History and Development
We were incorporated in Israel on May 23, 2002 and we commenced operations in May 2006. Our principal executive offices are located at 2 Yodfat Street, Lod 71291, Israel and our telephone number is 972-8-918-8667. Substantially all of our assets and most of our officers and employees are located in Israel.
Our CKChip technology is a modification of the cell carrier grid used for our CellScan system, first developed by scientists at Bar Ilan University in Israel to diagnose cancer based upon the belief that disease can be detected by testing the response of the immune system to antigens, which are immune system stimulants, for specific diseases. These scientists believed that, using the CellScan technology, simple and effective tests for breast cancer and other diseases could be developed. In 1991, Bar Ilan granted Israel Aerospace Ltd. (formerly Israel Aircraft Industries Ltd.), one of Medis' principal stockholders, a perpetual worldwide license to develop, manufacture and sell the CellScan. This license included all of Bar Ilan's intellectual property rights related to the CellScan. In 1992, Israel Aerospace assigned all of its rights under this license to Medis El, then a majority owned subsidiary of Medis.
From its inception in 1992, Medis El attempted to develop , market and test the CellScan as a machine to screen for and detect breast cancer by means of a blood test. Medis El sold a small number of CellScans to various hospitals and institutions around the world but, from inception, there were problems with an inconsistency of testing results. In 1998, Medis El redesigned the CellScan to improve its accuracy, repeatability and ease of handling, adding a new optical system and new software.
In 1997, Medis El concluded that the CellScan also had significant potential as an alternative to flow cytometers for research applications in addition to its originally conceived role of a breast cancer diagnostic tool. Further ongoing research by Medis El's scientists and engineers led to numerous improvements of the CellScan, including the development and refinement of the Cell Carrier, which is an integral component of the CellScan. In January 2006, Medis El developed a coated version of the CellScan's cell carriers, capable of holding up to 10,000 individual cells and providing an opportunity for measuring the reactions of different cells by the CellScan
Over the past decade, Medis has increasingly devoted its efforts and financial resources to the development of innovative liquid fuel cell solutions. These efforts, combined with a realization that upgrading the CellScan for its originally intended purpose would entail a major financial expenditure, as well as regulatory and competitive uncertainties, led Medis to conclude that it would be prudent and ultimately more rewarding to seek commercial exploitation of the CellScan's Cell Carrier technology for life sciences research and clinical diagnostic applications as a separate company.
At the end of 2006 we initiated a new development plan including the modification of the Cell Carrier to fit fluorescence microscopy. In addition we started developing dedicated software that will support processing and analysis of data acquired from studies performed with the CKChip.
As of July 27, 2007, we entered into a service agreement with Medis El and Medis pursuant to which they will provide us with administrative services, equipment usage and facilities for a period of 18 months from the January 7, 2008 completion date of our rights offering. This agreement provides that Medis El and Medis will charge us for such services at their cost, as a contribution to our capital.
In furtherance of Medis' plan to commercialize the CKChip technology, Medis transferred its CellScan and Cell Carrier related operations, including its intellectual property rights relating to the CellScan and its Cell Carrier technology, to us pursuant to an asset purchase agreement dated July 26, 2007 in consideration of our issuance to Medis El of 15,500,000 of our ordinary shares. Medis has also granted us a five year right of first refusal upon all further medical diagnostic opportunities that are sourced by, or presented to Medis. In addition, Medis has agreed to provide to us a cash capital contribution of up to $1,500,000 over an 18 month period on an as needed basis commencing on the January 7, 2008 completion date of our rights offering. Medis has also agreed that, following the completion of the 2008 rights offering, it will provide us with such office and laboratory facilities as we may reasonably require to further the commercialization of the Cell Carrier and to launch and operate our proposed medical device incubator and will provide us with administrative and professional services, at cost as a contribution to our capital, for a period of not less than 18 months thereafter. Medis has also committed to provide us with additional financing to carry-out our operations through at least January 7, 2009, if our other resources are insufficient for such period of time. On June 30, 2008, Medis El provided funding to us in the amount $1,500,000, pursuant to a non-interest bearing, unsecured promissory note, with a due date of January 1, 2010 - subject to certain other repayment conditions that are based on our receiving alternative sources of financing for our operations or the sale of our business to or merger with a third party. At the option of Medis El, any remaining balance on the promissory note may be contributed to our capital.
