NIS 1.00 par value  each
 
 The authorized ordinary shares of the Company as of December 31, 2010 and 2009 was 400,000,000 shares with a value of NIS 1.00 per share.
 
 The holders of ordinary shares are entitled to receive dividends and are entitled to one vote per share at meetings of the Company.
 
 C.
Treasury stock
 
 The reserve for treasury stock comprises the cost of the Company’s shares which the Company committed to purchase from former employees as described in section E2 of this note.
  The rights attached to 930 thousand of the Company’s own shares that the Company committed to purchase are suspended until their re-issuance.
 
 D.
On March 21, 2006, the Company issued to a group of new investors 20,000,000 ordinary shares for a total consideration of $3.6 million, together with three separate warrants for the purchase of 6,000,000 ordinary shares per each warrant, with exercise prices of $0.36, $0.54 and $1.00, exercisable for a period of three years, with a mandatory exercise mechanism under certain conditions. These warrants expired in March 2009.
 
 E.
Share-based compensation
 
 1.
In 2004, the Company granted Aviv Tzidon, the Chairman of the Board of Directors, an option to purchase 9,000,000 ordinary shares of the Company at an exercise price per share of $0.18, vesting in five equal increments subject, to Mr. Tzidon serving as an active Chairman of the Board of Directors. One fifth of the options vested upon the completion of each full year of service, which commenced on November 24, 2003. The options expire three years from the vesting date of each installment.
 As of December 31, 2010, 6,200,000 options have expired, 1,000,000 options have been exercised and 1,800,000 options are outstanding and exercisable.
 
 F - 27
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 11 - Shareholders' Equity (cont’d)
 
 E.
Share-based compensation (cont'd)
 
 2.
In January 2004, the Company's Board of Directors approved the grant of up to 5,000,000 options to the Company's employees and service providers. In 2006, the Company’s Board of Directors approved an increase to 5,200,000 options in the total option program. Each option is exercisable into one ordinary share of the Company. As of December 31, 2009, there were 2,937,600 employee options outstanding and there were 904,000 options outstanding for service providers, which are all exercisable. The options are exercisable at prices of $0.145 to $0.65 per share, and are exercisable in five equal increments commencing one year after their issuance. The options expire three years from the vesting date of each increment.
 On September 13, 2009, the Company's Board of Directors approved the acceleration of the vesting dates for options held by employees of the Company who accepted offers of employment from Elbit, in connection with the Elbit Transaction. The Company recognized compensation cost in an amount of $57 thousand related to the modification of those options.
 The fair value on the day of grant of options granted during 2008 amounted to approximately $81 thousand. During the year 2009, no options were granted. Stock based compensation expenses related to options granted to employees in the amount of $95 thousand and $141 thousand was recorded in the year ended December 31, 2009 and 2008, respectively.
 On February 15, 2010, the Company’s Board of Directors decided to extend the exercise period until September 30, 2010 for all of the outstanding options previously granted to employees and service providers which their contract was terminated as part of the Elbit transaction.
  In June 2010, the Company’s Board of Directors approved and in July 2010, the Company executed an offering to all former employees and service providers of the Company with outstanding options and shares (which were working in the Company until the Elbit transaction and agreed to sign a new contract with Elbit) to repurchase their options or shares at a purchase price equal to $0.23 minus the options exercise price, subject to the provisions of the law and tax obligations.
  In September 2010, the Company repurchased 2,186,000 options from its former employees and service providers that accepted the offer, according to the above mentioned conditions, for a net consideration of $107 thousand. This amount was recognized as an expense during 2010.
  As part of the abovementioned offer, as of December 2010, the Company is still obligated to purchase from certain of its former employees 930,000 ordinary shares held by them for an amount of $214 thousand. These shares were issued to the employees as a result of the employees exercising options they held under the Company’s option plans. Subsequent to the balance sheet date, in January 2011, the Company settled this obligation with these former employees in consideration of $47 thousand (net of exercise price), and as of December 31, 2010, the Company recorded $167 thousand as treasury stock in its equity.
  3.
In 2009, the Company received $3.5 million (the "Debenture Amount") based on a debenture agreement with Yuval Golan Investments Ltd. and Michael Golan Securities Holdings Ltd. (collectively the "Investor"), together with an option to purchase 3,000,000 Ordinary Shares of the Company, at an exercise price per share of $0.18, exercisable for a period of five years. The repayment terms of the debenture were based on specific terms and conditions as detailed in the agreement, including a provision that required repayment in the event that the Company would be acquired while the debenture is still outstanding. In 2009, as a result of the Elbit transaction the Company repaid the debenture in the amount of $4.55 million including accrued interest. As of December 31, 2010, the option granted as part of the debenture agreement is still outstanding
 
