FORM 10-QSB
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

              |X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2005

                                       OR

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

              For the transition period from _________ to _________

                         Commission File Number 0-23901

                                    GSV, INC.

        (Exact name of small business issuer as specified in its charter)



             Delaware                                     13-3979226
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

           191 Post Road West, Westport, CT                 06880
       (Address of principal executive offices)           (Zip Code)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirement for the past 90 days. Yes |X| No |_|

The number of shares of the issuer's common stock, par value $.001 per share,
outstanding on May 11, 2005 was 7,472,703 shares, excluding 168,592 shares held
in Treasury.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

                           GSV, INC. AND SUBSIDIARIES


                              INDEX TO FORM 10-QSB



                                                                           Page
                                                                          Number
                                                                          ------
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements:

               Consolidated Balance Sheet (unaudited)                       2

               Consolidated Statements of Operations for the
               Three Months ended March 31, 2005 and 2004 (unaudited)       3

               Consolidated Statements of Cash Flows for the
               Three Months ended March 31, 2005 and 2004 (unaudited)       4

               Notes to Consolidated Financial Statements                   5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                               8

Item 3.  Controls and Procedures                                            11

PART II. OTHER INFORMATION                                                  12

Item 6.  Exhibits                                                           12

SIGNATURES                                                                  13

<PAGE>

                          PART I. FINANCIAL INFORMATION

Item 1. - Financial Statements

                           GSV, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEET
                                 March 31, 2005


    ASSETS
CURRENT ASSETS
  Cash and cash equivalents                                        $    224,131
  Accounts receivable and other current assets                          103,053
                                                                   ------------

    Total current assets                                                327,185


  Investments                                                            50,000
  Other long-term assets - geologic studies                           2,316,721
  Investments - oil & gas wells, net accumulated depletion              181,961
  Property and equipment, net accumulated depreciation                    7,674
  Other assets                                                               --
                                                                   ------------
                                                                      2,556,356

    Total assets                                                   $  2,883,540
                                                                   ============

  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable                                                 $    314,927
  Other Current liabilities                                             132,897
  Accrued Interest                                                       25,500
                                                                   ------------

    Total current liablities                                            473,324

Note payable                                                            425,000
                                                                   ------------

    Total liablities                                                    898,324


STOCKHOLDERS' EQUITY
  Series B Preferred stock, $0.001 par value;
    1,500,000 shares authorized; 1,500,000 shares
    issued and outstanding                                                1,500
  Common stock, $0.001 par value; 75,000,000 shares
    authorized; 7,641,295 issued;
    7,472,703 outstanding                                                 7,641
  Additional paid-in capital                                         41,016,185
  Treasury stock                                                       (558,998)
  Accumulated deficit                                               (38,481,112)
                                                                   ------------

    Total stockholders' equity                                        1,985,216
                                                                   ------------

    Total liabilities and stockholders' equity                     $  2,883,540
                                                                   ============


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


                                       2
<PAGE>

                           GSV, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENT OF OPERATIONS
                  For the three months March 31, 2005 and 2004


                                                        2005            2004
                                                    -----------     -----------

Oil and gas income                                  $   165,614           7,731
Other income                                                 --          14,452
                                                    -----------     -----------
  Total revenues                                        165,614          22,183

General and administrative expenses                     222,453         128,329
                                                    -----------     -----------
  Total operating expenses                              222,453         128,329

  Loss from operations before other                     (56,839)       (106,146)
    income and expense

  Interest income, net                                        6              25
  Interest expense                                       (9,648)         (4,250)
  Writedown of investments                                   --          16,077
  Gain on sale of investments                                --              --
                                                    -----------     -----------
  NET LOSS                                          $   (66,481)    $   (94,294)
                                                    ===========     ===========
Net loss per common share:
Loss per common share from
  operations - basic                                $     (0.01)    $     (0.01)
                                                    ===========     ===========
Weighted average common shares
  outstanding, basic                                  7,472,703       7,253,416
                                                    ===========     ===========


