RNS Number:7455S
Technoplast Industries Ld
2 December 2003



                             


                              KIDRON PLASTICS LTD.

                              FINANCIAL STATEMENTS

                                  30 JUNE 2003

                                  (unaudited)





                               TABLE OF CONTENTS




                                                                     Page
Review Report                                                         2
Financial Statements
Balance Sheets                                                        3
Statements of Income                                                  4
Statements of Changes in Shareholders' Equity                         5
Statements of Cash Flows                                            6 - 7
Notes to Financial Statements                                       8 - 10

                           =========================



                                ===============














The Board of Directors

Kidron Plastics Ltd.







Dear Sirs,

Re:  Review of the unaudited interim financial statements
for the period ended June 30, 2003

At your request, we reviewed the interim balance sheet of Kidron Plastics Ltd.,
(hereinafter - the "Company") as of June 30, 2003 and the statements of income,
changes in shareholders' equity and cash flows for the six and three month
periods then ended.



Our review was conducted in accordance with procedures prescribed by the
Institute of Certified Public Accountants in Israel and included, inter alia,
reading the said financial statements, reading the minutes of the shareholders'
meetings and of the Board of Directors and its committees, as well as making
inquiries of persons responsible for financial and accounting matters.



Since the review performed is limited in scope and does not constitute an audit
in accordance with generally accepted auditing standards, we do not express an
opinion on the said interim financial statements.



Based on our review, we are not aware of any material modifications that would
have to be made to the financial statements referred to above in order for them
to be in conformity with generally accepted accounting principles, and in
accordance with the Securities Regulations (periodic and immediate reports)
1970.



We hereby agree to have the review report included in the immediate filing of
Technoplast Industries Ltd. which is scheduled to be filed in September 2003.





                              Oren Horowitz & Co.

                      Certified Public Accountants (Isr.)

Tel-Aviv, Israel, 14, September 2003

                                     - 2 -


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

                                                                                   Balance Sheets

                                                                             Adjusted to NIS of June 2003
                                                                        30 June             31 December
                                                                   2003         2002          2002
                                                                  NIS'000      NIS'000        NIS'000
                                                                      (unaudited)            (audited)
Current assets
Cash and cash equivalents                                           12           46           14
Trade accounts receivable                                           4,026        3,998        4,143
Accounts receivable and other debit balances                        496          485          661
Inventory                                                           1,106        1,009        1,257
                                                                    ______       ______       ______
                                                                    5,640        5,538        6,075
                                                                    ---------    ---------    ---------
Long-term debit balances
Excess of funded amounts over the liability for                     21           32           23
employee severance pay, net
                                                                    ---------    ---------    ---------
Fixed assets                                                        483          489          522

                                                                    ---------    ---------    ---------
                                                                    ______       ______       ______
                                                                    6,144        6,059        6,620
                                                                    ______       ______       ______
                                                                    ______       ______       ______

Current liabilities

Credit from banking institutions                                    4,020        3,902        4,449
Suppliers and service providers                                     1,354        1,534        1,849
Accounts payable and other credit balances                          564          763          412
                                                                    ______       ______       ______
                                                                    5,938        6,199        6,710
                                                                    ---------    ---------    ---------
Long-term liabilities

Deferred taxes                                                      7            12           8
                                                                    ---------    ---------    ---------
Shareholders' equity (deficit)                                      199          (152)        (98)

                                                                    ---------    ---------    ---------
                                                                    ______       ______       ______
                                                                    6,144        6,059        6,620
                                                                    ______       ______       ______
                                                                    ______       ______       ______








        Michael Susz                              Max Kissos                            Natalie Eilat
    Chairman of the Board                           C.E.O.                                  C.F.O.







Date: 14 September 2003


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

                                                                 Statements of Income

                                                              Adjusted to NIS of June 2003




                                             Six months ended      Three months ended 30     Year ended
                                                  30 June                  June              31 December
                                             2003        2002        2003        2002           2002
                                            NIS'000     NIS'000     NIS'000     NIS'000        NIS'000
                                                   (unaudited)             (unaudited)           (audited)


Revenues                                     4,948       5,043       2,539       2,610       10,133
Cost of revenues                             2,847       2,738       1,420       1,409       5,679
                                             _____       _____       _____       _____       _____
Gross profit                                 2,101       2,305       1,119       1,201       4,454
                                             --------    --------    --------    --------    --------

Selling and marketing expenses               279         259         145         116         516
General and administrative                   1,424       1,714       678         808         3,221
                                             _____       _____       _____       _____       _____
                                             1,703       1,973       823         924         3,737
                                             --------    --------    --------    --------    --------
                                             _____       _____       _____       _____       _____
Operating income                             398         332         296         277         717
Finance income (expenses), net               80          (288)       158         (155)       (576)
Other expenses                               -           1           -           1           1
                                             _____       _____       _____       _____       _____
Income before taxes on income                478         43          454         121         140
Taxes on income                              181         41          168         51          84
                                             _____       _____       _____       _____       _____
Net income                                   297         2           286         70          56
                                             _____       _____       _____       _____       _____
                                             _____       _____       _____       _____       _____



Base earnings per share (NIS)                   2.97        0.02        2.86        0.70           0.56
                                                _____       _____       _____       _____          _____
                                                _____       _____       _____       _____          _____




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

                                                              Statements of Changes in Shareholders' Equity

                                                                      Adjusted to NIS of June 2003




                                                                Share          Retained          Total
                                                               capital         earnings
                                                                              (accumulated
                                                                                deficit)
                                                               NIS'000         NIS'000          NIS'000

Balance at 1 January 2002                                       (*)             (154)            (154)
Changes in 2002
Net income                                                      -               56               56
                                                                ____            _______          _______
Balance at 31 December 2002                                     (*)             (98)             (98)
Changes during the period 1-6/2003 (unaudited)
Net income                                                      -               297              297
                                                                ____            _______          _______
Balance at 30 June 2003                                         (*)             199              199
                                                                ____            _______          _______
                                                                ____            _______          _______

Balance at 1 January 2002                                       (*)             (154)            (154)
Changes during the period 1-6/2002 (unaudited)
Net income                                                      -               2                2
                                                                ____            _______          _______
Balance at 30 June 2002                                         (*)             (152)            (152)
                                                                ____            _______          _______
                                                                ____            _______          _______

Balance at 1 April 2003                                         (*)             (87)             (87)
Changes during the period 4-6/2003 (unaudited)
Net income                                                      -               286              286
                                                                ____            _______          _______
Balance at 30 June 2003                                         (*)             199              199
                                                                ____            _______          _______
                                                                ____            _______          _______

Balance at 1 April 2002                                         (*)             (222)            (222)
Changes during the period 4-6/2002 (unaudited)
Net income                                                      -               70               70
                                                                ____            _______          _______
Balance at 30 June 2002                                         (*)             (152)            (152)
                                                                ____            _______          _______
                                                                ____            _______          _______



(*)  Less than NIS 1,000.


