10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark one)

x Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the fiscal year ended December 31, 2005

OR

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number:  0-31151

RADVIEW SOFTWARE LTD.

(Exact name of registrant as specified in its charter)

Israel	Not applicable
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

7 New England Executive Park
Burlington, MA 01803

(Address of principal executive offices)

Telephone Number (781) 238-1111

(Registrant’s telephone number, including area code)

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

None

Securities registered pursuant to Section 12(g) of the Act:

Ordinary Shares, NIS 0.01 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yeso   No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   Yes o   No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x   Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

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

Large accelerated fileroAccelerated fileroNon-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o   No x

Aggregate market value, based upon the closing sale price of the shares as reported by the Nasdaq SmallCap Market, of voting shares held by non-affiliates at June 30, 2005: $2,710,930 (excludes shares held by executive officers, directors, and beneficial owners of more than 10% of the registrant’s Ordinary Shares). Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of management or policies of the registrant, or that such person is controlled by or under common control with the registrant.

As of March 31, 2006, there were 20,525,682 shares of the registrant’s Ordinary Shares outstanding, excluding 134,000 Ordinary Shares held by the registrant as treasury shares that are “dormant” shares for purposes of Israeli law.

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business		1
	Company Overview		1
	Recent Developments		1
	2005 Business Highlights		2
	Industry Background		3
	Our Market Opportunity		4
	Our Solution		4
	Our Strategy		5
	Products		6
	Services		10
	Customers		10
	Sales and Marketing		10
	Customer Support		11
	Research and Development		11
	Product Technology and Architecture		11
	Competition		12
	Proprietary Rights		13
	Employees		13
	Available Information		14
Item 1A.	Risk Factors		14
Item 1B.	Unresolved Staff Comments		25
Item 2.	Properties		25
Item 3.	Legal Proceedings		25
Item 4.	Submission of Matters to a Vote of Security Holders		25
	PART II
Item 5.	Market for Registrant’s Common Equity and Related Shareholder Matters		26
Item 6.	Selected Financial Data		27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk		40
Item 8.	Financial Statements and Supplementary Data		41
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		68
Item 9A.	Controls and Procedures		68
	PART III
Item 10.	Directors and Executive Officers of the Registrant		69
Item 11.	Executive Compensation		69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters		69
Item 13.	Certain Relationships and Related Transactions		69
Item 14.	Principal Accountant Fees and Services		69
	PART IV
Item 15.	Exhibits and Financial Statement Schedules		71
	Signatures		73

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Documents Incorporated by Reference

Portions of the Registrant’s definitive proxy statement, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of our fiscal year, for our Annual Meeting of Shareholders, to be held on or about June 5, 2006, are incorporated by reference into Part III of this Annual Report on Form 10-K.

PART I

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. In some cases, forward-looking statements are identified by words such as “believes,” “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Factors that could cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include those more fully described in Item 1A. Risk Factors. Our business may have changed since the date hereof, and we undertake no obligation to update the forward-looking statements in this Annual Report of Form 10-K.

Item 1.BUSINESS

Unless the context otherwise requires, “RadView,” “us,” “we” and “our” refer to RadView Software Ltd. and its subsidiaries.

Company Overview

RadView provides innovative application testing software and services that enable companies to evaluate and measure the performance of their business-critical web applications. Our software allows companies to accelerate the development and deployment of their web applications and enables the successful implementation of their strategies involving their websites. We also provide support and maintenance services to our installed base of customers.

We were incorporated in Israel in 1991 and conducted our operations in Israel from 1993 until April 2000, when we relocated our corporate offices to the United States. We maintain our research and development operations in Israel. In August 2000, we completed the initial public offering of our ordinary shares, raising $35.3 million after offering costs.

We provide an integrated suite of products that comprehensively verifies the performance, scalability, and integrity of web applications throughout the development lifecycle. Together our award-winning products provide all the technology needed to implement an organized, efficient process for automated testing through central consoles, seamless script sharing and support for open-standards. By using our family of products customers can detect and resolve issues faster and improve the quality of their web applications.

Over 1,600 customers worldwide have purchased our products, such as Audi, Bank of America, Best Western, British Telecom, Cabela’s, Canadian Broadcasting Corporation, Federal Express, Fidelity Investments, London Stock Exchange, Microsoft, Mitsubishi, Philip Morris, Sun Microsystems and The Vanguard Group.

Recent Developments

In our report on Form 10-Q for the quarter ended September 30, 2005, we had previously disclosed that we were evaluating our alternatives for the potential sale of our business with the assistance of investment bankers and that we were engaged in negotiations with prospective purchasers. Our negotiations with a prospective purchaser concluded unsuccessfully in late November 2005 when the

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prospective purchaser was unable to secure sufficient financing to acquire us. As a result, we resumed discussions with other prospective purchasers while also pursuing alternative sources of financing necessary to continue our operations.

In January 2006, we entered into a term sheet for a proposed financing lead by Fortissimo Capital Fund GP LP, and a group of co-investors that would include one of our directors and two existing shareholders. In January 2006, we also signed a bridge loan financing agreement with the investors for interim financing of up to $500,000. On April 4, 2006, we executed definitive agreements with the investors for an initial investment of $1.5 million consisting of $750,000 from the purchase of 25,000,000 convertible preferred shares, or Preferred Shares, at a purchase price of $0.03 per share, and $750,000 as a convertible loan, of which $500,000 has been or would be provided under the bridge loan. The investors would also have the right to purchase up to an additional $2.25 million of Preferred Shares at a price of $0.03 per share, for up to a total of 75,000,000 additional Preferred Shares, within 18 months after the closing of the initial investment. The Preferred Shares would be convertible, at the election of the holder, into our ordinary shares on a one-for-one basis. In addition to voting rights similar to our ordinary shares, Preferred Shares would also be entitled to nominate a majority of the members of our board of directors and would have voting control over significant corporate actions. Preferred Shares would also have a preference in liquidation over our ordinary shares. The investors would also receive warrants to purchase 18,750,000 Preferred Shares with respect to the initial investment and up to a total of 56,250,000 additional Preferred Shares with respect to the additional investment, each at an exercise price of $0.04 per share exercisable for a period of five years from date of issuance.

The maximum number of ordinary shares potentially owned by the investors as a result of the proposed financing would be 200,000,000 ordinary shares, assuming the purchase of all available Preferred Shares in the initial and additional investments, exercise of all available warrants to purchase Preferred Shares and conversion of all convertible debt into Preferred Shares under the proposed financing, and further assuming the subsequent conversion of all such Preferred Shares into ordinary shares.

The completion of the proposed financing remains subject to the approval by a majority of our shareholders. See the section titled “Risks Related to Our Financing Transaction” in Item 1A. Risk Factors and also Note 1(b) in the notes to the consolidated financial statements for further information.

2005 Business Highlights

In May 2005, we entered into a one-year revolving line of credit facility with Comerica Bank for borrowings of up to $2.0 million. Advances under the facility were limited to the lesser of $2.0 million or the sum of 75% of eligible accounts receivable plus $1.0 million. In December 2005, our borrowings under the credit facility exceeded the collateral base and, as a result, we triggered an event of default. We agreed upon a repayment plan with Comerica Bank to repay the outstanding borrowings under the facility in installments through January 2006. As of December 31, 2005, we had an outstanding balance under the facility of $70,000. In January 2006, all borrowings under the credit facility were fully repaid and the credit facility was terminated.

In May 2005, we announced the launch of a new version of our root-cause analysis product, WebLOAD Analyzer, for .NET and Microsoft web applications. In September 2005, we followed up with the launch of a version of WebLOAD Analyzer for J2EE web applications. Both of these new versions of WebLOAD Analyzer are licensed to us under an original equipment manufacturing, or OEM, agreement with a third party software provider.

In December 2005, we entered into a license and distribution agreement with OPNET Technologies, Inc, or OPNET, under which OPNET received a non-exclusive license to use the source code for our TestView suite of products, including restricted rights of distribution on a royalty-free basis, for a transaction fee of $572,000, payable in varying installment amounts through January 2006. Under the

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agreement, we are obligated to provide OPNET with eight weeks of engineering and training services. In January 2006, OPNET exercised a right to extend the engineering services through March 2006 for an additional fee of $96,000.

Industry Background

Distributed Computing Environments

Historically, companies relied on traditional client/server applications to perform internal business processes and share information. The rapid growth and acceptance of the Internet has fundamentally changed the way companies now conduct business and has enabled the proliferation of distributed computing environments.

Today, these distributed computing environments have the following attributes:

·Scope:  may include any combination of client/server environments, the Internet, intranets and extranets;

·Structure:  may be composed of a complex system of rapidly evolving hardware and software technologies, all of which may be geographically dispersed throughout the world;

·Usage:  commonly used to communicate, obtain and share information, sell goods and services, interact with customers, suppliers and partners; and

·Accessibility:  users can access the application from any location at any time.

An integral element of software technology used in today’s distributed computing environments is the web application.

Characteristics of Web Applications

Web applications are becoming the standard for new application software. We believe that web applications will eventually displace legacy client/server systems. Web applications have the following characteristics that present significant challenges to their successful development, deployment and ongoing operation:

·Complexity. Web applications typically involve the integration of many hardware and software components and technologies from multiple vendors often requiring close collaboration among a wide array of technology, media and graphic specialists;

·Unpredictable Loads and Stresses. Web applications are available to a potentially large number of users and can be subject to large traffic spikes;

·Nonstop Operation. Due to the business-critical nature of website initiatives, web applications must be available to users on a constant basis with minimal or no downtime for upgrades or modifications;

·Rapidly Evolving Technologies. Web applications are typically developed using software that is continuously changing as new technologies and standards emerge; and

·Continuously Modified and Updated. Web applications are typically modified and updated on a continuous basis as companies add new content and functionality and incorporate new technologies and standards.

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Importance of Web Application Integrity and Performance

As companies move various aspects of their businesses to corporate intranets, extranets and the Internet, they are placing greater reliance on their web applications. At the same time, web applications continue to become more complex, which produces a higher risk of failure. If a company’s web applications operate erroneously, perform poorly, or fail entirely, the resulting financial and business costs can be substantial, including lost revenues, customer defections, business interruptions and damage to a company’s reputation. In order to successfully compete, companies must rapidly deploy web applications of high quality and robust performance.

The performance of web applications includes the following key elements:

·Integrity: must operate as designed with full functionality accurately intact;

·Scalability: must be able to accommodate very large numbers of concurrent users and complex usage patterns;

·Efficiency: must operate rapidly and efficiently without deteriorating response time or processing bottlenecks; and

·Reliability: must consistently function as intended over prolonged periods when deployed and integrated into a company’s existing and evolving systems.

Our Market Opportunity

We believe that the distributed environment segment of the automated software quality, or ASQ, market is where virtually all the growth of the ASQ market will be realized in the next few years, and that there is a significant market opportunity for solutions that test and verify the integrity, scalability, efficiency and reliability of web applications to facilitate their rapid deployment. This is due to the expanded use of the Internet and corporate intranets and extranets, the need for high quality software, and the increase in the criticality of web applications for the success of businesses.

In our view, this growing market opportunity is best addressed by solutions that:

·efficiently and accurately simulate real world operating conditions;

·offer integrated and comprehensive performance assessment capabilities;

·allow performance assessment and error detection early in development process;

·provide detailed performance analysis to assist companies in better identifying and quickly resolving performance bottlenecks and other problems; and

·enable collaboration among all parties involved in the development and deployment of web applications.

Our Solution

We are a premier provider of software that enables companies to assure the integrity and performance of business-critical web applications. We address the functionality and performance requirements of web applications throughout their product lifecycle, from initial design through development, deployment and ongoing modifications and upgrades. In meeting these requirements, companies are able to mitigate the financial and business costs that can result from unsuccessful deployment and failures of their web applications. Companies that test their web applications using our solutions benefit from earlier detection of potentially costly problems such as performance bottlenecks, scalability issues, and functionality limitations. This results in significantly reduced costs and increased speed to market needed to successfully launch high performing, reliable web applications.

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Our Strategy

Our objective is to be a leading provider of web application testing and performance software solutions that enable companies to successfully implement their web-based business strategies by assuring the performance of their business-critical web applications. Key elements of our strategy are:

Increase Revenues and Control Costs to Achieve Profitability

Our net loss was $5.1 million in 2003, $3.8 million in 2004 and $2.5 million in 2005. The decrease in the net loss in 2004 resulted primarily from reduced operating costs, partially offset by a decline in our revenues in 2004. The decrease in net loss in 2005 resulted from an increase in total revenues and further reductions in our operating costs. We have lowered our operating costs in each of the past five years to more closely align costs with our expected revenues. We are focused on increasing our revenues while continuing to control costs in order to further reduce our net loss with the objective to ultimately achieve profitability and positive cash flow in the future.

Maintain and Extend Product Leadership

We believe that our software provides the most comprehensive verification of web applications, including scalability, efficiency and reliability. Our software supports Document Object Model, or DOM-based, verification, which enables quicker identification and resolution of application errors. In addition to DOM, our award-winning software is based on Internet standards such as JavaScript and Extensible Markup Language, or XML, and is used for benchmarking the performance of web applications by testing laboratories, trade media and independent software vendors.

In 2004, we introduced a comprehensive testing suite to address major areas of web application testing, including load testing, functional testing, root-cause analysis and test automation, all of which conveniently share the same script for greater efficiency.

In 2005, we introduced new versions of our root-cause analysis solution, called WebLOAD Analyzer, through a licensing arrangement with a different third party technology partner.

Develop and Expand Strategic Relationships

We believe that strategic relationships with industry leaders will enable us to accelerate our market penetration and visibility, and maintain our technology leadership. We collaborate with leading technology companies such as Sun Microsystems, as well as other Internet software and service providers. These strategic relationships help to ensure that our software is optimized for use with their product offerings and allow us to promote market awareness of our products. We plan to continue to develop strategic technology and marketing relationships with leading providers of web-related software.

We further believe that certain proprietary technologies used in our products may have alternative uses for other companies in their respective markets. In February 2003, we formed a strategic relationship with Ixia for the use of our WebLOAD product on their hardware platform to create a network application verification solution. As a result of this relationship, we generated revenues from royalties earned in 2003 and 2004 and eventually from the sale of a source code license in 2004 that provided us with technology license revenues in 2004 and 2005. In December 2005, OPNET Technologies purchased a license to use the source code for our TestView suite of products. The revenues from the technology license and related professional services under this arrangement are being recognized in 2005 and 2006. We plan to continue to develop similar technology relationships with other companies where our products and technologies may be beneficial.

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Leverage Our Installed Customer Base

To date, we have licensed our software to over 1,600 companies worldwide. Approximately 50% of our product orders are received from existing customers. These orders are typically the result of upgrades or expansions to their previously purchased licenses. For example, upon payment of additional license fees, an existing customer of our load-testing product may increase either or both the maximum number of allowable simulated users that can be generated from within the product and the number of end-users allowed to operate the product. In addition, as we introduce new products that complement our existing products, we believe there is an opportunity to increase our revenues through our installed customer base, in addition to sales to new customers.

Provide Solutions that Contribute to a Low Total Cost of Ownership

Companies purchase testing solutions based on several criteria, including the total cost of ownership. Factors that contribute to the total cost of ownership for testing solutions include, among others, the costs of testing software, hardware used to simulate user load traffic, training, and designing, writing and maintaining test scripts. We believe our software contributes to a low total cost of ownership in many ways, including:

·We offer competitive prices and flexible licensing options for our software solutions, minimizing up-front license costs;

·Our software efficiently simulates user load traffic which reduces the cost of hardware required to perform tests;

·Our open-standards scripting language reduces the learning requirements for users and simplifies test script generation and reduces script maintenance; and

·Our software runs on a variety of platforms allowing users to leverage the infrastructure they already own or have access to.

Products

Our current product line consists of:

·TestView Suite: a suite of products that integrate our load and functional testing technologies with a test management solution to provide comprehensive reporting and automated test execution. This helps the test and quality assurance professional to be efficient in reducing application delivery time;

·WebLOAD: software that assures the performance of web applications by efficiently simulating very large numbers of users, extreme fluctuations in traffic and the complex user demands placed on web applications within an operating environment;

·WebRM: enterprise software that promotes efficient use of resources, facilitates collaboration and enables increased productivity by allowing developers, quality assurance, or QA, and information technology staff to share the same testing technologies, methodologies and resources throughout the application development life cycle. This enables the systematic verification of web application quality at all stages and facilitates rapid deployment;

·WebFT:  software that offers accurate, reliable and highly efficient functional testing under real-world conditions across multiple applications and databases, isolating defects and problems that could impact web application performance; and

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·WebLOAD Analyzer: a software solution for detecting and resolving web application performance problems. Its unique ability of gathering and integrating data from multiple levels of application tiers provides users with the ability to determine the root cause of performance issues and resolve these issues faster.

Together, our products provide a comprehensive solution that enables users to verify their application’s integrity, scalability, efficiency and reliability at each point in the application development cycle. Our suite of products combines all aspects of the web application performance verification process into an integrated solution using a unified test script. Our products are designed specifically for web-based applications, and employ Internet-standard technologies. Using a standards-based approach makes our products easier to use and readily adaptable to new technology standards.

Key features of our software include:

Comprehensive Performance Software.   Our software provides an integrated solution to simultaneously verify the integrity, scalability, efficiency and reliability of web applications. In addition, our software can assess a web application’s overall performance, the performance of an application’s specific components and determine critical thresholds where performance starts to deteriorate.

Designed for Web Applications.   Our software is specifically designed for the complex web-based computing environment and is based on Internet standards, such as JavaScript, Java, ActiveX, HTML, XML, and DOM. This enables efficient simulation of very large numbers of users, extreme fluctuations in traffic and complex user demands placed on web applications. This also makes our software easier to use and allows it to be readily adaptable to emerging Internet technologies.

Detailed Performance Analysis.   Our software automatically monitors over 75 performance criteria and supports an extensive number of additional user-defined criteria. Companies using our products have the ability to verify the performance of web applications for each simulated user or transaction. By identifying and recording the root cause of a problem, our comprehensive measurement and reporting mechanisms expedite the process of problem resolution.

Verification Early in the Development Lifecycle.   Our software assists companies in identifying and resolving issues with their web applications at every point in the development life cycle. Resolving issues as early as possible in the development life cycle can lower the cost of developing web applications and accelerate the deployment of scalable, high performance web applications.

Facilitate Collaboration Throughout the Development Process.   Our software allows designers, developers, quality assurance and information technology professionals to store and seamlessly share test scripts, templates and results between products, allowing previously isolated technical teams within a company to work on a coordinated and collaborative basis.

Ease of Use.   All of our test scripts are generated using JavaScript, the programming language most commonly used by web application developers. This avoids the learning curve and costs associated with other products that utilize proprietary scripting languages.

Efficient Use of Resources.   We design our products to run on a variety of platforms and make efficient use of a company’s available computer resources, thereby reducing the hardware requirements and investments needed to simulate heavy user traffic. In addition, our software allows users to share company resources on an as-needed basis.

TestView Suite

The TestView suite is a web application test management solution that automates the creation of sophisticated functional and load test scripts from one central location. With the TestView suite, customers can define, schedule, execute, and report test scripts from a centralized console. These capabilities address

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the needs of customers to build efficient, reliable, and organized test plans and processes. This allows them to successfully test and deploy high performing web applications.

Key features and benefits of the TestView suite include:

Define and Store Sophisticated Test Scripts.   The TestView suite enables customers to easily create a test-plan tree that consists of hundreds of automated tests. Once tests are defined, the TestView suite allows users to store them in a central repository where they can readily be accessed and reused.

Schedule and Execute Test Scripts.   The TestView suite gives users the ability to schedule the execution of a test for anytime it is convenient—by time, by day, even overnight and during the weekend. The TestView suite fully automates the execution of tests, allowing users to work on other tasks while running tests. These capabilities save customers time and improve their efficiency.

Intelligent Results Reporting.The TestView suite provides users with intelligent summary reports that allow them rapidly assess the readiness of a web application for production. Users may view results of an entire test plan comprised of many individual test scripts, or if details are needed users may easily drill-down to quickly see the summary of a specific test script within a plan.

WebLOAD

Using WebLOAD, customers create test scripts that simulate users’ interactions with web applications. These scripts are written in JavaScript, the web standard for application scripting. WebLOAD includes recorders that enable customers to rapidly generate scripts by copying interactions between a web browser and a web application. WebLOAD also enables more advanced users to create highly complex interactions using JavaScript and WebLOAD’s script authoring tools.

WebLOAD can simultaneously run multiple scripts that reflect different user interactions with the underlying application. These differences may be task based. For example, a retail application might mix site visitors that browse with purchasers, or based on other user characteristics such as their connection speed, the browser they are using, or their Secure Socket Layer, or SSL, which is an encryption configuration.

WebLOAD executes scripts for multiple simulated users, or virtual clients, on load generation machines, such as existing servers, that are centrally managed by the customer. The customer can schedule these virtual clients independently to simulate fluctuating user traffic patterns. Alternatively, a customer can use WebLOAD’s patented Cruise Control feature, which steadily increases the number of virtual clients interacting with an application until that application fails to perform based on one or more customer-defined performance criteria. Cruise Control allows our customers to readily and rapidly determine the maximum user load their application can support while maintaining specified performance criteria.

WebLOAD efficiently generates large numbers of virtual clients requiring significantly less computer memory than competing products with comparable functionality. This benefits companies by significantly reducing the cost of hardware required to simulate large numbers of users.

While a performance session is running, WebLOAD generates over 75 different pre-defined statistical measurements, which are displayed to the user in real time. Our customers can also add an extensive number of user-defined measurements and timers, as well as monitor the performance profile of the components within a customer’s Internet architecture. WebLOAD reports these data points on a per client and per transaction level, thus providing detailed information about the potential causes of any detected application failures during the simulation and allowing customers to rapidly and effectively address any performance issues. Customers can analyze this performance data and readily export it to industry-standard, third party formats, such as Microsoft Excel.

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WebRM

WebRM addresses the needs of companies to systematically verify web application quality and standardize their web application performance solution across the application design, development, quality assurance and information technology functions. It allows companies to share WebLOAD resources, so that a web application’s architecture, design, implementation and hardware environment can all be tested using the same technology at each step of the development life cycle. Verification performed earlier in the development process generally results in earlier problem detection, lower costs and more rapid application development. Companies using WebRM can therefore capitalize on WebLOAD’s comprehensive, integrated, standard-based approach to facilitate the rapid delivery of higher quality web applications.

Key features and benefits of WebRM include:

Flexible Management of Resources.   Customers who license WebRM receive a fixed number simulated users, or virtual clients, which may be distributed throughout the enterprise on an as-needed basis. For example, a customer with a license for 10,000 virtual clients could allocate all 10,000 virtual clients for use in one performance session, or alternatively, could conduct several concurrent performance sessions with any number of virtual clients, up to an aggregate of 10,000 virtual clients.

Collaborative and Accelerated Development.   By enabling the sharing of resources and verification technologies throughout the application development lifecycle, WebRM enables developers, QA engineers and IT staff to use a common solution across the entire project. Using the same technology in all phases of application development and deployment enables easy communication across these functions. For example, WebRM permits a QA engineer to save a test script that identified a problem in the web application, and allows a developer to share that test script in order to reproduce, diagnose and fix the problem. Similarly, by using WebRM early in the development phase, developers can share their test scripts with QA engineers, increasing the shared understanding of what verification work has already been performed and allowing the QA function to scale these tests further.

WebFT

WebFT addresses the needs of companies to systematically verify the integrity of their web applications and ensure they perform as expected. WebFT offers accurate, reliable and highly efficient functional testing under real-world conditions across multiple applications and databases, isolating defects and problems that could impact web application performance. Once the functionality of the web application has been verified using WebFT, companies can share the same test scripts with WebLOAD or WebRM to verify that the functionality performs under user load.

Key features of WebFT, our functional testing product include:

Ease of Use:   By providing a highly visual development environment, users can easily record and playback transaction activity in web applications to verify the functionality of the application. This allows novice users to become productive quickly while providing experienced users with an agenda testing tree that they can modify and work with to verify and handle complex testing cases.

Automated Support for Client-Side Java:   This feature allows for easy recording and verification of client-side events.

Detailed Error Reporting:   This feature allows for identification of application failures through descriptive messages and alerts. In addition, reporting capabilities are enhanced through support for many formats including text, HTML, and Portable Document Format, or PDF.

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WebLOAD Analyzer

WebLOAD Analyzer is a powerful solution for managing and ensuring optimal performance in a distributed application server environment by identifying the root cause of performance issues highlighted during load and stress testing. WebLOAD Analyzer monitors and collects detailed information on the application infrastructure and correlates that information with user transaction activity and traffic bursts. This combination of internal data with external activity provides detailed information on areas that are operating outside of expected and acceptable thresholds, so users can quickly isolate and resolve their performance issues.

WebLOAD Analyzer works in conjunction with our load testing solution, WebLOAD, for an integrated and comprehensive perspective on performance. Measurements from end-user transactions and load levels generated by WebLOAD are integrated and correlated with the information recorded and collected by WebLOAD Analyzer’s data recorders for a comprehensive view of performance at any layer of the distributed application system.

When performance issues are encountered, users can examine the relationship of the load level along with application servers, database servers, and operating system information occurring at the same time, to drill-down to the specific level. This integrated and detailed information allows rapid diagnosis and detection of inter-related performance issues that would previously have gone undetected or would consume extensive resources and time to recreate.

WebLOAD Analyzer was initially introduced in July 2003 with a version specific to web applications based on J2EE technology. In May 2005, we introduced a version of WebLOAD Analyzer for .NET and Microsoft web applications. In September 2005, we introduced a new version of WebLOAD Analyzer for J2EE web applications using other technology. WebLOAD Analyzer is currently based on technology licensed to us under an OEM arrangement with a third party software company. We are obligated to pay royalties to our OEM partner based on our end-user revenues derived from WebLOAD Analyzer.

Services

Services consist of support and maintenance and training services. Support and maintenance services include technical support services via telephone and e-mail and product enhancements. Support and maintenance arrangements are generally purchased for 12-month terms. Training services consist of introductory and advanced courses on the use of our software products.

Customers

To date, we have licensed our software to over 1,600 customers worldwide. Our customers include companies across a broad range of industries, including financial services, technology, retail, manufacturing, government, telecommunication, health care and education.

Our customers are located primarily in the United States, Canada, Europe, Asia Pacific, and Israel. Revenues derived from customers in the United States as a percent of total revenues were 67.2% in 2003, 73.1% in 2004 and 68.6% in 2005. We expect to continue to derive the majority of our revenues from customers in the United States.

Sales and Marketing

Sales.   We sell our products principally through a direct sales force. Our direct sales force consists of sales personnel and sales engineers located at our corporate headquarters in Burlington, Massachusetts, as well as offices throughout the United States, Israel, Germany and the United Kingdom. In addition, we have indirect channel partners, principally consisting of OEM partners, web system integrators, web hosting companies, independent software vendors and international distributors in Europe, Israel and

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Asia. Revenues from our indirect distribution channels as a percentage of total revenues were 12.8% in 2003, 22.3% in 2004 and 21.5% in 2005. We expect revenues from indirect channels will decline due to the completion in 2005 of a substantial OEM license transaction and revenues from anticipated future OEM royalty and technology license fee arrangements, if any, are expected to be lower.

Marketing.   We engage in a variety of company and product marketing activities and provide product information through our website. We offer free trials of our TestView suite, WebLOAD and WebFT software that can be downloaded from our website. Our marketing programs are aimed at informing customers and prospects of the benefits of our software, increasing the market awareness of our products and generating demand for our products. Our marketing strategy includes public relations initiatives, focused lead generation activities, participation in trade shows and conferences, web seminars, and cultivating relationships with key technology analysts.

Customer Support

We offer a range of support and maintenance and training services to our customers. We believe that providing a high level of customer service and technical support is necessary to achieve rapid product implementation, which in turn, is essential to customer satisfaction and continued license sales and revenue growth. We provide telephone and e-mail technical support from our corporate office in Burlington, Massachusetts and from our development center in Israel. We track support requests through a series of customer databases, including current status reports and historical customer interaction logs. We use customer feedback as a source of ideas for product improvements and enhancements. We also provide training and consulting to assist our customers in the development and deployment of web-based applications using our products.

Research and Development

Our research and development efforts are focused on enhancing our core technology and developing additional functionality and capabilities for our products. We conduct our research and development principally from our facility in Israel. Our software development approach consists of a methodology that provides guidelines for planning, controlling and implementing projects. This approach uses a cross-functional, team-based development and release process. Our development group works closely with our sales and marketing groups, who provide customer and market requirements, and senior management who provide strategic input, to assist in defining product direction and to ensure that the right products are brought to market. Members of our research and development group have extensive experience working with web technologies and software testing solutions. We believe that our future performance will depend in large part on our ability to enhance our current product line, develop new products and provide innovative solutions for verifying the performance and scalability of web applications. Our research and development expenses were $3.0 million in 2003, $2.6 million in 2004 and $2.2 million in 2005.

Product Technology and Architecture

Our technologies are built on an open, portable architecture based on industry standard technologies. Our products may be deployed on Windows NT, Windows 2000, Windows XP, Windows 2003, Sun Solaris and Linux operating systems. Our products incorporate the Internet standard scripting language, JavaScript, enabling our customers to easily develop, deploy and manipulate the scripts required to assess the performance of their web applications. We have also extended JavaScript to enable integration of Java, ActiveX and XML and work with other standard web technologies, such as SSL encryption schemes. Integration with these standard technologies helps ensure our products are available for use regardless of the customer’s operating environment.

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Use of JavaScript as a core technology enables our products to perform extensive functional verification capabilities. Our DOM extensions readily make XML available to the script developer in a familiar setting making it easier to extend a web application to include XML interactions. Our efficient browser emulator minimizes the use of computer memory, thereby enabling companies to simulate a larger number of virtual clients in order to place considerable load, or stress, on the underlying application infrastructure.

We have developed an application architecture that scales to any arbitrary test size, delivering consistent throughput for any arbitrary load size, independent of the number of machines used to generate the load. We employ a 32-bit, multi-threaded and multi-process implementation, which dynamically adjusts and allocates new processes as the load requirements are raised. This ensures that load generators are optimized for the test and the load demanded of them, as well as readily taking advantage of multi-processor machines to increase performance.

Competition

The web application performance and testing solutions market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other activities of market participants. Our primary competitors include companies who offer application-testing software, such as Mercury Interactive, Compuware, Empirix and Segue Software. We also compete against companies that provide a broader spectrum of development tools that include some verification functionality, such as IBM/Rational Software. In addition, we compete with companies like Quest Software whose main offering is application performance management software.

We expect that competition will continue to intensify in the future. Increased competition is likely to result in pricing pressures, reduced margins and may result in the failure of our products to achieve or maintain market acceptance, any of which could have a material adverse effect on our business, results of operations and financial condition. Some of our competitors have longer operating histories, better brand recognition, a larger installed base of customers and substantially greater financial, technical, marketing and other resources than we do.

We anticipate that there will be continuing consolidation in the web application products market and related markets such as computer software, media and communications. Our competitors may be acquired by, receive investments from, or enter into other commercial relationships with, larger, well-established and well-financed companies. As a result, they may be able to respond more quickly to new or changing opportunities, technologies, standards or customer requirements. Many of these competitors also have broader and more established distribution channels that may be used to deliver competing products directly to customers through bundling or other means. If competitors were to bundle competing products with their products, the demand for our products might be substantially reduced and our ability to distribute our products successfully would be substantially diminished.

We believe the principal competitive factors affecting our market include:

·the ability to accurately emulate client-user interactions with the web application, including efficient simulation of very large numbers of users, extreme fluctuations in traffic and complex user demands placed on web applications;

·breadth and depth of features for detecting and resolving software errors early in the development cycle;

·ease of use and interactive user features;

·price and total cost of use, including hardware and training requirements;

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·ability to stay technically current and compatible with rapidly emerging and changing web technologies and standards; and

·compatibility with the user’s existing network components and software systems.

To expand our customer base, we must continue to innovate and improve the performance of our products. Although we believe that our products compete favorably with respect to these factors, our market is subject to constant change. We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, marketing, service, technical and other resources.

Proprietary Rights

Our success and ability to compete depend upon our proprietary technology. In addition, we rely on patent, copyright, trade secret and trademark law to protect our proprietary information. We also typically enter into an agreement with each of our employees, consultants and customers to control their access to and distribution of our software, documentation and other proprietary information. Nevertheless, a third party could copy or otherwise obtain our software or other proprietary information without our authorization, or could develop software competitive to ours. Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop similar technology or duplicate our products or our other intellectual property. In addition, the laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the United States. We expect that it will become more difficult for us to monitor the use of our products if we increase our international presence.

There has been substantial litigation in the software and Internet industries regarding intellectual property rights. It is possible that, in the future, third parties can claim that we, or our current or potential future products, infringe on their intellectual property. We expect that software product developers will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and the functionality of products in industry segments overlaps. Any claims, with or without merit, could be time-consuming, result in costly litigation, cause product licensing delays or require us to license or pay royalties for certain products in order to continue to sell our products. Licensing or royalty agreements, if required, may not be available on terms acceptable to us or at all. As a result, our business could be harmed.

We license the technology for our WebLOAD Analyzer product from third party software companies under distribution agreements. These third party software companies retain all intellectual property rights to their technology.

Employees

As of December 31, 2005, we had 41 employees worldwide, of whom 16 were employed in research and development, 14 in sales and marketing, 8 in management and administration and 3 in technical support. Of our employees, 15 are based in the United States, 23 are based in Israel and 3 are based in Europe. None of our employees is represented by a labor union and we consider our relations with employees to be good.

Although our Israeli employees are not party to any collective bargaining agreement, all of our Israeli employees are subject to Israeli labor laws and certain provisions of collective bargaining agreements among the Government of Israel, the General Federation of Labor in Israel and one or more employer’s associations. These provisions and laws concern the length of the workday, minimum daily wages for workers, procedures for dismissing employees, determination of severance pay, adjustments of wages to increases in the Israeli consumer price index, and other conditions of employment.

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Available Information

We are subject to the informational requirements of the Securities Exchange Act of 1934, or the Exchange Act. Therefore, we file periodic reports, proxy statements and other information with the Securities and Exchange Commission, or the SEC. Such reports, proxy statements and other information may be obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at www.sec.gov that contains reports, proxy statements and other information regarding issuers that file electronically with the SEC.

We maintain a corporate investor relations website at www.radview.com where shareholders and other interested persons may review, among other things, our corporate governance materials and certain SEC filings. We have made all reports and amendments to reports available on our website free of charge. We also make available, free of charge, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. We do not intend for information contained in our website to be part of this Annual Report on Form 10-K. In addition, we have posted to our website the latest versions of our corporate governance guidelines, our Audit Committee and Compensation Committee charter, as well as our code of business conduct, which includes our code of ethics for senior financial officers. We will provide each of these documents in print, without charge, upon written request to RadView Software, Inc., 7 New England Executive Park, Burlington, MA 01803, attn: Investor Relations.

Item 1A.RISK FACTORS

In addition to risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our industry and our company could materially impact our future performance and results. We have provided below a list of these risk factors that should be reviewed in connection with our securities. These are not all the risks we face and other factors currently considered immaterial or unknown to us may impact our future operations.

Risks Relating Our Financing Transaction

We will need additional capital to finance our operations.

We need to raise additional capital to finance our operations unless we are able to generate cash from operations. To date we have been unable to generate cash from operations. Cash used in operating activities was $4.6 million in 2003, $2.7 million in 2004, and $2.2 million in 2005.

We obtained a bridge loan that provides for borrowings of up to $500,000, of which $280,000 has been borrowed as of April 5, 2006. We have entered into definitive agreements in connection with an initial investment of $1.5 million, including amounts borrowed under the bridge loan, with the investors having the right to invest an additional $2.25 million over the 18 month period after the closing. The completion of this financing remains subject to approval by a majority of our shareholders. Our management believes that approval by a majority of our shareholders can be reasonably expected based on representations from several of our significant shareholders, representing 39.3% of our outstanding ordinary shares, that they intend to vote in favor of the financing. However, there can be no complete assurance that a majority of our shareholders will approve this financing or that the financing will close.

Failure to close this financing would materially adversely affect our ability to conduct our business. Even if this financing were to close, there is no assurance as to the amounts that the investors will elect to invest beyond the initial investment.

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The financing may have an adverse effect on the market price of our ordinary shares.

Under the terms of the financing, our ordinary shares may be issued as a result of the conversion of convertible securities or the exercise of warrants. All of these ordinary shares would be sold at prices that are substantially below the market price of our ordinary shares on March 31, 2006 and substantially below the historical market prices of our ordinary shares. As a result, the market price of our ordinary shares may decline.

There will be substantial dilution to our existing shareholders as a result of the financing.

At the initial closing of the financing, we would issue a minimum of 25,000,000 Preferred Shares, convertible debt that would be convertible into 25,000,000 Preferred Shares, and warrants to purchase 18,750,000 Preferred Shares. As a result, upon the closing of the financing, the investors would have the ability to acquire up to 68,750,000 of our ordinary shares as a result of the conversion of the Preferred Shares and convertible debt and exercise of the warrants.

If the investors invest the maximum amount under the proposed financing, then the investors would hold 100,000,000 Preferred Shares, convertible debt that would be convertible into 25,000,000 Preferred Shares, and warrants to purchase 75,000,000 Preferred Shares. As a result, the investors would have the ability to acquire up to 200,000,000 of our ordinary shares as a result of the conversion of the Preferred Shares and convertible debt and exercise of the warrants.

Our shareholders will suffer substantial dilution as a result of this financing. Based on the number of our ordinary shares outstanding as of December 31, 2005, and not taking into account any outstanding options or warrants to other investors, upon the closing of the initial investment of the financing our existing shareholders will own 45.2% of our outstanding capital shares and 23.1% of those shares on a fully diluted basis. If the investors were to make the maximum investment under this financing, on a similar basis, our existing shareholders would own 17.0% of our outstanding capital shares and 9.3% of those shares on a fully diluted basis.

There may be an adverse effect on the market price of our shares as a result of shares being available for sale in the future.

In connection with previous capital raising activities, including our private placement in March 2004 and revolving line of credit facility in 2005, we have outstanding several series of warrants to purchase our ordinary shares at various exercise prices. In connection with the financing, we would issue a substantial number of Preferred Shares and warrants to purchase Preferred Shares, as well as convertible debt that is convertible into Preferred Shares. Under the terms of the financing, the holders of these securities and the holders of certain other securities outstanding prior to the financing would be able to require us to register the ordinary shares underlying these securities for resale to the public.

If our current or future shareholders sell substantial amounts of our ordinary shares, including shares issued upon the conversion of Preferred Shares or convertible debt, or upon the exercise of outstanding options and warrants, then the market price of our ordinary shares may decline. These sales also might make it more difficult for us to sell equity or equity-related securities in the future at a time and place that we deem appropriate.

Fortissimo and the other investors in the financing would have control over most matters submitted to a vote of the shareholders, thereby limiting the power of other shareholders to influence corporate action.

As of March 31, 2005, our principal shareholders, executive officers, and directors owned 49.5% of our outstanding ordinary shares. As a result, these shareholders may have the power to substantially influence the outcome of most matters submitted to a vote of shareholders, including approval of the

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financing transaction, the election of members of our board and the approval of significant corporate transactions. This concentration of ownership may also have the effect of making it more difficult to obtain approval for a change in control of us.

