UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB

(Mark One)

[X]   Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934

            For the quarterly period ended March 31, 2005

[ ]   Transition report under Section 13 or 15(d) of the Exchange Act

            For the transition period from ________________ to ________________

                        Commission File Number 333-106160

                                  m-Wise, Inc.
                                  ------------
        (Exact name of small business issuer as specified in its charter)

            Delaware                                             11-3536906
            --------                                             ----------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                 3 Sapir Street, Herzeliya Pituach, Israel 46852
                 -----------------------------------------------
                    (Address of principal executive offices)

                                 +972-9-9611212
                                 --------------
                (Issuer's telephone number, including area code)

                             All Correspondence to:
                             Arthur S. Marcus, Esq.
                 Gersten, Savage, Kaplowitz, Wolf & Marcus, LLP
                           101 E. 52 Street, 9th Floor
                            New York, New York 10022
                                 (212) 752-9700

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 registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
                                                                  Yes [X] No [ ]

The number of shares outstanding of the issuer's common stock, as of May 15,
2005 was 69,506,898.

Transitional Small Business Disclosure Format (check one):        Yes [ ] No [X]
<PAGE>

                                  M-WISE, INC.
                                TABLE OF CONTENTS

                                                                            Page

PART I
FINANCIAL INFORMATION

Item 1.  Financial Statements
           Unaudited Balance Sheet as of March 31, 2005                       2
           Unaudited Statements of Operations for the Three Months
             Ended March 31, 2005 and 2004                                    3
           Unaudited Statements of Cash Flows for the Three Months
             Ended March 31, 2005 and 2004                                    5
           Notes to Unaudited Financial Statements                            6
Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                           18
Item 3.  Controls and Procedures                                             22

PART II
OTHER INFORMATION

Item 1   Legal Proceedings                                                   23
Item 2   Changes in Securities and Small Business                            23
         Issuer Purchases of Equity Securities                               23
Item 3   Defaults upon Senior Securities                                     23
Item 4   Submission of Matters to a Vote of Security Holders                 23
Item 5   Other Information                                                   23
Item 6   Exhibits and Reports on Form 8-K                                    23
<PAGE>

PART I
FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

                                   M-WISE INC.

                        CONSOLIDATED FINANCIAL STATEMENTS

                     QUARTERS ENDED MARCH 31, 2005 AND 2004


                                    CONTENTS

Report of Independent Registered Public Accounting Firm                        1

Consolidated Balance Sheets                                                    2

Consolidated Statements of Operations                                          3

Consolidated Statements of Changes in Stockholders' Deficit                    4

Consolidated Statements of Cash Flows                                          5

Notes to Consolidated Financial Statements                                  6-17
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
M-WISE, INC.

      We have reviewed the accompanying consolidated balance sheets of m-Wise,
Inc. and subsidiaries (the "Company") as of March 31, 2005 and 2004, and the
related consolidated statements of deficit, operations, change in stockholders'
deficit and cash flows for the three months then ended. These interim financial
statements are the responsibility of the Company's management.

      We conducted our reviews in accordance with standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists primarily of applying analytical procedures and
making inquires of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

      Based on our reviews, we are not aware of any material modifications that
should be made to the consolidated interim financial statements referred to
above for them to be in conformity with accounting principles generally accepted
in the United States of America.


                                                       "SF PARTNERSHIP, LLP"


TORONTO, CANADA                                        CHARTERED ACCOUNTANTS
May 17, 2005


                                       -1-
<PAGE>

M-WISE, INC.
Balance Sheets
March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                   2005            2004
<S>                                                        <C>             <C>
                                     ASSETS
CURRENT
    Cash                                                   $     28,618    $     77,231
    Accounts receivable - trade (net of allowance for           228,933          94,118
       doubtful accounts of $25,177, 2004, $15,193)
    Other receivables                                             4,838          12,354
    Prepaid and sundry assets                                     6,743          23,713
                                                           ----------------------------
                                                                269,132         207,416
LONG-TERM PREPAID EXPENSES                                       15,980          11,111
EQUIPMENT (note 3)                                              209,755         250,703
DEFERRED FINANCING FEES                                          34,737          47,365
                                                           ----------------------------
                                                           $    529,604    $    516,595
                                                           ============================
                                   LIABILITIES
CURRENT
    Bank indebtedness                                      $     17,363    $     15,760
    Trade accounts payable                                      144,563         191,219
    Other payables and accrued liabilities                      876,630         737,959
    Billings in excess of costs on uncompleted contracts         55,786         409,780
    Notes payable - current portion                              85,300          28,200
                                                           ----------------------------
                                                              1,179,642       1,382,918
ACCRUED SEVERANCE PAY (note 4)                                   31,092          21,893
NOTES PAYABLE (note 5)                                        1,810,193       1,817,036
                                                           ----------------------------
                                                              3,020,927       3,221,847
                                                           ----------------------------
                            STOCKHOLDERS' DEFICIENCY
CAPITAL STOCK (note 6)                                     $    118,162    $    118,162
PAID IN CAPITAL                                               6,900,084       6,877,453
ACCUMULATED DEFICIT                                          (9,509,569)     (9,700,867)
                                                           ----------------------------
                                                             (2,491,323)     (2,705,252)
                                                           ----------------------------
                                                           $    529,604    $    516,595
                                                           ============================
</TABLE>