On January 7, 2008, we completed a rights offering to Medis common stockholders pursuant to which subscribers purchased
an aggregate of 3,492,788 of our ordinary shares, at the subscription price of $0.30 per share, for aggregate gross proceeds of $1,048,000, less offering expenses of approximately $601,000. Subscribers also received four year warrants to purchase additional ordinary shares, at an exercise price of $0.60 per share, at the rate of one such warrant for every two ordinary shares purchased in the rights offering. Under the terms of the rights offering, record holders of our outstanding common stock received, at no cost, one nontransferable subscription right for every ten shares of our common stock held by them as of the close of business on the record date, which was November 12, 2007. Upon the completion of the rights offering, we continued to own approximate 82.5% of Cell Kinetics' outstanding ordinary shares and subscribers owned the balance.
B. Business Overview
The CKChip Technology and Product Line
Introduction
We are seeking to commercially exploit what we believe to be a growing need to study individual live cells through the development, marketing and sale of an improved Cell Carrier under the "CKChip™" product line. This unique Cell Carrier can accommodate large quantities of cells, each in individual wells, for measuring reactions of living cells while the cells are in a static state for a considerable period of time. While our business model initially also contemplated investing in early stage Israeli-based medical device company, and pursuant to that model invested in Scorpion Surgical Technologies, due to our financial situation, we are no longer making any such investments.
Our CKChip is a platform static cytometry technology that enables the simultaneous examination of many individual live cells using simple imaging methods such as fluorescence microscopy. Whereas until now cells were fixed and stained for microscopic examination, broken down for examination of their contents, or held alive on micro-plates, the CKChip™ will enable the dispersion of a group of living cells, each into its own micro-well for individual scrutiny over time. We believe that our proprietary CKChip™ platform will address the need for cell-based assays that are simple to use, providing continuous recording of cellular activities with high sensitivity, reliability and medium to high throughput screening.
Monitoring of cells held on the CKChip is performed by means of fluorescence emission detected microscopically, using an upright or inverted microscope, in conjunction with common imaging software. As fluorescence imaging microscopes are common in most life science and medical laboratories, we assume high availability of such imaging modalities to almost every scientist and researcher interested in using the CKChip™ .
Advances in cell biology and medical research are driving the growing need for technologies that enable the examination of dynamic molecular and physiological processes in individual living cells over time.
We believe that scientists today recognize that in order to advance the understanding of biological processes and to carry out tests on them, it is necessary to integrate separate functions into one complex modulus. The smallest living unit, the cell, plays a central role as a functional system model for such tests. We believe that detailed quantitative understanding of single cell basis and integration of various aspects of cellular events become important tools for cell function analysis.
We believe that the CKChip technology could be used for research purposes in various scientific fields including immunology, cell biology, genetic engineering, systems biology, cancer research, drug discovery and the analysis of live cells.
Analysis of Live Cells
Live cell analysis is a growing field in life sciences and clinical medicine. This is due to rapid advances in imaging microscopy and corresponding software now enabling easier and more efficient live cell imaging procedures. New technologies are expected to open up new possibilities in cell biology, drug discovery, immunology, cancer, and stem cell research, expanding the current markets and leading to new markets.
The following live cell investigations are becoming increasingly important, and we believe that we bring an innovative and important tool for research of cell behavior and cell function in a manner not available before.
| · | Dynamic Imaging in Living Cells |
Imaging cells without killing them makes it possible to watch biology in action. Among the real-time processes that can be recorded are the congregating of protein complexes, microvilli responding to changes in osmotic pressure and viruses preparing to infect a cell. Recently, observation and tracking of individual proteins tagged with green fluorescent protein (GFP) in live cells has opened new important possibilities for studying events occurring in living cells at the level of single molecules, providing powerful
means to investigate the localization, movement, assembly, and activation that signaling molecules undergo as the result of an external stimulus.
| · | Assessing Responses of Individual Cells |
Assessing single cells within a population of cells has become an invaluable measure for evaluating immune response or suppression in many disease settings. For example, production of various cytokines by immune cells (both intracellular and secreted) helps define the nature of immune response in auto-immune disease and in transplant and cancer patients.
| · | Gene Expression and Genetic Engineering |
A key goal of biology is to relate the expression of specific genes to a particular cellular phenotype. However, current assays for gene expression destroy the structural context.
We believe that our proprietary CKChip platform will address the need for cell-based assays that are simple to use, providing continuous recording of cellular activities with high sensitivity, reliability and medium to high content kinetic analysis and high content screening.