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

                                                               Statements of Cash Flows

                                                             Adjusted to NIS of June 2003




                                                   Six months ended       Three months ended       Year ended
                                                        30 June                 30 June           31 December
                                                   2003        2002        2003        2002           2002
                                                  NIS'000     NIS'000     NIS'000     NIS'000       NIS'000
                                                      (unaudited)             (unaudited)          (audited)
Cash flows from operating activities:
Net income (loss)                               297         2           286         70          56
Adjustments required to reflect cash from       159         (8)         79          (37)        (548)
operating activities (Appendix A)
                                                _____       _____       _____       _____       ______
Net cash provided by (used in)                  456         (6)         365         33          (492)
operating activities
                                                --------    --------    --------    --------    ---------

Cash flows from investment activities:
Purchase of fixed assets                        (29)        (7)         (3)         -           (101)
Proceeds from sale of fixed assets              -           45          -           45          46
                                                _____       _____       _____       _____       ______
Net cash provided by (used in)                  (29)        38          (3)         45          (55)
investment activities
                                                --------    --------    --------    --------    ---------

Cash flows from financing activities:
Increase (decrease) in credit from banking      (429)       (1)         (364)       (14)        546
institutions, net
Repayment of long-term loans                    -           (98)        -           (28)        (98)
                                                _____       _____       _____       _____       ______
Net cash provided by (used in) financing        (429)       (99)        (364)       (42)        448
activities
                                                --------    --------    --------    --------    ---------
                                                _____       _____       _____       _____       ______

Increase (decrease) in cash and cash            (2)         (67)        (2)         36          (99)
equivalents
Cash and cash equivalents at beginning of       14          113         14          10          113
period
                                                _____       _____       _____       _____       ______
Cash and cash equivalents at end of period      12          46          12          46          14
                                                _____       _____       _____       _____       ______
                                                _____       _____       _____       _____       ______




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

                                                      Appendices to the Statements of Cash Flows

                                                            Adjusted to NIS of June 2003





Appendix A - Adjustments required to reflect cash from operating activities

                                               Six months ended       Three months ended       Year ended
                                                    30 June                 30 June           31 December
                                               2003        2002        2003        2002           2002
                                              NIS'000     NIS'000     NIS'000     NIS'000       NIS'000
                                                  (unaudited)             (unaudited)          (audited)
Income and expenses not constituting cash
flows:
Depreciation and amortization                   68          65          34          32          125
Deferred taxes, net                             2           13          3           23          (30)
Decrease in liability for employee              2           (4)         -           4           5
severance pay
Capital loss                                    -           1           -           1           1
                                                _____       _____       _____       _____       ______
                                                72          75          37          60          101
                                                --------    --------    --------    --------    ---------

Changes in assets and liabilities:
Decrease (increase) in trade accounts           117         (267)       (179)       (138)       (216)
receivable
Decrease (increase) in accounts receivable and  162         189         285         7           (144)
other debit balances
Decrease (increase) in inventory                151         (97)        65          190         (344)
Increase (decrease) in suppliers                (495)       (213)       (300)       (162)       101
Increase (decrease) in accounts payable and     152         305         171         6           (46)
other credit balances
                                                ______      ____        ______      ____        _____
                                                87          (83)        42          (97)        (649)
                                                --------    --------    --------    --------    ---------
                                                ______      ____        ______      ____        _____
                                                159         (8)         79          (37)        (548)
                                                ______      ____        ______      ____        _____
                                                ______      ____        ______      ____        _____




                       NOTES TO THE FINANCIAL STATEMENTS





NOTE 1    -    GENERAL

A.   They financial statements are presented as at 30 June 2003 and for the six
and three-month periods then ended.  The financial statements should be read in
conjunction with the annual financial statements as at 31 December 31, 2002 and
for the year then ended, together with the accompanying notes.

B.   The major accounting policies applied in the presentation of the financial
statements are identical with those applied in the presentation of the latest
annual financial statements.





NOTE 2    -    FINANCIAL STATEMENTS IN ADJUSTED VALUES

Adjusted financial statements

The financial statements are presented on the basis of the historical cost
convention, adjusted for changes in the general purchasing power of the Israeli
currency, on the basis of the changes in the Israeli Consumer Price Index
(hereinafter - "I.C.P.I.").

We present below information regarding the I.C.P.I. and the exchange rates of
the U.S. dollar:
                                                                     ICPI        U.S.$ 1 = NIS

30 June 2003                                                        181.1            4.312
31 March 2003                                                       183.4            4.687
31 December 2002                                                    182.0            4.737
30 June 2002                                                        181.7            4.769
31 March 2002                                                       175.0            4.668

Increase (decrease) during:
3-6/03                                                              (1.3%)           (8.0%)
1-3/03                                                               0.8%            (1.1%)
1-12/02                                                              6.5%             7.3%
3-6/02                                                               3.9%             2.3%
1-3/02                                                               2.4%             5.7%


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)

NOTE 3    -    ISRAELI ACCOUNTING STANDARD NO. 12 - DISCONTINUANCE OF ADJUSTING
FINANCIAL STATEMENTS

According to this standard and according to the decision of the Israel
Accounting Standards Board to postpone implementation of the standard as part of
Standard No. 17, inflationary adjustment of financial statements will be
discontinued as at 1 January 2004.  Until 31 December 2003, the Company will
continue to present adjusted financial statements in accordance with Opinion No.
36 of the Institute of Certified Public Accountants in Israel.  The adjusted
values to be included in the financial statements as at 31 December 2003 will
serve as the basis for the nominal financial reporting commencing 1 January
2004.





NOTE 4    -    MERGER AGREEMENT

A.    On 31 August 2003, an agreement was signed between the shareholders of the
Company (hereinafter - the "Shareholders") and Technoplast Industries Ltd.
(hereinafter - "Technoplast") whereby the Shareholders will transfer to
Technoplast, by way of a merger, all of the shares of the Company against an
allotment of Technoplast shares which will grant the Shareholders a 75% share of
the issued and paid in share capital of Technoplast (fully diluted).  The
percentage of the allotment was determined on the basis of a company valuation
performed by an outside party.  Consummation of the transaction is contingent on
the fulfillment of certain conditions and on receipt of the approval of various
parties.

B.    In view of the aforementioned agreement, the following will apply to
agreements with interested parties:

1.     The management agreement with the parent company, Kidron Management and
Holdings (1961) Ltd., will remain in force.  This agreement includes management
and consulting fees at an annual rate of 5% of the Company's annual sales
turnover, and a payment in respect of office services on the basis of the
relative office space designated for the provision of services to the Company
out of the parent company's office space.

        The Company estimates that the annual amount it will have to pay in
respect of the office services in accordance with the relative share of office
space described above would be NIS 150 thousand.

2.     During the periods under report, the Company paid various payments to
interested parties in respect of services.  Under the new agreement, these
services will be included as part of the management fees to be paid by the
Company as reported in paragraph 1 above.

3.     The management agreement with an interested party company, under which
the Company paid management and consulting fees of U.S.$ 8,333 a month, will be
endorsed such that the management fees will be paid to Technoplast and will
remain within the framework of the group's revenues, following the merger.
Moreover, the aforementioned management agreement will be amended so as to add a
clause that stipulates that Technoplast will charge the Company in respect of
expenses involving product development, consultation, and engineering services.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)



NOTE 4    -    MERGER AGREEMENT (cont.)