In connection with the financing, Fortissimo’s portion of the investment would be 75% of the total investment and three existing shareholders, one of whom is one of our directors, would collectively account for the remaining 25%. Upon closing of the initial investment of the financing, Fortissimo would be expected to hold 41.2% of the outstanding voting shares and 57.8% of the voting shares on a fully-diluted basis. In addition, Fortissimo will also be entitled to nominate a majority of the members of our board of directors to be designated as preferred directors. These preferred directors will be granted approval authority over significant corporate actions and transactions.

As a result, upon closing of the initial investment of the financing, Fortissimo will have substantial control over both the voting shares and our board of directors, which may significantly limit the power of all other shareholders and our existing directors to influence corporate actions.

Additionally, Fortissimo may exercise its control over our business that may have a direct or indirect effect on other aspects of our operations, such as our business strategy, management structure, and personnel. There can be no assurance that any changes resulting from the influence of Fortissimo will not materially adversely affect our business.

There would be an adverse effect on the privileges and rights of our ordinary shareholders as a result of changes in our capital structure and Articles of Association as a result of the financing.

Our Articles of Association currently provide for the issuance of only one a class of shares designated as ordinary shares.

In connection with the financing, our Articles of Association would be amended to allow for the creation of Preferred Shares and establishment of their rights and preferences, which include the following:

·Preferred Shares would vote on an as-converted basis with ordinary shares on all matters presented at a general meeting of shareholders;

·Preferred Shares would be entitled to nominate a majority of the members of the board of directors, including the chairman;

·Preferred Shares would have a priority preference in the event of the declaration of any dividends or upon liquidation; and

·Preferred Shares would have protective rights over significant corporate actions, such as approval over merger and acquisitions, voluntary liquidation or dissolution, declaration of dividends, amendments to articles of association, sale or transfer of assets, and issuance of securities with equal or superior rights.

As a result, the rights granted to holders of our Preferred Shares may have an adverse effect on the rights and preferences of our ordinary shareholders.

Our ability to actively seek out other forms of financing or pursue strategic alternatives is significantly restricted under the terms of the financing.

Since the execution of the term sheet for the financing signed on January 12, 2006, we have been prohibited from actively soliciting or participating in discussions with other parties that may be interested in investing in or acquiring all or a portion of our business. Under the terms of the financing, we would remain subject to this limitation until the conclusion of the meeting of our shareholders to be convened to

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approve the financing. Upon closing of the financing, similar limitations would exist as a result of the protective rights granted to holders of Preferred Shares.

In addition, under the terms of the financing, we would be required to pay a break-up fee of $500,000 if we were to conduct discussions with another party that resulted in the completion of an alternate transaction within twelve months of the termination or unsuccessful completion of the financing.

We are restricted in our ability to seek other financing or pursue other strategic alternatives. As a result, in the event that the Proposed Financing is not approved by a majority of our shareholders or does not close, our ability to continue operations will be materially adversely affected.

We will incur additional costs in connection with the financing.

We will incur costs and expenses arising directly from the financing such as interest expense and amortization of deferred financing charges and warrants. We incurred legal and accounting expenses in connection with the negotiation and execution of the financing agreements and will incur additional expenses to prepare the proxy materials for the shareholders meeting to approve the financing. In addition, we would be required to pay to Fortissimo a management fee in a minimum amount of $50,000 per year, plus an additional amount up to $70,000 per year, such additional amount payable from our annual profits, if any. These additional expenses will adversely affect our results of operations if we are not able to increase our revenues and/or decrease our other expenses.

Risks Related to Our Operations

We have had losses since our inception and expect to incur losses for the foreseeable future.

We incurred net losses of $5.1 million in 2003, $3.8 million in 2003 and $2.5 million in 2005. As of December 31, 2005, we had an accumulated deficit of $59.3 million. We expect to incur losses for the foreseeable future and cannot be certain if or when we will achieve profitability. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis in the future.

Our quarterly operating results may fluctuate, and if we fail to meet the expectations of our investors, our share price may decrease significantly and shareholders could lose part or all of their investment.

Our quarterly revenues and operating results have varied significantly in the past and are likely to continue to vary significantly in the future. Our future quarterly operating results may fluctuate significantly and may not meet the expectations of investors.

The factors that may cause fluctuations of our operating results include the following:

·the size, timing and terms of sales of our products and services;

·unexpected delays we may encounter in introducing new versions of our existing products as well as any new future products and services;

·our ability to successfully retain our direct sales force and international sales organization;

·our ability to establish and maintain relationships with our partners;

·the fixed nature of expenses such as base compensation and rent; and

·transaction costs, including legal, investment banking and accounting fees, in connection with extraordinary activities, such as obtaining financing or pursuing our strategic alternatives.

Due to these and other factors, we believe that period-to-period comparisons of our results of operations may not be meaningful and should not be relied upon as indicators of our future performance.

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It is possible that in future periods our results of operations may be below the expectations of public market analysts and investors. If this occurs, the price of our ordinary shares may decline.

We expect to depend on sales of our WebLOAD product for a substantial majority of our revenues for the foreseeable future. We are licensing WebLOAD to others and sales by our licensees may compete with our sales of this product.

We anticipate that revenues from our WebLOAD will constitute a substantial majority of our revenues for the foreseeable future. Consequently, any decline in the demand for our WebLOAD product would seriously harm our business.

We have also entered into technology licenses arrangements with Ixia and OPNET Technologies that permit the use of the technology underlying our WebLOAD products and we may enter into additional licenses in the future. These technology licenses will generate revenues for only a specified period of time. Our licensees may compete with us for sales of WebLOAD and their product offerings may contain features in addition to those contained in WebLOAD. Competition from our licensees could reduce the amount of revenues we generate from our sales of these products in an amount that exceeds any license revenues recognized by us directly from the licensee. This could have an adverse affect on our results of operations.

If we fail to develop new products or fail to enhance our existing products to respond to emerging technologies and industry trends, we will likely lose market share to our competitors and our revenues will likely decline.

The target market for our products is characterized by rapid technological change, frequent new product introductions, changes in customer requirements, evolving industry standards and significant competition. We expect to introduce new products and develop enhancements to our existing products. Our future financial performance depends upon our ability to timely identify new market trends and Internet technology and to develop and commercialize software that is compatible with these emerging trends and technologies. We may not accurately identify trends and technologies or we may experience difficulties that delay or prevent the successful development, introduction or marketing of new or enhanced software products in the future. In addition, our products may not meet the requirements of the marketplace or achieve market acceptance. If we fail to successfully and timely develop and deploy new products or product enhancements, we may lose market share to our competitors and our revenues may decline.

In addition, our existing software products could become obsolete and unmarketable with the introduction of products, web applications or computer systems employing new technologies or industry standards. If our current software products become obsolete and we fail to introduce new products, our business will not be viable. Further, if our competitors introduce products earlier or that are more responsive than our products to emerging technologies and market trends, we will lose market share to our competitors and our revenues may decline.

We face significant competition from other technology companies and we may not be able to compete effectively.

The web application performance and testing solutions market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other activities of market participants. Our primary competitors include companies who offer application-testing software, such as Mercury Interactive and Compuware. We also compete against companies that provide a broader spectrum of development tools that include some verification functionality, such as Rational Software. In addition, we compete with companies like Quest Software whose main offering is application performance management software.

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We expect that competition will intensify in the future and that additional competitors will enter the market with competing products as the size and visibility of the market opportunity increases. Increased competition is likely to result in pricing pressures, reduced margins and may result in the failure of our products to achieve or maintain market acceptance, any of which could have a material adverse effect on our business, results of operations and financial condition.

Some of our competitors have longer operating histories, better brand recognition, a larger installed base of customers and substantially greater financial, technical, marketing and other resources than we do. As a result, they may be able to respond more quickly to new or changing opportunities, technologies, standards or customer requirements.

Many of our competitors also have broader and more established distribution channels that may be used to deliver competing products directly to customers through bundling or other means. If competitors were to bundle competing products with their products, the demand for our products might be substantially reduced and our ability to distribute our products successfully would be substantially diminished. The entry of new competitors into our market could reduce our sales, require us to lower our prices, or both. Many of the factors that affect competition are outside our control, and there can be no assurance that we can maintain or enhance our competitive position against current and future competitors.

Our sales cycle depends partly on factors outside our control and may cause our revenues to vary significantly.

Our customers view the purchase of our products as an important decision. As a result, our customers may take a long time to evaluate our products before making their purchase decisions and this could result in a long, and often unpredictable, sales and implementation cycle for our products. This may cause our revenues and results of operations to vary significantly from period to period. In addition, we may expend significant sales and marketing expenses during the evaluation period before the customer places an order with us. Our customers often begin by purchasing our products on a pilot basis before they decide whether or not to purchase additional licenses for broader use within their organizations.

We usually have no significant order backlog. This makes revenues in any quarter substantially dependent upon orders we receive and deliver in that quarter. Because of this, our revenues and results of operations in any quarter may not meet market expectations or be indicative of future performance and it may be difficult for an investor to evaluate our prospects.

Defects in our products may increase our costs and diminish the demand for our products.

Our products are complex and they have occasionally contained, and may in the future contain, undetected errors when first introduced or when new versions are released. If our products do not perform as intended in specific company environments, we may incur warranty and repair costs, be subject to liability and experience delays. Regardless of the source of the errors, we must divert the attention of our engineering personnel from our research and development efforts to address any errors. We may incur warranty or repair costs, be subject to liability claims for damages related to product errors or experience delays as a result of these errors in the future. Any insurance policies that we may have may not provide sufficient protection should a claim be asserted. Moreover, the occurrence of errors, whether caused by our products or the products of another vendor, may result in significant customer relation problems and injury to our reputation and may impair the market acceptance of our products and technology.

Failure to develop strategic relationships could limit our growth.

We believe that our success in penetrating our target markets depends in part on our ability to develop and maintain strategic relationships with resellers, systems integrators and distribution partners. If we are unable to maintain our existing marketing and distribution relationships, or fail to enter into

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additional relationships, we will have to devote substantially more resources to direct sales and marketing of our products. In addition, licenses of our products through indirect channels have been limited to date. Our existing relationships do not, and any future relationships may not, afford us exclusive marketing or distribution rights. Therefore, our partners could reduce their commitment to us at any time in the future. In addition, many of these partners have multiple relationships and they may not regard us as significant for their business. In addition, these partners may terminate their relationships with us, pursue other relationships with our competitors or develop or acquire products that compete with our products. Even if we succeed in entering into these relationships, they may not result in additional customers or revenues.

If we fail to manage our geographically dispersed organization, we may fail to implement our business plan and our revenues may decline.

We have our principal executive offices in the U.S. and conduct our research and development primarily in Israel. In addition, we have sales offices in the U.S., Israel, Germany and the United Kingdom. Our directors, executive officers and other key employees are similarly dispersed throughout the world. Our management must devote resources to manage geographically diverse operations. In addition, conducting international operations subjects us to risks we do not face in the United States. These include:

·currency exchange rate fluctuations;

·seasonal fluctuations in purchasing patterns;

·unexpected changes in regulatory requirements;

·longer accounts receivable payment cycles and difficulties in collecting accounts receivable;

·difficulties in managing and staffing international operations;

·potentially adverse tax consequences, including restrictions on the repatriation of earnings;

·the burdens of complying with a wide variety of foreign laws; and

·reduced protection for intellectual property rights in some countries.

Failure to manage our geographically dispersed organization could harm our business.

The success of our business depends on our senior management, including Ilan Kinreich, our Chief Executive Officer and President, whose knowledge of our business and expertise would be difficult to replace.

Our success depends largely on the continued contributions of our senior management. In particular, we depend on the services of Ilan Kinreich, our Chief Executive Officer and President. Employment agreements with our senior management team and other key personnel, including Mr. Kinreich, do not require a specified service obligation. We also do not carry life insurance on our senior management or other key personnel. If one or more members of our senior management were to terminate their employment, we could experience delays in product development, loss of sales and diversion of management resources.

We may not be able to retain our existing personnel, which could negatively impact development, sales and support of our products.

In the past we have reduced the size of our workforce in order to reduce our operating expenses. As a result, our success depends on our ability to retain our existing experienced employees. If we fail to retain our current employees, our revenues could decline. Competition for qualified personnel is intense, and we may not be able to retain our highly qualified personnel. Our future success also depends upon the continued service of our key sales, marketing and support personnel. In addition, our products and technologies are complex and we are substantially dependent upon the continued service of our existing engineering personnel. None of our key employees are bound by an employment agreement that requires a specified service obligation. If we are not able to retain our existing personnel, we could have difficulty developing, selling or supporting our products.

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We may not be able to protect our intellectual property rights and we may lose a valuable asset or incur costly and time-consuming litigation attempting to protect our rights.

Our success depends upon the protection of our technology, trade secrets and trademarks. To protect our rights to our intellectual property, we rely on a combination of trade secret protection, patent law, trademark law, confidentiality agreements and other contractual arrangements. The protective steps we have taken may be inadequate to deter infringement or misappropriation. We may be unable to detect the unauthorized use of our intellectual property or take appropriate steps to enforce our intellectual property rights. Policing unauthorized use of our products and technology is difficult. In addition, the laws of some foreign countries in which we currently or may in the future sell our products do not protect our proprietary rights to as great an extent as do the laws of the United States.

To date, we have granted to two separate strategic partners licenses to use the source code of certain of products or technology. We expect that we may grant similar license rights to other partners in the future. The measures we take to ensure that the source code provided under these licenses are protected may not be sufficient to protect our intellectual property. As a result, these technology licenses may result in an increase in risk to us with respect to our ability to control, monitor and enforce our intellectual property rights.

Failure to adequately protect against or to promptly detect unauthorized use of our intellectual property could devalue our proprietary content and impair our ability to compete effectively. Defending our intellectual property rights could result in the expenditure of significant financial and managerial resources, whether or not the defense is successful. Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop similar technology, or duplicate our products or our other intellectual property. We may have to resort to litigation to enforce our intellectual property rights, to protect our trade secrets or know-how or to determine the scope, validity or enforceability of our intellectual property rights. Our protective measures may prove inadequate to protect our proprietary rights, and any failure to enforce or protect our rights could cause us to lose a valuable asset.

We may be subject to intellectual property infringement claims that, with or without merit, could be costly to defend or settle.

Substantial litigation regarding intellectual property rights exists in the software industry. We expect that software products may be increasingly subject to third-party infringement claims as the number of competitors in our industry segments grows and the functionality of products in different industry segments overlaps. Third parties may make a claim of infringement against us with respect to our products and technology or claims that our intellectual property rights are invalid. Any claims, with or without merit, could:

·be time-consuming to defend;

·result in costly litigation;

·divert management’s attention and resources; or

·delay product delivery.

In addition, if our products were found to infringe a third party’s proprietary rights, we could be required to enter into royalty or licensing agreements in order to continue to be able to sell our products. Royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all. A successful claim of product infringement against us and our failure or inability to license the infringed or similar technology could harm our business.

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We do not have sufficient insurance to cover all of our potential product liability and warranty claims.

Companies use our products to assure the performance of their web applications. In many cases, web applications serve critical business functions. The sale and support of our products may entail the risk of product liability or warranty claims based on our products not detecting critical errors or problems with web applications that fail in a “live” environment and cause companies financial loss. In addition, the failure of our products to perform to customer expectations could give rise to warranty claims. Although we seek to limit our exposure to claims under our license terms and we carry general liability insurance, it is unlikely that our insurance would cover potential claims of this type and our insurance may not be adequate to protect us from all liability that may be imposed. If we are subject to any claims, our results of operations may be harmed.

We have not yet evaluated our internal controls over financial reporting in compliance with Section 404 of the Sarbanes-Oxley Act.

We are required to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act by no later than the end of our 2007 fiscal year. We have only recently begun the process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404. This process may divert internal resources and will take a significant amount of time and effort to complete. If it is determined that we are not in compliance with Section 404, we may be required to implement new internal control procedures and reevaluate our financial reporting. We may experience higher than anticipated operating expenses as well as external auditor fees during the implementation of these changes and thereafter. Further, we may need to hire additional qualified personnel in order for us to be compliant with Section 404. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in our being unable to obtain an unqualified report on internal controls from our independent auditors.

Risks Relating to the Market for Our Ordinary Shares

Our ordinary shares are listed on the Over-the-Counter Bulletin Board, or OTCBB.

Our shares are quoted on the OTCBB. Until September 2004, our shares were traded on the Nasdaq SmallCap Market. As a result of being traded on the OTCBB, our shareholders and we may experience negative consequences, including:

·a less liquid trading market for our ordinary shares;

·loss of investor confidence that could result in the decline in the trading price or volume of our ordinary shares;

·decrease of our reputation with prospects, customers, employees and vendors, any of which may have a material adverse affect on our business; and

·reduced access to capital markets in the event we need to raise additional capital.

The market price of our ordinary shares has fluctuated and may continue to fluctuate significantly.

Our share price has fluctuated and may continue to fluctuate significantly. Fluctuations in our share price can occur for reasons that may be unrelated to operating results, including stock market-wide downturns and events in the technology industry as well as in Israel. These fluctuations may adversely affect the market price of our ordinary shares.

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Risks Relating to Our Location in Israel

Conditions in Israel affect our operations and may limit our ability to produce and sell our products, which could have a material adverse effect on our business.

Our principal offices and many of our subcontractors and suppliers are located in Israel. Accordingly, political, economic and military conditions in Israel affect our operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. A state of hostility, varying in degree and intensity, has led to security and economic problems for Israel. Since October 2000, there has been a marked increase in hostilities between Israel and the Palestinians, and in January 2006, Hamas, an Islamic movement responsible for many attacks against Israelis, won the majority of the seats in the Parliament of the Palestinian Authority. The election of a majority of Hamas-supported candidates is expected to be a major obstacle to relations between Israel and the Palestinian Authority, as well as to the stability in the Middle East as a whole.

The future of relations between Israel and the Palestinian Authority is uncertain. Terrorist attacks, armed conflicts or political instability in the region could negatively affect local business conditions and harm our results of operations. We cannot predict the effect on us of the increase in the degree of violence by Palestinians against Israel or the effect of military action elsewhere in the Middle East. Furthermore, several countries restrict doing business with Israel and Israeli companies, and additional companies may restrict doing business with Israel and Israeli companies as a result of the increase in hostilities. This may also seriously harm our operating results, financial condition and the expansion of our business.

If our key personnel are required to perform military service, we could experience disruptions in our business.

A number of our key personnel in Israel have standing obligations to perform periodic reserve duty in the Israel Defense Forces and are subject to be called for active military duty at any time. If our key personnel are absent from our business for a significant period of time, we may experience disruptions in our business that could affect the development, sales or technical support of our products. As a result, we might not be able to compete in the market and our results of operations could be harmed.

Because substantially all of our revenues are generated in U.S. dollars, while a portion of our expenses is incurred in New Israeli Shekels, or NIS, inflation in Israel could harm our results of operations.

Substantially all of our revenues are generated in U.S. dollars, while a portion of our expenses, primarily salaries and related expenses incurred in our Israeli facility, is in NIS. Our Israeli-based employees’ salaries are influenced by inflation in Israel. As a result, any increase in the rate of inflation in Israel may have a negative impact on our dollar-measured operating results unless the inflation in Israel is offset by a devaluation of the NIS in relation to the U.S. dollar. In 2003, the rate of deflation in Israel was 1.9% and the value of the U.S. dollar decreased in relation to the NIS by 7.6%. In 2004, the rate of inflation in Israel was 1.2% and the value of the U.S. dollar decreased in relation to the NIS by 1.6%. In 2005, the rate of inflation in Israel was 2.4% and the value of the U.S. dollar increased in relation to the NIS by 6.8%. We cannot predict any future trends in the rate of inflation in Israel or trends in the rate of exchange between the NIS and the dollar. If the dollar cost of our operations in Israel increases, our dollar-measured results of operations will be adversely affected.

Israeli regulations may impact our ability to engage in research and development and export of our products in accordance with our current practices.

Israeli law requires us to obtain a government license to engage in research and development of, and export of, the encryption technology incorporated in our products. We currently have government licenses to engage in production of our encryption technology in our products in their 40- and 128-bit versions. Our research and development activities in Israel would need to be modified to transfer this activity to our U.S.

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development organization, and our current practice of exporting our products from Israel to the U.S., with embedded encryption technology, would need to be changed if:

·the Israeli government revokes our current licenses;

·our licenses fail to cover the scope of the technology in our products; or

·Israeli laws regarding research and development export or use in general of encryption technologies were to change.

We currently benefit from government programs and tax benefits that may be discontinued or reduced.

We received grants and currently receive tax benefits under Government of Israel programs. In order to maintain our eligibility for these programs and benefits, we must continue to meet specified conditions, including making specified investments in property and equipment. We may not be able to continue to meet all of these conditions. In addition, some of these programs restrict our ability to manufacture particular products or transfer particular technology outside of Israel. If we fail to comply with these conditions in the future, the benefits received could be canceled and we could be required to refund any payments previously received under these programs or to retroactively pay tax on any income at a higher tax rate than that applying under these benefits.

In recent years, the Government of Israel has reduced the benefits available under these programs and has amended the specified conditions that must be met in order to achieve or maintain eligibility. You can see more information regarding recent changes in Note 12(b) to the Notes to Consolidated Financial Statements. We cannot guarantee that these programs and tax benefits will continue in the future at their current levels or at all. If the Government of Israel reduces or ends these tax benefits, our business, financial condition and results of operations could be materially adversely affected.

It may be difficult to enforce a U.S. judgment against us or certain of our directors, or to assert U.S. securities laws claims in Israel or serve process on these persons.

We are incorporated in Israel. The chairman of the board of our directors and two other directors are nonresidents of the United States and a portion of our assets and the assets of these persons are located outside the United States. Therefore, it may be difficult to enforce a judgment obtained in the United States against us or any of those persons or to effect service of process upon these persons in the United States. It may also be difficult to enforce civil liabilities under U.S. federal securities laws in original actions instituted in Israel.

Provisions of the Israeli law could delay, prevent, or make difficult, a change of control, thereby depressing the price of our ordinary shares.

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

The Israeli Companies Law also provides that an acquisition of shares in a public company on the open market must be made by means of a tender offer if, as a result of the acquisition, the purchaser will

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

Finally, Israeli tax law treats some acquisitions, such as stock-for-stock exchanges between an Israeli company and a foreign company, less favorably than United States tax law. For example, Israeli tax law may subject a shareholder who exchanges our ordinary shares for shares in another corporation to immediate taxation.

These Israeli laws could have the effect of inhibiting third party attempts to acquire us.

Item 1B.UNRESOLVED STAFF COMMENTS

None.

Item 2.PROPERTIES

We do not own any real property. We lease 4,929 square feet of office space in Burlington, Massachusetts for our corporate headquarters under a lease expiring in July 2009. In addition, we lease 10,136 square feet of office space in Tel Aviv, Israel for our principal research and development and international sales operations under a lease expiring in August 2006. We also lease space for our sales operations in Milpitas, California. We believe that the properties leased by us are adequate for all of our present and near-term needs.

Item 3.LEGAL PROCEEDINGS

To our knowledge we are not involved in any legal proceedings that are material to our business or financial condition.

Item 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)The Company held an Annual Meeting of Shareholders, or the Annual Meeting, on December 14, 2005.

(b)Shai Beilis, Ilan Kinreich, William J. Geary, Kathleen A. Cote were elected as directors at the Annual Meeting. David Assia was elected as an external director for a period of three years.

(c)The following are the proposals that were considered at the Annual Meeting, together with the results for the respective proposals.

PROPOSAL 1—To elect the following individuals to our Board of Directors.

Director Nominee	Votes In Favor		Votes Withheld
Shai Beilis		14,818,133		144,270
Ilan Kinreich		14,804,133		158,270
William J. Geary		14,817,883		144,520
Kathleen A. Cote		14,818,133		144,270
David Assia(1)		14,818,133		144,270

(1)Indicates an External Director Nominee elected to our Board of Directors, to serve as an External Director under the Israeli Companies Law.

PROPOSAL 2—to ratify and approve the selection of Kost Forer Gabbay & Kasierer, a Member of Ernst & Young Global, as our independent auditors for the year ended December 31, 2005. The proposal was approved with 14,809,883 shares voted in favor, 145,850 shares voted against, and 6,670 abstentions.

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PART II

Item 5.MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market for Ordinary Shares

In September 2004, our ordinary shares were delisted from the Nasdaq SmallCap Market because we no longer satisfied the shareholders’ equity, market capitalization and net income requirements for continued listing. Our shares are now traded on the Over-the-Counter Bulletin Board, or the OTCBB, under the trading symbol of “RDVWF.”

The high and low sales prices for our ordinary shares for the quarterly periods since January 1, 2004, as reported on Nasdaq or the OTCBB, as applicable, were as set forth below:  These quotations reflect inter-dealer prices, without retail markup, markdown or commission and may not necessarily represent actual transactions.

	Low Sales Price			High Sales Price
Year Ended December 31, 2004:
Quarter ended March 31, 2004		$	0.60		$	0.98
Quarter ended June 30, 2004		$	0.49		$	0.88
Quarter ended September 30, 2004		$	0.19		$	0.52
Quarter ended December 31, 2004		$	0.15		$	0.29
Year Ended December 31, 2005:
Quarter ended March 31, 2005		$	0.16		$	0.24
Quarter ended June 30, 2005		$	0.16		$	0.21
Quarter ended September 30, 2005		$	0.11		$	0.20
Quarter ended December 31, 2005		$	0.06		$	0.15
Year Ending December 31, 2006:
Quarter ended March 31, 2006		$	0.08		$	0.14

Holders of Record

As of March 31, 2006, there were approximately 150 holders of record and, we believe, approximately 1,200 beneficial owners of our ordinary shares.

Dividends

We have never declared or paid any cash dividends on our capital shares and do not intend to pay any cash dividends in the foreseeable future.

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Item 6.SELECTED FINANCIAL DATA

The following is our historical selected consolidated financial data and is qualified by reference to and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report. The selected consolidated financial data set forth below as of December 31, 2004 and 2005 and for each of the years ended December 31, 2003, 2004 and 2005 are derived from our audited consolidated financial statements, which are included in Item 8 of this Annual Report on Form 10-K. The selected consolidated financial data as of December 31, 2001, 2002, and 2003 and for the years ended December 31, 2001 and 2002 are derived from our audited consolidated financial statements, which are not included in this Annual Report on Form 10-K. The data should be read in conjunction with the Consolidated Financial Statements and the Notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this Annual Report on Form 10-K.

	Year Ended December 31,
	2001			2002			2003			2004			2005
	(In thousands, except per share data)
Consolidated Statements of Operations Data:
Revenues:
Software licenses	$	5,829		$	3,389		$	2,549		$	2,456		$	3,138
Services	2,817			2,379			2,287			2,207			2,507
Total revenues	8,646			5,768			4,836			4,663			5,645
Cost of revenues:
Software licenses	271			63			147			86			147
Nonrecurring royalty reversal	—			(448		)	—			—			—
Services	1,169			631			426			327			255
Total cost of revenues	1,440			246			573			413			402
Gross profit	7,206			5,522			4,263			4,250			5,243
Operating expenses:
Sales and marketing	14,267			5,424			4,254			3,542			3,287
Research and development	6,353			3,517			2,951			2,631			2,229
General and administrative	3,059			2,362			1,879			1,831			2,004
Restructuring charges	1,671			929			245			—			—
Total operating expenses	25,350			12,232			9,329			8,004			7,520
Loss from operations	(18,144		)	(6,710		)	(5,066		)	(3,754		)	(2,277		)
Other income (expense):
Interest income (expense), net	693			127			32			19			(177		)
Other income (expense), net	20			34			(51		)	(45		)	(11		)
Net loss	$	(17,431	)	$	(6,549	)	$	(5,085	)	$	(3,780	)	$	(2,465	)
Basic and diluted net loss per share	$	(1.07	)	$	(0.40	)	$	(0.31	)	$	(0.19	)	$	(0.12	)
Weighted average number of shares used in computing basic and diluted net loss per share	16,346			16,455			16,595			19,826			20,526

	As of December 31,
	2001		2002		2003		2004			2005
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	13,182	$	7,566	$	3,075	$	2,163		$	166
Working capital (deficit)	10,935		5,915		1,534		(142		)	(2,369		)
Total assets	17,425		10,607		5,155		3,914			1,591
Total shareholders’ equity (deficit)	12,351		6,311		1,796		(84		)	(2,381		)

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ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. In some cases, forward-looking statements are identified by words such as “believe,” “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” and similar expressions. In addition, any statements that refer to our plans, expectations, strategies or other characterizations of future events or circumstances are forward-looking statements. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Factors that could cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include those more fully described in Item 1A. Risk Factors. Our business may have changes since the date hereof, and we undertake no obligation to update these forward-looking statements.

Overview

We develop, market and support software that enables companies to assure the scalability, performance, efficiency and reliability of web applications. In May 2004, we introduced the TestView suite of products, which provides a comprehensive test management solution for test automation and reporting for web applications. The TestView suite efficiently integrates test management and automation with the functionality of our existing stand-alone products to include functional testing, load testing, and root-cause analysis.

We derive the majority of our software license revenues from perpetual licenses of our load testing products and, to a lesser extent, our functional testing and root-cause analysis products. We derive the majority of our services revenues from support and maintenance arrangements and, to a lesser extent, from training and consulting services. Substantially all of our revenues are denominated in U.S. dollars.

A portion of our software license revenues, and to a lesser extent our services revenues, was derived from royalty fees, license fees and engineering service fees from technology license transactions. Revenues recognized under such arrangements totaled $213,000 in 2003, $730,000 in 2004 and $928,000 in 2005. While we expect to recognize a portion of our revenues from technology arrangements in 2006, we expect that the impact of future technology license transactions, if any, will not represent a material portion of our total revenues.

We measure our operating success using both financial and non-financial metrics. The financial metrics include revenue, gross profit, operating expenses, and loss from operations, as well as cash position and operating cash flow. Other key metrics include product orders by industry segment, average deal size, repeat customer orders, and the portion of revenue that is generated by indirect channels.

We have incurred net losses since our inception. Our net loss was $5.1 million in 2003, $3.8 million in 2004 and $2.5 million in 2005. Net losses have declined as a result of significant cost reductions achieved through restructuring actions undertaken in response to a decline in our revenues in previous years. In 2005, the decrease in our net loss was primarily attributable to an increase in revenues and, to a lesser extent, lower operating expenses. If we are to achieve future profitability, we must continue to increase our revenues while maintaining lower operating expenses.

Cash used in operating activities was $4.6 million in 2003, $2.7 million in 2004 and $2.1 million in 2005, attributable primarily to our net losses, partially offset by noncash charges such as depreciation expense and stock-based compensation along with changes in current assets and liabilities. We expect that operating expenses will constitute a material use of our cash resources.

On April 4, 2006, we signed definitive agreements for a financing lead by Fortissimo Capital Funds, or Fortissimo, along with several co-investors including one of our directors and two existing shareholders, to provide for a minimum initial investment of $1.5 million and up to $2.25 million of additional investments,

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at the election of the investors, over 18 months. The completion of the proposed financing is subject to approval by a majority of our shareholders.  See Note 1(b) in the Notes to Consolidated Financial Statements for further information related to the proposed financing. Prior to signing the definitive agreements for the financing, in January 2006, we executed a bridge loan agreement with Fortissimo to provide us with interim funding for up to $500,000, subject to compliance by the Company with an approved budget, of which we have borrowed $280,000 as of April 5, 2006 and have $220,000 available for future borrowings. Borrowings under the bridge loan will become part of the minimum investment at closing.

Our cash balance was $166,000 as of December 31, 2005. We believe that our existing cash and cash equivalents, along with the proceeds available under the bridge loan and the expected proceeds from the initial investment from the financing, assuming the approval by a majority our shareholders and completion of the financing, will be sufficient to meet our anticipated needs for working capital and capital expenditures for at least the next 12 months.

Critical Accounting Policies and Estimates

General

We prepare our consolidated financial statements in conformity with U.S. generally accepted accounting principles. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. To fully understand and evaluate our reported financial results, we believe it is important to understand the significant estimates and judgments applied as they relate to our policies for revenue recognition, software development costs, and accounting for stock options. More detailed descriptions of these policies are provided in Note 2 to the Consolidated Financial Statements.

Revenue Recognition

Our revenue recognition approach requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the fee is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) is based on management’s judgments regarding the fixed nature of the fee charged for services rendered and products delivered, and the collectibility of those fees. Should changes in conditions cause management to determine these criteria are not met for certain future transactions, revenue recognized for any reporting period could be adversely affected.

Software Development Costs

Software development costs incurred from the point of reaching technological feasibility until the time of general product release are normally capitalized. We define technological feasibility as the completion of a working model. The determination of technological feasibility requires the exercise of judgment by our management. Because we sell our products in a market that is subject to rapid technological change, new product development and changing customer needs, we have concluded that technological feasibility is not established until the development stage of the product is nearly complete. For us, the period in which we can capitalize software development costs is very short, so the amounts that could be capitalized are not material to our financial statements. Therefore, we have charged all such costs to research and development expense in the period incurred.

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Accounting for Stock Options

Effective January 1, 2005, we have accounted for stock options issued to employees in accordance with SFAS No. 123R (Revised 2004), or SFAS 123(R), Share-Based Payment and SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure. Under this approach all share-based payments to employees, including grants of employee stock options, are required to be recognized in the financial statements based on their fair values, instead of providing the information in a pro forma disclosure in the notes to the financial statements. We have elected to use the modified prospective method of adoption as permitted under SFAS 123(R), which requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123(R). We have determined the fair value of share-based payments issued after January 1, 2005 using the Black-Scholes option valuation model. The Black-Scholes model includes assumptions regarding dividend yields, expected volatility, expected lives and risk-free interest rates. These assumptions reflect management’s best estimates.

For reporting periods before January 1, 2005, we accounted for stock options using the intrinsic method in accordance with Accounting Principles Board, or APB, Opinion No. 25, Accounting for Stock Issued to Employees. Under this approach we did not record any expense at the time the options were granted unless the exercise price of a granted option was below the fair market price of our ordinary shares on the date of grant.  For reporting periods before January 1, 2005, we have provided pro forma disclosures of impact to our reported net loss and net loss per share if we had applied the fair value method.

The determination of fair value of stock options, whether for actual expense reporting under SFAS 123(R) or for pro forma disclosures, requires the application of estimates, such as estimated expected life of the options and estimated market volatility for our ordinary shares. These estimates are based on management’s review of historical option lives and computations of market volatility for our ordinary shares.

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Results of Operations

The following table sets forth the consolidated statement of operations data as a percentage of total revenues for the periods indicated:

	For the Year Ended December 31,
	2003		2004		2005
Revenues:
Software licenses	52.7	%	52.7	%	55.6	%
Services	47.3	%	47.3	%	44.4	%
Total revenues	100.0	%	100.0	%	100.0	%
Cost of revenues:
Software licenses	3.0	%	1.8	%	2.6	%
Services	8.8	%	7.0	%	4.5	%
Total cost of revenues	11.8	%	8.9	%	7.1	%
Gross profit	88.2	%	91.1	%	92.9	%
Operating expenses:
Sales and marketing	87.9	%	75.9	%	58.2	%
Research and development	61.0	%	56.4	%	39.5	%
General and administrative	38.9	%	39.3	%	35.5	%
Restructuring charges	5.1	%	0.0	%	0.0	%
Total operating expenses	192.9	%	171.6	%	133.2	%
Loss from operations	(104.7	)%	(80.5	)%	(40.3	)%
Other income (expense), net:
Interest income (expense), net	0.7	%	0.4	%	(3.2	)%
Other expense, net	(1.1	)%	(1.0	)%	(0.2	)%
Net loss	(105.1	)%	(81.1	)%	(43.7	)%

Years Ended December 31, 2004 and 2005

Revenues

Total Revenues.   Total revenues were $4.7 million in 2004 and $5.6 million in 2005. Total revenues increased $982,000, or 21%, due to a $682,000 increase in product revenues and a $300,000 increase in services revenues.

Software Licenses.   Software licenses revenues consist primarily of revenues from the license of our software products to end-users, resellers, and technology partners. Software license revenues were $2.5 million in 2004 and $3.1 million in 2005. Software license revenues increased $682,000, or 28%, due to a $416,000 increase in revenues attributable to the expansion of our product offerings following the introduction of TestView suite and new versions of WebLOAD Analyzer, and $266,000 of incremental software license fees from technology license transactions.

Services.   Services revenues consist primarily of revenue from annual support and maintenance contracts and, to a lesser extent, training and consulting services. Services revenues were $2.2 million in 2004 and $2.5 million in 2005. Services revenues increased $300,000, or 14%, primarily due to $149,000 of incremental service revenues in 2005 attributable to engineering services provided under technology transactions with OPNET and IXIA, and an $82,000 increase maintenance services revenue derived from new customers and renewal orders.

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Cost of Revenues

Cost of Software Licenses.   Cost of software licenses consists principally of direct product costs, such as product media and packaging, as well as royalties due to third parties. Cost of software licenses was $86,000 in 2004, or 3.5% of software license revenue, compared to $147,000 in 2005, or 4.7% of software license revenue. The increase in cost of software licenses resulted from third-party royalties attributable to increased revenues from royalty-bearing products in 2005.

Cost of Services.   Cost of services consists principally of personnel related costs associated with customer support and training. Cost of services was $327,000 in 2004, or 14.8% of services revenues, compared to $255,000 in 2005, or 10.2% of services revenue. This decrease was due to lower personnel costs for support and maintenance services resulting from staff reallocations made in late 2004 and through reductions in personnel and salary-related costs in July 2005.

Operating Expenses

Sales and Marketing.   Sales and marketing expenses consist principally of salaries and commissions for sales personnel, recruiting costs, trade show costs, travel and other marketing costs such as lead generation activities, advertising and product promotion. Sales and marketing expenses were $3.5 million in 2004, or 75.9% of total revenues, compared to $3.3 million in 2005, or 58.2% of total revenues. The decrease in sales and marketing costs relate primarily to personnel reductions and lower marketing program spending. We expect that our sales and marketing expenses will decrease in 2006 as a result of cost reduction measures taken in July 2005.

Research and Development.   Research and development expenses consist principally of salaries and related expenses required to develop and enhance our products. Research and development expenses were $2.6 million in 2004, or 56.4% of total revenues, compared to $2.2 million in 2005, or 39.5% of total revenues. These decreases resulted primarily as a result of cost reductions in July 2005 achieved through reductions in personnel and salary-related costs. We expect that our research and development expenses will decrease in 2006 as a result of cost reduction measures taken in July 2005 and March 2006.

General and Administrative.   General and administrative expenses consist principally of executive, finance and administrative salaries and related expenses, and costs of being a publicly held company. General and administrative expenses were $1.8 million in 2004, or 39.3% of total revenues, compared to $2.0 million in 2005, or 35.5% of total revenues.  The increase in general and administrative costs in absolute dollars resulted primarily from increased professional fees incurred in 2005 arising from the exploration of strategic alternatives, including the potential sale of our business. We expect that our general and administrative expenses will decrease in 2006 as a result of cost reduction measures taken in March 2006.

