UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 20-F
[_]  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, 2003

                                       OR

          FOR THE TRANSITION PERIOD FROM _____________ TO ____________

                         COMMISSION FILE NUMBER 0-30820

                            TIKCRO TECHNOLOGIES LTD.

            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER AND
                 TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)

                                     ISRAEL
                 (JURISDICTION OF INCORPORATION OR ORGANIZATION)

                 126 YIGAL ALLON STREET, TEL AVIV 67443, ISRAEL
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
       TITLE OF EACH CLASS      NAME OF EACH EXCHANGE ON WHICH REGISTERED

              NONE              ________________________________

 SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                  ORDINARY SHARES, PAR VALUE NIS 0.10 PER SHARE
                                (TITLE OF CLASS)

        SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO
                           SECTION 15(d) OF THE ACT:
                                      NONE
                                (TITLE OF CLASS)

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:

            23,726,401 ORDINARY SHARES, PAR VALUE NIS 0.10 PER SHARE

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.                      [X] Yes [_] No

            Indicate by check mark which financial statement item the Registrant
                                                          has elected to follow.

                                                      Item 17 [_]     Item 18[X]

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<Table>
<S>                                                                                     <C>
PART 1   ...............................................................................1

ITEM 1.  Identify of Directors, Senior Management and Advisors..........................1

ITEM 2.  Offer Statistics and Expected Timetable........................................1

ITEM 3.  Key Information................................................................1

A.       Selected Financial Data........................................................1

B.       Capitalization and Indebtedness................................................4

C.       Reasons for the offer and use of proceeds......................................4

D.       Risk Factors...................................................................5

ITEM 4.  Information on the Company.....................................................9

A.       History and Development of the Company.........................................9

B.       Business Overview..............................................................10

C.       Organizational Structure.......................................................11

D.       Property, Plants and Equipment.................................................11

ITEM 5.  Operating and Financial Review and Prospects...................................11

A.       Operating Results..............................................................11

B.       Liquidity and Capital Resources................................................16

C.       Research and Development, Patents and Licenses.................................17

D.       Trend Information..............................................................18

E.       Off-balance Sheet Arrangements.................................................18

F.       Tabular Disclosure of Contractual Obligations..................................18

ITEM 6.  Directors, Senior Management and Employees.....................................18

A.       Directors and Senior Management................................................18

B.       Compensation...................................................................19

C.       Broad Practices................................................................19

D.       Employees......................................................................25

E.       Share Ownership................................................................25
</Table>

                                        2
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<Table>
<S>                                                                                     <C>
ITEM 7.  Major Shareholders and Related Party Transactions..............................26

A.       Major Shareholders.............................................................26

B.       Related Party Transactions.....................................................26

C.       Interests of Experts and Counsel...............................................27

ITEM 8.  Financial Information..........................................................28

A.       Consolidated Statements and other Financial Information........................28

B.       Significant Changes............................................................28

ITEM 9.  The Offer and Listing..........................................................28

A.       Offer and Listing Details......................................................28

B.       Plan of Distribution...........................................................30

C.       Markets........................................................................30

D.       Selling Shareholders...........................................................30

E.       Dilution.......................................................................30

F.       Expenses of the Issue..........................................................30

ITEM 10. Additional information.........................................................30

A.       Share Capital..................................................................30

B.       Memorandum and Articles of Association.........................................30

C.       Material Contracts.............................................................35

D.       Exchange Controls..............................................................37

E.       Taxation.......................................................................37

F.       Dividends and Paying Agents....................................................45

G.       Statement by Experts...........................................................45

H.       Documents On Display...........................................................46

I.       Subsidiary Information.........................................................46

ITEM 11. Quantitative and Qualitative Disclosures about Market Risk.....................46

ITEM 12. Description of Securities other than Equity Securities.........................46
</Table>

                                        3
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<Table>
<S>                                                                                     <C>
PART 2.  ...............................................................................46

ITEM 13  Defaults, Dividend Averages and Delinquencies..................................46

ITEM 14  Material Modifications to the Rights of Security Holders and Use of Proceeds...46

ITEM 15. Controls and Procedures........................................................46

ITEM 16A. Audit Committee Financial Expert..............................................47

ITEM 16B. Code of Ethics................................................................47

ITEM 16C. Principal Accountant Fees and Services........................................47

ITEM 16D. Exemptions from Listing Standards for Audit Committees........................48

PART 3   ...............................................................................48

ITEM 17. Financial Statements...........................................................48

ITEM 18  Financial Statements...........................................................48

ITEM 19. Exhibits.......................................................................49
</Table>

                                        4
<Page>

                                     PART 1

Unless the context otherwise requires, "Tikcro," "us," "we" and "our" refer to
Tikcro Technologies Ltd., an Israeli company, and its subsidiaries.

STATEMENTS IN THIS ANNUAL REPORT CONCERNING OUR BUSINESS OUTLOOK OR FUTURE
ECONOMIC PERFORMANCE; ANTICIPATED REVENUES, EXPENSES OR OTHER FINANCIAL ITEMS;
AND STATEMENTS CONCERNING ASSUMPTIONS MADE OR EXPECTATIONS AS TO ANY FUTURE
EVENTS, CONDITIONS, PERFORMANCE OR OTHER MATTERS, ARE "FORWARD-LOOKING
STATEMENTS" AS THAT TERM IS DEFINED UNDER THE UNITED STATES FEDERAL SECURITIES
LAWS. IN SOME CASES, YOU CAN IDENTIFY FORWARD-LOOKING STATEMENTS BY OUR USE OF
WORDS SUCH AS "EXPECT," "ANTICIPATE," "BELIEVE," "INTEND," "PLAN," "SEEK" AND
"ESTIMATE" AND SIMILAR EXPRESSIONS. FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THOSE STATED IN SUCH STATEMENTS. FACTORS THAT COULD CAUSE
OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE SET
FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS ANNUAL REPORT AS WELL AS OUR
REPORTS ON FORM 6-K SUBMITTED TO THE SECURITIES AND EXCHANGE COMMISSION

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 FINANCIAL DATA

We were formed in December 1999 to receive substantially all of the assets and
liabilities of the semiconductor chip business of our former parent, Orckit
Communications Ltd., in accordance with the terms of a plan of separation. Under
this plan, Tikcro received substantially all of Orckit's semiconductor chip
business, including the business of Silicon Value (S.V.) Ltd., a company which
Orckit acquired prior to consummation of the plan and whose business we sold in
April 2001. The spin-off was consummated on June 30, 2000.

We have derived the following selected financial data from the financial
statements of Tikcro, which have been prepared in accordance with generally
accepted accounting principles in the United States. The financial data of
Tikcro contained in this annual report are presented as if Tikcro had been a
separate entity since January 1, 1998 and the results of operations of the ASIC
business of Silicon Value, which we sold in April 2001, are reflected only in
the line item called "loss from discontinued operations". You should read the
selected consolidated financial data together with Item 5 "Operating and
Financial Review and Prospects" and our consolidated financial statements
included elsewhere in this annual report. These data are not necessarily
indicative of operating results or financial position that would have been
achieved had the plan been consummated on January 1, 1998 and should not be
construed as representative of Tikcro's future operating results or financial
position. Our mode of operation and operating results were significantly
affected by the agreements we entered into in February 2002 with
STMicroelectronics, which are described below under Item 10.C "Additional
Information--Material Agreements."

                                        1
<Page>

In April 2003, we sold substantially all of our assets and liabilities to
STMicroelectronics (other than financial indebtedness) pursuant to an asset
purchase agreement, which is described below under Item 10.C "Additional
Information--Material Agreements." Since then, our plan of operation has been to
explore the best course of action for Tikcro, including to attempt to merge or
effect a business combination with a domestic or foreign, private or public
operating entity in a new area of operations. Accordingly, the data presented
below are not indicative of our future operating results or financial position.

                                        2
<Page>

<Table>
<Caption>
                                                                              YEARS ENDED DECEMBER 31,
                                                    ----------------------------------------------------------------------------
                                                        1999            2000            2001            2002            2003
                                                    ------------    ------------    ------------    ------------    ------------
                                                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                 <C>             <C>             <C>             <C>             <C>
STATEMENT OF OPERATIONS DATA:
Revenues ........................................   $      5,261    $     14,517    $      1,440    $      7,912    $      2,691
Product costs ...................................          4,561          13,107              --              --              --
Research and development expenses and
development services costs ......................          3,606           8,974           9,545           6,395           2,152
Less - royalty-bearing grants ...................             --              --           1,571           1,468             392
Research and development expenses, net and
development services costs, net .................          3,606           8,974           7,974           4,927           1,760
Selling, marketing, general and administrative
expenses ........................................            588           3,470           4,067           2,227             788
Spin-off expenses ...............................             --           1,199              --              --              --
Impairment of property and equipment ............             --              --              --             157              --
Amortization of deferred stock compensation(1)                50              92           2,252             635             771
Operating loss ..................................         (3,544)        (12,325)        (12,853)            (34)           (628)
Other expenses ..................................                                            (16)            (10)             --
Other income ....................................             --              --              --           9,698          12,834
Financial income (expense), net .................             80             969          (1,238)           (874)           (228)
                                                    ------------    ------------    ------------    ------------    ------------
Net income (loss) from continuing operations ....         (3,464)        (11,356)        (14,107)          8,780          11,978
Income (loss) from discontinued operations(2) ...             --        (120,839)         (4,043)             19              --
                                                    ------------    ------------    ------------    ------------    ------------
Net income (loss) ...............................   $     (3,464)   $   (132,195)   $    (18,150)   $      8,799    $     11,978
                                                    ============    ============    ============    ============    ============
Basic net earnings (loss) per share from
continuing operations ...........................   $      (0.16)   $      (0.51)   $      (0.60)   $       0.35    $       0.50
                                                    ------------    ------------    ------------    ------------    ============
Basic net earnings (loss) per share from
discontinued operations .........................             --           (5.38)          (0.17)             *)              --
                                                    ------------    ------------    ------------    ------------    ------------
Basic net earnings (loss) per share .............   $      (0.16)   $      (5.89)   $      (0.77)   $       0.35    $       0.50
                                                    ============    ============    ============    ============    ============
Diluted net earnings (loss) per share from
continuing operations ...........................   $      (0.16)   $      (0.51)   $      (0.60)         $0. 31    $       0.47
Diluted net earnings (loss) per share from
discontinued operations .........................             --           (5.38)          (0.17)             *)              --
                                                    ------------    ------------    ------------    ------------    ------------
Diluted net earnings (loss) per share ...........   $      (0.16)   $      (5.89)   $      (0.77)   $       0.31    $       0.47
                                                    ============    ============    ============    ============    ============
Number of shares used in computing basic net
earnings (loss) per share .......................     22,007,000      22,455,860      23,604,309      24,771,743      23,948,650
Number of shares used in computing diluted net
earnings (loss) per share .......................     22,007,000      22,455,860      23,604,309      24,888,462      25,288,650

</Table>

                                        3
<Page>

----------
(1)  Amortization of deferred stock compensation related to the following
     operating expenses: research and development expenses, net and development
     services costs, net of $50, $92, $1,338, $387 and $47 for the years ended
     December 31, 1999, 2000, 2001, 2002 and 2003, respectively; and selling,
     marketing, general and administrative expenses of $0, $0, $914, $248 and
     $724 for the years ended December 31, 1999, 2000, 2001, 2002 and 2003,
     respectively.

(2)  This item includes, for the year 2000, impairment of goodwill and other
     intangible assets in the amount of $58,068, a charge to expense of
     in-process research and development in the amount of $24,695, goodwill
     amortization in the amount of $21,598 and amortization of other intangible
     assets in the amount of $4.1 million. For the year 2001, this item includes
     goodwill amortization in the amount of $2,259 and impairment of property
     and equipment in the amount of $823.

*)   Represents an amount lower than $0.01.

<Table>
<Caption>
                                                                    DECEMBER 31,
                                                ----------------------------------------------------
                                                  1999       2000       2001       2002       2003
                                                --------   --------   --------   --------   --------
                                                                   (IN THOUSANDS)
<S>                                             <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents and short term
investments .................................   $  1,762   $ 18,793   $  7,712   $  5,559   $  7,883
Working capital .............................      1,764     (2,653)    (4,368)     3,951     10,146
Total assets ................................      3,618     59,697     13,450      9,498     10,146
Parent company investment ...................      1,840         --         --         --         --

Shareholders equity (deficiency) ............         --      3,629    (10,994)    (1,548)     9,965
</Table>

B. CAPITALIZATION AND INDEBTEDNESS

          Not applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

          Not applicable.

                                        4
<Page>

D. RISK FACTORS

WE BELIEVE THAT THE OCCURRENCE OF ANY ONE OR SOME COMBINATION OF THE FOLLOWING
FACTORS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

WE HAVE SOLD OUR BUSINESS AND CURRENTLY CONDUCT NO BUSINESS ACTIVITIES.

In April 2003, we sold substantially all of our assets and liabilities (other
than financial indebtedness) to STMicroelectronics. Since then, our plan of
operation has been to evaluate the best course of action for Tikcro, including
to attempt to merge or effect a business combination with a domestic or foreign,
private or public operating entity in a new area of operations. Other than
activities relating to attempting to locate such a candidate and activities
relating to the investment of our funds in short and long term investments, we
do not currently conduct any operations.

WE MAY NOT BE SUCCESSFUL IN IDENTIFYING AND EVALUATING SUITABLE BUSINESS
OPPORTUNITIES OR IN CONSUMMATING A BUSINESS COMBINATION.

We do not have an agreement or understanding with respect to engaging in a
business combination with a specific entity. We expect to incur expenses in the
course of this evaluation, whether or not such evaluation results in a business
combination. There can be no assurance that we will be successful in identifying
and evaluating suitable business opportunities or in consummating a business
combination. No particular industry or specific business within an industry has
been selected for a target company. Accordingly, we may enter into a business
combination with a business entity having no significant operating history,
losses, limited or no potential for immediate earnings, limited assets, negative
net worth or other negative characteristics. In the event that we complete a
business combination, the success of our operations will be dependent upon the
management of the target company and numerous other factors 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 MAY BE DEEMED AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT OF
1940.

Following the sale of our business to STMicroelectronics in April 2003 and the
investment of the cash proceeds of the sale, we may be deemed an "investment
company" under the Investment Company Act of 1940, unless we qualify for an
exemption. If we are deemed an investment company, we could be found to be in
violation of the Investment Company Act of 1940. A violation of that law could
subject us to material adverse consequences.

POSSIBLE DILUTION OF VALUE OF SHARES UPON BUSINESS COMBINATION.

A business combination normally will involve the issuance of a significant
number of additional shares. Depending upon the value of the assets acquired in
such business combination, the per share value of our ordinary shares may
increase or decrease, perhaps significantly.

                                        5
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WE MAY NEED ADDITIONAL FINANCING FOLLOWING A BUSINESS COMBINATION.

If we consummate a business combination, we may need to raise funds through a
public or private financing. We may be unable to obtain additional financing on
acceptable terms or at all.

WE MAY FACE TAX LIABILITIES RELATING TO OUR ASSET SALES.

We have generated a significant amount of income from the sale of the ASIC
business of Silicon Value and our various agreements with STMicroelectronics.
Based on our assessment and that of our tax advisors, we believe that we have
fully satisfied all tax due in relation with these transactions. The tax
authorities may not agree with our view. Any such disagreement and subsequent
tax dispute could result in tax liabilities in amounts which we currently can
not estimate.

WE MIGHT LOSE MONEY FROM OUR INVESTMENTS.

We plan to invest the majority of our cash on hand in a variety of financial
instruments. Some of these instruments may be rated below investment grade or
not rated. If the obligor of any of the instruments we hold default or undergo a
reorganization in bankruptcy, we may lose all or a portion of our investment.
This will harm our financial condition. For information on the types of our
investments as of December 31, 2003, see Item 11 - "Quantitative and Qualitative
Disclosures About Market Risk--Interest Rate Risk Management."

RISKS RELATING TO OUR INCORPORATION IN ISRAEL

OUR INCORPORATION IN ISRAEL MAY LIMIT OUR ABILITY TO FIND A TARGET FOR A MERGER
OR OTHER BUSINESS COMBINATION.

We are incorporated under the laws of Israel. A state of hostility, varying in
degree and intensity, has led to security and economic problems for Israel.
Since October 2000, there has been a high level of violence between Israel and
the Palestinians, which has led to a crisis in the entire peace process and
affected Israel's relationship with its Arab citizens and several Arab
countries. Furthermore, several countries restrict business with Israel and
Israeli companies, and additional companies may restrict doing business with
Israel and Israeli companies as a result of the recent increase in hostilities.
These political, economic and military conditions might deter potential targets
from effecting a business combination with an Israeli company.

IT MAY BE DIFFICULT TO ENFORCE A U.S. JUDGMENT AGAINST US, OUR OFFICERS AND
DIRECTORS OR TO ASSERT U.S. SECURITIES LAW CLAIMS IN ISRAEL.

Service of process upon our directors and officers named herein may be difficult
to effect within the United States because some of these people reside outside
the United States. Any judgment obtained in the United States against us or
these individuals or entities may not be enforceable within the United States.

                                        6
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There is doubt as to the enforceability of civil liabilities under the
Securities Act and the Securities Exchange Act in original actions instituted in
Israel. However, subject to specified time limitations, Israeli courts may
enforce a U.S. final executory judgment in a civil matter, provided that:

          o    adequate  service of process has been  effected and the defendant
               has had a reasonable opportunity to be heard;

          o    the  judgment  and its  enforcement  are not contrary to the law,
               public policy, security or sovereignty of the State of Israel;

          o    the  judgment was  obtained  after due process  before a court of
               competent   jurisdiction   according  to  the  rules  of  private
               international law prevailing in Israel;

          o    the judgment was not  obtained by  fraudulent  means and does not
               conflict with any other valid judgment in the same matter between
               the same parties;

          o    an action  between  the same  parties  in the same  matter is not
               pending  in  any  Israeli  court  at  the  time  the  lawsuit  is
               instituted in the U.S. court; and

          o    the U.S. court is not prohibited  from enforcing the judgments of
               Israeli courts.

If a foreign judgment is enforced by an Israeli court, it generally will be
payable in new Israeli shekels, which can then be converted into non-Israeli
currency and transferred out of Israel. The usual practice in an action to
recover an amount in non-Israeli currency is for the Israeli court to render
judgment for the equivalent amount in new Israeli shekels at the rate of
exchange on the date of payment, but the judgment debtor also may make payment
in non-Israeli currency. Pending collection, the amount of the judgment of an
Israeli court stated in new Israeli shekels ordinarily will be linked to the
Israel Consumer Price Index plus interest at the annual rate (set by Israeli
law) prevailing at that time. Judgment creditors bear the risk of unfavorable
exchange rates.

PROVISIONS OF ISRAELI LAW MAY DELAY, PREVENT OR MAKE MORE DIFFICULT A MERGER OR
OTHER BUSINESS COMBINATION.

Provisions of Israeli corporate law may have the effect of delaying, preventing
or making more difficult a merger with, or acquisition of, us. The Israeli
Companies Law generally provides that a merger be approved by the board of
directors and a majority of the shares present and voting on the proposed merger
at a meeting called upon at least 21 days' notice. For purposes of the
shareholder vote, unless a court rules otherwise, the merger will not be deemed
approved if a majority of the shares not held by the other party to the merger
(or by any person who holds 25% or more of the shares or the right to appoint
25% or more of the directors of the other party or its general manager) have
voted against the merger. Upon the request of any creditor of a party to the
proposed merger, a court may delay or prevent the merger if it concludes that
there is a reasonable concern that, as a result of the merger, the surviving
company will be unable to satisfy the obligations of the surviving company.
Finally, a merger may not be completed unless at least 70 days have passed since
the filing of a merger proposal signed by both parties with the Israeli
Registrar of Companies.

                                        7
<Page>

The Companies Law also provides that an acquisition of shares in 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% or greater shareholder of the
company, unless there is already another 25% or greater shareholder of the
company. Similarly, an acquisition of shares must be made by means of a tender
offer if as a result of the acquisition the purchaser would become a 45% or
greater shareholder of the company, unless there is already a majority
shareholder of the company. In any event, if as a result of an acquisition of
shares the acquirer will hold more than 90% of a company's shares, the
acquisition must be made by means of a tender offer for all of the shares.

Finally, Israel tax law treats some acquisitions, such as stock-for-stock
exchanges between an Israeli company and a foreign company, less favorably than
U.S. tax laws. For example, Israeli tax law may, under certain circumstances,
subject a shareholder who exchanges his ordinary shares for shares in another
corporation, to taxation prior to the sale of the shares received in such
stock-for-stock swap.