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


                                       3
<PAGE>

                           GSV, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  For the three months March 31, 2005 and 2004

                                                             2005        2004
                                                           --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                    (66,481)    (94,294)
Adjustments to reconcile net loss to net cash flows
  from operating activities:
Depreciation                                                    750         975
Depletion                                                    97,164       6,692
Increase (decrease) in cash from changes in:
Account receivable and other current assets                 (23,049)      6,708
Other assets                                                  4,599       8,474
Accounts payable and other current liabilities               22,827      41,558
                                                           --------    --------

      Net cash flows from operating activities               81,908     (29,887)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment - oil & gas wells                         --     (12,105)
                                                           --------    --------

      Net cash flows from investing activities                   --     (12,105)

CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in notes payable                        (25,000)     50,000
                                                           --------    --------
      Net cash flows from financing activities              (25,000)     50,000
                                                           --------    --------
      Net increase in cash                                   56,908       8,008

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                167,223      18,410
                                                           --------    --------
CASH AND CASH EQUIVALENTS,  END OF YEAR                     224,131      26,418
                                                           ========    ========

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


                                       4
<PAGE>


                           GSV, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Description of the Business and Basis of Presentation

Since July 2003 the business operations of GSV, Inc. and Subsidiaries ("the
Company") have been focused on managing existing investments in oil and gas
assets and entering into new investments in this industry. Currently, the
Company has been pursuing opportunities in the alternative energies arena,
specifically in the biodiesel sector.

From June 2001 to July 2003 the Company's business operations included entering
into new business operations through acquisitions or mergers and managing
existing investments including the Company's oil and gas assets.

Prior to June 2001, the Company had sought to identify and develop attractive
early stage Internet companies in exchange for equity positions in such
companies. The Company has since made substantial write downs of its internet
investments to more accurately reflect current market valuations, and these
investments do not represent a significant asset. As of March 31, 2004, these
investments were valued at approximately 1.7% of the total value of the
Company's assets. The Company received approximately $16,000 in January 2004
when one of these investments, Fasturn, Inc., was liquidated. The Company is
continuing to investigate whether or not there are any business prospects
through which material value can be realized from the remaining internet
investments.

Effective June 1, 2002, the Company acquired working interests in two oil and
gas wells in the state of Louisiana pursuant to an asset purchase agreement with
Polystick U.S. Corporation ("Polystick"), a privately held New York corporation.
Additionally, the Company acquired an option, including a right of first
refusal, to purchase other oil and gas properties held by Polystick. The
consideration consisted of $550,000 in cash and 850,000 shares of the Company's
common stock valued at $0.25 per share.

On July 21, 2003, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Polystick, Cybershop, L.L.C., a New Jersey limited
liability company and wholly-owned subsidiary of the Company ("Merger Sub"), and
Polystick Oil & Gas, Inc., a Delaware corporation and a wholly-owned subsidiary
of Polystick ("POGI"), pursuant to which, on the same day, POGI was merged into
Merger Sub (the "Merger") and in consideration thereof the Company issued to
Polystick 4,500,000 shares of common stock and 1,500,000 shares of Series B
convertible preferred stock.

As a result of the Merger, the Company, through Merger Sub, acquired an interest
in Century Royalty LLC ("Century"), a Texas limited liability company that holds
certain oil and gas properties in Texas plus an additional interest in the
Louisiana properties in which the Company already held an interest. Century also
holds the rights to certain geologic studies.

On May 20, 2004, the Company elected to participate in re-completion of one of
the wells in Louisiana. The work was successfully completed on June 10, 2004.
The total cost to the Company was $74,063. The Company has seen an increase in
revenues as a result of the re-completion of this well.

On November 1, 2004, the working interest partnership started work on a re-entry
prospect in Texas. After reaching 6,000 feet and logging, it was determined that
it was not economical to compete the well and it was decided on November 8,
2004, to plug and abandon the well.