Interest Income (Expense), Net.   Interest income, net was $19,000 in 2004 resulting primarily from interest earned on invested cash balances. Interest expense, net was $177,000 in 2005 resulting primarily from interest expense arising from borrowings under a revolving line of credit facility entered into in 2005, including amortization of deferred debt issuance costs, partially offset by interest income from lower invested cash balances in 2005 as compared to 2004. We expect that our interest expense, net may increase in 2006 as a result of interest and amortization of warrants and debt issuance costs in connection with the proposed financing we expect to complete in 2006.

Other Expense, Net.   Other income (expense), net consists principally of currency translation gains and losses. Other expense, net was $45,000 in 2004 and $11,000 in 2005. The decrease resulted from exchange rate fluctuations.

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Income Taxes.We have estimated net operating loss carry forwards for Israeli tax purposes totaling approximately $17.2 million through December 31, 2005 that would reduce future Israeli income taxes, if any. These net operating losses may be carried forward indefinitely and offset against future taxable business income. We expect that during the period these losses are utilized, our income would be substantially tax exempt.

Our U.S. subsidiary has net operating loss carry forwards for U.S. Federal and state tax purposes totaling approximately $34.6 million through December 31, 2005. These losses are available to offset any future U.S. taxable income of the U.S. subsidiary and will expire between 2012 and 2025.

We have recorded a full valuation allowance against all of our deferred tax assets since we believe it is not likely that those deferred taxes will be realized in the foreseeable future.

Years Ended December 31, 2003 and 2004

Revenues

Total Revenues.   Total revenues were $4.8 million in 2003 and $4.7 million in 2004. Total revenues decreased $173,000, or 3.6%, due to a $234,000 decrease in total revenues from international customers, partially offset by a $61,000 increase in total revenues from customers in the U.S. The decreases in total revenues are attributable to lower unit volume sales of software licenses and, to a lesser extent, a decline in related services revenues.

Software Licenses.   Software license revenues were $2.5 million in 2003 and $2.5 million in 2004. Software license revenues from U.S. customers increased $138,000 from $1.8 million in 2003 to $1.9 million in 2004, due primarily to the increase in software license revenue attributable to the technology license arrangement with Ixia. Software license revenues from international customers decreased $230,000 from $777,000 in 2003 to $546,000 in 2004, attributable to a decrease in orders from our Asia Pacific distributors and lower sales resulting from employee turnover in our Europe sales operation in 2004.

Services.   Services revenues were $2.3 million in 2003 and $2.2 million in 2004. Services revenues from U.S. customers decreased $77,000 from $1.6 million in 2003 to $1.5 million in 2004, with services revenues from international customers remaining relatively the same. This decrease in U.S. services revenues was primarily a result of a decline in training and consulting revenues due to lower customer demand for consulting services.

Cost of Revenues

Cost of Software Licenses.   Cost of software licenses was $147,000 in 2003, or 5.8% of software license revenue, compared to $86,000 in 2004, or 3.5% of software license revenue. The decrease in cost of software licenses resulted from lower spending on product packaging in addition to lower royalty costs as a result of a decline in orders for our products that result in third-party royalties.

Cost of Services.   Cost of services was $426,000 in 2003, or 18.6% of services revenues, compared to $327,000 in 2004, or 14.8% of services revenue. This decrease was due to reduced personnel costs to provide support and maintenance services resulting from the headcount reductions taken in the first half of 2003.

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Operating Expenses

Sales and Marketing.   Sales and marketing expenses were $4.3 million in 2003, or 87.9% of total revenues, compared to $3.5 million in 2004, or 75.9% of total revenues. These decreases were due primarily to headcount reductions of sales and marketing personnel during the first half of 2003.

Research and Development.   Research and development expenses were $3.0 million in 2003, or 61.0% of total revenues, compared to $2.6 million in 2004, or 56.4% of total revenues. These decreases were due primarily to headcount reductions of research and development personnel during the first half of 2003.

General and Administrative.   General and administrative expenses were $1.9 million in 2003, or 38.9% of total revenues, compared to $1.8 million in 2004, or 39.3% of total revenues.

Restructuring Expenses.   Restructuring expenses were $245,000 in 2003. There were no restructuring expenses in 2004. The restructuring expenses in 2003 consisted of severance costs for terminated employees of $207,000, lease termination costs of $26,000, and vendor contract termination fees and other costs of $12,000. A total of 20 employees were terminated, or approximately 27% of the then current workforce, of whom 6 employees were from sales and marketing, 11 employees were from research and development, and three employees were from general and administrative.

Interest Income (Expense), Net.   Interest income, net consists principally of interest earned on cash investments. Interest income, net was $32,000 in 2003 compared to $19,000 in 2004. The decrease resulted from lower invested cash balances and lower interest rates in 2004 as compared to 2003.

Other Expense, Net.   Other expense, net consists principally of currency translation gains and losses. Other expense, net was $51,000 in 2003 and $45,000 in 2004. The decrease resulted from exchange rate fluctuations.

Liquidity and Capital Resources

Cash and cash equivalents totaled $2.2 million as of December 31, 2004 and $166,000 as of December 31, 2005. Restricted cash totaled $40,000 as of December 31, 2005.

Cash used in operating activities was $4.6 million in 2003, $2.7 million in 2004 and $2.1 million in 2005. Cash used in operating activities have resulted substantially from our reported net losses partially reduced by noncash items such as depreciation and stock-based compensation, and changes in current assets and liabilities.

Cash used in operating activities in 2003 was due primarily to a net loss of $5.1 million, a decrease of $514,000 in accrued expenses and a decrease of $292,000 in accrued restructuring charge, partially offset by noncash items and a decrease of $348,000 in accounts receivable. Accrued expenses decreased as a result of additional reductions of operating expenses in 2003. Accrued restructuring charge decreased as a result of the lease payments made in 2003. Accounts receivable decreased as a result of decreased order volume and favorable collection activities.

Cash used in operating activities in 2004 was due primarily to a net loss of $3.8 million, a decrease of $128,000 in accounts payable and a decrease of $291,000 in accrued restructuring charge, partially offset by noncash items and a decrease of $73,000 in accounts receivable. The accounts payable decreased as a result of lower operating expenditures. The accrued restructuring charge decreased as a result of the payments made in 2004. Accounts receivable decreased as a result of decreased order volume and favorable collection activities.

Cash used in operating activities in 2005 was due primarily to a net loss of $2.5 million, an increase of $74,000 in accounts receivable, a decrease of $174,000 in accrued severance pay, and a decrease of $246,000 in deferred revenue, partially offset by noncash items, a decrease of $196,000 in prepaid expenses

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and other current assets and an increase of $331,000 in accounts payable. Accounts receivable increased as a result of incremental amounts to be collected under a technology license agreement entered into in December 2005. Accrued severance pay decreased due to the termination of several employees in Israel during 2005. Deferred revenues decreased due primarily to the recognition of deferred technology license fees during 2005. Prepaid expenses and other current assets decreased as a result of lower prepayments of insurance policies and vendor maintenance contracts. Accounts payable increased due to increased professional costs incurred at end of 2005 and slower payments to vendors.

Cash used in investing activities was $43,000 in 2003 and $29,000 in 2004. Cash provided by investing activities was $105,000 in 2005. Cash used in investing activities in 2003 was for the purchase of $83,000 in property and equipment offset by a decrease of $40,000 in other assets. Cash used in investing activities in 2004 was for the purchase of $65,000 in property and equipment partially offset by a decrease of $36,000 in other assets. Cash provided by investing activities in 2005 was due to the decrease of $224,000 in other assets partially offset by the purchase of $79,000 in property and equipment and investment in restricted cash of $40,000. Other assets decreased as a result of the release to terminated employees of deposits maintained for severance pay obligations in 2003, 2004 and 2005 and reductions in security deposits for expiring office space leases in 2004 and 2005.

Cash provided by financing activities was $183,000 in 2003 and consisted of proceeds from exercise of stock options. Cash provided by financing activities was $1.8 million in 2004 consisting primarily of the net proceeds from a private placement in March 2004 of 3,333,331 of our ordinary shares, plus warrants and additional investment rights for an aggregate purchase price of $2.0 million. There was no net cash provided by financing activities in 2005 attributable to the issuance of warrants for $52,000 and borrowings of $1.3 million under the revolving line of credit, entirely offset by repayments totaling $1.3 million under the revolving line of credit and payment of debt issuance costs of $70,000.

In May 2005, we entered into a one-year revolving line of credit facility with Comerica Bank for borrowings of up to $2.0 million. Advances under the facility were limited to the lesser of $2.0 million or the sum of 75% of eligible accounts receivables plus $1.0 million. In December 2005, our borrowings under the credit facility exceeded the collateral base and, as a result, we triggered an event of default. We agreed upon a repayment plan with Comerica Bank to repay the outstanding borrowings under the facility in installments through January 2006. As of December 31, 2005, we had an outstanding balance under the facility of $70,000. In January 2006, all outstanding borrowings under the credit facility were fully repaid and the revolving line of credit facility was terminated.

On April 4, 2006, we signed definitive agreements for a financing with Fortissimo Capital Fund GP LP on behalf of several limited partnerships in which it serves as general partner and other potential co-investors including one of our directors and two existing shareholders, or the Investors. The initial investment of the financing would be for a minimum of $1.5 million consisting of $750,000 to purchase 25,000,000 of convertible preferred shares, or Preferred Shares, at a price of $0.03 per share and $750,000 as a convertible loan. The closing of the initial investment is required to occur within 14 days of approval by a majority of our shareholders. The financing also provides for an additional investment, at the option of the Investors, to purchase up to an additional $2.25 million of Preferred Shares at a price of $0.03 per share for a period of 18 months after the closing of the initial investment. Each Preferred Share would be convertible into one of our ordinary shares, subject to adjustment for anti-dilution events. Each Preferred Share would receive the same voting rights as ordinary shares, except Preferred Shares would be entitled to elect the majority of our board of directors and have approval rights over specified actions. Each Preferred Share would be entitled to a preference in liquidation over our ordinary shares. The Investors would also receive warrants to purchase 18,750,000 Preferred Shares with respect to the initial investment and up to 56,250,000 Preferred Shares with respect to the additional investment, each at an exercise price of $0.04 per share for a period of five years from date of issuance.

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The financing also provides for the issuance of a convertible loan payable at the closing of the initial investment in the principal amount of $250,000 plus the balance of any borrowings still available under the Bridge Loan at the time of closing. The principal balance of bridge loans previously borrowed also will become part of the convertible loan at the closing of the Investment. The convertible loan will bear interest at 8.0% per annum. The convertible loan plus, at the election of the Investors, any accrued interest thereon, would be convertible into Preferred Shares at a conversion price of $0.03 per share. The convertible loan would mature three years from the closing date and, if not converted by such date, would become due and payable 30 days thereafter.

Prior to the signing of definitive agreements, on January 26, 2006, we entered into a bridge loan agreement, or the Bridge Loan, with the Investors. Under the Bridge Loan, the Investors agreed to provide us with up to $500,000 of loans, subject to the terms of the loan. As of April 5, 2006, we have borrowed $280,000 and the remaining $220,000 remains available for future borrowing on an as-needed basis until the closing, subject to approval of the Investors and compliance by us with an approved budget. The Bridge Loan bears interest at 8.0% per annum and is secured by a fixed charge on our accounts receivables and intellectual property and a floating charge on all of our assets. The Bridge Loan would be subject to the terms and conditions of the convertible loan portion of the financing when the financing closes. If the financing is not closed due to failure to secure shareholder approval or termination by either party, the Bridge Loan will become due and payable within 60 days of notice by either party of an intention to terminate negotiations with respect to the financing.

The financing remains subject to, among other things, filing of amended articles of association establishing the rights and preferences of the Preferred Shares and approval by a majority of our shareholders. Several of our significant shareholders, representing 39.3% of our outstanding ordinary shares, have represented to us that they intend to vote in favor of the financing. If a majority of our shareholders does not approve the financing, the Investors will be entitled to receive a termination fee of $250,000.

The financing also provides for an us to enter into an management services agreement with Fortissimo, under which Fortissimo will provide management and board services in consideration a minimum fee of $50,000 per year payable quarterly plus an additional amount of up to $70,000 payable at the end of each year that we are profitable, provided that such additional amount may not to exceed the available profits.

We expect that operating expenses will constitute a material use of our cash resources. We believe that our existing cash and cash equivalents, along with amounts available under the existing bridge loan agreement and potential investment by the Investors, assuming the execution of definitive agreements related to the proposed investment and approval by a majority of our shareholders, will be sufficient to meet our anticipated needs for working capital for at least the next 12 months. In the event that we are unable to complete the proposed investment with the Investors, we may not be able to continue as a going concern.

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Contractual Obligations

We lease all of our office facilities under noncancellable operating leases that expire over varying terms through 2009.

	Payments due by Period
Contractual Obligations	Total		Less than  1 year			1-3 years			3-5 years			More than 5 years
	(In thousands)
Operating leases	$	384		$	157		$	175		$	52		$	—
Revolving line of credit	70			70			—			—			—
Severance pay(1)	539			162			—			—			377
Total	$	993		$	389		$	175		$	52		$	377

(1)Severance pay relates to accrued severance obligations to our Israeli employees as required under Israeli labor laws. These obligations are payable only upon the termination of the respective employee and may be reduced if the employee’s termination is voluntary.

Impact of Inflation and Currency Fluctuations

A substantial majority of our revenues is received, and a majority of our expenses is incurred, in U.S. dollars. Revenues denominated in U.S. dollars as a percent of total revenues were 92.6% in 2003, 94.8% in 2004 and 88.9% in 2005. Expenses denominated in U.S. dollars as a percent of total expenses were 55.1% in 2003, 57.9% in 2004, and 57.6% in 2005.

A portion of our expenses, mainly salary and personnel costs related to our employees in Israel, is incurred in New Israeli Shekels, or NIS. The salaries of our Israel-based employees are partially linked to increases in the Israeli consumer price index. As a result, the U.S. dollar cost of our Israeli operations is influenced by inflation in Israel as well as the currency exchange rate between the NIS in relation to the U.S. dollar. Any increase in the rate of inflation in Israel may have a negative effect on our operating results, unless such inflation is offset by a devaluation of the NIS in relation to the U.S. dollar. Exchange rates between the NIS and the dollar fluctuate continuously, and therefore exchange rate fluctuations and especially larger periodic devaluations will have an impact on our operating results and period-to-period comparisons of its results. The effects of foreign currency translations are reported in our financial statements in current operating results. We believe that neither inflation in Israel, nor exchange rate fluctuations between the NIS and the U.S. dollar, historically has had a material effect on our operations.

In addition to our operations in Israel, we also conduct operations in Germany and the United Kingdom. Transactions denominated in currencies other than the U.S. dollar or NIS were not material.

Effective Corporate Tax Rate

Israeli companies are currently subject to tax at the rate of 34% for 2005, 32% for 2006 and 29% for 2007, 27% for 2008, 26% for 2009 and 25% thereafter. However, we have derived, and expect to continue to derive, a substantial portion of our income under our Approved Enterprise capital investment program. Subject to compliance with applicable requirements, such income will be tax exempt for a period of two years and will be subject to a reduced corporate tax rate of 25% in the following five to eight years, subject to the level of foreign shareholders holdings in our ordinary shares. Tax benefits for each capital investment program are only effective in restricted periods according to the Encouragement of Capital Investments Law. If we do not comply with the applicable requirements, the tax benefits may be canceled. We believe that we comply with these conditions. If we operate under more than one approval, or if our capital investments are only partially approved, our effective tax rate will be a weighted combination of the various applicable tax rates. We may not be able to obtain approval for additional Approved Enterprise

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programs. Since we have incurred tax losses through December 31, 2005, we have not yet used the tax benefits for which we are eligible.

Market Risk

We currently do not invest in, or hold for trading or other purposes, any financial instruments subject to market risk. Except for the $500,000 bridge loan obtained in January 2006, we currently do not have any outstanding borrowings or other credit facilities.

Impact of Recently Issued Accounting Standards

In May 2005, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard, or SFAS, No. 154, Accounting Changes and Error Corrections, a replacement of APB, No. 20, Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. APB No. 20 previously required that most voluntary changes in accounting principles be recognized by including in net income for the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 requires retroactive application to prior periods’ financial statements of a voluntary change in accounting principles unless it is impracticable. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

Passive Foreign Investment Company Status

General

Under U.S. federal income tax laws, we will be treated a passive foreign investment company, or PFIC, in any tax year if, in such tax year, either 75% or more of our gross income is passive in nature, also referred to as the Income Test, or, on average for such tax year, 50% or more the fair market value of our assets produce or are held for the production of passive income, also referred to as the Asset Test. We must make a separate determination each year as to whether we are a PFIC. As a result, our PFIC status may change from year to year. Classification as a PFIC may have important and adverse tax implications to U.S. Holders. For purposes of this summary, a U.S. Holder is a holder of our ordinary shares that is, for U.S. income tax purposes:

·a citizen or resident of the United States;

·a domestic U.S. corporation;

·an estate, the income of which is subject to U.S. federal income tax regardless of the source of its income; and

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

In applying the Asset Test, the average fair market value of our assets is determined on the basis of the average fair market value of our assets as of the end of each quarter of the tax year. The value of the total assets of a publicly traded foreign corporation is generally equal to the sum of the aggregate value of its outstanding stock plus its liabilities. Although we may no longer be “publicly traded” for this purpose, we believe our share price continues to provide the best indication of the fair value of our assets for this purpose.

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Our Determination of PFIC Status

Based on the composition of our income and assets for purposes of the Income Test and the Asset Test, respectively, we believe that we were a PFIC for the 2002 and 2003 tax years, but we do not believe we were a PFIC for the 2004 and 2005 tax years. There can be no assurance that we will not be treated as a PFIC in any future tax year. Although we generally will be treated as a PFIC as to any U.S. Holder if we are a PFIC for any year during such U.S. Holder’s holding period of our ordinary shares, such U.S. Holder may avoid the consequences of PFIC classification for years after we cease to be a PFIC by making an election, as described below. In view of the complexity of the issues regarding our treatment as a PFIC, U.S. Holders are urged to consult their own tax advisors for guidance as to our status as a PFIC.

Tax Consequences if We Are a PFIC

There are no U.S. federal income tax consequences to a non-U.S. Holder if we are classified as a PFIC.

If we are a PFIC for U.S. federal income tax purposes for any year during a U.S. Holder’s holding period of our ordinary shares and such U.S. Holder does not make either of the special elections described below, any gain recognized by such U.S. Holder upon the sale of ordinary shares, or upon the receipt of certain distributions, will be treated as ordinary income. Such income generally would be allocated ratably over the U.S. Holder’s holding period of our ordinary shares. The amount allocated to prior years, with certain exceptions, will be subject to tax at the highest tax rate in effect for those years and an interest charge will be imposed on the amount of deferred tax on the income allocated to the prior taxable years.

Although we generally will be treated as a PFIC as to any U.S. Holder if we are a PFIC for any year during such U.S. Holder’s holding period, if we cease to satisfy the requirements for PFIC classification, the U.S. Holder may avoid PFIC classification for subsequent years by electing to recognize gain based on the unrealized appreciation in the ordinary shares through the close of the tax year in which we cease to be a PFIC. Additionally, if we are a PFIC, a U.S. Holder who acquires ordinary shares from a decedent will be denied the normally available step-up in tax basis for our ordinary shares to fair market value at the date of death and instead will have a tax basis equal to the lower of fair market value or the decedent’s tax basis.

For any tax year in which we are determined to be a PFIC, U.S. Holders may elect to treat their ordinary shares as an interest in a qualified electing fund, or a QEF Election, in which case such U.S. Holders would be required to include in income currently their proportionate share of our earnings and profits in years in which we are a PFIC regardless of whether distributions of such earnings and profits are actually distributed to such U.S. Holders. Any gain subsequently recognized upon the sale of their ordinary shares by such U.S. Holders generally would be taxed as capital gain and a denial of the basis step-up at death would not apply.

A U.S. Holder may make a QEF Election with respect to a PFIC for any taxable year of the U.S. Holder. A QEF Election is effective for the year in which the election is made and all subsequent taxable years of the U.S. Holder. Procedures exist for both retroactive elections and the filing of protective statements. A U.S. Holder making the QEF Election must make the election on or before the due date, as extended, for the filing of the U.S. Holder’s income tax return for the first taxable year to which the election will apply.

A U.S. Holder must make a QEF Election by completing Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and attaching it to their U.S. federal income tax return, and must satisfy additional filing requirements each year the election remains in effect. We intend to provide to each U.S. Holder, upon request, the tax information required to make a QEF Election and to make subsequent annual filings.

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As an alternative to a QEF Election, a U.S. Holder of PFIC shares that are “marketable” generally may be able to avoid the imposition of the special tax and interest charge described above by electing to mark to market the ordinary shares, or a Mark-to-Market Election. Our ordinary shares ceased being “marketable” for purposes of the Mark-to-Market Election in 2004, however, and as a result, any such election made by a U.S. Holder for a prior year terminated automatically as of the beginning of our 2004 tax year.

U.S. Holders should consult their own tax advisors regarding the eligibility, manner and advisability of making a QEF Election, the consequences of the automatic termination of any existing Mark-to-Market Election in 2004, and the effect of these elections on the calculation of the amount of foreign tax credit that may be available to them.

A U.S. Holder who beneficially owns shares of a PFIC must file Form 8621 with the U.S. Internal Revenue Service for each tax year in which the U.S. Holder holds shares in a PFIC. This form describes any distributions received with respect to these shares and any gain realized upon the disposition of these shares.

The summary above is based on current provisions of the United States Internal Revenue Code of 1986, as amended, final, temporary and proposed U.S. Treasury Regulations promulgated thereunder, and administrative and judicial interpretations thereof, all of which are subject to change, possibly with retroactive effect. This summary is limited to a description of certain of the material U.S. federal income tax consequences to U.S. Holders of our status as a PFIC and does not consider any other aspects of U.S. federal income taxation that may be relevant to U.S. Holders, nor does it consider all aspects of the PFIC regime that may be relevant to particular U.S. Holders by reason of their particular circumstances. This summary is directed only to U.S. Holders that hold ordinary shares as capital assets and does not address the considerations that may be applicable to particular classes of U.S. Holders, including tax-exempt organizations, holders of ordinary shares as part of a “straddle,” “hedge” or “conversion transaction,” U.S. Holders who own, directly, indirectly or through attribution, 10% or more of our outstanding ordinary shares, and persons who own ordinary shares through a partnership or other pass-through entity.

Rules relating to the income tax consequences of being treated as a PFIC are very complex. U.S. Holders are urged to consult their own tax advisors regarding the application of the PFIC rules to their investment in our ordinary shares.

ITEM 7A.QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

We do not use derivative financial instruments in our investing portfolio. We place our investments in instruments that meet high credit quality standards such as money market funds, government securities, and commercial paper. We limit the amount of credit exposure to any one issuer. We do not expect any material loss with respect to our investment portfolio.

We conduct business in various foreign currencies, primarily in Europe and the Israel. As a result, we are exposed to the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated revenues and expenses. We do not use foreign exchange forward contracts to hedge our foreign currency denominated receivables. Looking forward, there can be no assurance that changes in foreign currency rates, relative to the U.S. dollar, will not materially adversely affect our consolidated results.

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ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

RADVIEW SOFTWARE, LTD. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2005
IN U.S. DOLLARS

INDEX

	Page
Report of Independent Registered Public Accounting Firm		42
Consolidated Balance Sheets		43
Consolidated Statements of Operations		44
Consolidated Statements of Shareholders’ Equity (Deficit)		45
Consolidated Statements of Cash Flows		46
Notes to Consolidated Financial Statements		47

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of
RadView Software Ltd.

We have audited the accompanying consolidated balance sheets of RadView Software Ltd. and its subsidiaries (the “Company”) as of December 31, 2004 and 2005 and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of RadView Software Ltd. and its subsidiaries as of December 31, 2004 and 2005 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2005 in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, in 2005, the Company changed its method of accounting for stock-based compensation.

	Kost Forer Gabbay & Kasierer
	A Member of Ernst & Young Global
Tel-Aviv, Israel
April 10, 2006

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RADVIEW SOFTWARE LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

	December 31,
	2004			2005
ASSETS
Current Assets:
Cash and cash equivalents	$	2,163		$	166
Restricted cash	—			40
Accounts receivable, net of reserves of $72 at December 31, 2004 and $56 at December 31, 2005	605			679
Prepaid expenses and other current assets	375			179
Total Current Assets	3,143			1,064
Property and Equipment, net	164			144
Other Assets	607			383
Total Assets	$	3,914		$	1,591
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Revolving line of credit	$	—		$	70
Accounts payable	239			570
Accrued expenses	1,112			1,134
Accrued restructuring charges, current portion	29			—
Deferred revenue	1,905			1,659
Total Current Liabilities	3,285			3,433
Accrued severance pay	713			539
Total Liabilities	3,998			3,972
Commitments and Contingent Liabilities (Note 9)
Shareholders’ Deficit:
Ordinary shares, NIS 0.01 par value— Authorized—40,000,000 shares; Issued—20,659,682 shares at December 31, 2004 and 2005; Outstanding—20,525,682 shares at December 31, 2004 and 2005	51			51
Treasury shares, at cost—134,000 shares at December 31, 2004 and 2005	(100		)	(100		)
Additional paid-in capital	56,813			56,981
Accumulated deficit	(56,848		)	(59,313		)
Total Shareholders’ Deficit	(84		)	(2,381		)
Total Liabilities and Shareholders’ Deficit	$	3,914		$	1,591

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

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RADVIEW SOFTWARE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

	Year Ended December 31,
	2003			2005			2004
Revenues:
Software licenses	$	2,549		$	2,456		$	3,138
Services	2,287			2,207			2,507
Total Revenues	4,836			4,663			5,645
Cost of Revenues:
Software licenses	147			86			147
Services	426			327			255
Total Cost of Revenues	573			413			402
Gross Profit	4,263			4,250			5,243
Operating Expenses:
Sales and marketing	4,254			3,542			3,287
Research and development	2,951			2,631			2,229
General and administrative	1,879			1,831			2,004
Restructuring expenses (Note 4)	245			—			—
Total Operating Expenses	9,329			8,004			7,520
Operating loss	(5,066		)	(3,754		)	(2,277		)
Interest income	47			26			17
Interest expense	(15		)	(7		)	(194		)
Other expense, net	(51		)	(45		)	(11		)
Net loss	$	(5,085	)	$	(3,780	)	$	(2,465	)
Basic and diluted net loss per share	$	(0.31	)	$	(0.19	)	$	(0.12	)
Weighted average number of shares used in computing basic and diluted net loss per share	16,595			19,826			20,526

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

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RADVIEW SOFTWARE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT)
(In thousands, except share data)

	Ordinary Shares				Treasury Shares
	Number  of Shares	Value			Number of Shares		Value			Additional Paid-In Capital				Deferred Compensation				Accumulated Deficit				Total Shareholders’ Equity (Deficit)
Balance, December 31, 2002	16,605,177		$	42		134,000	$	(100	)		$	54,888			$	(536	)		$	(47,983	)		$	6,311
Exercise of options	589,368		1			—	—				182				—				—				183
Amortization of deferred compensation	—		—			—	—				—				387				—				387
Adjustment for forfeitures and cancellations of stock options	—		—			—	—				(60		)		60				—				—
Net loss	—		—			—	—				—				—				(5,085		)		(5,085		)
Balance, December 31, 2003	17,194,545		43			134,000	(100		)		55,010				(89		)		(53,068		)		1,796
Exercise of options	131,806		1			—	—				31				—				—				32
Proceeds from private placement of ordinary shares and warrants, net of offering costs of $216,000	3,333,331		7			—	—				1,777				—				—				1,784
Amortization of deferred compensation	—		—			—	—				—				84				—				84
Adjustment for forfeitures and cancellations of stock options	—		—			—	—				(5		)		5				—				—
Net loss	—		—			—	—				—				—				(3,780		)		(3,780		)
Balance, December 31, 2004	20,659,682		51			134,000	(100		)		56,813				—				(56,848		)		(84		)
Stock-based compensation	—		—			—	—				116				—				—				116
Issuance of warrants in connection with revolving line of credit	—		—			—	—				52				—				—				52
Net loss	—		—			—	—				—				—				(2,465		)		(2,465		)
Balance, December 31, 2005	20,659,682		$	51		134,000	$	(100	)		$	56,981			$	—			$	(59,313	)		$	(2,381	)

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

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RADVIEW SOFTWARE LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Year Ended December 31,
	2003			2004			2005
Cash Flows from Operating Activities:
Net loss	$	(5,085	)	$	(3,780	)	$	(2,465	)
Adjustments required to reconcile net loss to net cash used in operating activities—
Depreciation	576			234			99
Stock-based compensation	387			84			116
Amortization of debt discount and deferred financing costs	—			—			122
Accrued severance pay	(153		)	94			(174		)
Changes in operating assets and liabilities—
Accounts receivable	348			73			(74		)
Prepaid expenses and other current assets	80			51			196
Accounts payable	9			(128		)	331
Accrued expenses	(514		)	123			22
Accrued restructuring charge	(292		)	(291		)	(29		)
Deferred revenue	13			841			(246		)
Net cash used in operating activities	(4,631		)	(2,699		)	(2,102		)
Cash Flows from Investing Activities:
Purchases of property and equipment	(83		)	(65		)	(79		)
Investment in restricted cash	—			—			(40		)
Decrease in other assets	40			36			224
Net cash provided by (used in) investing activities	(43		)	(29		)	105
Cash Flows from Financing Activities:
Issuance of warrants in connection with revolving line of credit	—			—			52
Debt issuance costs in connection with revolving line of credit	—			—			(70		)
Borrowings under revolving line of credit	—			—			1,348
Repayments under revolving line of credit	—			—			(1,330		)
Exercise of stock options	183			32			—
Proceeds from private placement of ordinary shares, net	—			1,784			—
Net cash provided by financing activities	183			1,816			—
Decrease in cash and cash equivalents	(4,491		)	(912		)	(1,997		)
Cash and cash equivalents at the beginning of the year	7,566			3,075			2,163
Cash and cash equivalents at the end of the year	$	3,075		$	2,163		$	166
Cash paid during the year for interest	$	15		$	7		$	68

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

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RADVIEW SOFTWARE LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   Operations

(a)   Overview

RadView Software Ltd., an Israeli corporation, and its subsidiaries (collectively, the “Company”) develops, markets and supports software that enables organizations to verify the scalability, efficiency and reliability of web applications, and facilitates their rapid development.

The Company incurred net losses of $5.1 million in 2003, $3.8 million in 2004 and $2.5 million in 2005, and had an accumulated deficit of approximately $59.3 million as of December 31, 2005. The Company has reduced its net losses primarily through the reduction of operating costs, and in 2005 through an increase in revenues. The Company has funded these losses principally from proceeds from equity financing, including an initial public offering in August 2000 and a private placement in March 2004, as well as proceeds from technology license arrangements (see Note 3).

As of December 31, 2005, the Company had cash of $166,000 and had an outstanding balance of $70,000 under a revolving credit facility that was subsequently repaid and terminated in January 2006 (see Note 7).

In January 2006, subsequent to the balance sheet date, the Company obtained a bridge loan from a group of potential investors for borrowings of up to $500,000. On April 4, 2006, the Company subsequently entered into definitive agreements with this group of investors to provide for a minimum investment of at least $1.5 million (see Note 1(b)). The completion of the investment transaction remains subject to the approval by a majority of the Company’s shareholders. Several significant shareholders, representing 39.3% of the outstanding ordinary shares, have represented to the Company their intention to vote in favor of the investment. Management believes that existing cash and cash equivalents, along with borrowings currently available from the bridge loan and the proceeds that would be available at the closing of the investment transaction, will be adequate to fund operations into 2007.

(b)   Subsequent Financing

On April 4, 2006, subsequent to the balance sheet date, the Company signed definitive agreements for a financing with Fortissimo Capital Fund GP LP on behalf of several limited partnerships in which it serves as general partner and other potential co-investors including one of the Company’s directors and two existing shareholders (the “Investors”). The initial investment of the financing would be for a minimum of $1.5 million consisting of $750,000 to purchase 25,000,000 of convertible preferred shares (the “Preferred Shares”), at a price of $0.03 per share and $750,000 as a convertible loan. The closing of the initial investment is required to occur within 14 days of approval by the Company’s shareholders. The financing also provides for an additional investment, at the option of the Investors, to purchase up to an additional $2.25 million of Preferred Shares at a price of $0.03 per share for a period of 18 months after the closing of the initial investment. Each Preferred Share would be convertible into one of the Company’s ordinary shares, subject to adjustment for anti-dilution events. Each Preferred Share would receive the same voting rights as ordinary shares, except Preferred Shares would be entitled to elect the majority of the Company’s board of directors and have approval rights over specified actions. Each Preferred Share would be entitled to a preference in liquidation over ordinary shares. The Investors would also receive warrants to purchase 18,750,000 Preferred Shares with respect to the initial investment and up to 56,250,000 Preferred Shares with respect to the additional investment, each at an exercise price of $0.04 per share for a period of five years from date of issuance.

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The financing also provides for the issuance of a convertible loan at the closing of the initial investment in the principal amount of $250,000 plus the balance of any borrowings still available under an existing $500,000 bridge loan at the time of closing. The principal balance of bridge loans previously borrowed also will become part of the convertible loan at the closing of the initial investment of the financing. The convertible loan would bear interest at 8.0% per annum. The convertible loan plus, at the election of the Investors, any accrued interest thereon, would be convertible into Preferred Shares at a conversion price of $0.03 per share. The convertible loan would mature three years from the closing date and, if not converted by such date, would become due and payable 30 days thereafter.

Prior to the signing of definitive financing agreements, on January 26, 2006, the Company entered into a bridge loan agreement (the “Bridge Loan”) with the Investors. Under the Bridge Loan, the Investors have agreed to provide the Company with up to $500,000 of loans, subject to the terms of the loan. As of April 5, 2006, the Company has borrowed $280,000 and the remaining $220,000 remains available for future borrowing on an as-needed basis until the closing, subject to approval of the Investors and compliance by the Company with an approved budget. The Bridge Loan bears interest at 8.0% per annum and is secured by a fixed charge on the Company’s accounts receivables and intellectual property and a floating charge on all of its assets. The Bridge Loan would be subject to the terms and conditions of the convertible loan portion of the financing if the financing closes. If the financing is not closed due to failure to secure shareholder approval or termination by either party, the Bridge Loan will become due and payable within 60 days of notice by either party of an intention to terminate negotiations with respect to the financing.

The financing remains subject to, among other things, filing of amended articles of association establishing the rights and preferences of the Preferred Shares and approval by a majority of the Company’s shareholders. Several significant shareholders, representing 39.3% of the outstanding ordinary shares, have represented to the Company that they intend to vote in favor of the financing. If a majority of the Company’s shareholders do not approve the financing, the Investors will be entitled to receive a termination fee of $250,000.

The financing also provides for an us to enter into an management services agreement with Fortissimo, under which Fortissimo will provide management and board services in consideration a minimum fee of $50,000 per year payable quarterly plus an additional amount of up to $70,000 payable at the end of each year that we are profitable, provided that such additional amount may not to exceed the available profits.

(c)   Major Customers

For a discussion of major customers, refer to Note 2 (q).

2.   Significant Accounting Policies

The Company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles. The significant accounting policies followed in the preparation of the consolidated financial statements, applied on a consistent basis, are as follows:

(a)   Use of Estimates

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

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(b)Financial Statements in U.S. Dollars

Substantially all of the Company’s revenues are in U.S. dollars. In addition, most expenses are incurred in U.S. dollars. The Company’s management believes that the U.S. dollar is the primary currency of the economic environment in which the Company operates. Thus, the functional and reporting currency of the Company is the U.S. dollar.

Accordingly, monetary accounts maintained in currencies other than the dollar are remeasured into dollars in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 52, “Foreign Currency Translation”. Changes in currency exchange rates between the Company’s functional currency and the currency in which a transaction is denominated are included in the Company’s results of operations as financial income (expense) in the period in which the currency exchange rates change.

All exchange gains and losses from the above-mentioned remeasurement are reflected in the statements of operations and were not material for all periods presented. The representative rate of exchange was U.S. $1.00 to 4.379  New Israeli Shekel (“NIS”) at December 31, 2003, U.S. $1.00 to NIS 4.308 at December 31, 2004 and U.S. $1.00 to NIS 4.603 at December 31, 2005.

(c)Principles of Consolidation

The consolidated financial statements include the accounts of RadView Software Ltd. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(d)Cash Equivalents and Restricted Cash

Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less. Restricted cash is invested in a short-term bank deposit, which is used as security for Company’s guarantee to leased facilities. The deposit is in U.S. dollars and bears interest at an average rate of 3.274%.

Restricted cash as of December 31, 2005 consists of security for a bank guarantee to landlord in Israel.

(e)Accounts Receivable Reserve

The Company provides for an allowance for doubtful accounts reserve against its accounts receivable. The reserve is computed for specific accounts, the collectibility of which is doubtful based upon the Company’s experience. A summary of the allowance for doubtful accounts is as follows:

	Year Ended December 31,
	2003			2004			2005
	(In thousands)
Balance at the beginning of year	$	171		$	72		$	72
Provision (benefit)	(18		)	25			—
Write-offs	(81		)	(25		)	(16		)
Balance at the end of year	$	72		$	72		$	56

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\(f)Property and Equipment, net

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful life of the assets as follows:

Category	Estimated Useful Life
	(In years)
Equipment	3
Office furniture	3 to 5
Leasehold improvements	Over the shorter of the term of the lease or the life of the asset

(g)Impairment of Long-Lived Assets

The Company’s long-lived assets are reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

(h)Severance Pay

In accordance with Israeli compensation law, the Company is required to make severance payments to Israeli employees upon their termination of employment. The amount of such severance payments is based on the most recent monthly salary multiplied by the number of years of employment as of the balance sheet date. The Company has accrued for the estimated total cost of severance pay as computed as of the balance sheet date. Severance expense totaled $178,000 in 2003, $192,000 in 2004 and $90,000 in 2005.

The Company has partially funded its severance pay obligations by monthly deposits for insurance policies. The deposited funds may be withdrawn only upon the fulfillment of the obligation pursuant to Israeli severance pay law or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies and is presented as an asset in the consolidated balance sheets (see Note 6).

(i)Revenue Recognition

The Company generates revenues mainly from licensing the rights to use its software products. The Company also generates revenues from support and maintenance services and, to a lesser extent, training and consulting services. The Company sells its products primarily through its direct sales force and, to a lesser extent, through resellers and distributors considered as end-users.

The Company recognizes revenue in accordance with Statement of Position (“SOP”) 97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain Transactions. Under SOP 97-2, revenues from software product licenses are recognized upon delivery of the software provided there is persuasive evidence of an agreement, the fee is fixed or determinable and collection of the related receivable is probable and no further obligations exist. Revenues under multiple-element arrangements, which may include software licenses, support and maintenance, and training and consulting services, are allocated to each element based on their respective fair values based on vendor-specific objective evidence. This objective evidence represents the price of

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products and services when sold separately. When vendor-specific objective evidence of fair value exists for undelivered elements but does not exist for delivered elements of a software arrangement, the Company uses the residual method for recognition of revenues, when all other revenue recognition criteria are met. Under the residual method, the Company defers revenues related to the undelivered elements based on their vendor specific objective evidence of fair value and recognizes the remaining arrangement fee for the delivered elements. When vendor-specific objective evidence of fair value for undelivered elements does not exist, and the only undelivered element is services,  revenues from the entire arrangement are recognized over the term of the service agreement.