RISKS RELATING TO THE MARKET FOR OUR ORDINARY SHARES

HOLDERS OF OUR ORDINARY SHARES WHO ARE U.S. RESIDENTS FACE INCOME TAX RISKS.

There is a high likelihood that we are properly classified as a passive foreign
investment company, or PFIC, for 2003. Our classification as a PFIC could result
in a reduction in the after-tax return to the U.S. holders of our ordinary
shares, thus causing a reduction in the value of our shares, and could trigger
the application of certain United States tax reporting requirements. For U.S.
federal income tax purposes, we are treated as a PFIC for any tax year in which
either:

o    75% or more of our gross income is passive in nature, or

o    on average for such tax year, 50% or more of our assets (by value or, if we
so elect in certain circumstances, by adjusted tax basis) produce, or are held
for the production of, passive income.

For this purpose, passive income includes dividends, interest, royalties, rents,
annuities and the excess of gains over losses from the disposition of assets
which produce passive income. As a result of our relatively substantial cash and
investment assets, there is a high likelihood that we are properly classified as
a PFIC for 2003 under the asset test. We could also be classified as a PFIC for
2004. A separate determination must be made each year as to whether we are a
PFIC. As a result, our PFIC status may change.

Highly complex rules apply to U.S. holders of our ordinary shares if we are
treated as a PFIC for U.S. federal income tax purposes for any year during the
U.S. holder's holding period. Accordingly, U.S. holders are urged to consult
their tax advisors regarding the application of these tax rules.

U.S. residents should carefully read Item 10.E "Taxation - United States Federal
Income Tax Consequences" for a more complete discussion of the U.S. federal
income tax risks related to owning and disposing of our ordinary shares and the
consequences of PFIC status.

                                        8
<Page>

THE DELISTING OF OUR ORDINARY SHARES MAY REDUCE THEIR LIQUIDITY.

On December 19, 2001, our ordinary shares were delisted from the Nasdaq National
Market and subsequently from the Tel Aviv Stock Exchange. Our ordinary shares
currently are quoted on the OTC Bulletin Board, an electronic quotation medium
regulated by the National Association of Securities Dealers. The market for
shares quoted on the OTC Bulletin Board is typically less liquid than that for
shares quoted on the Nasdaq National Market. This could make it more difficult
for our shareholders to sell their shares at desired prices and amounts.

OUR SHARES ARE SUBJECT TO THE SECURITIES AND EXCHANGE COMMISSION'S "PENNY STOCK"
RULES AND MAY BE DIFFICULT TO SELL.

The rules of the Securities and Exchange Commission require brokers to provide
information to purchasers of securities traded at less than $5.00 per share and
not traded on a national securities exchange or quoted on the Nasdaq Stock
Market. Once our shares were delisted from Nasdaq, they became "penny stock"
that is not exempt from these rules. Therefore, these disclosure requirements
may have the effect of reducing trading activity in our shares and making it
more difficult for investors to sell. The rules require a broker-dealer to
deliver a standardized risk disclosure document prepared by the Securities and
Exchange Commission that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker must also give bid and
offer quotations and broker and salesperson compensation information to the
customer orally or in writing before or with the confirmation. The rules also
require a broker to make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction before a transaction in a penny stock.

TWO SHAREHOLDERS MAY BE ABLE TO CONTROL US.

Izhak Tamir and Eric Paneth, directors of Tikcro, each own approximately 13.3%
of our outstanding ordinary shares and are our largest shareholders. Currently,
Messrs. Paneth and Tamir are not party to a shareholders agreement. However, if
Messrs. Paneth and Tamir act together, there is a high likelihood that they
effectively would have the power to control the outcome of all matters submitted
for the vote of our shareholders, including the election of directors and the
approval of significant change in control transactions. Their combined equity
interest in us may have the effect of making certain transactions more difficult
and may result in delaying, deferring or preventing a change in control of
Tikcro unless approved by one or both of them.

ITEM 4.   INFORMATION ON THE COMPANY

A.  HISTORY AND DEVELOPMENT OF THE COMPANY

We were incorporated on December 14, 1999 under the laws of the State of Israel.
We are governed by the Israeli Companies Law, 5759-1999. In September 2003, we
changed our name from "Tioga Technologies Ltd." to "Tikcro Technologies Ltd."
Our principal executive offices are located at 126 Yigal Allon Street, Tel Aviv,
Israel and our telephone number is (972-3) 694-8648.

                                        9
<Page>

In February 2002, we entered into three strategic agreements with
STMicroelectronics NV. Pursuant to a technology transfer agreement, we granted
STMicroelectronics certain co-ownership rights in our existing intellectual
property in the DSL field and ownership rights over our products, including
products under development. Pursuant to a development, marketing and services
agreement, we provided research and development and marketing services to
STMicroelectronics through April 2003. Pursuant to a one-year option agreement,
STMicroelectronics had the right to acquire our business. For a more detailed
description of these agreements, please see Item 10.C "Additional
Information--Material Agreements." Following the execution of these agreements,
our activities consisted primarily of research and development and marketing
services provided to STMicroelectronics and we ceased to conduct business as an
independent DSL chip developer.

In January 2003, STMicroelectronics exercised its option to acquire our
business. This acquisition was consummated in April 2003. For a more detailed
description of our asset purchase agreement with STMicroelectronics, please see
Item 10.C "Additional Information--Material Agreements."

PRINCIPAL CAPITAL EXPENDITURES

Our principal capital expenditures to date have been the purchase of equipment
and other fixed assets used in our business. These purchases totaled $0.5
million in 2001, $0.1 million in 2002 and $10,000 in 2003.

B. BUSINESS OVERVIEW

Our historical business was the design, development and marketing of DSL chips
used by manufacturers of telecommunications equipment.

Upon the sale of our business to STMicroelectronics in April 2003, we ceased the
operations of our business as conducted prior thereto. Since then, our plan of
operation has been to explore the best course of action for Tikcro, including to
attempt to merge or effect a business combination with a domestic or foreign,
private or public operating entity in a new area of operations. In addition to
the cash and cash equivalents that we hold, we believe that there are perceived
benefits to being a "reporting company" with a class of publicly-traded
securities which may be attractive to private entities.

We may enter into a definitive agreement with a wide variety of businesses
without limitation as to their industry or revenues. It is not possible at this
time to predict when, if ever, we will enter into a business combination with
any such private company or what will be the industry, operating history,
revenues, future prospects or other characteristics of any such company.

C. ORGANIZATIONAL STRUCTURE

We do not have significant subsidiaries.

D. PROPERTY, PLANTS AND EQUIPMENT

We do not have any material fixed assets.

                                       10
<Page>

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.  OPERATING RESULTS

Our operating and financial review and prospects should be read in conjunction
with our financial statements, accompanying notes thereto and other financial
information appearing elsewhere in this annual report.

OVERVIEW

We were formed as a private Israeli company in December 1999. Prior to our
separation from Orckit, our business was operated as a division of Orckit. Our
historical business was the design, development and marketing of DSL chips used
by manufacturers of telecommunications equipment, and the vast majority our chip
sales were to Orckit. Upon our separation from Orckit, we received from Orckit
all of the outstanding capital stock of Silicon Value. Silicon Value designed,
developed and marketed ASIC solutions to systems manufacturers in the
communication and other markets.

In April 2001, we sold the ASIC business of Silicon Value to a wholly owned
subsidiary of Zen Research plc. for consideration of $21.7 million. As a result,
the results of operations of the ASIC business of Silicon Value are reported
separately as a discontinued operation in our statement of operations.

In February 2002, we entered into three strategic agreements with
STMicroelectronics. Pursuant to a technology transfer agreement, we granted
STMicroelectronics certain co-ownership rights in our existing intellectual
property in the DSL field and ownership rights over our products, including
certain products still under development and our rights under certain design
wins. Pursuant to a development, marketing and services agreement, we provided
research and development and marketing services to STMicroelectronics through
April 2003. Pursuant to a one year option agreement, we granted to
STMicroelectronics the right to acquire our business. STMicroelectronics
exercised its option and acquired our business in April 2003 pursuant to an
asset purchase agreement. In January 2004, we reached an agreement
STMicroelectronics that settled certain reciprocal financial claims, including
with respect to an escrow account which had been established under the asset
purchase agreement. For a more detailed description of these agreements, please
see Item 10.C "Additional Information--Material Agreements."

As a result of these agreements, from February 2002 through April 2003 our
activities consisted primarily of research and development and marketing
services provided to STMicroelectronics. During this period, substantially all
of our revenue derived from STMicroelectronics.

Following the sale of our business to STMicroelectronics in April 2003, our plan
of operation has been to explore the best course of action for Tikcro, including
to attempt to merge or effect a business combination with a domestic or foreign,
private or public operating entity in a new area of operations. Accordingly, the
financial information presented herein is not indicative of our future operating
results or financial position.

In 2001, we incurred net losses of $18.2 million. The loss for 2001 included
$4.0 million relating to the discontinued operations of the ASIC business of
Silicon Value that we sold in April 2001. The 2001 loss from discontinued
operations includes goodwill amortization in the amount of $2.3 million and
impairment of property and equipment in the amount of $0.8 million.

                                       11
<Page>

In 2002, we generated net income of $8.8 million. Our net income in 2002
includes $9.7 million of "other income," which consists of payments under the
technology transfer agreement signed with STMicroelectronics in February 2002,
net of transaction costs.

In 2003, we generated net income of $12.0 million. Our net income in 2003
includes $12.8 million in "other income".

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We prepare our consolidated financial statements in conformity with accounting
principles generally accepted in the United States. These accounting principles
require management to make certain estimates, judgments and assumptions based
upon the information available at the time they are made, historical experience
and various other factors believed to be reasonable under the circumstances.
These estimates, judgments and assumptions can affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the periods presented. Management
evaluates its estimates and judgments on an on-going basis. Some of those
judgments can be subjective and complex, and consequently actual results may
differ from those estimates.

The Company is also subject to risks and uncertainties that may cause actual
results to differ from estimates and assumptions, such as changes in the
economic environment, competition, foreign exchange, taxation and governmental
programs. Certain of these risks, uncertainties and assumptions are discussed in
Item 3.D - "Risk Factors." To facilitate the understanding of our business
activities, described below are certain accounting policies that are relatively
more important to the portrayal of our financial condition and results of
operations and that require management's subjective judgments. We base our
judgments on past experience and various other assumptions that are believed to
be reasonable under the circumstances. Please refer to Note 2 to our
consolidated financial statements included in this Annual Report for a summary
of all of our significant accounting policies

REVENUE RECOGNITION

Prior to entering into the agreements with STMicroelectronics in February 2002,
we derived our revenues from continuing operations mostly from royalties and
sales of products to Orckit. In 2001, following the amendment of our product
supply agreement, we recognized our royalty revenues as net revenues without
cost of goods sold. Revenues under our agreements with Orckit were recognized at
the time of shipment as reported to us by Orckit.

Revenues from sales of products were recognized when persuasive evidence of an
agreement exists, delivery occurred, the fee was fixed and determinable and
collectibility was probable.

Revenues from research and development services are recognized at the time they
are rendered.

                                       12
<Page>

RESULTS OF OPERATIONS

The table below sets forth, for the periods indicated, financial data which we
believe to be significant in analyzing our results of operations.

<Table>
<Caption>
                                                                          Years Ended December 31,
                                                                       2001         2002         2003
<S>                                                                 <C>          <C>          <C>
STATEMENT OF OPERATIONS DATA:
Revenues ........................................................   $    1,440   $    7,912   $    2,691
Product costs ...................................................
                                                                    ----------   ----------   ----------
Research and development expenses and
development services costs ......................................        9,545        6,395        2,152
Less royalty-bearing grants .....................................        1,571        1,468          392
                                                                    ----------   ----------   ----------
Research and development expenses, net
and development services costs, net .............................        7,974        4,927        1,760
Selling, marketing, general and
administrative expenses .........................................        4,067        2,227          788
Impairment of property and equipment ............................            -          157            -
Amortization of deferred stock
compensation ....................................................        2,252          635          771
Operating loss ..................................................      (12,853)         (34)        (628)
Other expenses ..................................................          (16)         (10)
Other income ....................................................            -        9,698       12,834
Financial income (expense), net .................................       (1,238)        (874)        (228)
                                                                    ----------   ----------   ----------
Net income (loss) from continuing
operations ......................................................      (14,107)       8,780       11,978
                                                                    ==========   ==========   ==========
Income (loss) from discontinued
operations ......................................................       (4,043)          19            -
                                                                    ==========   ==========   ==========
Net income (loss) ...............................................   $  (18,150)  $    8,799   $   11,978
                                                                    ==========   ==========   ==========
</Table>

                                       13
<Page>

The table below sets forth, for the periods indicated, financial data, expressed
as a percentage of total revenues, which we believe to be significant in
analyzing our results of operations.

<Table>
<Caption>
                                                      YEARS ENDED DECEMBER 31,
                                                   2001        2002        2003
<S>                                               <C>           <C>         <C>
Revenues: (1)                                       100.0%        100%        100%

Product costs

Research and development expenses, net
and development services costs, net                 553.8%       62.3%       65.4%
Selling, marketing, general and
administrative expenses                             282.4%       28.1%       29.3%
Impairment of property and equipment                    -         1.9%          -
Amortization of deferred stock
compensation                                        156.4%        8.0%       28.7%
Operating loss                                     (892.6)%      (0.4)%     (23.3)%
Other expenses                                       (1.1)%      (0.1)%         -
Other income                                            -       122.6%      476.9%
Financial income (expense), net                     (86.0)%     (11.0)%      (8.5)
Net income (loss) from continuing
operations                                         (979.7)%     111.0%      445.1%
                                                 --------    --------    --------
Net income (loss) from discontinued
operations                                         (280.8)%       0.2%          -
                                                 ========    ========    ========
Net income (loss)                                 (1260.4)%     111.2%      445.1%
                                                 ========    ========    ========
</Table>

     ----------
     (1)  In 2001, most of our revenues were royalties, which do not have any
          cost of revenues.

REVENUES. In 2002 and 2003 we had revenues from development and marketing
services of $7.7 million and $2.7 million, respectively, under our agreement
with STMicroelectronics, which was in effect from February 2002 to April 2003.
In 2001 and 2002, all of our royalties and chip sale revenues were generated
from ADSL KeyWave(TM) chips. Effective January 1, 2001, our product supply
agreement with Orckit was amended, as a result of which we began generating
revenues in the form of royalties. Specifically, Orckit paid us a royalty equal
to 10% of the actual price paid by Orckit to the chip supplier. This agreement
expired on May 1, 2002.

RESEARCH AND DEVELOPMENT EXPENSES, NET AND DEVELOPMENT COSTS, NET. Research and
development expenses consist primarily of salaries and other personnel-related
expenses, consultant expenses, equipment and software depreciation, supplies,
overhead expenses and other expenses related to the design and development of
our products. Our research and development costs are expensed as incurred. The
decrease in 2002 was primarily a result of a reduction in our development plans
and a reduction in personnel and contractors. The decrease in 2003 was the
result of the transfer on April 28, 2003 of all employees in connection with the
sale of our business to STMicroelectronics.

                                       14
<Page>

SELLING, MARKETING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, marketing,
general and administrative expenses consist primarily of salaries and other
personnel-related expenses for sales and marketing personnel, executive,
accounting and administrative personnel, professional fees and other general
corporate expenses. The significant decrease in 2002 was primarily a result of
the termination of our sales and marketing personnel.

INCOME (LOSS) FROM DISCONTINUED OPERATIONS. As a result of our sale of the ASIC
business of Silicon Value, the results of operations of the ASIC business are
reported separately as a discontinued operation in our statement of operations
for the year ended December 31, 2001 and 2002. The impairment of the goodwill
and other intangible assets in 2001 was due to the decrease in the value of our
investment in Silicon Value as a result of the downturn in the
telecommunications industry. Loss from discontinued operations in 2001 includes
goodwill amortization in the amount of $2.3 million and impairment of property
and equipment in the amount of $0.8 million.

OTHER INCOME. Other income consists of income generated from STMicroelectronics.
In 2003, we had $12.8 million of other income, which consists of payments under
the assets purchase agreement signed with STMicroelectronics in April 2003. In
2002, we had $9.7 million of other income, which consists of payments under the
technology transfer agreement signed with STMicroelectronics in February 2002,
net of transaction costs.

FINANCIAL INCOME (EXPENSES), NET. Financial income consists primarily of
interest on marketable securities and bank deposits. Financial expense consists
of interest on the loan received from Orckit during the second half of 2000,
which was repaid in 2002 and 2003, and bank credit, which was fully repaid as of
December 31, 2001.

NET INCOME (LOSS). As a result of the foregoing, we had a net loss of $18.2
million in 2001. The net loss for 2001 includes a net loss of $4.0 million from
discontinued operations.

In 2002 we generated net income of $8.8 million, primarily as a result of
payments in the amount of $9.7 million received from STMicroelectronics under
our technology transfer agreement, net of transaction expenses.

In 2003, we generated net income of $12.0 million, primarily as a result of the
receipt of proceeds in the amount of $12.8 million in connection with our asset
sale to STMicroelectronics.

IMPACT OF INFLATION, DEVALUATION AND FLUCTUATION OF CURRENCIES ON RESULTS OF
OPERATIONS LIABILITIES AND ASSETS

A devaluation of the new Israeli shekel in relation to the U.S. dollar would
have the effect of decreasing the dollar value of our assets in new Israeli
shekels to the extent the underlying value is new Israeli shekel-based. Such a
devaluation also would have the effect of reducing the U.S. dollar amount of any
of our liabilities which are payable in new Israeli shekels (unless such
payables are linked to the U.S. dollar).

Most of our revenues were denominated in dollars and our expenses in new Israeli
shekels. Our expenses in new Israeli shekels were principally payroll. Our
results of operations were adversely affected by increases in the rate of
inflation in Israel when such increases are not offset by a corresponding
devaluation of the new Israeli shekel against the U.S. dollar. We do not
presently engage in any hedging or other transactions intended to manage risks
relating to foreign currency exchange rate fluctuations.

                                       15
<Page>

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

<Table>
<Caption>
                                                                ISRAEL INFLATION
    YEARS ENDED       ISRAELI INFLATION   ISRAELI DEVALUATION     ADJUSTED FOR
    DECEMBER 31,            RATE                  RATE            DEVALUATION
-------------------   -----------------   -------------------   ----------------
<S>                         <C>                  <C>                  <C>
1999...............          1.3                 (0.2)                 1.5
2000...............          0.0                 (2.7)                 2.7
2001...............          1.4                  9.3                 (7.9)
2002 ..............          6.5                  7.3                 (0.8)
2003 ..............         (1.9)                (7.6)                 5.7
</Table>

B. LIQUIDITY AND CAPITAL RESOURCES

In June 2000, in connection with our separation from Orckit, we borrowed $20.0
million under a credit facility from Orckit. In 2002, we repaid an aggregate of
$13.0 million of outstanding principal. We repaid the balance of $7.0 million in
2003, as well as net accrued interest of $3.0 million. For additional
information about this credit facility, please see "--Related Party
Transactions" below.

In 2000, we also received a $10.0 million short-term credit line from a bank,
which we fully repaid during 2001. In April 2001, we sold the ASIC business of
Silicon Value for total consideration of $21.7 million ($18.0 in the form of
cash, of which $16.2 million was paid in 2002 and the remaining $1.8 million was
paid in 2003).

In 2002 and 2003, substantially all of our revenues and other income arose from
our agreements with STMicroelectronics, including the sale of our business to
STMicroelectronics in April 2003.

In addition, in February 2003, the District Court of Tel Aviv approved our
application for the repurchase of our ordinary shares at an aggregate price of
up to $2.0 million. As of December 31, 2003, we repurchased 4,341,154 ordinary
shares at an aggregate price of $1.1 million.

We had working capital of $(4.37) million as of December 31, 2001, $3.95 million
as of December 31, 2002 and $10.1 million as of December 31, 2003.

During 2001, we had net losses and as a result used more cash than we generated
from operations. We used cash in our operating activities in the amount $17.2
million in 2001. During 2002, we had net income of $8.8 million and we generated
$9.0 million of cash from operations. During 2003, we had net income of $12.0
million and we used $98,000 in our operations.

                                       16
<Page>

We generated net cash from investing activities of $15.0 million in 2001, which
consisted principally of proceeds from disposition of the ASIC business of
Silicon Value, $1.8 million in 2002 and 3.6$ million in 2003.

