FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                 AMENDMENT NO. 1 TO THE FORM 10-KSB FOR THE YEAR

                               ENDED JULY 31, 2006

   |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.

<PAGE>

                                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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<PAGE>

                                     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.


                                        3

<PAGE>

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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<PAGE>

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.

Going Concern

Due to our being a development stage company and not having generated revenues,
in the consolidated financial statements for the year ended July 31, 2006, we
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our consolidated financial statements contain
additional note disclosures describing the circumstances that lead to this
disclosure.

The continuation of our business is dependent upon us raising additional
financial support. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Going Concern

Our annual financial statements have been prepared on the going concern basis,
which assumes the realization of assets and liquidation of liabilities in the
normal course of operations. The financial statements have been prepared
assuming we will continue as a going concern. However, certain conditions exist
which raise doubt about our ability to continue as a going concern. We have
suffered recurring losses from operations and have accumulated deficit during
the development stage of approximately $28,332,000 since inception through the
fiscal year ended July 31, 2006.

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 6th day of November 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              November 6, 2006
-------------------------------   Officer and Chairman of
                                  the Board of Directors


/s/ Alex Werber                   Chief Financial              November 6, 2006
-------------------------------   Officer & Chief Accounting
                                  Officer


/s/ Robert G. Pico                Director                     November 6, 2006
-------------------------------


/s/ Meir Segev                    Director                     November 6, 2006
-------------------------------


/s/ Peretz Shmuel                 Director                     November 6, 2006
-------------------------------


                                       20

<PAGE>

                         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-