Revenues from support and maintenance agreements are recognized ratably over the term of the maintenance period, which is typically one year. Revenues from training and consulting arrangements are recognized as the services are performed.

Revenue is recognized for software licenses sold to resellers or distributors at the time of shipment, provided that all revenue recognition criteria set forth in SOP 97-2 are fulfilled.

The Company generally does not grant a right of return to its customers. When a right of return exists, revenue is deferred until the right of return expires, at which time revenue is recognized provided that all other revenue recognition criteria are met.

Amounts collected or billed prior to satisfying the above revenue recognition criteria are reflected as deferred revenue. Deferred revenue primarily represents deferred maintenance revenue.

(j)Advertising Expenses

Advertising expenses are charged to the consolidated statements of operations as they are incurred. Advertising expenses totaled $62,000 in 2003, $177,000 in 2004, and $200,000 in 2005.

(k)Research and Development Costs

The Company has evaluated the establishment of technological feasibility of its products in accordance with SFAS No. 86, Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed. The Company sells products in a market that is subject to rapid technological change, new product development and changing customer needs. Accordingly, the Company has concluded that technological feasibility is not established until the development stage of the product is nearly complete. The Company defines technological feasibility as the completion of a working model. The time period during which costs could be capitalized from the point of reaching technological feasibility until the time of general product release is very short. Consequently, the amounts that could be capitalized are not material to the Company’s financial position or results of operations. Therefore, the Company has charged all such costs to research and development expense in the period incurred.

(l)Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 prescribes the use of the liability method whereby deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be reversed. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.

(m)Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123R (Revised 2004) (“SFAS 123(R)”), Share-Based Payment, which replaces SFAS No. 123, Accounting for Stock-Based Compensation, and supersedes APB

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Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123(R), as amended, requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first annual reporting period beginning after January 1, 2006. Early adoption will be permitted in periods in which financial statements have not yet been issued. SFAS 123(R) permits public companies to adopt its requirements using one of two methods:

·A “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date.

·A “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either (a) all prior periods presented or (b) prior interim periods of the year of adoption.

The Company has elected to early adopt the provisions of SFAS 123(R) effective January 1, 2005 following the modified prospective method of adoption described above.

The Company has determined the fair value of share-based payments issued after January 1, 2005 and unvested options granted in prior periods using the Black-Scholes option valuation model, using the following weighted-average assumptions:

	Year Ended December 31,
	2003		2004		2005
Expected life of option	5 years		4 years		4 years
Dividend yield	—		—		—
Expected volatility	135	%	110	%	123	%
Risk-free interest rate	4.0	%	3.4	%	3.9	%

Expected volatilities are based on historical volatility of the Company’s ordinary shares. The Company uses historical data to estimate option exercises and employee terminations within the valuation model. The expected term of options granted is based on the Company’s estimate and represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on the U.S. Treasury yield curve.

For all periods presented before January 1, 2005, the Company elected to follow APB No. 25and FASB Interpretation (“FIN”) No. 44, Accounting for Certain Transactions Involving Stock Compensation, in accounting for its employee stock option plans. Under APB No. 25, when the exercise price of an employee stock option is equivalent to or above the market price of the underlying stock on the date of grant, no compensation expense is recognized. The Company adopted the disclosure provisions of SFAS No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure, which amended certain provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for an entity that voluntarily changes to the fair value based method of accounting for stock-based employee compensation, effective as of the beginning of the fiscal year.

Pro forma information regarding the Company’s net loss and net loss per share prior to the adoption of SFAS No. 123(R) has been determined as if the Company had accounted for its employee stock options under the fair value method prescribed by SFAS No. 123.

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The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation prior to January 1, 2005.

	Year Ended December 31,
	2003			2004
	(In thousands, except per share data)
Net loss, as reported	$	(5,085	)	$	(3,780	)
Add: Stock-based employee compensation included in reported net loss	379			84
Deduct: Total stock-based employee compensation expense under fair value based methods	(873		)	(347		)
Pro forma net loss	$	(5,579	)	$	(4,043	)
Basic and diluted net loss per share:
As reported	$	(0.31	)	$	(0.19	)
Pro forma	$	(0.34	)	$	(0.20	)

The Company applies SFAS No. 123 and Emerging Issues Task Force (“EITF”) No. 96-18, Accounting for Equity Instruments that Are Issued to Other than Employee for Acquiring, or in Conjunction with Selling Goods or Services, with respect to options and warrants issued to nonemployees. SFAS No. 123 requires the use of option valuation models to measure the fair value of the options and warrants at the measurement date.

(n)   Reclassifications

Certain amounts in the accompanying consolidated financial statements have been reclassified to conform to the current period’s presentation.

(o)   Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share is presented in conformity with SFAS No. 128, Earnings Per Share, for all periods presented. Basic and diluted net loss per ordinary share was determined by dividing net loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted net loss per ordinary share is the same as basic net loss per ordinary share for all periods presented, as the effects of the Company’s potential additional ordinary shares were antidilutive.

The calculation of diluted net loss per share excludes outstanding stock options, warrants and additional investment rights held by certain investors because their inclusion would be antidilutive, as set forth in the following table.

	Year Ended December 31,
	2003	2004	2005
	(In thousands)
Stock options	3,710	3,264	3,033
Warrants	—	2,334	2,334
Additional investment rights	—	3,333	—
Warrants held by Comerica Bank	—	—	353

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(p)   Fair Value of Financial Instruments

The Company’s financial instruments consist mainly of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and line of credit. The carrying amounts of these instruments approximate their fair value due to their short-term maturity of such instruments.

(q)   Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, restricted cash and accounts receivables.

Cash, cash equivalents and restricted cash are invested mainly in U.S. dollars with major banks in Israel and the United States. Such deposits in the United States may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.

Accounts receivable are derived from sales to customers located in the United States, Europe, Israel and Japan. The Company performs on-going credit evaluations of its customers and to date has not experienced any material losses. An allowance for doubtful accounts is maintained with respect to those amounts that the Company has determined to be doubtful of collection.

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

In 2003, no single customer represented greater than 10% of total revenues or greater than 10% of total accounts receivable as of December 31, 2003. In 2004, one customer represented 16% of total revenue in 2004 and one customer represented 16% of total accounts receivable as of December 31, 2004. In 2005, one customer represented 13% of total revenue and one customer represented 17% of total accounts receivable as of December 31, 2005.

(r)   Recently Issued Accounting Standards

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB No. 20, Accounting Changes, and SFAS No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. APB No. 20 previously required that most voluntary changes in accounting principles be recognized by including in net income for the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 requires retroactive application to prior periods’ financial statements of a voluntary change in accounting principles unless it is impracticable. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

3.Technology License Transactions

(a)   Ixia

On July 7, 2004, the Company received $1,000,000 in cash from a technology license transaction for its WebLOAD product with Ixia, an original equipment manufacturer, pursuant to the exercise of an option by Ixia under the terms of a former development, publishing and distribution agreement. As a result of the option exercise, the technology license provides Ixia with expanded license rights including the right to access and use source code for the WebLOAD product and the right to create derivative products. Under the terms of the original agreement, Ixia was required to continue to pay to the Company royalties on its sale of WebLOAD at a reduced rate through July 7, 2005. Ixia was also granted a right to make a single

54

lump-sum payment of $250,000 to the Company in lieu of its reduced royalty obligations. In November 2004, Ixia exercised its right and made payment to the Company. Accordingly, Ixia has no further license fee or royalty payment obligations to the Company pursuant to this arrangement.

The Company was obligated to provide product updates and technical and engineering support to Ixia until July 2005. The Company recognized the $1,000,000 technology license fee as revenue over the 12-month period commencing July 7, 2004, which was the term the Company was obligated to provide support services to Ixia. The Company recognized as revenue the $250,000 payment in lieu of royalties on a straight-line basis over the remaining term from November 2004 until July 2005.

The Company recognized revenue under this technology license transaction of $575,000 in 2004 and $725,000 in 2005 that has been classified as software licenses revenues in the condensed consolidated statements of operations.

(b)   OPNET Technologies

On December 7, 2005, the Company and OPNET Technologies, Inc. (“OPNET”) entered into a license and distribution agreement (the “License Agreement”), which granted to OPNET a non-exclusive, non-royalty-bearing, perpetual source code license for the Company’s WebLOAD and WebFT products. In addition, the Company agreed to provide limited engineering support services for a period of eight weeks for the purpose of assisting OPNET with the use of the source code and up to ten days of training services for OPNET’s support personnel. OPNET was also was granted a right to extend the service period for up to an additional eight weeks for an additional fee. The total consideration under the agreement of approximately $572,000 was payable in cash as follows: $360,000 paid upon execution of the Agreement; $200,000 paid in bi-weekly installments in varying amounts through January 16, 2006; and $12,000 paid at varying dates as training services are performed.

According to SOP 97-2, if sufficient VSOE of the fair value of the elements does not exist to permit the allocation of revenue to the services and the only undelivered element is services, the entire arrangement fee should be recognized as the services are performed or on a straight-line basis over the service period if no other pattern of performance is discernible. The Company is recognizing the entire arrangement fee on a ratable basis over the initial eight-week engineering service period. The Company recognized revenue under this technology license transaction of $203,000 in 2005.

In January 2006, subsequent to the balance sheet date, OPNET exercised its right to extend the engineering services through March 2006 for an additional fee of $96,000. The revenue from these additional services will be recognized as they are delivered.

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4.Restructuring Expenses

Restructuring expenses totaled $245,000 in 2003. There were no restructuring expenses in 2004 and 2005. The following is a reconciliation of the accrued restructuring charges for each of the three years ended December 31, 2005.

Description	Balance, Beginning  of Year			Provision			Payments and  Write-offs				Balance,  End of Year
	(In thousands)
Year Ended-
December 31, 2003:
Employee severance costs		$	—		$	215		$	(215	)		$	—
Idle-lease costs		612			22			(314		)		320
Vendor contract termination fees		—			8			(8		)		—
		$	612		$	245		$	(537	)		$	320
December 31, 2004:
Employee severance costs		$	—		$	—		$	—			$	—
Idle-lease costs		320			—			(291		)		29
		$	320		$	—		$	(291	)		$	29
December 31, 2005:
Employee severance costs		$	—		$	—		$	—			$	—
Idle-lease costs		—			—			(29		)		—
		$	29		$	—		$	(29	)		$	—

Accrued restructuring charges payable within one year have been classified as a current liability in the accompanying consolidated balance sheets.

Restructuring charges in 2003 were incurred in April 2003 and related to additional employee severance costs, facility termination charges, idle-lease space and vendor contract termination fees. Employee severance costs, which were paid in 2003, resulted from the termination of 20 employees, of whom 6 were sales and marketing employees, 11 were research and development employees, and 3 were general and administrative employees.

5.Property and Equipment, Net

	December 31,
	2004		2005
	(In thousands)
Equipment	$	3,514	$	3,593
Office furniture	218		218
Leasehold improvements	199		199
	3,931		4,010
Less—Accumulated depreciation	3,767		3,866
	$	164	$	144

Depreciation expense was $576,000 in 2003, $234,000 in 2004, and $99,000 in 2005.

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6.Other Assets

	December 31,
	2004		2005
	(In thousands)
Severance pay funds	$	502	$	343
Deposits on operating leases	105		40
	$	607	$	383

7.Revolving Line of Credit Facility

On May 27, 2005, the Company, through RadView Software Inc., the Company’s U.S. subsidiary (the “U.S. Subsidiary”), obtained a one-year revolving line of credit facility with Comerica Bank for borrowings of up to $2.0 million. Advances under the facility were limited to the lesser of $2.0 million or the sum of 75% of eligible accounts receivables plus $1.0 million.

Borrowings under the facility bear interest at the bank’s prime rate (3.68% as of December 31, 2005) plus 1.25%. Borrowings under the credit facility were secured by substantially all of the assets of the U.S. Subsidiary and specified assets of the Company, and guaranteed by the Company and specified subsidiaries of the Company. The Company and the U.S. Subsidiary were required to maintain compliance with financial covenants including: (a) a minimum cash balance of $1.0 million and (b) specified net income (loss) levels based on the Company’s consolidated operating budget. The Company borrowed $1.2 million under the line of credit. In December 2005, an event of default was incurred under the credit facility when the borrowings under the credit facility exceeded the collateral base and the Company was unable to repay the amount of the overadvance. The bank suspended all future borrowings under the facility and demanded repayment of the overadvance. The Company and the bank agreed upon a plan of repayment for all outstanding borrowings. As of December 31, 2005, outstanding borrowings under the revolving line of credit totaled $70,000. This amount was fully repaid in January 2006, subsequent to the balance sheet date, and the revolving line of credit facility was terminated.

In connection with the facility, the Company issued to the bank a warrant to purchase 352,941 of the Company’s ordinary shares at an exercise price of $0.17 per share. The warrant was exercisable immediately and has a term of seven years. The warrant also provides for piggyback registration rights. These warrants are not affected by the early termination of the revolving line of credit facility. Pursuant to an evaluation of the terms of the warrant under the provisions of EITF 00-19, the Company has classified the warrant issued in connection with the line of credit as equity.

The total consideration of $1.3 million under the credit facility was allocated based on the relative fair values of the revolving line of credit and the warrants in accordance with APB No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. At the grant date, the fair value of the warrants was determined to be $52,000 using the Black-Scholes option-pricing model assuming a risk free interest of 3.9%, a volatility factor of 120%, dividend yield of 0% and contractual life of seven years.

The Company also incurred financing costs totaling $70,000 consisting of bank fees and legal costs , which have been accounted for as deferred financing costs, until fully amortized following the repayment of the loan. The warrant costs and deferred financing costs were amortized as interest expense over the life of the revolving credit facility. Amortization of warrants costs and deferred financing costs totaled $122,000 in 2005.

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8.Accrued Expenses

	December 31,
	2004		2005
	(In thousands)
Employee compensation and related costs	$	696	$	617
Other accrued expenses	416		517
	$	1,112	$	1,134

9.Deferred Revenues

	December 31,
	2004		2005
	(In thousands)
Maintenance contracts	$	1,082	$	1,124
Technology license arrangements (Note 3)	725		369
Other deferred revenues	98		166
	$	1,905	$	1,659

10.Commitments and contingent liabilities

(a)   Lease Obligations

The Company operates primarily from leased facilities. Lease agreements expire through July 2009. Annual minimum future rental payments due under the lease agreements as of December 31, 2005 are as follows:

	Amount
	(In thousands)
For the Year Ending December 31,
2006		157
2007		86
2008		89
2009		52
		$	384

Rent expense, net of sublease income and idle-lease restructuring credits, was $335,000 in 2003, $350,000 in 2004, and $284,000 in 2005.

(b)   Royalties

In June 2003, the Company entered into a distribution agreement for the rights to re-brand, market and distribute certain software products from Altaworks Corporation under the Company’s private label name of WebLOAD Analyzer. The Company was required to pay royalties based on selling price at rates decreasing from 50% to 20% based on specified revenue volume levels. This distribution agreement was terminated in December  2005.

In May 2005, the Company entered into a distribution agreement with another third party to re-brand, market and distribute certain software products of a third party also under the Company’s private label name of WebLOAD Analyzer. The Company is required to pay royalties to the third party based on the Company’s selling price for end-user revenues from the WebLOAD Analyzer product.

Royalties incurred in connection with these royalty arrangements totaled $25,000 in 2003, $28,000 in 2004 and $88,000 in 2005 and have been classified as cost of license revenues.

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11.Shareholders’ Equity (Deficit)

(a)   Authorized Share Capital

As of December 31, 2005, the Company has authorized 40,000,000 ordinary shares NIS 0.01 par value. Ordinary shares confer upon their holders voting rights, the right to receive dividends or bonus shares, if declared, and the right to share in the excess assets upon liquidation of the Company.

(b)   Treasury Shares

As of December 31, 2005, the Company holds 134,000 of ordinary shares as treasury shares at an aggregate cost of $100,000. Although such shares are legally considered outstanding, the Company has no dividend or voting rights associated with its treasury shares.

(c)   Dividends

The Company has never paid cash dividends to shareholders. The Company intends to retain future earnings for use in its business and does not anticipate paying cash dividends on its ordinary shares in the foreseeable future.

(d)   Private Placement

In March 2004, the Company completed a private placement (the “Private Placement”) of its ordinary shares, additional investment rights to purchase ordinary shares (the “Additional Investment Rights”) and four series of warrants to purchase ordinary shares (the “Warrants”) pursuant to a securities purchase agreement (the “Purchase Agreement”) between the Company and certain purchasers named therein (the “Purchasers”), in reliance on an exemption under Section 4(2) of the Securities Act of 1933, as amended, and Regulation D promulgated thereunder.

The Company issued 3,333,331 ordinary shares to the Purchasers for aggregate gross proceeds of $2.0 million. The Company also issued Additional Investment Rights and Warrants to the Purchasers. The Company received net proceeds of $1.8 million from the Private Placement.

In accordance with the Purchase Agreement, the Company was required to register for resale on Form S-3 (the “Registration Statement”) the ordinary shares issued in the Private Placement and the ordinary shares issuable upon exercise of the Additional Investment Rights and Warrants. The Registration Statement was declared effective on June 17, 2004. The Company must maintain the effectiveness of the Registration Statement for a period of up to two years from the effective date of the Registration Statement.

(e)   Warrants and Additional Investment Rights

In connection with the Private Placement, the Company issued to the Purchasers Additional Investment Rights to purchase 3,333,331 ordinary shares at an exercise price of $0.81 per share, exercisable from March 11, 2004 until June 17, 2005. None of the Additional Investment Rights were exercised before their expiration in June 2005 and are no longer outstanding as of December 31, 2005.

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The Company also issued to the Purchasers four series of Warrants as follows:

Series	Term	Exercise Price			Number of  Shares
Series A warrants	Four and a half years		$	0.98	1,000,000
Series B warrants	Two years		$	0.86	666,668
Series C warrants	Four and a half years		$	0.98	666,664
Series D warrants	Two years		$	0.86	666,664
					2,999,996

The Warrants were initially exercisable for the number of shares indicated above, subject to customary anti-dilution adjustments and, with respect to the Series C and D warrants, subject to the conditions indicated below. The Series A and Series B warrants became exercisable beginning September 11, 2004 for a term as noted in the table above. One half of the Series C and Series D warrants became exercisable on September 20, 2004, the date the Company’s ordinary shares were delisted from the Nasdaq SmallCap Market.  Because the Additional Investment Rights were not exercised before the delisting event, the other one-half of the Series C and Series D warrants are not exercisable. As a result, warrants to purchase 2,333,332 shares remain exercisable.

In May 2005, the exercise price of the Warrants was reduced in accordance with the anti-dilution provisions of the Warrants when the Company issued a warrant to a bank (see Note 7) at an exercise price below the then current exercise price of the Warrants. The table above reflects the adjusted exercise price for the Warrants immediately following the issuance of the bank warrant.

The Company may require the Purchasers to exercise their right to purchase ordinary shares pursuant to the Warrants if the closing price of the ordinary shares on an eligible market exceeds the respective exercise prices of any series of the Warrants by at least 100% for twenty consecutive trading days on which the average daily trading volume of the ordinary shares is at least 250,000 Ordinary Shares, excluding blocks of 25,000 or more ordinary shares.

Pursuant to an evaluation of the terms of the Purchase Agreement under the provisions of EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, the Company has classified all the above derivative financial instruments issued in connection with the private placement as equity.

As for warrants issued to a bank in connection with a revolving line of credit, see Note 7.

(f)   Employee Share Purchase Plan

In November 2002, the Company established an employee share purchase plan (the “ESPP”) which permits the eligible employees of the Company to purchase shares of the Company’s ordinary shares at 85% of the closing market price on either the first day or the last day of the applicable three-month period, whichever is lower. Employees may participate in the ESPP through regular payroll deductions of up to 10% of their pre-tax gross salary. Subject to adjustment for stock splits, stock dividends and similar events, a maximum of 1,500,000 ordinary shares may be issued under the ESPP. No ordinary shares were issued in connection with the ESPP in 2003, 2004 and 2005. As of December 31, 2005, there are 1,491,791 ordinary shares available for future issuance under the ESPP.

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(g)Stock Option Plans

The Company has approved for issuance an aggregate of 7,811,862 ordinary shares for the issuance of stock options under three stock option plans as follows:

·4,786,622 ordinary shares approved for issuance under a key employee share incentive plan (the “1996 Option Plan”) adopted in 1996 and amended in 2001 and 2003;

·75,240 ordinary shares approved for issuance under an affiliate stock option plan (the “1997 Option Plan”) adopted in 1997; and

·2,950,000 ordinary shares approved for issuance under the United States Share Incentive Plan (the “2000 Option Plan”) adopted in 2000 and amended in 2001.

The 1996 Option Plan provides for the grant by the Company of option awards to officers and employees of the Company and its subsidiaries and to non-employees. The options granted under the 1996 Option Plan vest ratably over vesting periods ranging from three to five years of employment and expire 62 months from the date of issuance.

The 1997 Option Plan provided for the grant by the Company of nonqualified option awards to employees of RAD-Bynet Group of companies, which are affiliated companies. Options granted under this plan vest ratably over four years and expire 62 months from date of issuance. Through December 31, 2000, all available authorized options under this plan had been granted. No options were granted under this plan since completion of the initial public offering in August 2000. The Company accounted for these options in accordance with SFAS No. 123 utilizing the Black-Scholes option-pricing model. The Company has charged to operations $8,000 in 2003 and $3,000 in 2004 in connection with these options. As of December 31, 2005, there were no options outstanding under this plan.

The 2000 Option Plan provides for the grant by the Company of option awards to officers and employees of its U.S. subsidiary. Options granted under the 2000 Option Plan vest ratably over three to four years of employment and expire 10 years from the date of issuance.

Under all option plans, any options that are cancelled or forfeited before expiration become available for future grants. As of December 31, 2005, there were 3,371,772 options available for future grant.

Transactions related to the Company’s stock option plans for each of the three years in the period ended December 31, 2005 are summarized as follows:

	Options Outstanding		Weighted Average Exercise Price Per Share			Weighted Average Fair Value of Options Granted
Outstanding, December 31, 2002	4,667,198			$	1.10
Granted	817,500			0.17			$	0.15
Exercised	(589,368	)		0.31
Forfeited, cancelled or expired	(1,185,166	)		1.59
Outstanding, December 31, 2003	3,710,164			0.87
Granted	192,500			0.45			$	0.34
Exercised	(131,806	)		0.24
Forfeited, cancelled or expired	(507,280	)		0.97
Outstanding, December 31, 2004	3,263,578			0.85
Granted	1,101,055			0.21			$	0.16
Exercised	—			—
Forfeited, cancelled or expired	(1,331,753	)		1.44
Outstanding, December 31, 2005	3,032,880			$	0.36
Exercisable, December 31, 2003	2,125,761			$	1.16
Exercisable, December 31, 2004	2,307,738			$	1.08
Exercisable, December 31, 2005	1,866,508			$	0.43

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The following table summarizes information about options outstanding and exercisable at December 31, 2005:

	Options Outstanding							Options Exercisable
Exercise Price	Number Outstanding at December 31, 2005		Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price			Number Outstanding at December 31, 2005		Weighted Average Exercise Price
$0.16 - $0.18		294,177		2.8		$	0.16		215,012		$	0.16
$0.22		777,272		6.9		0.22			162,939		0.22
$0.25 - $0.27		298,931		6.1		0.26			284,181		0.26
$0.28		1,100,000		6.0		0.28			670,001		0.28
$0.32 - $0.95		562,500		4.8		0.86			534,375		0.89
		3,032,880		5.7		$	0.36		1,866,508		$	0.43

Through December 31, 2004 the amount of stock-based compensation arising from the difference between the exercise price and the fair market value on the date of the grant is included in shareholders’ equity as deferred compensation and totaled $8.5 million. Under APB Opinion No. 25, deferred compensation was amortized over the vesting periods of the underlying options as stock-based compensation expense.

The Company has elected to early adopt the provisions of SFAS 123(R) effective January 1, 2005 with respect to is stock-based payments to employees. The Company used the “modified prospective” method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date.

Stock-based compensation expense included in the reported net loss totaled $387,000 in 2003, $84,000 in 2004 and $116,000 in 2005.

The cumulative effect of the change in accounting principle related to the adoption of SFAS 123(R) was immaterial. Additional information related to our stock-based compensation awards is presented below along with the additional disclosures required by SFAS 123(R).

During 2003, the Company extended the exercise period for a former employee. The extension was accounted for under FIN No. 44, by applying a new measurement date, which resulted in no additional compensation expenses.

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The following table summarizes the weighted average fair value of options granted for each of the three years in the period ended December 31, 2005:

	For Options on the Grant Date that:
For the Year Ended:	Exercise Price is Equal to  Market Price			Exercise Price is Greater than Market Price
December 31, 2003:
Weighted average exercise price		$	0.16		$	0.32
Weighted average fair value on grant date		$	0.14		$	0.24
December 31, 2004:
Weighted average exercise price		$	0.45		—
Weighted average fair value on grant date		$	0.34		—
December 31, 2005:
Weighted average exercise price		$	0.21		$	0.22
Weighted average fair value on grant date		$	0.17		$	0.14

The following table presents information regarding unvested stock option activity as of December 31, 2005:

	Number of Options		Weighted Average Grant-Date Fair Value
Unvested at January 1, 2005	955,840			$	0.25
Granted	1,101,055			$	0.16
Vested	(524,644	)		$	0.23
Forfeited	(365,879	)		$	0.18
Unvested at December 31, 2005	1,166,372			$	0.20

As of December 31, 2005, there was $235,000 of total unrecognized compensation cost related to unvested stock options. Unrecognized compensation cost is expected to be recognized over a weighted average period of 2.7 years. Total fair value of shares vested during the year ended December 31, 2005 was $180,000.

12.Taxes on Income

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

Results for tax purposes of RadView Software Ltd. are measured and reflected in accordance with the change in the Israeli Consumer Price Index (“CPI”). As described elsewhere, the Company’s consolidated financial statements are presented in U.S. dollars. The difference between the change in the Israeli CPI and the exchange rate between the U.S. dollar and the NIS causes a difference between taxable income or loss and the income or loss before taxes reflected in the consolidated financial statements. In accordance with SFAS No. 109, the Company has not provided deferred income taxes on this difference between the reporting currency and the tax bases of assets and liabilities.

(b)Tax benefits under the Law for the Encouragement of Capital Investments, 1959 (“the Law”)

In 1998, the Company’s investment program totaling $66,000 was granted Approved Enterprise status under the Law. The Company elected to adopt the “Alternative Benefits Program Status.”  This status entitles the Company to a benefit period of seven years on income derived from this program as follows: (a) a full income tax exemption for the first two years and (b) a reduced income tax rate of 25%, instead of the regular rate of 34% in 2005, for the remaining five-year period. Depending on the level of non-Israel

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investments in the Company, the period for which the Company is entitled to a reduced tax rate of 25% can be extended to eight years. The period of the benefit is limited to 12 years from commencement of production or 14 years from the date of approval. As the Company has not yet reported any taxable income, the benefit period has not yet commenced. The tax benefit will expire in 2007.

The benefits from the Company’s approved enterprise programs are dependent upon the Company fulfilling the conditions stipulated by the Law for Encouragement of Capital Investments, 1959 and the regulations published under this law, as well as the specific criteria in the Company’s approved enterprise programs. If the Company does not comply with these conditions, the tax benefits may be canceled, and the Company may be required to refund the amount of the canceled benefits, with the addition of linkage differences and interest. As of the date of these financial statements, the Company believes it complies with these conditions.

If the Company distributes a cash dividend out of retained earnings which were tax exempt due to its approved enterprise status, the Company would have to pay a 25% corporate tax on the amount distributed, and a further 15% withholding tax would be deducted from the amounts distributed to the recipients.

As of December 31, 2005, the Company does not have retained earnings and accordingly, no tax-exempt income. Tax-exempt income attributable to the Approved Enterprise cannot be distributed to shareholders without subjecting the Company to taxes except upon complete liquidation of the Company. If the retained tax-exempt income is distributed in a manner other than upon the complete liquidation of the Company, it would be taxed at the corporate tax rate applicable to such profits as if the Company had not elected alternative tax benefits. The Company’s board of directors does not intend to distribute any amounts of its undistributed tax-exempt income as dividends.

On April 1, 2005, an amendment to the Investment Law came into effect (the “Amendment”) and has significantly changed the provisions of the Investment Law. The Amendment limits the scope of enterprises which may be approved by the Investment Center by setting criteria for the approval of a facility as a Privileged Enterprise, such as provisions generally requiring that at least 25% of the Privileged Enterprise’s income will be derived from export. Additionally, the Amendment enacted major changes in the manner in which tax benefits are awarded under the Investment Law so that companies no longer require Investment Center approval in order to qualify for tax benefits.

In addition, the Investment Law provides that terms and benefits included in any certificate of approval already granted will remain subject to the provisions of the law as they were on the date of such approval. Therefore, the Company’s existing Approved Enterprise will generally not be subject to the provisions of the Amendment.

As a result of the Amendment, tax-exempt income generated under the provisions of the new law will subject the Company to taxes upon distribution or liquidation and the Company may be required to record a deferred tax liability with respect to such tax-exempt income.

Income from sources other than the Approved Enterprise during the benefit period will be subject to tax at the regular corporate tax rate. Israeli companies are subject to income tax at the corporate tax rate of 34% for the 2005 tax year. On July 25, 2005, the Knesset (Israeli Parliament) passed the Law for the Amendment of the Income Tax Ordinance (No. 147), 2005, which prescribes, among others, a gradual decrease in the corporate tax rate in Israel to the following tax rates: 31% in 2006, 29% in 2007, 27% in 2008, 26% in 2009and 25% in 2010 and years thereafter.

Due to reported losses for tax purposes, the benefit period under the Approved Enterprise program has not yet commenced.

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By virtue of this law, the Company is entitled to claim accelerated depreciation on equipment used by the Approved Enterprise during five tax years. The Company has received final approval in respect to the investment program.

(c)Tax benefits under Israel’s Law for the Encouragement of Industry (Taxation), 1969

The Company currently qualifies as an “Industrial Company” under the Law for Encouragement of Industry (Taxes), 1969 and is therefore entitled to tax benefits, mainly accelerated depreciation of machinery and equipment and deduction of expenses incurred in connection with a public offering.

(d)Income (Loss) before Income Tax

	Year Ended December 31,
	2003			2004			2005
	(In thousands)
Israel	$	(1,104	)	$	(185	)	$	507
United States	(3,981		)	(3,595		)	(2,972		)
	$	(5,085	)	$	(3,780	)	$	(2,465	)

(e)Net Operating Losses

As of December 31, 2005, the Company’s net operating loss carry forwards for Israeli tax purposes amounted to approximately $17.2 million. These net operating losses may be carried forward indefinitely and offset against future taxable business income. The Company expects that during the period in which these tax losses are utilized its income would be substantially tax-exempt. There will be no tax benefit available from these losses and no deferred income taxes have been included in these financial statements. Deferred taxes in respect of other temporary differences are immaterial.

Through December 31, 1995, the Company’s losses generated in Israel for tax purposes were assigned to a shareholder, and are not available to the Company.

The Company’s U.S. subsidiary’s carry forward tax losses through December 31, 2005 totaled approximately $34.6 million. These losses are available to offset future U.S. taxable income of the U.S. subsidiary and will expire between the years 2012 and 2025. Net operating loss carry forwards are subject to review and possible adjustments by the Internal Revenue Service and may be limited in the event of certain cumulative changes in excess of 50% in the ownership interests of significant shareholders over a three-year period.

The components of the Company’s U.S. deferred tax asset are approximately as follows:

	December 31,
	2004		2005
	(In thousands)
Net operating loss carry forwards	$	12,638	$	13,838
Temporary differences	67		74
	12,704		13,912
Less—Valuation allowance	12,704		13,912
Net deferred tax asset	$	—	$	—

As of December 31, 2005 the Company had provided valuation allowances of approximately $13.9 million in respect of deferred tax assets resulting from tax loss carry forwards, and other temporary differences. The valuation allowance increased $667,000 in 2003, $1,782,000 in 2004, and $1,208,000 in 2005. Management currently believes that since the Company has a history of losses, it is not likely that those deferred taxes will be realized in the foreseeable future.

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The main reconciling items between the statutory tax rate of the Company and the effective tax rate are the non-recognition of tax benefits from accumulated net operating losses carry forward among the various subsidiaries worldwide due to the uncertainty of the realization of such tax benefits and the effect of approved enterprise.

(f)Final Tax Assessments

The Company has received final tax assessments in Israel regarding tax years through the end of 2003.

13.Related Party Balances and Transactions

Balances with related parties consisted of the following:

	December 31,
	2004			2005
	(In thousands)
Accounts receivable		$	3		$	2
Accounts payable and accrued expenses		12			22

Transactions with related parties consisted of the following:

	Year Ended December 31,
	2003			2004			2005
	(In thousands)
Revenues	$	2		$	2		$	—
Costs and expenses	(34		)	(46		)	(42		)

Management believes that all related party transactions have been conducted on an arm’s-length basis.

14.Disclosures About Segments of an Enterprise

The Company has adopted SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. The Company operates in one reportable segment (see Note 1 for a brief description of the Company’s business). The total revenues are attributed to geographic areas based on the location of the end-user customer.

The Company’s revenues by its customers’ geographic locations are as follows:

	Year Ended December 31,
	2003		2004		2005
	(In thousands)
United States	$	3,251	$	3,409	$	3,875
Europe	933		731		895
Israel	110		258		515
Other	542		265		360
	$	4,836	$	4,663	$	5,645

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The Company’s long-lived assets by geographic location are as follows:

	December 31,
	2004		2005
	(In thousands)
United States	$	160	$	90
Europe	7		3
Israel	604		434
Total	$	771	$	527

For major customers, see Note 2 (q).

15. Quarterly Statement of Operations Information (Unaudited)

The following table presents a summary of quarterly results of operations for the years ended
December 31, 2004 and 2005:

	Mar. 31, 2004			June 30, 2004				Sept. 30, 2004				Dec. 31,  2004
	(In thousands, except per share data)
Total revenues	$	980			$	1,068			$	1,286			$	1,329
Gross profit	$	869			$	973			$	1,187			$	1,221
Net loss	$	(1,151	)		$	(995	)		$	(768	)		$	(866	)
Basic and diluted net loss per share	$	(0.06	)		$	(0.05	)		$	(0.04	)		$	(0.04	)

	Mar. 31, 2005				June 30, 2005				Sept. 30, 2005				Dec. 31,  2005
	(In thousands, except per share data)
Total revenues		$	1,507			$	1,640			$	1,247			$	1,251
Gross profit		$	1,414			$	1,553			$	1,089			$	1,187
Net loss		$	(743	)		$	(569	)		$	(635	)		$	(518	)
Basic and diluted net loss per share		$	(0.04	)		$	(0.03	)		$	(0.03	)		$	(0.03	)

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Item 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

Item 9A.CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures

As of December 31, 2005, under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) was performed. Based on this evaluation, the CEO and CFO have concluded that as of December 31, 2005 our disclosure controls and procedures are effective to ensure that material information is recorded, processed, summarized and reported by our management on a timely basis in order to comply with our disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in internal controls

There were no significant changes in our internal controls or in other factors during the fourth quarter of 2005 that have materially affected, or are reasonably likely to materially affect, our internal controls.

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PART III

Item 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is incorporated herein by reference to the section titled “Proposal One—Election of Directors” in our definitive Proxy Statement (the “Proxy Statement”) relating to our Annual Meeting of Shareholders to be held on or about June 5, 2006, to be filed pursuant to Regulation 14A of the Securities Exchange Act of 1934 with the Securities and Exchange Commission within 120 days after the end of the Company’s fiscal year to which this Annual Report on Form 10-K relates.

Item 11.EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to the section titled “Executive Compensation” included in the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on or about June 5, 2006, which will be filed with the Securities and Exchange Commission within 120 days after the end of the Company’s fiscal year to which this Annual Report on Form 10-K relates.

Item 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The information required by this item is incorporated herein by reference to the section titled “Security Ownership of Certain Beneficial Owners and Management” included in the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on or about June 5, 2006, which will be filed with the Securities and Exchange Commission within 120 days after the end of the Company’s fiscal year to which this Annual Report on Form 10-K relates.

Item 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to the section titled “Compensation Committee Interlocks and Insider Participation,” and “Certain Relationships and Related Transactions” included in the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on or about June 5, 2006, which will be filed with the Securities and Exchange Commission within 120 days after the end of the Company’s fiscal year to which this Annual Report on Form 10-K relates.

Item 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents the aggregate fees for professional audit services and other services rendered by the Company’s independent auditors, Kost Forer Gabbay & Kasierer, a Member of Ernst & Young Global, in 2004 and 2005.

	Year Ended December 31,
	2004		2005
Audit Fees	$	62,500	$	63,000
Tax Fees	5,000		5,000
All Other Fees	—		7,100
	$	67,500	$	75,100

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Audit Fees consist of fees billed for the annual audit and the quarterly reviews of the Company’s consolidated financial statements. Audit Fees also include fees billed for other audit services, which are those services that only the external auditor reasonably can provide, and include services performed in connection with documents filed with the SEC.

Tax Fees include fees billed for tax compliance services, including the preparation of tax returns and claims for refund and tax consultations.

All Other Fees include fees billed for assistance with tax examinations by Israeli income tax authorities.

The Audit Committee is required to approve in advance any audit or non-audit services performed by the Company’s independent public accountants that do not meet the pre-approval standards established by the audit committee. The pre-approval policies and procedures established by the Audit Committee require that the Audit Committee meet with the independent auditor and financial management prior to the audit to review planning and staffing, the scope of the proposed audit for the current year, the audit procedures to be utilized, and the proposed fees. During 2004 and 2005, 100% of the fees for services rendered by the Company’s independent auditors were pre-approved by the Audit Committee.

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PART IV

ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements.

Financial statements are shown in the index in Item 8 of this report.

(a)(2) Schedules.

All schedules have been omitted because either they are not required, are not applicable, or the information is otherwise set forth in the Consolidated Financial Statements and notes thereto.

(a)(3) Exhibits.

The following exhibits are filed as part of this Annual Report on Form 10-K.

