FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
      1934

                    For the fiscal year ended July 31, 2006.

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF 1934

              For the transition period from ________ to ________.

                                  TISSERA, INC.
             (Exact name of registrant as specified in its charter)

                                Bert Logic, Inc.
                           (Former Name of Registrant)

           Washington                      0-32801              91-2034750
(State or other jurisdiction of         (Commission          (I.R.S. employer
incorporation or organization)            File No.)         identification  no.)

                    Amos Eiran, Chairman of the Board and CEO
                              Herzlia Business Park
                             8 Maskit St., 4th floor
                                     Herzlia
                                  46733 Israel
                                 +972-9-9561151
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)

         Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class                    Name of each Exchange on Which Registered
Common Stock ($0.0001 Par Value)                           None
Preferred Stock ($0.0001 Par Value)                        None

       Securities registered under Section 12(g) of the Exchange Act: None

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the 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| No |_|

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB |X|.

The issuer's had no revenues for the year ended July 31, 2006.

At July 31, 2006, the number of shares outstanding of the registrant's Common
Stock, $0.0001 par value (the only class of voting stock), was 27,814,332.

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                                 TABLE OF CONTENTS

                                     PART I

Item 1.  Description of Business ...........................................   1

Item 2.  Description of Property ...........................................   5

Item 3.  Legal Proceedings .................................................   5

Item 4.  Submission  Of  Matters  To  A Vote Of Security Holders ...........   5

                                    PART II

Item 5.  Market  For  Common  Equity And Related Stockholder Matters .......   6

Item 6.  Management's Discussion And Analysis Of Financial Condition,
Changes In Financial Condition And  Results Of Operations ..................   7

Item 7.  Financial  Statements .............................................   9

Item 8. Changes And Disagreements With Accountants On Accounting And
Financial  Disclosure ......................................................  10

Item 8A. Controls and Procedures ...........................................  10

Item 8B. Other Information .................................................  10

                                    PART III

Item 9. Directors, Executive Officers, Promoters And Control Persons;
Compliance With Section 16(A) Of The Exchange Act ..........................  11

Item 10.  Executive  Compensation ..........................................  11

Item 11. Security Ownership Of Certain Beneficial Owners And Management ....  12

Item 12.  Certain  Relationships  And  Related  Transactions ...............  12

Item 13.  Exhibits .........................................................  13

Item 14.  Principal Accountant Fees and Services ...........................  13

                 [This Space Has Been Intentionally Left Blank]


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                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

History

Tissera, Inc. (the "Company") was incorporated under the laws of the State of
Washington on May 31, 2000 as Bert Logic, Inc. Our Internet address is
www.tissera.com.

On September 4, 2003, the former president of Bert Logic Inc. completed a share
purchase agreement with the Company's existing shareholders, who purchased
15,000,000 shares of the then issued and outstanding 18,036,000 of the Company's
Common shares. In connection with the consummation of the transaction, the
president of the Company resigned as president and sole director of the Company.
Pursuant to the agreement, the Company entered into an amended license agreement
to sell Bit Error Rate Testers on a worldwide non-exclusive basis. In exchange,
the Company obtained forgiveness of the remaining promissory note of $10,299,
and accrued interest of $2,436. Also, in connection with the transaction, the
former president of the Company agreed to forgive his shareholders' loan, in the
amount of $2,442.

Following the share purchase agreement dated September 4, 2003, the management
of the Company has decided to discontinue all activities related to the sales of
Bit Error Rate Testers, used for the integrity and reliability of communication
channels. The discontinuation of their activity was accounted for under the
provision of SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets".

On October 8, 2003, the Company entered into a research and license agreement
(the "Research Agreement") with Yeda Research and Development Company Limited
("Yeda"), described in greater detail below.

On October 9, 2003, the Company's Board of Directors resolved to change the name
of the Company from Bert Logic, Inc. to "Tissera, Inc.".

On October 27, 2003, the Company incorporated a wholly-owned subsidiary in
Israel, Tissera Ltd.

General

We develop, test and intend to commercialize solid organ transplantation
therapies based on an approach employing organ-specific precursor tissues. Our
future approach involves harvesting embryonic mammalian tissue at the most
appropriate stages after stem cells have committed to becoming organ-specific
precursor tissues and transplanting them in target human organ systems. The
optimal windows for embryonic tissue transplantation have been defined by Prof.
Reisner's lab at the Weizman Institute. We entered into a Research and License
Agreement with Yeda, whereby Yeda procures the performance of research at the
Weizman Institute of Science, under the supervision of Professor Yair Reisner of
the Department of Immunology. Pursuant to the Company's agreement with Yeda,
Yeda provided the Company with a worldwide, exclusive license to develop,
manufacture and sell products for solid organ transplantation from embryonic
tissue based on research conducted under the supervision of Professor Reisner of
the Department of Immunology of the Weizmann Institute of Science. The license
shall expire in each country with respect to each product at the later of (i)
the expiration of the patents covering such product in the country of sale, or
(ii) 15 years from the date of receipt of FDA New Drug Approval in the United
States for such product, or the equivalent in any other country in which the
products are sold.

For the year ended July 31, 2006, we did not generate revenues and generated net
losses of $1,715,000 as compared to no revenue and net losses in the amount of
$3,983,000 for the year ended July 31, 2005.

We are at development stage and devoting substantially all of our efforts toward
conducting R&D activities, raising capital, pursuing regulatory approval,
recruiting personnel and building infrastructure.

Organ Transplantation

General

Yeda is the commercial arm of the Weizmann Institute of Science. The Yeda
Research Agreement provides the Company with the license to market and sell
products for solid organ transplantation from embryonic tissue based on research
conducted at the Weizmann Institute of Science under the supervision of Prof.
Reisner in accordance with the Research Agreement. The Company intends to market
and sell products for solid organ transplantation from embryonic tissue based on
research conducted by Prof. Reisner's lab at the Weizmann Institute of Science.
The Company believes this technology will provide effective alternatives to
current kidney, liver and pancreas transplants and provide therapies for a
number of unmet medical needs in large markets. Yeda has filed several patent
applications with the United States Patent and Trademark Office in accordance
with the Research Agreement.


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About the Product

Technologies involving the utilization of stem cells from early human embryos or
adults are being researched and developed as a source of early stage cells that
could be isolated, grown in culture and used to replace tissues impaired by many
devastating diseases. In 1998, scientists first developed a procedure whereby
they were able to isolate embryonic stem cells from early human embryos and grow
them in culture. Embryonic stem cells were viewed as a new source of tissue that
could be used to replace cells or tissues that are damaged or destroyed by
various diseases. However, scientists have not been able to overcome the
difficulties involved in replicating nature and controlling the growth and
differentiation of stem cells in the laboratory.

Embryonic stem cell research was delayed due to the inability to determine which
organ a cell would develop into. At a certain point in embryonic development,
stem cells differentiate and commit to a particular development pathway leading
to the formation of a specific organ. Unfortunately, it could not be determined
which cells were going to develop into a specific organ. As a result of
embryonic stem cells tendency to develop in a disorganized fashion that could
not be controlled, the scientific community was not able to develop any real
world uses for embryonic stem cells.

Prof. Reisner, through his research at the Weizmann Institute of Science, has
learned to identify kidney, liver, pancreatic and other precursor tissues found
in the developing embryo. Prof Reisner intends to continue to identify
additional organ precursor tissues as well. In their initial experiments, Prof.
Reisner's team harvested kidney precursor tissue from human and porcine embryos
which was then implanted in mice. The approach developed in Prof. Reisner's lab
preserves the natural state of harvested tissue. Tissue is harvested from
aborted embryos and then implanted in the recipient. Tissues are tested for
control purposes; however, cells are not isolated, cultured, expanded or
genetically engineered. This approach takes embryonic tissue and transplants it
in a recipient where it matures into appropriate functional tissue. By using
committed organ-specific precursor cells, uncontrolled differentiation is
avoided. By taking tissue at the earliest time after cells commit to a pathway,
immune response is minimized. Further, cells are not altered through culturing
and manipulation in ways that may reduce their integration in the host.

Implanting healthy embryonic tissue into humans, tissue which will mature and
produce missing proteins, is believed to be a therapy for many diseases where a
specific protein is not being produced in sufficient quantities (i.e. type I
diabetes, hemophilia, etc.). Ideally, human embryonic tissue would be used for
treating diseased human patients. However, in some countries, most notably the
United States, there are objections on ethical grounds to using tissue from
aborted embryos. Furthermore, pigs may be a preferred source of tissue for
certain clinical applications. Pigs can be raised in controlled environments and
typically gestate five to ten embryos in each pregnancy. Embryonic porcine
tissue can be made available as needed. Human tissue produces human proteins
that may have a better therapeutic potential than porcine tissue that produces
somewhat different proteins. In treating some diseases, these differences may be
significant.

The Company intends to market and sell products for solid organ transplantation
from embryonic tissue based on research conducted by Prof Reisner's lab in
accordance with the Research Agreement. The Company believes that the use of
early organ-committed tissues may be appropriate for treating many serious
diseases. The Company believes initial targets should include insulin dependent
diabetes, hemophilia and other liver-related genetic deficiencies, and certain
renal pathologies. The Company, through its commercialization of research
conducted pursuant to the Research Agreement, intends to provide readily
available on demand solutions for patients waiting for transplant organs that
will reduce the need for long term use of immunosuppressive drugs and will
involve minimally invasive surgical procedures that are normally associated with
transplants. The Company understands there are numerous regulatory approvals
which will be needed before the above can be put into place.

Plan of Operation

The Company has licensed the right to develop products for solid organ
transplantation from embryonic tissue from Yeda and entered an agreement to
sponsor research in Prof. Reisner's laboratory at the Weizmann Institute of
Science for three years on May, 2006 the research agreement was prolonged for an
additional year unitl April 9, 2007 Prof. Reisner's team is continuing the
development of applications employing kidney precursor tissue as well as
pancreas and liver precursor tissues. Prof. Reisner plans to begin experiments
implanting pancreatic precursor tissues harvested from pig embryos into pigs and
monkeys. This will allow scientists to monitor the growth of precursor tissues
in a large animal, to develop appropriate surgical techniques, to optimize the
amount of tissue transplanted and to determine the most suitable use of
immunosuppressive drugs. The Company will initially seek approval through
pre-clinical development in Israel and/or Europe.

The License

We develop, test and intend to commercialize solid organ transplantation
therapies based on an approach employing organ-specific precursor tissues. Our
future approach involves harvesting embryonic mammalian tissue at the most
appropriate stages after stem cells have committed to becoming organ-specific
precursor tissues and transplanting them in target human organ systems. The
optimal windows for embryonic tissue transplantation have been defined by Prof.
Reisner's lab at the Weizman Institute.

On October 8, 2003, we entered into a Research and License Agreement (the
"Research Agreement") with Yeda. The agreement relates to the rights of our
company to have the license from Yeda related to research conducted and to be
conducted at the Weizmann Institute of Science, under the supervision of
Professor Reisner of the Department of Immunology, and relates to an invention
comprising methods of organ transplantation utilizing developing nephric and
other tissues. The License granted to us shall expire in each country with
respect to each product at the later of the following:


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<PAGE>

      o     the expiration of the patents covering such product in the country
            of sale; or

      o     15 years from the date of receipt of FDA New Drug Approval (in the
            United States), or the equivalent in any other country in which the
            products are sold.

In addition, Yeda may terminate the Research and License Agreement if we are in
breach thereof and Yeda may, at its option, terminate the Research and License
Agreement, in whole or in part, or make it non-exclusive if we fail to reach
certain commercialization and development goals as set out in the Research and
License Agreement. Yeda is entitled to unilaterally amend the license so that it
is non-exclusive or terminate the license in the event that we fail to achieve
commercialization of at least one product within certain time limits, fail to
commence various phases of clinical trials within certain time limits or fail to
sell a product after certain milestones. Further, if we contest the validity of
the patents, Yeda may terminate the license. In the event that Yeda would like
to pursue sponsored research with respect to, or the commercialization of, a
given product that would otherwise be subject to the Research and License
Agreement that we have not already commenced developing, then Yeda may provide
us with notice of its intention. Upon receipt of such notice, we will then have
three months to submit a product development program. If we do not submit such
program, the license will be terminated with respect to said given product.

As part of the Research and License Agreement, on February 24,2005, the Company
agreed to issue to Yeda the following:

      o     a warrant, exercisable at an aggregate exercise price of US $900 to
            purchase up to 2.23% of the issued and outstanding shares of common
            stock of our company immediately following the exercise of such
            warrant; and

      o     a warrant, exercisable at an aggregate exercise price of US $1,100
            to purchase up to 2.67% of the issued and outstanding shares of our
            company immediately following the exercise of such warrant.

However, the Research and License Agreement provides that the maximum number of
shares of common stock that Yeda may exercise into for each warrant is 3,010,699
and 3,612,839, respectively (in each case as such number of shares of common
stock shall be appropriately adjusted in the event of stock splits, stock
dividends, capital reorganizations, reclassifications, recapitalizations and the
like as well as issuances or sales by us of shares for par value only, for
consideration less than par value and for no consideration, all in accordance
with the terms and conditions of said warrant, which shall be satisfactory to
Yeda and us). The share amounts described above are adjusted to reflect the
three for one split, but not the other adjustment events described above that
have occurred through the date hereof. Each such warrant shall be exercisable
for a period beginning on the date of its issuance and ending at the later of
the following:

      o     one year following the termination of the Research and License
            Agreement; and

      o     October 7, 2013.