 F - 28
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 11 - Shareholders' Equity (cont’d)
 
 E.
Share-based compensation (cont’d)
 
 4.
Option plan information
 
 a.
A summary of the status of the Company's stock option plans as of December 31, 2010, 2009 and 2008, and changes during the years then ended, is as follows:
 
 As of December 31,2010


2009


2008Weighted





Weighted





Weightedaverage





average





averageNumber of


exercise price


Number of


exercise price


Number of


exercise priceoptions


($)


options


($)


options


($)Optionsoutstanding at the beginning of the year


7,441,600



0.18



10,172,200



0.18



12,695,200



0.19Granted


-



-



-



-



1,140,000



0.18Repurchased


(2,186,000
)


0.18Exercised


(930,000
)


0.18



(1,000,000
)


0.18



(110,000
)


0.18Forfeited


-



-



(114,000
)


0.21



(252,000
)


0.18Expired


(2,525,600
)


0.18



(1,616,600
)


0.18



(3,301,000
)


0.19Outstandingat  the end of the  year


1,800,000



0.18



7,441,600



0.18



10,172,200



0.18Optionsexercisable at the end of the year


1,800,000



0.18



7,441,600



0.18



8,240,200



0.18
  The options outstanding at December 31, 2010 and 2009 have an exercise price in the range of $0.145 to $0.65 and contractual life in the range of 0.17 to 7.41 years.
 
 The weighted average share price at the date of exercise for share options exercised in 2010 was $0.18.
 
 F - 29
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 11 - Shareholders' Equity (cont’d)
 
 E.
Share-based compensation (cont'd)
 
 4.
Option plan information (cont'd)
 
 b.
The following table summarizes information relating to stock options at December 31, 2010:
 
 Number of OptionsOutstanding


ExercisableExercise price ($)0.18


1,800,000



1,800,0001,800,000



1,800,000
 
 The outstanding options as of December 31, 2010 may be exercised immediately at a weighted average exercise price of $0.18.
 
 c.
The fair value of the options granted and accounted for under IFRS No. 2 was calculated on the basis of the Black & Scholes model for the pricing of options. The parameters that were used in order to implement the model are as follows:
 
 Option grant dateMay 2008


November 2007


May 2007


August 2006


June 2006


March 2006Share price (in $)


0.18



0.17



0.2



0.185



0.23



0.19Exercise price (in $)


0.18



0.17



0.2



0.185



0.23



0.19Expected volatility


55.33
%


63.88
%


85.82
%


125.29
%


123.58
%


146.63
%Life of options (in years)


2-4



2-4



2-4



2-4



2-4



2-4Risk-free interest rate


2.7
%


4.82
%


4.82
%


4.93
%


5
%


4.99
%Rate of anticipateddividends


0



0



0



0



0



0Fair value


0.071



0.078



0.111



0.131



0.161



0.149
 
 F - 30
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 11 - Shareholders' Equity (cont’d)
 
 E.
Share-based compensation (cont'd)
 
 4.
Option plan information (cont'd)
 
 c.
(cont’d)
 
 The expected volatility was determined on the basis of the historical volatility in the Company's share prices.
 
 The life of the option warrants was determined on the basis of the management's estimate of the period the employees will hold the options, taking into consideration their position with the Company and the Company's experience regarding the turnover of employees.
 