Exhibit No.	Description
3.1	Memorandum of Association of Registrant (English translation) (filed as Exhibit 3.1 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
3.2	Amended and Restated Form of Articles of Association of Registrant (filed as Appendix B to the Company’s Proxy Statement Pursuant to Section 14(a) for the Year Ended December 31, 2000, and incorporated herein by reference)
4.1	Form of Ordinary Share Certificate (filed as Exhibit 4.1 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
4.2	Investor Rights Agreement (filed as Exhibit 4.2 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
10.1	Lease Agreement for 2 Habarzel St., Tel-Aviv, 69710, Israel (English Translation) (filed as Exhibit 10.1 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
10.1a	Amendment to Lease Agreement dated May 26, 2005 for 2 Habarzel St., Tel-Aviv, 69710, Israel (English Translation) (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2005, and incorporated herein by reference)
10.2	Lease Agreement for 7 New England Executive Park, Burlington, Massachusetts (filed as Exhibit 10.2 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
10.2a	First Amendment to Lease Agreement for 7 New England Executive Park, Burlington, Massachusetts, 01803 dated July 20, 2004 (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2004, and incorporated herein by reference)
10.3	Lease Agreement for 890 Hillview Court, Suite 130, Milpitas, California 95035 (filed as Exhibit 10.3 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
10.4	Amended and Restated Key Employee Share Incentive Plan (1996) (filed as Exhibit 99.1 to the Company’s Registration Statement on Form S-8, No. 333-67086, and incorporated herein by reference)
10.5	Amended and Restated United States Share Incentive Plan (2000) (filed as Exhibit 99.2 to the Company’s Registration Statement on Form S-8, No. 333-67086, and incorporated herein by reference)
10.6	Form of Indemnification Agreement (filed as Exhibit 10.7 to the Company’s Registration Statement on Form F-1, No. 333-41526, and incorporated herein by reference)
10.7	Employee Share Purchase Plan (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended September 30, 2002, and incorporated herein by reference)

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10.8	Employment Agreement dated February 6, 2001 with Ilan Kinreich, President and Chief Executive Officer (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended March 31, 2001, and incorporated herein by reference)
10.9	Employment Agreement dated September 16, 2003 with Christopher Dineen, Chief Financial Officer (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarter ended September 30, 2003, and incorporated herein by reference)
10.10	Development, Publishing and Distribution Agreement, dated as of February 7, 2003, between Ixia and RadView Software Ltd. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 7, 2004 and incorporated herein by referenced) **
10.11	Amendment Number One to the Development, Publishing and Distribution Agreement, dated July 7, 2004, between Ixia and RadView Software Ltd. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 7, 2004 and incorporated herein by referenced) **
10.12	License and Distribution Agreement between Allen Systems Group and RadView Software Ltd., dated as of December 21, 2004 (filed as Exhibit 10.12 to the Company’s Form 10-K for the year ended December 31, 2004, and incorporated herein by reference) **
10.13*	License and Distribution Agreement between OPNET Technologies Inc and RadView Software Ltd., dated as of December 7, 2005.
10.14	Loan and Security Agreement between RadView Software Inc. and Comerica Bank dated May 25, 2005 (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2005, and incorporated herein by reference)
10.15	Third Party Security Agreement between RadView Software Ltd. and Comerica Bank dated May 25, 2005 (filed as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended June 30, 2005, and incorporated herein by reference)
10.16*	Loan Payoff and Termination Agreement between RadView Software, Inc. and Comerica Bank dated January 13, 2006.
10.17*	Bridge Loan Agreement between Fortissimo Capital Fund GP, L.P., and RadView Software Ltd., dated as of January 26, 2006.
10.18*	Share Purchase Agreement between Fortissimo Capital Fund GP, L.P. and RadView Software Ltd., dated as of April 4, 2006.
10.19*	Convertible Loan Agreement between Fortissimo Capital Fund GP, L.P. and RadView Software Ltd., dated as of April 4, 2006.
21.1	Subsidiaries of the Registrant (filed as Exhibit 21.1 to the Company’s Form 10-K for the year ended December 31, 2001, and incorporated herein by reference)
23.1*	Consent of Independent Registered Public Accounting Firm, Kost Forer Gabbay & Kasierer, a Member of Ernst & Young Global
31.1*	Certification by Chief Executive Officer pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification by Chief Financial Officer pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*Filed herewith

**A request for confidential treatment was filed for certain portions of the indicated document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 406.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the registrant, RadView Software Ltd., has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Burlington, in the Commonwealth of Massachusetts, on this 13th day of April, 2006.

	RadView Software Ltd.
By:	/s/ ILAN KINREICH
	Ilan Kinreich
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated:

	Signature		Title		Date
/s/ ILAN KINREICH		President, Chief Executive Officer and Director		April 13, 2006
Ilan Kinreich
/s/ SHAI BEILIS		Director and Chairman of the Board		April 13, 2006
Shai Beilis
/s/ DAVID ASSIA		Director		April 13, 2006
David Assia
/s/ YOCHAI HACOHEN		Director		April 13, 2006
Yochai Hacohen
/s/ CHRISTOPHER DINEEN		Chief Financial Officer		April 13, 2006
Christopher Dineen

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EX-10.13

Exhibit 10.13

License and Distribution Agreement

This License and Distribution Agreement is entered into by and between OPNET Technologies, Inc., a Delaware corporation with principal offices located at 7255 Woodmont Avenue, Bethesda, Maryland 20814 (“OPNET”), and RadView Software, Ltd., an Israeli corporation with corporate headquarters located at 7 New England Executive Park, Burlington, Massachusetts 01803 (“RadView”), effective this 7^th day of December 2005 (the “Effective Date”).

In consideration of the premises and mutual covenants contained herein, and other valuable consideration, the receipt and adequacy of which is hereby acknowledged by each party, the parties hereby agree as follows:

1.Scope of Agreement.

This Agreement shall set forth the terms and conditions pursuant to which (a) RadView shall deliver, and OPNET shall be licensed to use and exploit, the RadView proprietary Source Materials to the Software, and (b) RadView shall provide certain professional services to OPNET in connection with and in support of OPNET’s license rights with respect to the Source Materials.

2.Definitions.

2.1Derivative Product(s).   The term “Derivative Product(s)” shall refer to any and all (a) new software applications or documentation, or (b) modifications, enhancements, improvements, updates, re-branding, and derivative works of the Software, in either case developed by OPNET from the Source Materials.

2.2Software.   The term “Software” shall refer to the two RadView proprietary applications, WebLOAD and WebFT, identified in Exhibit A hereto.

2.3Source Materials.   The term “Source Materials” shall mean:  (i) source code, including related reference files, resource files, configuration files, and “include” files necessary to compile the source code into machine-executable form used to run the Software or used in the preparation of the Software or its enabling keys; (ii) any associated files necessary to run and exercise all functions of the Software; (iii) a listing and description of all known product defects and bugs current and open as of the Effective Date, and all closed bugs associated with the source code; (iv) instructions, notes, references, programs and other materials (excluding any third party software programs) required for the technical staff of OPNET, without any additional assistance from RadView, to make modifications and prepare an executable code copy of the Software from the source code of such Software, via the procedures of assembly, compilation, linking and/or any other procedure, which materials shall include all such materials  (exclusive of third party materials) actually used by RadView to prepare executable code copies of such Software and access keys for such Software; (v) product documentation (source version and final form); (vi) installation procedures and any installation or support utilities; (vii) any “back-office” applications necessary to allow end-users to exercise any function of the source code, including but not limited to automatic updating or patching of the end-user’s installation; (viii) images and graphics (source version and final form); and (ix) design documents, source code overviews and descriptions, API documents, and requirement documents for each of the following: (a) the highest patch level of each Major Release of the Software generally distributed by RadView during the forty-eight (48) months preceding the Effective Date and including the optional (at OPNET’s election) additional portions of the Source Material described in Section 5, (b) all “in progress” work related to the Software as of the Effective Date, and (c) all “in progress” work related to Java applet testing technology as of the payment date specified under Section 7.2 for the fourth installment payment of the Initial Services Fee. RadView shall deliver to OPNET, within two (2) business days following RadView’s receipt of the Source Code License Fee identified in Section 7 below, thirty (30) FlexLM license keys for running each of the Software, including thirty (30) “100 Virtual Users” licenses for WebLOAD for the in progress work and the Major Release using FlexLM generally distributed by RadView in the 12 months immediately prior to the effective date. Source Materials shall not include any source code or source code documentation for third party products.

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2.4Major Release.   The term “Major Release” shall mean Software version numbers that differ in the number to the left of the first decimal place and/or differ in the number immediately to the right of the first decimal place. For example, versions 6.0, 6.1, 6.2, and 7.1, and 7.2 are all considered Major Releases.

3.Delivery of Source Materials.

3.1RadView shall deliver to OPNET, within two (2) business days following RadView’s receipt of the Source Code License Fee identified in Section 7 below, one copy of the Source Materials, in electronic form. The deliverables under this Agreement shall include the complete “build environment”, including full test system and all existing test cases for API and UI testing, as well as the source code for any custom developed build or test tools. This environment shall be installed and working on equipment delivered to OPNET by RadView. Title to the build environment and equipment shall pass to OPNET immediately following OPNET’s notice to RadView that OPNET has obtained all third party licenses required for the build environment deliverable: (a) as a licensee and/or (b) as an authorized sublicensee under a third party license(s) issued to RadView. The build environment and equipment shall be delivered as directed by OPNET during the Knowledge Transfer Period.

3.2RadView shall deliver to OPNET, within two (2) business days following RadView’s receipt of the fourth installment payment of the Initial Services Fee one copy in electronic form of all “in progress” work related to the Java applet testing technology described under Section 2.3(c).

4.Source Code License Grant.

4.1License to Create, and Distribute and Sublicense Derivative Products.   Subject to OPNET’s compliance with the terms and conditions of this Agreement, including the license terms and limitations set forth in this Section, and contingent upon OPNET’s payment to RadView in full of the Source Code License Fee, RadView hereby grants to OPNET a non-exclusive, non-royalty-bearing, perpetual (subject to the terms set forth in Section 13 below) license to:

a) modify the Software and merge or combine the Software or any part thereof into or with other computer programs to form a Derivative Product;

b) modify, prepare and enhance Derivative Products based on the Software and/or the Source Materials;

c) use internally for its own business purposes or on behalf of any third party any such Derivative Product; and

d) market, distribute (directly or through third parties), support and sublicense any such Derivative Product in object code form;

provided, however, that any Derivative Product created by OPNET shall not diminish or otherwise affect RadView’s pre-existing rights in the Software and the Source Materials and any and all intellectual property embodied thereby or embedded therein; and provided further, however, that OPNET shall market, distribute, use, sublicense and support the Software and the Derivative Products solely under OPNET’s brands and using product names which shall not be similar to or likely to be confused with the RadView names for the Software. To that end, OPNET shall re-brand the Software and/or Derivative Products, as applicable, including, without limitation, revising the splash screen, documentation and similar RadView-branded areas to reflect the OPNET branding; provided, however, that any Software and Derivative Products used, sublicensed, marketed, supported or distributed by OPNET shall retain the copyright and other proprietary legends of RadView’s object code and source code in the form as delivered under this Agreement unless such form is determined by OPNET to be unreasonable.

4.2License to Copy.   Subject to OPNET’s compliance with the terms and conditions of this Agreement, including the license terms set forth in this Section, and contingent upon OPNET’s payment to RadView in full of the Source Materials License Fee, RadView hereby grants to OPNET a non-exclusive, non-royalty-bearing, perpetual (subject to the terms set forth in Section 12.1 below),  license to

a) copy the Source Materials to the extent  necessary to exercise the rights granted under this Agreement; and

b) copy the Derivative Products to the extent necessary to allow use and distribution of the Derivative Products pursuant to the rights granted under this Agreement;

provided, however, that each copy of the Source Materials and the Derivative Products, or any part thereof, shall reproduce the copyright and other proprietary legends as described in Section 4.1 above.

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4.3Source Code License for Derivative Products.   (a) Commencing on the first anniversary of the Effective Date, and subject in each instance to RadView’s rights as the owner of full right and title to the Source Materials and the intellectual property embodied thereby or embedded therein, OPNET shall be entitled to grant a source code license with respect to all or any portion of one or more Derivative Products subject to the conditions described herein; (b) any source code license granted by OPNET under this Section 4.3 shall:  (i) require that the licensee include in all copies of the Derivative Product source code copyright and other proprietary legends of RadView included in the source code or Derivative Product source code licensed, (ii) require that the third party licensee’s use of the Derivative Product source code shall be according to the terms of a written license agreement issued by OPNET consistent with the terms of this Agreement and, that includes an acknowledgement by the licensee of the pre-existing proprietary and intellectual property rights of RadView in the Derivative Product source code, (iii) requires the licensee to protect the confidentiality of, and the proprietary rights of RadView in, the  Derivative Product source code using the same degree of care it uses to protect its own confidential information but in no case less than a reasonable degree of care, and (iv) shall irrevocably release RadView of any liability to the licensee or to any third party claim through such licensee.

4.4Non-Competition Agreement.   (a) For a period of five (5) years after the Effective Date, and subject to the exceptions below OPNET shall not: (i) assign this Agreement, or (ii) directly market or license a source code license for any Derivative Product to any entity listed on Exhibit B. Exhibit B may be amended upon the mutual agreement of the parties. (b) For a period of two (2) years after the Effective Date, and subject to the exceptions below, OPNET shall not: (i) assign this Agreement or (ii) directly market or license a source code license for any Derivative Product to any entity listed on Exhibit C. (c) In the event that any court determines that the duration of Section 4.4(a) or 4.4(b) is unreasonable, and to such extent is unenforceable, OPNET and RadView agree this section shall remain in effect for the greatest time period that would not render it unenforceable but in no event beyond the duration specified herein. Either party however, shall have the right at any time to assign or transfer this Agreement or any interest herein (including rights and duties of performance), upon written notice to the other party, to any entity: (i) which acquires all or substantially all of such party’s operating assets, (ii) which acquires more than 50% of such party’s issued and outstanding shares, (iii) which is under common ownership or control with a party to this Agreement, or (iv) into which a party to this Agreement is merged or reorganized pursuant to any plan of merger or reorganization.

5.Services to be Provided by RadView.

5.1Transfer of Knowledge.   For a period of eight (8) consecutive weeks following the Effective Date (such eight week period, the “Knowledge Transfer Period”), and provided that OPNET pays timely and in full the Initial Services Fee identified in Section 7 below, RadView shall make available to OPNET the professional services of three (3) RadView employees, each of whom shall be knowledgeable in the source code for the Software, and qualified to provide Services  to OPNET with respect to the Source Materials (the “Knowledge Transfer Consultants”) and each of whom shall be dedicated to OPNET on a full time basis (assuming an eight (8) hour workday, during the Israeli or United States work week, as applicable based on the venue of the  Knowledge Transfer Consultants when performing the Services, and subject to the RadView paid holidays identified in Exhibit D hereto) during the Knowledge Transfer Period. Each such employee, and any other RadView employee who may perform professional services for OPNET in connection with this Agreement, shall be hereinafter referred to as a “Knowledge Transfer Consultant” or a “Training Consultant”. The Knowledge Transfer Consultants shall provide Services on a time and material basis and work under the direction of OPNET to provide one or more of the following services (collectively, the “Services”):  (i) knowledge transfer with respect to the Source Materials, (ii) creation of the “build environment”, including full test system and all existing test cases for API and UI testing (as well as the source code for any custom developed build or test tools), (iii)  support OPNET’s use of the Source Materials, and general technical support to OPNET in its use of the Source Materials, (iv) development tasks and work related to Derivative Product(s) as directed by OPNET, and (v) such other professional services permitted under this Agreement related to the Source Materials and/or the Derivative Product(s). During the Knowledge Transfer period, OPNET may, at its sole discretion elect to use portions of the Services described in this Section 5: (a) to extract additional portions of the Source Material revision control history, including but not limited to any file versions in between the Major Releases of the Software generally distributed by RadView, as well as any “check-in comments” and “change logs” associated with those file versions, limited to the 48 months prior to the Effective Date, and as late as the payment date

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specified under Section 7.2 for the fourth installment payment of the Initial Services Fee. RadView shall deliver this additional material to OPNET at such times designated by OPNET prior to the expiration of the Knowledge Transfer period and/ or (b) to conduct training related to the Source Materials for OPNET’s field personnel and support personnel. Any such training services shall be provided by an employee of RadView, other than a Knowledge Transfer Consultant, qualified to provide training services and whose place of employment for RadView is in the United States (the “Training Consultant”). Training services under this Agreement shall not exceed ten (10) staff days, whether used concurrently or not. The fee for each staff day of training services shall be at the rate stated in Section 7.3. The Knowledge Transfer Consultants and the Training Consultant shall be chosen by RadView, in its sole discretion provided that each Consultant has the qualifications defined above. RadView further reserves the right, at any time, to replace any individual  Knowledge Transfer Consultant or Training Consultant with a similarly qualified RadView employee provided that RadView shall take commercially reasonable measures to effect any such replacement in a manner calculated to cause minimal disruption to the provision of the Services. Upon RadView’s receipt of a good faith request by OPNET, RadView shall promptly replace any individual Knowledge Transfer Consultant or Training Consultant with a similarly qualified RadView employee in a manner calculated to cause minimal disruption to the provision of the Services.

5.2No Warranty on Services.   RadView shall provide the Services under this Agreement on a time and materials basis. RadView makes no warranties or representations, express or implied, oral or written, with respect to the Services provided under this Agreement, whether to OPNET or to any other entity. RadView expressly disclaims any and all warranties with respect to such Services, including, without limitation, any implied warranties or those arising out of usage of trade.

5.3Venue for Services and Consultant’s Bonus.   The Services to be performed by the Knowledge Transfer Consultants or the Training Consultant may, at the direction of OPNET, be performed on site at any of OPNET’s offices or from RadView’s offices; provided, however, that Israel based Knowledge Transfer Consultants shall not be required to work on site at an OPNET site in the United States for more than three (3) consecutive weeks in any four (4) week period; each Knowledge Transfer Consultant who works not less than forty hours each week for three (3) or more consecutive weeks on site at an OPNET site in the United States shall be paid a bonus calculated at the rate of ONE THOUSAND DOLLARS ($1,000 ($US)) for each consecutive week of work. For example, if a Knowledge Transfer Consultant works three (3) consecutive weeks at an OPNET site in the United States, the Knowledge Transfer Consultant is entitled to a $3,000 bonus; if the Knowledge Transfer Consultant works two consecutive weeks no bonus has been earned. The maximum bonus payable to any Israel based Knowledge Transfer Consultant under the terms of this section during any four consecutive week period shall be FOUR THOUSAND DOLLARS ($4,000 (US)). OPNET shall use its best effort to forecast travel requirements in advance and shall provide not less than five (5) days advance notice to a Consultant of any travel requirement and shall include the required arrival date at the site designated by OPNET. RadView hereby confirms that the passports of the Consultants are and shall remain current and valid during the Knowledge Transfer Period. RadView further waives any rights it may have to prevent the travel of a Consultant to an OPNET site in the United States.

5.4Extension of Knowledge Transfer Period.   OPNET shall have the right, in its sole discretion, to elect a one-time extension to the Knowledge Transfer Period for any one or more of the three (3) Consultants, upon written notice to RadView; provided that any such extension shall not continue the Knowledge Transfer Period beyond March 30, 2006. The notice to RadView must be delivered at least seven (7) days prior to the expiration of the original Knowledge Transfer Period and shall specify the length of the extension elected by OPNET and the number of Consultant(s) to whom OPNET would like the extension to apply. The Additional Service fees applicable to any such extension are as set forth in Section 7 below.

5.5Insurance During Knowledge Transfer Period.   During the Knowledge Transfer Period when Consultants are providing services on OPNET’s premises (including extensions by OPNET pursuant to the terms of Section 5.4), OPNET shall maintain comprehensive general liability insurance, including broad form property damage coverage, with limits of at least one million U.S. Dollars each for personal injury and property damage for each occurrence.

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6.Proprietary Rights.

6.1Derivative Products.   (a) As between RadView and OPNET and excluding the Source Materials, OPNET shall be the sole owner of all right, title and interest in and to, any Derivative Product developed by OPNET in accordance with this Agreement, and any other software prepared by OPNET in connection with the Source Materials and/or OPNET’s exercise of its rights under this Agreement. RadView shall not acquire any right, title, or interest in or to such Derivative Product(s); provided, however, that any Derivative Product or other materials created by OPNET shall not diminish, qualify or otherwise affect RadView’s pre-existing rights in the Software and Source Materials. (b) Nothing in this Agreement shall be construed as limiting the independent development of products and/or services by the parties hereto. Each party hereto acknowledges that the other may, as of the Effective Date or at any time thereafter, engage in or pursue the independent development of products and/or services which are the same as or similar to actual or planned activities and/or products and services of the other party hereto. Each party acknowledges and agrees that the other party’s independent development activities with respect to the Source Materials or similar products and/or services shall not in and of itself be determined to violate the terms of this Agreement. Nothing in this Section 6.1 shall be deemed to grant any ownership, distribution, license, sublicense or any other rights to use a party’s intellectual property except as expressly provided herein; this section does not waive either party’s statutory intellectual property rights for patents, copyrights, trademarks, trade secrets or other intellectual property.

6.2Trademarks.   Nothing in this Agreement shall be construed as giving either party any right to use any trademark, service mark, trade name, logo, designation or other identifier of the other party at any time during or after the term of this Agreement. OPNET shall re-brand any Software or Derivative Products which it markets, makes available to third parties or which it uses internally pursuant to the provisions of Sections 4.1, 4.2, and 4.3 above.

6.3Limited Transfer of Rights.   Except as expressly set forth in Section 3 above, the parties agree that nothing in this Agreement is intended or should be construed as transferring ownership rights of any kind from one party to the other with respect to any intellectual property held or developed by either party.

7.Economic Terms.

7.1Source Code License Fee.   In consideration for the license rights granted under Section 4 above and a non-exclusive, non-royalty-bearing, perpetual (subject to the terms set forth in Section 13.1 and 13.2 below) license to all patents in the Software or the Source Materials, OPNET shall remit to RadView a Source Code License Fee in the amount of THREE HUNDRED TEN THOUSAND DOLLARS  ($310,000($US)). Such amount shall be payable, in full, upon the Effective Date.

7.2Initial Services Fee.   In consideration for the Services being made available to OPNET pursuant to Section 5.1 above, OPNET shall remit to RadView an Initial Services Fee in the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000 ($US)). Such amounts shall be due and payable in four installments as follows:

•FIFTY THOUSAND DOLLARS ($50,000($US)) shall be due and payable on the Effective Date;

•FIFTY THOUSAND DOLLARS ($50,000($US)) shall be due and payable on December 19, 2005;

•FIFTY THOUSAND DOLLARS ($50,000($US)) shall be due and payable on January 2, 2006; and

•ONE HUNDRED THOUSAND DOLLARS ($100,000 ($US)) shall be due and payable on January 16, 2006;

provided, however, that in the event the Consultants, or any one of them, (a) is unwilling to travel to the United States to perform the Services, (b) does not respond in a reasonable timeframe (as evaluated against the nature of the request and taking into account the effect of potentially different time zones), or (c) is not qualified to provide any of the Services (it being understood that each of the Consultants may be bringing different areas of expertise to bear in support of the Services), then in any such event, the payment schedule for the installments due and payable on December 19, 2005, January 2, 2006, and January 16, 2006 shall be revised as follows:

•The second installment shall be due and payable on January 2, 2006;

•The third installment payment shall be due and payable on January 16, 2006; and

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•The fourth installment payment shall be due and payable on January 30, 2006.

7.3Additional Service Fees.   In the event that OPNET elects to extend the Knowledge Transfer Period pursuant to the provisions of Section 5.3 above, OPNET shall remit to RadView an amount equal to ONE THOUSAND TWO HUNDRED DOLLARS ($1,200($US)) for each additional staff day included in the extension (e.g., an extension of ten business days to the Knowledge Transfer Period with respect to two Consultants would entail an additional Services fee of $24,000 (10 days x two consultants x $1,200)). The Service fees for the initial Knowledge Transfer Period and for any extension thereof are based on an eight (8) hour day. Service hours in excess of eight (8) hours per day shall be invoiced at a rate of $175 ($US) per hour. The additional Service fee associated with the extension to the Knowledge Transfer Period shall be invoiced at the conclusion of each week during which additional services were completed after the expiration of the original Knowledge Transfer Period (e.g., using the example above of a ten day extension for two consultants, an additional Services fee of TWELVE THOUSAND DOLLARS ($12,000 ($US) would be invoiced at the conclusion of each successive week after the expiration of the original Knowledge Transfer Period, for a total consideration of TWENTY-FOUR THOUSAND DOLLARS ($24,000 ($US)), payable as described in Section 7.5). Additional Service hours (i.e., hours in excess of eight (8) hours for any staff day during the Knowledge Transfer Period or any extension thereof) shall be performed only with the prior written consent of OPNET.

7.4Consultant’s Bonus and Travel Expenses.   OPNET shall be responsible for: (a) reimbursing RadView for Consultant Bonus amounts determined under Section 5.3 and actually paid by RadView to Knowledge Transfer Consultants, and (b) all reasonable travel-related expenses incurred by RadView in connection with the performance of the Services provided that (i) such expenses are consistent with  travel expense guidelines set forth in Exhibit E hereto, and (ii) the travel has been pre-approved in writing by or scheduled with the written consent of OPNET. OPNET shall not be liable for reimbursing RadView for any international travel-related expenses incurred by the Training Consultant.

7.5Payment Terms.   (a) Excepting payments required under Sections 7.1 and 7.2, all invoices submitted by RadView shall be due and payable within thirty (30) days following invoice receipt. The fees set forth above do not include any applicable taxes or duties. OPNET and RadView shall each be responsible for such taxes to the extent required by law. All invoices, fees and payments shall be stated and paid in United States dollars. (b) All payments required by OPNET under Sections 7.1 and 7.2 shall be by wire transfer of immediately available funds to an account designated in writing by RadView.

8.Protection of Confidential Information.

8.1Definition of Confidential Information.   During the term of this Agreement, either party may disclose to the other certain proprietary or confidential information, including without limitation information relating to the disclosing party’s business, products, services, finances, customers or strategies (“Confidential Information”). Confidential Information may include technical information and may be in tangible or intangible form. All Confidential Information will be marked as confidential or proprietary at the time of disclosure or, in the case of oral disclosure, will be designated as confidential at the time of disclosure and promptly confirmed in writing thereafter; provided, however, that the Source Materials and any materials reflecting or incorporating the Source Materials (in whole or in part) shall be deemed Confidential Information whether or not expressly designated as such. In addition, information which by the nature of its content and the circumstances of its disclosure would reasonably be understood to be the confidential and/or proprietary information of the disclosing party shall be treated as Confidential Information by the receiving party. The term “Confidential Information” shall not include information that (a) is in the public domain or which enters the public domain other than through an action of the receiving party, (b) is published or otherwise made known to the public by the disclosing party, (c) is lawfully known to or in the possession of the receiving party prior to its receipt hereunder, provided that the information was not received from the disclosing party or a third party with an obligation of confidentiality to the disclosing party.

8.2Obligations to Protect Confidential Information.   Each party agrees to protect the Confidential Information it receives from the other party with the same degree of care it uses to protect its own Confidential Information but in no case less than a reasonable degree of care. OPNET shall treat all RadView source code received under this Agreement with the same degree of care as OPNET uses to protect its own source code but in

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no case less than a reasonable degree of care; OPNET may disclose source code received under this Agreement on a need to know basis to any person or entity for legitimate business reasons, as determined by OPNET, provided the party receiving access to the source code has entered into a written nondisclosure agreement with OPNET containing terms as least as restrictive as the nondisclosure obligations in this Agreement. Each party further agrees to hold in confidence and not to disclose or reveal to any person or entity any Confidential Information disclosed by the other party hereunder without the clear and express prior written consent of a duly authorized representative of the disclosing party provided, however, that any party may make any public disclosure it believes in good faith is required by applicable law, regulation or stock market rule. The receiving party further agrees not to use or disclose any of the Confidential Information of the disclosing party for any purpose at any time, other than for the limited purpose(s) for which the disclosure was made as contemplated by this Agreement. Except as provided in Sections 8.3 and 8.4 below, each party agrees that disclosure of the other party’s Confidential Information shall be strictly limited to disclosure to employees or independent contractors with a need to know the information for the purposes of this Agreement, and each party agrees that each such employee or independent contractor will be informed of the confidential and/or proprietary nature of the information and will be bound, prior to disclosure, by a written agreement containing substantially the same confidentiality terms as those in this Section 8. Nothing in this Section 8 shall be construed to prohibit the disclosure of the Software, Source Materials, Derivative Products or Derivative Product source code by OPNET to an escrow agent or other third party who is subject to a written agreement containing substantially the same confidentiality terms as those in this Section 8.

8.3Required Disclosure.   In the event that either party is required to disclose any portion of any Confidential Information of the other party or any other materials proprietary to the other party in conjunction with a judicial or administrative proceeding, the party so directed shall immediately notify the other party both orally and in writing. Each party agrees to provide the other with reasonable cooperation and assistance in obtaining a suitable protective order and in taking any other steps to preserve confidentiality of the Confidential Information which is required to be disclosed.

8.4No Publicity.   Unless and until the terms of the Agreement are publicly disclosed by either party in a filing made with the United States Securities Exchange Commission, information relating to the substance and/or terms of this Agreement shall be deemed Confidential Information, and neither party shall disclose such information to third parties without the prior written consent of the other; provided, however, that each party shall be entitled to disclose, on a limited basis as possible in any discussions with analysts, current customers, prospective clients or government regulators or to comparable parties, the nature and scope of the relationship, the respective roles of the parties, the deliverables, services to be provided, and the fees payable to RadView.

8.5Pre-Existing Non-Disclosure Agreement.   Nothing set forth herein shall be construed to diminish or qualify the obligations undertaken by the parties pursuant to the mutual non-disclosure agreement previously executed between the parties but rather, such agreement shall remain in full force and effect.

9.Representations and Warranties.

9.1Authority to Enter into Agreement.   By its execution of this Agreement, each party represents and warrants that it has the full right and authority to enter into this Agreement and that it is capable, prepared and intent on meeting its obligations and responsibilities hereunder.

9.2Intellectual Property Warranty.   RadView warrants that it holds full right and title to the Source Materials, with the exception of any third party source materials which may be included within the Source Materials and which shall be disclosed in writing to OPNET as described in Section 12.4. RadView further warrants that, to RadView’s knowledge and subject to OPNET’s obtaining any required third party licenses there is no third party right which would interfere with or burden OPNET’s exercise of its rights hereunder. OPNET agrees that its sole and exclusive remedy for any breach of the foregoing warranties shall be as set forth in Section 10.1 below. OPNET further acknowledges and agrees that the foregoing warranties by RadView do not apply to any third party intellectual property issue arising out of any modification or extension of or to the Source Materials or the Software caused by OPNET or by any third party contractor of OPNET and which would not exist but for such modification(s) and/or extension(s).

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9.3No Warranty on Source Materials.   Subject to the limited warranties set forth in Section 9.2 above, OPNET acknowledges and agrees that RadView is delivering the Source Materials “AS IS” without warranty of any kind, whether express or implied. RadView expressly disclaims any and all warranties with respect to such Source Materials, including, without limitation, any implied warranties or those arising out of usage of trade. OPNET further acknowledges and agrees that, except as otherwise expressly set forth with respect to the Services identified in Section 5 above, RadView’s obligations under Sections 8 and 10, and the additional undertakings of RadView set forth in Section 12 below, RadView shall have no further obligation to OPNET with respect to the Software or the Source Materials.

9.4No Warranty on Services.   RadView makes no warranties or representations, express or implied, oral or written, with respect to the Services provided under this Agreement, whether to OPNET or to any other entity. RadView expressly disclaims any and all warranties with respect to such Services, including, without limitation, any implied warranties or those arising out of usage of trade.

10.Indemnification Obligations.

10.1Indemnification of OPNET by RadView for Third Party Claims.   Subject to the Limitations of Section 11, RadView shall indemnify and hold OPNET (and all of its officers, employees, directors, consultants, contractors and agents) harmless from and with respect to any loss, expense, costs, damages (including reasonable attorneys’ fees and costs) or other liability, arising out of or relating to any claim, demand, suit or proceeding brought by a third party (individually and collectively, a “Claim”) against OPNET (or any of its officers, employees, directors, consultants, contractors and agents) insofar as such Claim, shall be based upon or arise out of (a) a breach by RadView of its obligations under this Agreement, or (b) an alleged or actual violation of third party intellectual property rights by the Source Materials (in the form provided by RadView to OPNET and exclusive of any third party source materials which may be included therewith). OPNET shall give RadView prompt written notice of any such Claim and control over the defense and settlement of such claim (provided that RadView will not enter into any settlement which imposes any obligations or constraints on OPNET without the prior written consent of OPNET), and shall provide at RadView’s expense reasonable cooperation and assistance as RadView may request from time to time in the defense thereof. OPNET shall have the right, but not the obligation, to participate in such litigation or proceeding at its sole expense through counsel of its own choosing.

10.2Indemnification of RadView by OPNET for Third Party Claims.   Subject to the limitations of Section 11, OPNET shall indemnify and hold RadView (and all of its officers, employees, directors, consultants, contractors and agents) harmless from and with respect to any loss, expense, costs, damages (including reasonable attorneys’ fees and costs) or other liability, arising out of or relating to any claim, demand, suit or proceeding brought by a third party (individually and collectively, a “Claim”) against RadView (or any of its officers, employees, directors, consultants, contractors and agents) insofar as such Claim, shall be based upon or arise out of (a) a breach by OPNET of its obligations under this Agreement, or (b) the creation, use, modification, support or distribution of a Derivative Product by OPNET or a third party to whom OPNET has provided access or authority to use the Source  Materials, to the extent such Claim is not covered by clause (b) of Section 10.1 above. RadView shall give OPNET prompt written notice of any such Claim and control over the defense and settlement of such claim (provided that OPNET will not enter into any settlement which imposes any obligations or constraints on RadView without the prior written consent of RadView), and shall provide at OPNET’s expense such reasonable cooperation and assistance as OPNET may request from time to time in the defense thereof. RadView shall have the right, but not the obligation, to participate in such litigation or proceeding at its sole expense through counsel of its own choosing.

10.3Indemnification of Employment Claims.   OPNET shall indemnify and hold RadView harmless against any and all claims which may be brought against RadView (and/or any of its officers, employees, directors, consultants, contractors and agents) by one or more Consultants based on actions or failures to act by OPNET with respect to such Consultant’s provision of the Services, including, without limitation, claims by a Consultant of sexual harassment or sexual or other prohibited discrimination by OPNET; provided, however, that OPNET shall have no obligation under the terms of this paragraph in the event the Consultant’s claim is based on the action or failure to act by RadView.

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11.Limitation of Liability and Exclusion of Consequential Damages.

NOTWITHSTANDING ANYTHING STATED IN THIS AGREEMENT TO THE CONTRARY IN NO EVENT SHALL RADVIEW BE LIABLE TO OPNET OR TO ANY THIRD PARTY CLAIMING DIRECTLY OR THROUGH OPNET FOR ANY DAMAGES OF ANY KIND, OR UNDER ANY CIRCUMSTANCES, INCLUDING WITHOUT LIMITATION, (A) ANY INCIDENTAL INDIRECT, PUNITIVE, OR SPECIAL DAMAGES, OR (B) ANY DAMAGES WHATSOVER RESULTING FROM LOSS OF USE, DATA, REVENUES, BUSINESS OR PROFITS, OR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, IN EITHER EVENT ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND/OR THE SOURCE MATERIALS AND/OR THE SOFTWARE, EVEN IF RADVIEW HAD BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.

NOTWITHSTANDING ANYTHING STATED IN THIS AGREEMENT TO THE CONTRARY IN NO EVENT SHALL OPNET BE LIABLE TO RADVIEW OR TO ANY THIRD PARTY CLAIMING DIRECTLY OR THROUGH RADVIEW FOR ANY DAMAGES OF ANY KIND, OR UNDER ANY CIRCUMSTANCES, INCLUDING WITHOUT LIMITATION, (A) ANY INCIDENTAL INDIRECT, PUNITIVE, OR SPECIAL DAMAGES, OR (B) ANY DAMAGES WHATSOVER RESULTING FROM LOSS OF USE, DATA, REVENUES, BUSINESS OR PROFITS, OR COSTS OF PROCUREMENT OF SUBSTITUTE PRODUCTS OR SERVICES, IN EITHER EVENT ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND/OR THE SOURCE MATERIALS AND/OR THE SOFTWARE, EVEN IF OPNET HAD BEEN APPRISED OF THE LIKELIHOOD OF SUCH DAMAGES OCCURRING.

12.Additional Obligations of RadView.

12.1Export Control Information.   Promptly following RadView’s receipt of the Source Code License Fee, RadView shall provide to OPNET any existing export control certificates, product classification documents, export review applications for the Software issued by the Israeli or United States governments.

12.2RadView Employees.   Promptly following RadView’s receipt of the Source Code License Fee, RadView shall provide to OPNET a list of the names and titles of employees who have left the employment of RadView during the twelve (12) month period preceding the Effective Date. For any former or current RadView employee hired by OPNET under conditions that do not violate Section 12.3, RadView shall waive any post-employment noncompete restrictions or other restrictions that would prohibit the former employees from working for OPNET or on the Source Materials or OPNET’s Derivative Product(s). For purposes of this Section 12.2, employees will be deemed to have left the employment of RadView if they are no longer employed by RadView or a RadView affiliate.

12.3Restrictive Covenant Pertaining to RadView Employees.   (a) OPNET shall not directly or indirectly solicit or permit any organization on its behalf to directly or indirectly solicit for employment (or for work as an independent contractor) any employee of RadView. Provided there is no violation of Section 12.3(a) above, OPNET is allowed to hire up to three (3) RadView current employees. All prohibitions and restrictions applicable to OPNET under this Section 12.3 shall terminate upon the earlier of three (3) months after the completion of the Knowledge Transfer Period including any extensions thereto permitted under this Agreement, or the date RadView files for bankruptcy or is the subject of an involuntary bankruptcy or has all assets assigned for the benefit of creditors.

12.4Third Party Vendors for Software.   Attached hereto as Exhibit F is a list of the third party components and technology used by RadView to create, support and distribute the Software, including, without limitation, the third party tools used for key generation and distribution. RadView warrants that Exhibit F attached hereto is true and correct as of the Effective Date, and that it contains a comprehensive listing of third party components and technology for the Software as distributed by RadView on the Effective Date. Exhibit F shall list the third party components and technology according to the following categories:  Used for WebFT or Used for WebLOAD. On or before January 6, 2006, and using its “best effort”, RadView shall deliver to OPNET a revised Exhibit F that shall also include a listing of third party components and technology used by RadView to create, support and distribute the Software during the 48 months immediately preceding the Effective Date.

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Upon receipt by OPNET the revised Exhibit F shall amend this Agreement and shall be incorporated herein by this reference.

12.5OEM Agreement Amendment and Termination.   As a material condition of this Agreement, RadView and OPNET shall amend the OEM Agreement dated June 30, 2003 by and between Altaworks Corporation and RadView substantially in the form of the amendment attached hereto as Exhibit G.

13.Termination.

13.1Termination Prior to Delivery of Deliverables and Expiration of Knowledge Transfer Period.   At any time prior to the latter of: (a) delivery of all Source Materials described in Section 3 or (b) the expiration of the Knowledge Transfer Period, either party may terminate this Agreement upon written notice in the event one party breaches a material term in this Agreement and fails to cure the breach(es) identified in a written notice to the breaching party within twenty (20) days (the “20-day Cure Period”) following the date of such written notice, and further provided that the breach(es) remain ongoing as of the end of the 20-day Cure Period. Termination of this Agreement by RadView under this Section 13.1 shall not relieve OPNET of its obligation to pay to RadView the fees identified in Section 7.

13.2Termination by RadView or OPNET.   Upon expiration of the termination rights under Section 13.1, either party may terminate this Agreement upon written notice in the event one party breaches a material term in this Agreement and fails to cure the breach(es) identified in a written notice to the breaching party within forty-five (45) days (the “45-day Cure Period”) following the date of such written notice, and further provided that the breach(es) remain ongoing as of the end of the 45-day Cure Period.