We had a negative cash flow from financing activities of $8.9 million in 2001,
principally due to the repayment of short-term bank credit. In 2002, we had a
negative cash flow from financing activities of $13.0 million due to the
repayment of $13.0 million of the loan from Orckit. In 2003, we had a negative
cash flow from financing activities of $8.2 million, principally due to the
repayment of $7.0 million of the loan from Orckit.

GOVERNMENT GRANTS

Under the Law for the Encouragement of Industrial Research and Development,
1984, or the R&D Law, research and development programs which meet specified
criteria and are approved by a governmental committee of the Office of the Chief
Scientist of the Ministry of Industry, Trade and Labor of the Government of
Israel are eligible for grants of up to 50% of the project's expenditure, as
determined by the research committee, in exchange for the payment of royalties
from the sale of products developed in accordance with the program.

In 2001, 2002 and 2003 we recognized grants from the Office of the Chief
Scientist in the amount of approximately $1.6, million, $1.5 million and $
400,000, respectively.

Our agreements with STMicroelectronics were approved by the Office of the Chief
Scientist. This approval was conditioned upon the undertaking of
STMicroelectronics to comply with the provisions of the R&D Law and to pay to
the Office of the Chief Scientist royalties on the sale of the purchased
products that are based on our funded intellectual property.

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 and product applications. As a result of
the agreements with STMicroelectronics, from February 2002 through April 2003
our activities consisted primarily of research and development services provided
to STMicroelectronics. Following the sale of our business to STMicroelectronics
in April 2003, we conduct no research and development activities.

Our gross research and development expenditures were $9.5 million in 2001, $6.4
million in 2002 and $2.3 in 2003. In 2001, we recognized grants from the Office
of the Chief Scientist of approximately $1.6 million and thus the net research
and development expenses was $7.9 million. In 2002, our research and development
expenditures were funded by payments from STMicroelectronics pursuant to our
development, marketing and services agreement and from grants in the aggregate
amount of $1.5 million from the Office of the Chief Scientist. In 2003, we
recognized grants from the Office of the Chief Scientist of approximately
$400,000. Accordingly, our net research and development expenses were $1.8
million.

                                       17
<Page>

D. TREND INFORMATION

Not applicable.

E. OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

As of December 31, 2003, we had no contractual obligations of the type required
to be disclosed in this section.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT AND EMPLOYEES

     The following table lists our current directors and senior managers as of
March 31, 2004:

<Table>
<Caption>
NAME            AGE    POSITION
<S>             <C>    <C>
Izhak Tamir     51     Chairman of the Board and Chief Executive Officer
Harel Kodesh    45     External Director
Eric Paneth     54     Director
Irit Gal        52     External Director
</Table>

The business experience of each of our directors and executive officers is as
follows:

IZHAK TAMIR has served as Chairman of our Board of Directors since February 2000
and as our Chief Executive Officer since August 2003. He has served as President
and a Director of Orckit since its founding in 1990. From 1978 to 1985, he was a
senior engineer in the Israeli Government. Mr. Tamir holds an engineering degree
from the Israel Institute of Technology, commonly known as the Technion, and an
M.B.A. from Tel Aviv University.

HAREL KODESH has served as one of our Directors since June 2000. Since July
2003, Mr. Kodesh has served as Chief Product Officer for Amdocs, a worldwide
leader in billing and customer care systems. From 2000 to 2003, he served as
President and Chief Executive Officer of Wingcast Corporation, a joint venture
between Ford Motor Corporation and Qualcomm Inc. that offers telematics services
to people on the move. From 1992 to 2000, he served in a variety of technical
and managerial roles at Microsoft Corporation, most recently as Vice President
of the productivity appliance division and, prior to that time, as Vice
President of the information appliances division. Mr. Kodesh holds a B.S. degree
in Computer Engineering and an M.S. degree in Electrical Engineering, both from
the Technion.

                                       18
<Page>

ERIC PANETH has served as one of our Director since February 2000 and served as
our President from February 2000 to June 2000. Mr. Paneth has also served as
Chairman of the Board of Directors and Chief Executive Officer of Orckit since
its founding in 1990. From 1975 until 1983, Mr. Paneth was a senior engineer in
the Israeli Government, and from 1985 to 1990, was a technical department head
in the Israeli Ministry of Defense. Mr. Paneth holds an advanced engineering
degree from the Technion.

IRIT GAL has served as one of our external directors since August 2003. Since
September 2002,she has served as an Associate at Stanford University,
California, Office of Technology Licensing. Prior to that, she served as a
director and a manager for investments and strategic relations of ZettaLight, an
optical communications company. From May 2000 to February 2002, she served as
Vice President of Runway Telecom Ventures, an Israeli-based venture capital fund
founded by Alcatel and others. From June 1999 to 2000, she served as Vice
President for marketing and business development of Ceramight Composites, which
operates in the area of ceramic composites. From 1997 to 1999, she served as a
manager with PricewaterhouseCoopers in the areas of business development and
corporate finance for technology companies. Ms. Gal holds B.S. and M.S. degrees
in Chemical Engineering from the Technion and an M.A. degree in Economics from
Queens College of the City University of New York.

There are no family relationships between any director or senior manager. There
are no arrangements or understandings between any director or senior manager and
any other person pursuant to which the director or senior manager was selected.

B. COMPENSATION

The aggregate direct remuneration, including fringe benefits commonly provided
by companies in Israel, paid or accrued by us to all persons as a group (six
persons) who served in the capacity of director or executive officer in the year
ended December 31, 2003, was approximately $25,000. The foregoing information
includes the compensation of directors who have resigned from Tikcro.

In 2003, we granted to each of our two External Directors options to purchase
100,000 ordinary shares. The options vest in three equal annual installments,
are exercisable at $0.29 per share and expire upon the earlier of the tenth
anniversary of the date of grant and six months following termination of
services as director.

C. BOARD PRACTICES

     ISRAELI COMPANIES LAW

We are subject to the provisions of the new Israeli Companies Law, 5759-1999,
and the regulations adopted thereunder.

                                       19
<Page>

     BOARD OF DIRECTORS

According to the Companies Law and our articles of association, the oversight of
the management of our business is vested in our board of directors. The board of
directors may exercise all powers and may take all actions that are not
specifically granted to our shareholders. As part of its powers, our board of
directors may cause us to borrow or secure payment of any sum or sums of money
for our purposes, at times and upon terms and conditions as it thinks fit,
including the grant of security interests in all or any part of our property.
Our board of directors may consist of not less than three nor more than 15
directors and as of the date hereof, consists of four directors, including our
external directors.

According to the Companies Law, a company's chairman of the board may not serve
as its chief executive officer, unless otherwise approved by the shareholders
for periods of up to three years. The required shareholder approval is a
majority of the shares voted on the matter, including at least two-thirds of the
shares of non-controlling shareholders voted on the matter. At the shareholder
meeting held in August 2003, our shareholders resolved to allow Mr. Tamir, our
chairman, to serve also as our chief executive officer for a period of up to
three years. Mr. Tamir did not receive any compensation for serving in such
office during 2003.

Our directors are elected at annual meetings of our shareholders by a vote of
the holders of a majority of the ordinary shares voting thereon. Generally, our
directors hold office until the next annual meeting of shareholders following
the annual meeting at which they were elected. Directors may be removed earlier
from office by resolution passed at a general meeting of our shareholders.
Pursuant to the Israeli Companies Law, external directors are elected by
shareholders for a three-year term and may be re-elected by shareholders for an
additional three-year term.

Unless otherwise unanimously decided by our directors, a quorum at a meeting of
the board of directors is constituted by the presence of a majority of the
directors then in office who are lawfully entitled to participate in the
meeting, but not less than two directors. A resolution proposed at a meeting of
the board of directors is deemed adopted if approved by a majority of the
directors present and voting on the matter.

There are no arrangements or understandings between us and any of our directors
for benefits upon termination of service.

     EXTERNAL DIRECTORS

     QUALIFICATIONS OF EXTERNAL DIRECTORS

Under the Companies Law, companies incorporated under the laws of Israel whose
shares are listed for trading on a stock exchange or have been offered to the
public in or outside of Israel are required to appoint 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 an external director, or had, during the two years preceding that date
any affiliation with:

                                       20
<Page>

          o    the company;

          o    any entity controlling the company; or

          o    any entity controlled by the company or by its controlling
               entity.

The term affiliation includes:

          o    an employment relationship;

          o    a business or professional relationship maintained on a regular
               basis;

          o    control; and

          o    service as an office holder.

The Companies Law defines the term "office holder" of a company to include a
director, the chief executive officer, the chief business manager, a vice
president and any officer that reports directly to the chief executive officer.

No person can serve as an external director if the person's position or other
business creates, or may create conflict of interests with the person's
responsibilities as an external director or may otherwise interfere with the
person's ability to serve as an external director. 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.

     ELECTION OF EXTERNAL DIRECTORS

External directors are to be elected by a majority vote at a shareholders'
meeting, provided that either:

          o    at least one third of the shares of non-controlling shareholders
               voted at the meeting vote in favor of the election; or

          o    the total number of shares voted against the election of the
               external director does not exceed one percent of the aggregate
               voting rights in the company.

The initial term of an external director is three years and may be extended for
an additional three years. External directors may be removed from office only by
the same percentage of shareholders as is required for their election, or by a
court, and then only if the external directors cease to meet the statutory
qualifications for their appointment or if they violate their duty of loyalty to
the company. Each committee of a company's board of directors is required to
include at least one external director, except for the audit committee which is
required to include all the external directors. Irit Gal commenced her first
term as an External Director on August 28, 2003, and Harel Kodesh commenced his
second term as an External Director on September 28, 2003.

                                       21
<Page>

     AUDIT COMMITTEE

Under the Companies Law, our board of directors is required to appoint an audit
committee, comprised of at least three directors including all of the external
directors, but excluding:

          o    the chairman of the board of directors; and

          o    a controlling shareholder or a relative of a controlling
               shareholder and any director employed by the company or who
               provides services to the company on a regular basis.

The role of the audit committee is to examine flaws in the business management
of the company, in consultation with the internal auditor and the company's
independent accountants, suggest appropriate course of action and to approve
specified related party transactions. Our audit committee consists of our two
external directors and one additional director, Eric Paneth.

We have adopted an audit committee charter, which sets forth the powers and
responsibilities of our audit committee. Our audit committee assists the board
of directors in fulfilling its responsibility for oversight of the quality and
integrity of our accounting, auditing and financial reporting practices and
financial statements and the independence qualifications and performance of our
independent auditors. Our audit committee also has the authority and
responsibility to oversee our independent auditors, to recommend for shareholder
approval the appointment and, where appropriate, replacement of our independent
auditors and to pre-approve audit engagement fees and all permitted non-audit
services and fees. Our audit committee also serves as our qualified legal
compliance committee, responsible for investigating reports, made by attorneys
appearing and practicing before the SEC in representing us, of perceived
material violations of U.S. federal or state securities laws, breaches of
fiduciary duty or similar violations by us or any of our agents.

     APPROVAL OF INTERESTED PARTY TRANSACTIONS

The approval of the audit committee is required to effect specified actions and
transactions with office holders, controlling shareholders and entities in which
they have a personal interest. An audit committee may not approve an action or a
transaction with related parties or with its office holders unless at the time
of approval the two external directors are serving as members of the audit
committee and at least one of whom was present at the meeting in which an
approval was granted.

                                       22
<Page>

     INTERNAL AUDITOR

Our board of directors has appointed an internal auditor. Under the Companies
Law, the role of the internal auditor is to examine, among other things, whether
the company's actions comply with the law and orderly business procedure. Under
the Companies Law, the internal auditor may not be an interested party, an
office holder or a relative of any of the foregoing, nor may the internal
auditor be the company's independent accountant or its representative. The
Companies Law defines the term "interested party" to include a person who holds
5% or more of the company's outstanding share capital or voting rights, a person
who has the right to appoint one or more directors or the general manager, or
any person who serves as a director or as the general manager.

     APPROVAL OF SPECIFIED RELATED PARTY TRANSACTIONS UNDER ISRAELI LAW

          FIDUCIARY DUTIES OF OFFICE HOLDERS

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 with 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:

          o    information on the advisability of a given action brought for his
               approval or performed by him by virtue of his position; and

          o    all other important information pertaining to these actions.

The duty of loyalty of an office holder includes a duty to:

          o    refrain from any conflict of interest between the performance of
               his duties in the company and the performance of his other duties
               or his personal affairs;

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

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

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

          DISCLOSURE OF PERSONAL INTEREST OF AN OFFICE HOLDER

The Israeli Companies Law requires that an office holder of a company disclose
to the company any personal interest that he may have and all related material
information known to him, 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. If the transaction is an extraordinary
transaction, the office holder must also disclose any personal interest held by:

                                       23
<Page>

          o    the office holder's spouse, siblings, parents, grandparents,
               descendants, spouse's descendants and the spouses of any of these
               people; or

          o    any corporation in which the office holder is a 5% or greater
               shareholder, director or general manager or in which he has the
               right to appoint at least one director or the general manager.

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

          o    other than in the ordinary course of business;

          o    otherwise than on market terms; or

          o    that is likely to have a material impact of the company's
               profitability, assets or liabilities.

Once an office holder complies with the above disclosure requirement, the board
of directors may approve a transaction between the company and an office holder,
or a third party in which an office holder has a personal interest. A
transaction that is adverse to the company's interest may not be approved.

If the transaction is an extraordinary transaction, approval of both the audit
committee and the board of directors is required. Under specific circumstances,
shareholder approval may also be required. A director who has a personal
interest in an extraordinary transaction that 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, unless a majority of the members of the board of directors
or the audit committee, as the case may be, has a personal interest in the
matter. If a majority of members of the board of directors have a personal
interest therein, shareholder approval is also required.

          DISCLOSURE OF PERSONAL INTERESTS OF A CONTROLLING SHAREHOLDER

Under the Israeli Companies Law, the disclosure requirements that apply to an
office holder also apply to a controlling shareholder of a public company. A
controlling shareholder is a shareholder who has the ability to direct the
activities of a company, including, for this purpose, a shareholder that owns
25% or more of the voting rights if no other shareholder owns more than 50% of
the voting rights, but excluding a shareholder whose power derives solely from
his or her position on the board of directors or any other position with the
company. Extraordinary transactions with a controlling shareholder or in which a
controlling shareholder has a personal interest, and the engagement of a
controlling shareholder as an office holder or employee, require the approval of
the audit committee, the board of directors and the shareholders of the company
in that order. The shareholder approval must be by a majority of the shares
voted on the matter, provided that either:

          o    at least one-third of the shares of shareholders who have no
               personal interest in the transaction and who vote on the matter
               vote in favor thereof; or

                                       24
<Page>

          o    the shareholders who have no personal interest in the transaction
               who vote against the transaction do not represent more than one
               percent of the voting rights in the company.

Shareholders generally have the right to examine any document in the company's
possession pertaining to any matter that requires shareholder approval.

D. EMPLOYEES

As a result of the sale of our business to STMicroelectronics in April 2003 and
the transfer or resignation of our employees, since May 31, 2003, we have no
employees (other than Izhak Tamir, our Chief Executive Officer). As of December
31, 2002, we had 67 employees, 66 based in Israel and one in the United States,
of whom 57 employees were engaged in research and development, none in sales and
marketing and 10 in management, administration and operations. As of December
31, 2001, we had 71 employees, 66 based in Israel and 5 in the United States, of
whom 56 employees were engaged in research and development, 2 in sales and
marketing and 13 in management, administration and operations.

E. SHARE OWNERSHIP

As of May 31, 2004, Messrs. Eric Paneth and Izhak Tamir, each, directly or
through a wholly owned company, owns 2,965,105 ordinary shares and options to
purchase 220,000 of our ordinary shares at NIS 0.10 per share, which is the par
value of the ordinary shares. The options are fully vested and will expire on
the earlier of ten years following the date of grant and six months following
termination of the holder's directorship. Accordingly, each of Messrs. Paneth
and Tamir beneficially owns approximately 13.3% of our ordinary shares. Except
for Messrs. Paneth and Tamir, none of our executive officers or directors
beneficially owns 1% or more of our outstanding ordinary shares.

SHARE INCENTIVE PLAN

We have a Share Incentive Plan pursuant to which options may be granted to
directors, officers, key employees, consultants and contractors of Tikcro. This
share option plan is administered by our compensation committee, which is
empowered, among other things, to recommend to our board of directors the
optionees, dates of grant and the exercise price of options. Unless otherwise
decided by our board of directors or the compensation committee, options granted
under the share option plan are be non-assignable except by the laws of descent.
Under the share option plan, the grantee is responsible for all personal tax
consequences of the grant and the exercise thereof.

As a result of the sale of our business to STMicroelectronics in April 2003, the
vesting schedules of the options held by our directors and employees were
accelerated and the expiration date of all outstanding options, other than those
held by continuing directors, was set for November 2003.

As of March 31, 2004, we had outstanding options to purchase a total of 640,000
ordinary shares. All of these options are held by our directors.

                                       25
<Page>

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 March 31, 2004, by each person who is
known to own beneficially more than 5% of the outstanding ordinary shares. The
voting rights of all major shareholders are the same as for all other
shareholders.

<Table>
<Caption>
IDENTITY OF PERSON OR GROUP   AMOUNT OWNED   PERCENT OF CLASS(1)
<S>                             <C>                 <C>
Eric Paneth(2)                  3,185,105           13.3%
Izhak Tamir(2)                  3,185,105           13.3%
</Table>

----------
(1)  Based on 23,726,401 ordinary shares outstanding on March 31, 2004.
(2)  Includes 220,000 ordinary shares issuable upon the exercise of options that
     are exercisable currently or within the next 60 days.

Clal Electronics Industries Ltd. and affiliates filed a Schedule 13D on February
14, 2003 reporting that they beneficially own 4.7% of our outstanding ordinary
shares. On June 30, 2000, they beneficially owned 12.9%, on April 30, 2001 they
beneficially owned 14.4% and on May 31, 2002 they beneficially owned 10.1% of
our outstanding ordinary shares.

As of June 20, 2004, there were 73 holders of record of our ordinary shares in
the United States who collectively held approximately 74.7% of our outstanding
ordinary shares. 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.

B. RELATED PARTY TRANSACTIONS

RELATIONSHIP BETWEEN TIKCRO AND ORCKIT

Tikcro and Orckit, except as otherwise contemplated in the agreements referred
to below, operate independently of one another as separate public companies.

We believe that all of the agreements described below have been entered into on
terms similar to terms that would be obtained from independent third parties.

The following is a summary of the material terms of the agreements entered into
by Tikcro and Orckit which define their ongoing relationship and is qualified in
its entirely by reference to the text of the agreements which are filed or
incorporated by reference as exhibits to this report. See Item 19 - "Exhibits".

                                       26
<Page>

          INTELLECTUAL PROPERTY AGREEMENT

In 2000, we entered into an agreement with Orckit for, among other things, the
assignment to us of substantially all of Orckit's DSL chip intellectual
property. In addition, Orckit agreed, for a period of two years from our
separation in June 2000, not to sell on a stand-alone basis chip products which
compete with our current line of business as it relates to the technology
assigned to us. In connection with our transaction with STMicroelectronics,
Orckit agreed to extend this period to January 15, 2004.

          CREDIT FACILITY

In 2000, we borrowed $20.0 million under a variable rate revolving credit
facility with Orckit. The credit facility was to mature on March 1, 2005 and
initially accrued interest at the rate of 12-month LIBOR plus 2.0% per annum.
Effective January 1, 2001, the interest was changed to 6% per annum. This
revolving credit facility was secured by a first priority interest in all our
present and future assets.

Pursuant to the terms of the credit facility, Orckit may have been entitled to
accelerate the repayment of the loan as a result of our transaction with
STMicroelectronics in February 2002. In connection with that transaction, we
entered into an agreement with Orckit pursuant to which we paid in 2002 to
Orckit an aggregate of $13.0 million of outstanding principal. We repaid the
remaining principal and accrued interest in the aggregate amount of $10.0
million in 2003.

          OUR OBLIGATION TO ISSUE SHARES UPON CONVERSION OF ORCKIT'S NOTES

On March 13, 2000, Orckit raised approximately $125 million in a private
placement of 5.75% convertible subordinated notes due April 2005. Holders of the
notes are entitled to convert the notes into the ordinary shares Orckit and
Tikcro, at a conversion rate of 2.34962 ordinary shares of Orckit (after giving
effect to a one-for-five reverse share split) and 11.7481 ordinary shares of
Tikcro per $1,000 principal amount of notes. In 2001, Orckit converted notes
that it repurchased from holders and has received from us an aggregate of
364,191 ordinary shares upon said conversions. On April 1, 2004, Orckit redeemed
the balance of the notes.