We also agreed to pay or have paid to Yeda the following:

      o     with regard to the first year of the research period (commencing on
            April 9, 2003), we paid the amount of US $450,000 of which a
            non-refundable installment of US $450,000 was paid on December 23,
            2003. This amount is in addition to the $450,000 paid to Yeda in
            connection with researched performed by Yeda during the first year;

      o     with regard to the second year of research we paid an amount of US
            $900,000 of which $225,000 was paid on April 23, 2004; $225,000 was
            paid on July 8, 2004; $225,000 was paid on October 8, 2004; and
            $225,000 was paid on January 10, 2005;

      o     with regard to the third year of research we paid an amount of US
            $900,000 of which $225,000 was paid on April 18, 2005; $225,000 was
            paid on July 11, 2005; $225,000 was paid on October 12, 2005 and
            $225,000 was paid on January 9, 2006.

      o     pursuant to the third addendum of the Research Agreement dated April
            11, 2006, with regard to the fourth year of research we committed to
            pay an amount of US $600,000 of which $150,000 was paid on May 2,
            2006 and $150,000 was paid on July 19, 2006. Further, the
            termination for the research period was extended from April 10, 2006
            to April 9, 2007.


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<PAGE>

We have also agreed that within one year from the date of the Research and
License Agreement, we will submit a development program to Yeda for its
approval. The company has applied to Yeda for the deferral of the submission of
this program to September 2005, and Yeda has given its consent for the deferral.
The September 2005 product development plan has been submitted to Yeda. We
further undertook to use our best efforts to commercialize the licensed
products. We also agreed to pay Yeda a license fee as follows:

      o     $50,000 per year commencing from the end of the license period,
            which has been extended until April 9, 2007;

      o     4% of net sales of all products covered by the Research and License
            Agreement;

      o     33% of all sublicense fees for all agreements entered into within
            one year of the Agreement; and

      o     16% of all sublicense fees for all agreements entered into after
            such one year period.

Industry

There are numerous companies developing drugs or devices to slow down or halt
the progression of kidney and liver disease, to treat diabetes and to care for
genetic diseases. These companies are developing traditional chemical compounds,
new biological drugs, cloned human proteins and other treatments, which are
likely to impact the markets which the Company is targeting.

There are a number of companies developing cell therapies. Among them, there are
those that are using genetically-engineered, non genetically-engineered cells,
fetal cells, adult cells, progenitor cells, mature cells, human cells and
non-human cells. The Company is aware of two companies that have been involved
in fetal porcine cell transplant. Alexion Pharmaceuticals was developing fetal
porcine cell treatments. Alexion's annual report states that is looking for a
corporate partner and is no longer investing in their cell therapy program.
Diacrin, Inc. was active in developing fetal porcine cell therapies for liver
and cardiac applications. Diacrin had begun phase I studies for a number of
applications. It showed positive phase I results for a Parkinson's disease
therapy but failed to show convincing phase II results. In August 2003, Diacrin
merged with GenVec, Inc. and it is not clear which, if any, of the porcine cell
therapies will be continued.

There are a number of companies using adult stem cells or adult precursor cells.
These companies must first isolate the adult stem cells from surrounding tissue
and then grow them in culture in order to arrive at the number of cells required
for therapeutic use. Growing adult stem cells generally requires the extensive
use of growth factors or genetic engineering techniques. Some of these companies
have had moderate success developing cell therapies (e.g. Genzyme's Carticel for
knee cartilage repair) although they have not yet been able to engineer a
functional organ structure.

Dr. Marc Hammerman at the Washington University in St. Louis has been active in
developing kidney disease therapies based on transplanted embryonic
kidney-precursor cells and has been granted a patent, titled "Chimeric Kidney",
by the US Patent and Trademark Office in connection with this research. A
British company, Intercytex Ltd., has licensed this technology and is sponsoring
research in Dr. Hammerman's laboratory. This same company has also filed a
related PCT application titled "Kidney Formation". In addition, Dr. Hammerman
has been active in developing diabetes mellitus therapies based on transplanted
embryonic endocrine pancreas-precursor tissues and has filed a US patent
application, titled "Chimeric Pancreas", in connection with this research. As it
was felt by us that the above-mentioned patent and patent applications might
have a negative impact on our potential to develop our products, we have
commissioned an expert legal opinion on the matter from a leading office of
patent attorneys. This opinion has been delivered to us, and on its basis, we
now do not believe that either Dr. Hammerman's patent and patent application or
Intercytex' patent application should restrict Tissera's freedom to implement
its pancreatic and/or kidney product development.

We believe, based on information currently available to us, that Dr. Hammerman's
research will not impact our liver, spleen and other organ applications.

Employees

We currently only have three officers and no day to day employees. Mr. Amos
Eiran serves as Chairman of the Board and CEO, Mr. Alex Werber serves as our
Chief Financial officer and Dr. Uri Elmaleh serves as our V.P. of Medical and
Regulatory Affairs. We currently use consultants, attorneys and accountants as
necessary. If we hire employees a portion of any employee compensation likely
would include the right to acquire our stock, which would dilute the ownership
interest of holders of existing shares of our common stock.

ITEM 2. DESCRIPTION OF PROPERTY

We are headquartered at 8 Maskit St. 4th floor, Herzlia Israel where we occupy
1,000 square feet of office space. We believe that this facility is generally
suitable and adequate to accommodate our current operations and that such
facility is adequately insured.


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ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal
proceedings which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm the Company's business. Except
for the following, the Company is currently not aware of nor has any knowledge
of any such legal proceedings or claims that we believe will have, individually
or in the aggregate, a material adverse affect on our business, financial
condition or operating results:

      o     On December 21, 2004, Dr. Rabenou, our former CEO and a director,
            filed claim in the District Labor Court located in Tel Aviv Israel
            ("Labor Court") against the Company alleging that the Company owed
            Dr. Rabenou a sum of NIS 564,140 (approximately $128,418) pursuant
            to the terms of her employment agreement. This claim remains
            pending, and the Company intends to continue its current defense
            efforts with respect to such claim. In addition, the Company, filed
            a counterclaim against Dr. Rabenou in the Labor Court based on
            damages incurred to the Company pursuant to certain of Dr. Rabenou's
            actions or omissions, during her tenure as the Company's CEO. The
            counterclaim seeks damages against Dr. Rabenou in the amount of NIS
            9,405,491 (approximately $2,141,018). These damages are based
            primarily on certain actions taken by Dr. Rabenou as follows: (i)
            the issuance of an unauthorized bonus to Dr. Rabenou while she was
            CEO in the amount of $110,000 upon completion of the private
            offering in the amount of $5,500,000 in March 2004;; (ii) the
            issuance of 280,000 shares of common stock to Pini Rabenou, the
            brother of Dr. Rabenou, for which the Company did not receive any
            discernable consideration; (iii) the failure to withhold Israeli
            income taxes with respect to the exercise of options by Dr. Rabenou;
            and (iv) the issuance of shares to Biogreen Ltd. as more fully
            described below. On January 15, 2004, when Dr. Rabenou recommended
            the issuance of Company shares to number of specified entities and
            individuals, including a company known as BioGreen Ltd.
            ("BioGreen"), to which the Company issued 397,000 shares (the
            "BioGreen Shares"). The issuance of the BioGreen Shares gave rise to
            a Company expense of $833,700. After Dr. Rabenou resigned as CEO,
            the Company commenced an internal investigation into all corporate
            actions taken during Dr. Rabenou's tenure, including the BioGreen
            matter. The Company's management attempted, unsuccessfully, to
            identify the specific services that served as the basis for
            BioGreen's compensation, and Dr. Rabenou refused to cooperate with
            the Company's investigation. Notwithstanding, in response to the
            Company's counterclaim, Dr. Rabenou filed a reply brief within which
            she denied our claims and asserted that she assigned her right to
            the BioGreen Shares to an unnamed offshore company incorporated in
            the Bahamas (that the Company believes is BioGreen), and asserting a
            number of new defenses and mitigating factors, which were not
            disclosed either during or immediately subsequent to the January 15,
            2004 Board of Directors Meeting. The Company initially described the
            above litigation proceedings, within its Form 10-QSB filed for the
            quarter ended April 30, 2005. Subsequent to the filing of such Form
            10-QSB, Dr. Rabenou's legal counsel: (a) communicated to the Company
            that it believed that the statements in such 10-QSB constituted
            libel; (b) threatened legal action against the Company if such
            statements were not withdrawn; and (c) claimed damages of
            approximately $23,000 related to such alleged libel. The Company,
            based on the opinion of its legal advisors, does not intend to
            retract any of its public statements regarding the above matters.

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

During the forth quarter ended 2006, the Company did not submit any matters to a
vote of security holders through the solicitation of proxies or otherwise.


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                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

a) Market Information

The Company's common stock is currently traded on the OTC Bulletin Board under
the symbol "TSSR". The Company's common stock was traded on the OTC Bulletin
Board under the symbol "BRTL". The Company's common stock began trading on
August 27, 2002.

The table below sets forth the high and low sales prices for the Company's
common stock for the relevant calendar quarters of 2005, 2006 and 2007. The
quotations below reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions:

Year   Quarter   High    Low
----   -------   -----   -----
2005   First     $0.48   $0.26
2005   Second    $0.47   $0.28
2005   Third     $0.38   $0.18
2005   Fourth    $0.28   $0.15
2006   First     $0.26   $0.14
2006   Second    $0.15   $0.08
2006   Third     $0.18   $0.08
2006   Fourth    $0.13   $0.08
2007   First*    $0.11   $0.06

*Up to October 23, 2006

b) Holders

As of October 23, 2006, there were approximately 59 shareholders of record
holding a total of 27,814,332 shares of common stock. The holders of our common
stock are entitled to one vote for each share held of record on all matters
submitted to a vote of shareholders. Holders of the common stock have no
preemptive rights and no right to convert their common stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
common stock.

c) Dividends

There have been no dividends declared since the inception of the Company and
there are no restrictions on the ability to pay dividends on common equity or
that are likely to do so in the future. The payment of dividends is within the
discretion of the Board of Directors and will depend on the Company's earnings,
capital requirements, financial condition, and other relevant factors. There are
no restrictions that currently limit the Company's ability to pay dividends on
its Common Stock other than those generally imposed by applicable state law.

d) Recent Sales of Unregistered Securities

None.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, CHANGES IN
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This annual report on Form 10-KSB contains forward-looking statements, which are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements. You should not place undue reliance on
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "intends", "expects",
"plans", "anticipates", "believes", "estimated", "predicts", "potential", or
"continue" or the negative of such terms or other comparable terminology. These
statements are only predictions and involve known and unknown risks,
uncertainties, and other factors that may cause the Company's actual results,
levels of activity, performance, or achievements to be materially different from
any future results, levels of activity, performance, or achievements expressed
or implied by such forward-looking statements. These factors include, among
other things, those discussed in this annual report on Form 10-KSB and in the
Company's other filings with the SEC. Although the Company believes that the
expectations reflected in the forward-looking statements are reasonable,
forward-looking statements are inherently uncertain, and the Company cannot
guarantee future results, levels of activity, performance, or achievements. The
Company is under no duty to update any of the forward-looking statements in this
annual report on Form 10-KSB to conform forward-looking statements to actual
results. All forward-looking statements should be considered in light of these
risks and uncertainties.


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Overview

We were incorporated under the laws of the State of Washington on May 31, 2000.
We develop, test and intend to commercialize solid organ transplantation
therapies based on an approach employing organ-specific precursor tissues. Our
future approach involves harvesting embryonic mammalian tissue at the earliest
stage at which stem cells commit to becoming organ-specific precursor tissues
and transplanting them in target human organ systems. The optimal window for
embryonic tissue transplantation was defined by Prof. Reisner's lab at the
Weizman Institute. We entered into a Research and License Agreement with Yeda,
whereby Yeda procures the performance of research at the Weizman Institute of
Science, under the supervision of Professor Reisner of the Department of
Immunology. We have a world wide license that shall expire in each country with
respect to each product at the later of (i) the expiration of the patents
covering such product in the country of sale, or (ii) 15 years from the date of
receipt of FDA New Drug Approval in the United States for such product, or the
equivalent in any other country in which the products are sold.

We are at development stage and devoting substantially all of our efforts toward
conducting R&D activities, raising capital, pursuing regulatory approval,
recruiting personnel and building infrastructure. Our former line of business
was selling bit error testers. Our license in connection with bit error testers
expired in May 2004.

Research and License Agreement

On October 8, 2003, we entered into a Research and License Agreement (the
"Research Agreement") with Yeda. The agreement relates to the rights of our
company to have the license from Yeda related to research conducted and to be
conducted at the Weizmann Institute of Science, under the supervision of
Professor Reisner of the Department of Immunology, and relates to an invention
comprising methods of organ transplantation utilizing developing nephric and
other tissues. The License granted to us shall expire in each country with
respect to each product at the later of the following:

      o     the expiration of the patents covering such product in the country
            of sale; or

      o     15 years from the date of receipt of FDA New Drug Approval (in the
            United States), or the equivalent in any other country in which the
            products are sold.