B.    (cont.)

        We present below data from the pro forma income statement for the period
ended 30 June 2003.  The data reflect the major results of company operations in
accordance with the new consideration outlined above (in NIS thousands):

                                           As reported in the financial statements
                             Six months ended      Three months ended 30     Year ended
                                  30 June                  June              31 December
                              2003        2002        2003        2002           2002
                             NIS'000     NIS'000     NIS'000     NIS'000        NIS'000
                                (unaudited)             (unaudited)           (audited)
General and administrative    1,424       1,714       678         808         3,221
Operating income              398         332         296         277         717
Taxes on income               181         41          168         51          84
Net income                    297         2           286         70          56


Base earnings per share (NIS) 2.97        0.02        2.86        0.70        0.56


                                                   Pro forma data
                             Six months ended      Three months ended 30     Year ended
                                  30 June                  June              31 December
                             2003        2002        2003        2002           2002
                            NIS'000     NIS'000     NIS'000     NIS'000        NIS'000
                               (unaudited)             (unaudited)           (audited)
General and administrative    1,241       1,398       582         693         2,956
Operating income              581         648         392         392         982
Taxes on income               247         155         203         93          179
Net income                    414         204         347         143         226


Base earnings per share (NIS) 4.14        2.04        3.47        1.43        2.26







                            =======================

                                   ==========













                              KIDRON PLASTICS LTD.

                              FINANCIAL STATEMENTS
                                31 DECEMBER 2002








                              KIDRON PLASTICS LTD.

                              FINANCIAL STATEMENTS

                                31 DECEMBER 2002



                               TABLE OF CONTENTS




                                                                     Page
Auditors' Report                                                      2
Financial Statements
Balance Sheets                                                        3
Statements of Income                                                  4
Statements of Changes in Shareholders' Equity                         5
Statements of Cash Flows                                            6 - 7
Notes to Financial Statements                                       8 - 24



                           =========================



                                ===============




                      AUDITORS' REPORT TO THE SHAREHOLDERS

                                       OF

                              KIDRON PLASTICS LTD.

We have audited the accompanying balance sheets of Kidron Plastics Ltd.
(hereinafter the "Company") as at 31 December 2002 and 2001, and the related
statements of income, changes in shareholders' equity, and cash flows for each
of the three years in the period ended 31 December 2002.  These financial
statements are the responsibility of the board of directors and management of
the Company.  Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards,
including those prescribed by the Israeli Auditors' Regulations (Mode of
Performance), 1973.  Those standards require that we plan and perform the audit
to obtain reasonable assurance 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 the board of directors and by management, as well as evaluating the
overall financial statement presentation.  We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements present fairly, in conformity with
generally accepted accounting principles, in all material respects, the
financial position of the Company as at 31 December 2002 and 2001, and the
results of its operations, changes in its shareholders' equity and its cash
flows for each of the three years in the period ended 31 December 2002.  In
addition, in our opinion, the aforementioned financial statements are presented
in accordance with the Securities Regulations (Preparation of Annual Financial
Statements), 1993.

As explained in Note 2, the abovementioned financial statements are presented in
adjusted values, based on changes in the general purchasing power of the Israeli
currency, in accordance with opinions of the Institute of Certified Public
Accountants in Israel.

This opinion is based on a previous opinion, the last of which, regarding the
year ended 31 December 2002, was rendered on 7 July 2003.

We hereby agree to have this opinion included in the immediate filing of
Technoplast Industries Ltd. which is scheduled to be filed in September 2003.





                              Oren Horowitz & Co.

                      Certified Public Accountants (Isr.)

Tel-Aviv, Israel, 14, September 2003

                                     - 2 -


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

                                                                                        Balance Sheets

                                                                                 Adjusted to NIS of June 2003




                                                                                             31 December
                                                                                        2002         2001
                                                                              Note    NIS'000      NIS'000
Current assets
Cash and cash equivalents                                                             14           113
Trade accounts receivable                                                       3     4,143(1)     3,927(1)
Accounts receivable and other debit balances                                    4     661(1)       479(1)
Inventory                                                                       5     1,257        912
                                                                                      _____        _____
                                                                                      6,075        5,431
                                                                                      --------     --------
Long-term investments and debit balances
Excess of funded amounts over the liability for                                 6     23           28
employee severance pay, net
                                                                                      --------     --------

Fixed assets                                                                    7     522          593
                                                                                      --------     --------
                                                                                      _____        _____
                                                                                      6,620        6,052
                                                                                      _____        _____
                                                                                      _____        _____

Current liabilities
Credit from banking institutions                                                8     4,449        3,947
Suppliers and service providers                                                 9     1,849        1,748
Accounts payable and other credit balances                                     10     412          457
                                                                                      _____        _____
                                                                                      6,710        6,152
                                                                                      --------     --------
Long-term liabilities
Deferred taxes                                                                 15     8            -
Liabilities to banking institutions                                            11     -            54
                                                                                      _____        _____
                                                                                      8            54
                                                                                      --------     --------

Contingent liabilities, commitments, and liens                                 13
Shareholders' deficit                                                          12     (98)         (154)
                                                                                      --------     --------
                                                                                      _____        _____
                                                                                      6,620        6,052
                                                                                      _____        _____
                                                                                      _____        _____



(1)        Reclassified






        Michael Susz                              Max Kissos                            Natalie Eilat
    Chairman of the Board                           C.E.O.                                  C.F.O.



Date: 14 September 2003


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

                                                                           Statements of Income

                                                                       Adjusted to NIS of June 2003




                                                                                 Year ended
                                                                                31 December
                                                                     2002           2001           2000
                                                           Note    NIS'000        NIS'000        NIS'000

Revenues                                                   14-A    10,133         10,484         11,505
Cost of revenues                                           14-B    5,679(1)       5,904(1)       6,180(1)
                                                                   ______         ______         ______
Gross profit                                                       4,454          4,580          5,325
                                                                   ---------      ---------      ---------
Selling and marketing expenses                             14-C    516(1)         531(1)         548(1)
General and administrative expenses                        14-D    3,221(1)       3,399(1)       3,283(1)
                                                                   ______         ______         ______
                                                                   3,737          3,930          3,831
                                                                   ---------      ---------      ---------
                                                                   ______         ______         ______
Operating income                                                   717            650            1,494
Financing income (expenses), net                           14-E    (576)          (586)          3
                                                                   ______         ______         ______
Income after financing                                             141            64             1,497
Other income (expenses), net                               14-F    (1)            37             (11)
                                                                   ______         ______         ______
Income before taxes on income                                      140            101            1,486
Taxes on income                                             15     (84)           (323)          (561)
                                                                   ______         ______         ______

Net income (loss)                                                  56             (222)          925
                                                                   ______         ______         ______
                                                                   ______         ______         ______

Base earnings (loss) per share (NIS)                                   0.56         (2.22)           9.25
                                                                   ______         ______         ______
                                                                   ______         ______         ______



(1)        Reclassified.