Current Means of Cell Analysis
Two major techniques are currently used for examining live cells:
| · | Microscopy , in which cells are held on a glass slide or in small wells in nutrient medium. Often groups of cells are held in a well in which they are free to move around in the microscopic field so that monitored cellular events reflect the average response of the group, rather than that of individual cells which may deviate far from the average. |
Microscopy relies on software tools that enable the imaging and follow-up of specific cells. These software packages are limited in their ability to identify and follow up on targets containing a variety of cells, especially non adherent cells that tend to move about the microscopic field. It is also difficult to follow a large number of cells simultaneously and over time.
Flow cytometry is a technique for counting and sorting microscopic particles, such as cells, suspended in a stream of fluid. It allows simultaneous multi-parametric analysis of the physical and/or molecular characteristics of cells as they flow through an optical and/or electronic detection apparatus.
Flow cytometry has been widely used for over 30 years but we believe it lacks a number of capabilities and features needed in today's life science and medical diagnostics research We believe flow cytometry has distinct limitations:
| · | Flow methods are limited to analyzing cells in fluids and the recorded cells are often discarded after measurement; |
| · | Cell-based assays requiring time resolution, such as enzyme kinetics or drug uptake and/or action, make no sense by flow methods as specific cells cannot be re-analyzed; |
| · | It is difficult to use Flow cytometry to determine sub-cellular localization of fluorochromes employed to study intracellular events; |
| · | Flow cytometry is impractical for small cell numbers; and |
| · | Flow cytometry equipment is a high-priced tool ($50,000 - $500,000). |
Our CKChip Technology
Our CKChip is a platform static cytometry technology that enables the simultaneous examination of many individual live cells using simple imaging methods such as fluorescence microscopy. Whereas until now cells were fixed and stained for microscopic examination, broken down for examination of their contents, or held alive in groups on micro-plates, the CKChip enables the dispersion of whole living cells, each into its own micro-well for individual scrutiny over time. Both small and large numbers of cells can be simultaneously monitored in up to 10,000 micro-wells. This proprietary system enables:
| · | Imaging adherent as well as non-adherent live cells; |
| · | Revisiting and monitoring specific cells at designated "addresses;" |
| · | Sequential manipulation of individual live cells; |
| · | Potential retrieval of specific cells; and |
| · | Simultaneous monitoring of kinetic data of multiple individual cells. |
The Cell Carrier, is currently marketed on a limited basis according to our limited sales force capability and we intend to continue to market it under the "CKChip" name. This devise enables loading cells onto the CKChip where each cell is drawn/siphoned into a microwell and become trapped in its individual microwell. for analysis, treatment or rinsing with multiple reagents. The location, or "address", of each microwell is registered, so that cells identified for special attention during monitoring can be revisited and potentially retrieved for further treatment and investigation
Monitoring of cells held on the CKChip is performed by means of fluorescence emission detected microscopically, using virtually any upright or inverted fluorescence, in conjunction with common imaging software. As fluorescence imaging microscopes are common in most life science and medical laboratories, anyone interested in using the CKChip may be able to do so.
We believe the CKChip has the following distinct advantages over other cytometric technologies:
| · | ability to capture and register living cells at specific addresses; |
| · | ability to monitor identifiable individual cells and rare events; |
| · | ability to repeatedly monitor cells for acquisition of kinetic data; |
| · | simultaneous and sequential monitoring of up to 10,000 cells by conventional imaging microscopy; |
| · | enables characterization of specific cells within a heterogeneous cell population; |
| · | manipulation and analysis of adherent and non-adherent living cells; and |
| · | adding and rinsing reagents from living cells under observation. |
Potential Applications
We believe that there are numerous potential applications for our CKChip technology, such as:
| · | Clinical diagnostic / in vitro diagnostic market. Clinical diagnostic / in vitro diagnostic tests are essential to the practice of health care worldwide: In clinical diagnostics, a biological sample is taken from the patient and sent to a medical laboratory for analysis using reagents and instrument developed by the in vitro diagnostic (IVD) industry. A wide range of increasingly sophisticated diagnostic tests exist, and are used: |
· for systematic screening of certain populations;
· to establish or confirm a diagnosis for a person presenting with clinical symptoms; and
· to determine appropriate treatment and monitor its efficacy.