 The risk-free interest rate was determined on the basis of the yield to maturity of dollar-denominated Government debentures with a remaining life equal to the anticipated life of the option warrants.
 
 Note 12 - Earnings Per Ordinary Share
 
 The following table summarizes information related to the computation of basic and diluted earnings per Ordinary Share for the years indicated:
 
 Year ended December 31,2010


2009


2008$ thousandsNet profit attributable to Ordinary Shares


441



29,407



1,623Weighted average number of Ordinary Shares outstandingused in basic earnings per Ordinary Share calculation


117,971



117,069



116,952Add assumed exercise of outstanding dilutive potentialOrdinary Shares


-



29



6Weighted average number of Ordinary Shares outstandingused in diluted earnings per Ordinary Share calculation


117,971



117,098



116,958Basic earnings per Ordinary Share


0.0037



0.2512



0.0139Diluted earnings per Ordinary Share


0.0037



0.2512



0.0139Number of options excluded from the diluted earningsper share calculation because of anti-dilutive effect


*4,800,000



7,441,600



9,977,000
 
 *
The Company has outstanding options to Yuval Golan Investments Ltd. and Michael Golan Securities Holdings Ltd. an option to purchase 3,000,000 Ordinary Shares of the Company, at an exercise price per share of $0.18, the Company also has outstanding options to Aviv Tzidon an option to purchase 1,800,000 Ordinary Shares of the Company, at an exercise price per share of $0.18. These options did not have dilutive effect.
 
 F - 31
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 13 - Commitments and Contingent Liabilities
 
 A.
Cooperation agreement
 
 1.
The predecessor of the Company developed, manufactured and marketed the “Ehud” system pursuant to a joint venture agreement entered into in 1992 with the MLM division of Israel Aircraft Industries Ltd. (the "IAI Agreement"). Pursuant to the IAI Agreement, the predecessor and IAI agreed to jointly develop, manufacture and market the "Ehud", with IAI subcontracting certain of the manufacturing and integration work with respect to the "Ehud" product to the predecessor. The Company and IAI operated in accordance with an amendment to the IAI agreement executed in August 2005 that amended a prior agreement entered into in 1999.
 
 The 2005 agreement expanded cooperation between the parties in the marketing of Naval Combat Maneuvering Instrumentation Systems in various countries worldwide through the transfer of work share from the leading party to the other. The 2005 Agreement also set the rate of royalties in all territories to 5% with respect to "Ehud" Systems. In addition, the 2005 Agreement resolved all disagreements between the parties prior to January 1, 2005. The term of the 2005 Agreement is for ten years.
 
 During the years ended December 31, 2009 and 2008, the Company recognized royalty revenue from IAI in the amount of $0.2 million and $ 1.6 million, respectively. Furthermore, the Company recorded royalty fees to IAI in the amount of $0.5 million and $0.6 million for the years ended December 31, 2009 and 2008, respectively.
 
 In accordance with the Elbit transaction entered into between the Company and Elbit, dated November 19, 2009, Elbit shall be responsible to the total obligation for future royalties to be paid or received.
 
 B.
Liabilities and guarantees
 
 1.
As discussed in Note 4, as of December 31, 2009, the Company had placed $4.8 million in escrow accounts. As of December 31, 2010 all of the Company’s escrow accounts were released.
 
 2.
During 2009, the Company filed a complaint against Hartech Systems Ltd., Hartech Technologies Ltd., Mr. Ofer Har and three employees of these companies (“the Defendants” or “Hartech”), in the Tel Aviv District Court. In the complaint, the Company claims the Defendants violated the Company's copyright by using the original live training simulation software which was developed and owned by the Company. In August 2009, HarTech filed a counterclaim against the Company seeking recovery for non-payment of fees due under a consulting agreement between the Company and HarTech as well as damages to the counterclaimants' reputation resulting from the Company’s complaint in the amount of approximately NIS 907 thousand ($241 thousand as of December 31, 2009). In addition, a deposit in the amount of $241 thousand was pledged in respect of the abovementioned claim, see Note 4B and a similar amount was remained held by Elbit Systems under a lien.
 