                                       5
<PAGE>

The information presented as of March 31, 2005 is unaudited, but, in the opinion
of management of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for the fair presentation of
the Company's financial position as of March 31, 2005, the results of its
operations for the three month periods ended March 31, 2005 and 2004 and its
cash flows for the three-month periods ended March 31, 2005 and 2004. The
consolidated financial statements included herein have been prepared without
audit pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and accompanying notes for the year ended
December 31, 2004, included in the Company's Annual Report on Form 10-KSB as
filed with the Securities and Exchange Commission. Certain prior period amounts
have been reclassified to conform to the current period presentation.

2.    Investments

The Company has invested in four internet-related companies, which have been
accounted for using the cost method. These investments have been written off
except the investment in Telephone.com, which is valued at $ 50,000.

As described above, the Company acquired working interests in two oil and gas
wells effective June 1, 2002 for $550,000 in cash and common stock of the
Company valued at $212,500, for a total investment of $762,500. The asset is
depleted on a periodic basis using the units of production method. Depletion
expense for the quarter ended March 31, 2005 was $97,154. In the fourth quarter
of 2002, the properties exhibited a marked decrease in the volume of oil and gas
produced. On May 20, 2004, the Company elected to participate in re-completion
of one of the wells in Louisiana. The work was successfully completed on June
10, 2004. The total cost to the Company was $74,063. The Company has seen an
increase in revenues as a result of the re-completion of this well. An
independent reserve study performed effective March 2005 estimates the total
remaining reserves in this well including PDP and PDNP, net of expenses and
discounted at 10%, was $778,954.

As described above, on July 21, 2003, the Company entered into the Merger
Agreement, pursuant to which, on the same day, POGI was merged into Merger Sub
and in consideration thereof the Company issued to Polystick 4,500,000 shares of
common stock and 1,500,000 shares of Series B convertible preferred stock. Each
share of Series B convertible preferred stock is convertible at any time at the
holder's option into a number of shares of common stock equal to $1.00 divided
by the conversion price then in effect. The conversion price is initially $1.00.
No dividends are payable on the Series B convertible preferred stock, except
that in the event dividends are declared with respect to common stock, each
holder of share of Series B convertible preferred stock shall be entitled to
receive an amount equal to the amount of dividends that would have been paid on
the shares of common stock issuable upon conversion of such shares of Series B
convertible preferred stock has such shares been converted into common stock
immediately before such dividend was declared. Upon any Liquidation Event, the
holders of the outstanding Series B convertible preferred stock will be entitled
to be paid an amount equal to $1.00 per share plus the amount of any declared
and unpaid dividends thereon. If upon any Liquidation Event, the net assets of
the Company are insufficient to permit payment in full of such preferential
amount to the holders of Series B convertible preferred stock, then the entire
net assets of the Company will be distributed ratably among the holders of the
Series B convertible preferred stock.

Following is a condensed balance sheet showing the fair values of the assets
acquired and the liabilities assumed as of the date of the acquisition:

      Current assets                     $   210,784
      Other long-term assets               2,316,721
      Investments - oil & gas wells          219,420
                                         -----------
                                           2,746,925
      Current liabilities                   (121,925)
                                         -----------
      Net assets acquired                $ 2,625,000
                                         ===========

In connection with and as a condition to the Merger, the Company redeemed all of
its existing outstanding Series A preferred stock, par value $0.001 per share,
for $400,001, plus dividends payable. The Company paid $263,801 of the
redemption price in cash and $200,000 by a full recourse promissory note bearing
interest at a rate of 8% per annum and due September 4, 2004, secured by a lien
on all of the Company's assets. The maturity date of the promissory note has
been extended to September 1, 2005.