Diagnostic tests are used for monitoring patient status and to follow the course of treatment in cancer, chronic diseases and others.
| · | Enzyme Kinetics. Enzyme kinetics is the study of the rates of chemical reactions that are catalyzed by enzymes. These studies provide insights into the catalytic mechanism of enzymes, their role in metabolism, how their activities are controlled within cells and how drugs and poisons can inhibit their activities. These studies are important because they help to explain how enzymes work and may predict how enzymes behave in living organisms. |
| · | Cytokine measurements. Cytokines are extracellular signaling proteins or peptides that act as a local mediator in cell to cell communication. The communication involves regulating proliferation (division) and differentiation of cells. When these "social controls" on cell division fail, cancer and other diseases result and damage occurs to body tissues and organs. The study of cytokine reactions in cells plays an important role in understanding diseases and developing new drugs to combat them. |
| · | Immunology. Immunology research on medical problems is becoming increasingly complex, focusing on the regulation and control of immune responses that involve cytokines, receptors, signaling and other biochemical processes. Vaccines developed as a result of this research need to be tested in vivo but studies in mice and other laboratory animals often cannot be directly extrapolated to humans because of biological differences. |
Our Products
Our current products, as well as products in varied states of development, are summarized below:
| · | Generation I (CCI) - The following are the current product lines available for sales and marketing under the CKChip brand name offering to basic grid types A-20 for cells under 15 micrometer in size and A-50 for cells above 15 micrometer in size . |
| o | Starter Kit - Including cell loader, cover-slips, holder unit, vacuum-pen, 8 CKChip units and our "WELLS" software |
| o | CKChip-R - for upright and inverted fluorescence microscopy applications enabling repeated multi-live single cell monitoring, and multiple rinsing of reagents and continues rinsing in upright microscopes only. |
| o | CKChip - I - for upright and inverted fluorescence microscopy applications enabling repeated multi-live single cell monitoring, and multiple rinsing of reagents and continues rinsing in inverted microscopes only. |
| o | DynamiCa kit - A dedicated kit for Ca flux measurements offering a simple platform that facilitates microscopic analysis of transient intracellular calcium levels. |
| o | WELLS Software - A dedicated CKChip image analysis software providing software tools for researchers using the CKChip. |
| o | CKChip HM - for high magnification imaging. |
The following are products that we intend to develop provided that we can raise adequate funds to maintain our operations:
| · | Generation II (CCT) - a transparent Cell Carrier that in addition to the features described above, is also suitable for light microscopy, reagent, chemical, and biological coating options. Subject to available funds, we are making an effort to introduce the first version of this product, which is in a development stage, during 2010. |
| · | Generation III (CCM) - We expect the CCM will be offered with special kits to enable clinical diagnostic applications based on research currently in progress. We are currently performing feasibility test of the first clinical diagnostic application for the CCM. |
Our Marketing Strategy
We have recently commenced the marketing of the CCI version, our first product. To this end, we presented the CKChip at a limited number of international congresses of cell biology and cytometry, as well as in a series of scientific seminars presented at various universities and academic institutions. In April 2008 we signed with Rikaken Co., Ltd. Japan, an exclusive distribution agreement for marketing and distributing our CKChip in Japan. This agreement was not extended after the initial term as provided in the agreement because CKChip sales did not meet expectations.
On May 10, 2009, we signed a distribution agreement exclusive for the territory of Italy. The agreement was signed with EuroClone S.p.A., a company that manufactures and distributes products for cell biology, molecular biology, cytogenesis, genomics, proteomics and immunology. Our current financial situation limits our ability to perform under this agreement
We are making an effort to form research collaborations with academic and other research institutions throughout the world. We believe that academic institutions researchers exhibit a number of characteristics that can impact on the success of novel technologies for cell analysis, such as:
| · | The academic community tends to operate in networks in which word of mouth supports the spread of a chosen technology; |
| · | Academic researchers are considered early adopters of new technology, relative to clinicians, allowing them to expand their research capabilities; and |
| · | There is strong scientific focus on cell-based applications. |
We are hopeful that the CKChip's exposure to academic institutions and researchers will facilitate our demonstration of the CKChip's capabilities in comparison to other technologies and thereby enhance our efforts to position the CKChip as a unique platform for cutting edge research in diverse fields.
We will be able to continue to present our technology and increase our sales activities only upon raising and securing adequate financing, of which we can give no assurance of success. These activities would include presentations at professional meetings, lectures and seminars direct sales activities, public relations campaigns and others. We anticipate that papers that we expect will be published by researchers in leading professional journals will generate publicity and will boost awareness of the CKChip technology.
Manufacturing and Sales
The assembly and packaging of our products is done in our facilities in Israel; however, we do not presently have large scale internal manufacturing or a meaningful sales capacity. We expect to seek to establish strategic alliances and joint ventures with third
parties possessing these capabilities until we can raise sufficient funds to perform these functions with our own personnel.