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

                                                              Statements of Changes in Shareholders' Equity

                                                                       Adjusted to NIS of June 2003




                                                                 Share          Retained          Total
                                                                capital         earnings
                                                                              (accumulated
                                                                                deficit)
                                                                NIS'000         NIS'000          NIS'000

Balance at 1 January 2000                                       (*)             2,709            2,709
Changes in 2000
Net income                                                      -               925              925
Dividend                                                        -               (430)            (430)
                                                                ____            _______          _______
Balance at 31 December 2000                                     (*)             3,204            3,204
Changes in 2001
Loss                                                            -               (222)            (222)
Dividend                                                        -               (3,136)          (3,136)
                                                                ____            _______          _______
Balance at 31 December 2001                                     (*)             (154)            (154)
Changes in 2002
Net income                                                      -               56               56
                                                                ____            _______          _______

Balance at 31 December 2002                                     (*)             (98)             (98)
                                                                ____            _______          _______
                                                                ____            _______          _______



(*)        Less than NIS 1,000.


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

                                                                              Statements of Cash Flows

                                                                            Adjusted to NIS of June 2003




                                                                                    Year ended
                                                                                    31 December
                                                                          2002        2001        2000
                                                                         NIS'000     NIS'000     NIS'000
Cash flow from operating activities
Net income (loss) for the year                                            56          (222)       925
Adjustments required to reconcile net income (loss) to net cash from      (548)       (1,141)     1,043
operating activities (Appendix A)
                                                                          ____        ____        ____
Net cash provided by (used in) operations activities                      (492)       (1,363)     1,968
                                                                          ------      ------      ------

Cash flows from investing activities
Purchase of fixed assets                                                  (101)       (215)       (220)
Proceeds from sale of fixed assets                                        46          50          82
Redemption (granting) of long-term loans                                  -           869         (869)
                                                                          ____        ____        ____
Net cash provided by (used in) investing activities                       (55)        704         (1,007)
                                                                          ------      ------      ------

Cash flows from financing activities
Increase (decrease) in credit from banking institutions, net              546         3,388       (431)
Receipt (redemption) of long-term loan                                    (98)        98          -
Dividend distributed                                                      -           (3,136)     (430)
                                                                          ____        ____        ____
Net cash provided by (used in) financing activities                       448         350         (861)
                                                                          ------      ------      ------
                                                                          ____        ____        ____

Increase (decrease) in cash and cash equivalents                          (99)        (309)       100
Cash and cash equivalents, beginning of the year                          113         422         322
                                                                          ____        ____        ____
Cash and cash equivalents, end of the year                                14          113         422
                                                                          ____        ____        ____
                                                                          ____        ____        ____




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

                                                                     Appendices to the Statements of Cash Flows

                                                                            Adjusted to NIS of June 2003





Appendix A - Adjustments required to reconcile net income /loss to net cash from
operating activities

                                                                                   Year ended
                                                                                   31 December
                                                                         2002         2001         2000
                                                                       NIS'000      NIS'000      NIS'000
Income and expenses not constituting a current flow of funds
Depreciation and amortization                                           125          130          133
Deferred taxes, net                                                     (30)         18           11
Increase in liability for employee severance pay, net                   5            86           (128)
Capital loss (gain)                                                     1            (37)         11
                                                                        ____         ____         ____
                                                                        101          197          27
                                                                        ------       ------       ------

Changes in assets and liabilities
Increase in trade accounts receivable                                   (216)        (178)        (161)
Decrease (increase) in accounts receivable and other debits             (144)        (355)        248
Decrease (increase) in inventory                                        (345)        126          (84)
Increase in supplier balances                                           101          28           347
Increase (decrease) in accounts payable and other credit balances       (45)         (959)        666
                                                                        ____         ____         ____
                                                                        (649)        (1,338)      1,016
                                                                        ------       ------       ------
                                                                        ____         ____         ____
                                                                        (548)        (1,141)      1,043
                                                                        ____         ____         ____
                                                                        ____         ____         ____




                       NOTES TO THE FINANCIAL STATEMENTS





NOTE 1    -    GENERAL

A.   The Company was incorporated on 10 August 1993 and commenced operations at
the beginning of 1994.  The Company is engaged in importing, marketing and
selling raw materials in the field of plastics.

B.   Definitions

The Company           -     Kidron Plastics Ltd.

Interested parties    -     As defined in the Securities Regulations (Preparation of Annual Financial
                            Statements) 1993

Related party         -     As defined in Opinion No. 29 of the Institute of Certified Public
                            Accountants in Israel



NOTE 2    -    SIGNIFICANT ACCOUNTING POLICIES

The major accounting policies applied in the presentation of the financial
statements are as follows:

A.    Adjusted financial statements

1.     The Company records its current transactions in nominal Shekels.  In
accordance with the principles set forth in Opinions issued by the Institute of
Certified Public Accountants in Israel, the financial statements are presented
in terms of the shekel at the end of the reporting period, having identical
purchasing power (adjusted NIS).  The purchasing power of adjusted NIS reflects
the price level of June 2003 - in accordance with the Israeli Consumer Price
Index of June 2003 which was published on 15 July 2003 (see Note 2I).

2.     The adjusted amounts presented in the financial statements do not
necessarily represent their realizable or current economic value.  The figures
merely represent historical cost, adjusted for changes in the general purchasing
power of the Israeli currency.

3.     The term "cost", as used in these financial statements, refers to cost in
adjusted shekels.

4.     The condensed nominal data are presented in Note 19.

B.    Principles of adjustment

1.     Balance sheet

Non-monetary items (amounts in the balance sheet which reflect historical value
at the time of acquisition or generation - see below) were adjusted for changes
in the Israeli Consumer Price Index (hereinafter - "I.C.P.I.") from the date of
purchase or generation.

The following items were treated as non-monetary: fixed assets, inventory, and
share capital.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 2    -    SIGNIFICANT ACCOUNTING POLICIES (cont.)

B.    Principles of adjustment (cont.)

2.     Statement of Income

a.     Income statement items (excluding financing items), which reflect
transactions conducted during the year, were adjusted on the basis of the dates
on which the transactions were carried out, in accordance with monthly base
indices.  Erosion of monetary balances related to these transactions were
including in the financing component.

b.     Income statement components related to non-monetary items in the balance
sheet were adjusted in accordance with the same basis that was used in adjusting
the relevant balance sheet item: asset write-downs, etc.

c.     Income statement components related to allowances contained in the
balance sheet were computed on the basis of the changes in the related balance
sheet items, taking into consideration the relevant cash flows deriving
therefrom.

d.     The net financing component is derived from the other income statement
components, and reflects financing income and expenses in real terms, including
the erosion of monetary items during the course of the year.

C.          Use of estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities, including contingent
liabilities, and the reported amounts of revenues and expenses. These estimates
are computed on the basis of Management evaluations, based on past experience
and data.  Actual results could differ from these estimates.

D.          Cash and cash equivalents

Cash and cash equivalents includes cash held in banks in shekels and in foreign
currency, as well as deposits held in banks for immediate withdrawal or with
original maturity dates of three months or less.