          SERVICES AGREEMENT

          On July 1, 2003, Tikcro signed a Services Agreement with Orckit for
administrative services, including bookkeeping and office services, as well as
for certain services related to the evaluation of prospective opportunities for
a business combination. Total fees to Orckit for such services are $100,000 per
year.

C. INTERESTS OF EXPERTS AND COUNSEL

          Not applicable.

                                       27
<Page>

ITEM 8.   FINANCIAL INFORMATION

A.   CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

          See financial statements under Item 18.

     LEGAL PROCEEDINGS

          We have no material legal proceedings.

B.   SIGNIFICANT CHANGES

          None.

ITEM 9.   THE OFFER AND LISTING

A.   OFFER AND LISTING DETAILS

Our ordinary shares are currently quoted on the OTC Bulletin Board, an
electronic quotation medium regulated by the National Association of Securities
Dealers, under the symbol TKCRF. The OTC Bulletin Board typically has lower
liquidity than the Nasdaq National Market.

Since June 26, 2000, the following table sets forth, for the periods indicated,
the high and low sales prices of our ordinary shares as reported on the Nasdaq
National Market or the OTC Counter Bulletin Board.

                                       28
<Page>

<Table>
<Caption>
Calendar Year                      Price Per Share
-------------------------------   ------------------
                                    High       Low
                                  --------   -------
<S>                               <C>        <C>
2000 (commencing June 26, 2000)   $  20.25   $  1.50
2001                                  3.53      0.23
2002                                  0.43      0.12
2003                                  0.45      0.12
</Table>

<Table>
<Caption>
Calendar Period                    Price Per Share
-------------------------------   ------------------
                                    High       Low
                                  --------   -------
<S>                                   <C>       <C>

2004

      First Quarter                   0.61      0.32

2003

      First Quarter                   0.22      0.12

      Second Quarter                  0.34      0.15

      Third Quarter                   0.34      0.25

      Fourth Quarter                  0.45      0.27

2002

      First Quarter                   0.43      0.14

      Second Quarter                  0.20      0.14

      Third Quarter                   0.24      0.12

      Fourth Quarter                  0.17      0.12
</Table>

<Table>
<Caption>
Calendar Month                     Price Per Share
-------------------------------   ------------------
                                    High       Low
                                  --------   -------
<S>                                   <C>       <C>

2004

      May                             0.35      0.32

      April                           0.39      0.33

      March                           0.43      0.36

      February                        0.48      0.36

      January                         0.61      0.32

2003

      December                        0.38      0.31
</Table>

                                       29
<Page>

B.   PLAN OF DISTRIBUTION

Not applicable

C.   MARKETS

Our ordinary shares are quoted on the OTC Bulletin Board under the symbol TKCRF.

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.

B.  MEMORANDUM AND ARTICLES OF ASSOCIATION

OBJECTS AND PURPOSES

We were organized under Israeli law on December 14, 1999 as a private company,
and on June 30, 2000 became a public company. Our registration number with the
Israeli registrar of companies is 51-286883-7. Our object is to engage, directly
or indirectly, in any lawful undertaking or business whatsoever, including,
without limitation, as stipulated in section 2 of our Memorandum of Association,
which was filed with the Israeli registrar of companies.

                                       30
<Page>

TRANSFER OF SHARES AND NOTICES

Fully paid ordinary shares may be freely transferred pursuant to our articles of
association unless the transfer is restricted or prohibited by another
instrument. Unless otherwise prescribed by law, shareholders of record will be
provided at least 21 calendar days' prior notice of any general shareholders
meeting.

The ownership or voting of our ordinary shares by non-residents of Israel,
except with respect to citizens of countries which are in a state of war with
Israel, is not restricted in any way by our Memorandum of Association or
Articles of Association or by the laws of the State of Israel.

DIVIDEND AND LIQUIDATION RIGHTS

Our board of directors is authorized to declare dividends, subject to applicable
law. Dividends may be paid only out of profits and other surplus, as defined in
the Companies Law, as of the end of the most recent financial statements or as
accrued over a period of two years, whichever is higher. Alternatively, if we do
not have sufficient profits or other surplus, then permission to effect a
distribution can be granted by order of an Israeli court. In any event, a
distribution is permitted only if there is no reasonable concern that the
dividend will prevent us from satisfying our existing and foreseeable
obligations as they become due.

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. Dividend and 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.

VOTING, SHAREHOLDERS' MEETINGS AND RESOLUTIONS

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. No cumulative
voting is permitted.

We have two types of general shareholders meetings: the annual general meetings
and extraordinary general meetings. These meetings may be held either in Israel
or in any other place the board of directors determines. An annual general
meeting must be held in each calendar year, but not more than 15 months after
the last annual general meeting. Our board of directors may convene an
extraordinary meeting, from time to time, at its discretion and is required to
do so upon the request of any two directors, at least 25% of the directors, or
shareholders holding at least 5% of our ordinary shares. 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 may designate with the consent of the holders of a majority of the
voting power represented at the meeting and voting on the matter adjourned. At
such reconvened meeting the required quorum consists of any two members present
in person or by proxy.

                                       31
<Page>

Under the Companies Law and our articles of association, all resolutions of the
shareholders require a simple majority of the shares present, in person or by
proxy, and voting on the matter.

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.

DUTIES OF SHAREHOLDERS

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 and to refrain from abusing his power in Tikcro, such as in
voting in the general meeting of shareholders on the following matters:

     o    any amendment to the articles of association;

     o    an increase of our authorized share capital;

     o    a merger; or

     o    approval of certain actions and transactions which require shareholder
          approval.

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

Furthermore, any controlling shareholder, any shareholder who knows that it
possesses the power to determine the outcome of a shareholder vote and any
shareholder that, pursuant to the provisions of the articles of association, has
the power to appoint or to prevent the appointment of an office holder in Tikcro
or any other power toward Tikcro is under a duty to act in fairness towards us.
The Companies Law does not describe the substance of this duty of fairness.

MERGERS AND ACQUISITIONS UNDER ISRAELI LAW

The Israeli Companies Law includes provisions that allow a merger transaction
and requires that each company that is a party to a merger have the transaction
approved by its board of directors and a vote of the majority of its shares, at
a shareholders' meeting called on at least 21 days' prior notice. For purposes
of the shareholder 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 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 70 days have
passed from the time that a proposal of the merger has been filed with the
Israeli Registrar of Companies by each merging company.

                                       32
<Page>

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% or greater shareholder of the
company and there is no existing 25% or greater shareholder in the company. 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% or
greater shareholder of the company and there is no existing majority shareholder
in the company. This requirement does not apply if the acquisition occurs in the
context of a private placement by the company. If following any acquisition of
shares, the acquiror will hold 90% or more of the company's shares, the
acquisition may not be made other than through a tender offer to acquire all of
the shares of such class. If the shares tendered in the tender offer would
result in the acquirer holding more than 95% of the outstanding shares, all the
shares that the acquirer offered to purchase will be transferred to it. The law
provides for appraisal rights if a shareholder files a request in court within
three months following the consummation of a full tender offer.

Finally, Israeli tax law treats stock-for-stock acquisitions between an Israeli
company and a foreign company less favorably than does U.S. tax law. For
example, Israeli tax law may, under certain circumstances, subject a shareholder
who exchanges his ordinary shares for shares in another corporation to taxation
prior to the sale of the shares received in such stock-for-stock swap.

MODIFICATION OF CLASS RIGHTS

Our articles of association provide that the rights attached to any class
(unless otherwise provided by the terms of that class), such as voting, rights
to dividends and the like, may be varied by a shareholders resolution, subject
to the sanction of a resolution passed by the holders of a majority of the
shares of that class at a separate class meeting.

INDEMNIFICATION, EXCULPATION AND INSURANCE OF OFFICE HOLDERS

          EXCULPATION OF OFFICE HOLDERS

Under the Companies Law, an Israeli company may not exempt an office holder from
liability for breach of his duty of loyalty, but may exempt in advance an office
holder from liability to the company, in whole or in part, for a breach of his
duty of care provided the articles of association of the company allow it to do
so. Our articles of association allow us to exempt our office holders to the
fullest extent permitted by law.

          INSURANCE OF OFFICE HOLDERS

Our articles of association provide that, subject to the provisions of the
Companies Law, we may enter into an insurance contract which would provide
coverage for any monetary liability incurred by any of our office holders, with
respect to an act performed in the capacity of an office holder for:

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

          o    a breach of his 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

                                       33
<Page>

          o    a financial liability imposed upon him in favor of another
               person.

          INDEMNIFICATION OF OFFICE HOLDERS

Our articles of association provide that we may indemnify an office holder
against the following obligations and expenses imposed on the office holder with
respect to an act performed in the capacity of an office holder:

          o    a financial obligation imposed on him in favor of another person
               by a court judgment, including a compromise judgment or an
               arbitrator's award approved by the court; and

          o    reasonable litigation expenses, including attorneys' fees,
               expended by the office holder or charged to him by a court in
               connection with:

          o    proceedings we institute against him or that are instituted on
               our behalf or by another person;

          o    a criminal charge from which he is acquitted; or

          o    a criminal proceeding in which he is convicted of an offense that
               does not require proof of criminal intent.

Our articles of association also include provisions:

          o    authorizing us to undertake to indemnify an office holder as
               described above, provided that the undertaking is limited to
               those types of events which our board of directors deems to be
               anticipated when the undertaking is given and to an amount
               determined by our board of directors to be reasonable under the
               circumstances; and

          o    authorizing us to retroactively indemnify an officer or director.

          LIMITATIONS ON EXCULPATION, INSURANCE AND INDEMNIFICATION

The Israeli Companies Law provides that a company may not exculpate or indemnify
an office holder, or enter into an insurance contract which would provide
coverage for any monetary liability incurred as a result of any of the
following:

          o    a breach by the office holder of his duty of loyalty unless, with
               respect to insurance coverage, the office holder acted in good
               faith and had a reasonable basis to believe that the act would
               not prejudice the company;

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

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

          o    any fine levied against the office holder.

                                       34
<Page>

In addition, under the Companies Law, exculpation of, indemnification of, and
procurement of insurance coverage for, our office holders must be approved by
our audit committee and our board of directors and, if the beneficiary is a
director, by our shareholders.

Our articles of associations also provide that, subject to the provisions of
applicable law, we may procure insurance for or indemnify any person who is not
an office holder, including without limitation, any of our employees, agents,
consultants or contractors.

C. MATERIAL CONTRACTS

The agreements that we entered into with Orckit are summarized below under Item
7.B "Major Shareholders and Related Party Transactions--Related Party
Transactions" and also are incorporated by reference as exhibits to this report.

AGREEMENTS WITH STMICROELECTRONICS

On February 14, 2002, we entered into three strategic agreements with
STMicroelectronics NV, and its Israeli subsidiary, ST Microelectronics Ltd.
STMicroelectronics is a large, multi-national semiconductor company
headquartered in Geneva and listed on the New York Stock Exchange. Our
agreements with STMicroelectronics consist of the following: a technology
transfer agreement; a development, marketing and services agreement; and an
option agreement. In addition, on April 28, 2003, we entered into an asset
purchase agreement with STMicroelectronics. Each of these agreements is
summarized below. This summary is qualified in its entirety by reference to the
full agreements, which are filed or incorporated by reference as exhibits to
this annual report. See Item 19 - "Exhibits". In connection with the agreements
entered into on February 14, 2002, we entered into an agreement with Orckit
relating to our loan agreement with Orckit. That agreement is described above in
Item 7.B "Major Shareholders and Related Party Transactions--Related Party
Transactions."

          TECHNOLOGY TRANSFER AGREEMENT

Pursuant to the technology transfer agreement, we granted STMicroelectronics
co-ownership rights to all of our intellectual property in the fields of DSL,
network traffic management applied to DSL semiconductor products and DSL
chipsets existing on the date of the agreement.

The technology transfer agreement further provides for the transfer to
STMicroelectronics of ownership over our existing PeakADSL and Condor integrated
circuits, and PeakVDSL, PeakSHDSL and Perflow integrated circuits still under
development. In addition, we transferred to STMicroelectronics ownership of
rights under certain design wins.

In consideration for the above, STMicroelectronics paid us on June 4, 2002 an
amount of $9.0 million. In addition, STMicroelectronics paid us $1.0 million on
February 22, 2002 in exchange for co-ownership rights with respect to certain
VDSL patents and certain services that we provided to STMicroelectronics with
respect to a research and development project.

                                       35
<Page>

We made certain representations with respect to ourselves and the transferred
technology and products and undertook not to grant to any third party any rights
in the transferred technology during that one-year period.

          DEVELOPMENT, MARKETING AND SERVICES AGREEMENT

Pursuant to the development, marketing and services agreement, we were required
to provide STMicroelectronics with research and development and marketing
services in the DSL field, as determined by STMicroelectronics from time to
time. The performance of the services commenced upon the closing of the
technology transfer agreement and was scheduled to expire on April 15, 2003. It
was subsequently extended until April 28, 2003.

In consideration for the services and certain intellectual property rights in
the technology and products developed during the term of the agreement,
STMicroelectronics was required to pay us $2.0 million for each three-month
period in which the services were rendered, commencing on January 15, 2002.

Subject to STMicroelectronics's compliance with the terms of the development,
marketing and services agreement, the DSL design wins and DSL products developed
by our workforce during the term of the agreement were to be solely owned by
STMicroelectronics. However, all intellectual property developed by such
workforce during the term of the development, marketing and services agreement
was to be jointly owned by STMicroelectronics and us.

          OPTION AGREEMENT

Under the option agreement, we granted STMicroelectronics, subject to all
requirements and consents required under Israeli law and under applicable
regulations of the Securities and Exchange Commission, the right to acquire our
business via a merger between us and a wholly-owned Israeli subsidiary of
STMicroelectronics. This option was exercisable at any time until January 15,
2003. In addition, STMicroelectronics granted us the option to cause
STMicroelectronics to effect such merger, subject to certain conditions. Our
option was exercisable at any time between January 16, 2003 and January 31,
2003. In lieu of structuring the acquisition of our business by
STMicroelectronics as a merger, STMicroelectronics may elect to structure it as
a purchase of assets and assumption of certain liabilities, regardless of which
party exercises its option.

The consideration for the acquisition of our business was $12.0 million, subject
to certain adjustments. In the event of an asset sale, the consideration would
be adjusted by the aggregate amount of certain unfunded employee-related
liabilities, overdue current liabilities that have not been paid under their
original terms of payment and accounts receivable sold that have not yet
expired.

STMicroelectronics exercised its option to purchase our business on January 15,
2003 and, in accordance with the option agreement, elected to structure the deal
as a purchase of assets and assumption of certain liabilities. Accordingly, we
entered into an asset purchase agreement with STMicroelectronics dated as of
April 28, 2003, which is summarized below.

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          ASSET PURCHASE AGREEMENT

Under the asset purchase agreement, STMicroelectronics acquired all of our
assets and assumed all of our liabilities other than the following liabilities:
(i) our financial indebtedness (including our debt to Orckit); (ii) our
liabilities towards our subsidiaries and our subsidiaries' liabilities to us;
(iii) tax liabilities (other than value added tax, if any, which is to be borne
by STMicroelectronics); (iv) liabilities towards the Office of Chief Scientist
with respect to our development, marketing and services agreement with
STMicroelectronics; and (v) any other liability which is actually known to us
and not disclosed to STMicroelectronics.

The purchase price for the acquisition of our business was $12.8 million,
subject to certain adjustments.
STMicroelectronics hired most of our employees under terms of employment
substantially identical to the terms under which we had employed these
employees.

We have undertaken additional covenants in the asset purchase agreement,
including the following: (i) the obligation to change our corporate name to a
name that does not include the word "Tioga"; (ii) the obligation not to engage,
for a period of three years, in any business that competes with our business as
conducted prior to the closing of the asset purchase agreement; and (iii) the
obligation not to solicit, for a period of two years, the services of any
employee of STMicroelectronics previously employed by us or to otherwise
interfere with the relationship between STMicroelectronics and any such
employees.

In February 2004, we reached an agreement with STMicroelectronics that settled
certain reciprocal financial claims, including with respect to an escrow account
which was established under the asset purchase agreement.

D. EXCHANGE CONTROLS

There are currently no Israeli currency control restrictions on payments of
dividends or other distributions with respect to our ordinary shares or the
proceeds from the sale of the shares, except for the obligation of Israeli
residents to file reports with the Bank of Israel regarding certain
transactions. However, legislation remains in effect pursuant to which currency
controls can be imposed by administrative action at any time.

E. TAXATION

THE FOLLOWING IS A GENERAL SUMMARY ONLY AND SHOULD NOT BE CONSIDERED AS INCOME
TAX ADVICE OR RELIED UPON FOR TAX PLANNING PURPOSES. 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.

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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain material U.S. federal income tax
consequences arising from the purchase, ownership and disposition of our
ordinary shares that are relevant to shareholders who are "U.S. holders," as
defined below. This summary is based upon current law, including the United
States Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations promulgated thereunder, administrative pronouncements and judicial
decisions relating thereto, and the current U.S-Israeli treaty relating to taxes
on income and capital gains, all of which are subject to change or differing
interpretations, possibly on a retroactive basis. This summary is limited to
U.S. federal income tax law, and does not consider estate or gift tax
consequences, U.S. state or local tax consequences, or taxation under the laws
of any other jurisdiction. This summary is further limited to U.S. holders that
hold our shares as capital assets within the meaning of Section 1221 of the
Code, and does not address all aspects of U.S. federal income taxation that may
be relevant to U.S. holders in light of their particular circumstances (e.g.,
persons who acquired our shares as compensation) or to certain types of U.S.
holders subject to special treatment under the U.S. federal income tax laws,
such as dealers in securities or currencies, tax-exempt plans and organizations,
regulated investment companies, life insurance companies, banks, other financial
institutions, U.S. holders who own, directly, indirectly or constructively, 10%
or more of our voting shares or U.S. holders holding our shares as part of a
"straddle," "hedge" or "conversion transaction." Accordingly, shareholders are
urged to consult with their own tax advisors to determine the tax consequences
applicable to their individual situations.

The U.S. federal income tax treatment of a partner in a partnership (or other
entity classified as a partnership for U.S. federal income tax purposes) that
holds the notes generally will depend on such partner's particular circumstances
and on the activities of the partnership. Partners in such partnerships should
consult their own tax advisors.

          For purposes of the following discussion, a "U.S. holder" is a
beneficial owner of our ordinary shares that is, for U.S. federal income tax
purposes:

     o    a citizen or resident of the United States;

     o    a corporation, or other entity taxable as a corporation for U.S.
          federal income tax purposes, created or organized in or under the laws
          of the United States or of any political subdivision thereof;

     o    an estate or trust the income of which is subject to U.S. federal
          income taxation regardless of its source; or

     o    a trust if (i) the administration of the trust is subject to the
          primary supervision of a court in the United States and one or more
          U.S. persons have the authority to control all substantial decisions
          of the trust or (ii) the trust has a valid election in effect under
          applicable U.S. Treasury regulations to be treated as a U.S. person.

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SALE OR EXCHANGE OF OUR SHARES

A U.S. holder's sale or exchange of our shares generally will result in the
recognition of capital gain or loss by such U.S. holder in an amount equal to
the difference between the amount realized and the U.S. holder's tax basis in
our shares sold, although a portion of any gain may be recharacterized as
ordinary income under the PFIC rules, discussed below. Gain or loss realized on
the sale of our shares will be long-term capital gain or loss if the U.S.
holder's holding period for our shares is more than one year at the time of the
sale or exchange; otherwise such gain or loss will be short-term capital gain or
loss. Long-term capital gains of individuals are subject to U.S. federal income
tax at preferential rates, which have been reduced for long-term capital gains
recognized on or after May 6, 2003, and before January 1, 2009. Short-term
capital gains are taxed at rates applicable to ordinary income. The
deductibility of capital losses is subject to limitations. In general, any
capital gain recognized by a U.S. holder upon the sale or exchange of our shares
will be treated as U.S. source income for U.S. foreign tax credit purposes.

TREATMENT OF DIVIDEND DISTRIBUTIONS

For U.S. federal income tax purposes, subject to the PFIC rules, discussed
below, the gross amount of any distribution, including the amount of any Israeli
taxes withheld therefrom, paid to a U.S. holder with respect to our shares will
be included in his, her or its ordinary income to the extent that the dividends
are paid out of our current or accumulated earnings and profits, as determined
based on U.S. federal income tax principles. These dividends will not be
eligible for the dividends received deduction allowed to U.S. corporations under
Section 243 of the Code. Because we expect to be treated as a PFIC, as discussed
below, we do not expect that our dividends will eligible to be treated as
"qualified dividend income," which is subject to tax at reduced rates for
shareholders that are individuals, estates or trusts.