In addition, Yeda may terminate the Research and License Agreement if we are in
breach thereof and Yeda may, at its option, terminate the Research and License
Agreement, in whole or in part, or make it non-exclusive if we fail to reach
certain commercialization and development goals as set out in the Research and
License Agreement. Yeda is entitled to unilaterally amend the license so that it
is non-exclusive or terminate the license in the event that we fail to achieve
commercialization of at least one product within certain time limits, fail to
commence various phases of clinical trials within certain time limits or fail to
sell a product after certain milestones. Further, if we contest the validity of
the patents, Yeda may terminate the license. In the event that Yeda would like
to pursue sponsored research with respect to, or the commercialization of, a
given product that would otherwise be subject to the Research and License
Agreement that we have not already commenced developing, then Yeda may provide
us with notice of its intention. Upon receipt of such notice, we will then have
three months to submit a product development program. If we do not submit such
program, the license will be terminated with respect to said given product.

As part of the Research and License Agreement, on February 24,2005, the Company
agreed to issue to Yeda the following:

      o     a warrant, exercisable at an aggregate exercise price of US $900 to
            purchase up to 2.23% of the issued and outstanding shares of common
            stock of our company immediately following the exercise of such
            warrant; and

      o     a warrant, exercisable at an aggregate exercise price of US $1,100
            to purchase up to 2.67% of the issued and outstanding shares of our
            company immediately following the exercise of such warrant.

However, the Research and License Agreement provides that the maximum number of
shares of common stock that Yeda may exercise into for each warrant is 3,010,699
and 3,612,839, respectively (in each case as such number of shares of common
stock shall be appropriately adjusted in the event of stock splits, stock
dividends, capital reorganizations, reclassifications, recapitalizations and the
like as well as issuances or sales by us of shares for par value only, for
consideration less than par value and for no consideration, all in accordance
with the terms and conditions of said warrant, which shall be satisfactory to
Yeda and us). The share amounts described above are adjusted to reflect the
three for one split, but not the other adjustment events described above that
have occurred through the date hereof. Each such warrant shall be exercisable
for a period beginning on the date of its issuance and ending at the later of
the following:

      o     one year following the termination of the Research and License
            Agreement; and

      o     October 7, 2013.


                                       9

<PAGE>

We also agreed to pay or have paid to Yeda the following:

      o     with regard to the first year of the research period (commencing on
            April 9, 2003), we paid the amount of US $450,000 of which a
            non-refundable installment of US $450,000 was paid on December 23,
            2003. This amount is in addition to the $450,000 paid to Yeda in
            connection with researched performed by Yeda during the first year;

      o     with regard to the second year of research we paid an amount of US
            $900,000 of which $225,000 was paid on April 23, 2004; $225,000 was
            paid on July 8, 2004; $225,000 was paid on October 8, 2004; and
            $225,000 was paid on January 10, 2005;

      o     with regard to the third year of research we paid an amount of US
            $900,000 of which $225,000 was paid on April 18, 2005; $225,000 was
            paid on July 11, 2005; $225,000 was paid on October 12, 2005 and
            $225,000 was paid on January 9, 2006.

      o     pursuant to the third addendum of the Research Agreement dated April
            11, 2006, with regard to the fourth year of research, we committed
            to pay an amount of US $600,000 of which $150,000 was paid on May 2,
            2006 and $150,000 was paid on July 19,2006. Further, the termination
            for the research period was extended from April 10, 2006 to April 9,
            2007.

We have also agreed that within one year from the date of the Research and
License Agreement, we will submit a development program to Yeda for its
approval. The company has applied to Yeda for the deferral of the submission of
this program to September 2005, and Yeda has given its consent for the deferral.
The September 2005 product development plan has been submitted to Yeda. We
further undertook to use our best efforts to commercialize the licensed
products. We also agreed to pay Yeda a license fee as follows:

      o     $50,000 per year commencing from the end of the license period,
            which has been extended until April 9, 2007;

      o     4% of net sales of all products covered by the Research and License
            Agreement;

      o     33% of all sublicense fees for all agreements entered into within
            one year of the Agreement; and

      o     16% of all sublicense fees for all agreements entered into after
            such one year period.

RESULTS OF OPERATIONS - FISCAL YEAR ENDED JULY 31, 2006 COMPARED TO THE FISCAL
YEAR ENDED JULY 31, 2005

REVENUES AND COSTS OF GOODS SOLD

We are in a development stage and, therefore, have no revenues and cost of goods
sold.

OPERATING EXPENSES

Operating expenses from continuing operations for the year ended July 31, 2006
were $1,760.000 as compared to $4,036,000 for the year ended July 31, 2005. This
decrease is attributed mainly to options and warrants granted to employees,
service providers and consultants totaling $7,000 in the year ended July 31,
2006 as compared to $1,794,000 during the year ended July 31, 2005 and to a
decrease in salaries expenses as well to a decrease in general and
administrative expenses.

The R&D expenses for the year ended July 31, 2006 amounted to $1,031,000
compared to $1,296,000 during the year ended July 31, 2005. This decrease is
attributed mainly to a decrease in salaries expenses due to a lesser amount of
employees during the year ended July 31, 2006 and to a decrease in the amount
paid to Yeda.

Our general and administrative expenses decrease to $729,000 for the year ended
July 31, 2006 from $2,740,000 for the year ended July 31, 2005. The decrease in
general and administrative expenses is attributed to a decrease in costs related
to warrants and shares granted to service providers and to employees and
directors which was $1,780,000 for the year ended July 31, 2005 and $27,000 for
year ended July 31, 2006. On March 16, 2005, the Company entered into a
Settlement Agreement in which it amended the terms of the private offering from
March 18, 2004, in which the Company received gross proceeds in the amount of
$5,500,000. The Company recorded an expense of $1,980,000 in relation with the
Settlement Agreement. In addition the company decreases its general and
administrative expenses mainly to its auditors and legal advisors.


                                       10

<PAGE>

FINANCIAL INCOME

We had net financial income in the amount of $55,000 for the year ended July 31,
2006 compared to net financial income of $68,000 for the year ended July 31,
2005. This is primarily a result from interest income on the funds raised on
March 2004 privet placement. The decrease in financial income is attributed to a
decrease in fund available for investment due to it uses cash to finance its
Research and development activities. The Company has invested its funds in bank
deposits that bear interest rates of approximately 5.0% per annum.

TAXES ON INCOME

Taxes on Income

We had a tax expense amounting to $10,000 for the year ended July 31, 2006
compared to $15,000 for the year ended July 31, 2005. These expense resulting
from tax liability of our wholly owned subsidiary Tissera Ltd.

Our company has an agreement with our subsidiary to which we will provide
services related to our Research and Development activities. We will reimburse
Tissera Ltd. for expenses on a cost plus 10% basis which creates a taxable
income in our subsidiary.

NET LOSS

As a result of the above, we incurred a net loss of $1,715,000 for the year
ended July 31, 2006, as compared to a net loss of $3,983,000 for the year ended
July 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Our cash and short-term deposit were $938,000 as of July 31, 2006, compared to
$2,603,000 as of July 31, 2005. This decrease in Cash and Cash equivalents is
attributed to the Company need to finance its development activities from its
cash and short-term deposit. We had a working capital of $499,000 as of July 31,
2006, compared to $2,203,000 as of July 31, 2005. We plan to continue to consume
cash in our research and development activities by payments of salaries,
payments for services received from Yeda and other costs. We also plan to
continue finance our operations through a combination of private placement,
stock issuances, debt issuances, mutual development with possible milestone
license payments and research and development programs. There are no assurances,
however, that we will be successful in obtaining an adequate level of financing
required for the long-term development and commercialization of our planned
products.

ITEM 7. FINANCIAL STATEMENTS

The financial statements are attached hereto following the signature page
beginning on page F-1.


                                       11

<PAGE>

ITEM 8. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

ITEM 8A. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our chief executive officer
and chief financial officer of our disclosure controls and procedures (as
defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon
this evaluation, our chief executive officer and chief financial officer
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission's rules and forms. There was
no change in our internal controls or in other factors that could affect these
controls during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 8B. OTHER INFORMATION

None.


                                       12

<PAGE>

PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

The Company's directors hold office until the annual meeting of shareholders
next held after their election. The officers and directors of the Company as of
October 23, 2006 are as follows:

   Name          Age   Position
--------------   ---   ---------------------------------------
Amos Eiran       70    Chief Executive Officer and Chairman of
                       the Board of Directors
Alex Weber       51    Chief Financial Officer and Chief
                       Accounting Officer
Robert G. Pico   61    Director
Uri  Elmaleh     59    VP Research
Meir Segev       53    Director
Peretz Shmuel    65    Director

Amos Eiran was appointed on September 7, 2004 as the Chairman of the Board and
as the Acting Chief Executive Officer of the Company. On March 13, 2006 Amos
Eiran was appointed as Chief Executive Officer. Mr. Eiran serves as Chairman of
Atudot, a major Israeli pension fund, and Chairman of the Investments Committee
of Clal Insurance Group, an Israeli insurance company. He also serves as a
director of Deleck Oil Exploration. Mr. Eiran has been a director for Medis
Technologies Ltd. (Nadaq: MDTL) since 1992 and is also a director of two of its
subsidiaries, Medis Inc. and Medis El. Through the summer of 2002, Mr. Eiran
served as the Chairman of the Industrial Cooperation Authority, the agency in
charge of the buy-back and offset programs of the State of Israel, for seven
years. Mr. Eiran was Director General of the Prime Minister's office during
Yitzhak Rabin's first term as Prime Minister. Prior to and after his term with
the Prime Minister's office, he was Director General and Chairman of Mivtahim,
the largest pension fund in Israel. From 1993 to 1995, Mr. Eiran served as a
director for XTL Biopharmaceuticals Ltd., a company presently traded on the
London Stock Exchange. Mr. Eiran received a bachelor's degree in Liberal Arts
from American University in Washington D.C. in 1968, a master's degree in
History from Tel Aviv University in 1974, a diploma in business administration
from Harvard University in 1963 and a diploma in investments from the Wharton
Business School in 2002.

Alex Werber serves as our Chief Financial Officer. From August 2002 to the
present, Mr. Werber has worked as a financial services consultant where he has
provided a wide range of outsourced financial services. In addition, since
September 2000 Mr. Werber has served as the Audit Committee Chairman of the
Board of Directors of Crow Technologies Ltd., a manufacturer of security
products. From October 2001 to August 2002, Mr. Werber was the Chief Financial
Officer of CTMotion Ltd. a developer and deplorer of mobile internet and
location-based services. In addtion, Mr. Werber served as a business developer
for Nokrom Technologies, which specializes in retain financial services,
insurance and telecommunications sectors. From November 1996 to March 2000, Mr.
Werber served as the Vice President of Finance for Vcon Telecommunications, a
developer and manufacturer of video conferencing systems. Mr. Werber is a
Certified Public Accountant and received his Bachelor of Arts in Economics and
Accountancy from Tel Aviv University and did his post graduate study in
Accounting at Tel Aviv University.

Uri Elmaleh holds an M.D. degree from the Hebrew University and Hadassah medical
school in Jerusalem. He is a certified board specialist, who underwent training
in both Internal Medicine and Obstetrics & Gynecology at Hadassah University
Hospital. Prior to joining the company, he served as VP for Business Development
in Rad Biomed Ltd, where he was actively involved in the establishment and
scientific and business mentoring of several Life Sciences start-up companies.

Robert Pico, since joining TranSwith Corporation in 1989, has held several top
management positions at TranSwitch, a publicly traded Nasdaq corporation,
including director of business operations, vice president of sales and vice
president of business development. Mr. Pico is currently the vice president of
business development at TranSwitch Corporation. Mr. Pico sits on the board of
IC4IC , TeraOP, SOSI and is an advisor for Accordion Networks and Optix
Networks. In 1966, Mr. Pico received a BSEE from the University of Hartford, in
1972 he received an MS in Physics from Trinity College and in 1981 he completed
the coursework for an MBA from the University of Hartford.

Meir Segev is a director of our company. Meir Segev was appointed as a director
of Pluristem Inc. on March 18, 2003 and also serves as the Chief Executive
Officer of ISC Holdings Ltd. Mr. Segev graduated from University of Haifa and
received his Bachelor of Arts degree in political science in 1997. From 1997 to
2002, Mr. Segev served as the Headquarters Division Head of Shabak, the Israel
Security Agency. He was primarily responsible for the management and strategic
planning of resources and budget for the entire Headquarters Division of Shabak.

Shmuel Peretz was appointed on November 29, 2004 as a director and as a Chairman
of the Audit Committee of the Board. Mr. Pertez has held several top management
positions Israel Aircraft Industry (IAI) among them the CEO of IAI and President
of IAI Europe. Mr. Petetz served as director on several companies including
Elta, Magal, Elcint and others. Mr. Peretz in 1982, received a MBA degree from
the New York Institution of Technology, in 1963 he received a BA in Economics
from the Hebrew University, Jerusalem.


                                       13

<PAGE>

Code of Ethics

The Company adopted a Code of Ethics for its officers, directors and employees.
A copy of the Code of Ethics is attached hereto as an exhibit.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more then 10 percent of
the Company's Common Stock, to file with the SEC the initial reports of
ownership and reports of changes in ownership of common stock. Officers,
directors and greater than 10 percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

Specific due dates for such reports have been established by the Commission and
the Company is required to disclose any failure to file reports by such dates
during fiscal year 2006. Based solely on its review of the copies of such
reports received by it, or written representations from certain reporting
persons that no Forms 5 were required for such persons, the Company believes
that during the fiscal year ended July 31, 2006, there was no failure to comply
with Section 16(a) filing requirements applicable to its officers, directors and
ten percent stockholders.