E.          Allowance for doubtful debts

The allowance for doubtful debts is computed mainly for specific debts, the
collection of which is deemed doubtful.



F.          Inventory

Inventory is valued at the lower of cost or market value.  Cost is determined on
the "first in first out" method.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 2    -    SIGNIFICANT ACCOUNTING POLICIES (cont.)

G.          Fixed assets

Fixed assets are stated at cost, net of accumulated depreciation.

Depreciation is computed on the straight-line method, at annual rates considered
adequate to fully depreciate the assets over their estimated useful lives.



Annual rates of depreciation are as follows:

Equipment and furniture - 6-15%; computers and peripheral equipment - 33%;
leasehold improvements - for the duration of the lease.



H.         Deferred taxes

Deferred taxes are computed in respect of temporary differences, which include
timing differences in reporting income and expenses for accounting purposes and
reporting them for tax purposes, and differences in respect of the value of
assets and liabilities for tax purposes and their book value.  The deferred
taxes are computed at the rates expected to be in effect when the deferred taxes
are utilized.



I.           Israel Consumer Price Index and the Exchange Rate of the U.S.
Dollar

1.     Balances denominated in foreign currency or linked thereto are presented
according to the exchange rate of the balance sheet date.

2.     Balances linked to the ICPI are presented on the basis of the index to
which they balance is linked.

3.     We present below information regarding the increase (decrease) in the
I.C.P.I. and the exchange rates of the U.S. dollar:
                                                                     ICPI        U.S.$ 1 = NIS

30 June 2003                                                        181.1            4.312
31 December 2002                                                    182.0            4.737
31 December 2001                                                    170.9            4.416
31 December 2000                                                    168.5            4.041

Increase (decrease) during:
2002                                                                 6.5%             7.3%
2001                                                                 1.4%             9.3%
2000                                                                 0.0%            (2.7%)



J.          Revenue recognition

Revenues from sales are recognized upon the supply of the products to the
customers.  Revenues from commissions are recognized on the accrual basis.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 2    -    SIGNIFICANT ACCOUNTING POLICIES (cont.)

K.         Earnings per share

Earnings per share is computed according to the provisions of Opinion No. 55 of
the Institute of Certified Public Accountants in Israel.  For information
regarding the number of shares that was used as the basis for the computation,
see Note 16.



L.          Financial instruments

The Company's financial instruments include mainly non-derivative assets and
liabilities - cash and cash equivalents, trade and other accounts receivable,
credit from banking institutions, trade and other accounts payable.  Due to
their nature, the fair value of the aforementioned financial instruments is not
materially different than their value as presented in the financial statements.



M.         New accounting standards

Standard No. 12 - Discontinuance of Adjusting Financial Statements

According to this standard and according to the decision of the Israel
Accounting Standards Board to postpone implementation of the standard as part of
Standard No. 17, inflationary adjustment of financial statements will be
discontinued as at 1 January 2004.  Until 31 December 2003, the Company will
continue to present adjusted financial statements in accordance with Opinion No.
36 of the Institute of Certified Public Accountants in Israel.  The adjusted
values to be included in the financial statements as at 31 December 2003 will
serve as the basis for the nominal financial reporting commencing 1 January
2004.

Standard No. 15 - Decline in Asset Value

The Standard stipulates the accounting treatment in the event of a decline in
value of the company's assets, including investments in investee companies which
are not subsidiaries, goodwill deriving from the acquisition of companies, and
adjustments to fair value.  This standard applies to the financial statements of
periods commencing on 1 January 2003.  In the opinion of the Company, this
standard will have no material effect, if any, on the financial statements of
the Company.





NOTE 3    -    TRADE ACCOUNTS RECEIVABLE

                                                                                  31 December
                                                                              2002         2001
                                                                            NIS'000      NIS'000
                                                                           (adjusted)   (adjusted)
Composition:
Open accounts                                                                 3,059        2,777
Post-dated checks                                                             1,036        1,009
Income receivable                                                             205          196
                                                                              _______      _______
                                                                              4,300        3,982
Allowance for doubtful debts                                                  (157)        (55)
                                                                              _______      _______
                                                                              4,143        3,927
                                                                              _______      _______
                                                                              _______      _______


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 4    -    ACCOUNTS RECEIVABLE AND OTHER DEBIT BALANCES

                                                                            31 December
                                                                        2002         2001
                                                                      NIS'000      NIS'000
                                                                     (adjusted)   (adjusted)
Composition:
Interested party company (1)                                           185          -
Deferred taxes (Note 15)                                               64           26
Institutions                                                           363          407
Miscellaneous and prepaid expenses                                     49           46
                                                                       _______      _______
                                                                       661          479
                                                                       _______      _______
                                                                       _______      _______



(1)         Linked to the I.C.P.I., non-interest bearing.





NOTE 5    -    INVENTORY

                                                                            31 December
                                                                        2002         2001
                                                                       NIS'000      NIS'000
                                                                      (adjusted)   (adjusted)
Raw materials                                                          1,257        912
                                                                       _______      _______
                                                                       _______      _______





NOTE 6    -    EXCESS OF FUNDED AMOUNTS OVER THE LIABILITY FOR EMPLOYEE

                       SEVERANCE PAY, NET

A.    Composition:
                                                                       31 December
                                                                    2002         2001
                                                                NIS'000      NIS'000
                                                                (adjusted)   (adjusted)
Funded amounts                                                    52           69
Less - liability for severance pay                                29           41
                                                                  ______       ______
                                                                  23           28
                                                                  ______       ______
                                                                  ______       ______



B.    The obligation of the Company for employee severance pay is covered by
payments of premiums for managers insurance policies and by the liability
presented in the balance sheet.

        The amounts accumulated in the managers insurance policies are not
reflected in the financial statements since they are neither controlled nor
managed by the Company.

C.    The funded amounts are on deposit with recognized severance funds, in the
name of the Company, and include income accrued until the balance sheet date.
The amounts on deposit can be withdrawn only after fulfillment of the terms of
the Severance Pay Law.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 7    -    FIXED ASSETS
                                    Equipment &     Motor     Computers      Leasehold       Total
                                     furniture    vehicles       and       improve-ments
                                                               peripheral
                                                               equipment
                                      NIS'000      NIS'000     NIS'000        NIS'000       NIS'000
                                     (adjusted)  (adjusted)   (adjusted)    (adjusted)    (adjusted)

Cost
Balance at 1 January 2002              242          653         58           62              1,015
Acquisitions during the year           8            -           14           79              101
Disposals during the year              -            (56)        -            -               (56)
                                       ______       ______      _____        ______          _______
Balance at 31 December 2002            250          597         72           141             1,060
                                       ----------   ---------   --------     ---------       ----------

Accumulated depreciation
Balance at 1 January 2002              171          182         45           24              422
Depreciation for the year              15           93          9            8               125
Cancellations for disposals during the -            (9)         -            -               (9)
year
                                       ______       ______      _____        ______          _______
Balance at 31 December 2002            186          266         54           32              538
                                       ---------    ---------   --------     ---------       ----------
                                       ______       ______      _____        ______          _______

Depreciated cost
31 December 2002                       64           331         18           109             522
                                       ______       ______      _____        ______          _______
                                       ______       ______      _____        ______          _______

31 December 2001                       71           471         13           38              593
                                       ______       ______      _____        ______          _______
                                       ______       ______      _____        ______          _______





NOTE 8    -    CREDIT FROM BANKING INSTITUTIONS
                                                           Interest             31 December
                                                             Rates          2002          2001
                                                               %           NIS'000       NIS'000
                                                                         (adjusted)    (adjusted)
Overdraft                                                 8.4 - 11.9    423           423
Short-term bank loans (1)                                               4,026         3,480
Current maturities (see Note 11)                                        -             44
                                                                        _______       _______
                                                                        4,449         3,947
                                                                        _______       _______
                                                                        _______       _______



1.     Shekel loans amounting to NIS 1,998 thousand (last year NIS 3,480
thousand) bear interest at a rate of Prime + 0.5%.