                                       6
<PAGE>

As a result of the Merger, the Company acquired an interest in Century Royalty
LLC ("Century"), which holds certain oil and gas properties in Texas plus an
additional interest in the Louisiana properties in which the Company presently
holds an interest. Century also holds the rights to certain geologic studies
that are included in other long term assets on the accompanying balance sheet.
Century is a member of a working interest partnership that has identified
several prospects derived from the geological studies and is working towards
drilling these prospects. Century has a carried interest with this partnership
of 20% for the first well drilled in the first 5 prospects or $ 1.25 million of
investment, whichever comes first. Century has a 20% participation interest in
all subsequent wells drilled in the first 5 prospects. For later prospects,
Century is entitled to an 80% participation interest. GSV is entitled to the
first $4,168,659 of net income in Century and to 75% of net income thereafter.
The balance of this preference as of April 30, 2005 was $3,887,429.

On November 1, 2004, the working interest partnership started work on a re-entry
prospect in Texas. After reaching 6,000 feet and logging, it was determined that
it was not economical to complete the well and it was decided on November 8,
2004, to plug and abandon the well.

3.    Stockholders' Equity

There were no changes in stockholders' equity during the three months ended
March 31, 2005.

4.    Net Loss Per Common Share

Basic net loss per common share is calculated by dividing net loss per common
share after effect of adjustable common stock warrants, as explained below, by
the weighted average number of shares of common stock outstanding during the
period as follows:
<TABLE>
<CAPTION>
                                                              3 Months ending March 31
                                                 2005                                           2004
                                ----------------------------------------       ----------------------------------------
                                                               Per                                            Per
                                Loss            Shares         Share           Loss            Shares         Share
                                ----------------------------------------       ----------------------------------------
<S>                             <C>             <C>            <C>             <C>             <C>            <C>
      Loss from continuing
      operations                $ (66,481)      7,472,703      $    (.01)      $ (94,294)      7,253,416      $    (.01)
      Effect of preferred
      stock dividends
                                ---------       ---------      ---------       ---------       ---------      ---------
      Net loss available
      for common
      shareholders              $ (66,481)      7,472,703      $    (.01)      $ (94,294)      7,253,416      $    (.01)

                                =========       =========      =========       =========       =========      =========
</TABLE>


                                        7
<PAGE>

      Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Since July 2003 our business operations have been focused on managing our
existing investments in oil and gas assets and entering into new investments in
this industry. Currently, we have been pursuing opportunities in the alternative
energies arena, specifically in the biodiesel sector. From June 2001 to July
2003, our business operations included managing our existing investments and
entering into new business operations through acquisitions or mergers.

Prior to June 2001, we had sought to identify and develop attractive early stage
internet companies in exchange for equity positions in such companies. We have
since made substantial write downs of these investments to more accurately
reflect current market valuations, and our investments do not represent a
significant asset. As of December 31, 2004, these investments were valued at
approximately 1.7% of the total value of our assets. We are presently
investigating whether or not there are any business prospects through which
material value can be realized from the remaining investments.

Effective June 1, 2002, we acquired working interests in two oil and gas wells
in the state of Louisiana pursuant to an asset purchase agreement with Polystick
U.S. Corporation ("Polystick"). The consideration consisted of $550,000 in cash
and 850,000 shares of our common stock valued at $0.25 per share. Additionally,
we acquired a one-year option valued at $80,210, including the right of first
refusal, to purchase other oil and gas properties held by Polystick.

On July 21, 2003, we entered into an Agreement and Plan of Merger with
Polystick, Cybershop, L.L.C., a New Jersey limited liability company and
wholly-owned subsidiary of GSV, Inc. and Polystick Oil & Gas, Inc., a Delaware
corporation and wholly-owned subsidiary of Polystick ("POGI"), pursuant to
which, on the same day, POGI was merged into Cybershop, L.L.C. and in
consideration thereof we issued to Polystick 4,500,000 shares of our common
stock and 1,500,000 shares of our Series B convertible preferred stock.