APPROVED ON BEHALF OF THE BOARD
       "SHAY BEN ASULIN"                                   "MORDECHAI PROUDO"
-------------------------------                           --------------------
            Director                                            Director

            (THE ACCOMPANIED NOTES OF THE FINANCIAL STATEMENTS IS AN
                       INTEGRAL PART OF THESE STATEMENTS)


                                       -2-
<PAGE>

M-WISE, INC.
Consolidated Statements of Operations
Quarters Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                              2005            2004
<S>                                                   <C>             <C>
NET SALES                                             $  1,264,549    $    123,969

COST OF SALES                                              305,454           8,267
                                                      ----------------------------
GROSS PROFIT                                               959,095         115,702
                                                      ----------------------------
EXPENSES
    General and administrative                             306,766         278,915
    Research and development                               152,447          54,989
    Financial                                               14,652             901
                                                      ----------------------------
                                                           473,865         334,805
                                                      ----------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES                        485,230        (219,103)
                                                      ----------------------------
    Provision for income taxes - current                   121,300              --
    Income taxes recoverable from loss carryforward       (121,300)             --
                                                      ----------------------------
NET EARNINGS (LOSS)                                   $    485,230    $   (219,103)
                                                      ============================
BASIC EARNINGS (LOSS) PER SHARE                       $      0.007          (0.003)
                                                      ============================
BASIC EARNINGS (LOSS) PER SHARE                       $      0.007          (0.003)
                                                      ============================
FULLY DILUTED EARNINGS (LOSS) PER SHARE               $      0.007          (0.003)
                                                      ============================
FULLY DILUTED EARNINGS (LOSS) PER SHARE (note 6)      $      0.007          (0.003)
                                                      ============================
BASIC WEIGHTED AVERAGE NUMBER OF SHARES                 69,506,898      69,506,898
                                                      ============================
</TABLE>

            (THE ACCOMPANIED NOTES OF THE FINANCIAL STATEMENTS IS AN
                       INTEGRAL PART OF THESE STATEMENTS)


                                       -3-
<PAGE>

M-WISE, INC.
Consolidated Statements of Stockholders' Deficit
Quarters Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                  Common Shares
                                                                             Additional
                                            Number of                           Paid in      Accumulated
                                               Shares           Amount          Capital          Deficit
                                           -------------------------------------------------------------
<S>                                        <C>             <C>              <C>              <C>
Balance, January 1, 2004                   69,506,898      $   118,162      $ 6,869,184      $(9,481,764)

Net Loss                                           --               --               --         (219,103)

Options vested for employee services               --               --            8,269               --
                                           -------------------------------------------------------------
Balance, March 31, 2004                    69,506,898      $   118,162      $ 6,877,453      $(9,700,867)
                                           =============================================================
Balance, January 1, 2005                   69,506,898      $   118,162      $ 6,894,664      $(9,994,799)

Net earnings                                       --               --               --          485,230

Options vested for employee services               --               --            5,420               --
                                           -------------------------------------------------------------
Balance, March 31, 2005                    69,506,898      $   118,162      $ 6,900,084      $(9,509,569)
                                           =============================================================
</TABLE>

              (THE ACCOMPANIED NOTES OF THE FINANCIAL STATEMENTS IS
                      AN INTEGRAL PART OF THESE STATEMENTS)