Our sales activity was relatively limited during 2008 due to budget constraints. We focused on identifying target customers by analyzing their scientific work and on optimizing our sales force ability to efficiently focus on customers with a high probability to purchase our products. Using this sales strategy, we sold $21,000 of our products to more than 10 customers in the academic research area. However, we encountered difficulties in introducing our products to the market because of the need for expensive market education, which substantially influences the success of sales of our products at this stage.
In order to maintain market awareness and overall control, we intend to be highly involved in directing the sales force of our strategic partners to the extent they will request and circumstances allow us.
We intend to build direct communication and channels with our target customers to obtain market feedback, enhance product quality, and facilitate product improvement and new product development.
Research and Development
Our research and development programs are generally pursued by our employees and consultants. The primary objectives of our research and development programs are to advance the development of our Cell Carrier technology and CKChip™ products, and to enhance the commercial value of our products and technology.
We have incurred research and development costs of approximately $1,191,000, $1,182,000 and $1,079,000 for the years ended December 31, 2008, 2007 and 2006, respectively.
Recent research and development initiatives include the following:
| · | We have recently invested substantial efforts in developing our transparent cell carrier, which was a challenging objective that required a series of prototype development and investigation of various potential designs that met product definitions and allowed an economical production process. Due to budget constraints, however, we were required to limit our efforts and decided upon a preferred first product design which may not be optimal in performance. |
| · | We have also invested efforts in studying and developing specific coating capabilities on the cell carrier in order to expand its potential applications and product line range. While we made initial steps to establish the foundation for potential future products incorporating specific coatings of reagents chemicals and antibodies on the Cell Carrier, this activity was limited due to budget constraints as well. |
| · | The current software that accompanies our products provides image analysis of data acquired from the microscope. We are currently working on the definition and development of data analysis software to enhance the ability of scientists using the Cell Carrier to retrieve and analyze imagery data in a user friendly efficient way. |
| · | We decided upon the first diagnostic clinical application to be developed based on our live cell monitoring ability. We are currently evaluating the feasibility of the protocol selected and we are also exploring means to optimize and establish stable test protocol. In order to facilitate this research activity we are collaborating with clinicians, although budget constraints have limited the process. |
Additionally, we maintain a quality assurance system and we declare our products in accordance with CE mark standards.
Investment in Scorpion Surgical Technologies
While it was our intention to develop a medical device incubator, we have decided to accord priority to the development and commercialization of our CKChip technology and successive generations of CKChip applications and products. Accordingly, at this time we are no longer investing in early stage medical device enterprises, and we do not expect to resume such activity in the future.
We previously invested in Scorpion Surgical Technologies, Ltd., a start-up company in the field of orthopedic surgical instrumentation, with particular emphasis upon spinal stabilization systems. Scorpion's technology is intended to enhance implant stability, increase implant strength as well as resistance to pull-out, and improve bone implant interaction. Scorpion's first product, presently in the development stage, is a vertebral attachment system, indented to offer a solution superior to pedicle screws and spinal stabilization. Scorpion received approval for a $250,000 grant contingently repayable from future royalty revenues only, from the Israeli Office of Chief Scientist, to further its research and product development efforts.
In July 2007, we entered into an agreement with Scorpion pursuant to which we agreed to acquire up to a 20% equity interest
in Scorpion for $150,000. Under the agreement, we will acquire 20,000 shares of Scorpion ratably based upon our payment of three equal installments of $50,000 each. The first payment was made in July 2007. The other two payments are subject to the performance of milestones that provide for our completion of an equity fund raising of at least $1,500,000 and Scorpion's signing an agreement with a medical research center for the performance of clinical trials, as well as the fulfillment of several administrative conditions. These two additional payments have not yet been made as management believes the milestones per the agreement have not yet been achieved. We also have been given the right to appoint a director to Scorpion's board of directors, which is currently vacant. See Item 7B. Related Party Transactions, for further information regarding our agreement with Scorpion.
Dr. Ben-Arye, who is a director and co-founder of Scorpion, did not participate in the negotiation of the terms of our investment in Scorpion. Additionally, Dr. Ben Arye has not and will not receive any portion of the payments that we have made and will make to Scorpion in consideration of our equity interest.