As a result of the merger we acquired, through Cybershop L.L.C., an interest in
Century Royalty LLC, a Texas limited liability company that holds certain oil
and gas properties in Texas plus an additional interest in the Louisiana
properties in which we presently hold an interest. Century Royalty LLC also
holds the rights to certain geologic studies. Due to the existence of certain
revenue overrides accruing to the benefit of Polystick, the operations of
Century Royalty LLC are included in the accompanying statements of operations.

The sole shareholder of Polystick is RT Sagi Holding Ltd., an Israeli
corporation. The sole stockholder of RT Sagi and indirect owner of Polystick is
Mr. Sagi Matza. Effective as of the consummation of the Merger, Mr. Matza was
appointed to our board of directors as the designee of Polystick. Polystick has
the right to elect two additional persons to our board of directors but has not
yet done so.

Each share of Series B convertible preferred stock is convertible at any time at
the holder's option into a number of shares of common stock equal to $1.00
divided by the conversion price then in effect. The terms upon which the Series
B convertible preferred stock may be converted into common stock are set forth
in the Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock filed by the Company with the Secretary of State of
the State of Delaware on July 18, 2003 ("Certificate of Designations"). As of
November 1, 2003, the Series B convertible preferred stock owned by Polystick
was convertible into 1,500,000 shares of common stock.

No dividends are payable on the Series B convertible preferred stock, except
that in the event dividends are declared with respect to the common stock each
holder of shares of Series B convertible preferred stock will be entitled to
receive an amount equal to the amount of dividends that would have been paid on
the shares of common stock issuable upon conversion of such shares of Series B
convertible preferred stock had such shares of Series B convertible preferred
stock been converted into common stock immediately before the dividend was
declared.


                                        8
<PAGE>

Upon any Liquidation Event, as defined in the Certificate of Designations, the
holders of the outstanding Series B convertible preferred stock will be
entitled, before any distribution or payment is made to any holder of common
stock or any other Junior Stock (as defined in the Certificate of Designations),
to be paid an amount equal to $1.00 per share plus the amount of any declared
and unpaid dividends thereon. If upon any Liquidation Event our net assets
distributable among the holders of the Series B convertible preferred stock are
insufficient to permit the payment in full of such preferential amount to the
holders of the Series B convertible preferred stock, then the our net assets
will be distributed ratably among the holders of the Series B convertible
preferred stock in proportion to the amounts they otherwise would have been
entitled to receive.

The Certificate of Designations provides that so long as any shares of Series B
convertible preferred stock are outstanding, we will not, without the written
approval of the holders of at least a majority of the then-outstanding Series B
convertible preferred stock, increase the maximum number of directors
constituting our board of directors to more than seven. The Certificate of
Designations also provides that, so long as any shares of Series B convertible
preferred stock are outstanding, the holders of the Series B convertible
preferred stock, voting separately as a class, will be entitled to designate and
elect three of the members of our board of directors. Also, a vacancy in any
directorship elected by the holders of the Series B convertible preferred stock
may be filled only by vote or written consent of the holders of at least a
majority of the then outstanding shares of Series B convertible preferred stock.
The Series B convertible preferred stock has no other voting rights except as
provided by applicable law.

In connection with and as a condition to consummation of the merger in July
2003, we redeemed all of our outstanding Series A convertible preferred stock,
par value $0.001 per share, for $400,001 plus dividends payable. We paid
$263,801 of the redemption price in cash and $200,000 by a promissory note
secured by a lien on all of our assets.