13.3Damages and Limitation of Damages.   If a breach of this Agreement occurs that cannot be cured within the cure period under Section 13.1 or 13.2 the breaching party shall be liable for the actual damages of the nonbreaching party but not to exceed ONE MILLION DOLLARS ($US). Excepting breaches of this Agreement that are the direct result of bad faith conduct the nonbreaching party’s sole remedy under this section shall be the recovery of actual damages subject to the limitations herein. The Limitation of Damages under this Section shall not apply to a material breach of this Agreement that is the direct result of bad faith conduct by the breaching party.

13.4Survival of Terms.   Those terms which, by their nature, would be reasonably understood to survive any expiration or termination of this Agreement shall so survive, including Sections 2, 6, 7-11, 13.4, and 14.

14.Miscellaneous.

14.1Entire Agreement.   This Agreement constitutes the entire understanding and agreement between the parties hereto and supersedes any and all prior or contemporaneous representations, understandings and agreements between OPNET and RadView with respect to the subject matter hereof, all of which are merged herein. Notwithstanding the foregoing, the parties understand and agree that any confidentiality agreements between the parties are separate from this Agreement, and, except as may be expressly stated herein, nothing contained in this Agreement shall be construed as affecting the rights or obligations of either party set forth in any such agreement. It is expressly understood and agreed that no employee, agent or other representative of either party has any authority to bind such party with regard to any statement, representation, warranty, or other expression unless the same is specifically set forth or incorporated by reference herein. It is expressly understood and agreed that, there being no expectation of the contrary between the parties hereto, no usage of trade or custom and practice within the industry, and no regular practice or method of dealing between the parties hereto, shall be used to modify, supplement or alter in any manner the terms of this Agreement or any part hereof. This Agreement shall not be modified, amended or in any way altered except by an instrument in writing signed by an officer of RadView and an officer of OPNET.

14.2Independent Parties. Nothing contained herein shall be deemed to create or construed as creating a joint venture or partnership between OPNET and RadView. Neither party is, by virtue of this Agreement or otherwise, authorized as an agent or legal representative of the other party. Neither party is granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name

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of the other party or to bind such other party in any manner. Further, it is not the intention of this Agreement or of the parties hereto to confer a third party beneficiary right of action upon any third party or entity whatsoever, and nothing hereinbefore or hereinafter set forth shall be construed so as to confer upon any third party or entity other than the parties hereto a right of action under or in connection with this Agreement.

14.3Waiver.   No waiver of any provision of this Agreement or any rights or obligations of either party hereunder shall be effective, except pursuant to a written instrument signed by the party or parties waiving compliance, and any such waiver shall be effective only in the specific instance and for the specific purpose stated in such writing.

14.4Amendments.   All amendments or modifications of this Agreement shall be binding upon the parties despite any lack of consideration so long as the same shall be in writing and executed by the parties hereto in accordance with the other terms of this Agreement regarding modifications.

14.5.Severability of Provisions.   In the event that any provision hereof is found invalid or unenforceable pursuant to judicial decree or decision, the remainder of this Agreement shall remain valid and enforceable according to its terms.

14.6.Assignment.   Except as otherwise permitted under this Agreement neither party shall have the right to, and each party covenants that it will not, assign or transfer this Agreement or any of its rights, duties or obligations hereunder for a period of one (1) year following the Effective Date of the Agreement. Either party however, shall have the right at any time after the Effective Date to assign or transfer this Agreement or any interest herein (including rights and duties of performance), upon written notice to the other party, to any entity: (i) which acquires all or substantially all of such party’s operating assets, (ii) which acquires more than 50% of such party’s issued and outstanding shares, (iii) which is under common ownership or control with a party to this Agreement, or (iv) into which a party to this Agreement is merged or reorganized pursuant to any plan of merger or reorganization.

14.7Choice of Law; Forum and Jurisdiction.   This Agreement was entered into in the Commonwealth of Massachusetts, and its validity, construction, interpretation and legal effect shall be governed by the laws and judicial decisions of the Commonwealth of Massachusetts applicable to contracts entered into and performed entirely within Massachusetts. The parties expressly agree that any action arising out of or relating to this Agreement shall be filed and maintained only in the courts of the State of Massachusetts for the County of Middlesex, or the United States District Court for Middlesex County. The parties hereby consent and submit to the personal jurisdiction of such courts for the purposes of litigating any such action.

14.8Attorneys’ Fees.   In the event any litigation or other proceeding is brought by either party arising out of or relating to this Agreement, the prevailing party in such litigation or other proceeding shall be entitled to recover from the other party all costs, attorneys’ fees and other expenses incurred by such prevailing party in such litigation or proceeding.

14.9Force Majeure.   Neither party shall be deemed in default if its performance or obligations hereunder are delayed or become impossible or impractical by reason of any act of God, war, fire, earthquake, labor dispute, accident, civil commotion, epidemic, act of government or government agency or officers, or any other cause beyond such party’s control.

14.10Counterparts.   This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. The signature on any counterpart which is transmitted by facsimile to the other party shall be deemed the same as an original signature.

14.11Notices.   Notice to either party to this Agreement shall be deemed received on the day of delivery if delivered, with confirmation of receipt, by electronic facsimile, by courier or by hand during normal business hours, and the following day if delivered after normal business hours. Delivery of all notices shall be made to the following persons at the respective addresses of the parties first set forth above: for RadView, to the attention of its Chief Financial Officer (fax number (781) 238-8875); for OPNET, to the attention of Marc A. Cohen,

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Chairman and CEO (fax number (240) 497-1060 with a copy to:  Corporate Counsel (fax number (301) 497-1062).

EACH PARTY RECOGNIZES AND AGREES THAT THE WARRANTY DISCLAIMERS AND LIABILITY AND REMEDY LIMITATIONS IN THIS AGREEMENT ARE MATERIAL BARGAINED FOR BASES OF THIS AGREEMENT AND THAT THEY HAVE BEEN TAKEN INTO ACCOUNT AND REFLECTED IN DETERMINING THE CONSIDERATION TO BE GIVEN BY EACH PARTY UNDER THIS AGREEMENT AND IN THE DECISION BY EACH PARTY TO ENTER INTO THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

OPNET TECHNOLOGIES, INC.		RADVIEW SOFTWARE, LTD.
By:	/s/ ALAIN COHEN	By:	/s/ ILAN KINREICH
Name: Alain Cohen		Name: Ilan Kinreich
Title: President and CTO		Title: President and CEO
Date: December 7, 2005		Date: December 7, 2005

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Exhibits:

A. Software

B. RadView Entity List – 5 Year  Prohibition

C. RadView Entity List – 2 Year Prohibition

D. RadView Paid Holidays

E. OPNET’s Travel Expense Guidelines

F. Third Party Components and Technology

G. Amendment to OEM Agreement

EXHIBIT A:  SOFTWARE

WebLOAD

All Utility Programs associated with or distributed with WebLOAD

WebFT

All Utility Programs associated with or distributed with WebFT

EXHIBIT B:  RADVIEW ENTITY LIST – 5-YEAR PROHIBITION

Compuware Corporation and any subsidiary or affiliated company

The Rational Division of International Business Machines Corporation (“IBM”)

Empirix Inc. and any subsidiary or affiliated company

Mercury Interactive Corporation and any subsidiary or affiliated company

Segue Software, Inc. and any subsidiary or affiliated company

Wily Technology, Inc. and any subsidiary or affiliated company

EXHIBIT C:  RADVIEW ENTITY LIST – 2-YEAR PROHIBITION

APPLABS Technologies Pvt. Ltd

Identify Software Ltd.

Radware Ltd.

Shunra Software Ltd.

Symantec Corporation/VERITAS Software Corporation

EXHIBIT D: RADVIEW PAID HOLIDAYS DURING KNOWLEDGE TRANSFER PERIOD

Date	Name
Monday, January 2, 2006	New Year’s Day (Observed)
Monday, January 16, 2006	Dr. Martin Luther King, Jr. Day (Observed)

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EXHIBIT E: OPNET’S TRAVEL EXPENSE GUIDELINES

TO BE PROVIDED

EXHIBIT F: THIRD PARTY COMPONENTS AND TECHNOLOGY

TO BE PROVIDED

EXHIBIT G: OEM AGREEMENT AMENDMENT

TO BE PROVIDED

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EX-10.16

Exhibit 10.16

Comerica

Technology and Life Sciences

100 Federal Street, 28^th Floor, Boston, MA 02110

January 13, 2006

Mr. Christopher Dineen

Chief Financial Officer

RadView Software, Inc.

7 New England Executive Park

Burlington, MA 01803

RE:RadView Software, Inc. Payoff and Termination Agreement

Loan Account No. 8717994468

Dear Chris:

We refer to the Loan and Security Agreement, dated as of May 25, 2005 (as amended, the “Loan Agreement”), by and between RadView Software, Inc. (“Borrower”) and Comerica Bank, successor by merger to Comerica Bank-California (“Bank”). All capitalized terms used herein without definition shall have the respective meanings assigned to such terms in the Loan Agreement. As used herein, the term “Loan Documents” shall have the meaning given to that term in the Loan Agreement, but, for all purposes of this agreement, the term “Loan Documents” shall not in any event mean or include the Warrants to Purchase Stock.

For Surviving Warrant Documents and Surviving Warrant Obligations, each of the following defined terms shall, when used in this agreement, have the following meanings:

(a)“Warrants to Purchase Stock”, means the Warrant to Purchase 352,941 shares of Ordinary Stock issued May 25, 2005.

(b)“Surviving Warrant Documents” means, collectively, (i) the Warrants to Purchase Stock, as such Warrants to Purchase Stock may be amended, modified or supplemented from time tot time, and (ii) any other Warrants to Purchase Stock or other securities from time to time issued in substitution of or replacement for the Warrants to Purchase Stock.

(c)“Surviving Warrant Obligations” means, collectively, all obligations and liabilities of the Borrower, contingent or otherwise, now or hereafter existing, and whether joint or several, arising by contract, operation of law or otherwise, under or with respect to any of the Surviving Warrant Documents.

The Borrower has advised the Bank that it intends to terminate the Loan Agreement, permanently terminate the Bank’s commitment to lend under the Loan Agreement (the “Commitment”), and repay all amounts owing by the Borrower to the Bank under the Loan Agreement, each of the forgoing to be effective and to be completed on and as of January 13, 2006. In accordance with the Borrower’s request, the Commitment of the Bank will be terminated in full, effective January 13, 2006. The Bank has agreed to accept the following amount for payment in full and in complete satisfaction of the Borrower’s Obligations, as of January 13, 2006 (“Payoff Date”) under the Loan Agreement:

Note #25	Principal	$	45,428.75
	Interest as of 01/13/06	140.52		Per diem $10.73
	Outstanding legal fees	5,000.00
	Total Amount Due (“Payoff Amount” on Payoff Date)	$	50,569.27

The Borrower shall pay on the Payoff Date by wire transfer or by authorizing the Bank to deduct from Borrower’s deposit account the Payoff Amount on the Payoff Date. Payoff Amount, if sent by wire transfer, should be wired to:

Comerica Bank

San Jose, CA 95110

ABA#

For Credit to: Commercial Loan Wire Suspense Account

Credit Account Number:

Ref: RadView Software, Inc.

Attn:  Commercial Loan Operations

Upon receipt of the Total Loan Payoff Amount, all Indebtedness and Obligations of the Borrower to the Bank under or in respect of the Loan Agreement and the other Loan Documents shall be deemed to be and shall be paid and discharged in full, other tan certain indemnification obligations that survive under the terms of the Loan Agreement. Furthermore, all of the Loan Documents, and all of the Liens and security interests granted by the Borrower to the Bank thereunder, shall be deemed released and terminated. The Bank shall file UCC terminations and other releases of the collateral interest as may be reasonably necessary to release any security or pledged interests held by Bank in and to any of the Borrower’s assets which have been granted as collateral for the Obligations, including, without limitations, releases of control on any deposit or securities accounts of the Borrower.

As provided above in this agreement, each of the Surviving Warrant Documents and all of the Surviving Warrant Obligations shall survive the payment of the Total Loan Payoff Amount on the Payoff Date and shall also survive the release and termination of the Commitment, the Loan Agreement and all of the other Loan Documents.

Very truly yours,

The Bank:
COMERICA BANK
By:	/s/ PAULA J. HOWELL
			Paula J. Howell
			Senior Vice President – Technology & Life Sciences
Accepted and agreed to on January 13, 2006
The Borrower:
RadView Software, Inc.
By:	/s/ Christopher Dineen
		Christopher Dineen
		Chief Financial Officer

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EX-10.17

Exhibit 10.17

BRIDGE LOAN AGREEMENT

This Bridge Loan Agreement (this “Agreement”) is entered into as of January 26, 2006 by and among Fortissimo Capital Fund GP, L.P., on behalf of the several parallel partnerships in which it serves as the General Partner (the “ Lender”), whose principal offices are located at 14 Hamelacha Street, Park Afek, Rosh Haayin 48091, Israel, and Radview Software Ltd., an Israeli corporation, corporate registration number 511627952, with its principal offices in Israel located at 2 Habarzel Street, Tel Aviv 69710, Israel and its principal offices in the U.S.A. located at 7 New England Executive Park, Burlington, MA 01803 (the “Company”, or the “Borrower”).

RECITALS

WHEREAS, Lender and Borrower have entered into a term sheet dated January 12, 2006, with respect to several transactions with the Company including an equity investment, convertible loan and bridge loan (the “Term Sheet”); and

WHEREAS, pursuant to the Term Sheet, the Lender shall, (i) in the framework of the equity transaction invest up to US$3,000,000 in the Company (the “Equity Investment”); and (ii) in the framework of the convertible loan, lend the Company US$250,000 by April 17, 2006, which loan shall bear interest at the annual rate of 8% and be convertible together with all interest accrued thereon into Preferred Shares of the Company on the terms and conditions set forth therein (the “Convertible Loan” and “Convertible Loan Agreement”, respectively); and (iii) in the framework o f this Agreement, make available to the Company a bridge loan of up to US$500,000, all under the terms and conditions set forth in this Agreement (the “Bridge Financing”); and

WHEREAS, the parties agree that upon the Closing of the Share Purchase Agreement to be entered into between Lenders and Borrower to give effect to the Equity Investment (the “SPA Closing”, and the “SPA”, respectively), the Principal Amount (as defined herein) together with any interest accrued thereon, shall become subject to the terms a nd conditions of the Convertible Loan Agreement, as if it has been borrowed pursuant to such agreement; and

WHEREAS, it is the parties intention that the SPA be executed within thirty (30) days following the execution of the Term Sheet (the “SPA Target Date”); and

WHEREAS, the Lender is conducting its due diligence with respect to the Equity Investment and Convertible Loan transactions; and

WHEREAS, the Company is in need of immediate funds in order to continue to conduct its business; and

WHEREAS, the Lender has agreed to provide to the Company the Bridge Financing upon the terms and conditions set forth in this Agreement .

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

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ARTICLE 1 - THE BRIDGE LOAN

1.1The Bridge Loan.

(a)Subject to the terms and conditions of this Agreement, the Lender agrees to provide to the Borrower a loan in the aggregate amount of up to $500,000 (the “Principal Amount”) in several installments as described herein.

(b)  &# 160;    The Company shall use the Principal Amount in accordance with a budget, pre approved by the Lender (the “Budget”) a copy of which has been previously provided to Lender and which is included in the Schedule of Exceptions and Disclosures referred to in the preamble to Article 2 below.

(c)Lender shall transfer the first installment, in the aggregate amount of US$200,000 to the Borrower o n Sunday, January 29^th, 2006 (the “First Installment”).

(d)Additional installments shall be loaned to the Borrower on an as-needed basis, as determined between the Lender and Borrower, provided that the Borrower is in compliance with the Budget and further provided that Lender and Borrower have executed, an Advancement of Installment Form, in the form attached hereto as Schedule 1.1(d) (each, an “ Additional Installment”, and collectively the “Additional Installments”).

(e)Each of the First Installment and any Additional Installment of the Principal Amount shall accrue and bear interest at the annual rate of eight percent (8%) (“Interest”). The Principal Amount together with the Interest shall be referred to herein as the “Loan& #148;. Each of the First Installment and any Additional Installment of the Principal Amount shall begin to accrue Interest on the date on which it was actually advanced by the Lender to the Borrower (each, a “Loan Date”) and until the earlier of conversion in accordance with the terms and conditions of the Convertible Loan Agreement or the repayment of the Loan on the Maturity Date of the Convertible Loan (as such term is defined in the Convertible Loan Agreement) or on the Early Repayment Date.

1.2Repayment or Conversion.

(a)Unless earlier converted in accordance with the terms of the Convertible Loan Agreement, the Loan shall become immediately repayable in full upon the earlier to occur of: (a) the date due for the repayment of the Convertible Loan; (b) if by the SPA Target Date the SPA has not been executed, then - sixty (60) days following the date on which either the Lender or the Borrower gives notice of termination of negot iations of the Equity Investment (the “Early Repayment Date”), subject to Section 1.4(b); or (c) at the option of the Lender, upon the occurrence of an Event of Default (as defined herein).

(b)At the SPA Closing, the Loan shall automatically, with no need for any further action by the parties hereto, become subject to all of the terms and conditions of the Convertible Loan Agreement, as if it has been borrowed pursuant to such agreement.

(c)At any time after the SPA Closing, the Loan shall be convertible, at the option of the Lender, on the terms and conditions, and at such time or times as set forth for conversion of the Convertible Loan, subject to the terms and conditions of the Convertible Loan Agreement.

1.3< font size="1" face="Times New Roman" style="font-size:8.5pt;">       Default Interest.

Without derogating from any rights or remedies afforded by law, any delay of more than ten (10) days in the payment of any amount due to the Lender from Borrower on account of the Loan or otherwise due pursuant to this Agreement shall subject such overdue amounts to additional interest which shall accrue at an annual rate of four percent (4%) from the date such payment has become due and payable and until actual payment thereof. Such default interest shall be compounded daily. T he default interest described in this Section 1.3 shall be referred to as the “Default Interest”.

1.4Payments.

All payments by Borrower to Lender made under this A greement shall be:

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(a)Free and clear of and without deduction for all taxes, levies, imposts, deductions, assessments, charges or withholdings, and all liabilities with respect thereto of any nature whatsoever, provided the Lender has provided to Borrower in advance all documented exemptions and approvals required to implement the foregoing, to Borrower’s reasonable satisfaction, including an Israeli Tax Authority exemption from tax withholding at the source.

(b)Made on a Business Day. For the purposes of this Agreement, the term “Business Day” means any day on which banks in Israel are open and execute foreign exchange transactions. For the avoidance of doubt, in the event any payment due to Lender hereunder is to occur on a non Business Day, the obligation of Borrower to make such payment shall be deferred to the very next Business Day occurring thereafter.

&nb sp;

(c)Made to the Lender’s bank account the details of which will be provided by separate written notice by the Lender to Borrower at least seven (7) days prior to any required payment by Borrower hereunder.

1.5Deliverables at First Loan Date.

On or prior to the first Loan Date, Borrower shall deliver to the Lender the following:

(a)A copy of a resolution of Borrower’s Board of Directors (the “Board”), pursuant to which Borrower approves the execution and performance by Borrower of this Agreement and its annexes and the Charge Debentures (all, as defined below); and

(b)Duly executed Advancement of Installment Form evidencing the borrowing of the First Installment.

(c)Duly executed Charge Debentures (as defined below) with respect to the Charged Assets (as defined below) together with duly executed notices of Charges ready for filings with the applicable Israeli authorities in the forms provided for such purpose by applicable law.

1.6Deliverables at Additional Loan Dates.

At each additional Loan Date on which the Lender advances an Additional Installment to Borrower pursuant to the terms of this Agreement, Borrower shall deliver to Lender a duly executed Advancement of Installment Form evidencing the borrowing of the amount of such Additional Installment.

1.7Lender’s Records.

Any amounts owed under this Agreement and any ancillary documents hereunder, including but not limited to Advancement of Installment Form/s the Charge Debentures and all other contracts, instruments, addenda and documents executed in connection with this Agreement or the extensions of credit which are the subject of this Agreement ( collectively, the “Loan Documents”), shall be evidenced by the respective entries in records maintained by the Lender for such purpose. Each payment on and any other credits with respect to the Loan and all other sums outstanding under any Loan Document shall be evidenced by the respective entries in such records. Absent manifest error, Lender’s records shall be prima-facie evidence thereof.

1.8Security.< /font>

Borrower shall secure the repayment of all amounts due or which may become due to the Lender from Borrower in accordance with the provisions of the Loan Documents and the Convertible Loan Agreement by creating the following charges:

(a)A floating charge on all of Borrower’s present and future tangible and intangible a ssets and rights of any kind, whether contingent or absolute as more fully set forth in the Floating Charge Debenture attached hereto as Schedule 1.8(a) (the “Floating Charge” and “Floating Charge Debenture”, respectively); and

(b)A fixed charge on the Company’s (i) intellectual property rights, and (ii) accounts receivable, all as more fully set forth in the Fixed Charge Debenture attached hereto as Schedule 1.8(b) (the “Fixed Charge” and “Fixed Charge Debenture”, respectively).

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In this Agreement, (1) the Floating Charge and Fixed Charge shall collectively be referred to as the “Charges”, (2) the assets forming the subject matter of the Charges shall be referred to as the “Charged Assets”; and (3) the Floating Charge Debenture and Fixed Charge Debenture shall collectively be referred to as the “Charge Debentures”.

As soon as practicable following the First Loan Date, Borrower shall file with the applicable foreign governmental agencies the documents necessary to reflect the Charges with respect to Borrower’s Intellectual Property, more specifically referred to in the Charge Debentures as ‘Pledgor’s IP’. Borrower shall bear all costs and expenses in connection with such filings.

1.9Priority.

Without derogating from the provisions contained herein, all amounts borrowed hereunder as well as all other amounts due to the Lender pursuant to the provisions of this Agreement, shall rank senior to any other Security Interest (as defined below) on the assets and rights of the Borrower and to any other indebtedness to banks, financial and lending institutions, creditors, shareholders or others.

For the purposes of this Agreement a “Security Interest” shall mean any lien, pledge, encumbrance, security interests, charge or transfer, assignment over or in any person’s or entity’s property.

ARTICLE 2 - - REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower hereby represents and warrants to the Lender, that except as set forth in this Article 2 or in the corresponding section of the Schedule of Exceptions and Disclosures delivered by Borrower Lender’s counsel prior to the execution and delivery of this Agreement (the “Schedule of Exceptions and Disclosures”), as of the date hereof:

2.1Due Organizatio n.

The Company is a corporation duly incorporated and validly existing under the laws of the State of Israel and has the legal capacity and authority to conduct business in each jurisdiction in which its business is conducted or its properties are located, except where the failure to be so would not reasonably be expected to constitute: (a) a material adverse change in, or have a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of Borrower; (b) a material impairment of the ability of Borrower to perform under any Loan Document; or (c) a material adverse effect upon the legality, validity, binding effect or enforcea bility against Borrower of any Loan Document(the occurrence of either of (a), (b), or (c) would constitute a “Material Adverse Effect”).

2.2Authorization, Validity, Conflict and Enforceability.

The Borrower has all franchises, permits and licenses necessary for the conduct of its business as now being conducted, and, to the best of Borrower’s knowledge, as proposed to be conducted by it, the lack of which would reasonably be expected to have a Material Adverse Effect. The Borrower has not received any notices of default relating to any such franchises, permits and licenses. Neither the execution, delivery and performance of all Loan Documents nor compliance by the Borrower with the terms thereof, will conflict with or result in a breach or violation of, any of the terms, conditions and provisions of: (i) Borrower’s articles of association or other charter or organizational document of Borrower, as amended from time to time; (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority (except as set forth in Section 2.8), domestic or foreign; (iii) any agreement, contract, lease, license or commitment to which the Borrower is a party or to which it is subject; (iv) any applicable law the incompliance therewith shall constitute  a Material Adverse Effect. Except as set forth in the Schedule of Exception and Disclosures, such execution, delivery and compliance will not (a) give to others any rights, including rights of termination, cancellation or acceleration, in or with respect to any agreement, contract, or commitment referred to in this Section 2.2, or to any of the properties of the Borrower, or (b) except as set forth in Section 2.8, otherwise require the consent or approval of any person, which consent or approval has not heretofore been obtained. The Loan Documents, when executed and delivered by or on behalf of the Borrower, shall constitute valid and legally binding obligations of Borrower, legally enforceable in accordance wi th their terms (except as may be limited by bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights in general, and subject to general principles of equity).

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2.3Compliance With Applicable Laws.

Borrower has complied with all domestic and foreign laws, rules, regulations and orders applicable to its business and operations and except as set forth in the Sche dule of Exception and Disclosures, has further complied with all licensing, permits and requirements necessary to lawfully conduct the business in which it is engaged, noncompliance with which would have a Material Adverse Effect.

2.4Financial Statements.

Borrower’s audited balance sheet at December 31, 2004, and the related financial statements for the period then ending (including the notes thereto) included in its Annual Report on Form 10-K filed on March 31, 2005 (the “Borrower Annual Report”), and Borrower’s un-audited balance sheet at September 30, 2005 and related un-audited financial statements for the period then ending (including the notes thereto) included in its form 10-Q filed on November 18, 2005 (collectively, the “Borrower Financial Statements”), which have been delivered to the Lender, have been prepared in accordance with United States generally accepted accounting principles consistently applied, present fairly Borrower’s financial condition as of such date and the results of operations of Borrower for such period, are correct and complete and are co nsistent with the books and records of Borrower. The Borrower Annual Report and all reports Borrower has filed with the SEC thereafter, when filed, were free of material errors and omissions, and as of the date hereof continue to be free of material errors and omissions, except to the extent modified or superceded by disclosures made in this Agreement, including the Schedules hereto.

2.5Intellectual Property Rights.

In this Agreement, “Intellectual Property” means all intellectual property rights, whether or not patentable, including without limitation, patents, trademarks, service marks, trade names, internet domain names and copyrights, applications, licenses, and rights with respect to the foregoing, an all trade secrets, know-how, inventions, designs, processes, works of authorship, computer programs and technical data and information. To the best of the Borrower knowledge, the Borrower has the right to use all of the Intellectual Property required for its business as currently conducted and as proposed to be conducted. To the best of Borrower’s knowledge (i) no Intellectual Property used or proposed to be used in the business of the Borrower as currently con ducted has infringed or infringes upon any Intellectual Property rights of others; (ii) the use of such Intellectual Property in the business of Borrower as currently conducted will not constitute an infringement, misappropriation or misuse of any Intellectual Property rights of any third party; and (iii) no third party has the right to assert any claim regarding the use of, or challenging or questioning Borrower’s right or title in, any of such Intellectual Property. Borrower has taken and will continue to take all measures reasonable and customary in the field of Borrower’s business and the Borrower’s resources, including but not limited to measures against unauthorized disclosure, to protect the secrecy, confidentiality and value of its Intellectual Property. Except for intellectual property developed by the Company for Ixia in connection with a binary release of Security Builder v3.2 for IXIA’s PPC750 pro cessor (which intellectual property is not used by the Company), all Intellectual Property that has been developed or is being developed on behalf of the Borrower by any employee or third party is or shall be the sole property of Borrower. The Borrower has not received any written or oral communications alleging that the Borrower and/or its products have violated or by conducting its business as currently being conducted, would violate, any of the Intellectual Property of third parties.

2.6Legal Proceedings.

There are no outstanding legal proceedings against or initiated by the Borrower in connection with the Borrower or its business, and except as set forth in the Schedule of Exception and Disclosures, the Borrower is not aware of any legal proceedings that any third parties intend or threaten to initiate against the Borrower in connection with the Borrower or its business.

2.7Loans & Charges.

Except as set forth in the Schedule of Exception and Disclosures, Borrower has no charges on its assets, does not have any outstanding loans to any person, not made in the Borrower’s ordinary course of business, and is not obligated to make any such loans or advances.

2.8Government Approvals.

Except in connection with for the Israeli Investment Center of the Ministry of Industry, Trade and Labor, Borrower is not required to give notice or obtain any permit, authorization, license, approval, order, action,

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designation, declaration or filing with any governmental authority or consent from any person in connection with the valid execution, delivery and performance of the Loan Documents.

2.9Full Disclosure.

None of the representations or warranties made by Borrower in this Agreement (including any exhibits and schedules) and the Charge Debentures as of the date such representations and warranties are made, when taken together, contains any untrue statement of a material fact, or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

ARTICLE 3 - CONDITIONS PRECEDENT

3.1Conditions To Loan.

The obligation of the Lender to advance any or all of the Principal Amount and is subject to the receipt by the Lender of the documents listed in Section 1.5 above together with a counterpart signature page of this Agreem ent and the Charge Debentures.

ARTICLE 4 – BORROWER COVENANTS

During the term of this Agreement and until the later of: (a) the performance of all of Borrower’s obligations towards the Lender; or (b) the SPA Closing, Borrower covenants and agrees with the Lender as follows:

4.1Use of Funds.

Borrower agrees that it will use Principal Amount for general working capital purposes, only in accordance with the Budget.

4.2Access to Facilities.

Borrower and any of its subsidiaries will permit any representatives designated by the Lender, upon reasonable notice and during normal business hours and at reasonable intervals, at Lender’s expense and accompanied by a representative of Borrower, to: (a) visit and inspect any of the properties of the Borrower and its subsidiaries; (b) examine the corporate and financial records of the Borrower and of its subsidiaries (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom; and (c) discuss the affairs, finances and accounts of the Borrower and of its subsidiaries with the directors, officers and independent accountants of the Borrower and/or  its subsidiaries.

4.3Taxes.

Borrower will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of Borrower; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings (such non payment to include those instances set in the Schedule of Exception and Disclosures), and provided, further, that the Borrower will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefore.

4.4Insurance.

Borrower will keep its assets which are of an insurable character insured by financially sound and reputable insurers against (a) loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Borrower; (b) other hazards and risks and liability to persons and property to the extent and in the manner which the Borrower believes is customary for companies in similar business similarly situated as the Borrower and to the extent available on commercially reasonable terms.

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4.5Intellectual Property.

Borrower shall maintain in full force and effect its existence, rights and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business.

4.6Investment Center.

Borrower shall provide Lender with a copy of the approval of the Israeli Investment Center of the Ministry of Industry, Trade and Labor to the transactions contemplated hereby (the “IC Approval”) no later than thirty (30) days from the date hereof.

4.7Required Approvals.

Borrower shall obtain the prior written approval of the Lender before taking any of the below listed actions:

(a)Directly or indirectly declare or pay any dividends;

(b)Liquidate, dissolve or effect a creditors’ arrangement;

(c)Become subject to (including, without limitation, by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict Borrower’s right to perform the provisions of this Agreement or any other Loan Document;

(d)Create, incur, assume or suffer to exist any indebtedness in excess of US$2,000;

(e)Create or acquire any subsidiary after the date hereof;

(f)Make or undertake to make, any disposition or transfer of any interest, in the Charged Assets, which under any of the Charge Debentures requires the prior written approval of the Lender;

(g)Conduct it business other than in the ordinary course of business.

ARTICLE 5 - EVENTS OF DEFAULT

5.1Events Of Default.  The occurrence of any of the following shall, at the option of the Lender, shall: (1) make the entire Loan and any other amounts owing under any Loan Documents immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or any other notices or demands, and (2) give the Lender the right to exercise any other right or remedy provided by contract or applicable law:

(A)Borrower shall fail to pay any of the Principal Amount or Interest under this Agreement in a timely manner, or fail to pay any fees or other charges when due and such failure continues for ten (10) Business Days or more after the same first becomes due; or an event of default as defined in any other Loan Document shall have occurred.

(B)Any representation or warranty made, or financial statement, certificate or other document provided, by Borrower under any Loan Document shall prove to have been false or misleading in any material respect when made or deemed made herein.

(C)Borrower shall be unable to generally pay its debts as they become due or commence any insolvency proceeding with respect to itself; an involuntary insolvency proceeding shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors, or other similar official, shall be appointed to take possession, custody or control of the properties of Borrower, and such involuntary insolvency proceeding, petition or appointment is acquiesced to by Borrower or is not dismissed within sixty (60) days; or the dissolution or termination of the business of Borrower.

( D)Borrower shall be in default beyond any applicable period of grace or cure under any other agreement involving the borrowing of an amount exceeding $40,000, from any person, which results in the acceleration of payment of such obligation.

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(E)Any governmental or regulatory authority shall take any judicial or administrative action, that would have a Material Adverse Effect, and which cannot be cured by Borrower within sixty (60) days of such action.

(F)Any sale, transfer or other disposition of all o r a substantial or material part of the assets of Borrower, including without limitation to any trust or similar entity, shall occur where such sale, transfer, lease or other disposition of assets would constitute a Material Adverse Change.

(G)Any judgment shall be entered against Borrower, which remains unsatisfied or un-stayed pending appeal for sixty (60) or more days after entry thereof; and/or any lien is granted by a competent court, or by any authorized execution office over all or a major part of the Borrower’s assets or bank accounts and such lien is not removed within sixty (60) days of its issuance.

(H)Borrower shall fail to perform or observe any covenant contained in this Agreement or any other Loan Document (including but not limited to any of the covenants contained in Article 4 above) and the breach of such covenant is not cured within thirty (30) days after the sooner to occur of Borrower’s receipt of notice of such breach from the Lender or the date on which such breach first becomes known to any officer of Borrower; provided, however, that if such breach is not capable of being cured within such 30-day period and Borrower timely notifies the Lender of such fact and Borrower diligently pursues such cure, then the cure period shall be extended to the date requested in Borrower’s notice but in no event more than ninety (90) days from the initial breach, and to the extent that such breach is not capable of cure regardless of any extension of time, then breach shall be deemed to have occurred for the purposes of this Article 5.

ARTICLE 6 - GENERAL PROVISIONS

6.1Notices.  Any notice given by any party under any Loan Document shall be in writing and personally delivered, sent by overnight courier, or mail, postage prepaid, or sent by facsimile, to be promptly confirmed in writing, or other authenticated message, charges prepaid, to the other party’s or parties’ addresses shown on the cover page to this Agreement. Each party may change the address or facsimile number to which notices, requests and other communications are to be sent by giving written notice of such change to each other party. Notice given by hand delivery shall be deemed received on the date delivered; if sent by overnight courier, on the next Business Day after delivery to the courier service; if by first class mail, on the third Business Day after deposit in the Mail; and if by telecopy, on the date of transmission.

6.2Binding Effect.  The Loan Documents shall be binding upon and inure to the benefit of Borrower and the Lender and their respective successors and assigns; provided, however, that Borrower may not assign or transfer Borrower’s rights or obligations under any Loan Document without the Lender’s prior written consent except in connection with a con solidation, merger or other transaction in compliance with the provisions of this Agreement. The Lenders reserves the right, to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, the Lenders’ rights and obligations under the Loan Documents. In connection with any of the foregoing, Lender may disclose all documents and information which Lender now or hereafter may have relating to the Loan, Borrower, or its business; provided that any person who receives such information shall have agreed in writing in advance to maintain the confidentiality of such information.

6.3No Waiver.  Any waiver, consent or approval by Lender of any event of default or breach of any provision, condition, or covenant of any Loan Document must be in writing and shall be effective only to the extent set forth in writing. No waiver of any breach or default shall be deemed a waiver of any later breach or default of the same or any other provision of any Loan Document. No failure or delay on the part of Lender in exercising any power, right, or privilege under any Loan Document shall operate as a waiver thereof, and no single or partial exercise of any such power, right, or privilege shall preclude any further exercise thereof or the exercise of any other power, right or privilege. Lender has the right at its sole option to continue to accept Interest and/or Principal Amount payments due under the Loan Documents after default, and such acceptance shall not constitute a waiver of said default or an extension of the maturity date unless Lender agrees otherwise in writing.

6.4Rights Cumulative.  All rights and remedies existing under the Loan Documents are cumulative to, and not exclusive of, any other rights or remedies available under contract or applicable law.

6.5Unenforceable Provisions.  Any provision of any Loan Document executed by Borrower which is

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prohibited or unenforceable in any jurisdiction, shall be so only as to such jurisdiction and only to the extent of such prohibition or unenforceability, but all the remaining provisions of any such Loan Document shall remain valid and enforceable.

6.6Indemnification; Exculpation.  Borrower shall, upon Lender’s first written demand, pay and protect, defend and indemnify Lender and Lender’s employees, officers, directors, shareholders, affiliates, correspondents, agents and representatives (other than Lender, collectively “Agents”) against, and hold the Lender and each such Agent harmless from, all claims, actions, proceedings, liabilities, damages, losses, expenses (including, without limitation, attorneys’ fees and costs) and other amounts incurred by Lender and each such Agent, arising from (i) any breach by the Borrower of an undertaking by the Borrower under this Agreement, (ii) any breach by the Borrower of any representations and warranties in Section 4 above, or (iii) any action to enforce the Lender’s rights hereunder, including by realization of the Charges, provided, however, that this indemnification shall not apply to any of the foregoing incurred solely as the result of Lender’s or any Agent’s gross negligence or willful misconduct and, further provided, that indemnification pursuant to subsection 6.6.(iii) above shall be contingent upon the enforcement action referred to therein not being contested by the Borrower or, if contested, such enforcement action has been confirmed by a ruling of a competent court. This indemnification shall survive for period of two (2) years from the payment and satisfaction of all of Borrower’s obligations to Lender.

6.7Execution In Counterparts.  This Agreement may be executed in any number of counterparts which, when taken togethe r, shall constitute but one agreement.

6.8Entire Agreement.  The Loan Documents are intended by the parties as the final expression of their agreement with respect to the subject matter hereof and therefore contain the entire agreement between the parties and supersede all prior understandings or agreements concerning the subject matter hereof. The term “this Agreement” shall be deemed to include all schedules thereof and in particular the Schedule of Exceptions and Disclosures. This Agreement may be amended only in a writing signed by Borrower and the Lender. For the avoidance of doubt, the Loan under this Agreement, shall, upon the execution of the Convertible Loan Agreement, become subject to the terms and conditions of the Convertible Loan Agreement.

6.9Governing Law And Jurisdiction.  This Agreement and any and all of the Loan Documents shall be deemed to have been executed and delivered in the State of Israel, and the validity, enforcement and construction hereof shall be governed in a ll respects by the internal laws (without regard to principles of conflicts of law) of the State of Israel. Any legal action or proceeding arising under or in relation to this Agreement and any of the Loan Documents shall be filed exclusively in a court of competent jurisdiction within the State of Israel. In addition, each of the undersigned parties consents and agrees that any competent court in which such legal action or proceeding is commenced may exercise jurisdiction over his, her or its person for purposes of enforcing the terms of this Agreement and any of the Loan Documents and agrees not to assert that venue in Israel is inappropriate or inconvenient.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK – SIGNATURE PAGE TO FOLLOW]

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SIGNATURE PAGE OF BRIDGE LOAN AGREEMENT

IN WITNESS WHEREOF, Borrower and Lenders have executed this Agreement as of the date set forth in the preamble.

BORROWER		LENDER
RADVIEW SOFTWARE LTD.		FORTISSIMO CAPITAL FUND GP, L.P. BY: FORTISSIMO CAPITAL (GP) MANAGEMENT LTD., ITS GENERAL PARTNER
/s/ ILAN KINREICH		/s/ Yuval Cohen
Name:	Ilan Kinreich	Name:	Yuval Cohen
Title:	President and CEO	Title:

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Schedule 1.1(d)

Advancement of Installment Form

This Advancement of Installment Form is dated as of                                , and is made under the Bridge Loan Agreement by and between Radview Software Ltd. (the “Company”), and Fortissimo Capital Fund GP, L.P. on behalf of the several parallel partnerships in which it serves as the General Partner (the “Lender”), dated as of January     , 2006 (the “Bridge Loan Agreement”).