ITEM 10. EXECUTIVE COMPENSATION

The following table provides summary information for the years 2004, 2005 and
2006 concerning cash and noncash compensation paid or accrued by the Company to
or on behalf of the president and the only other employee(s) to receive
compensation in excess of $100,000.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                               Long Term Compensation
                                                        ---------------------------------
                         Annual Compensation                     Awards           Payouts
                       ------------------------------------------------------------------
                                               Other                 Securities
                                               Annual   Restricted     Under-
Name and                                      compen-      Stock        lying       LTIP     All Other
Principal              Salary    Bonus         sation     Awards      Options/    Payouts     Compen-
Position        Year-    ($)      ($)           ($)         ($)       SARs (#)      ($)     sation ($)
-------------------- ---------------------------------------------------------------------------------
<S>             <C>    <C>       <C>               <C>          <C>   <C>              <C>     <C>
Vicki Rabenou   2006        --        --           --           --           --        --           --
                2005   125,000        --           --           --           --        --      158,415
                2004   179,000   110,000(1)        --           --    2,042,551        --      868,492(2)

Amos Eiran      2006   180,000        --           --           --           --        --           --
                2005   162,000        --           --           --    1,500,000        --       20,156
                2004        --        --           --           --           --        --           --
</TABLE>

(1) On November 4, 2004, the Board of Directors decided to rescind the Bonus
granted to Dr. Rabenou. Dr. Rabenou refused to repay any such amount pursing the
Company request. This amount is included with in the Company claim against
Dr.Rabenou.

(2) Represents value of the options granted to Dr. Rabenou.

Compensation of Directors

Mr. Pico and Mr. Segev received warrants to purchase 270,540 shares of common
stock each at an exercise price of $ 0.30.

Mr. Smuel Peretez received warrants to purchase 270,540 shares of common stock
at an exercise price of $ 0.31.

Directors who are not employees of the Company are paid $500 for participation
in Board meeting and $250 for telephonic attendance as well as annual fee of
$8,400.


                                       14

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial
ownership of the stock of the Company as of October 23, 2006, by each
shareholder who is known by the Company to beneficially own more than 5% of the
outstanding common stock, by each director, and by all executive officers and
directors as a group.

<TABLE>
<CAPTION>
                   Name and Address of
Title of Class     Beneficial Owner                  Amount of Shares(2)   Percent of Class(2)
----------------   -------------------------------   -------------------   -------------------
<S>                <C>                               <C>                   <C>
Common Stock       Robert G. Pico**                  225,450 (3)           *%
                   3 Field Drive
                   Woodbridge, CT 06525

Common Stock       Alex Werber**                     88,888 (4)            *%

Common Stock       Amos Eiran**                      1,500,000 (1)         4.86%

Common Stock       Meir Segev**                      232,965(3)            *%

Common Stock       Peretz Shmuel**                   142,785               *%

Common Stock       Uri  Elmaleh **                   206,111               *%

Common Stock       Sharon Laor                       1,620,000             5.82%
                   27 Alexander Penn
                   Tel Aviv, Israel 69641

Common Stock       Yael Zucker                       1,740,000             6.26%
                   27 Alexander Penn
                   Tel Aviv, Israel 69641

Common Stock       All officers and directors as a   2,362,583             7.92%
                   Group
</TABLE>

* Less than 1% of the outstanding common stock.

** Executive officer and/or director. Addresses are c/o Tissera, Inc., Herzlia
Business Park, 8 Maskit Street, 4th Floor 46733 Israel.

(1) The Company granted Mr. Eiran warrants to purchase 1,500,000 shares of
common stock at an exercise price of $0.30. Executive's rights to exercise the
warrants shall vest in 24 equal monthly installments during a period of two
years commencing September 7, 2004, of which 1,500,000 are currently vested.

(2) Unless otherwise indicated, each person has sole investment and voting power
with respect to the shares indicated. For purposes of this table, a person or
group of persons is deemed to have "beneficial ownership" of any shares which
such person has the right to acquire within 60 days as of October 23, 2006. For
purposes of computing the percentage of outstanding shares held by each person
or group of persons named above on October 23, 2006 any security which such
person or group of persons has the right to acquire within 60 days after such
date is deemed to be outstanding for the purpose of computing the percentage
ownership for such person or persons, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. As of
October 23, 2006, we had 27,814,332 shares of common stock outstanding.

(3) Received a warrant to purchase 270,540 shares of common stock, of which
225,450 are vested for Mr. Pico and 216,111 are vested for Meir Segev.

(4) We granted a warrant to purchase 100,000 shares of common stock to Mr.
Werber. Currently, 88,888 shares of common stock have vested in connection with
the warrant.


                                       15

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

No director, executive officer or nominee for election as a director of our
company, and no owner of five percent or more of our outstanding shares or any
member of their immediate family has entered into or proposed any transaction in
which the amount involved exceeds $60,000 except as set forth below.

Mr. Meir Segev and Mr. Robert G. Pico, our directors, each received 270,540
warrants which vest at the rate of 22,545 shares of common stock every three
months during the terms of the warrants. The warrants are exercisable at $0.30
per share.

Mr. Alex Werber, our CFO, was granted 100,000 stock options that are exercisable
at $0.30 per share on a cashless basis. The Stock Options vest and become
exercisable in 36 equal monthly installments of 2,778. The Stock Options expire
(5) years after the date they granted and become exercisable, but in any case
not later than six (6) months after termination of the reporting person's
employment. We have an agreement with Mr. Werber which provides that we must pay
Mr. Werber a monthly salary equivalent to 30,000 NIS ($6,666) pursuant to Mr.
Werber's full time employment with the Company.

We have entered into an employment agreement with Dr. Uri Elmaleh, our Vice
President of Medical and Regulatory Affairs. The agreement provides that we must
pay him 35,000 shekels per months as well as provide him with a car and phone
allowance. We also granted Dr. Elmaleh a warrant to purchase 280,000 shares of
common stock at $.30 per share. On May 25, 2004 the Company granted Dr. Elmaleh
10,090 shares in consideration for services rendered.

In March 2004, the Board of Directors authorized the issuance of 280,000 shares
of common stock to Mr. Pinny Rabenou. Mr. Rabenou is the brother of Dr. Rabenou.
In addition, the Board also authorized the issuance of common stock purchase
warrants to purchase 280,000, which the granting of such warrants were
contingent upon the entering into a definitive employment agreement with Mr.
Rabenou. The issuance was approved by the Board of Directors. However, following
the Company's later investigation, the Company discovered that no consulting
agreement was ever signed between the Company and Mr. Rabenou, and the Company
received what it believes to be only token services from Mr. Rabenou, which, the
Company believes, did not justify the largess of such grant. As no definitive
employment agreement was entered into, the Board of Directors cancelled the
warrants issued to Mr. Rabenou.

We entered into an employment arrangement with Mr. Yaron Sagi. Mr. Sagi, a
shareholder of our company, in exchange for serving in an administrative
capacity, received a warrant to purchase 33,333 shares of common stock at an
exercise price of $.30 per share. Further, Mr. Sagi received a salary of 25,000
new Israeli shekels per month plus use of a company car and cellular phone. This
employment agreement has been terminated.

In consideration for Dr. Rabenou's efforts in obtaining financing for the
Company in the amount of $5,500,000 in March 2004, the Board of Directors
granted a bonus in the amount of $110,000 to Dr. Rabenou. On November 4, 2004,
the Board of Directors decided to cancel a former bonus granted to Dr. Rabenou
in March 2004, in the amount of $110,000 and demand the bonus to be repaid,
based on the Board of Directors' analysis that the grant of such bonus was not
approved by a majority of the Company's shareholders. The Company has submitted
a letter to the former CEO demanding that the bonus be repaid and filed a
counterclaim against Dr. Rabenou seeking full restitution. Dr. Rabenou filed a
reply brief within which she denied our claims.

At a special meeting of the Board of Directors of the Company, a majority of the
directors of the Company elected to terminate Dr. Rabenou as the Chief Executive
Officer of the Company. In addition, Dr. Rabenou has resigned as a director of
the Company pursuant to a resignation letter from Dr. Rabenou to the Board of
Directors of the Company dated September 20, 2004 (the "Resignation Letter"). In
addition, Dr. Rabenou has resigned as a director and Chief Executive Officer of
Tissera, Ltd., a wholly-owned subsidiary of the Company, pursuant to the
Resignation Letter. Dr. Rabenou's resignation in said capacities was effective
on September 20, 2004.

On November 4, 2004, the Company ratified the issuance of warrants to purchase
200,000 shares of common stock at an exercise price of $1.00 to each Prof
Abraham Shaked, M.D., Ph.D., Sir Roy York Calne, M.D., F.R.C.P., F.R.C.S and
Prof. Shutherland.

The Company granted Mr. Eiran warrants to purchase 1,500,000 shares of common
stock at an exercise price of $0.3. Executive's rights to exercise the warrants
shall vest in 24 equal monthly installments during a period of two years
commencing September 7, 2004. Any vested portion of the warrants, if not
previously exercised shall terminate upon the earlier of three months after
termination of the agreement or 10 years from the date of vesting.


                                       16

<PAGE>

Mr. Smuel Peretez received warrants to purchase 270,540 shares of common stock
at an exercise price of $ 0.31.


                                       17

<PAGE>

ITEM 13. EXHIBITS

Exhibit  Page
No.      No.    Description
-------- ----   ----------------------------------------------------------------
3(a)(i)  *      Articles Of Incorporation of Tissera, Inc. (Incorporated by
                reference filed with the Company's Form SB-2 on November 14,
                2000).

3(a)(ii) *      By-laws of Tissera, Inc.

4        *      Specimen Share of Common Stock

10.1     *      Agreement Between BERT Logic Inc. and Reach Technologies Inc
                Dated May 31, 2000 for the right to distribute the Reach
                Technologies Inc. licensed product line.


10.2     **     Agreement Between BERT Logic Inc. And Reach Technologies Inc
                Dated May 11, 2001 amending the Licensing Agreement with Reach
                Technologies, Inc. dated May 31, 2000 as it pertains to new
                territory

10.3     ****   Agreement Between BERT Logic Inc. And Reach Technologies Inc
                Dated May 31, 2003 amending the Licensing Agreement with Reach
                Technologies, Inc. dated May 31, 2000

10.4     *****  Agreement Between BERT Logic Inc. And Reach Technologies Inc
                Dated September 4, 2003 amending the Licensing Agreement with
                Reach Technologies, Inc. dated May 31, 2000

10.5     ****** Research and License Agreement between Yeda Research and
                Development Company Limited and Bert Logic Inc.

14.1     ****** Code of Ethics

16.1     ***    Letter on change in certifying accountant.

31.1            Certification of the Acting Chief Executive Officer of Tissera,
                Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2            Certification of the Chief Financial Officer of Tissera, Inc.
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1            Certification of the Acting Chief Executive Officer of Tissera,
                Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.1            Certification of the Chief Financial Officer of Tissera, Inc.
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*Incorporated by reference filed with the Form SB-2 filed with the Securities
and Exchange Commission on November 14, 2000.

**Incorporated by filed with the Company's Form 10-KSB filed with the Securities
and Exchange Commission on March 15, 2001.

***Incorporated by reference filed with Company's Form 8-K filed with the
Securities and Exchange Commission on January 13, 2004.

**** Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on June 16, 2003.

***** Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on September 8, 2003.

****** Incorporated by reference to the Company's Form 8-K filed with the
Securities and Exchange Commission on October 14, 2003.

******Incorporated by reference to the Company's Form 10-KSB filed with the
Securities and Exchange Commission on November 3, 2003.


                                       18

<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees. The aggregate fees billed by our auditors, for professional services
rendered for the audit of the Company's annual financial statements for the two
years ended July 31, 2006 and 2005 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB during
that fiscal years were $70,000, and $92,000, respectively.

Audit Related Fees. The Company did not engage auditors to provide any other
professional services to the Company during the two fiscal years ended July 31,
2006 and 2005.

All Other Fees. There were no fees billed by auditors for services rendered to
the Company, other than the services covered in "Audit Fees" for the fiscal
years ended July 31, 2006 and 2005.

For the fiscal years ended July 31, 2005. $5,000 was billed by auditors for
services rendered to the Company, other than the services covered in "Audit
Fees"

The Audit Committee has considered whether the provision of non-audit services
is compatible with maintaining the principal accountant's independence and has
confirmed that no conflict exists.


                                       19

<PAGE>

                                   SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this Amendment to Form 10-KSB to be signed on its behalf by
the undersigned, thereunto duly authorized, this 30th day of October 2006.

                                        TISSERA, INC.