Off-Balance Sheet Transactions

In June 2001, we sublet to Nekema.com our former offices in Jersey City, New
Jersey through December 31, 2008. The rent on the sublease was guaranteed by
Lumbermens Mutual Casualty Company, d/b/a Kemper Insurance Company, until May
2003. In September 2002 Nekema ceased business operations and defaulted on the
sublease. Kemper Insurance Company made all payments of rent due under the
sublease through May 2003. On May 5, 2004 we filed a proof of claim against
Nekema's estate in the United States Bankruptcy Court for the Southern District
of New York. The proof of claim is for the total sum of $421,455.15 as permitted
by law. We cannot assure you that we will be able to collect any of this claim.
We ceased paying rent beginning in July 2003 and since then have been
negotiating towards a settlement with the landlord. If we are unable to
negotiate a settlement with the landlord, we will remain obligated to pay rent
on the space until our lease expires in December 2008. The lease contains
automatic increases based upon the consumer price index. Estimated minimum
future lease payments, including such increases, aggregate approximately
$700,934.

Results of Operations

Three Months Ended March 31, 2005 compared to Three Months Ended March 31, 2004.

Revenues: Revenues for the quarter increased by $143,431 over the corresponding
period of the preceding year due primarily to the increase in production
resulting from the expansion of one of the two wells in Louisiana, which was
completed on June 10, 2004.

General and administrative: General and administrative expenses consist
primarily of payroll and payroll related expenses for administrative,
information technology, accounting, and management personnel, legal fees,
depletion and general corporate expenses. General and administrative expenses
increased by 74%, or $94,124, to $222,453 in the first quarter of 2005 from
$128,329 in the first quarter of 2004, primarily as a result of the increase in
depletion ..

Interest income, net: Interest income decreased $19 to $6 in the first quarter
of 2004 from $25 in the first quarter of 2004. The decrease is primarily the
result of the decrease in interest rates.

Net Losses: Loss from operations decreased by $27,813 from $94,294 in the first
quarter of 2004, or ($0.01) per basic and diluted common share, to $66,481 in
the first quarter of 2005, or ($0.01) per basic and diluted common share.


                                        9
<PAGE>

Liquidity and Capital Resources

Net cash provided by operations increased by $111,795, from a deficit of $29,887
for the three months ended March 31, 2004, to a positive $81,908 for the three
months ended March 31, 2005. The increase in cash provided by operations was
primarily due to the sharp increase in revenues from the wells in Louisiana and
a drop in general and administrative expenses other than depletion.

Net cash used in investing activities during the quarter ended March 31, 2005,
was $0, as compared to $(12,105) in the prior year.

In 2003, we issued to Polystick 4,500,000 shares of common stock and 1,500,000
shares of Series B convertible preferred stock valued at $2,625,000 to acquire
assets in a non-cash transaction.

On February 11, 2004, we borrowed $25,000 from Brooks Station Holdings, Inc., a
private investment corporation ("Brooks Station"). In partial consideration for
the loan, we issued 100,000 shares of common stock to Brooks Station. On March
18, 2004, we borrowed another $25,000 from Brooks Station and in partial
consideration for the loan issued another 100,000 shares of common stock to
Brooks Station. Each loan is evidenced by a promissory note bearing interest at
8% per annum and maturing on September 1, 2004 and is secured by a lien on all
of our assets. On September 20, 2004, we negotiated an extension of the maturity
of the notes from their original maturity date of September 1, 2004 to March 1,
2005. On March 10, 2005, we repaid the note issued on February 11, 2004 and
negotiated an extension of the maturity of the note dated March 18, 2004 to
September 1, 2005. We also extended to the same date the maturity of an 8%
secured promissory note we issued to Brooks Station on July 21, 2003 in the
principal amount of $200,000.