Distributions in excess of our current and accumulated earnings and profits will
be treated first as a non-taxable return of the U.S. holder's tax basis in our
shares to the extent thereof and then as a gain from the sale of our shares.

Dividends paid in new Israeli shekels, including the amount of any Israeli taxes
withheld therefrom, will be includable in income in a U.S. dollar amount based
on the exchange rate at the time of their receipt. Any gain or loss resulting
from currency fluctuations during the period from the date a dividend is paid to
the date such payment is converted into U.S. dollars generally will be treated
as ordinary income or loss.

Dividends paid to a U.S. holder with respect to our shares will be treated as
foreign source dividend income for U.S. foreign tax credit limitation purposes.
At the election of a U.S. holder, any Israeli withholding tax imposed on such
dividends will be eligible for credit against such U.S. holder's U.S. federal
income tax liability, subject to the general conditions and limitations imposed
on foreign tax credits. However, a credit generally will not be available to the
extent the Israeli rate of tax on such dividends exceeds the U.S. rate of tax
thereon. A credit also will not be available to the extent the U.S. holder has
not held the shares with respect to which the dividend is paid for at least 16
days of the 30 day period beginning on the date which is 15 days before the
ex-dividend date or to the extent such U.S. holder is under an obligation to
make related payments with respect to substantially similar or related property.
Any days during which a U.S. holder has substantially diminished its risk of
loss on our shares are not counted toward meeting the 16-day holding period
required by the statute. A U.S. holder not electing to claim a credit for
foreign taxes generally will be entitled to a deduction for any withholding
taxes imposed on dividends.

                                       39
<Page>

The calculation of allowable foreign tax credits and, in the case of a U.S.
holder that elects to deduct foreign taxes, the availability of deductions for
foreign taxes paid involve the application of rules that depend on a U.S.
holder's particular circumstances, and also may be complicated by the
application of the PFIC rules, discussed below. Accordingly, U.S. holders should
consult their own tax advisors regarding their eligibility for foreign tax
credits or deductions.

PASSIVE FOREIGN INVESTMENT COMPANY STATUS

Generally, we will be classified as a passive foreign investment company, or
PFIC, for U.S. federal income tax purposes for any tax year if, in such tax
year, either (i) 75% or more of our gross income is passive in nature, or (ii)
on average for such tax year, 50% or more of our assets (by value or, if we so
elect in certain circumstances, by adjusted tax basis) produce or are held for
the production of passive income. We believe we did not satisfy either of the
above tests for PFIC status in 2002. However, it is likely that we are properly
classified as a PFIC for 2003.

If we are treated as a PFIC for U.S. federal income tax purposes then, as to a
U.S. holder who does not make a QEF Election (as described below):

Excess distributions by us will be taxed in a special way. "Excess
distributions" are amounts received by a U.S. holder with respect to our stock
in any taxable year that exceed 125% of the average distributions received by
such U.S. holder from us in the shorter of either the three previous years or
such U.S. holder's holding period for ordinary shares before the present taxable
year. Excess distributions must be allocated ratably to each day that a U.S.
holder has held our stock. A U.S. holder must include in its gross income for
the current taxable year, as ordinary income, amounts allocated to the current
taxable year or to a prior tax year in which we were not a PFIC. A U.S. holder
must pay tax on amounts allocated to each prior taxable year in which we were a
PFIC at the highest rate in effect for that year on ordinary income plus an
interest charge at the rate applicable to tax deficiencies.

The entire amount of gain that is realized by a U.S. holder upon the sale or
other disposition of our shares will be treated in the same manner as an excess
distribution and would be subject to tax as described above, at ordinary income
rates.

The tax basis in shares of our stock that were acquired from a decedent who was
a U.S. holder will not receive a step-up to fair market value as of the date of
the decedent's death but will instead be equal to the decedent's basis, if
lower.

A U.S. holder who beneficially owns shares of a PFIC must file Form 8621 (Return
by a Shareholder of a Passive Foreign Investment Company or Qualified Electing
Fund) with the U.S. Internal Revenue Service for each tax year in which he, she
or it holds stock in a PFIC, generally by attaching the form to a timely filed
U.S. federal income tax return.

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For any tax year in which we are determined to be a PFIC, a U.S. holder may
elect to treat our shares as an interest in a qualified electing fund (a "QEF
Election"), in which case the U.S. holder will be required to include in income
currently his, her or its proportionate share of our ordinary earnings and net
capital gain in years in which we are a PFIC regardless of whether distributions
of such earnings and gain are actually distributed to such U.S. holder, but any
gain subsequently recognized upon the sale by such U.S. holder of our shares
generally will be taxed as capital gain and the denial of the basis step-up at
death described above will not apply. A QEF election, once made, will apply with
respect to the electing U.S. holder's holding of our shares in all subsequent
taxable years.

The PFIC rules also provide a "mark-to-market" election for certain PFIC stock
as an alternative to a QEF Election. However, the mark-to-market election
generally applies only to stock that is traded on certain qualified exchanges.
Because of the delisting of our shares from the Nasdaq National Market and the
Tel Aviv Stock Exchange, U.S. holders generally will not be able to make a
mark-to-market election with respect to our stock.

U.S. holders, especially U.S. holders of our ordinary shares as of January 1,
2003, should consult their own tax advisors regarding the eligibility, manner
and advisability of making a QEF Election or a mark-to-market election if we are
treated as a PFIC.

INFORMATION REPORTING AND BACKUP WITHHOLDING

Any dividends paid on our shares, and payments of the proceeds of a sale of our
shares, paid within the United States or through certain U.S.-related financial
intermediaries are subject to information reporting and may be subject to backup
withholding at the rate of 28% unless (i) the payor is entitled to, and does in
fact, presume the U.S. holder of our shares to be a corporation or other exempt
recipient or (ii) the U.S. holder provides a taxpayer identification number on a
properly completed Form W-9 and certifies that no loss of exemption from backup
withholding has occurred. The amount of any backup withholding will be allowed
as a credit against a U.S. holder's U.S. federal income tax liability and may
entitle the U.S. holder to a refund, provided that the U.S. holder files a
timely federal income tax return and furnishes the required information to the
Internal Revenue Service.

ISRAELI TAX CONSIDERATIONS

The following is a summary of the principal tax laws applicable to companies in
Israel, with special reference to their effect on us, and certain Israeli
Government programs benefiting us. This section also contains a discussion of
certain Israeli tax consequences to persons acquiring ordinary shares. This
summary does not discuss all the acts of Israeli tax law that may be relevant to
a particular investor in light of his or her personal investment circumstances
or to certain types of investors subject to special treatment under Israeli law,
such as traders in securities or persons that own, directly or indirectly, 10%
or more of our outstanding voting share capital. To the extent that the
discussion is based on new tax legislation which has not been subject to
judicial or administrative interpretation, there can be no assurance that the
views expressed in this discussion will be accepted by the tax authorities or
the courts. The discussion should not be construed as legal or professional tax
advice and is not exhaustive of all possible tax considerations.

                                       41
<Page>

Potential investors are urged to consult their own tax advisors as to the
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.

TAX REFORM

On January 1, 2003, the Law for Amendment of the Income Tax Ordinance (Amendment
No. 132), 5762-2002, as amended, commonly known as the Tax Reform, came into
effect.

          The Tax Reform, aimed at broadening the categories of taxable income
and reducing the tax rates imposed on employment income, introduced the
following measures, among other things:

o    Reduction of the tax rate levied on capital gains (other than gains from
     the sale of listed securities) derived after January 1, 2003 to a general
     rate of 25% for both individuals and corporations. Regarding assets
     acquired prior to January 1, 2003, the reduced tax rate will apply to a
     proportionate part of the gain, in accordance with the holding periods of
     the asset, before or after January 1, 2003, on a linear basis;

o    Imposition of Israeli tax on all income of Israeli residents, individuals
     and corporations, regardless of the territorial source of income, including
     income derived from passive sources such as interest, dividends and
     royalties;

o    Introduction of controlled foreign corporation (CFC) rules into the Israeli
     tax structure. Generally, under such rules, an Israeli resident who holds,
     directly or indirectly, 10% or more of the rights in a foreign corporation
     whose shares are not publicly traded (or which has offered less than 30% of
     its shares or any rights to its shares to the public), in which more than
     50% of the rights are held directly or indirectly by Israeli residents, and
     a majority of whose income in a tax year is considered passive income, will
     be liable for tax on the portion of such income attributed to his holdings
     in such corporation, as if such income were distributed to him as a
     dividend;

o    Effectuation of a new regime for the taxation of shares and options issued
     to employees, officers and directors; and

o    Introduction of tax at a rate of 25% on dividends paid by one Israeli
     company to another (which are generally not subject to tax), if the source
     of such dividends is income that was derived outside of Israel.

GENERAL CORPORATE TAX STRUCTURE

Generally, Israeli companies are subject to corporate tax at the rate of 36% on
taxable income and are subject to capital gains tax at a rate of 25% for capital
gains (other than gains deriving from the sale of listed securities) derived
after January 1, 2003. However, the effective tax rate payable by a company that
derives income from an Approved Enterprise (under the Law for the Encouragement
of Capital Investments, 1959) may be considerably less, as further discussed
below.

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On June 2, 2004, the Israeli government introduced a bill to the Israeli
parliament proposing, among others things, changes to the corporate tax rate.
The bill proposes to reduce the corporate tax rate from 36% to 35% for the 2004
tax year, 34% for the 2005 tax year, 32% for the 2006 tax year and 30% for the
2007 tax year and thereafter. In order to enact the bill as law, the bill must
be approved by the Israeli parliament and published. The bill might be modified
prior to enactment or might not be enacted at all. Accordingly, we cannot
predict the consequences of the bill to us.

TAXATION UNDER INFLATIONARY CONDITIONS

The Income Tax (Inflationary Adjustments) Law, 1985, which is referred to below
as the Inflationary Adjustments Law, attempts to overcome some of the problems
presented to a traditional tax system by an economy experiencing rapid
inflation, which was the case in Israel at the time the law was enacted.
Generally, the Inflationary Adjustments Law provides significant tax deductions
and adjustments to depreciation methods and tax loss carry forwards to
compensate for loss of value resulting from an inflationary economy. Our taxable
income is subject to the provisions of this law. However, the Minister of
Finance may, with the approval of the Knesset Finance Committee, determine by
order, during a certain fiscal year (or until February 28 of the following year)
in which the rate of the increase of the price index did not exceed, as
applicable, 3%, that all or some of the provisions of this law will not apply to
such fiscal year, or, that the rate of increase of the price index relating to
such fiscal year will be deemed to be 0%, and to make the adjustments required
to be made as a result of such determination.

The Israeli Income Tax Ordinance and regulations promulgated thereunder allow
"Foreign-Invested Companies," which maintain their accounts in U.S. dollars in
compliance with the regulations published by the Israeli Minister of Finance, to
base their tax returns on their operating results as reflected in the dollar
financials statements or to adjust their tax returns based on exchange rate
changes rather than changes in the Israeli CPI, in lieu of the principles set
forth by the Inflationary Adjustments Law. For these purposes, a
Foreign-Invested Company is a company, more than 25% of whose share capital, in
terms of rights to profits, voting and appointment of directors, and of whose
combined share and loan capital is held by persons who are not residents of
Israel. A company that elects to measure its results for tax purposes based on
the dollar exchange rate cannot change that election for a period of three years
following the election. We believe that we qualify as a Foreign Investment
Company within the meaning of the Inflationary Adjustments Law. We have not yet
elected to measure our results for tax purposes based on the U.S. dollar
exchange rate, but may do so in the future.

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TAX BENEFITS OF RESEARCH AND DEVELOPMENT

Israeli tax law permits, under certain conditions, a tax deduction in the year
incurred for expenditures, including depreciation, relating to scientific
research and development projects, if the expenditures are approved by the
relevant government ministry, determined by the field of research, and if the
research and development is for the promotion or development of the enterprise
and is carried out by, or on behalf of, a company seeking such deduction.
However, the amount of such deductible expenses shall be reduced by the sum of
any funds received through government grants for the finance of such scientific
research and development projects; expenditures not so approved are deductible
over a three-year period.

CAPITAL GAINS TAX ON SALES OF OUR ORDINARY SHARES

Israeli law generally imposes a capital gains tax on the sale of any capital
assets by residents of Israel, as defined for Israeli tax purposes, and on the
sale of any capital assets located in Israel, including shares in Israeli
companies, by both residents and non-residents of Israel, 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 real gain and inflationary surplus. The inflationary surplus is a
portion of the total capital gain that 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.

Pursuant to the Tax Reform, generally, capital gains tax is imposed on both
individuals and corporations at a general rate of 25% on real gains derived on
or after January 1, 2003 (other than gains from the sale of listed securities).
Regarding assets acquired prior to January 1, 2003, the reduced tax rate will
apply to a proportionate part of the gain, in accordance with the holding
periods of the asset, before or after January 1, 2003, on a linear basis.

In some instances where our shareholders may be liable to Israeli tax on the
sale of their ordinary shares, the payment of the consideration may be subject
to the withholding of Israeli tax at the source.

Pursuant to a treaty between the governments of the United States and Israel
concerning taxes on income, known as the U.S.-Israel Tax Treaty, the sale
exchange or disposition of ordinary shares by a person who holds the ordinary
shares as a capital asset and who qualifies as a resident of the United States
within the meaning of the treaty and who is entitled to claim the benefits
afforded to a resident by the treaty will not be subject to Israeli capital
gains tax. This exemption does not apply if: (i) the treaty U.S. resident holds,
directly or indirectly, shares representing 10% or more of our voting power
during any part of the twelve-month period preceding the applicable sale,
exchange or disposition, subject to specific conditions. In this case, the sale,
exchange or disposition would be subject to Israel tax, to the extent
applicable, as mentioned above. However, under the U.S.-Israel Tax Treaty, the
treaty U.S. resident would be permitted to claim a credit for the capital gains
tax paid in Israel against the U.S. federal income tax imposed with respect to
the applicable sale, exchange or disposition, subject to the limitations in U.S.
laws applicable to foreign tax credits. The U.S.-Israel Tax Treaty does not
relate to U.S. state or local taxes.

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TAX ON DIVIDENDS

Non-residents of Israel are subject to income tax on income accrued or derived
from sources in Israel. These sources of income include passive income such as
dividends, royalties and interest, as well as non-passive income from services
rendered in Israel. On distributions of dividends other than bonus shares, or
stock dividends, income tax is generally withheld at the source at the rate of
25%. If the income out of which the dividend is being paid is attributable to an
Approved Enterprise, the rate is 15%. A different rate may be 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
ordinary shares who is a U.S. resident (as defined in the treaty) is 25%, and if
such shareholder is a U.S. corporation holding at least 10% of the issued voting
power throughout the tax year in which the dividend is distributed as well as
the previous tax year, the maximum Israeli tax on dividends paid to such
corporation is 12.5%, or 15% for dividends of income generated from an Approved
Enterprise.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, applicable to foreign private issuers and fulfill the
obligations 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 1-800-SEC-0330 for further information on the public reference room.

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.

I. SUBSIDIARY INFORMATION

Not applicable.

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ITEM 11.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

GENERAL

We are exposed to market risk, including movements in interest rates and foreign
currency exchange rates. Our primary market risk exposure occurs because we
generate most of our revenues in U.S. dollars but incur most of our expenses and
part of our other in new Israeli shekels.

We do not presently engage in any hedging or other transactions intended to
manage risks relating to foreign currency exchange rate or interest rate
fluctuations. At December 31, 2003, we did not own any market risk sensitive
instruments. However, we may in the future undertake hedging or other similar
transactions or invest in market risk sensitive instruments if our management
determines that it is necessary to offset these risks.

INTEREST RATE RISK MANAGEMENT

As of December 31, 2003, we had $7.8 million of cash and short and long term
investments, all linked to the U.S. dollar.

ITEM 12.  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

                                     PART 2

ITEM 13.  DEFAULTS, DIVIDEND AVERAGES 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

We performed an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Rule 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2003.
The evaluation was performed with the participation of our senior management and
under the supervision and with the participation of our principal executive and
financial officer. Based on this evaluation, our principal executive and
financial officer has concluded that our disclosure controls and procedures are
effective to alert them on a timely basis to material information required to be
included in our periodic reports with the Securities and Exchange Commission.

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In addition, there were no changes in our internal control over financial
reporting that occurred during 2003 that have materially affected, or that are
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

While all the members of our audit committee are financially literate, our board
of directors has not designated any of them as an "audit committee financial
expert," as defined in the applicable regulations. Since we currently have no
business operations, our financial reporting process is relatively simple.
Accordingly, we believe that our current situation does not justify the
appointment of an "audit committee financial expert."

ITEM 16B.   CODE OF ETHICS

Our board of directors has adopted a Code of Ethics. We will provide a copy of
our Code of Ethics free of charge to any person who requests one. Such requests
may be sent to our offices at 126 Yigal Alon Street, Tel Aviv, Israel,
Attention: Chief Executive Officer.

ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

          AUDIT FEES

For 2002 and 2003, our independent accountant was Kost Forer & Gabbay, a member
of Ernst & Young Global. These accountants billed the following fees to us for
professional services in each of the last two fiscal years:

<Table>
<Caption>
                     Year Ended December 31,
                        2003       2002
<S>                  <C>         <C>
Audit Fees           $  28,000   $  108,000
Audit-Related Fees       2,000        6,000
Tax Fees                 5,000        2,000
All Other Fees          58,000       16,000
                     ---------   ----------

     Total           $  93,000   $  132,000
</Table>

"Audit Fees" are the aggregate fees billed for the audit of our annual financial
statements. This category also includes services that generally the independent
accountant provides, consents and assistance with and review of documents filed
with the SEC. "Audit-Related Fees" are the aggregate fees billed for assurance
and related services that are reasonably related to the performance of the audit
and are not reported under Audit Fees. These fees include mainly accounting
consultations regarding the accounting treatment of matters that occur in the
regular course of business, implications of new accounting pronouncements and
other accounting issues that occur from time to time. "Tax Fees" are the
aggregate fees billed for professional services rendered for tax compliance, tax
advice, other than in connection with the audit. Tax compliance involves
preparation of original and amended tax returns, tax planning and tax advice.

                                       47
<Page>

Our Audit Committee has adopted a pre-approval policy for the engagement of our
independent accountant to perform certain audit and non-audit services. Pursuant
to this policy, which is designed to assure that such engagements do not impair
the independence of our auditors, the audit committee pre-approves annually a
catalog of specific audit and non-audit services in the categories of Audit
Service, Audit-Related Service, Tax Services and other services that may be
performed by our independent accountants and the maximum pre-approved fees that
may be paid as compensation for each pre-approved service in those categories.
Any proposed services exceeding the maximum pre-approved fees require specific
approval by the Audit Committee.

With respect to each pre-approved service actually requested to be provided, an
executive officer is required to notify the Audit Committee in writing and state
whether, in the executive officer's view, the provision of such service by the
outside auditor would impair its independence.

The Audit Committee may delegate its pre-approval authority to one or more of
its members, subject to ratification by the entire Audit Committee.

ITEM 16D.   EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

                                     PART 3

ITEM 17.  FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of this item.

ITEM 18.  FINANCIAL STATEMENTS

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

ITEM 19.  EXHIBITS

The exhibit lists required by this Item is incorporated by reference to the
Exhibit Index, which appears before the first exhibit filed with this document.

                                       48
<Page>

                                    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.

                                               TIKCRO TECHNOLOGIES LTD.


                                               By: /s/ Izhak Tamir
                                                 -----------------
                                                   Izhak Tamir
                                                   Chief Executive Officer

Date:  June 21, 2004

                                       49
<Page>

                  TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES

                       (FORMERLY: TIOGA TECHNOLOGIES LTD.)


                        CONSOLIDATED FINANCIAL STATEMENTS


                             AS OF DECEMBER 31, 2003


                                 IN U.S. DOLLARS




                                      INDEX

<TABLE>
<CAPTION>

                                                               PAGE
                                                             ---------
<S>                                                          <C>
REPORT OF INDEPENDENT AUDITORS                                  F-2

CONSOLIDATED BALANCE SHEETS                                  F-3 - F-4

CONSOLIDATED STATEMENTS OF OPERATIONS                           F-5

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)      F-6

CONSOLIDATED STATEMENTS OF CASH FLOWS                           F-7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                   F-8 - F-26
</TABLE>




                                 - - - - - - - -

                                      F-1
<PAGE>

ERNST & YOUNG

                         REPORT OF INDEPENDENT AUDITORS

                             TO THE SHAREHOLDERS OF

                            TIKCRO TECHNOLOGIES LTD.