        Loans linked to the U.S. dollar, in an amount of NIS 2,028 thousand,
bear interest at a rate of LIBOR + 2.5%.




                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 9    -    SUPPLIERS AND SERVICE PROVIDERS
                                                                                     31 December
                                                                                  2002         2001
                                                                                NIS'000      NIS'000
                                                                               (adjusted)   (adjusted)
Composition
Open debts                                                                    1,751        1,464
Post-dated checks                                                             98           284
                                                                              _______      _______
                                                                              1,849        1,748
                                                                              _______      _______
                                                                              _______      _______





NOTE 10  -    ACCOUNTS PAYABLE AND OTHER CREDIT BALANCES
                                                                                     31 December
                                                                                  2002         2001
                                                                                NIS'000      NIS'000
                                                                               (adjusted)   (adjusted)
Composition
Interested party companies (1)                                                322          249
Employees                                                                     41           46
Institutions                                                                  10           106
Reserve for vacation pay                                                      20           17
Miscellaneous and expenses payable                                            19           39
                                                                              _______      _______
                                                                              412          457
                                                                              _______      _______
                                                                              _______      _______

(1)   The balances are linked to the I.C.P.I.





NOTE 11  -    LIABILITIES TO BANKING INSTITUTIONS
                                                           Interest             31 December
                                                             Rates          2002          2001
                                                               %           NIS'000       NIS'000
                                                                         (adjusted)    (adjusted)
Loans linked to the ICPI                                      5.5       -             98
Less current maturities                                                 -             44
                                                                        _______       _______
                                                                        -             54
                                                                        _______       _______
                                                                        _______       _______




                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 12  -    SHARE CAPITAL

Composition:

                                                             Number of shares
                                               31 December 2002            31 December 2001
                                           Registered    Issued and    Registered    Issued and
                                                         outstanding                outstanding
Ordinary shares, NIS 1 par value          22,900        100           22,900       100
                                          _________     _________     _________    _________
                                          _________     _________     _________    _________





NOTE 13  -    CONTINGENT LIABILITIES, COMMITMENTS AND LIENS

A.    Liens

        The Company pledged all of its assets in favour of the First
International Bank of Israel Ltd., including all types of rights that it
currently has or will have in the future.  The amount secured by these liens as
at 31 December 2002 totalled NIS 4,450 thousand.

B.    Guarantees

The parent company is a guarantor for the liabilities of the Company to the
First International Bank of Israel Ltd.

C.    Commitments

1.     The Company has an agreement with the C.E.O. of the Company to receive
C.E.O. services through a company under his control, in consideration for an
amount of U.S.$ 14,552 per month, plus an annual bonus based on the results of
the Company's operations.  Subsequent to the balance sheet date, the amount of
the remuneration was changed to U.S.$ 12,469 per month, commencing on 1 January
2003.  The agreement is in force until 31 December 2004.

2.     The Company has an agreement to receive management services from the
parent company in consideration for an amount equal to 5% of the Company's sales
turnover.  Under this agreement, the Company also received office services from
the parent company, and, as part of the agreement, the Company paid in 2002,
2001, and 2000, amounts of NIS 258 thousand, NIS 449 thousand, and NIS 207
thousand respectively.  For information regarding the Company's estimate of
office services provided subsequent to the balance sheet date, see Note 18.

3.     The Company has an agreement for provision of import, storage, and
distribution services to an interest party, under which the Company received an
amount of NIS 190 thousand in 2002.

4.     The Company has an agreement to receive management and consultancy
services from an interest party company, in consideration for an amount of U.S.$
 8,333 per month.

5.     The Company has an agreement to rent 2 buildings covering an area of 800
sq.m. in Haifa.  The buildings are used to maintain and operate a workshop,
manufacturing, marketing and importing of raw materials for industry.  This
agreement is in force until 31 December 2005.




                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 13  -    CONTINGENT LIABILITIES, COMMITMENTS AND LIENS (cont.)

D.    Litigation

In June 2003, a former employee of the Company filed a suit in respect of bodily
damages allegedly caused to him during his work at the Company.  Based on the
opinion of its legal counsel, and on its insurance policy, the Company estimates
that there will be no material exposure in respect of this suit, and therefore,
no provision was set up in the financial statements in respect thereof.





NOTE 14  -    NOTES TO THE INCOME STATEMENTS

                                                                             Year ended
                                                                             31 December
                                                                  2002          2001          2000
                                                                 NIS'000       NIS'000       NIS'000
                                                               (adjusted)    (adjusted)    (adjusted)
A.    Revenues
Sales                                                         9,480         9,784         10,767
Commissions                                                   653           700           738
                                                              _______       _______       _______
                                                              10,133        10,484        11,505
                                                              _______       _______       _______
                                                              _______       _______       _______

B.    Cost of revenues
Purchases                                                     6,024         5,777         6,264
Changes in inventory                                          (345)         127           (84)
                                                              _______       _______       _______
                                                              5,679         5,904         6,180
                                                              _______       _______       _______
                                                              _______       _______       _______

C.    Selling and marketing expenses
Payroll and related expenses                                  203           215           197
Vehicle maintenance (including depreciation)                  204           251           247
Advertising                                                   10            24            29
Others                                                        99            41            75
                                                              _______       _______       _______
                                                              516           531           548
                                                              _______       _______       _______
                                                              _______       _______       _______

D.    General and administrative expenses
Payroll and related expenses and management fees              1,399         1,559         1,712
Management fees and reimbursement of expenses of parent       1,280         1,401         1,076
company
Bad and doubtful debts                                        107           (5)           51
Depreciation and amortisation                                 21            19            15
Others                                                        414           425           429
                                                              _______       _______       _______
                                                              3,221         3,399         3,283
                                                              _______       _______       _______
                                                              _______       _______       _______



                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 14  -    NOTES TO THE INCOME STATEMENTS (cont.)