                                        /s/ Amos Eiran
                                        ----------------------------------------
                                        Name: Amos Eiran
                                        Title: Chairman of the Board of
                                               Directors and Chief Executive
                                               Officer

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

Signature                               Title                  Date
---------                               -----                  ----


/s/ Amos Eiran                    Chief Executive              October  30, 2006
-------------------------------   Officer and Chairman of
                                  the Board of Directors


/s/ Alex Werber                   Chief Financial              October  30, 2006
-------------------------------   Officer & Chief Accounting
                                  Officer


/s/ Robert G. Pico                Director                     October  30, 2006
-------------------------------


/s/ Meir Segev                    Director                     October  30, 2006
-------------------------------


/s/ Peretz Shmuel                 Director                     October  30, 2006
-------------------------------


                                       20

                         TISSERA INC. AND ITS SUBSIDIARY
                           (FORMERLY: BERT LOGIC INC.)

                          (A development stage company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                               AS OF JULY 31, 2006

                                 IN U.S. DOLLARS

<PAGE>

                                      INDEX

                                                                           Page
                                                                           ----
Report of Independent Registered Public Accounting Firm                      2

Consolidated Balance Sheets                                                  3

Consolidated Statements of Operations                                        4

Statements of Changes in Stockholders' Equity (Deficiency)                   5

Consolidated Statements of Cash Flows                                        6

Notes to Consolidated Financial Statements                                7 - 27

<PAGE>

[ERNST & YOUNG LOGO]

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

                             To the shareholders of

                                  TISSERA INC.
                           (FORMERLY: BERT LOGIC INC.)
                          (A development stage company)

      We have audited the accompanying consolidated balance sheets of Tissera
Inc. (Formerly: Bert Logic Inc.) ("the Company") (a development stage company)
and its subsidiary as of July 31, 2006 and 2005 and the related consolidated
statements of operations, statements of changes in stockholders' equity
(deficiency) and the consolidated statements of cash flows for each of the years
then ended and for the period from May 31, 2000 (inception) through July 31,
2006. 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. The financial statements as of July 31, 2003 and
for the period from May 31, 2000 (inception) through July 31, 2003, were audited
by other auditors whose report dated September 13, 2003 expressed an unqualified
opinion on those statements. The consolidated financial statements for the
period from May 31, 2000 (inception) through July 31, 2003 included a net loss
of $ 105 thousand. Our opinion on the consolidated statements of operations,
changes in stockholders' equity (deficiency) and cash flows for the period from
May 31, 2000 (inception) through July 31, 2006 insofar as it relates to amounts
for prior periods through July 31, 2003, is based solely on the report of other
auditors.

      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
audit 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 and the report of the other auditors provide a reasonable basis for our
opinion.

      In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above, present fairly, in all
material respects, the consolidated financial position of the Company and its
subsidiary as of July 31, 2006 and 2005, and the consolidated results of their
operations and cash flows for each of the years then ended and for the period
from May 31, 2000 (inception) through July 31, 2006 in conformity with
accounting principles generally accepted in the Unites States.

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 1c,
the Company is in the development stage and, as such, has incurred recurring
operating losses, has generated an accumulated deficit and has a negative cash
flow from operating activities. These conditions raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainly.

Tel-Aviv, Israel                                  KOST FORER GABBAY & KASIERER
October 30, 2006                                A Member of Ernst & Young Global


                                      -2-

<PAGE>

                         TISSERA INC. AND ITS SUBSIDIARY
                           (FORMERLY: BERT LOGIC INC.)
                          (A development stage company)

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

                                                                  July 31,
                                                            -------------------
                                                              2006       2005
                                                            --------   --------

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                 $    111   $  2,603
  Short-term deposit (Note 4)                                    844         --
  Accounts receivable and prepaid expenses (Note 5)              174        265
                                                            --------   --------
Total current assets                                           1,129      2,868
                                                            --------   --------
RESTRICTED CASH                                                    5         --
                                                            --------   --------
SEVERANCE PAY FUND                                                33         29
                                                            --------   --------
PROPERTY AND EQUIPMENT, NET (Note 6)                              13         21
                                                            --------   --------
Total assets                                                $  1,180   $  2,918
                                                            ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Trade payables                                            $      4   $      5
  Other accounts payable and accrued expenses (Note 7)           626        660
                                                            --------   --------
Total current liabilities                                        630        665
                                                            --------   --------
ACCRUED SEVERANCE PAY                                             44         39
                                                            --------   --------
COMMITMENTS AND CONTINGENCIES  (Note 8)
Total liabilities                                                674        704
                                                            --------   --------
STOCKHOLDERS' EQUITY:
  Stock capital (Note 10) -
  Common stock of $ 0.0001 par value each -
    Authorized: 100,000,000 shares as of July 31, 2006
      and 2005; Issued and outstanding: 27,814,332 and
      27,582,114 shares as of July 31, 2006 and 2005,
      respectively                                                 3          3
  Preferred stock of $ 0.0001 par value each -
    Authorized: 20,000,000 shares as of July 31, 2006
      and 2005; Issued and outstanding: 0 shares as of
      July 31, 2006 and 2005                                      --         --
  Additional paid-in capital                                  28,839     28,859
  Deferred stock based compensation                               (4)       (31)
  Deficit accumulated during the development stage           (28,332)   (26,617)
                                                            --------   --------
Total stockholders' equity                                       506      2,214
                                                            --------   --------
Total liabilities and stockholders' equity                  $  1,180   $  2,918
                                                            ========   ========

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


                                       -3-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

<TABLE>
<CAPTION>
                                                                                                  From
                                                                                              May 31, 2000
                                                                                            (inception date)
                                                                   Year ended July 31,           through
                                                                -------------------------       July 31,
                                                                    2006          2005            2006
                                                                -----------   -----------   ----------------
<S>                                                             <C>           <C>                <C>
Operating expenses:
  Research and development (including expenses (income)
    related to options granted to employees and warrants
    granted to Yeda and to service providers in the amount of
    $ (20) and $ 14 for the years ended July 31, 2006 and
    2005, respectively)                                         $     1,031   $     1,296        $15,064
  General and administrative (including expenses related to
    warrants, options and shares granted to service
    providers, employees and directors and compensation to
    investors in the amount of $27 and $ 1,780 for the years
    ended July 31, 2006 and 2005, respectively)                         729         2,740         13,253
                                                                -----------   -----------        -------
                                                                      1,760         4,036         28,317
Financial income, net (Note 12)                                          55            68            125
                                                                -----------   -----------        -------
Loss from continuing operations before income taxes                   1,705         3,968         28,192
Income taxes (Note 9)                                                    10            15             48
                                                                -----------   -----------        -------
Loss from continuing operations                                       1,715         3,983         28,240
Loss from discontinued operations (Note 1a)                              --            --             92
                                                                -----------   -----------        -------
Net loss                                                        $     1,715   $     3,983        $28,332
                                                                ===========   ===========        =======
Basic and diluted net loss per share                            $      0.06   $      0.14
                                                                ===========   ===========

Weighted average number of shares used in computing basic
  and diluted net loss per share                                 27,662,795    27,580,571
                                                                ===========   ===========
</TABLE>

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


                                      -4-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share data

<TABLE>
<CAPTION>
                                                                                                          Deficit
                                                                                                        accumulated      Total
                                                             Stock capital    Additional    Deferred     during the  stockholders'
                                                         -------------------    paid-in    stock based  development      equity
                                                           Number     Amount    capital   compensation     stage      (deficiency)
                                                         -------------------  ----------  ------------  -----------  -------------
<S>                                                      <C>           <C>      <C>          <C>         <C>            <C>
Balance as of May 31, 2000                                       --    $  --    $    --      $  --       $     --       $     --
Stock issued for cash on May 31, 2000                    15,036,000        2          8         --             --             10
Net loss                                                         --       --         --         --             (5)            (5)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2000                              15,036,000        2          8         --             (5)             5
Stock issued for cash on July 17, 2001                    3,000,000     *)--         40         --             --             40
Contribution of capital                                          --       --         15         --             --             15
Net loss                                                         --       --         --         --            (30)           (30)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2001                              18,036,000        2         63         --            (35)            30
Contribution of capital                                          --       --         15         --             --             15
Net loss                                                         --       --         --         --            (39)           (39)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2002                              18,036,000        2         78         --            (74)             6
Contribution of capital                                          --       --         15         --             --             15
Net loss                                                         --       --         --         --            (31)           (31)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2003                              18,036,000        2         93         --           (105)           (10)
Stock issued for cash related to PPM1, net of $ 176 of
  cash issuance expenses                                  1,767,200     *)--      2,033         --             --          2,033
Stock issued for cash related to PPM2, net of $ 517 of
  cash issuance expenses                                  3,142,858        1      4,983         --             --          4,984
Stock based compensation related to warrants granted to
  service providers                                              --       --     11,429         --             --         11,429
Stock based compensation related to options granted to
  employees and directors                                        --       --      1,130         --             --          1,130
Compensation related to stock granted to service
  providers and to employees                              3,067,090     *)--      7,366         --             --          7,366
Deferred stock based compensation                                --       --        163       (163)            --             --
Exercise of options                                       1,543,766     *)--         --         --             --           *)--
Net loss                                                         --       --         --         --        (22,529)       (22,529)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2004                              27,556,914        3     27,197       (163)       (22,634)         4,403
Stock based compensation related to warrants granted to
  investors                                                      --       --      1,980         --             --          1,980
Warrants granted to Yeda and to service providers                --       --       (362)        --             --           (362)
Amortization of stock based compensation related to
  options granted to employees and directors                     --       --         --        176             --            176
Deferred stock based compensation                                --       --         44        (44)            --             --
Exercise of options                                          25,200     *)--         --         --             --             --
Net loss                                                         --       --         --         --         (3,983)        (3,983)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2005                              27,582,114        3     28,859        (31)       (26,617)         2,214
Exercise of options                                         232,218     *)--       *)--         --             --           *)--
Warrants granted to service providers                            --       --        (20)        --             --            (20)
Amortization of stock based compensation related to
  options granted to employees and directors                     --       --         --         27             --             27
Net loss                                                         --       --         --         --         (1,715)        (1,715)
                                                         ----------    -----    -------      -----       --------       --------
Balance as of July 31, 2006                              27,814,332    $   3    $28,839      $  (4)      $(28,332)      $    506
                                                         ==========    =====    =======      =====       ========       ========
</TABLE>

*)    Represents an amount lower than $ 1.

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


                                      -5-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. dollars in thousands

<TABLE>
<CAPTION>
                                                                                                   From
                                                                                               May 31, 2000
                                                                       Year ended July 31,   (inception date)
                                                                       -------------------   through July 31,
                                                                         2006       2005           2006
                                                                       -------   ---------   ----------------
<S>                                                                    <C>        <C>           <C>
Cash flows from operating activities:
  Net loss                                                             $(1,715)   $(3,983)      $(28,332)
  Adjustments required to reconcile net loss to net cash used in
    operating activities:
  Depreciation                                                               8         14             25
  Expenses (income) related to warrants granted to Yeda and to
    service providers                                                      (20)      (362)        11,047
  Expenses related to options granted to employees and directors            27        176          1,333
  Expenses related to shares granted to service providers and
    compensation to investors                                               --      1,980          9,346
  Interest accrued on short-term deposit                                   (17)        --            (17)
  Decrease (increase) in accounts receivable and prepaid expenses           91        (28)          (174)
  Increase (decrease) in trade payables                                     (1)       (16)             4
  Increase (decrease) in other accounts payable and accrued expenses       (34)       157            626
  Increase in accrued severance pay, net                                     1          6             11
                                                                       -------    -------       --------
Net cash used in continuing operating activities                        (1,660)    (2,056)        (6,131)
Net cash provided by discontinued operating activities                      --         --             75
                                                                       -------    -------       --------
Total net cash used in operating activities                             (1,660)    (2,056)        (6,056)
                                                                       -------    -------       --------
Cash flows from investing activities:
  Short-term deposit                                                      (827)        --           (827)
  Sales of property and equipment                                           --          9              9
  Purchase of property and equipment                                        --         (6)           (47)
  Restricted cash                                                           (5)        --             (5)
                                                                       -------    -------       --------
Net cash used in continuing investing activities                          (832)         3           (870)
Net cash used in discontinued investing activities                          --         --            (15)
                                                                       -------    -------       --------
Total net cash used in investing activities                               (832)         3           (885)
                                                                       -------    -------       --------
Cash flows from financing activities:
  Issuance of shares and warrants, net                                    *)--       *)--          7,017
                                                                       -------    -------       --------
Net cash provided by continuing financing activities                        *)         --          7,017
Net cash provided by discontinued financing activities                      --         --             35
                                                                       -------    -------       --------
Total net cash provided by financing activities                             *)         --          7,052
                                                                       -------    -------       --------
Increase (decrease) in cash and cash equivalents                        (2,492)    (2,053)           111
Cash and cash equivalents at beginning of period                         2,603      4,656             --
                                                                       -------    -------       --------
Cash and cash equivalents at end of period                             $   111    $ 2,603       $    111
                                                                       =======    =======       ========
</TABLE>

*)    Represents an amount lower than $ 1.

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


                                      -6-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 1:- GENERAL

      a.    Tissera Inc. ("the Company") was incorporated under the laws of the
            State of Washington on May 31, 2000. The Company is in the
            development stage. The Company is engaged in developing and testing
            organ transplantation therapies based on an approach employing
            organ-specific precursor tissues.