 In January 2010 the court ordered to cancel this pledge and in April 2010 ordered to reduce the sum that was held by Elbit Systems to approximately NIS 360 thousand ($95 thousand) that will be remained held by Elbit Systems under a lien to guarantee company's ability to pay the alleged debt in respect of the fees due under the above consulting agreement.
 
 F - 32
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 13 - Commitments and Contingent Liabilities (cont'd)
 
 B.
Liabilities and guarantees (cont'd)
  Subsequent to the balance sheet date, in January 2011 a settlement agreement was reached with Hartech, according to which both parties dropped their mutual claims and Hartech agreed to pay the Company $180 thousand secured by a bank guarantee, in two equal installments, in June 2011 and in June 2012.
  Note 14 - Income Tax
 
 A.
Amendments to the Income Tax Ordinance
 
 On July 25, 2005 the Knesset passed the Law for the Amendment of the Income Tax Ordinance (No. 147) – 2005, which provides, inter alia, for a gradual reduction in the corporate tax rate to 25% as from the 2010 tax year.
 
 On July 14, 2009, the Knesset passed the Economic Efficiency Law (Legislation Amendments for Implementation of the 2009 and 2010 Economic Plan) – 2009, which provided, inter alia, an additional gradual reduction in the corporate tax rate to 18% as from the 2016 tax year. In accordance with the aforementioned amendments, the corporate tax rates applicable as from the 2009 tax year are as follows: In the 2009 tax year – 26%, in the 2010  tax year – 25%, in the 2011 tax year – 24%, in the 2012 tax year – 23%, in the 2013 tax year – 22%, in the 2014 tax year  – 21%, in the 2015 tax year – 20% and as from the 2016 tax year the company tax rate will be 18%.
 
 Current and deferred tax balances for the periods reported in these financial statements are calculated in accordance with the new tax rates specified in the Economic Efficiency Law.
 
 B.
Deferred income taxes
 
 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
 
 In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers projected taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, the Company will need to generate future taxable income prior to the expiration of the deferred tax assets governed by the tax code. Based on the level of historic taxable losses, management can determine that it is more likely than not that they will not be able to use the tax asset of the company net operating loss carry forwards in the future.
 
 F - 33
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 14 - Income Tax (cont’d)
  C.
A reconciliation of the theoretical tax expense, assuming all income is taxable at the statutory rates applicable in Israel, and the actual tax expense, is as follows:
 
 Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsProfit before taxes on income


441



29,407



1,623Statutory tax rate in Israel


25
%


26
%


27
%Theoretical tax cost


110



7,646



438Losses, deductions and expenses in respect ofwhich deferred tax assets were not recorded


(110
)


(7,670
)


(499
)Non-deductible expenses


-



24



61Actual tax expense


-



-



-
  D.
Income tax assessments
 
 Final tax assessment has been received by the Company up to and including 2006.
  E.
Net operating loss carry forwards
 
 Net operating loss carry forwards of the Company as of December 31, 2010, totaled approximately $30 million. The net operating loss carry forwards have no expiration date.
  F - 34
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 15 - Supplementary Statement of Operation Information
 
 A.
Summary information about geographical areas:
 
 Total revenues are attributed to geographic areas based on the location of the customers.
 
 Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsTotal revenues from:Israel


-



138



438Far East


-



28,173



28,241Europe


-



4,510



1,609Africa


-



3,912



140South America


-



380



1,138Total revenues


-



37,113



31,566
  B.
Major customers’ data as a percentage of the total revenues:
 
 Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsCustomer A


-



29
%


44
%Customer B


-



29
%


10
%Customer C


-



17
%


34
%Customer D


-



10
%


*Customer E


-



*



*Customer F


-



*



*-



85
%


88
%
 
 * Less than 10%
 
 C.
Cost of revenues
  Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsRaw materials and components


-



3,740



2,521Salaries, wages and employees’ benefits


-



6,061



6,350Subcontractors


-



12,836



10,168Agents fees


-



2,543



1,342Depreciation and amortization


-



287



388Other manufacturing costs


-



2,826



2,513-



28,293



23,282
  F - 35
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 15 - Supplementary Statement of Operation Information (cont'd)
 