On May 11, 2004, we sold a convertible promissory note in the principal amount
of $200,000 and a warrant to purchase up to 1,142,857 shares of our common stock
at a price of $.70 per share to D. Emerald Investments Ltd., a private
investment corporation ("Emerald"). The note bears interest at the rate of 8%
per annum and is convertible into shares of our common stock at a price of $.70
per share. The aggregate purchase price of these securities was $200,000. In
connection with the sale of these securities we agreed that if Emerald exercises
the warrant in full and converts the convertible note in full, then, at
Emerald's request, we will appoint a person designated by Emerald to our Board
of Directors and, in addition, for so long as Emerald holds at least eighty-five
percent (85%) of the common stock issued upon such exercise and conversion, we
will nominate such person (or a different person designated by Emerald) to be
reelected to the Board of Directors in connection with any meeting of our
stockholders at which directors are to be elected. We also agreed that within
120 days of the exercise of the warrant and/or conversion of the note for an
aggregate of at least 428,572 shares of common stock (subject to adjustment for
dilutive events as set forth in the warrant and the note) we will register all
of the shares issuable upon conversion of the note and exercise of the warrant
under the Securities Act of 1933. Additionally, we granted Emerald rights to
have the shares included in other registration statements we may file for the
public offering of our securities for cash proceeds.

Our principal stockholder, Polystick, entered into a guaranty and a pledge
agreement with Emerald under which Polystick pledged 200,000 shares of our
Series B convertible preferred stock as collateral security for the note.
Polystick also entered into a voting agreement with Emerald under which
Polystick agreed that if we fail to fully and timely fulfill our obligations to
appoint or nominate a representative for election to our board of directors,
then, at Emerald's request, Polystick will vote its shares of Series B
convertible preferred stock in favor of a nominee designated by Emerald in any
election of directors occurring during such time and for so long as Emerald
holds at least 85% of the common stock issued upon exercise of the warrant and
conversion of the note. Polystick also agreed that, provided that Polystick
continues to have the right to designate and elect three directors to the
Company's board of directors under the terms of the Series B convertible
preferred stock, any such nominee will count as one of such directors.
Additionally, Polystick agreed to use all its power and authority as provided by
our by-laws and the Series B convertible preferred stock to convene, at
Emerald's request, meetings of stockholders as may be necessary to elect
Emerald's nominee to the board of directors.

We believe that our existing capital resources will enable us to maintain our
operations at existing levels for at least the next twelve months. However, it
is difficult to project our capital needs. We cannot assure you that any
additional financing or other sources of capital will be available to us upon
acceptable terms, if at all. The inability to obtain additional financing, when
needed, would have a material adverse effect on our business, financial
condition and operating results.


                                       10
<PAGE>

Forward-Looking Statements:

Some of the statements in this report are forward-looking statements that
involve risks and uncertainties. These forward-looking statements include
statements about our plans, objectives, expectations, intentions and assumptions
that are not statements of historical fact. You can identify these statements by
the following words:

      -   "may"
      -   "will"
      -   "should"
      -   "estimates"
      -   "plans"
      -   "expects"
      -   "believes"
      -   "intends"

and similar expressions. We cannot guarantee our future results, performance or
achievements. Our actual results and the timing of corporate events may differ
significantly from the expectations discussed in the forward-looking statements.
You are cautioned not to place undue reliance on any forward- looking
statements. Potential risks and uncertainties that could affect our future
operating results include, but are not limited to, our limited operating
history, history of losses, need to raise additional capital, the high risk
nature of our business, and other risks described in our Annual Report on Form
10-KSB for the year ended December 31, 2004.

Item 3. Controls and Procedures

As of the end of the period covered by this report, our company conducted an
evaluation, under the supervision and with the participation of our chief
executive and financial officer, of our disclosure controls and procedures (as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act")). Based on this evaluation, our chief executive and financial
officer concluded that our company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in Securities and Exchange
Commission rules and forms.

There was no change in our internal controls, which are included within
disclosure controls and procedures, during our most recently completed fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal controls.


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<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits

31.1  Certification of Chief Executive and Financial Officer pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.

32.1  Certification of Chief Executive and Financial Officer pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002.


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<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Date: May 13, 2005

                                By: /s/ Gilad Gat
                                    --------------------------------------------
                                    Gilad Gat
                                    Chief Executive Officer and President
                                    (principal executive officer)
                                    Chief Financial Officer
                                    (principal financial and accounting officer)


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