Licensed Technology
Medis El acquired the rights to the CellScan in August 1992 by assignment from IAI of a license from Bar Ilan University (the "University") to IAI. Medis El paid IAI $1,000,000 in consideration of the assignment of the license and for certain tooling and equipment. The license is a perpetual worldwide license to develop, manufacture and sell the CellScan, and to sublicense the right to manufacture and sell the device. The license includes all rights to the University's CellScan patents, know-how and inventions including any subsequently acquired, and all improvements thereto. Medis El is obligated to pay the University a royalty for a twenty-year period beginning in 1995. For the first ten years, the royalty is at the rate of 6.5% of proceeds of sales (after deducting sales commissions and other customary charges) and 4.5% on any fees received from granting territorial rights. The royalty for the second ten-year period is 3.5% on all revenues whether from sales or fees. In addition to such royalty payments, we are required to grant $100,000 to the University during the first year that our after-tax profits exceed $300,000. On July 26, 2007, Medis El assigned all of its intellectual property rights to the CellScan, including the Cell Carrier, to us and delegated to us its royalty payment commitments.
Intellectual Property Rights
We hold one U.S. patent on our Cell Carrier technology, which expires in June 2021, This patent is also valid in South Korea , Canada and Japan. We have filed three additional applications under the Patent Cooperation Treaty relating to a new version of our cell carrier technology and one provisional application submitted to the U.S. Patent and Trademark Office related to a specific testing method.
We do not believe that Bar Ilan's patent rights with respect to the CellScan, which have been assigned to us by Medis El, will be of material value to us in our future efforts to commercialize and protect our Cell Carrier technology as the underlying patents and attendant proprietary rights have expired.
Competition
The life sciences research and clinical diagnostics markets are characterized by intense competition. We believe that we directly compete with WBT (previously known as Molecular Cytomics Inc)., which offers a microscope slide-based device that contains thousands of micron-sized wells. Its technology enables high content analysis of non-adherent cells such as human blood, bone marrow and stem cells,. We are also aware of several other potentially competing technologies, among them:
| · | An academic collaboration at the Berkeley campus of the University of California, which has developed a dynamic single cell culture array that, if commercialized, would directly compete with our current and future intended CKChip applications and products. |
| · | SC World Inc., a Japanese biotechnology venture, that has been established to exploit micro-well cell chip technology that can capture lymphocyte cells for potential development of immunotherapeutic and immunodiagnostic tools. |
We also compete indirectly with a number of companies, both domestic and foreign, that engage in more traditional methods for carrying out single cell analyses, by means of microscope slides and culture microplates of various types. These companies include CompuCyte Corporation, Cellomics, a business unit within the Biosciences group of Thermo Fisher Scientific Inc., IBIDI and Chipman Technologies Ltd.
We will seek to effectively compete based upon the unique features and capabilities of our CKChip technology, the diversity of its applications and what we believe to be costly and comparatively inefficient means of cell analysis currently in use in our targeted markets.
Government Regulation
While we believe that the marketing of laboratory consumables for research applications only requires perfunctory regulatory filings, we may become subject to laws, regulations and recommendations relating to safe working conditions, laboratory and manufacturing practices, and the use and disposal of hazardous or potentially hazardous substances used in connection with our research and development work. In addition, the sale by us of any commercially viable product will or may be subject to government regulation from several standpoints, including manufacturing, advertising and promoting, selling and marketing, labeling, and distributing.
Facilities
Medis currently provides us with office and laboratory facilities of approximately 300 square meters at 2 Yodfat Street, Lod, Israel. These facilities are adequate for our projected needs. Medis El charges us for these facilities at its cost as a contribution to our capital and has agreed to do so through July 7, 2009. We may relocate our facilities if Medis El ceases to continue to support us and we are unable to successfully raise adequate capital for maintaining our operations.
Employees
As of December 31, 2008, we had 10 full-time employees, including our chief executive officer, and one part-time employee. We also use consultants from time to time on full or part time schedule. See "Major Shareholders and Related Party Transactions-Related Party Transactions" for a description of administrative services provided to us by Medis El.
Israeli labor laws govern the length of the workday, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days and other conditions of employment. Israeli law generally requires severance pay upon the retirement or death of an employee or termination of employment. Furthermore, we and our employees are required to make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Such amounts also include payments by the employee for health insurance. The total payments to the National Insurance Institute are equal to approximately 17.7% of an employee's wages (up to a specified amount), of which the employee contributes approximately 12% and the employer contributes approximately 5.7%.
Our employees are not represented by any labor union. Since our inception, we have not experienced labor-related work stoppages and believe that our relations with our employees are good. However, due to our financial situation, we may need to dismiss some or all of our employees in the near future.
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