1.All capitalized terms used and not defined herein shall bear the meaning ascribed to them in the Bridge Loan Agreement.

2.The undersigned hereby requests to receive from the Lender the First / an Additional Installment in the amount of $                      , under the terms of the Bridge Loan Agreement.

3.This First / Additional Installment shall be part of the Principal Amount and shall be subject to the terms and conditions of the Bridge Loan Agreement

4.The Company hereby confirms to the Lender, that prior to the date hereof, it has received from the Lender, under the Bridge Loan Agreement, loans in the aggregate amount of $                  .

5.This First / Additional Installment, together with the amounts previously borrowed as set forth in Section 4 above, shall equal to an aggregate Principal amount of $                 .

Sincerely yours, 

RADVIEW SOFTWARE LTD.

Name:

Title:

Agreed and accepted:

FORTISSIMO CAPITAL FUND GP, L.P.
BY: FORTISSIMO CAPITAL (GP) MANAGEMENT
LTD., ITS GENERAL PARTNER

Name:

Title:

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EX-10.18

Exhibit 10.18

SHARE PURCHASE AGREEMENT

This Share Purchase Agreement (this “Agreement”) is entered into as of April 4, 2006, by and among Radview Software Ltd., an Israeli corporation, corporate registration number 511627952, with its principal offices in Israel located at 2 Habarzel Street, Tel Aviv 69710, Israel and its principal offices in the U.S.A. located at 7 New England Executive Park, Burlington, MA 01803 (the “Company”) and Fortissimo Capital Fund GP, LP on behalf of the several parallel partnerships for which it serves as the General Partner, whose principal offices are located at 14 Hamelacha Street, Park Afek, Rosh Haayin 48091, Israel (the “Lead Investor”), Shem Basum Ltd., an Israeli company, having its address at 8 Hanna Senesh St., Kfar Saba, Israel (“Beilis”); Mr. Yehuda Zisapel, an individual having his address at 24 Raoul Wallenberg Street, Tel Aviv 69719, Israel (“Zisapel”) and Michael Chill, an individual having his address at 210 West 89^th Street Apt. 4-N, New York, NY 10024, U.S.A. (“Chill”). Each of the Lead Investor, Zisapel, Beilis and Chill being referred to individually as an “Investor”, and collectively, as the “Investors”.

WHEREAS Lead Investor and the Company have entered into a term sheet dated January 12, 2006, with respect to several transactions with the Company including an equity investment, convertible loan and bridge loan (the “Term Sheet”);

WHEREAS pursuant to the Term Sheet, the Lead Investor shall following the date hereof or has prior to the date hereof, (i) in the framework of this Agreement, invest, together with the Investors, up to US$3,000,000 in the Company, each Investor investing the amounts set forth opposite such Investor’s name on Schedule A attached hereto (the “Equity Investment”); and (ii) in the framework of the convertible loan, lend the Company, together with the Investors, US$250,000 at the First Closing (defined herein), subject to the approval of the Company’s shareholders of the transactions contemplated herein, which loan shall bear interest at the annual rate of 8% and be convertible together, at the election of the lenders, with all interest accrued thereon into Preferred Shares of the Company on the terms and conditions set forth therein, each Investor advancing the amounts set forth opposite such Investor’s name on Schedule A hereto (the “Convertible Loan” and “Convertible Loan Agreement”, respectively); and (iii) in the framework of a Bridge Loan Agreement, the Lead Investor made available to the Company a bridge loan of up to US$500,000, all under the terms and conditions set forth in a certain Bridge Loan Agreement, dated January 26, 2006 (the “Bridge Loan” and “Bridge Loan Agreement& #148;, respectively); and

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

1.INTERPRETATION; DEFINITIONS

1.1.The headings of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

1.2.In this Agreement, the following capitalized terms shall have the meanings set forth below and all terms defined in the recitals to this Agreement and below are incorporated herein by reference:

1.2.1.“Board” means the Company’s board of directors.

1.2.2.“Convertible Securities” means options to purchase and/or rights to subscribe for Ordinary Shares, and/or securities by their terms convertible into and/or exchangeable for Ordinary Shares and/or options or warrants to purchase and/or rights to subscribe for such convertible and/or exchangeable securities of the Company.

1.2.3.“Director(s)” means a member(s) of the Board.

1.2.4.“Fully Diluted Basis” means all issued Shares, and all outstanding options, warrants or any other securities issued by the Company, which are convertible or exchangeable into Shares.

1.2.5.“Management Agreement” means that certain Management Agreement referred to in Section 11 below, in the form attached hereto as Schedule 11.2.

1.2.6.“Ordinary Shares” means ordinary shares of the Company, nominal value NIS 0.01 per share.

1.2.7.“Original Issue Price” with respect to a share means, for each Series A Preferred Share, US$0.03; and for each Series B Preferred Share, US$0.04.

1.2.8.“Preferred Directors” means, those Directors designated for appointment to the Board by the Lead Investor.

1.2.9.“Preferred Shares” means Series A Preferred Shares and Series B Preferred Shares.

1.2.10.“Recapitalization Event” means any share split, share subdivision or combination, distribution of a share dividend or recapitalization relating to the Company’s share capital.

1.2.11.“Registration Rights Agreement” means that certain Registration Rights Agreement referred in Section 10 below, in the form attached hereto as Schedule 10.

1.2.12.“Series A Preferred Shares” means Preferred A Shares of the Company, nominal value NIS 0.01 each.

1.2.13.“Series B Preferred Shares” means Preferred B of the Company, nominal value NIS 0.01 each.

1.2.14.“Subsidiary” means with respect to any entity, the possession directly or indirectly of at least 25% (twenty five percent) of the voting power, the right to appoint at least 50.1% of the members of the board of directors or the right to receive at least 50.1% of the distributed profits of such entity.

2.FIRST CLOSING - INVESTMENT; ACQUIRED SHARES; GRANT OF WARRANTS

2.1.At the First Closing (as defined below), the Company shall issue and the Investors shall acquire 25,000,000 newly issued Series A Preferred Shares (the “Acquired Shares”) in accordance with the terms of this Section 2, free and clear of any lien, encumbrance, debt, or any other third party right whatsoever at a price per share of US$0.03 (the “Price Per Share”) and for an aggregate purchase price of US $750,000 for all the Acquired Shares (the “Purchase Price”). Actual issuances and purchase of the Acquired Shares shall be in accordance with the terms and conditions set forth in the sub-sections below of this Section 2 (including Section 2.5).

2.2.Each Investor shall pay its respective portion of the Purchase Price to the Company at the Closing in immediately available funds against issuance to each Investor of its respective portion of the Acquired Shares, all as set forth opposite each Investor’s name appearing in Schedule A attached hereto. The Acquired Shares, when issued in accordance with this Agreement, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights or any third party rights, and will have the rights, preferences, privileges, and restrictions set forth in the Amended Articles, and will be free and clear of any liens, claims, encumbrances or third party rights whatsoever (collectively, “Encumbrances”).

2.3.At the First Closing, the Company shall issue to the Investors 18,750,000 warrants in accordance with the terms of this Section 2 (the “Warrants”) exercisable into 18,750,000 newly issued Series B Preferred Shares (the “Warrant Shares”) for an exercise price of US$0.04 per Warrant Share (the “Exercise Price”). Upon issuance, the Warrant Shares, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, third party rights and Encumbrances. A form of the Warrants to be issued to the Investors is attached hereto as Schedule 5.2.1(c). Actual grants of the Warrants shall be in accordance with the terms and conditions set forth in the sub-sections below of this Section 2.

2.4.The Warrants shall be issued to the Investors at the First Closing for no additional payment or consideration. The Warrants may be exercised by the holders thereof in whole or in part, on a cashless basis or against payment of the applicable Exercise Price per Warrant Share, at any time, from time to time, from the First Closing and until the fifth (5^th) anniversary thereof (the “Exercise Period”). All unexercised Warrants shall expire immediately after the end of the Exercise Period.

2.5.On and subject to the terms and conditions of this Agreement, at the First Closing, the Company shall sell, issue and allot to each Investor, the number of Acquired Shares and Warrants set forth against its name on Schedule A; provided however, that the obligation to issue Acquired Shares and Warrants to Beilis is contingent upon obtaining the required approvals pursuant to Israeli law and that any failure to obtain such approvals and effect such issuance shall not mitigate from the Company’s obligations to the Investors (other than Beilis) or the Investors’ (other than Beilis) obligations under this Agreement.

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3.ADDITIONAL CLOSINGS - INVESTMENT; ADDITIONAL ACQUIRED SHARES; GRANT OF ADDITIONAL WARRANTS

3.1.Following the First Closing and until the date, which is eighteen (18) months following the First Closing (the “Investment Period”), each Investor may, at its sole discretion, invest, in one or more investment transactions (each such transaction consisting of at least $250,000), an additional amount of up to US$2,250,000. Each Investor shall be entitled to participate in each such additional investment up to the maximum amounts set forth opposite such Investor’s name on Schedule B hereto; provided however, that the obligation to allow Beilis’ participation is contingent upon obtaining the required approvals pursuant to Israeli law. Each such additional investment shall be effected in a separate closing, at which time the Company shall issue and the Investors shall acquire such number of additional Acquired Shares as is obtained by dividing the applicable amount to be invested according to the determination of the Lead Investor (each such amount being referred to as an “Additional Purchase Price”), by the Price Per Share (each such additional closing being referred to as an “Additional Closing” and any additional Acquired Shares to be issued shall be referred to as “Additional Acquired Shares”, respectively). The total number of Additional Acquired Shares to be issued at all Additional Closings taken together shall not exceed 75,000,000. Any Additional Acquired Shares issued at any of the Additional Closings, when issued in accordance with the terms of this Section 3, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, third party rights and Encumbrances. Actual issuances and purchase of any Additional Acquired Shares shall be in accordance with the terms and conditions set forth in the sub-sections below of this Section 3. If either one of Beilis, Zisapel or Chill elects not to participate in one or more of the Additional Closings, then the Lead Investor shall have the right to invest, in addition to the amount set forth opposite the Lead Investor’s name on Schedule B, all or part of the amounts not invested by any one of Beilis, Zisapel or Chill.

3.2.Each Investor investing at any Additional Closing shall pay its respective pro-rata portion of the Additional Purchase Price to the Company at the applicable Additional Closing against issuance to each Investor of its respective pro-rata portion of the Additional Acquired Shares, all as shall be set forth, at each Additional Closing, opposite each Investor’s name in an amended Schedule A to be attached hereto at the time of each such Additional Closing.

3.3.At each Additional Closing, the Company shall issue to the Investors additional Warrants, to purchase additional Warrant Shares, at the Exercise Price (the “Additional Warrants”, and “Additional Warrant Shares”, respectively) in accordance with the terms set forth in this Section 3. The total number of Warrants issuable at each Additional Closing shall be determined by dividing the Additional Purchase Price by the Exercise Price, each Investor receiving its respective number of Warrants according to its respective portion out of the applicable Additional Purchase Price. The total number of Additional Warrants to be issued at all Additional Closings taken together shall not exceed 56,250,000 that are exercisable into 56,250,000 Warrant Shares at the Exercise Price. Upon issuance, the Additional Warrant Shares, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, third party rights and Encumbrances. The Additional Warrants shall be in the form attached hereto as Schedule 5.2.1(c). Actual grants of the Warrants shall be in accordance with the terms and conditions set forth in the sub-Sections below of this Section 3.

3.4.At each Additional Closing, the Additional Warrants shall be issued to the Investors that participated at each such Additional Closing for no additional payment or consideration. The Additional Warrants may be exercised by the holders thereof in whole or in part, on a cashless basis or against payment of the applicable Exercise Price per Additional Warrant Share, at any time, from time to time, from the time of the Additional Closing at which such Additional Warrants were issued and until the fifth (5^th) anniversary thereof (the “Additional Warrant Exercise Period”). All unexercised Additional Warrants shall expire immediately after the end of the Exercise Period.

4.TERMS OF ACQUIRED SHARES AND WARRANT SHARES

The Acquired Shares, Additional Acquired Shares, Warrant Shares and Additional Warrant Shares, shall, when issued to the Investors, have such rights, preferences and obligations as are set forth in the Company’s Amended and Restated Articles of Association, in the form attached hereto as Schedule 4 (the “Amended Articles”).

5.CLOSINGS

5.1.First Closing. The transactions contemplated hereby in Section 2 above, shall take place at a first closing (the “First Closing”) to be held at the offices of Amit, Pollak, Matalon & Co., NYP Tower 19^th Floor 17 Yitzhak Sade Street, Tel Aviv, Israel, within fourteen (14) days following the date of the Company’s shareholders meeting convened to approve this Agreement, or at such other date, time and place as the Company and the Lead Investor shall have mutually agreed to.

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5.2.At the First Closing, the following transactions shall occur simultaneously:

5.2.1.The following documents shall have been provided to the Lead Investor and each of the Investors:

(a)A resolution of the Board in the form reasonably satisfactory to the Lead Investor: (i) authorizing the execution, performance and delivery of this Agreement and all related documents hereunder, (ii) approving the Management Agreement, and (iii) approving the issuance of all the Acquired Shares, Additional Acquired Shares, Warrants, Warrant Shares, Additional Warrants and Additional Warrant Shares, on the date of the First Closing and the applicable Additional Closings, at all times, conditional upon payment of Purchase Price and/or the Additional Purchase Price and/or in the case of the Warrant Shares and Additional Warrant Shares, the Exercise Price, as applicable for each Closing;

(b)Minutes of the general meeting of the Company’s shareholders signed by the chairman of the meeting in a form reasonably satisfactory to the Lead Investor: (i) approving the terms of this Agreement and the transactions contemplated hereunder, including but not limited to the Registration Rights Agreement, (ii) approving the Amended Articles, including an increase of the Company’s authorized share capital and the creation of the Preferred Shares, (iii) approving the terms of the Management Agreement; (iv) appointing the Preferred Directors; and (v) if the required corporate approvals were previously obtained, approving  the terms of new indemnification agreements to be entered into with the Company’s officers and Directors as contemplated by this Agreement;

(c)The Warrants in the form attached hereto as Schedule 5.2.1(c) duly executed by the Company and issued to each Investor, in the amounts set forth in Schedule A;

(d)Validly issued share certificates in the names of each Investor representing the Acquired Shares, together with signed notices to the Registrar of Companies regarding the Acquired Shares to be issued in the names of the Investors at the First Closing;

(e)A compliance certificate, in the form attached hereto as Schedule 5.2.1(e) duly executed by the Chief Executive Officer of the Company, dated as of the date of the First Closing, confirming and certifying that the representations and warranties set forth in Section 8 of this Agreement are true and correct in all material respects as of and through the date of First Closing, that the Company has performed and complied in all material respects with all its covenants, agreements, and undertakings as set forth herein;

(f)Duly executed opinion of Sharir, Shiv, Friedman & Co., counsel to the Company, in the form attached hereto as Schedule 5.2.1(f), dated as of the date of the First Closing

(g)Copy of a termination agreement or termination letter of the Investor Rights Agreement, dated December 13, 1999, as contemplated by Section 12.7 of this Agreement;

(h)Copies of termination letters of the existing indemnification agreements to be terminated in accordance with the provisions of Section 12.8 below;

(i)If required corporate approvals are previously obtained, duly executed new indemnification agreements as contemplated by Section 12.9 of this Agreement.

5.2.2.The Company and the Investors shall execute and deliver the Registration Rights Agreement attached hereto as Schedule 10.

5.2.3.The Company and the Lead Investor shall execute and deliver the Management Agreement attached hereto as Schedule 11.2.

5.2.4.Each of the Investors shall pay to the Company its proportional share of the Purchase Price as set next to its name on Schedule A, by way of instructing a bank transfer to the Company’s account, pursuant to wiring instructions given in writing by the Company prior to the First Closing.

5.3.Additional Closings.  The transactions contemplated hereby in Section 3 above, shall take place in Additional Closing(s), at such time(s) as determined by the Lead Investor, each such Additional Closing to be held at the offices of Amit, Pollak, Matalon & Co., NYP Tower 19^th Floor 17 Yitzhak Sade Street, Tel Aviv, Israel, within fourteen (14) days following receipt by the Company of written notice by the Lead Investor of its intention to effect an Additional Closing, provided however, that no

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Additional Closing takes place after the date, which is eighteen (18) months following the First Closing.

5.4.At each Additional Closing, the following transactions shall occur simultaneously:

5.4.1.The following documents shall have been provided to the Lead Investor and each of the Investors:

(a)The Additional Warrants in the form attached hereto as Schedule 5.2.1(c) duly executed by the Company and issued to each Investor, in the amounts set forth in the amended Schedule A reflecting the amounts being invested in each such Additional Closing; and

(b)Validly issued share certificates for the Additional Acquired Shares, together with signed notices to the Registrar of Companies regarding the Additional Acquired Shares to be issued in the names of the Investors at each Additional Closing.

5.4.2.Each of the Investors shall pay to the Company its proportional share of the Purchase Price as set next to its name on the amended Schedule A reflecting the amounts being invested in each such Additional Closing, by way of instructing a bank transfer to the Company’s account, pursuant to wiring instructions given in writing by the Company prior to the applicable Additional Closing.

6.CLOSING CONDITIONS FOR FIRST CLOSING

6.1.The Closing of the transactions contemplated hereunder and the obligations of the Investors at the First Closing are subject to the following conditions precedent, any one or more of which may be waived in whole or in part by the Lead Investor:

6.1.1.Receipt by the Company of the approval of any required regulatory or governmental authority, if any;

6.1.2.The Company’s obtaining all required corporate approvals, including the approval of the Company’s shareholders for the terms of this Agreement and the transactions contemplated hereunder and any other related transaction;

6.1.3.All representations and warranties of the Company contained herein shall be true and correct in all material respects at the time of the First Closing as though made again at that time;

6.1.4.The Company shall have performed and complied with all obligations and covenants required to be performed or complied with by the Company prior to the First Closing in all material respects;

6.1.5.No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain, prohibit or obtain substantial damages in respect of, or which is related to, or arises out of, this Agreement or the consummation of the transactions contemplated hereby.

6.2.The Closing and the obligations of the Company to issue, at the First Closing, the Acquired Shares and the Warrants to the Investors are subject to the payment by each Investor of its respective portion of the Purchase Price at the First Closing; and

7.CAPITALIZATION

7.1.[INTENTIONALLY OMITTED]

7.2.The Company agrees and undertakes that until the First Closing it will not sell issue, allot, grant or transfer in any other way any shares and/or any Convertible Securities (collectively, the “Securities”) to any person or entity, except for (a) issuances of Ordinary Shares to holders of Securities which are outstanding on the date hereof pursuant to the respective terms and conditions of those Securities, (b) grants of options to purchase Ordinary Shares to employees, officers and directors under the Company’s existing approved plans and obligations, provided, however, that in the aggregate, the Company will not grant more than 500,000 options, or (c) as approved in advance and in writing by the Lead Investor.

8.REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Investors, and acknowledges that the Investors are entering into this Agreement in reliance thereon, as follows:

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8.1.Organization.  The Company is a corporation duly incorporated and validly existing under the laws of the State of Israel and has the legal capacity and authority to conduct business in each jurisdiction in which its business is conducted or its properties are located, except where the failure to be so would not reasonably be expected to constitute: (a) a material adverse change in, or have a material adverse effect upon, the operations, business, properties, or condition (financial or otherwise) of the Company; (b) a material impairment of the ability of the Company to perform under this Agreement and any agreements ancillary and attached hereto as schedules; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company of this Agreement and any ancillary agreement hereto (the occurrence of either of (a), (b), or (c) would constitute a “Material Adverse Effect”).

8.2.Authorization, Validity, Conflict and Enforceability.  The Company has all franchises, permits and licenses necessary for the conduct of its business as now being conducted, and, to the best of the Company’s knowledge, as proposed to be conducted by it, the lack of which would reasonably be expected to have a Material Adverse Effect. The Company has not received any notices of default relating to any such franchises, permits and licenses. Neither the execution, delivery and performance of this Agreement and any and all ancillary agreements hereto, nor compliance by the Company with the terms thereof, will conflict with or result in a breach or violation of, any of the terms, conditions and provisions of: (i) the Company’s articles of association or other charter or organizational document of the Company in effect prior to and as at the date hereof (the “Existing Organizational Documents”); (ii) any judgment, order, injunction, decree, or ruling of any court or governmental authority (except as set forth in Section 8.23), domestic or foreign; (iii) any agreement, contract, lease, license or commitment to which the Company is a party or to which it is subject; (iv) any applicable law the incompliance therewith shall constitute a Material Adverse Effect. Except as set forth in the Schedule 8.2 hereto, such execution, delivery and compliance will not (a) give to others any rights, including rights of termination, cancellation or acceleration, in or with respect to any agreement, contract, or commitment referred to in this Section 8.2, or to any of the properties of the Company, or (b) except as set forth in Section 8.23, otherwise require the consent or approval of any person, which consent or approval has not heretofore been obtained. This Agreement and any ancillary agreement hereto, when executed and delivered by or on behalf of the Company, shall constitute valid and legally binding obligations of the Company, legally enforceable in accordance with their terms (except as may be limited by bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights in general, and subject to general principles of equity).

8.3.Records.  The Company has delivered to the Investors true and accurate copies of the Company’s incorporation documents as of the date of this Agreement, including the Company’s Existing Articles. The Company maintains all corporate, shareholder or other records and registers required by law and such records are complete and accurate in all material respects and are being maintained in compliance with applicable laws. True and correct copies of such records have been delivered to the Investors.

8.4.Public Listing.  Between August 2000 and September 2004 the Ordinary Shares of the Company were registered for trading on the Nasdaq. On September 20, 2004, the Company’s Ordinary Shares were de-listed from trade on Nasdaq.

8.5.Share Capital.  As of the date of this Agreement, the registered and authorized share capital of the Company is NIS 400,000 divided into 40,000,000 Ordinary Shares, of which no more than 20,525,682 Ordinary Shares are issued and outstanding as of March 15, 2006. In addition, as of March 15, 2006, the Company had issued and outstanding Convertible Securities exercisable into no more than 5,447,596 Ordinary Shares. Immediately prior to the First Closing, the Company’s registered and authorized share capital shall be NIS 5,000,000, divided into; 300,000,000 Ordinary Shares, of which no more than 20,525,682 shall be issued and outstanding; 125,000,000 Series A Preferred Shares and 75,000,000 Series B Preferred Shares. Since March 15, 2006, there has been no change in the Company’s share capital, except for issuances and grants of Securities in accordance with Section 7.2 above. Other than as listed in Schedule 8.5, there are no outstanding or authorized subscriptions, options, warrants, calls, rights, commitments, or any other agreements of any character, directly or indirectly obligating the Company to issue any Securities.

8.6.Employee Plans.  Except as set forth in Schedule 8.6, the Company has not adopted any plan for the benefit of its officers, employees, directors, consultants and/or service providers, which require or permit the issuance, sale, purchase or grant of any Securities.

8.7.Subsidiaries.  Schedule 8.7 lists all of the Subsidiaries of the Company, specifying with respect to each such Subsidiary, the percentage of ownership of the Company in such Subsidiary. Each Subsidiary of the Company is a corporation duly incorporated (or organized) and validly existing

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under the laws of the jurisdiction under which it was incorporated and has the legal capacity and authority to conduct business in each jurisdiction in which its business is conducted or its properties are located, except where the failure to be so would not reasonably be expected to constitute a Material Adverse Effect.

8.8.Shareholders Agreements.  Other than as set forth in Schedule 8.8 hereto and the Registration Rights Agreement contemplated by this Agreement to be executed as at the First Closing, there are no shareholders, voting, registration rights agreements or any other agreements or undertakings relating to the share capital of the Company.

8.9.Dividends and Redemption.  Other than as set forth in Schedule 8.9 hereto, the Company has not declared or paid any dividends, nor has the Company distributed any of its assets, except for the grant of licenses to the Company’s products and sales in the ordinary course of business. Other than as set forth in Schedule 8.9 hereto, the Company has not redeemed any of the Company’s Securities nor has it undertaken to redeem any of its Securities.

8.10.Full Disclosure.  None of the representations or warranties made by the Company in this Agreement (including any exhibits and schedules) as of the date such representations and warranties are made, when taken together, contains any untrue statement of a material fact, or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

8.11.Financial Statements.  The Company’s audited balance sheet as at December 31, 2004, and the related financial statements for the period then ending (including the notes thereto) included in its Annual Report on Form 10-K filed on March 31, 2005 (the “Annual Report”), and the Company’s un-audited balance sheet at September 30, 2005 and related un-audited financial statements for the period then ending (including the notes thereto) included in its form 10-Q filed on November 18, 2005 (collectively, the “Financial Statements”), which have been delivered to the Lead Investor, have been prepared in accordance with United States generally accepted accounting principles consistently applied, present fairly the Company’s financial condition as of such date and the results of operations of the Company for such period, are correct and complete and are consistent with the books and records of the Company. The Annual Report and all reports the Company has filed with the U.S. Securities and Exchange Commission (the “SEC”) thereafter, when filed, were free of material errors and omissions, and as of the date hereof continue to be free of material errors and omissions, except to the extent modified or superceded by disclosures made in this Agreement, including the Schedules hereto, or by subsequent filings with the SEC.

8.12.Reports.  The Company has timely filed, or caused to be filed, with the appropriate authorities or got extension for, all filings, reports and returns required to be filed by it, or with respect to it, its business, operations or assets, including without limitation, all tax returns, and as of the time of filing, such filings, reports and returns were true and complete in all material respects.

8.13.Due Authorization.  The Acquired Shares, Warrants, Warrant Shares, when issued, at the Closing or upon exercise of the Warrants, as applicable, shall all be duly authorized, validly issued, and upon payment of applicable Price Per Share and/or the Exercise Price thereof - fully paid, non-assessable and clear and free from any lien, encumbrance, or any other third party right whatsoever.

8.14.Approvals.  The execution and delivery of this Agreement and the full performance of all other obligations and undertakings of the Company contemplated hereunder including the issuance of the Acquired Shares, Additional Acquired Shares, grant and issuance of the Warrants and Additional Warrants and the issuance of the Warrant Shares and Additional Warrant Shares, shall have been duly approved by the Board. The Company shall seek shareholder approval under applicable law prior to the First Closing. Subject to such shareholder approval and except as otherwise set forth on Schedule 8.14, all acts required to be taken by the Company to authorize the execution and delivery of this Agreement, the performance of each of its obligations hereunder and the consummation of the transaction contemplated hereunder have been duly taken and are legally valid and in full force and effect.

8.15.Compliance with Laws.  The Company (i) has complied with all domestic and foreign laws, rules, regulations and orders applicable to its business and operations and (ii) except as set forth in the Schedule 8.15 hereto, has further complied with all licensing, permits and requirements necessary to lawfully conduct the business in which it is engaged, in each of (i) and (ii) above where noncompliance with would have a Material Adverse Effect.

8.16.No Integrated Offering.  Neither the Company, nor any person acting on its behalf, has directly or indirectly made any offers or sales of any security or solicited any offers to buy any security under

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circumstances that would cause the offering of the Acquired Shares, the Warrants and the Warrant Shares pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act of 1933, as amended (the “Securities Act”) such that would subject the offering, issuance and sale of the Acquired Shares, the Warrants and the Warrant Shares hereunder to the registration requirements of Section 5 of the Securities Act, nor will the Company take any action or steps that would cause the offering of the Securities to be integrated with other offerings

8.17.Binding Obligation.  This Agreement, when executed and delivered by or on behalf of the Company, shall, subject to the shareholders’ approval and other consents to be obtained by the Company on or before the date of Closing under any applicable law, constitute the valid and legally binding obligation of the Company, legally enforceable against the Company in accordance with its terms. There is no consent, approval, order, license, permit, action by, or authorization of, or filing with any governmental authority (including any notifications) or any person that is required to be obtained or made on the part of the Company prior to the Closing that has not been, or will not have been, obtained by the Company prior to the Closing in connection with the valid execution, delivery, and performance of this Agreement.

8.18.Brokers’ or Finders’ Fees.  Other than as set forth in Schedule 8.18 hereto, no agent, finder or broker acting on behalf of or under the authority of the Company, is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with the transactions contemplated hereby. Notwithstanding anything herein to the contrary, in the event of any breach of the provisions of this Section, the Company shall fully indemnify and compensate the Investors for any damage or loss, which they actually incur due to such breach.

8.19.Effectiveness.  Each representation and warranty herein is deemed to be made on the date of this Agreement (unless specifically stated otherwise) and as of the date of the First Closing.

8.20.Intellectual Property.  In this Agreement, “Intellectual Property” means all intellectual property rights, whether or not patentable, including without limitation, patents, trademarks, service marks, trade names, internet domain names and copyrights, applications, licenses, and rights with respect to the foregoing, an all trade secrets, know-how, inventions, designs, processes, works of authorship, computer programs and technical data and information. To the best of the Company’s knowledge, the Company has the right to use all of the Intellectual Property required for its business as currently conducted and as proposed to be conducted. To the best of the Company’s knowledge (i) no Intellectual Property used or proposed to be used in the business of the Company as currently conducted has infringed or infringes upon any Intellectual Property rights of others; (ii) the use of such Intellectual Property in the business of the Company as currently conducted will not constitute an infringement, misappropriation or misuse of any Intellectual Property rights of any third party; and (iii) no third party has the right to assert any claim regarding the use of, or challenging or questioning the Company’s right or title in, any of such Intellectual Property. The Company has taken and will continue to take all measures reasonable and customary in the field of the Company’s business and the Company’s resources, including but not limited to measures against unauthorized disclosure, to protect the secrecy, confidentiality and value of its Intellectual Property. Except for intellectual property developed by the Company for Ixia in connection with a binary release of Security Builder v3.2 for IXIA’s PPC750 processor (which intellectual property is not used by the Company), all Intellectual Property that has been developed or is being developed on behalf of the Company by any employee or third party is or shall be the sole property of the Company. The Company has not received any written or oral communications alleging that the Company and/or its products have violated or by conducting its business as currently being conducted, would violate, any of the Intellectual Property of third parties.

8.21.Legal Proceedings.  There are no outstanding legal proceedings against or initiated by the Company in connection with the Company or its business, and except as set forth in Schedule 8.21 hereto, the Company is not aware of any legal proceedings that any third parties intend or threaten to initiate against the Company in connection with the Company or its business

8.22.Loans and Charges.  Except as set forth in Schedule 8.22 hereto, the Company does not have any outstanding loans to any person, not made in the Company’s ordinary course of business, and is not obligated to make any such loans or advances. Other than the fixed and floating charges made by the Company in favor of the Lead Investor in the framework of the Bridge Loan Agreement, the Company has no other charges on its assets.

8.23.Government Approvals.  Except in connection with the Israeli Investment Center of the Ministry of Industry, Trade and Labor, the Company is not required to give notice or obtain any permit, authorization, license, approval, order, action, designation, declaration or filing with any

8

governmental authority or consent from any person in connection with the valid execution, delivery and performance of this Agreement including any ancillary agreements hereto and the transactions contemplated herein.

9.REPRESENTATIONS REGARDING THE INVESTORS, ACQUIRED SHARES AND ADDITIONAL ACQUIRED SHARES

Each Investor hereby represents and warrants to the Company, and acknowledges that the Company is entering into this Agreement in reliance thereon, as follows:

9.1.Organization.  Each Investor that is an entity has been duly organized and validly exists under the laws of the jurisdiction of its formation. Each Investor has all requisite power and authority to execute and deliver this Agreement and other agreements contemplated hereby or which are ancillary hereto and to consummate the transactions contemplated hereby.

9.2.Enforceability.  This Agreement, when executed and delivered by the Investor, will constitute a valid, binding, and enforceable obligation of the Investor.

9.3.Authorization.  The execution and delivery of this Agreement and the performance of the obligations of such Investor has been duly authorized by all necessary corporate action, if applicable, and the fulfillment of and compliance with the respective terms and provisions hereof and thereof, and the consummation by such Investor of this Agreement do not and will not conflict with, or violate any provision of, any law having applicability to such Investor or any of its respective assets; or result in any breach of, or constitute a default under any agreement to which such Investor is a party, except as would not have a material adverse effect on the Investor or  would not prevent in any way such Investor from performing its obligations and undertakings under this Agreement.

9.4.Accredited Investor.  Each Investor represents that it is an “accredited investor”, as that term is defined in Rule 501 of Regulation D under Securities Act, and has such business and financial experience as is required to protect its own interests in connection with its decision to enter this Agreement and to purchase the Acquired Shares, Additional Acquired Shares, Warrants, Additional Warrants, Warrant Shares and Additional Warrant Shares.

9.5.Absence of Registration.  Each Investor understands, acknowledges and agrees that the Acquired Shares, Additional Acquired Shares, Warrants, Additional Warrants, Warrant Shares and Additional Warrant Shares have not been registered under the Securities Act and may not be offered or sold in the United States or to US persons unless such shares are registered under the Securities Act and applicable state securities laws, or an exemption from the registration requirements of the Securities Act and such state securities laws is available. The Investors understand that the certificates evidencing the Acquired Shares, Additional Acquired Shares, Warrant and the Additional Warrant Shares will be imprinted with a legend in substantially the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE “SECURITIES ACT”). THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE SECURITIES ACT, OR AN OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES SATISFACTORY TO RADVIEW SOFTWARE LTD., THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.”

9.6.Investment Purpose.  Each Investor represents and agrees that the Acquired Shares, Additional Acquired Shares, Warrants, Additional Warrants, Warrant Shares and the Additional Warrant Shares are purchased and issued for investment purposes, for its own account, and without present intention to sell or distribute them other than under applicable securities laws and the terms of this Agreement.

9.7.Receipt of Information.  Without derogating from the Company’s undertakings under this Agreement, including the accuracy of all representations and warranties made by it, at the First Closing, each Investor will be deemed to have confirmed that it has reviewed the previous public filings of the Company and it received such information and has conducted such independent examinations as it deemed necessary.

9.8.Brokers’ or Finders’ Fees.  No agent, finder or broker acting on behalf of or under the authority of such Investor, is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with the transactions contemplated hereby. Notwithstanding anything herein to the contrary, in the event of any breach of the provisions of this Section, such Investor shall fully

9

indemnify and compensate the Company for any damage or loss, which they actually incur due to such breach.

9.9.Effectiveness.  Each representation and warranty herein is deemed to be made on the date of this Agreement (unless specifically stated otherwise) and as of the date of the First Closing. In addition, with respect to any Investor participating at any Additional Closing, the representations and warranties made by the Investors herein, except for the representation contained in Section 9.7 above, are deemed as well to be made as of the date of any Additional Closing.

10.REGISTRATION RIGHTS

The Investors shall be granted with certain registration rights with respect to the Acquired Shares, Additional Acquired Shares, Warrant Shares and the Additional Warrant Shares as set forth in the Registration Rights Agreement attached hereto as Schedule 10 (the “Registration Rights”).

11.ACTIONS PRIOR TO FIRST CLOSING

11.1.General Meeting of Shareholders.  The Company will use reasonable efforts to convene a general meeting of its shareholders as soon as possible and in any event not later than sixty (60) days following the date of this Agreement (and ninety (90) days if the SEC elects to review the Company’s proxy materials), to approve, among other things, the terms of this Agreement (the “Shareholders Meeting”). The proxy statement materials will be provided to the Lead Investor and the other Investors for their review.

11.2.Management Agreement.  The Company and the Lead Investor shall enter on or before the First Closing into a Management Agreement in the form attached hereto as Schedule 11.2, pursuant to which the Lead Investor shall provide management services to the Company in consideration for: (i) an annual management fee of US $50,000, payable quarterly, i.e., US$12,500 each quarter (the “Annual Management Fees”); and (ii) an additional payment of US$70,000 payable at the end of the fiscal year (starting from 2006) in the event that the Company is profitable in such fiscal year (the “Additional Fees”), and provided however, that any payment of such Additional Fees shall be payable only out of profits of the Company. For the avoidance of doubt, if the Company’s profits shall not suffice for payment of the Additional Fees, payment shall be made on the account of such fees up to the then available profits. The Management Agreement shall be subject to the approval of the Company’s Shareholders Meeting.

11.3.Board of Directors.  The Company will use commercially reasonable efforts to appoint the Preferred Directors at the Shareholders Meeting, so that following the First Closing the Lead Investor’s nominees shall have been appointed to fill a majority of the Board, regardless of the number of members composing the Board. Currently, the number of Directors the Lead Investor shall be entitled to nominate is four (4) out of seven (7) Directors constituting the Board. If the Lead Investor provides to the Company in a timely manner the information required for inclusion in the Company’s proxy materials for the Shareholders Meeting relating to the identity and background of the Lead Investor’s board nominees, the proxy materials will include a proposal to elect those nominees proposed by the Lead Investor to serve, as members of the Board effective immediately after the First Closing.

11.4.Adverse Events.  If at any time prior to the First Closing, the Lead Investor becomes aware of a particular event or circumstances not in the Company’s ordinary course of business that are unknown to the Company or are known to the Company and not reported to the Investors, which have, in the aggregate, an adverse effect on the Company of US$500,000 (the “Adverse Event”), then, the Lead Investor may decide not to proceed with the investment hereunder. It is agreed that a loss of a customer or potential customer, partner or potential partner shall be considered in the ordinary course of business and shall not constitute an Adverse Event. It is agreed that “Adverse Event” shall also include circumstances that prevent the Company from holding the Shareholders Meeting for approval of this Agreement on or before the date set for the First Closing.

11.5.Ordinary Course.  As of the date hereof and until the First Closing, the Company: (i) shall conduct its business solely in the ordinary course of business as is conducted on the date hereof; and (ii) shall not declare or pay any dividends or make any other distributions or payments with respect to its share capital.

12.COVENANTS

12.1.D&O Insurance.  Subject to any other provisions in law, the Investors will act and exercise their voting rights as shareholders in the Company in any required way so that the Company will acquire a new directors and officers liability policy (the “Policy”) in an amount and for a period that is reasonable

10

considering the Company’s size, potential exposure and other relevant factors, and in any event in an amount not exceeding US$5,000,000. The Policy will apply to obligations and liabilities of the Company’s directors and officers who serve in office in the Company and/or in the Subsidiaries, before the date of the First Closing for any wrongful act, omission, or event that preceded such date, all this being subject to the conditions of the Policy and its exclusions. The Company’s Directors and Officers as of the date of this Agreement are third party beneficiaries of this covenant of the Investors and are entitled to enforce such obligation of the Investors.

12.2.Use of Proceeds.  The proceeds of the investments contemplated by this Agreement shall be used by the Company to fund its ongoing ordinary course of business working capital needs.

12.3.Expenses.  The Company and the Investors will each bear their own legal and other expenses with respect to the transaction contemplated herein; except that, upon consummation of the First Closing, the Company will pay legal, accounting and due diligence expenses incurred by the Lead Investor in the amount of up to seventy-five thousand United States dollars (US$75,000) plus VAT.