            On September 4, 2003, the former president of the Company (and a
            former major shareholder) entered into a share purchase agreement
            ("the Agreement") with the Company's existing shareholders, who
            purchased 15,000,000 shares of the then issued and outstanding
            18,036,000 shares of the Company's Common stock. In connection with
            the agreement, the president of the Company resigned as president
            and sole director of the Company. Also, in connection with the
            Agreement, the Company obtained forgiveness of the remaining
            promissory note of $ 10 and accrued interest of $ 2 that was due on
            May 31, 2004 in respect of the Company's license to sell Bit Error
            Rate Testers ("the License") and agreed to convert the License to a
            worldwide non-exclusive license. Also, in connection with the
            Agreement, the former president of the Company agreed to forgive his
            loan, in the amount of $ 1.

            Subsequent to the Agreement, the management of the Company has
            decided to discontinue all activities related to the sales of Bit
            Error Rate Testers and to engage in the development of tissue
            transplant technologies. The discontinuation of this activity was
            accounted for under the provision of Statement of Financial
            Accounting Standard No. 144 ("SFAS 144"), "Accounting for the
            Impairment or Disposal of Long-Lived Assets".

            The statements of operations for the year ended July 31, 2004,
            include a gain in the amount of $ 13, reported in discontinued
            operations, related to the forgiveness of the note and the loan
            described above.

            On October 8, 2003, the Company entered into a research and license
            agreement with Yeda Research and Development Company Limited
            ("Yeda"), according to which Yeda provided the Company with a
            worldwide exclusive license to develop, manufacture and sell Yeda's
            tissue transplant technologies. Yeda is entitled to cancel the
            agreement under certain conditions determined in the agreement (see
            Note 2). The Company currently bases its entire operations on the
            license provided from Yeda. Should Yeda terminate the agreement with
            the Company, the Company will not be able to continue its current
            research operations. Regarding the extension of the research and
            development agreement, see Note 2.

            On October 9, 2003, the Company's Board of Directors resolved to
            change the name of the Company from Bert Logic, Inc. to "Tissera,
            Inc".

      b.    On October 27, 2003, the Company incorporated a wholly-owned
            subsidiary in Israel, Tissera Ltd. ("the subsidiary"), which is
            engaged in research and development.


                                      -7-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 1:- GENERAL (Cont.)

      c.    Going concern considerations:

            The Company's accumulated deficit and net loss as of July 31, 2006
            and for the year then ended, amounted to approximately $ 28,332 and
            $ 1,715, respectively. In addition, the Company has finalized its
            current research and development agreement with Yeda (see Note 2) so
            as to reduce its current R&D expenses. The Company's ability to
            continue to operate as a going concern is dependent on its ability
            to generate sufficient cash flows to meet its obligations on a
            timely basis, to obtain additional financing and to ultimately
            attain profitability. The Company is in the development stage and,
            as such, has no revenues (and is not intended to generate revenues
            in the near future), has incurred recurring operating losses, and an
            accumulated deficit and has a negative cash flow from operating
            activities (amounting to $ 1,660 for the year ended July 31, 2006).
            The process of developing commercial products will require
            significant additional expenditures for research and development,
            maintaining the key technology license, pre-clinical testing and
            clinical trials, as well as obtaining regulatory approval. These
            activities, together with general and administrative expenses, are
            expected to result in substantial operating losses in the
            foreseeable future.

            In the event the Company is unable to successfully raise capital and
            generate revenues, it is unlikely that the Company will have
            sufficient cash flows and liquidity to finance its business
            operations as currently contemplated. Accordingly, the Company will
            likely reduce general and administrative expenses and cease or delay
            development projects until it is able to obtain sufficient
            financing. There can be no assurance that additional funds will be
            available on terms acceptable to the Company, or at all.

            These conditions raise substantial doubt about the Company's ability
            to continue to operate as a going concern. The financial statements
            do not include any adjustments to reflect the possible future effect
            on the recoverability and classification of assets or the amounts
            and classification of liabilities that may result from the outcome
            of this uncertainly.

      d.    Risk factors:

            The Company depends on Yeda to conduct its research and development
            activities. As discussed in Note 2, the research services are to be
            provided until April 2007. Thereafter, the Company will have to
            negotiate for new research services to be received, whether, by Yeda
            or by other service providers. If Yeda fails to provide the research
            services or is unwilling to continue to provide research services
            after April 2007 at terms that are acceptable to the Company, the
            Company may be required to seek alternative sources of research
            services. A change in service provider could result in delays in the
            research activities, increase in expense and could adversely affect
            the Company's results of operations and cash flows. In addition, as
            discussed in Note 2, Yeda may terminate the research and license
            agreement ("the Agreement") under certain conditions.


                                      -8-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 2:- RESEARCH AND LICENSE AGREEMENT

            On October 8, 2003, the Company entered into a research and license
            agreement ("the agreement") with Yeda. The Company conducted the
            research for a period of three years, at the Weizmann Institute of
            Science (the commercialization company of Yeda). On April 11, 2006,
            the Company has signed an agreement with Yeda, extending the
            research period by one additional year, until April 2007. The
            research relates to an invention comprising methods of organ
            transplantation employing nephric tissues. The license that was
            granted to the Company shall expire at the later of (i) the
            expiration of the patents in the country of sale, or (ii) 15 years
            from the date of receipt of FDA new drug approval (in the United
            States), or the equivalent in any other country in which the
            products are sold. In addition, Yeda may terminate the agreement if
            the Company will fail to achieve certain commercialization and
            development achievements, as defined in the agreement. Currently,
            the Company complies with all of the terms of the agreement.

            The Company committed to grant Yeda, within 120 days of the date on
            which the agreement is signed, (i) a warrant, exercisable at an
            aggregate exercise price of $ 0.9 to purchase up to 2.23% of the
            issued and outstanding Common stock of the Company immediately
            following the exercise of such warrant, and (ii) a warrant,
            exercisable at an aggregate exercise price of $ 1.1 to purchase up
            to 2.67% of the issued and outstanding shares of the Company
            immediately following the exercise of such warrant, provided that
            the maximum number of shares of Common stock that Yeda may exercise
            under the warrants shall be 3,010,699 and 3,612,839, respectively
            (the number of shares of Common stock shall be appropriately
            adjusted in the event of stock splits, stock dividends, capital
            reorganizations, reclassifications, recapitalizations and the like
            as well as issuances or sales by the Company of shares for par value
            only, for a consideration of less than par value and for no
            consideration, all in accordance with the terms and conditions of
            said warrant). Each such warrant shall be exercisable for a period
            beginning one year after the date on which the agreement is signed,
            and ending at the later of (a) one year following the termination of
            the agreement and (b) October 7, 2013. As of the balance sheet date,
            1,433,125 of the Company's shares of Common stock are underlying the
            warrants. The warrants shall be exercisable on a cashless basis.

            Since the license is used for research and development activities
            and no alternative use exists for the license, the cost of the
            license was recorded as research and development (income) expenses
            amounting to $ (156) and $ 1.5 for the year ended July 31, 2005 and
            2006, respectively. The fair value of the warrants was determined
            based on the number of shares underlying the warrants as of the
            balance sheet date. The number of shares underlying the warrants as
            of the balance sheet date was determined based on the actual issued
            and outstanding shares of the Company and any options to acquire
            Company's shares for a nominal consideration, totaling 1,570,861
            shares of Common stock. Each such warrant shall be immediately
            exercisable at fair value till the later of (a) one year following
            the termination of the agreement and (b) October 7, 2013.


                                      -9-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 2:- RESEARCH AND LICENSE AGREEMENT (Cont.)

            Prior to the actual issuance of the warrants, the value of the
            warrants for recording the research and development expenses was
            remeasured at each reporting period based on the number of shares
            underlying the warrants as of each reporting period with the entire
            change in the fair value of the underlying shares reported in
            research and development expenses.

            After the issuance of the warrants, since the warrants entitle the
            investors to a final percentage of the Company's shares (up to a
            certain maximum number of shares), with each change in the number of
            the Company's issued and outstanding shares or the number of options
            with a nominal exercise price, the fair value of the additional
            shares underlying the warrants will be recorded as research and
            development expenses. Once the number of shares underlying the
            warrants will reach the maximum number of shares that can be issued
            under the warrants, the warrants will cease to be further
            re-measured.

            According to the agreement and addendums, the Company paid Yeda with
            regard to the first second and third years of the research period
            commencing April 9, 2003, an annual amount of $ 900.

            In April 2006, the Company signed a third addendum to the agreement
            with Yeda and committed to pay Yeda an amount of $ 600 to be paid in
            four equal installments payable in advance in respect of the fourth
            year of the research period ending April 9, 2007.

            According to the agreement, if within the fourth research year, the
            Company raises at least $ 1,000 due to an investment or merger as
            defined in the agreement, or granted an amount of $ 300 designated
            to finance the research and development then the budget shall
            increase to $ 900.

            The Company undertook to make its best efforts to commercialize the
            licensed products. The Company also agreed to pay Yeda a license fee
            of (i) $ 50 per year, to be paid commencing the first year after the
            completion of the research and development period; (ii) 4% of net
            sales of all products using the licensed technology; (iii) 33% of
            all sublicense fees for all agreements entered into within one year
            following the agreement date, and (iv) 16% of all sublicense fees
            for all agreements entered into after such one-year period.


                                      -10-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES

      The financial statements have been prepared in accordance with accounting
      principles generally accepted in the United States ("U.S. GAAP"). The
      significant accounting policies followed in the preparation of the
      financial statements, on a consistent basis, are:

      a.    Financial statements in U.S. dollars:

            The functional currency of the Company is the U.S dollar ("dollar")
            since the dollar is the currency of the primary economic environment
            in which the Company has operated and expects to continue to operate
            in the foreseeable future. A majority of the transactions of the
            subsidiary is recorded in new Israeli shekels ("NIS"); however, all
            of the subsidiary's revenues from transactions with the Company are
            generated in dollars and all intercompany balances are denominated
            in dollars. In addition, a substantial portion of the subsidiary's
            costs is incurred in dollars. Accordingly, management has designated
            the dollar as the currency of its and its subsidiary's primary
            economic environment and thus their functional and reporting
            currency.

            Transactions and balances denominated in dollars are presented at
            their original amounts. Non-dollar transactions and balances have
            been remeasured to dollars in accordance with the provisions of
            Statement of Financial Accounting Standard No. 52, "Foreign Currency
            Translation". All transaction gains and losses from remeasurement of
            monetary balance sheet items denominated in non-dollar currencies
            are reflected in the statement of operations as financial income or
            expenses, as appropriate.

      b.    Principles of consolidation:

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

      c.    Cash equivalents:

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

      d.    Short-term deposits:

            The Company classified deposits with original maturities of more
            than three months and less than one year as short-term deposits. The
            short-term deposits are presented at cost, including accrued
            interest.


                                      -11-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

      e.    Property and equipment:

            Property and equipment are stated at cost, less accumulated
            depreciation. Depreciation is calculated by the straight-line method
            over the estimated useful lives of the assets.

            The annual depreciation rates are as follows:

                                                          %
                                               --------------------------

Office furniture and equipment                             7
Computers, software and electronic equipment               33
Leasehold improvements                         Over the term of the lease

      f.    Impairment of long-lived assets:

            The Company's long-lived assets are reviewed for impairment in
            accordance with Statement of Financial Accounting Standard No. 144,
            "Accounting for the Impairment or Disposal of Long-Lived Assets"
            ("SFAS No. 144") whenever events or changes in circumstances
            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 the assets 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 their fair value. During the years
            ended July 31, 2006 and 2005, no impairment losses have been
            identified.

      g.    Research and development costs:

            Research and development costs are charged to expenses as incurred.

      h.    Severance pay:

            The liability of the subsidiary for severance pay is calculated
            pursuant to the Severance Pay Law in Israel, based on the most
            recent salary of the employees multiplied by the number of years of
            employment as of the balance sheet date and is presented on an
            undiscounted basis.

            The subsidiary's employees are entitled to one month's salary for
            each year of employment or a portion thereof. The Company's
            liability for all of its employees is fully provided by monthly
            deposits with insurance policies and by an accrual. The value of
            these policies is recorded as an asset in the Company's balance
            sheet.

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

            Severance expenses for the years ended July 31, 2006 and 2005
            amounted to $ 5 and $ 27, respectively.


                                      -12-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

      i.    Use of estimates:

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States
            requires management to make estimates and assumptions that affect
            the reported amounts of assets and liabilities and disclosure of
            contingent assets and liabilities at the date of the financial
            statements and the reported amounts of income and expenses during
            the reporting period. Actual results could differ from those
            estimates.

      j.    Accounting for share-based compensation:

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

            Pro forma information regarding net loss and loss per share is
            required by Statement of Financial Accounting Standard No. 123, and
            has been determined assuming the Company had accounted for its
            employee share options under the fair value method prescribed by
            that Statement. The fair value for these options was estimated on
            the date of grant using a Black-Scholes option pricing model, with
            the following weighted-average assumptions for the year ended July
            31, 2005: weighted average volatility of 217%, risk-free interest
            rates of 3.84%, dividend yields of 0% and a weighted-average
            expected life of the options of 7.79 years. (No options were granted
            during 2006.)