                       (FORMERLY: TIOGA TECHNOLOGIES LTD.)


     We have audited the accompanying consolidated balance sheets of Tikcro
Technologies Ltd. (formerly: Tioga Technologies Ltd.) ("the Company") and its
subsidiaries as of December 31, 2002 and 2003, and the related consolidated
statements of operations, changes in shareholders' equity (deficiency) and cash
flows for each of the three years in the period ended December 31, 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 consolidated financial position of
the Company and its subsidiaries as of December 31, 2002 and 2003, and the
consolidated results of their operations and cash flows for each of the three
years in the period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States.




Tel-Aviv, Israel                             KOST FORER GABBAY & KASIERER
February 9, 2004                           A Member of Ernst & Young Global


                                     F - 2
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>

                                          DECEMBER 31,
                                       -----------------
                                        2002      2003
                                       -------   -------
<S>                                    <C>       <C>
    ASSETS

CURRENT ASSETS:
  Cash and cash equivalents            $ 5,559   $   787
  Marketable securities (Note 3)             -     7,096
  Related party                          2,085     2,235
  Other current assets (Note 4)            516        28
  Inventories                               37         -
                                       -------   -------

TOTAL current assets                     8,197    10,146
                                       -------   -------

LONG-TERM INVESTMENTS:
  Long-term lease deposits                  28         -
  Severance pay fund                       894         -
                                       -------   -------

TOTAL long term investments                922         -
                                       -------   -------


PROPERTY AND EQUIPMENT, NET (Note 5)       379         -
                                       -------   -------

TOTAL assets                           $ 9,498   $10,146
                                       =======   =======
</TABLE>




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


                                     F - 3
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA

<TABLE>
<CAPTION>

                                                                                     DECEMBER 31,
                                                                                ----------------------
                                                                                  2002         2003
                                                                                ---------    ---------
<S>                                                                             <C>          <C>
    LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
  Current maturities of long term loan from a related party (Note 7)            $   1,800    $       -
  Trade payables                                                                      106            -
  Related party - current account (Note 11)                                           674           44
  Employees and payroll accruals                                                      448            -
  Other current liabilities (Note 6)                                                1,218          137
                                                                                ---------    ---------

TOTAL current liabilities                                                           4,246          181
                                                                                ---------    ---------

LONG-TERM LIABILITIES:
  Long-term loan from a related party (Note 7)                                      5,200            -
  Accrued severance pay                                                             1,600            -
                                                                                ---------    ---------

TOTAL long-term liabilities                                                         6,800            -
                                                                                ---------    ---------

COMMITMENTS AND CONTINGENT LIABILITIES (Note 8)

SHAREHOLDERS' EQUITY (DEFICIENCY) (Note 9):
  Share capital:
    Ordinary shares of NIS 0.1 par value - Authorized: 50,000,000 shares at
      December 31, 2002 and 2003; Issued: 25,025,436 and 28,067,555 shares at
      December 31, 2002 and 2003, respectively; Outstanding: 25,025,436 and
      23,726,401 shares at December 31, 2002 and 2003, respectively                   600          676
  Additional paid-in capital                                                      145,607      145,360
  Deferred stock compensation                                                        (771)           -
  Less - treasury shares, at cost (0 and 4,341,154 Ordinary shares at
    December 31, 2002 and 2003, respectively)                                           -       (1,065)
  Accumulated deficit                                                            (146,984)    (135,006)
                                                                                ---------    ---------

TOTAL shareholders' equity (deficiency)                                            (1,548)       9,965
                                                                                ---------    ---------

TOTAL liabilities and shareholder's equity (deficiency)                         $   9,498    $  10,146
                                                                                =========    =========
</TABLE>


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


                                     F - 4
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

<TABLE>
<CAPTION>

                                                                            YEAR ENDED DECEMBER 31,
                                                                       --------------------------------
                                                                         2001        2002        2003
                                                                       --------    --------    --------
<S>                                                                    <C>         <C>         <C>
Revenues (Note 13):
  Development and marketing services (Note 1)                          $      -    $  7,667    $  2,691
  Royalties from a related party (Note 11)                                1,418         200           -
  Product                                                                    22          45           -
                                                                       --------    --------    --------

                                                                          1,440       7,912       2,691
                                                                       --------    --------    --------
Operating costs and expenses:
  Research and development expenses, net and development services
    costs, net (Notes 1 and 2)                                            7,974       4,927       1,760
  Selling, marketing, general and administrative expenses                 4,067       2,227         788
  Impairment of property and equipment                                        -         157           -
  Amortization of deferred stock compensation *)                          2,252         635         771
                                                                       --------    --------    --------

Total operating costs and expenses                                       14,293       7,946       3,319
                                                                       --------    --------    --------

Operating loss                                                          (12,853)        (34)       (628)
Other expenses                                                              (16)        (10)          -
Other income (Note 1)                                                         -       9,698      12,834
Financial expenses, net (Note 15)                                        (1,238)       (874)       (228)
                                                                       --------    --------    --------

Net income (loss) from continuing operations                            (14,107)      8,780      11,978

Discontinued operations
  Income (loss) from discontinued operations net of income tax
     provision of $ 13, $ (157) and $ 0 for the years ended December
     31, 2001, 2002 and 2003, respectively (Note 13)                     (4,043)         19           -
                                                                       --------    --------    --------

Net income (loss)                                                      $(18,150)   $  8,799    $ 11,978
                                                                       ========    ========    ========

Net earnings (loss) per share (Note 12):


  Basic net earnings (loss) per share from continuing operations       $  (0.60)   $   0.35    $   0.50
  Basic net earnings (loss) per share from discontinued operations        (0.17)      **) -           -
                                                                       --------    --------    --------


Basic net earnings (loss) per share (Note 12)                          $  (0.77)   $   0.35    $   0.50
                                                                       ========    ========    ========



Diluted net earnings (loss) per share from continuing operations       $  (0.60)   $   0.31    $   0.47
Diluted net earnings (loss) per share from discontinued operations        (0.17)      **) -           -
                                                                       --------    --------    --------


Diluted net earnings (loss) per share                                  $  (0.77)   $   0.31    $   0.47
                                                                       ========    ========    ========
</TABLE>



*)   Amortization of deferred stock compensation related to the following
     operating expenses: research and development expenses, net and development
     services costs net of $ 1,338, $ 387 and $ 47 for the years ended December
     31, 2001, 2002 and 2003 respectively; selling, marketing, general and
     administrative expenses of $ 914, $ 248 and $ 724 for the years ended
     December 31, 2001, 2002 and 2003, respectively.

**)  Represents an amount lower than $ 0.01.

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


                                     F - 5
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT SHARE DATA


<TABLE>
<CAPTION>

                                                                              SERIES A CONVERTIBLE
                                                         OUTSTANDING               REDEEMABLE                      NOTES
                                                       ORDINARY SHARES           ORDINARY SHARES  ADDITIONAL    RECEIVABLE
                                                  -------------------------    ----------------    PAID-IN         FROM
                                                   SHARES         AMOUNT        SHARES   AMOUNT    CAPITAL       OFFICERS
                                                  ----------    -----------    ---------   ----   -----------    --------


<S>                                               <C>           <C>            <C>         <C>    <C>            <C>
Balance at January 1, 2001                        22,466,930    $       540    1,510,000   $ 38   $   146,532    $ (5,075)
Exercise of employee stock options                 1,565,241             37            -      -           984           -
Exercise of stock options to service
   providers                                          50,000              1            -      -             -           -
Conversions of Series A Convertible
   Redeemable Ordinary shares into
   Ordinary shares                                    60,000              2      (60,000)    (2)            -           -
Redemption of Series A Convertible
   Redeemable Ordinary shares                              -              -   (1,450,000)   (36)       (5,039)      5,075
Issuance of shares upon exercise of ESPP              49,417              1            -      -            47           -
Deferred stock compensation related to
   repriced options                                        -              -            -      -         3,374           -
Amortization of deferred compensation
   related to repriced options                             -              -            -      -             -           -
Amortization of deferred stock
   compensation related to Series A
   Convertible Redeemable Ordinary
   shares                                                  -              -            -      -             -           -
Compensation related to options granted
   to service providers                                    -              -            -      -           140           -
Conversion of Orckit's subordinated
   notes                                             364,191              9            -      -            (9)          -
Comprehensive loss:
Realized losses from available-for-sale
   marketable securities                                   -              -            -      -             -           -
Net loss                                                   -              -            -      -             -           -
                                                  ----------    -----------    ---------   ----   -----------    --------
Total comprehensive loss


Balance at December 31, 2001                      24,555,779            590            -      -       146,029           -
Exercise of stock options                            469,657             10            -      -             2           -
Deferred stock compensation                                -              -            -      -          (424)          -
Amortization of deferred stock
   compensation related to repriced
   options                                                 -              -            -      -             -           -
Net income                                                 -              -            -      -             -           -
                                                  ----------    -----------    ---------   ----   -----------    --------


Balance at December 31, 2002                      25,025,436            600            -      -       145,607           -
Exercise of stock options                          3,042,119             76            -      -             2           -
Amortization of deferred stock
   compensation related to repriced
   options                                                 -              -            -      -             -           -
Purchase of Orckit's subordinated notes                    -              -            -      -          (249)          -
Purchase of treasury shares                       (4,341,154)             -            -      -             -           -
Net income                                                 -              -            -      -             -           -
                                                  ----------    -----------    ---------   ----   -----------    --------


Balance at December 31, 2003                      23,726,401    $       676            -   $  -   $   145,360    $      -
                                                 ===========    ===========   ==========   ====   ===========    ========
</TABLE>


<TABLE>
<CAPTION>

                                                                        ACCUMULATED                                TOTAL
                                                  DEFERRED                OTHER                      TOTAL      SHAREHOLDERS'
                                                   STOCK      TREASURY COMPREHENSIVE ACCUMULATED COMPREHENSIVE     EQUITY
                                                COMPENSATION    SHARES     LOSS       DEFICIT    INCOME (LOSS)  (DEFICIENCY)
                                                 -----------    ------   --------   -----------    ----------   -----------
<S>                                              <C>           <C>      <C>       <C>            <C>          <C>
Balance at January 1, 2001                       $      (658)      $ -  $    (115)  $  (137,633)                $     3,629
Exercise of employee stock options                         -         -          -             -                       1,021
Exercise of stock options to service
   providers                                               -         -          -             -                           1
Conversions of Series A Convertible
   Redeemable Ordinary shares into
   Ordinary shares                                         -         -          -             -                           -
Redemption of Series A Convertible
   Redeemable Ordinary shares                              -         -          -             -                           -
Issuance of shares upon exercise of ESPP                   -         -          -             -                          48
Deferred stock compensation related to
   repriced options                                   (3,374)        -          -             -                           -
Amortization of deferred compensation
   related to repriced options                         1,544         -          -             -                       1,544
Amortization of deferred stock
   compensation related to Series A
   Convertible Redeemable Ordinary
   shares                                                658         -          -             -                         658
Compensation related to options granted
   to service providers                                    -         -          -             -                         140
Conversion of Orckit's subordinated
   notes                                                   -         -          -             -                           -
Comprehensive loss:
Realized losses from available-for-sale
   marketable securities                                   -         -        115           -      $      115           115
Net loss                                                   -         -          -       (18,150)      (18,150)      (18,150)
                                                 -----------    ------   --------   -----------    ----------   -----------
Total comprehensive loss                                                                           $  (18,035)
                                                                                                   ==========

Balance at December 31, 2001                          (1,830)        -          -      (155,783)                    (10,994)
Exercise of stock options                                  -         -          -             -                          12
Deferred stock compensation                              424         -          -             -                           -
Amortization of deferred stock
   compensation related to repriced
   options                                               635         -          -             -                         635
Net income                                                 -         -          -       8,799      $    8,799         8,799
                                                 -----------    ------   --------   -----------    ----------   -----------
                                                                                                   $   (9,236)
                                                                                                   ==========
Balance at December 31, 2002                            (771)        -          -      (146,984)                     (1,548)
Exercise of stock options                                  -         -          -             -                          78
Amortization of deferred stock
   compensation related to repriced
   options                                               771         -          -             -                         771
Purchase of Orckit's subordinated notes                    -         -          -             -                        (249)
Purchase of treasury shares                                -    (1,065)         -             -                      (1,065)
Net income                                                 -         -          -        11,978    $   11,978        11,978
                                                 -----------    ------   --------   -----------    ----------   -----------
                                                                                                   $    2,742
                                                                                                   ==========
Balance at December 31, 2003                     $         -   $(1,065)  $      -    $ (135,006)                $     9,965
                                                 ===========   ========  ========    ==========                 ===========
</TABLE>


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


                                     F - 6
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

<TABLE>
<CAPTION>

                                                                            YEAR ENDED DECEMBER 31,
                                                                      --------------------------------
                                                                        2001        2002        2003
                                                                      --------    --------    --------
<S>                                                                   <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income (loss)                                                   $(18,150)   $  8,799    $ 11,978
  Adjustments required to reconcile net income (loss) to net cash
    used in operating activities:
    Depreciation                                                         1,443         348         109
    Amortization of goodwill and other intangible assets                 2,759           -           -
    Losses from sale of property and equipment                              44          10           -
    Realized losses on available-for-sale marketable securities            115           -           -
    Decrease in related party                                            8,377          21         681
    Decrease (increase) in trade receivables                             1,761      (1,671)          -
    Decrease in other current assets                                       618         950         343
    Decrease (increase) in inventories                                    (321)         22          12
    Increase (decrease) in trade payables                                  (93)       (776)         99
    Increase (decrease) in related party - current account             (11,404)        460        (630)
    Decrease in other current liabilities and employees and payroll
      accruals                                                          (5,471)       (159)       (611)
    Impairment of property and equipment                                   823         157           -
    Accrued severance pay, net                                              32         (26)        (16)
    Amortization of deferred stock compensation                          2,202         635         771
    Compensation related to options granted to service providers           140           -           -
    Loss (gain) from disposal of SVL business                              (45)        300           -
    Gain from acquiring the Company's intellectual property                  -      (9,698)          -
    Gain from acquiring the Company's business                               -           -     (12,834)
    Other                                                                  (16)          -           -
                                                                      --------    --------    --------

Net cash used in operating activities                                  (17,186)       (628)        (98)
                                                                      --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of available for sale marketable securities                       -           -      (7,096)
  Proceeds from realization of available-for-sale marketable
    securities                                                              44           -           -
  Purchase of property and equipment                                      (932)        (53)        (10)
  Proceeds from sale of property and equipment                              39          19           -
  Decrease (increase) in long-term lease deposits                           63          (1)         28
  Proceeds from disposal of SVL business                                15,821       1,800           -
  Proceeds from acquiring the Company's intellectual property                -       9,698           -
  Proceeds from acquiring the Company's business                             -           -      10,640
                                                                      --------    --------    --------

Net cash provided by investing activities                               15,035      11,463       3,562
                                                                      --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:

  Proceeds from exercise of stock options                                1,070          12          78
  Purchase of Orckit's subordinated notes                                    -           -        (249)
  Payment of short-term bank credit                                    (10,000)          -           -
  Payment of long-term loan from a related party                             -     (13,000)     (7,000)
  Purchase of treasury shares                                                -           -      (1,065)
                                                                      --------    --------    --------

Net cash used in financing activities                                   (8,930)    (12,988)     (8,236)
                                                                      --------    --------    --------

Decrease in cash and cash equivalents                                  (11,081)     (2,153)     (4,772)
Cash and cash equivalents at the beginning of the year                  18,793       7,712       5,559
                                                                      --------    --------    --------

Cash and cash equivalents at the end of the year                      $  7,712    $  5,559    $    787
                                                                      ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS ACTIVITIES:

  Cash paid during the year for interest                              $    387    $      2    $  2,999
                                                                      ========    ========    ========
  Cash paid (refunded) during the year for taxes                      $    211    $   (157)   $      5
                                                                      ========    ========    ========
</TABLE>

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


                                     F - 7
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

NOTE 1:- GENERAL

     Tikcro Technologies Ltd. ("the Company" or "Tikcro") was incorporated in
     1999, under the laws of Israel. Tikcro has a wholly-owned subsidiary,
     Silicon Value (S.V.) Ltd. ("SVL"). SVL has a wholly-owned U.S. subsidiary,
     Tikcro Technologies Inc., which is currently inactive.

     On January 30, 2000, the board of directors of Orckit Communications Ltd.
     ("Orckit" or the "parent company") decided to execute a plan of separation
     ("the plan" or "the spin-off") under Section 350 of Israel's Companies Law,
     pursuant to which, Orckit will be formally divided into two separate
     companies: (i) Tikcro (previously "Tioga") which would own substantially
     all of Orckit's semiconductor chip business, and (ii) Orckit itself, which
     would continue to own and operate its telecom equipment and other
     businesses

     In April 2001, the Company sold the ASIC division of its wholly-owned
     subsidiary SVL. The results of operations for the two years ended December
     31, 2002, reflect the ASIC division as discontinued operations (see Note
     13).

     In September 2001, the Board of Directors of the Company decided to
     liquidate SVL, which became an inactive company.

     In February 2002, the Company entered into three strategic agreements with
     STMicroelectronics NV and its Israeli subsidiary STMicroelectronics Ltd.
     (collectively "ST"), a technology transfer agreement, a development,
     marketing and services agreement and an option agreement.

     Pursuant to the technology transfer agreement, the Company granted ST
     certain co-ownership rights in its then existing intellectual property in
     the DSL field and ownership rights over its products, including certain
     products that were still under development and its rights under certain
     design wins in consideration of approximately $ 10,000. With respect to the
     technology transfer agreement, the Company recorded $ 9,698, net of
     transaction expenses, as other income.

     Pursuant to the development, marketing and services agreement ("services
     agreement"), the Company was required to provide research and development
     and marketing services to ST in the DSL field as determined by ST from time
     to time as detailed in this agreement. In consideration of the performance
     of these services during the term of the agreement, ST paid the Company $
     2,000 for every quarter in which the services were rendered, commencing
     January 15, 2002. The services agreement was subsequently extended until
     April 28, 2003. The Company recorded such fees as revenues (see also Note
     2l).

     As a result of these agreements, the Company's activities consisted
     primarily of development and marketing services provided to ST. The Company
     did not conduct its business as an independent DSL chip developer and
     manufacturer.

     Pursuant to the option agreement, Tikcro granted to ST the right to acquire
     Tikcro's business via a merger or a sale of Tikcro's assets. On January 15,
     2003, ST exercised its option. According to the exercise notice, ST elected
     to acquire Tikcro's business as an asset deal.


                                     F - 8
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 1:- GENERAL (CONT.)

     On April 28, 2003, the Company and ST entered into the asset purchase
     agreement. Under the asset purchase agreement, ST acquired all of the
     Company's assets ("the acquired assets") in consideration of $ 12,000 and,
     in addition, it assumed all of its liabilities other than the following
     liabilities: the Company's financial indebtedness (including the debt to
     Orckit); the Company's liabilities towards its subsidiaries and the
     subsidiaries' liabilities to the Company; tax liabilities (other than Value
     Added Tax, if any, which under the agreement is to be borne by ST);
     liabilities towards the Office of Chief Scientist in Israel's Ministry of
     Industry and Trade with respect to the services agreement with ST and any
     other liability if actually known to the Company but is not disclosed to ST
     in the asset purchase agreement or in the financial statements as of April
     28, 2003 (see also Note 7). With respect to the asset purchase agreement,
     the Company recorded the capital gain of $ 12,834 as other income.

     As part of the asset purchase agreement, ST hired most of the Company's
     employees. The Company has undertaken additional covenants in the asset
     purchase agreement including: the obligation to change the Company's
     corporate name to a name that does not include the word "Tioga"; the
     obligation not to engage, for a period of three years, in any business that
     competes with the Company's business as conducted prior to April 28, 2003;
     and the obligation not to solicit, for a period of two years, the services
     of any employee of ST previously employed by the Company or to otherwise
     interfere with the relationship between ST and any such employees.

     Upon the closing of the asset purchase agreement, the Company ceased its
     current DSL activities and all the Company's operations were discontinued.

     For the years ended December 31, 2001 and 2002 and 2003, 0%, 97% and 100%,
     respectively, of the Company's revenues were derived from the development
     and marketing services agreement between the Company and ST.

     As for major customers, see Note 14.


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES

     The consolidated financial statements have been prepared in accordance with
     accounting principles generally accepted in the United States ("US GAAP").

     a.   Use of estimates:

          The preparation of the financial statements in conformity with
          generally accepted accounting principles requires management to make
          estimates and assumptions that affect the amounts reported in the
          financial statements and accompanying notes. Actual results could
          differ from those estimates.