 D.
Financial income (expenses), net
 
 Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsFinancial income:Interest on short-term deposits


225



24



173Changes in respect of foreign exchange differences


50



-



-Other


-



4



46275



28



219Financial expenses:Bank charges


8



741



549Interest on long-term loan from bank and others


-



1,290



22Changes in respect of foreign exchange differences


-



167



26Derivatives


-



57



1698



2,255



766Total financial income (expenses), net


267



(2,227
)


(547
)
  Note 16 - Related Parties
 
 A.
Balance sheet
  Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsOther payables - Chairman of board of directors


14



275



13
  B.
Key management personnel compensation (including directors)
 
 The chairman of the board of directors, Aviv Tzidon, who is considered key management of the company, participates in the Company’s share option program.
 
 Year ended December 312010


2009


2008$ thousands


$ thousands


$ thousandsShare-based payments


-



72



53Payments of salary, consulting fees and bonus


164



275



13164



347



66
 
 F - 36
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 16 - Related Parties (cont'd)
 
 C.
Agreement with Eyepoint Ltd.
 
 On March 1, 2004, the Company entered into a consulting agreement with Eyepoint Ltd., an Israeli company wholly owned by Dekel Tzidon, brother of Aviv Tzidon, the Chairman of our Board of Directors. Pursuant to this consulting agreement, Dekel Tzidon served as the Company’s Vice President of Research & Development and Chief Technological Officer until July 2008. In July 2008, Mr. Dekel Tzidon resigned as our Vice President of Research & Development and Chief Technological Officer, but continued to work for the Company on a part-time basis. In 2009 and 2008, Eyepoint Ltd. provided the Company with consulting services in the amount of $104 thousand and $173 thousand, respectively.
 
 As of November 19, 2009, and as a result of the Elbit transaction, the Board of Directors of the Company approved the payment of $20 thousand in consideration for consulting services to be provided to the Company, at a scope of two days per week, from the date of the closing of the Elbit transaction until June 30, 2010, relating to a certain outstanding matters.
 
 D.
Agreement with Consult Wise Pte Ltd.
 
 On January 1, 2007, following the expiration of previous agreement, the Company entered into a new agreement with Consult Wise Pte Ltd. ("Consult Wise") a Singaporean company in which  Maayan Tzidon (the brother of Aviv Tzidon, the Chairman of our Board of Directors) holds 50% of the issued and outstanding shares. Pursuant to this agreement, the Company agreed to pay Consult Wise $3.5 thousand per month for the provision of its marketing services and $3.5 thousand per month for supporting the Company operating programs in Singapore; furthermore, Consult Wise is entitled to commissions on purchase orders issued by customers introduced to the Company pursuant to its marketing services.
 
 During the years 2009 and 2008, Consult Wise provided the Company with consulting services in the amount of $279 thousand and $261 thousand, respectively.
 
 On April 19, 2009 this agreement was renewed for an additional period of two years, retroactively from January 1, 2009 until December 31, 2010. This agreement was terminated as of November 19, 2009, the date of the Elbit Transaction.
 
 F - 37
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 17 - Financial Instruments
 
 Credit risk
 
 Exposure to credit risk
 
 The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
 
 December 312010


2009$ thousands


$ thousandsCash and cash equivalents


23,094



29,886Bank Deposit


10,537



-Restricted bank deposits and deposits in escrow


-



4,072Trade receivables


434



1,271Other receivables


341



33034,406



35,559
  Impairment losses
 
 The aging of trade receivables including long term amounts at the reporting date was as follows:
 
 Gross


Impairment


Gross


Impairment2010


2009$ thousands


$ thousands


$ thousands


$ thousandsNot past due


-



-



-



-Past due less than six months


-



-



1,271



-Past due more than six months andless than one year


-



-



-



-Past due more than one year


434



-



-



-434



-



1,271



-
 
 The allowance for doubtful accounts represents Management’s best estimate of the probable loss inherent in existing accounts receivable balances as a result of possible non-collection. In determining the appropriate allowance, Management bases its estimate on information available about specific debtors, including aging of the balance, assessment of the underlying security received, the history of write-offs, relationships with the customers and the overall creditworthiness of the customers.
 