            For purposes of pro forma disclosures, the estimated fair value of
            the options is amortized as an expense over the option's vesting
            period. The Company's pro forma information is as follows:

                                                            Year ended July 31,
                                                            -------------------
                                                              2006       2005
                                                            -------    -------
Net loss as reported                                        $ 1,715    $3,983
Deduct: share-based employee compensation expense
  included in reported net loss in accordance with APB-25       (27)     (176)
Add: stock-based employee compensation expense
  determined under fair value method                          1,027       975
                                                            -------    ------
Pro forma net loss                                          $ 2,715    $4,782
                                                            =======    ======
Pro forma net loss per share (basic and diluted)            $   0.1    $ 0.17
                                                            =======    ======
Net loss per share (basic and diluted), as reported         $  0.06    $ 0.14
                                                            =======    ======


                                      -13-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

            The Company applies SFAS 123 and EITF 96-18, "Accounting for Equity
            Instruments That are Issued to Other Than Employees for Acquiring,
            or in Conjunction with Selling, Goods or Services" ("EITF 96-18")
            with respect to options and warrants issued to non-employees. SFAS
            123 and EITF 96-18 require the use of an option valuation model to
            measure the fair value of the options at the grant date.

      k.    Basic and diluted net loss per share:

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

            All outstanding share options and warrants have been excluded from
            the calculation of the diluted loss per share for the years ended
            July 31, 2006 and 2005, because all such securities have an
            anti-dilutive effect.

            Such outstanding securities consist of the following:

                            Year ended July 31,
                                    2006
                            -------------------

            Options              2,646,206
            Warrants            18,945,221
                                ----------

            Total               21,591,427
                                ==========

      l.    Income taxes:

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

      m.    Fair value of financial instruments:

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


                                      -14-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

            The carrying values of cash and cash equivalents, short-term
            deposits, accounts receivable, trade payables and other accounts
            payable, approximate their fair value due to the short-term maturity
            of these instruments.

      n.    Concentrations of credit risks:

            Financial instruments that potentially subject the Company and its
            subsidiary to concentrations of credit risk consist principally of
            cash and cash equivalents and short term deposits.

            Cash and cash equivalents and short-term deposits are deposited in
            banks in Israel and in 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.

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

      o.    Impact of recently issued accounting standards:

            1.    On December 16, 2004, the Financial Accounting Standards Board
                  issued FASB Statement No. 123 (revised 2004), "Share-Based
                  Payment" ("Statement 123(R)"), which is a revision of FASB
                  Statement No. 123, "Accounting for Stock-Based Compensation".
                  Statement 123(R) supersedes APB 25, and amends FASB Statement
                  No. 95, "Statement of Cash Flows". Generally, the approach in
                  Statement 123(R) is similar to the approach described in
                  Statement 123. However, Statement 123(R) requires all
                  share-based payments to employees, including grants of
                  employee stock options, to be recognized in the income
                  statement based on their fair values. Pro forma disclosure is
                  no longer an alternative. The new Standard will be effective
                  for the Company in the first interim period beginning after
                  August 1, 2006.

                  As permitted by Statement 123, the Company currently accounts
                  for share-based payments to employees using APB 25's intrinsic
                  value method. Accordingly, the adoption of Statement 123(R)'s
                  fair value method will have a significant impact on the
                  Company's results of operations, although it will have no
                  impact on the Company's overall financial position. The impact
                  of the adoption of Statement 123(R) cannot be predicted at
                  this time because it will depend on levels of share-based
                  payments granted in the future. However, had the Company
                  adopted Statement 123(R) in prior periods, the impact of that
                  Standard would have approximated the impact of Statement 123
                  as described in the disclosure of pro forma net loss and loss
                  per share above in sub Note j.

                  In March 2005, the SEC issued Staff Accounting Bulletin No.
                  107 ("SAB 107") to give guidance on implementation of
                  Statement 123(R). The Company will consider SAB 107 in
                  implementing Statement 123(R).


                                      -15-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

            2.    Recently issued accounting pronouncements:

                  In July 2006, the FASB issued FASB Interpretation No. 48,
                  "Accounting for Uncertainty in Income Taxes, an Interpretation
                  of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the
                  accounting for income taxes by prescribing the minimum
                  recognition threshold a tax position is required to meet
                  before being recognized in the financial statements. FIN 48
                  utilizes a two-step approach for evaluating tax positions.
                  Recognition (step one) occurs when an enterprise concludes
                  that a tax position, based solely on its technical merits, is
                  more-likely-than-not to be sustained upon examination.
                  Measurement (step two) is only addressed if step one has been
                  satisfied (i.e., the position is more-likely-than-not to be
                  sustained). Under step two, the tax benefit is measured as the
                  largest amount of benefit, determined on a cumulative
                  probability basis that is more-likely-than-not to be realized
                  upon ultimate settlement.

                  FIN 48 applies to all tax positions related to income taxes
                  subject to the Financial Accounting Standard Board Statement
                  No. 109, "Accounting for Income Taxes" ("SFAS 109"). This
                  includes tax positions considered to be "routine" as well as
                  those with a high degree of uncertainty.

                  FIN 48 has expanded disclosure requirements, which include a
                  tabular roll forward of the beginning and ending aggregate
                  unrecognized tax benefits as well as specific details related
                  to tax uncertainties for which it is reasonably possible the
                  amount of unrecognized tax benefit will significantly increase
                  or decrease within 12 months. These disclosures are required
                  at each annual reporting period unless a significant change
                  occurs in an interim period.

                  FIN 48 is effective for fiscal years beginning after December
                  15, 2006. The cumulative effect of applying FIN 48 will be
                  reported as an adjustment to the opening balance of retained
                  earnings.

                  The Company is currently evaluating the effect of the adoption
                  of FIN 48 on its financial statements.

NOTE 4:- SHORT-TERM DEPOSITS

                  Short-term deposits bear an effective annual interest rate of
                  5.1% as of July 31, 2006. The Company is able to break the
                  time deposit before its maturity date with a penalty worth of
                  one month's interest.


                                      -16-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 5:- ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

                                                 July 31,
                                               -----------
                                               2006   2005
                                               ----   ----
Government authorities                         $  5   $  7
Prepaid expenses                                169    258
                                               ----   ----
                                               $174   $265
                                               ====   ====

NOTE 6:- PROPERTY AND EQUIPMENT

Cost:
  Office furniture and equipment              $  2    $  2
  Computer software and electronic equipment    29      29
  Leasehold improvements                         6       6
                                              ----    ----
                                                37      37
                                              ----    ----
Accumulated depreciation:
  Office furniture and equipment               *)--    *)--
  Computer software and electronic equipment    18      10
  Leasehold improvements                         6       6
                                              ----    ----
                                                24      16
                                              ----    ----
Depreciated cost                              $ 13    $ 21
                                              ====    ====

*)    Represents an amount lower than $ 1.

NOTE 7:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Government authorities                        $348    $331
Employees and payroll accruals                  80      74
Accrued expenses                               198     255
                                              ----    ----
                                              $626    $660
                                              ====    ====


                                      -17-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 8:- COMMITMENTS AND CONTINGENCIES

      a.    The facilities and motor vehicles of the Company are rented under
            operating leases. Minimum rental commitments under the
            non-cancelable lease as of July 31, 2006 are for one additional year
            and amount to $ 17.

      b.    The Company's subsidiary obtained a bank guarantee in the amount of
            $ 5 to secure a rent agreement.

      c.    On September 7, 2004, the Board of Directors decided to terminate
            the employment of the Chief Executive Officer of the Company ("the
            Former CEO"). According to the Former CEO's employment agreement,
            the Former CEO is entitled to payments totaling approximately $ 78
            upon termination of employment with the Company. On December 21,
            2004, a claim against the Company was filed with to the Israeli
            Labor Court by the Former CEO for a payment of approximately $ 121
            (NIS 564 thousand) in respect of payments allegedly due to her. The
            Company has filed a statement of defense against the Former CEO's
            claim. The Company's management and its legal advisors are of the
            opinion that the Company has good defense arguments against the
            claim. In the year ended July 31, 2005, a provision in the amount of
            $ 100, in respect of net salary expenses was recorded under
            operating expenses, with respect to the Former CEO.

      d.    1. On June 5, 2005, the Former CEO submitted to the Company a third
            party notice by which the Company was informed that the Former CEO
            was the beneficiary of 397,000 shares of Common stock, $ 0.0001 par
            value issued to service providers on January 15, 2004 for services.
            The fair value of the shares in the amount of $ 834 was recorded
            under general and administrative expenses on the date of grant.

            2.    On November 4, 2004, the Board of Directors has questioned the
                  procedures according to which a bonus in the amount of $ 110
                  was granted to the Former CEO in March 2004 and decided to
                  cancel the bonus and to demand that the Former CEO returns the
                  bonus. The bonus amount was recorded under accounts
                  receivable, and was fully provided for as a doubtful account.

            3.    On November 4, 2004, the Board of Directors decided to demand
                  from the Former CEO to repay to the Company the amount of
                  withholding tax exposure totaling $ 538 to be paid by the
                  Company to the tax authorities, in respect of the exercise of
                  options. Based on a preliminary discussion with the income tax
                  authorities and consultations, the Company recorded a
                  liability to the tax authorities in the amount of $ 269. A
                  corresponding receivable from the Former CEO totaling $ 269
                  was recorded and fully provided for as a doubtful account as
                  of July 31, 2004. Additional social security taxes liability
                  totaling $ 21, was recorded and provided for as of July 31,
                  2006.

                  The former CEO claims in a letter dated March 7, 2006, that
                  the warrants were issued free of all taxes and that if the tax
                  authorities will demand any sums then reimbursement shall be
                  demanded from the Company. The Company rejects these demands
                  in its response from March 23, 2006.


                                      -18-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 8:- COMMITMENTS AND CONTINGENCIES (Cont.)

                  Furthermore, since the Company intends to continue its claim
                  and collect the withholding tax from the Former CEO,
                  management is of the opinion that it dose not have a gross up
                  tax exposure with regard the exercise of the options.

            4.    During 2004, the Former CEO's brother, who was also employed
                  by the Company, was granted 280,000 shares of Common stock at
                  no cash consideration. In March 2004, the Board decided to
                  grant him an additional 280,000 warrants to purchase 280,000
                  shares of Common stock, the vesting of which is subject to
                  signing a definitive employment agreement with the Company.
                  Such agreement was never entered into. As a result, on
                  November 4, 2004, the Board of Directors cancelled the
                  warrants. The cancelled warrants are not presented in these
                  financial statements, nor was any compensation expense
                  recorded in respect of these warrants.

            5.    The Company filed a counterclaim against its Former CEO in the
                  amount of approximately $ 2,023 (NIS 9,405 thousand) which
                  includes, inter alia, the issues described in (d)(1) through
                  (d)(4) above. The Company's management and its legal advisors
                  are of the opinion that the Company has a reasonably good
                  assertion in its counter claim.

      e.    On July 11, 2005, the Former CEO submitted to the Company a letter
            claiming that the Company included in its Form 10-QSB filed on June
            24, 2005 slanderous allegations regarding the Former CEO. The Former
            CEO demanded a retraction and asserted damages of at least $ 23. The
            Company's management denies the claim. Accordingly, no provision was
            recorded in the accounts.

      f.    In March 2004, the Former CEO was granted 2,267,046 options to
            purchase a total of 2,267,046 shares of Common stock, out of which
            270,000 options were exercised into 249,859 shares of Common stock
            on a cashless basis. The total number of options to which the Former
            CEO is entitled should have been based on a formula that was
            determined in the agreement with the Former CEO. However, the number
            of options that were granted in March 2004 was incorrect. In
            November 2004, the Company's Board of Directors decided to amend the
            number of options granted to the Former CEO to a total of 2,042,551
            options to purchase a total of 2,042,551 shares of Common stock. The
            amended calculation is based on the formula determined in the
            agreement. The number of options and related compensation recorded
            in the year ended July 31, 2004 financial statements are based on
            the revised calculation. As of July 31, 2006, all of the remaining
            options expired (see Note 8g).


                                      -19-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 8:- COMMITMENTS AND CONTINGENCIES (Cont.)

      g.    On September 7, 2004, certain shareholders demanded from the Former
            CEO to repay the Company the amount of $ 1,074 (which is the value
            of the shares that the Company issued as a result of the Former
            CEO's cashless exercise of the abovementioned options, at the date
            of exercise, and which were sold by the Former CEO), claiming that
            the exercise of the options was executed before the end of the
            vesting period. In addition, the shareholders demanded that the
            Former CEO pays the Company compensation in the amount of $ 645 for
            damages. The Company's management and its legal advisors are of the
            opinion that the vast majority of the assertions are against the
            Former CEO and not against the Company. The Company denies the
            assertions that may imply to the Company's responsibility and,
            accordingly, no provision has been made in the accounts.

NOTE 9:- TAXES ON INCOME

      a.    Deferred income taxes:

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

                                                         July 31,
                                                    -----------------
                                                      2006     2005
                                                    -------   -------
Operating loss carryforward                         $ 2,217   $ 1,575
Reserves and allowances                                  23         9
                                                    -------   -------
Net deferred tax asset before valuation allowance     2,240     1,584
Valuation allowance                                  (2,240)   (1,584)
                                                    -------   -------
Net deferred tax asset                              $    --   $    --
                                                    =======   =======

            As of July 31, 2006, the Company has provided valuation allowances
            of $ 2,240 in respect of deferred tax assets resulting from tax loss
            carryforwards and other temporary differences. Management currently
            believes that since the Company has a history of losses, it is more
            likely than not that the deferred tax regarding the loss
            carryforwards and other temporary differences will not be realized
            in the foreseeable future.

      b.    Available carryforward tax losses:

            As of July 31, 2006 and 2005, the Company has an accumulated tax
            loss carryforward of approximately $ 5,600 and $ 3,940,
            respectively. Carryforward tax losses in the U.S. can be carried
            forward and offset against taxable income in the future for a period
            of 20 years. Utilization of U.S. net operating losses may be subject
            to substantial annual limitations due to the "change in ownership"
            provisions of the Internal Revenue Code of 1986 and similar state
            provisions. The annual limitation may result in the expiration of
            net operating losses before utilization.