                                     F - 9
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     b.   Financial statements in U.S. dollars:

          The revenues of the Company are generated in U.S. dollars ("dollar").
          In addition, a substantial portion of the Company's cash flow
          transactions is incurred in dollars. The Company's management believes
          that the dollar is the primary currency of the economic environment in
          which the Company and its subsidiaries operate. Thus, the functional
          and reporting currency of the Company and its subsidiaries is the
          dollar.

          Accordingly, monetary accounts maintained in currencies other than the
          dollar are remeasured into U.S. dollars in accordance with Statement
          of Financial Accounting Standard No. 52 "Foreign Currency Translation"
          ("SFAS No. 52"). All transaction gains and losses of the remeasurement
          of monetary balance sheet items are reflected in the statements of
          operations as financial income or expenses, as appropriate.

     c.   Principles of consolidation:

          The consolidated financial statements include the accounts of the
          Company and its wholly-owned subsidiaries. Intercompany transactions
          and balances have been eliminated upon consolidation.

     d.   Cash equivalents:

          Cash equivalents are short-term highly liquid investments that are
          readily convertible to cash with original maturities of three months
          or less.

     e.   Marketable securities:

          Management determines the classification of investments in marketable
          equity securities at the time of purchase and reevaluates such
          designations as of each balance sheet date. At December 31, 2003, all
          marketable securities covered by Statement of Financial Accounting
          Standard No. 115 "Accounting for Certain Investments in Debt and
          Equity Securities", ("SFAS No. 115") were designated as
          available-for-sale. Accordingly, these securities are stated at fair
          value, with unrealized gains and losses reported in accumulated other
          comprehensive income (loss), a separate component of shareholders'
          equity. Realized gains and losses on sales of investments, as
          determined on a specific identification basis, are included in the
          consolidated statement of operations.

     f.   Property and equipment:

          Property and equipment were stated at cost, net of accumulated
          depreciation. Depreciation was calculated by the straight-line method
          over the estimated useful lives, at the following annual rates:

<TABLE>
<CAPTION>

                                                         %
                                            -------------------------------
<S>                                         <C>
Computers, software and related equipment               33
Office furniture and equipment                        7 - 15
Leasehold improvements                      Over the term of the lease
</TABLE>


                                     F - 10
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     g.   Impairment of long-lived assets:

          The Company's long-lived assets were reviewed for impairment in
          accordance with Statement of Financial Accounting Standard No. 144,
          "Accounting for the Impairment or Disposal of Long-Lived Assets"
          ("SFAS No. 144"), whenever events or changes in circumstances
          indicated that the carrying amount of an asset may not be recoverable.
          Recoverability of assets to be held and used was measured by a
          comparison of the carrying amount of an asset to the future
          undiscounted cash flows expected to be generated by the assets. If
          such assets were considered to be impaired, the impairment to be
          recognized was measured by the amount by which the carrying amount of
          the assets exceeds the fair value of the assets. During fiscal year
          2002, the Company changed the location of its Israeli office and
          abandoned some of its office furniture and equipment. In addition, in
          early 2002 the Company decided to close the majority of its U.S.
          operation, as a result, certain furniture and equipment were
          abandoned. Accordingly, during 2002 the Company and its subsidiary
          recorded an impairment charge in the amount of $ 157.

     h.   Research and development costs:

          Research and development costs net, of grants received, are charged to
          the statement of operations as incurred.

     i.   Income taxes:

          The Company and its subsidiaries account for income taxes in
          accordance with Statement of Financial Accounting Standard No. 109,
          "Accounting for Income Taxes" ("SFAS No. 109"). This Statement
          prescribes the use of the liability method whereby deferred tax assets
          and liability account balances are determined based on differences
          between financial reporting and tax bases of assets and liabilities
          and are measured using the enacted tax rates and laws that will be in
          effect when the differences are expected to reverse. The Company and
          its subsidiaries provide a valuation allowance, if necessary, to
          reduce deferred tax assets to their estimated realizable value.

     j.   Revenue recognition:

          The Company generates its revenues mostly from development and
          marketing services .

          1.   Revenues from research and development services are recognized at
               the time they are rendered (see also Note 1).

          2.   Revenues related to royalties received from Orckit were accounted
               for in accordance with Emerging Issues Task Force 99-19
               "Reporting Revenue Gross as a Principal Versus Net as an Agent"
               ("EITF 99-19") and, recognized according to the net as an Agent
               Method. Revenues under such agreement with Orckit, were
               recognized at the time of shipment, as reported to the Company by
               Orckit.


                                     F - 11
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

          3.   Revenues from sales of products are recognized when persuasive
               evidence of an agreement exists, delivery has occurred, the fee
               is fixed or determinable, collectibility is probable and no
               further obligations exist, in accordance with Staff Accounting
               Bulletin No. 101, "Revenue Recognition in Financial Statements"
               ("SAB No. 101").

          4.   Net effect of cancellation of SVL's ASIC NRE projects:

               In the fourth quarter of 2000, the Company decided to focus
               exclusively on its DSL business, and consequently it canceled
               some of its operating ASIC NRE projects and decided not to take
               on any new projects. During 2001, income (losses) resulting from
               canceled projects were excluded from revenues and presented as
               part of the discontinued operations (see Note 13b).

     k.   Royalty-bearing grants:

          Royalty-bearing grants from the Government of Israel for funding
          approved research and development projects are recognized at the time
          the Company is entitled to such grants, on the basis of the costs
          incurred and included as a reduction in research and development
          expenses. Research and development grants recognized amounted to $
          1,571, $ 1,468 and $ 394 in 2001, 2002 and 2003, respectively.

     l.   Accounting for stock-based compensation:

          The Company has elected to follow Accounting Principles Board Opinion
          No. 25 "Accounting for Stock Issued to Employees" ("APB No. 25") and
          FASB Interpretation No. 44 "Accounting for Certain Transactions
          Involving Stock Compensation ("FIN No. 44") in accounting for its
          employee stock option plans. Under APB No. 25, when the exercise price
          of the Company's share options is less than the market price of the
          underlying shares on the date of grant, compensation expense is
          recognized.

          The Company adopted the disclosure provisions of Statement of
          Financial Accounting Standards No. 148 "Accounting for Stock-Based
          Compensation" ("SFAS No. 148"), which amended certain provisions of
          SFAS No. 123 to provide alternative methods of transition for an
          entity that voluntarily changes to the fair value based method of
          accounting for stock-based employee compensation, effective as of the
          beginning of the fiscal year. The Company continues to apply the
          provisions of APB No. 25 in accounting for stock-based compensation.


                                     F - 12
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

          Under SFAS No. 123, pro forma information regarding net income (loss)
          and net income (loss) per share is required and has been determined as
          if the Company had accounted for its employee options (including
          options granted to SVL's employees prior to their termination and to
          Orckit's employees in relation to the spin-off) under the fair value
          method of that statement. The fair value for these options was
          estimated at the date of grant using a Black-Scholes Option Valuation
          Model, with the following weighted-average assumptions for 2001, 2002
          and 2003: expected volatility of 170%, 83% and 66%, respectively,
          risk-free interest rates of 4%, 4% and 2%, respectively, dividend
          yield of 0% for each year and a weighted-average expected life of the
          option of three years for each year.

          Pro forma information under SFAS No. 123 is as follows:
<TABLE>
<CAPTION>

                                                            YEAR ENDED DECEMBER 31,
                                                  -----------------------------------------
                                                      2001            2002          2003
                                                  ------------    ------------   ----------
<S>                                               <C>             <C>           <C>
Net income (loss) as reported                     $    (18,150)   $      8,799  $    11,978
Add: Total stock based compensation - intrinsic
   value                                                 2,252             635          771
Deduct: Total stock based compensation
   determined under fair value based method for
   all awards                                           (5,837)         (2,533)      (2,106)
                                                  ------------    ------------   ----------

Pro forma net income (loss)                       $    (21,735)   $      6,901  $    10,643
                                                  ============    ============   ==========
Basic net earnings (loss) per share as reported   $      (0.77)   $       0.35   $     0.50
                                                  ============    ============   ==========
Diluted net earnings (loss) per shares as
   reported                                       $      (0.77)   $       0.31   $     0.47
                                                  ============    ============   ==========
Pro forma basic net earnings (loss) per share     $      (0.92)   $       0.28   $     0.44
                                                  ============    ============   ==========
Pro forma diluted net earnings (loss) per share   $      (0.92)   $       0.25   $     0.42
                                                  ============    ============   ==========
</TABLE>

          The Company and its subsidiaries apply SFAS No. 123 and Emerging
          Issues Task Force 96-18 "Accounting for Equity Instruments that are
          Issued to Other than Employees for Acquiring, or in Conjunction with
          Selling Goods or Services" ("EITF 96-18") and with respect to options
          issued to non-employees. SFAS No. 123 requires use of an option
          valuation model to measure the fair value of the options at the date
          of grant.

     m.   Severance pay:

          The Company's liability for severance pay is calculated pursuant to
          Israel's Severance Pay Law based on the most recent salary of the
          employees multiplied by the number of years of employment as of the
          balance sheet date. Employees are entitled to one month's salary for
          each year of employment, or a portion thereof. The Company's liability
          is fully provided by monthly deposits with insurance policies and by
          an accrual. The value of these policies is recorded as an asset in the
          Company's balance sheet.


                                     F - 13
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

          The deposited funds include profits accumulated up to the balance
          sheet date. The deposited funds may be withdrawn only upon the
          fulfillment of the obligation pursuant to Israel's Severance Pay Law
          or labor agreements. The value of the deposited funds is based on the
          cash surrendered value of these policies, and includes immaterial
          profits.

          Severance expenses for the years ended December 31, 2001, 2002 and
          2003 amounted to approximately $ 757, $ 476 and $ 128, respectively.

     n.   Fair value of financial instruments:

          The following methods and assumptions were used by the Company in
          estimating its fair value disclosures for financial instruments:

          The carrying amounts of cash and cash equivalents, trade receivables
          and trade payables approximate their fair value due to the short-term
          maturity of such instruments.

          The carrying amount of the Company's long-term loan from a related
          party approximates its fair value. The fair value was estimated using
          discounted cash flow analyses, based on the Company's current
          incremental borrowing rates for similar type of borrowing
          arrangements.

          The fair value for marketable securities is based on quoted market
          price (see Note 3).

     o.   Basic and diluted net earnings (loss) per share:

          Basic net earnings (loss) per share are computed based on the weighted
          average number of Ordinary shares outstanding during each year.
          Diluted net earnings per share are computed based on the weighted
          average number of Ordinary shares outstanding during each year, plus
          dilutive potential Ordinary shares considered outstanding during the
          year, in accordance with Statement of Financial Accounting Standard
          No. 128, "Earnings per Share" ("SFAS No. 128").

          As of December 31, 2001, all Series A Convertible Redeemable Ordinary
          shares, outstanding stock options, warrants and subordinated
          convertible notes have been excluded from the calculation of the
          diluted net earnings (loss) per Ordinary share because all such
          securities are anti-dilutive. The total numbers of shares related to
          the Series A Convertible Redeemable Ordinary shares, outstanding
          options, warrants and subordinated convertible notes excluded from the
          calculations of diluted net loss per share for the years ended
          December 31, 2001 were 9,732,168.

          The total number of shares related to outstanding options, warrants
          and subordinated convertible notes, excluded from the calculation of
          the diluted net earnings (loss) per share for the years ended December
          31, 2002 and 2003, were 5,729,217 and 0, respectively.


                                     F - 14
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)

     p.   Concentrations of credit risks:

          Financial instruments that potentially subject the Company and its
          subsidiaries to concentrations of credit risk consist principally of
          cash and cash equivalents, available-for-sale marketable debt
          securities and trade receivables.

          Cash and cash equivalents are invested in major banks in Israel in
          U.S. dollars. 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.

          The Company's marketable securities include investments in debentures
          of U.S. Corporations. Management believes that those Corporations are
          financially sound, the portfolio is well diversified, and accordingly,
          minimal credit risk exists with respect to these marketable
          securities.

          Trade receivables derived from services rendered to ST located in
          Europe. The Company performs ongoing credit evaluations of its one
          main customer and to date has not experienced any material losses. An
          allowance for doubtful accounts is determined with respect to those
          amounts that the Company has determined to be doubtful of collection.
          As of December 31, 2003, no allowance has been provided by the
          Company.

          The Company has no off-balance-sheet concentration of credit risk such
          as foreign exchange contracts, option contracts or other foreign
          hedging arrangements.

     q.   Treasury shares:

          The Company repurchases its Ordinary shares from time to time on the
          open market and from employees who exercise their options, and holds
          such shares as treasury shares. The Company presents the cost to
          repurchase treasury shares as a reduction in shareholders' equity.

     r.   Reclassification:

          Certain amounts from prior years have been reclassified to conform to
          the current period presentation.

          The reclassification had no effect on previously reported net loss,
          shareholders' equity or cash flows.


                                     F - 15
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 3:-      MARKETABLE SECURITIES

<TABLE>
<CAPTION>

                                    ESTIMATED FAIR
                     AMORTIZED COST  MARKET VALUE
                          -----       -----
<S>                       <C>         <C>
AVAILABLE-FOR-SALE:
  Equity securities       7,096       7,096
                          =====       =====
</TABLE>

          As of December 31, 2003, the aggregate amount of gross unrealized
          losses, which have been in a continuous loss position for less than 12
          months, was temporary and immaterial.


NOTE 4:- OTHER CURRENT ASSETS

<TABLE>
<CAPTION>

                                                                                 DECEMBER 31,
                                                                             -------------------
                                                                              2002         2003
                                                                             ------       ------
<S>                                                                          <C>      <C>
Services to be rendered by the purchaser of SVL Business (see Note 13)       $  219   $        -
Prepaid expenses                                                                177           28
Government authorities                                                          104            -
Lease deposits and other                                                         16            -
                                                                             ------       ------

                                                                             $  516   $       28
                                                                             ======       ======


NOTE 5:- PROPERTY AND EQUIPMENT, NET

              Cost:
                 Computers, software and related equipment                   $1,417   $        -
                 Office furniture and equipment                                  51            -
                 Leasehold improvements                                           5            -
                                                                             ------       ------

                                                                              1,473            -
              Accumulated depreciation                                        1,094            -
                                                                             ------       ------

              Depreciated cost                                               $  379   $        -
                                                                             ======       ======
</TABLE>


          Depreciation expenses for the years ended December 31, 2001, 2002 and
          2003, amounted to $ 1,443, $ 348 and $ 109, respectively.

          As for impairment, see Note 2h.


NOTE 6:- OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>

                                                              DECEMBER 31,
                                                          -------------------
                                                           2002         2003
                                                          ------       ------
<S>                                                       <C>          <C>
Accrued vacation and recreation pay                       $  260       $    -
Royalties to the OCS - net of OCS grants receivable          588            -
Accrued expenses                                             370          137
                                                          ------       ------

                                                          $1,218       $  137
                                                          ======       ======
</TABLE>


                                     F - 16
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA

NOTE 7:- LONG-TERM LOAN FROM A RELATED PARTY

          As of December 31, 2000, the Company received a long-term loan from a
          related party (Orckit) in the amount of $ 20,000. The loan is
          denominated in U.S. dollars and originally was payable by March 1,
          2005 or upon change of control. In connection with the ST agreements
          (see Note 1), the Company entered into an agreement with Orckit
          relating to the loan repayments, according to which during 2002 and
          2003, the Company paid, $ 20,000 in respect of the principal of the
          outstanding loan and unpaid interest.

          As of December 31, 2000, the loan bore interest of LIBOR + 2% per
          annum. Commencing January 1, 2001, the interest was changed to a rate
          of 6% per annum and in no event shall the interest rate be less than
          5.75% per year (see Note 11).

          As for charges, see Note 8b.


NOTE 8:- COMMITMENTS AND CONTINGENT LIABILITIES

     a.   Directors and officers indemnification agreements:

          The Company, from time to time, has entered into indemnification
          agreements with several of its directors and officers in which the
          Company undertakes to indemnify them, to the fullest extent permitted
          by law, for acts taken or omitted by them in their respective
          capacities as directors or officers of the Company or its
          subsidiaries. Pursuant to these agreements, the obligations of the
          Company remain in effect even after the termination of the directors
          and officers services to or employment by the Company .

     b.   Under the asset purchase agreement, ST acquired the Company's assets
          and assumed its liabilities other than those specified in the
          agreement. For more information see also Note 1.


NOTE 9:- SHAREHOLDERS' EQUITY (DEFICIENCY)

     a.   Ordinary shares:

          The Ordinary shares confer upon the holders the right to receive
          notice to participate and vote in general meetings of the Company and
          the right to receive dividends, if declared.

     b.   Series A Convertible Redeemable Ordinary shares:

          The Series A Convertible Redeemable Ordinary shares ("Series A") had
          the same rights as Ordinary shares. In addition, these shares could
          automatically convert to Ordinary shares on a 1:1 basis according to
          the following schedule:

          25% shall convert on the first anniversary of such issuance date and
          an additional 6.25% of the shares could convert at the end of each
          three-month period thereafter.

          The Company should have the right to redeem all or a portion of the
          Series A shares upon termination of such holder's employment.


                                     F - 17
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA


NOTE 9:- SHAREHOLDERS' EQUITY (DEFICIENCY) (CONT.)

          The issuance of 1,450,000 of Series A Convertible Redeemable shares
          were in exchange for full-recourse promissory notes in the aggregate
          principal amount of $ 5,075. The notes were fully recoursed, bore
          interest at the rate of 6.08% per annum, and were payable upon the
          sale of any Ordinary shares issued upon conversion of the shares. The
          Series A share price was equal to the fair market value of the share
          of the Company's Ordinary shares at date of issuance. The issuance of
          60,000 of the Series A Convertible Redeemable shares was for cash in
          an amount less than their fair market value. Accordingly, the Company
          recorded deferred stock compensation in the amount of $ 750. The total
          compensation costs charged to the statements of operations in respect
          of the Series A shares in 2000 and 2001 were $ 92 and $ 658,
          respectively.

          During 2001, the Company redeemed 1,450,000 of the Series A shares in
          exchange for the promissory notes.

          The Company resolved to accelerate the conversion of 60,000 of the
          Series A shares to Ordinary shares, upon termination of holder's
          employment. The Company amortized the deferred stock compensation and
          charged it as expense at the acceleration date. The Company did not
          record compensation due to the acceleration, due to the fact that the
          fair value of the share price was lower than the Series A share
          original purchase price.

          As of December 31, 2003, there are no outstanding Series A Ordinary
          shares.

     c.   Stock option plans:

          1.   Under the Company's stock option plan ("the plan") options may be
               granted to employees, officers, consultants and directors of the
               Company or its subsidiaries.

          2.   As of December 31, 2003, an aggregate of 7,375,589 of the
               Company's options are still available for future grant.

          3.   The options granted generally become fully exercisable after four
               years and expire no later than 10 years from the approval date of
               the option plan under terms of grant. Any options, which are
               forfeited or cancelled before expiration, become available for
               future grants.


                                     F - 18
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA


NOTE 9:- SHAREHOLDERS' EQUITY (DEFICIENCY) (CONT.)

          The following is a summary of the Company's stock options granted
          among the various plans:


<TABLE>
<CAPTION>

                                                            YEAR ENDED DECEMBER 31,
                           -----------------------------------------------------------------------------------
                                     2001                           2002                         2003
                           -----------------------         ---------------------         ---------------------
                                            WEIGHTED                      WEIGHTED                      WEIGHTED
                                            AVERAGE                       AVERAGE                       AVERAGE
                             NUMBER         EXERCISE       NUMBER         EXERCISE        NUMBER        EXERCISE
                           OF OPTIONS        PRICE       OF OPTIONS        PRICE        OF OPTIONS       PRICE
                           ----------        -----         --------        -----         --------        -----
<S>                        <C>               <C>          <C>              <C>         <C>               <C>
Outstanding at the
   beginning of the
   year                     3,056,963        $ 3.8        5,358,513        $0.36        4,220,219        $0.44

   SVL's employees
     (see Note 9f)           (593,979)       $ 3.0                -        $   -                -        $   -
   Granted                  4,391,000        $ 0.2           15,500        $0.17          200,000        $0.29
   Exercised                 (289,599)       $0.03         (457,169)       $0.02       (2,873,859)       $0.03

   Forfeited               (1,205,872)       $2.28         (696,625)       $0.08         (906,360)       $2.00
                           ----------                      --------                      --------
Outstanding at the
   end of the year          5,358,513        $0.36        4,220,219        $0.44          640,000        $0.11
                           ==========        =====       ==========        =====       ==========        =====
Exercisable options
   at the end of the
   year                     1,370,292        $0.81        2,538,917        $0.56          440,000        $0.02
                           ==========        =====       ==========        =====       ==========        =====
</TABLE>



          All options granted during 2002 and 2003, were at an exercise price
          that is equal to the fair value of the stock at the grant date.