 F - 38
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 17 - Financial Instruments (cont'd)
 
 Liquidity risk
  The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
 
 December 31, 2010
 
 Carrying


Contractualamount


Cash flows


1st year$ thousandsShort-term loan


120



120



120Trade payables


403



403



403Other payables including due to related parties


228



228



228751



751



751
 
 December 31, 2009
 
 Carrying


Contractualamount


Cash flows


1st year$ thousandsShort-term loan


120



120



120Trade payables


1,305



1,305



1,305Other payables including due to related parties


875



875



8752,300



2,300



2,300
 
 Currency risk
 
 December 31, 2010


December 31, 2009Other currencies





Other currenciesNIS


(mainly Euro)


NIS


(mainly Euro)$ thousands


$ thousandsCash and cash equivalents


430



-



70



190Restricted bank deposits anddeposits in escrow


-



-



241



-Trade receivables


257



177



191



815Other receivables


341



-



331



-Trade payables


(319
)


(8
)


(176
)


(9
)Other payables


(87
)


-



(357
)


-622



169



300



996
  F - 39
  R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 17 - Financial Instruments (cont'd)
 
 Currency risk (cont'd)
 
 The Company's exposure to foreign currency risk was as follows based on notional amounts:
 
 Following is data regarding currency exchange rates to the USD:
  Reporting date spot rateDecember 31


December 312010


2009NIS


3.549



3.775EURO


0.749



0.693Change in % :Exchange rate of NIS in US$


(5.99
)%


(0.71
)%Exchange rate of EURO in US$


8
%


3.4
%
 
 Sensitivity analysis
 A change of the NIS to USD exchange rate as at December 31, 2010 and 2009 would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2009.
 
 Equity


Net incomeChange


$ thousands


$ thousandsDecember 31, 2010Increase in the NIS of


2.0
%


(12
)


(12
)Increase in the NIS of


1.0
%


(6
)


(6
)Decrease in the NIS of


(1.0
)%


12



12Decrease in the NIS of


(2.0
)%


6



6December 31, 2009Increase in the NIS of


2.0
%


(6
)


(6
)Increase in the NIS of


1.0
%


(3
)


(3
)Decrease in the NIS of


(1.0
)%


3



3Decrease in the NIS of


(2.0
)%


6



6
 
 Fair Values
 
 Fair values versus carrying amounts
 The carrying amounts of the financial assets and liabilities, including cash and cash equivalents, restricted bank deposits, trade receivables, other receivables, other non-current assets, short-term loans, trade payables and other payables are same or proximate to their fair value.
 
 F - 40
 
 R.V.B Holdings Ltd.
 Notes to the Consolidated Financial Statements
 
 Note 18 - Financial Risk Management
 
 The Company is exposed to credit, liquidity and market risks as part of its normal course of business. The Company's risk management objective is to monitor risks and minimize the possible influence that results from this exposure, according to its evaluations and expectations of the parameters that affect the risks.
 
 Liquidity risk
 Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and extreme conditions, without incurring unacceptable losses or risking damage to the Company's reputation. The Company's policy is to ensure that it has sufficient cash and cash equivalents to meet expected operational expenses, including financial obligations.
 
 Credit risk
 Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.
 
 At the reporting date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivatives, in the balance sheet. Financial instruments that could potentially subject the Company to credit risks consist primarily of cash and cash equivalents.
 
 Market risk
 Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return on risk.
 
 Interest rate risk
 The Company is exposed to insignificant fluctuations in the interest rate.
 
 Currency risk
 The Company's operating income and cash flows are exposed to currency risk. The Company manages bank accounts that are denominated in a currency other than its respective functional currency, primarily NIS.