                                      -20-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 8:- TAXES ON INCOME (Cont.)

      c.    Loss before taxes on income consists of the following:

                                                             Year ended July 31,
                                                           ---------------------
                                                             2006        2005
                                                           --------    -------
United States                                              $(1,739)    $(4,009)
Israel                                                          34          41
                                                           -------     -------
                                                           $(1,705)    $(3,968)
                                                           =======     =======

      d.    Taxes on income included in the statement of operations:

Current taxes:
  Domestic                                                     $--      $--
  Foreign *)                                                    10       15
                                                               ---      ---
                                                               $10      $15
                                                               ===      ===

      *)    In 2004, the Company signed an agreement with its subsidiary
            effective as of October 27, 2003, according to which the subsidiary
            will provide research, development and other services to the
            Company. The Company will reimburse the subsidiary for expenses on a
            cost plus 10% basis.

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


                                      -21-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 10:- STOCK CAPITAL

      a.    Common stock:

            Common stock confers on its holders the right to receive notice to
            participate and vote in general meetings of the Company, the right
            to a share in the excess of assets upon liquidation of the Company,
            and the right to receive dividends, if declared.

            Shares of Common stock are registered and publicly traded on the
            Over-the-Counter Bulletin Board service of the National Association
            of Securities Dealers, Inc. under the symbol TSSR.

      b.    Bonus shares:

            On November 4, 2003, it was resolved to allot a total of 12,024,000
            bonus shares at the rate of three fully-paid bonus shares for each
            then outstanding share. All the shares and per share amounts have
            been adjusted to give retroactive effect to the allotment.

      c.    Investments, warrants and options:

            Private placements

            1.    On February 1, 2004, the Company completed a private placement
                  ("PPM1") for the sale of 1,767,200 units at a price per unit
                  of $ 1.25. Each unit consists of one Common share and three
                  Common shares purchase warrants. The Company granted the
                  investors 5,301,600 warrants with an exercise price in a range
                  of $ 3.75 - $ 6.00 per share. The warrants are exercisable
                  within periods that range from six months to three years. The
                  contractual life of the warrants ranges from one year to three
                  years. As of July 31, 2006, 1,767,200 warrants are still
                  exercisable.

            2.    On March 18, 2004, the Company completed an additional PPM
                  ("PPM2") for the sale of 3,142,858 units at a price per unit
                  of $ 1.75. Each unit consists of one Common share and three
                  Common shares purchase warrants that were exercisable at a
                  price range of $ 3.75 - $ 6.00 per share. The warrants were
                  exercisable within periods that range from six months to three
                  years. In order to settle a dispute with the investors in
                  March 2005, the Company entered into a Settlement Agreement in
                  which it amended the terms of the private offering as follows:

                  The Company reduced the exercise price of each of the warrants
                  to $ 0.50.

                  The Company extended the period over which the Class A Common
                  Stock Purchase Warrants can be exercised from one year from
                  March 2004 to one year from the effective date of the Form
                  SB-2, the SB-2 become effective on September 2, 2005.

                  The period over which Class B Common Stock Purchase Warrants
                  and Class C Common Stock Purchase Warrants remained the same
                  and they are exercisable until two years and three years after
                  March 18, 2004, respectively.

                  As of July 31, 2006, 12,571,432 warrants are still
                  exercisable.


                                      -22-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 10:- STOCK CAPITAL (Cont.)

                  In addition, the Company issued Class D Common Stock Purchase
                  Warrants to purchase an aggregate of 6,285,716 shares of
                  Common stock. The Class D Common Stock Purchase Warrants are
                  exercisable for a period of one year from the effective date
                  of the Form SB-2 at an exercise price of $ 0.15 per share.

                  The Company recorded general and administration expenses in
                  the amount of $ 1,980, calculated as the difference between
                  the fair value of the warrants that were granted on March 18,
                  2004 at the date of the settlement agreement and the fair
                  value of the warrants granted and modified at the date of the
                  settlement agreement, in respect of the settlement agreement.

            3.    On October 27, 2005, the Board of Directors decided to amend
                  the exercise price of 473,445 warrants previously granted to
                  two directors, from $ 1 to $ 0.3 per share. The warrants are
                  exercisable into Common stock on a cashless basis.

                  In 2004, the Company granted two finders involved with the
                  Company's first PPM, 93,480 fully vested warrants, exercisable
                  until May 2005. On October 27, 2005, the Board of Directors
                  has extended the warrants exercise period until May 2006 at no
                  consideration. The Company has recorded the benefit totaling $
                  10 in general and administrative expenses. As of July 31,
                  2006, the above warrants were exercised.

                  Shares and warrants to service providers

                  1.    The Company granted in prior years 2,429,722 warrants to
                        purchase Common stock at an exercise price of $ 0.0001
                        per share, 150,000 warrants to purchase Common stock at
                        an exercise price of $ 0.01 per share, 600,000 warrants
                        to purchase 600,000 shares of Common stock at an
                        exercise price of $ 1 per share and 2,777,000 shares of
                        Common stock at no consideration. The warrants and
                        shares were granted to service providers and to advisory
                        board members, in exchange for research and development
                        services and general and administrative services.
                        2,776,269 warrants are fully vested as of July 31, 2006,
                        and 264,715 warrants vest over a period of three years
                        ending March 6, 2007. The Company accounted for such
                        warrants and shares under the provisions of EITF 96-18.
                        The fair value of fully vested warrants and shares was
                        recorded as research and development expenses and
                        general and administrative expenses at the grant date.
                        The fair value of the warrants that vest over the three
                        years period is amortized as an expense over the vesting
                        period. As of July 31, 2006 and 2005, 138,738 and 0
                        warrants were exercised into 138,738 and 0 shares of
                        Common stock, respectively.


                                      -23-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 10:- STOCK CAPITAL (Cont.)

            2.    Summary of warrants issued to service providers and to
                  investors:

                  The Company's outstanding warrants that were granted to
                  service providers and to investors as of July 31, 2006 are as
                  follows:

<TABLE>
<CAPTION>
                                        Exercise                            Exercisable
Issuance date   Number of warrants        price    Warrants exercisable        through
-------------   ------------------      --------   --------------------   -----------------
<S>                      <C>            <C>                   <C>         <C>
January 2004             1,519,815      $ *)--                1,519,815   January 2014
January 2004               150,000      $  0.01                 150,000   January 2009
February 2004            1,899,680      $     6               1,899,680   February 2007
March 2004                 493,692      $ *)--                  493,692   March 2014
March 2004                 277,477      $ *)--                  184,985   March 2014
March 2004                 200,000      $     1                 155,556   March 2009
March 2004               3,142,858      $  0.05               3,142,858   March 2007
March 2004               3,142,858      $  0.05               3,142,858   **)September 2006
April 2004                 200,000      $     1                 155,556   April 2009
November 2004              200,000      $     1                 116,667   November 2009
February 2005            1,433,125      $ *)--                1,433,125   October 2013
March 2005               6,285,716      $  0.15               6,285,716   **)September 2006
                        ----------                           ----------
                        18,945,221                           18,680,508
                        ==========                           ==========
</TABLE>

            *)    Represents an amount lower than $ 0.01.

            **)   The warrants expired as of October 28, 2006.

            The fair value of the warrants to service providers was estimated on
            the date of grant or at each balance sheet date (as applicable),
            using Black-Scholes option pricing model, with the following
            weighted-average assumptions for 2006 and 2005: weighted average
            volatility of 168% and 154%, risk-free interest rates of 4.88% and
            3.73% dividend yields of 0% and a weighted average expected life of
            the options of four and five years, respectively.

            Shares and options to employees and to directors

            1.    During 2004, the Company granted two of its directors 541,080
                  options to purchase 541,080 shares of the Company's Common
                  stock at an exercise price of $ 1 per share. The options vest
                  over a period of three years.

                  During 2004, 67,635 options were exercised into shares. On
                  October 27, 2005, the Board of Directors decided to amend the
                  exercise price of the remaining 473,445 options previously
                  granted from $ 1 to $ 0.3 per share. The options are
                  exercisable into Common stock on a cashless basis.

                  The Company accounted for such options under the provision of
                  APB 25. Since the optionees are entitled to exercise their
                  options on a cashless basis, the Company applied variable
                  accounting and the compensation related to the options was
                  recorded as research and development and general and
                  administrative expenses over the vesting period based on the
                  market price of the Company's stock at such reporting period.


                                      -24-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 10:- STOCK CAPITAL (Cont.)

                  No compensation was recorded since the exercise price of the
                  options is higher than the market price of the Company's
                  Common stock.

                  During March 2004, the Company granted to certain employees
                  413,333 options to purchase 413,333 shares of the Company's
                  Common stock at an exercise price of $ 0.30 per share. The
                  options vest over a period of three years.

            2.    On May 25, 2004, the Company granted to a certain employee
                  10,090 fully vested shares of Common stock at no
                  consideration.

            3.    In November 2004, the Company signed an employment agreement
                  with its current CEO, according to which, the CEO will be
                  granted 1,500,000 options to purchase 1,500,000 shares at an
                  exercise price of $ 0.30 per share. The options will vest over
                  a period of two years. The Company accounted for such options
                  according to the provision of APB 25.

            4.    In February 2005, the Company's Board of Directors decided to
                  grant a director, 270,540 options to purchase 270,540 shares
                  of Common stock at an exercise price of $ 0.31 per share. The
                  options vest over a period of two years commencing March 15,
                  2005. The Company accounted for such options according to the
                  provisions of APB-25.

                  As of July 31, 2006 and 2005, no options were exercised.

            5.    A summary of the Company's option activity related to options
                  to employees and directors, and related information is as
                  follows:

<TABLE>
<CAPTION>
                                                    July 31, 2006                              July 31, 2005
                                           -------------------------------------   ------------------------------------
                                                                Weighted average                       Weighted average
                                           Amount of options     exercise price    Amount of options    exercise price
                                           -----------------   -----------------   -----------------   ----------------

<S>                                            <C>                    <C>              <C>                   <C>
Outstanding at the beginning of the year       4,418,757              $0.376           2,648,217             $0.425

Granted                                               --              $                1,770,540             $0.302

Expired                                        1,772,551              $0.300                  --             $   --

Exercised                                             --              $                       --             $   --
                                               ---------                               ---------
Outstanding at the end of
  the year                                     2,646,206              $0.301           4,418,757             $0.376
                                               =========              ======           =========             ======
Exercisable options at the
  end of the year                              2,001,124              $0.301           1,974,553             $0.372
                                               =========              ======           =========             ======

</TABLE>


                                      -25-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands, except share and per share data

NOTE 10:- STOCK CAPITAL (Cont.)

            6.    The options outstanding as of July 31, 2006, have been
                  separated into ranges of exercise price, as follows:

<TABLE>
<CAPTION>
           Options outstanding     Weighted average      Options exercisable
Exercise     as of July 31,      remaining contractual      as of July 31,
  price           2006                   life                    2006
--------   -------------------   ---------------------   -------------------
                                         Years
                                         -----
<S>              <C>                      <C>                   <C>
  $ 0.3          2,646,206                5.85                  2,001,124
                 ---------                                      ---------
                 2,646,206                                      2,001,124
                 =========                                      =========
</TABLE>

            7.    All options were granted with exercise prices that were lower
                  than the market price of the Company's Common stock on the
                  date of grant. Weighted average fair values and weighted
                  average exercise prices of options whose exercise price is
                  lower than the market price of the shares at date of grant are
                  as follows:

                                                                     July 31,
                                                                 ---------------
                                                                  2006     2005
                                                                 ------   ------
Weighted average exercise price                                  $0.301   $0.376
Weighted average fair value on date of grant                     $0.426   $0.624

                  Compensation expenses recorded by the Company in respect of
                  its share-based employee compensation awards amounted to $ 27
                  for the year ended July 31, 2006.


NOTE 11:- TRANSACTIONS WITH RELATED PARTIES

      a.    From April 2003 until October 2003, funds raised and expenses paid
            by the Company were managed by certain shareholders through a
            trustee, at no consideration.

      b.    As for claims, see Note 8c, d, e, g.

                                                             Year ended July 31,
                                                             ------------------
                                                                2006   2005
                                                                ----   ----
Fees and related benefits and compensation expenses in
  respect of options granted to members of the Board of
  Directors                                                     $326   $287
                                                                ====   ====


                                      -26-

<PAGE>

                                                 TISSERA INC. AND ITS SUBSIDIARY
                                                     (FORMERLY: BERT LOGIC INC.)
                                                   (A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
U.S. dollars in thousands

NOTE 12:- FINANCIAL INCOME, NET

                    Year ended
                     July 31,
                    -----------
                    2006   2005
                    ----   ----
Income:
  Interest income    $65   $78
                     ---   ---
Expenses
  Bank charges        10    10
                     ---   ---
                     $55   $68
                     ===   ===


                                      -27-