          The options outstanding as of December 31, 2003, have been separated
          into ranges of exercise price as follows:

<TABLE>
<CAPTION>

                                                               WEIGHTED
            OPTIONS        WEIGHTED              OPTIONS       AVERAGE
          OUTSTANDING      AVERAGE   WEIGHTED  EXERCISABLE     EXERCISE
             AS OF        REMAINING  AVERAGE      AS OF        PRICE OF
EXERCISE   DECEMBER 31,  CONTRACTUAL EXERCISE  DECEMBER 31,    OPTIONS
  PRICE       2003       LIFE (YEARS) PRICE       2003       EXERCISABLE
--------    -------      ---------  --------    -------       --------

<S>         <C>             <C>     <C>         <C>           <C>
$   0.02    440,000         6.8     $   0.02    440,000       $   0.02
$   0.29    200,000         9.5     $   0.29          -       $     -
            -------         ---                  ------

            640,000         7.6     $   0.10    440,000       $   0.02
            =======         ===     ========    =======       ========
</TABLE>


          Following the assets purchase agreement all outstanding options, other
          than those held by directors, were either exercised or forfeited as of
          December 31, 2003.

     e.   Warrants and options issued to service providers and consultants:

          1.   The Company had accounted for its options to service providers
               under the fair value method of SFAS No. 123 and EITF 96-18. The
               fair value for these options was estimated using a Black-Scholes
               option-pricing model with the following weighted-average
               assumptions for 2001: risk-free interest rates of 5%, dividend
               yields of 0%, volatility factors of the expected market price of
               the Company's Ordinary shares of 1.7, and a weighted-average
               expected life of the options of approximately three years.

          2.   The Company recorded compensation expenses of $ 140 (out of
               which, $ 90 was included in the discontinued operations) during
               2001, related to the service providers options.


                                     F - 19
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA


NOTE 9:- SHAREHOLDERS' EQUITY (DEFICIENCY) (CONT.)

     f.   Under the agreement between the Company and SVL's employees, the
          exercise price of their vested options was amended to NIS 0.10 per
          share. The Company recorded on the new measurement date compensation
          expenses of $ 51, as part of the $ 1,544 compensation expenses (see
          also g below).

          Upon the disposal of SVL's ASIC business, most of SVL's employees were
          transferred to the purchaser and changed their status from employees
          to non-employees.

          The Company accounts for the unvested options as a variable plan and
          use the fair value method of SFAS No. 123 and EIFT 96-18. The fair
          value for these options was estimated using a Black-Scholes
          option-pricing model with the following weighted-average assumptions
          for 2001 and 2002: risk-free interest rates of 5% for each year,
          dividend yields of 0% for each year, volatility factors of the
          expected market price of the Company's Ordinary shares of 0.82 and
          1.7, respectively, and a weighted-average contractual life of the
          options of approximately 3 years for each year.

          As of December 31, 2001, 2002 and 2003, the Company recorded no
          compensation expenses related to the unvested options, as the fair
          value of such options was zero.

          During 2001, 2002 and 2003, 1,789, 473 and 83,142 options were
          exercised, respectively.

     g.   In April 2001, the Board of Directors of the Company resolved to
          reprice stock options of certain of its employees and employees of
          Orckit. The exercise price of the repriced stock options is NIS 0.10
          which is the par value of the Ordinary shares. The Company had a new
          measurement date and consequently recorded deferred stock compensation
          of $ 3,374. During 2001, 2002 and 2003 $ 1,544, $ 635 and $ 771,
          respectively was amortized to the statement of operations.

     h.   In March 2000, Orckit issued $ 125,000 aggregate principal amount of
          its 5.75% convertible subordinated notes due in April 2005. Holders of
          the notes are entitled to convert each $ 1 principal amount of the
          notes into 11.7481 Ordinary shares of Orckit (which is equivalent to a
          conversion price of $ 85.12 per share) plus 11.7481 Ordinary shares of
          Tikcro. The conversion rates with respect to Orckit and Tikcro are
          subject to adjustment in certain circumstances, such as changes in the
          applicable Company's capital structure or upon the issuance by the
          applicable company of stock dividends or certain cash distribution.

          During 2001, $ 31 of the subordinated convertible notes was converted
          by the holders. As a result, the Company issued 364,191 Ordinary
          shares of the Company.

          During 2003, Orckit repurchased $ 75,312 principal amount of the
          notes. These notes are convertible to 884,774 shares of the Company
          (the Company's average price 30 days prior to this date is $ 0.27).

          Orckit agreed not to convert the notes for a total consideration of $
          239 that was paid to Orckit by the Company during 2003.


                                     F - 20
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA


NOTE 9:- SHAREHOLDERS' EQUITY (DEFICIENCY) (CONT.)

          According to EITF 00-19 "Accounting for Derivative Financial
          Instruments Indexed to, and Potentially Settled in, a Company's Own
          Stock", the initial balance sheet classification is based on the
          concept that contracts that require settlement in shares are equity
          instruments.

          Therefore, according to EITF 00-19, the $ 239 was reduced from the
          additional paid in capital and classified as equity.

     i.   In February 2003, the Company obtained the required Israeli court
          approval for a share repurchase program.

          The program allows Tikcro to repurchase its Ordinary shares for an
          agreed consideration of up to $ 2,000. The purchases will be made from
          time-to-time at the discretion of management in open market purchases
          or in privately negotiated transactions. Purchases will depend upon
          market conditions and may be discontinued at any time.

          As of December 31, 2003, the Company repurchased 4,341,154 of its
          shares (out of which 2,000,000 were purchased from employees) in
          consideration of $ 1,065 and are recorded as Treasury shares that are
          presented at cost, and recorded as a reduction in shareholder's
          equity.


NOTE 10:- TAXES ON INCOME

     a.   Measurement of taxable income under the Income Tax (Inflationary
          Adjustments) Law, 1985:

          Results for tax purposes are measured in terms of earnings in NIS
          after certain adjustments for increases in Israel's Consumer Price
          Index ("CPI"). As explained in Note 2b, the financial statements are
          measured in U.S. dollars. The difference between the annual change in
          Israel's CPI and in the NIS/dollar exchange rate causes a further
          difference between taxable income and the income before taxes shown in
          the financial statements. In accordance with paragraph 9(f) of SFAS
          No. 109, the Company has not provided deferred income taxes on the
          difference between the functional currency and the tax bases of assets
          and liabilities.

     b.   The regular corporate tax rate in Israel is 36%.


                                     F - 21
<PAGE>


                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS

NOTE 10:- TAXES ON INCOME (CONT.)

     c.   Deferred taxes on income:

          Deferred income taxes reflect the net tax effect of temporary
          differences between the carrying amounts of assets and liabilities for
          financial reporting purposes and the amounts used for income tax
          purposes. Significant components of the Company's deferred tax
          liabilities and assets are as follows:


<TABLE>
<CAPTION>

                                                               DECEMBER 31,
                                                          ------------------------
                                                            2002            2003
                                                          --------        --------
<S>                                                       <C>             <C>
Deferred tax assets:
   Net operating loss and capital loss carryforward       $ 45,152        $ 47,412
   Reserves and allowances                                     344               -
                                                          --------        --------

Net deferred tax asset before valuation allowance           45,496          47,412
Valuation allowance                                        (45,496)        (47,412)
                                                          --------        --------

Net deferred tax asset                                $          -    $          -
                                                          ========        ========
</TABLE>



          Management currently believes that since the Company and its
          subsidiaries have a history of losses it is more likely than not that
          the deferred tax assets regarding the loss carryforward and other
          temporary differences will not be realized in the foreseeable future.

     d.   Net operating losses carryforward:

          The Company has accumulated operating losses for tax purposes as of
          December 31, 2003, in the amount of approximately $ 32,545, which may
          be carried forward and offset against taxable income in the future for
          an indefinite period.

          The Company has accumulated capital losses of $ 97,808, which may be
          carried forward and offset against capital gains for seven years and
          expire in 2008. There is no assurance that the Israeli tax authorities
          will accept such position.

          As of December 31, 2003, the U.S. subsidiary had approximately $ 1,385
          in federal net operating loss carryforward for income tax purposes,
          which can be carried forward and offset against taxable income for 20
          years and expire until 2023.

          Utilization of U.S. net operating losses may be subject to substantial
          annual limitation, due to the "change in ownership" provisions of the
          Internal Revenue Code of 1986 and similar state provisions. The annual
          limitation may result in the expiration of net operating losses before
          utilization.

     e.   The main reconciling item from the statutory tax rate of the Company
          to the effective tax rate is the non-recognition of tax benefits from
          accumulated net operating losses carryforward due to the uncertainty
          of the realization of such tax benefits.


                                     F - 22
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 10:- TAXES ON INCOME (CONT.)

     f.   Net income (loss) from continuing operations consists of the
          following:

<TABLE>
<CAPTION>

                                 YEAR ENDED DECEMBER 31,
                        ----------------------------------------
                          2001            2002            2003
                        --------        --------        --------

<S>                     <C>             <C>             <C>
Domestic (Israel)       $(11,133)       $  9,427        $ 12,012
Foreign                   (2,974)           (647)            (34)
                        --------        --------        --------

                        $(14,107)       $  8,780        $ 11,978
                        ========        ========        ========
</TABLE>


NOTE 11:- RELATED PARTY TRANSACTIONS

          The balances with and the results of operations from transactions with
          Orckit and ST related parties, were as follows:


<TABLE>
<CAPTION>

                                                                DECEMBER 31,
                                                           ---------------------
                                                            2002           2003
                                                           -------        ------
<S>                                                        <C>            <C>
Balances:

   Other accounts receivable                               $   400        $ 1,235
   Current account                                         $  (674)       $   (44)
   Trade receivables                                       $ 1,685        $ 1,000
   Long-term loan (see Note 7)                             $(5,200)       $     -
   Current maturities of long-term loan (see Note 7)       $(1,800)       $     -
</TABLE>



<TABLE>
<CAPTION>

                                                          YEAR ENDED DECEMBER 31,
                                                    -------------------------------------
                                                       2001          2002           2003
                                                    ------------  -----------      ------
<S>                                                 <C>           <C>              <C>
Transactions:

   Revenues from products and royalties (1)         $      1,418  $       200      $     -
   Revenues from development and marketing services
     (see Note 1b)                                  $          -  $     7,667      $ 2,691
   Interest on long-term loan                       $      1,200  $       961      $   195
   Administrative services                          $          -  $         -      $    50
</TABLE>



     (1)  Tikcro entered into a product supply agreement with Orckit as part of
          the spin-off, pursuant to which, Tikcro would sell certain
          semiconductor products to Orckit subject to performance criteria and
          price. Orckit would purchase from Tikcro a substantial portion of its
          chipsets requirements at most-preferred customer prices (see Note 1).

          Effective January 1, 2001, this agreement was amended to a royalty
          agreement under which, Orckit paid Tikcro royalties equal to 10% of
          the actual chips price paid by Orckit to the chips supplier. This
          agreement was terminated on May 1, 2002.


                                     F - 23
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 12:- BASIC AND DILUTED NET EARNINGS (LOSS) PER SHARE

          The following table sets forth the computation of basic and diluted
          net earnings (loss) per share.

<TABLE>
<CAPTION>

                                                                              YEAR ENDED DECEMBER 31,
                                                             ---------------------------------------------------
                                                                 2001                2002               2003
                                                             ------------        ------------       ------------
<S>                                                          <C>                 <C>                <C>
a.  Numerator:

       Net income (loss) from continuing operations          $    (14,107)       $      8,780       $     11,978
       Net income (loss) from discontinued operations              (4,043)                 19                  -
                                                             ------------        ------------       ------------
       Numerator for diluted net earnings (loss) per
          share - income available to shareholders of
          Ordinary shares                                    $    (18,150)       $      8,799       $     11,978
                                                             ============        ============       ============

b. Denominator:

       Denominator for basic net earnings (loss) per
          share - weighted average shares                      23,604,309          24,771,743         23,948,650
                                                             ------------        ------------       ------------
       Effect of dilutive securities:
       Employee stock options, Orckit's employee
          options, SVL's employee options and options
          to service providers                                        *)-           2,012,398            883,000
       Convertible subordinated notes                                 *)-           1,104,321            457,000
                                                             ------------        ------------       ------------
       Denominator for diluted net earnings (loss) per
          share - adjusted weighted average shares,
          assumed conversions and exercise of options
          and warrants                                         23,604,309          27,888,462         25,288,650
                                                             ============        ============       ============
</TABLE>

     *)   Antidilutive.


NOTE 13:- DISCONTINUED OPERATIONS

     a.   Discontinued operations:

          1.   In April 2001, the Company sold the ASIC division of its
               wholly-owned subsidiary ("SVL" - see also Note 1) in
               consideration of $ 21,650 in cash, assumptions of debts and
               future services that the purchaser has undertaken to render to
               the Company over a period of two years. The initial consideration
               was set on $ 22,250 of which $ 300 was settled in 2001 and
               additional $ 300 in 2002, see (3) below.

          2.   As of December 31, 2001, the Company received $ 16,200 in cash ($
               15,821 net of transaction costs), in addition to $ 1,800, which
               was released from an escrow account on December 2002, and the
               purchaser also assumed $ 1,900 of debt assumptions (initially $
               2,500 see (3) below). The Company was also entitled to receive
               services from the purchaser over a period of two years, in
               consideration of $ 1,750.


                                     F - 24
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 13:- DISCONTINUED OPERATIONS (CONT.)

               This transaction was accounted for in accordance with EITF 95-18,
               "Accounting and Reporting for a Discontinued Business Segment
               When the Measurement Date Occurs after the Balance Sheet Date but
               before the Issuance of the Financial Statements", and APB-30,
               "Reporting the Results of Operations-Reporting the Effects of
               Disposal of a Segment of a Business, and Extraordinary, Unusual
               and Infrequently Occurring Events and Transactions".

          3.   On November 25, 2002, the Company and the purchaser of SVL signed
               a settlement and release agreement pursuant to which the Company
               waived $ 600 out of the consideration of the transaction and the
               parties released the escrow account. Therefore, during 2002, the
               Company recorded an additional capital loss of only $ 300 as part
               of the discontinued operations.

     b.   As a result of the selling of the ASIC business as mentioned above,
          the results of operations of the ASIC business were reported
          separately as discontinued operations in the statement of operations
          for the years ended December 31, 2001, 2002 and 2003 and are
          summarized as follows:
<TABLE>
<CAPTION>

                                                       YEAR ENDED DECEMBER 31,
                                                 ---------------------------------
                                                  2001       2002*)       2003
                                                 -------    -------    -----------
<S>                                              <C>        <C>        <C>
Revenues                                         $(4,968)   $     -    $         -
Cost of revenues                                   1,740          -              -
Net income from cancellation of NRE projects        (494)         -              -
Research and development (income) expenses         2,821       (170)             -
Selling, general and administrative expenses       1,787          8              -
Amortization of goodwill                           2,259          -              -
Impairment of property and equipment                 823          -              -
Financial expenses, net                               79          -              -
Loss from selling property and equipment              28          -              -
Income taxes                                          13       (157)             -
Gain (loss) from the disposal of SVL business        (45)       300              -
                                                 -------    -------    -----------

Net loss (income) from discontinued operations   $ 4,043    $   (19)   $         -
                                                 =======    =======    ===========
</TABLE>



     *)   In accordance with Paragraph 25 of APB No. 30, those amounts were
          included in 2002 discontinued operations, as a result of a remaining
          contingency subsequent to the disposal of SVL business.


                                     F - 25
<PAGE>

                                   TIKCRO TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
                                             (FORMERLY: TIOGA TECHNOLOGIES LTD.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. DOLLARS IN THOUSANDS


NOTE 14:- MAJOR CUSTOMERS AND GEOGRAPHICAL INFORMATION

          The Company and its subsidiaries manage their business on a basis of
          one reportable segment (see Note 1 for a brief description of the
          Company's business) and follows the requirements of Statement of
          Financial Accounting Standard No. 131, "Disclosures About Segments of
          an Enterprise and Related Information" ("SFAS No. 131").

          The following table presents total revenues for the years ended
          December 31, 2001, 2002 and 2003:

<TABLE>
<CAPTION>

                 YEAR ENDED DECEMBER 31,
                ------------------------
                 2001     2002     2003
                ------   ------   ------
<S>             <C>      <C>      <C>
Switzerland$    $    -   $7,679   $2,667
Israel           1,425      233       24
United States       15        -        -
                ------   ------   ------

                $1,440   $7,912   $2,691
                ======   ======   ======
</TABLE>



          Most of the Company's long-lived assets are in Israel for all years
          presented.

          During 2001, the Company's major customer was Orckit and during 2002
          and 2003, the Company's major customer was ST (see also Note 1).


NOTE 15:- FINANCIAL EXPENSES

<TABLE>
<CAPTION>

                                                             YEAR ENDED DECEMBER 31,
                                                          -----------------------------
                                                           2001       2002       2003
                                                          -------    -------    -------
<S>                                                       <C>        <C>        <C>
Financial expenses:
   Interest                                               $(1,587)   $  (964)   $  (195)
   Foreign currency translation adjustments                     -        (51)       (98)
   Losses from available-for-sale marketable securities       (99)         -          -
   Other                                                      (46)       (12)         -
                                                          -------    -------    -------

                                                           (1,732)    (1,027)      (293)
                                                          -------    -------    -------
Financial income:
   Foreign currency translation adjustments                    10          -          -
   Interest                                                   484        153         65
                                                          -------    -------    -------

                                                              494        153         65
                                                          -------    -------    -------

                                                          $(1,238)   $  (874)   $  (228)
                                                          =======    =======    =======
</TABLE>



                                - - - - - - - - -


                                     F - 26
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.   Exhibit
-----------   -------

        1.1   Memorandum of Association (g)

        1.2   Amended and Restated Articles of Association (g)

        4.2   Intellectual Property Agreement, dated as of January 1, 2000,
              between Tikcro and Orckit (a)

        4.7   Registration Rights Agreement, dated March 13, 2000, by and among
              Orckit Communications Ltd., Tikcro and CIBC World Markets Corp.
              (b)

        4.8   Share Incentive Plan, as amended (c)

        4.9   Asset Purchase Agreement, dated as of April 23, 2001 by and among
              Silicon Value, Printsense and Tikcro (d)

       4.12   Technology Transfer Agreement, dated as of February 14, 2002, by
              and among Tikcro, ST Microelectronics Ltd. and STMicroelectronics
              NV (e)

       4.13   Option Agreement, dated as of February 14, 2002, by and between
              Tikcro and STMicroelectronics NV (e)

       4.14   Development, Marketing and Services Agreement, dated as of
              February 14, 2002, by and among Tikcro, ST Microelectronics Ltd.
              and STMicroelectronics NV (e)

       4.16   Asset Purchase Agreement, dated April 28, 2003, by and among
              Tikcro, ST Microelectronics Ltd. and STMicroelectronics NV (f)

       4.17   Tikcro Stock Option Plan (amended 2003) (g)

          8   List of Subsidiaries (g)

       12.1   Certification of Principal Executive Officer and Principal
              Financial Officer pursuant to 17 to CFR 240.13a-14(a), as adopted
              pursuant to Section 302 of the Sarbanes-Oxley Act (g)

       13.1   Certification of Principal Executive Officer and Principal
              Financial Officer pursuant to 18 to U.S.C. 1350, as adopted
              Section 906 of the Sarbanes-Oxley Act of 2002 (g)

       15.1   Consent of Independent Auditor (g)

(a) Incorporated by reference to Tikcro's Registration Statement on Form 20-F
filed June 22, 2000 (File No. 0-30820)

                                        1
<Page>

(b) Incorporated by reference to Tikcro's Registration Statement on Form F-1
(File No.333-12238)

(c) Incorporated by reference to Tikcro's Registration Statement on Form S-8
(File No. 333-12904).

(d) Incorporated by reference to Tikcro's Annual Report on Form 20-F for the
year ended December 31, 2001 (File No. 0-30820).

(e) Incorporated by reference to Tikcro's Report on Form 6-K for the month of
February 2002 dated February 14, 2002 (File No. 0-30820).

(f) Incorporated by reference to Tikcro's Annual Report on Form 20-F for the
year ended December 31, 2002 (File No. 0-30820)

(g) Filed herewith

                                        2