                                                                    Year ended
                                                                   31 December
                                                          2002         2001         2000
                                                        NIS'000      NIS'000      NIS'000
                                                       (adjusted)   (adjusted)   (adjusted)
E.  Financing income (expenses), net
Short-term loans                                      (370)        (282)        (70)
Erosion and other financing expenses, net             (206)        (304)        73
                                                      _______      _______      _______
                                                      (576)        (586)        3
                                                      _______      _______      _______
                                                      _______      _______      _______

F.   Other income (expenses), net
Capital gain (loss)                                   (1)          37           (11)
                                                      _______      _______      _______
                                                      _______      _______      _______





NOTE 15  -    TAXES ON INCOME

                       A.          Composition:
                                                                    Year ended
                                                                   31 December
                                                          2002         2001         2000
                                                        NIS'000      NIS'000      NIS'000
                                                       (adjusted)   (adjusted)   (adjusted)
Current taxes                                         (104)        (40)         (542)
Prior years' taxes                                    (10)         (265)        (8)
Deferred taxes                                        30           (18)         (11)
                                                      _______      _______      _______
Taxes on income                                       (84)         (323)        (561)
                                                      _______      _______      _______
                                                      _______      _______      _______



                       B.          Deferred taxes

                        1.         Changes in deferred taxes
                                                      Short-term     Long-term       Total
                                                        NIS'000       NIS'000       NIS'000
                                                      (adjusted)    (adjusted)    (adjusted)
Balance as at 1 January 2001                         25            19            44
Changes in 2001
Savings (expense)                                    1             (19)          (18)
                                                     _______       _______       _______
Balance as at 31 December 2001                       26            -             26

Changes in 2002
Savings (expense)                                    38            (8)           30
                                                     _______       _______       _______
Balance as at 31 December 2002                       64            (8)           56
                                                     _______       _______       _______
                                                     _______       _______       _______


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 15  -    TAXES ON INCOME (cont.)

                       B.          Deferred taxes (cont.)

                       2.          Balances presented in the balance sheet:
                                                                           31 December
                                                                        2002         2001
                                                                      NIS'000      NIS'000
                                                                     (adjusted)   (adjusted)
Current assets                                                      64           26
Long-term liabilities                                               (8)          -
                                                                    _______      _______
                                                                    56           26
                                                                    _______      _______
                                                                    _______      _______



                       C.          Legislation pertaining to taxation under
inflationary conditions

The Income Tax Law (Inflationary Adjustments) 1985 set down measurement of
results of operations for tax purposes on a "real" basis.  The Company is taxed
under this law.

                       D.          Final tax assessments

The Company has final tax assessments in respect of the tax years up to and
including 1999.

                       E.          Theoretical tax

We present below the major components of the reconciliation between the
theoretical income tax expense computed on the pre-tax income (loss) and the
amount presented in the financial statements:
                                                              Year ended
                                                             31 December
                                                    2002         2001         2000
                                                  NIS'000      NIS'000      NIS'000
                                                 (adjusted)   (adjusted)   (adjusted)
Pre-tax income                                  140          101          1,486
                                                _______      _______      _______
                                                _______      _______      _______

Theoretical tax computed at regular rates       (50)         (36)         (535)
Increase in tax liability due to:
Non-deductible expenses                         (15)         (15)         (13)
Prior years' taxes                              (10)         (265)        (8)
Other differences, net                          (9)          (7)          (5)
                                                _______      _______      _______
Amount presented in financial statements        (84)         (323)        (561)
                                                _______      _______      _______
                                                _______      _______      _______







                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 16  -    EARNINGS (LOSS) PER SHARE

We present below details of the earnings (loss) per share and the number of
shares used in computing the earnings (loss) per share):
                                                        2002          2001          2000
                                                       NIS'000       NIS'000       NIS'000
                                                     (adjusted)    (adjusted)    (adjusted)
Earnings (loss) per share                           56            (222)         925
                                                    _______       _______       _______
                                                    _______       _______       _______

Number of shares used to compute EPS                100           100           100
                                                    _______       _______       _______
                                                    _______       _______       _______





NOTE 17  -    INTERESTED AND RELATED PARTIES

A.    Transactions with interested parties
                                                              Year ended
                                                             31 December
                                                    2002         2001         2000
                                                  NIS'000      NIS'000      NIS'000
                                                 (adjusted)   (adjusted)   (adjusted)
Management fees, office services, and           1,280        1,401        1,076
reimbursement of parent company expenses
Management fees, grants, consultancy, and       913          888          1,471
salary of the Company's C.E.O. (1) (2)
Grants to former interested parties             89           183          -

(1)    For information regarding the agreement with the C.E.O., see Note 13C(1).

(2)    In 2000, the C.E.O. of the Company received a salary, and in 2001 and
2002, management fees were paid to a company under his control.

B.    Balances with related parties

        Asset and liability items include the following balances with interested
parties:
                                                                         31 December
                                                                      2002         2001
                                                                    NIS'000      NIS'000
                                                                   (adjusted)   (adjusted)
Credit balances as at the end of the year                         (322)        (249)
                                                                  _______      _______
                                                                  _______      _______
Debit balances as of the end of the year                          185          -
                                                                  _______      _______
                                                                  _______      _______
The highest debit balances during the year were:                  185          -
                                                                  _______      _______
The balances are linked to the I.C.P.I. and bear no interest.



C.    For information regarding guarantees with interested parties, see Note
13-B.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 18  -    MERGER AGREEMENT

A.    On 31 August 2003, an agreement was signed between the shareholders of the
Company (hereinafter - the "Shareholders") and Technoplast Industries Ltd.
(hereinafter - "Technoplast") whereby the Shareholders will transfer to
Technoplast, by way of a merger, all of the shares of the Company against an
allotment of Technoplast shares which will grant the Shareholders a 75% share of
the issued and paid in share capital of Technoplast (fully diluted).  The
percentage of the allotment was determined on the basis of a valuation performed
by an outside party.  Consummation of the transaction is contingent on the
fulfillment of certain conditions and on receipt of the approval of various
parties.

B.     In view of the aforementioned agreement, the following will apply to
agreements with interested parties:

1.     The management agreement with the parent company, Kidron Management and
Holdings (1961) Ltd., will remain in force.  This agreement includes management
and consulting fees at an annual rate of 5% of the Company's annual sales
turnover, and a payment in respect of office services on the basis of the
relative office space designated for the provision of services to the Company
out of the parent company's office space.  For information regarding the amounts
paid by the Company in respect of this agreement, see Note 13-C-2.

        The Company estimates that the annual amount it will have to pay in
respect of the office services in accordance with the relative share of office
space described above would be NIS 150 thousand.

        During the years under report, the Company paid various payments to
interested parties in respect of services.  Under the new agreement, these
services will be included as part of the management fees to be paid by the
Company as reported in Note 13-C-2.

2.     The management agreement with an interested party company, under which
the Company paid management and consulting fees of U.S.$ 8,333 a month, will be
endorsed such that the management fees will be paid to Technoplast and will
remain within the framework of the group's revenues, following the merger as per
Note 13-C-4.
Moreover, the aforementioned management agreement will be amended so as to add a
clause that stipulates that Technoplast will charge the Company in respect of
expenses involving product development, consultation, and engineering services.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 18  -    MERGER AGREEMENT (cont.)