12.4.Services Fee.  Recognizing the time, effort and resources dedicated by the Lead Investor (since the execution of Term Sheet entered into between the parties on January 12, 2006), in the provision to Company of consultation and assistance in devising a strategy for enhancing its operations, if the Shareholders Meeting does not approve the Equity Investment, then the Company shall pay the Lead Investor for such services a fee of US$250,000.

12.5.Right of First Refusal on Investments.  In addition to the break-up fee set forth in Section 12.4 above, if within twelve (12) months following the rejection of the Shareholders’ Meeting of the Equity Investment, the Company accepts another investment proposal (the “Alternative Investment”), the Company shall promptly advise the Lead Investor of such Alternative Investment and the Lead Investor shall have a right of first refusal to make the Alternative Investment on the terms thereof, by giving written notice to the Company within twenty-one (21) days of its receipt of the Company’s notice that an offer for an Alternative Investment has been made to the Company. Failure of the Lead Investor to respond in writing to a notice from the Company with respect to an Alternative Investment within the time-frame stated above shall be deemed a waiver by the Lead Investor of this right of first refusal.

12.6.Finder Fees.  Except as set forth on Schedule 8.18, the Company shall not pay any finder fees or commissions in connection with the transactions contemplated by this Agreement without the prior written approval of the Lead Investor.

12.7.Termination of Investor Rights Agreement.  As at the date of the First Closing, the Company shall have obtained the parties consent to the termination of that certain Investor Rights Agreement dated as of December 13, 1999.

12.8.Termination of Indemnification Agreements.  As at the date of the First Closing, the Company shall have effected the termination of all Indemnification Agreements with existing officers and directors (the “Terminated Agreements”). The Directors and officers who are parties to the Terminated Agreements shall be covered by the Policy described in Section 12.1 above.

12.9.New Indemnification Agreements.  No later than the First Closing, the Company shall have entered into new indemnification agreements with those of its officers and Directors who were parties to the Terminated Agreements and those of its officers and Directors holding office following the First Closing, providing for indemnification by the Company in an aggregate amount of US$1,500,000 for all indemnifiable events and for all indemnified persons (the “New Indemnification Agreements”). The terms and conditions for indemnification shall be set forth in the New Indemnification Agreements, which shall include, among other matters, a provision requiring the indemnified person to comply with the requirements of the insurance company underwriting the Policy (defined in Section 12.1 above) to the extent that the indemnifiable event is covered by the Policy. In the event that all necessary corporate approvals, as required by applicable law for the New Indemnification Agreements, are not obtained prior to the First Closing, then as soon as such approvals are obtained the Company will enter into the New Indemnification Agreements with those of its officers and Directors who were parties to the Terminated Agreements and those of its officers and Directors holding office following the First Closing. The Company’s Directors and officers as of the date of this Agreement and its officers and Directors holding office following the First Closing are third party beneficiaries of this covenant and are entitled to enforce such obligations.

13.RIGHTS OF PREFERRED SHARES

[INTENTIONALLY OMITTED]

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14.PUBLIC RELEASE

Subject to any duty imposed by any applicable law, the parties agree to coordinate among themselves any release or report to the public and/or to any authority of information relating to the transaction hereof.

15.NO SHOP

15.1.During a period ending on the date of the Shareholders Meeting but no later than September 1, 2006, the Company or any person acting on its behalf, shall not solicit, initiate, encourage, participate in, respond to or assist in the submission of any proposal, negotiation or offer from any person or entity other than the Investors, relating to the sale or issuance of any securities of the Company (including without limitation, debt, convertible debt, or the acquisition, sale, lease, license, or other disposition of the Company or any material part of the shares or assets of the Company, and shall notify the Investors promptly of any inquiries by any third parties in regards to the foregoing; and (ii) declare or make any distribution to shareholders or enter into any new transaction with any “Interested Party”, as defined in the Israeli Securities Act, 1968, as amended .

15.2.In the event that the Company breaches the provisions of Section 15.1 above, then upon the Closing of any of the transactions described in Section 15.1 above, the Company shall pay the Investors, a total amount of US$500,000 as liquidated damages, and the Bridge Loan under the Bridge Loan Agreement shall become immediately due and payable.

16.INDEMNIFICATION

16.1.The Company agrees that to the fullest extent permitted by applicable law, it will indemnify and hold the other parties to this Agreement harmless against and in respect of any and all loss, liability, deficiency or damage, or actions in respect thereof (including reasonable legal fees and expenses), occasioned by: (i) any breach of this Agreement; (ii) any falsity of any representations or warranties of such party or any certificate or other instrument furnished by that party hereunder; or (iii) any liability that is derived from an act or omission that has been committed prior to the date hereof, but that becomes known hereafter.

16.2.Notwithstanding the foregoing, no claims shall be asserted against the Company unless the cumulative amounts claimed for is in excess of US$375,000, and (ii) more than seven (7) years after the date of this Agreement; and under no circumstances shall a party be entitled to indemnification hereunder in an amount greater than its respective portion of the Purchase Price.

16.3.The remedies specified in this Section 16 shall be the sole and exclusive remedy to which the Investors are entitled with regard to any losses or damages caused to them under this Agreement or the transactions contemplated hereby.

17.MISCELLANEOUS

17.1.Governing Law and Jurisdiction.  This Agreement and the transactions contemplated hereunder shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to rules respecting conflict of law that would cause the laws of any jurisdiction other than the State of Israel to be applied. The competent courts of Tel Aviv-Jaffa shall have sole and exclusive jurisdiction to hear and resolve any disputes among the parties related to this Agreement.

17.2.Notices

17.2.1.All notices and other communications required or permitted hereunder to be given to a party to this Agreement shall be in writing and shall be sent by facsimile or mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed to such party’s address as set forth below:

If to the Investors:to such address and by facsimile as set forth in Schedule A.

If to the Company:Radview Software Ltd.

Attn: Ilan Kinreich, President

2 Habarzel Street

Tel Aviv 69710Israel

Facsimile: +972-3-647-1406

and

7 New England Executive Park

Burlington

MA 01803

U.S.A.

Facsimile: +1-781-238-8875

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or such other address with respect to a party as such party shall notify each other party in writing as above provided.

17.2.2.Any notice sent in accordance with this Section 17.2 shall be effective (i) if mailed, five (5) business days after mailing, (ii) if sent by messenger, upon delivery, and (iii) if send via facsimile, upon transmission and telephonic confirmation of receipt (provided that if transmitted on a day that is not a business day, on the next business day).

17.3.Entire Agreement; Amendment and Waiver.  This Agreement and the Schedules hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matters hereof and thereof. All prior representations, understandings and agreements relating to the subject matter hereof among the parties are void and have no further effect. Any term of this Agreement may be amended, waived, or discharged, either prospectively or retroactively, and either generally or in a particular instance, by written consent of Company and Lead Investor, other than the Registration Rights Agreement and Management Agreement, which may only be amended as set forth therein. Notwithstanding the foregoing, in the event that any proposed amendment to this Agreement increases and/or imposes additional financial obligations on any of the Investors (other than the Lead Investor) or disproportionately adversely affects the rights of any of the Investors (other than the Lead Investor), then the written consent of such Investor shall be required for such amendment.

17.4.Survival.  All representations and warranties set forth in this Agreement as well as the indemnification provisions shall survive for a period of five (5) years following the date of this Agreement.

17.5.Rights; Severability.  In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. The parties hereto shall be obliged to draw up an arrangement in accordance with the meaning and the object of the invalid provision.

17.6.Titles and Subtitles.  The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

17.7.Duties and Expenses.  All stamp duties (if any) incurred in connection with the execution and performance of this Agreement shall be borne by the Company, unless specifically stated otherwise.

17.8.Assignment.  The rights and obligations pursuant to this Agreement, or any part thereof, may be assigned or otherwise conveyed by the Investors or any subsequent transferee, both prior to and/or after the First Closing and each Additional Closing, as applicable, provided that such transferee agrees in writing to be bound by this Agreement. The Company may not assign, delegate or otherwise convey any of its rights and/or obligations pursuant to this Agreement.

17.9.Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be a duplicate original, but all of which taken together shall constitute one and the same agreement.

17.10.Conflict and Incorporation by Reference.  It is hereby agreed and understood that any amendment to the Amended Articles adopted pursuant to the terms thereof, that is effected following the date of the First Closing, and which amendment has the effect of altering the provisions relating to the Company’s Board, the anti-dilution provisions and the rights of the holders of Preferred Shares, shall be deemed to, automatically and with no need for further action, amend the applicable provisions of this Agreement as well. It is further agreed and understood, that in the event of any conflict between the provisions of this Agreement and the Amended Articles, as same shall be in effect from time to time, the provisions of the Amended Articles shall prevail and take precedence over the provisions of this Agreement.

[SIGNATURE PAGE TO FOLLOW]

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[SIGNATURE PAGE]

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date first written hereinabove.

RADVIEW SOFTWARE LTD.		FORTISSIMO CAPITAL FUND GP LP.
/s/ ILAN KINREICH		/s/ YUVAL COHEN
Name:	Ilan Kinreich	By:		Fortissimo Capital (GP)   Management Ltd., general partner
Title:	President and CEO	Name:		Yuval Cohen
		Title:
/s/ CHRISTOPHER DINEEN
Name:	Christopher Dineen
Title:	Chief Financial Officer
YEHUDA ZISAPEL		SHEM BASUM LTD.
/s/ YEHUDA ZISAPEL		/s/ SHAI BEILIS
Name:      Yehuda Zisapel		Name:	Shai Beilis
		Title:
MICHAEL CHILL
/s/ MICHAEL CHILL
Name:     Michael Chill

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Schedule A

List of Investors

Name of Investor	Address	Portion of Purchase Price in US$	Number of Acquired Shares	Number of Warrants
Fortissimo Capital Fund, LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	20,063.18	668,773	501,580
Fortissimo Capital Fund (Israel), LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	506,090.49	16,869,681	12,652,261
Fortissimo Capital Fund (Israel-DP), LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	36,346.34	1,211,545	908,659
Yehuda Zisapel	24 Raoul Wallnberg Street Tel-Aviv 69719, Israel Fax: +972-3-6440639 Cc: Yael Langer, Adv. RAD Bynet Group Legal Department 24 Raoul Wallenberg St. Tel-Aviv 69719, Israel Fax: +972-3-6498248	125,000	4,166,667	3,125,000
Shem Basum Ltd.	C/o Shai Beilis 8 Hanna Senesh St. Kfar Saba Fax: +972-9-960-1818 E-mail: shai@FormulaVentures.com	50,000	1,666,667	1,250,000
Michael Chill	210 West 89th Street Apt. 4-N, New York NY 10024 Email: mchill@paramountbio.com Phone: 212-554-4211 Cell: 646-245-2457	12,500	416,667	312,500
	Total	750,000	25,000,000	18,750,000

Schedule B

List of Investors

Name of Investor	Address	Maximum Portion of Purchase Price at all Additional Closings in US$	Maximum Number of Additional Acquired Shares	Maximum Number of Additional Warrants
Fortissimo Capital Fund, LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	60,189.53	2,006,318	1,504,738
Fortissimo Capital Fund (Israel), LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	1,518,271.46	50,609,048	37,956,787
Fortissimo Capital Fund (Israel-DP), LP	c/o Marc Lesnick Fortissimo Capital Management Ltd. 14 Hamelacha Street Park Afek, Rosh Haayin 48091 Fax: +972-3-9157411	109,039.01	3,634,634	2,725,975
Yehuda Zisapel	24 Raoul Wallnberg Street Tel-Aviv 69719, Israel Fax: +972-3-6440639 Cc: Yael Langer, Adv. RAD Bynet Group Legal Department 24 Raoul Wallenberg St. Tel-Aviv 69719, Israel Fax: +972-3-6498248	375,000	12,500,000	9,375,000
Shem Basum Ltd.	C/o Shai Beilis 8 Hanna Senesh St. Kfar Saba Fax: +972-9-960-1818 E-mail: shai@FormulaVentures.com	150,000	5,000,000	3,750,000
Michael Chill	210 West 89th Street Apt. 4-N, New York NY 10024 Email: mchill@paramountbio.com Phone: 212-554-4211 Cell: 646-245-2457	37,500	1,250,000	937,500
	Total	2,250,000	75,000,000	56,250,000

EX-10.19

Exhibit 10.19

CONVERTIBLE LOAN AGREEMENT

This Convertible Loan Agreement (this “Agreement”) is entered into as of April 4, 2006 by and among Fortissimo Capital Fund GP, L.P., on behalf of the several parallel partnerships in which it serves as the General Partner (the “Lead Lender”), whose principal offices are located at 14 Hamelacha Street, Park Afek, Rosh Haayin 48091, Israel, Shem Basum Ltd., an Israeli company, having its address at 8 Hanna Senesh St., Kfar Saba, Israel (“Beilis< /b>”); Mr. Yehuda Zisapel, an individual having his address at 24 Raoul Wallenberg Street, Tel Aviv 69719, Israel (“Zisapel”) and Michael Chill, an individual having his address at 210 West 89th Street Apt. 4-N, New York, NY 10024, U.S.A. (“Chill”); each of Beilis, Zisapel and Chill a “Lender”, and together with the Lead Lender, the “Lenders”), and Radview Software Ltd., an Israeli corporation, corporate registration number 511627952, with its principal offices in Israel located at 2 Habarzel Street, Tel Aviv 69710, Israel and its principal offices in the U.S.A. located at 7 New England Executive Park, Burlington, MA 01803 (the “Company”, or the “Borrower”).

RECITALS

WHEREAS, Lenders and Borrower have entered into a Share Purchase Agreement, of even date hereof, pursuant to which the Lenders shall make an equity investment of up to US$3,000,000 in the Company (the “SPA”) and which also contemplates the extension by the Lenders to the Company, concurrently with the Closing of the SPA (the “SPA Closing”) of a convertible loan (the “Convertible Loan”) in the amount of US$250,000 (in addition to the Bridge Loan Amount referred to below); and

WHEREAS, on January 26, 2006, the Lead Lender and the Company entered into a Bridge Loan Agreement (the “Bridge Loan Agreement”), pursuant to which the Lead Lender has agreed to advance to the Company a bridge loan in the amount of up to $500,000, of which, as of the dat e hereof, an amount of $200,000 has already been advanced and additional funds may be advanced by the Lean Lender during the period starting from the date hereof and ending on the SPA Closing (the total amounts lent under the Bridge Loan Agreement prior to the SPA Closing and any interest accrued thereon are termed the “Bridge Loan Amount”); and

WHEREAS, pursuant to Section 1.2(b) of the Bridge Loan Agreement, at the SPA Closing, the Bridge Loan Amount shall automatically become subject to all of the terms and conditions of the this Agreement, as if the Bridge Loan Amount has been borrowed pursuant hereunder; and

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WHEREAS, Beilis, who is the Company’s Chairman of the Board, Zisapel, who is an existing shareholder of the Company, and Chill wish to participate in the Convertible Loan.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows:

ARTICLE 1 - THE CONVERTIBLE LOAN

1.1The Convertible Loan.

(a)Subject to the terms and conditions of this Agreement, each of the Lenders, severally and not jointly, agrees to provide to the Borrower with a loan in the amount set forth opposite the name of such Lender in Schedule 1.1 hereto, amounting in the aggregate to a total of up to $550,000, which amount is comprised of $250,000, plus the balance available for borrowing by the Company under the Bridge Loan Agreement, which as of the date hereof is $300,000  (the “Principal Amount”).

(b)The Principal Amount shall bear interest at the rate of 8% per annum (the “Interest”), starting from the Loan Date (as defined below) and until the conversion of the Loan Amount   or the repayment thereof according to the provisions of Section 1.2 below. The Principal Amount, together with accrued Interest thereon, is referred to as the “Loan Amount”. To any Interest payment (including by way of conversion) there shall be adde d Value Added Tax (“VAT”) at the rate prescribed by the law.

(c)The Principal Amount shall be paid to the Company concurrently with the SPA Closing (the “Loan Date”).

1.2                   & #160; Repayment or Conversion.

(a)Unless earlier converted in accordance with the terms of Sub-section (b) below, the Loan Amount shall become immediately repayable in full upon the earlier to occur of: (a) the date which is thirty (30) days after the third anniversary of the Loan Date; or (b) at the opt ion of a Lender with respect to such Lender’s portion of the Loan Amount, upon the occurrence of an Event of Default (as defined herein).

(b)At any time and from time to time after the Loan Date and up to the third anniversary of the Loan Date, a Lender may (a “Converting Lender”), at its sole discretion and as set forth in a prior written notice provided to the Company (the “Conversion Notice”), elect to convert all or part of its respective outstanding Principal Amount and interest accrued thereon (excluding income tax that is to be withheld with respect to such interest, if any) into the Company’s Series A Preferred Shares nominal value NIS 0.01 per share, at a price equal to Three Cent ($0.03) per Preferred Share (the “Conversion Price”). Any accrued interest not converted together with the principal amount on which it has accrued shall be paid to the Converting Lender in cash at the time of the applicable conversion. Payment of Interest by Borrower (either by way of conversion or repayment), shall be made against receipt of a VAT invoice issued by the Lender receiving such Interest, unless Borrower shall be permitted, under applicable law, to issue with respect to such payment a “self issued” VAT invoice (Heshbonit Atsmit).The Conversion Price shall be subject to adjustment for any bonus share issues, share splits, combinations and similar events and pursuant to the anti–dilution provisions applicable to the conversion of the Preferred Shares as set forth in the Company’s Articles of Association adopted in connection with the SPA Closing.

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(c)Conversion of any portion of the Loan Amount shall be deemed as full repayment of such portion.

1.3Default Interest.

Without derogating from any rights or remedies afforded by law, any delay of more than ten (10) days in the payment of any amount due to a Lender from Borrower on account of the Loan Amount or otherwise due pursuant to this Agreement shall subject such overdue amounts to additional interest which shall accrue at an annual rate of four percent (4%) from the date such payment has become due and payable and until actual payment thereof. Such default interest shall be compounded daily.

1.4Payments.

All payments by Borrower to Lenders made under this Agreement shall be:

(a)Free and clear of and without deduction for all taxes, levies, imposts, deductions, assessments, charges or withholdings, and all liabilities with respect thereto of any nature whatsoever, provided the respective Lender has provided to Borrower in advance all documented exemptions and approvals required to implement the foregoing, to Borrower’s reasonable satisfaction, including an Israeli Tax Authority exemption from tax withholding at the source. For the avoidance of doubt in the event that a Converting Lender has failed to provide the Company with an exemption as aforesaid, in connection with the conversion of any interest accrued in connection with such Lender’s full or partial conversion of its respective Principal Amount, the Company shall be eligible to withhold tax at the source in connection with such conversion.

(b)Made on a Business Day. For the purposes of this Agreement, the term “Business Day” means any day on which banks in Israel are open and execute foreign exchange transactions. For the avoidance of doubt, in the event any payment due to a Lender hereunder is to occur on a non Business Day, the obligation of Borrower to make such payment shall be def erred to the very next Business Day occurring thereafter.

(c)Made in lawful money of the United States of America or New Israeli Shekels, at the election of the applicable Lender, by wire transfer of immediately available funds to the Lender’s bank account the details of which will be provided by separate written notice by the Lender to Borrower at least seven (7) days prior to any required payment by Borrower hereunder.

1.5Deliverables by Borrower.

On or prior to the Loan Date, Borrower shall deliver to the Lenders the following:

(a)A copy of a resolution of Borrower’s audit committee, Board of Directors (the “Board”) and Shareholders, approving the execution and performance by Borrower of this Agreement and its annexes and the Charge Debentures (all, as defined below) in the forms attached as Exhibit A hereto, provided however, that absent approval by the Borrower’s audit committee, Beilis shall not participate in the Convertible Loan and each of the other Lenders shall have the right (but not the obligation) to lend to the Borrower its pro-rata portion of the Loan Amount that was to be extended by Beilis under Schedule 1.1 hereto. It is hereby clarified that the non-participation of Beilis in the Convertible Loan, as aforesaid, shall not effect the several obligation of each of the other Lenders to extend such Lender’s portion of the Principal Loan Amount in accordance with the terms hereof.

(b)Duly executed Charge Debentures (as defined below) with respect to the Charged Assets (as defined and set forth below) together with duly executed notices of Charges ready for filings with the applicable Israeli authorities in the forms provided for such purpose by applicable law that are attached as Exhibit B1 and Exhibit B2 hereto.

(c)Duly executed notice of Charges ready for filings with the applicable US authorities in the form or forms provided for such purpose by applicable law that is attached as Exhibit C hereto.

(d)A copy of the approval of the Israeli Investment Center of the Ministry of Industry, Trade and Labor to the transactions contemplated hereby.

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1.7Lender’s Records.

Any amounts owed under this Agreement and any ancillary documents hereunder, including but not limited to Advancement of Installment Form/s entered into pursuant to the Bridge Loan Agreement, the Charge Debentures and all other contracts, instruments, addenda and documents execut ed in connection with this Agreement or the extensions of credit which are the subject of this Agreement (collectively, the “Loan Documents”), shall be evidenced by the respective entries in records maintained by the respective Lender for such purpose. Each payment on account of, and any other credits with respect to the Loan Amount and all other sums outstanding under any Loan Document shall be evidenced by the respective entries in such records. Absent manifest error, the applicable Lender’s records shall be prima-facie evidence thereof.

1.8                ;      Security.

(a)Borrower shall secure the repayment of all amounts due or which may become due to the Lenders from Borrower in accordance with the provisions of the Loan Documents (including the Bridge Loan Amount) by creating the following charges:

(i)A floating charge on all of Borrower’s present and future tangible and intangible assets and rights of any kind, whether contingent or absolute as more fully set forth in the Floating Charge Debenture attached hereto as Schedule 1.8(a) (the “Floating Charge” and “Floating Charge Debenture”, respectively); and

(ii)A fixed charge on the Company’s (i) intellectual property rights, and (ii) accounts receivable, all as more fully set forth in the Fixed Charge Debenture attached hereto as Schedule 1.8(b) (the “Fixed Charge” and “Fixed Charge Debenture”, respectively).

(b)In this Agreement, (1) the Floating Charge and Fixed Charge shall collectively be referred to as the “Charges”, (2) the assets forming the subject matter of the Charges shall be referred to as the “Charged Assets”; and (3) the Floating Charge Debenture and Fixed Charge Debenture shall collectively be referred to as the “Charge Debentures”.

(c)As soon as practicable following the Loan Date, Borrower shall file with the applicable foreign governmental agencies the documents necessary to reflect the Charges with respect to Borrower’s Intellectual Property, more specifically referred to in the Charge Debentures as ‘Pledgor’s IP’ (the “Foreign Charges”). Borrower shall bear all costs and expenses in connection with such filings. It is expressly agreed that the filing of the Foreign Charges hereunder shall be deemed to satisfy Borrower’s undertaking to file such Foreign Charges pursuant to the last paragraph of Section&nbs p;1.8 of the Bridge Loan Agreement.

(d)Each of Beilis, Zisapel and Chill (the “Co-Lenders”) expressly and irrevocably agree that they shall not take any action to realize their security interest under the Charge Debentures unless (i) the outstanding Loan Amount owed to such Co-Lender(s) exceeds $100,000;  (ii) at least 7 days prior notice of the contemplated action was delivered to the Lead Lender, and (iii)  such action received the Lead Lender’s prior written consent, which consent can be withheld for any reason or for no reason, except that no such consent from the Lead Lender shall be required subsequent to the settlement, by the Company, of the entire portion of the Loan Amount owing thereby to the Lead Lender (whether by way of repayment or conversion pursuant to Section 1.2 hereof)

(e)For the avoidance of doubt, by execution of this Agreement Lead Lender hereby provides its consent, pursuant to Section 4.7 (f) of the Bridge Loan Agreement and Section 5 of each of the Fixed and Floating Charge Debentures (as defined under the Bridge Loan Agreement) for the Borrower to enter into the Charge Debentures (as defined herein) and the creation the Charges hereunder.

1.9Priority.

Except as provided below, all amounts borrowed hereunder, under the Bridge Loan Agreement as well as all other amounts due to the Lenders pursuant to the provisions of this Agreement, shall rank senior to any other Security Interest (as defined below) on the assets and rights of the Borrower and to any other indebtedness to banks, financial and lending institutions, creditors, shareholders or others.

The Charges created hereunder and under the Charge Debentures (as defined in Section 1.8) shall be subordinate only to the Charges created under the Bridge Loan Agreement and the Charge Debentures as def ined under the Bridge Loan Agreement.

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For the purposes of this Agreement a “Security Interest” shall mean any lien, pledge, encumbrance, security interests, charge or transfer, assignment over or in any person’s or entity’s property.

ARTICLE 2 - - REPRESENTATIONS AND WARRANTIES OF BORROWER

Borrower’s representations and warranties set forth in the SPA are incorporated herein by reference, are deemed to be made to each of the Lenders on the date hereof and shall have the same force and effect as if explicitly set forth herein.

ARTICLE 3 - CONDITIONS PRECEDENT

3.1     0;                Conditions To Loan.

The obligation of each Lender to advance any or all of the Principal Amount is subject to the receipt by the Lender of the documents listed in Section 1.5 above together with a counterpart signature page of this Agreement and the Charge Debentures and the occurrence of the SPA Closing.

ARTICLE 4 – BORROWER COVENANTS

During the term of this Agreement and until the performance of all of Borrower’s obligations towards the Lenders (including repayment or conversion pursuant to Section 1.2 hereof), Borrower covenants and agrees with the Lender as follows:

4.1Use of Funds.

Borrower agrees that it will use the Principal Amount for general working capital purposes, only in accordance with the budget attached as Schedule 4.1 hereto.

4.2Access to Facilities.

Borrower and any of its subsidiaries will permit any representatives designated by the Lead Lender, upon reasonable notice and during normal business hours and at reasonable intervals, at Lead Lender’s expense and accompanied by a representative of Borrower, to: (a) visit and inspect any of the properties of the Borrower and its subsidiaries; (b) examine the corporate and financial records of the Borrower and of its subsidiaries (unless such examination is not permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom; and (c) discuss the affairs, finances and accounts of the Borrower and of its subsidiaries with the directors, officers and independent accountants of the Borrower and/or  its subsidiaries.

4.3Taxes.

Borrower will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of Borrower; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings (such non payment to include those instances set in the Schedule of Exception and Disclosures attached to the SPA), and provided, further, that the Borrower will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefore.

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4.4Insurance.

Borrower will keep its assets which are of an insurable character insured by financially sound and reputable insurers against (a) loss or damage by fire, explosion and other risks customarily insured against by companies in similar business similarly situated as the Borrower; (b) other hazards and risks and liability to persons and property to the extent and in the manner which the Borrower believes is customary for companies in similar business similarly situated as the Borrower and to the extent available on commercially reasonable terms.

4.5Intellectual Property.

Borrower shall maintain in full force and effect its existence, rights and franchises and all licenses and other rights to use Intellectual Property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business.

4.6Required Approvals.

Borrower shall obtain the prior written approval of the Lead Lender before taking any of the below listed actions:

(a)Directly or indirectly declare or pay any dividends;

(b)Liquidate, dissolve or effect a creditors’ arrangement;

(c)Become subject to (including, without limitation, by way of amendment to or modification of) any agreement or instrument which by its terms would (under any circumstances) restrict Borrower’s right to perform the provisions of this Agreement or any other Loan Document;

(d)Create or acquire any subsidiary after the date hereof;

(e)Make or undertake to make, any disposition or transfer of any interest, in the Charged Assets, which under any of the Charge Debentures requires the prior written approval of the Lender;

(f)Conduct it business other than in the ordinary course of business.

ARTICLE 5 - EVENTS OF DEFAULT

5.1Events Of Default.  The occurrence of any of the following shall, at the option of the applicable Lender: (1) make the entire Loan Amount and any other amounts owing under any Loan Documents to such Lender immediatel y due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or any other notices or demands, and (2) subject to section 1.8(d) above, give the Lender the right to exercise any other right or remedy provided by contract or applicable law:

(A)Borrower shall fail to pay to the Lender any of the Principal Amount or Interest under this Agreement in a timely manner, or fail to pay any fees or other charges when due and such failure continues for ten ( 10) Business Days or more after the same first becomes due; or an event of default as defined in any other Loan Document shall have occurred.

(B)Any representation or warranty made, or financial statement, certificate or other document provided, by Borrower under any Loan Document shall prove to have been false or misleading in any material respect when made or deemed made herein.

(C)Borrower shall be unable to generally pay its debts as they become due or commence any insolvency proceeding with respect to itself; an involuntary insolvency proceeding shall be filed against Borrower, or a custodian, receiver, trustee, assignee for the benefit of creditors, or other similar official, shall be appointed to take possession, custody or control of the properties of Borrower, and such involuntary insolvency proceeding, petition or appointment is acquiesced to by Borrower or is not dismissed within sixty (60) days; or the dissolution or termination of the business of B orrower.

(D)Borrower shall be in default beyond any applicable period of grace or cure under any other agreement involving the borrowing of an amount exceeding $40,000, from any person, which results in the acceleration of payment of such obligation.

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(E)Any governmental or regulatory authority shall take any judicial or administrative action, that would have a Material Adverse Effect, and which cannot be cured by Borrower within sixty (60) days of such action.

(F)Any sale, transfer or other disposition of all or a substantial or material part of the assets of Borrower, including without limitation to any trust or similar entity, shall occur where such sale, transfer, lease or other disposition of assets would constitute a Material Adverse Change.

(G)Any judgment shall be entered against Borrower, which remains unsatisfied or un-stayed pending appeal for sixty (60) or more days after entry thereof; and/or any lien is granted by a competent court, or by any authorized execution office over all or a major part of the Borrower’s assets or bank accounts and such lien is not removed within sixty (60) days of its issuance.

(H)Borrower shall fail to perform or observe any covenant contained in this Agreement or any other Loan Document (including but not limited to any of the covenants contained in Art icle 4 above) and the breach of such covenant is not cured within thirty (30) days after the sooner to occur of Borrower’s receipt of notice of such breach from the Lender or the date on which such breach first becomes known to any officer of Borrower; provided, however, that if such breach is not capable of being cured within such 30-day period and Borrower timely notifies the Lender of such fact and Borrower diligently pursues such cure, then the cure period shall be extended to the date requested in Borrower’s notice but in no event more than ninety (90) days from the initial breach, and to the extent that such breach is not capable of cure regardless of any extension of time, then breach shall be deemed to have occurred for the purposes of this Article 5.

ARTICLE 6 – BRIDGE LOAN PROVISIONS

Upon closing of this Agreement, the Bridge Loan Agreement shall be deemed amended such that the Bridge Loan Amount (as defined above) shall be deemed part of the Principal Amount hereunder and the provisions of this Agreement shall govern the parties rights and liabilities with  respect to the Bridge Loan Amount. Nothing in the above shall be deemed to derogate from Borrowers’ liabilities and Lead Lender’s rights and remedies as provided in the Bridge Loan Agreement, with respect to any Event of Default occurring prior to the SPA Closing.

ARTICLE 7 - GENERAL PROVISIONS

7.1Notices.  Any notice given by any party under any Loan Document shall be in writing and personally delivered, sent by overnight courier, or mail, postage prepaid, or sent by facsimile, to be promptly confirmed in writing, or other authenticated message, charges prepaid, to the other party
46;s or parties’ addresses shown on the cover page to this Agreement. Each party may change the address or facsimile number to which notices, requests and other communications are to be sent by giving written notice of such change to each other party. Notice given by hand delivery shall be deemed received on the date delivered; if sent by overnight courier, on the next Business Day after delivery to the courier service; if by first class mail, on the third Business Day after deposit in the Mail; and if by telecopy, on the date of transmission.

7.2Binding Effect.  The Loan Documents shall be binding upon and inure to the benefit of Borrower and the Lenders and their respective successors and assigns; provided, however, that Borrower may not assign or transfer Borrower’s rights or obligations under any Loan Document without the Lender’s prior written consent except in connection with a consolidation, merger or other transaction in compliance with the provisions of this Agreement. Each of the Lenders reserves the right, to sell, assign, transfer, negotiate or grant participation in all or any part of, or any interest in, such Lenders rights and obligations under the Loan Documents, provided that any transferee or assignee hereunder agrees in writing to be bound by this Agreement. In connection with any of the foregoing, Lender may disclose all documents and information which Lender now or hereafter may have relating to the Convertible Loan, the Borrower, or its bus iness; provided that any person who receives such information shall have agreed in writing in advance to maintain the confidentiality of such information.

7.3No Waiver.  Any waiver, consent or approval by Lender of any event of default or breach of any provision, condition, or covenant of any Loan Document must be in writing and shall be effective only to the extent set forth in writing. No waiver of any breach or default shall be deemed a waiver of any later breach or default of the same or any other provis ion of any Loan Document. No failure or delay on the part of Lender in exercising any power, right, or privilege under any Loan Document shall operate as a waiver thereof, and no single or partial exercise of any such power, right, or privilege shall preclude any further exercise thereof or the

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exercise of any other power, right or privilege. Lender has the right at its sole option to continue to accept Interest and/or Principal Amount payments due under the Loan Documents after default, and such acceptance shall not constitute a waiver of said default or an extension of the maturity date unless Lender agrees otherwise in writing.

7.4Rights Cumulative.  All rights and remedies existing under the Loan Documents are cumulative to, and not exclusive of, any other rights or remedies available under contract or applicable law.

7.5Unenforceable Provisions.  Any provision of any Loan Document executed by Borrower which is prohibited or unenforceable in any jurisdiction, shall be so only as to such jurisdiction and only to the extent of such prohibition or unenforceability, but all the remaining provisions of any such Loan Document shall remain valid and enforceable.

7.6Indemnification; Exculpation.  Borrower shall, upon a Lender’s first written demand, pay and protect, defend and indemnify such Lender and Lender’s employees, officers, directors, shareholders, affiliates, correspondents, agents and representatives (other than Lender, collectively “Agents”) against, and hold the Lender and each such Agent harmless from, all claims, actions, proceedings, liabilities, damages, losses, expenses (including, without limitation, attorneys’ fees and cos ts) and other amounts incurred by Lender and each such Agent, arising from (i) any breach by the Borrower of an undertaking by the Borrower under this Agreement, (ii) any breach by the Borrower of any representations and warranties in Section 4 above, or (iii) any action to enforce the Lender’s rights hereunder, including by realization of the Charges, provided, however, that this indemnification shall not apply to any of the foregoing incurred solely as the result of Lender’s or any Agent’s gross negligence or willful misconduct and, further provided, that indemnification pursuant to subsection 7.6.(iii) above shall be contingent upon the enforcement action referred to therein not being contested by the Borrower or, if contested, such enforcement action has been confirmed by a ruling of a competent court. This indemnification shall survive for period of two (2) years from the payment and satisfaction of all of Borrower’s obligations to the Lender.

7.7Execution In Counterparts.  This Agreement may be executed in any number of counterparts which, when taken together, shall constitute but one agreement.

7.8< b>Entire Agreement.  The Loan Documents and the Bridge Loan Agreement are intended by the parties as the final expression of their agreement with respect to the subject matter hereof and therefore contain the entire agreement between the parties and supersede all prior understandings or agreements concerning the subject matter hereof. The term “this Agreement” shall be deemed to include all schedules thereof and the Schedule of Exceptions and Disclosures to the SPA as well. This Agreement may be amended only in a writing signed by Borrower and the Lead Lender.

7.9Governing Law And Jurisdiction.  This Agreement and any and all of the Loan Documents shall be deemed to have been executed and delivered in the State of Israel, and the validity, enforcement and construction hereof shall be governed in all respects by the internal laws (without regard to principles of conflicts of law) of the State of Israel. Any legal action or proceeding arising under or in relation to this Agreement and any of the Loan Documents shall be filed exclusively in a court of competent jurisdiction within the State of Israel. In addition, each of the undersigned parties consents and agrees that any competent court in which such legal action or proceeding is commenced may exercise jurisdiction over his, her or its person for purposes of enforcing the terms of this Agreement and any of the Loan Documents and agrees not to assert that venue in Israel is inappropriate or inconvenient.

7.10Interpretation.  The headings of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. The preamble to this Agreement shall be deemed an integral part hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK – SIGNATURE PAGE TO FOLLOW]

8

SIGNATURE PAGE OF CONVERTIBLE LOAN AGREEMENT

IN WITNESS WHEREOF, Borrower and Lenders have executed this Agreement as of the date set forth in the preamble.

BORROWER			LEAD LENDER
RADVIEW SOFTWARE LTD.			FORTISSIMO CAPITAL FUND GP, L.P. BY: FORTISSIMO CAPITAL (GP) MANAGEMENT LTD., ITS GENERAL PARTNER
/s/ ILAN KINREICH			/s/ YUVAL COHEN
Name:		Ilan Kinreich	Name:	Yuval Cohen
Title:		President and CEO	Title:
/s/ CHRISTOPHER DINEEN
Name:	Christopher Dineen
Title:	Chief Financial Officer
SHEM BASUM LTD.
/s/ SHAI BEILIS
Name: Shai Beilis
Title:
YEHUDA ZISAPEL
/s/ YEHUDA ZISAPEL
Name: Yehuda Zisapel
MICHAEL CHILL
/s/ MICHAEL CHILL
Name: Michael Chill

9

Schedule 1.1

Name of Lender	Principal Amount
Fortissimo Capital Fund GP, L.P. (Lead Lender)	$	62,500
Shem Basum Ltd. / Shai Beilis	50,000
Yehuda Zisapel	125,000
Michael Chill	12,500
Sub-total	250,000
Fortissimo Capital Fund GP, L.P. - balance of Bridge Loan*	300,000
Total	$	550,000

*Fortissimo Capital Fund GP, L.P. has already provided $200,000 under the Bridge Loan. This $300,000 amount shall be reduced by any additional funds lent by Fortissimo to the Company between the signing of this Agreement and the SPA Closing.

10

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Forms S-8 (File No.’s 333-67086, 333-101321 and 333-99237) pertaining to RadView Software Ltd.’s Key Employee Share Incentive Plan (1996), United States Share Incentive Plan (2000), and Employee Share Participation Plan and Registration Statement on Form S-3 (File No. 333-114308) of our report dated April 10, 2006, with respect to the consolidated financial statements of RadView Software Ltd. and its subsidiaries included in the Annual Report (Form 10-K) for the year ended December 31, 2005.

April 10, 2006 Tel-Aviv, Israel	Kost Forer Gabbay & Kasierer A Member of Ernst & Young Global

EX-31.1

EXHIBIT 31.1

Ilan Kinreich, President and Chief Executive Officer

I, Ilan Kinreich, certify that:

1.I have reviewed this annual report on Form 10-K of RadView Software Ltd.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant  role in the registrant’s internal controls.

Date: April 13, 2006	/s/ ILAN KINREICH
	Ilan Kinreich
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Christopher Dineen, Chief Financial Officer

I, Christopher Dineen, certify that:

1.I have reviewed this annual report on Form 10-K of RadView Software Ltd.;

2.Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: April 13, 2006	/s/ CHRISTOPHER DINEEN
	Christopher Dineen
	Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of RadView Software Ltd.

Date: April 13, 2006
	/s/ ILAN KINREICH
	Ilan Kinreich
	President and Chief Executive Officer
Date: April 13, 2006
	/s/ CHRISTOPHER DINEEN
	Christopher Dineen
	Chief Financial Officer

The foregoing certification if being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350 and is not being filed under the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company after the date hereof, regardless of any general incorporation language in such filing.