B.    (cont.)

        We present below data from the pro forma income statement for the three
years period ended 31 December 2002.  The data reflect the major results of
company operations in accordance with the new consideration outlined above (in
NIS thousands):
                                 As reported in the financial              Pro forma data
                                          statements
                                 2002        2001        2000        2002       2001       2000
General and administrative    3,221       3,399       3,283       2,956      2,862      2,345
expenses
Operating income              717         650         1,494       982        1,187      2,432
Taxes on income               84          323         561         179        517        899
Net income (loss)             56          (222)       925         226        121        1,525
Base earnings (loss) per      0.56        (2.22)      9.25        2.26       1.21       15.25
share - in NIS






                   NOTES TO THE FINANCIAL STATEMENTS (cont.)

NOTE 19  -    LINKAGE TERMS
                                                                 Adjusted NIS thousands
                                                                    31 December 2002
                                                  Monetary balances
                                      Foreign      Index-linked    Unlinked     Non-monetary      Total
                                  currency-linked                                 balances
                                       (1)
Assets
Cash and cash equivalents              -                -             14            -              14
Trade accounts receivable              -                -             3,938         -              3,938
Accounts receivable and other debit    205              549           -             112            866
balances
Inventories                            -                -             -             1,257          1,257
Excess of funded amounts over the      -                -             23            -              23
liability for severance pay, net
Fixed assets                           -                -             -             522            522
                                       ________         ________      ________      ________       ________
Total assets                           205              549           3,975         1,891          6,620
                                       ------------     ------------  ------------  ------------   ------------
Liabilities
Credit from banking institutions       2,135            -             2,314         -              4,449
Suppliers and service providers        1,419            -             430           -              1,849
Accounts payable and other credit      -                322           90            -              412
balances
Deferred taxes                         -                -             -             8              8
                                       ________         ________      ________      ________       ________
                                       3,554            322           2,834         8              6,718
                                       ------------     ------------  ------------  ------------   ------------
                                       ________         ________      ________      ________       ________
Excess assets (liabilities)            (3,349)          227           1,141         1,883          (98)
                                       ________         ________      ________      ________       ________
                                       ________         ________      ________      ________       ________


                                                                 Adjusted NIS thousands
                                                                    31 December 2001
                                                    Monetary balances
                                      Foreign      Index-linked    Unlinked     Non-monetary      Total
                                  currency-linked                                 balances
                                        (1)
Assets
Cash and cash equivalents              99               -             14            -              113
Trade accounts receivable              -                -             3,731         -              3,731
Accounts receivable and other debit    196              407           -             72             675
balances
Inventories                            -                -             -             912            912
Excess of funded amounts over the      -                -             28            -              28
liability for severance pay, net
Fixed assets                           -                -             -             593            593
                                       ________         ________      ________      ________       ________
Total assets                           295              407           3,773         1,577          6,052
                                       ------------     ------------  ------------  ------------   ------------
Liabilities
Credit from banking institutions       -                -             3,947         -              3,947
Suppliers and service providers        1,144            -             604           -              1,748
Accounts payable and other credit      -                249           208           -              457
balances
Liabilities to banking institutions    -                54            -             -              54
                                       ________         ________      ________      ________       ________
                                       1,144            303           4,759         -              6,206
                                       ------------     ------------  ------------  ------------   ------------
                                       ________         ________      ________      ________       ________
Excess assets (liabilities)            (849)            104           (986)         1,577          (154)
                                       ________         ________      ________      ________       ________
                                       ________         ________      ________      ________       ________

(1)   Mainly to the Euro.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)





NOTE 20  -    COMPANY FINANCIAL STATEMENT DATA IN NOMINAL VALUES

A.    Balance sheets
                                                                         31 December
                                                                      2002          2001
                                                                     NIS'000      NIS'000
Current assets
Cash and cash equivalents                                         14            106
Trade accounts receivable                                         4,164(1)      3,707(1)
Accounts receivable and other debit balances                      664(1)        452(1)
Inventory                                                         1,263         861
                                                                  _______       _______
                                                                  6,105         5,126
                                                                  -----------   -----------
Long-term debit balances
Excess of funded portion over liability for severance pay, net    23            26
                                                                  ------------  -----------

Fixed assets                                                      486           541
                                                                  -----------   -----------
                                                                  _______       _______

                                                                  6,614         5,693
                                                                  ________      _______
                                                                  ________      _______

Current liabilities
Credit from banking institutions                                  4,472         3,725
Suppliers and service providers                                   1,858         1,649
Accounts payable and other credit balances                        414           433
                                                                  _______       _______
                                                                  6,744         5,807
                                                                  -----------   -----------
Long-term liabilities
Loan from banking institution                                     -             50
Deferred taxes                                                    8             -
                                                                  ________      _______
                                                                  8             50
                                                                  ------------  -----------

Shareholders' deficit                                             (138)         (164)
                                                                  ------------  -----------
                                                                  ________      _______

                                                                  6,614         5,693
                                                                  ________      _______
                                                                  ________      _______

(1)   Reclassified.


                   NOTES TO THE FINANCIAL STATEMENTS (cont.)



NOTE 20  -    COMPANY FINANCIAL STATEMENT DATA IN NOMINAL VALUES (cont.)

B.    Income statements
                                                      Year ended 31 December
                                                2002           2001           2000
                                              NIS'000        NIS'000        NIS'000
Revenues                                      10,057         9,894          10,708
Cost of revenues                              5,577          5,558          5,752
                                              ________       ________       ________
Gross profit                                  4,480          4,336          4,956
                                              -----------    ------------   ------------
Selling and marketing expenses                511            496            504
General and administrative expenses           3,187          3,205          3,042
                                              _______        _______        _______
                                              3,698          3,701          3,546
                                              -----------    ------------   ------------
Operating income                              782            635            1,410
Financing (income) expenses, net              (674)          (532)          1
                                              _______        _______        _______
Income (loss) after financing                 108            103            1,411
Other income (expenses), net                  1              37             (3)
                                              _______        _______        _______
Income before taxes on income                 109            140            1,408
Taxes on income                               (83)           (304)          (522)
                                              _______        _______        _______
Net income (loss)                             26             (164)          886
                                              _______        _______        _______
                                              _______        _______        _______





C.    Statement of changes in shareholders' equity
                                            Share capital Retained earnings     Total
                                                             (accumulated
                                                               deficit)
                                              NIS'000         NIS'000         NIS'000
Balance at January 1, 2000                     (*)           2,473             2,473
Changes in 2000
Net income                                     -             886               886
Dividend distribution                          -             (400)             (400)
                                               __            _______           _______
Balance at 31 December 2000                    (*)           2,959             2,959
Changes in 2001
Loss                                           -             (164)             (164)
Dividend distribution                          -             (2,959)           (2,959)
                                               __            _______           _______
Balance at 31 December 2001                    (*)           (164)             (164)
Changes in 2002
Net income                                     -             26                26
                                               __            _______           _______
Balance at 31 December 2002                    (*)           (138)             (138)
                                               __            _______           _______
                                               __            _______           _______

(*)  Less than NIS 1,000.






                      This information is provided by RNS
            The company news service from the London Stock Exchange
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