                                       -4-
<PAGE>

M-WISE, INC.
Consolidated Statements of Cash Flows
Quarters Ended March 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                        2005            2004
<S>                                                                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net earnings (loss)                                              $  485,230       $ (219,103)
  Adjustments required to reconcile net loss to net cash used
    in operating activities:
    Depreciation                                                       29,094           29,471
    Wages and salaries paid by options                                  5,420            8,269
  Net Changes in Assets & Liabilities
    Accounts receivable - trade                                       (74,029)         (44,153)
    Other receivables                                                  (4,379)           3,322
    Prepaid and sundry assets                                             265          (11,471)
    Billings in excess of costs on uncompleted contracts             (614,104)         353,994
    Trade accounts payable                                             (3,990)          (7,000)
    Other payables and accrued liabilities                             69,753          (46,871)
    Long-term prepaid expenses                                         (1,385)          (3,812)
    Deferred financing fees                                             3,157            3,157
    Accrued severance pay                                              14,575            1,220
                                                                   ---------------------------
                                                                      (90,393)          67,023
                                                                   ---------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
    Acquisition of equipment                                          (18,070)         (23,799)
                                                                   ---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of Promissory Notes                         11,600            5,677
    Bank indebtedness - net                                               627           (4,208)
                                                                   ---------------------------
                                                                       12,227            1,469
                                                                   ---------------------------
NET (DECREASE) INCREASE IN CASH                                       (96,236)          44,693

CASH - BEGINNING OF PERIOD                                            124,854           32,538
                                                                   ---------------------------
CASH - END OF PERIOD                                               $   28,618       $   77,231
                                                                   ===========================
INTEREST AND INCOME TAXES PAID

During the quarter, the company had cash flows arising
    from income taxes and interests paid as follows:

    Interest paid                                                  $      323       $    1,326
                                                                   ===========================
</TABLE>

            (THE ACCOMPANIED NOTES OF THE FINANCIAL STATEMENTS IS AN
                       INTEGRAL PART OF THESE STATEMENTS)


                                       -5-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004


1.    DESCRIPTION OF BUSINESS AND GOING CONCERN

      a)    Description of Business

            m-Wise Inc. (the "Company") is a Delaware corporation which develops
            interactive messaging platforms for mobile phone-based commercial
            applications, transactions and information services with internet
            billing capabilities.

            The Company has a wholly-owned subsidiary in Israel, which was
            incorporated in 2000 under the laws of Israel.

      b)    Going Concern

            The Company's financial statements are presented on a going concern
            basis, which contemplates the realization of assets and satisfaction
            of liabilities in the normal course of business. The Company has
            experienced recurring losses since inception and has negative cash
            flows from operations that raise substantial doubt as to its ability
            to continue as a going concern.

            The Company is in an industry where operational fluctuation is
            usually higher than other ordinary industries. The accompanying
            financial statements reflect management's current assessment of the
            impact to date of the economic situation on the financial position
            of the Company. Actual results may differ materially from
            management's current assessment.

            The Company's ability to continue as a going concern is also
            contingent upon its ability to secure additional financing,
            continuing sale of its products and sustaining profitable
            operations.

            The Company is pursuing additional financing, there can be no
            assurance that the Company will be able to secure financing when
            needed or obtain such on terms satisfactory to the Company, if at
            all.

            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 possible inability of the Company to continue as a
            going concern.


                                       -6-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The accounting policies of the Company are in accordance with U.S.
      generally accepted accounting principles, and their basis of application
      is consistent with that of the previous period. Outlined below are those
      policies considered particularly significant:

      a)    Basis of Presentation

            These unaudited interim financial statements reflect all adjustments
            that are, in the opinion of management, necessary to a fair
            statement of the results for the interim periods presented.

      b)    Reporting Currency

            A majority of the Company's revenues are generated in U.S. dollars.
            In addition, a substantial portion of the Company's costs are
            incurred in U.S. dollars. Management has determined that the U.S.
            dollar will be used as the Company's functional and reporting
            currency.

      c)    Basis of Consolidation

            The consolidated financial statements include the operations of
            m-Wise, Inc. and its subsidiaries. Intercompany's balances and
            transactions have been eliminated.

      d)    Deferred Financing Fees

            Deferred financing fees relate to a non-interest bearing credit line
            facility of $300,000 provided by a shareholder as disclosed in note
            6. The overdraft from the credit facility will be non-interest
            bearing and there will be no covenants with which the Company will
            need to comply. The credit line facility has no expiration date and
            management expects to retain the facility for a period of at least
            five years. Accordingly, the fees are being amortized using the
            straight-line method over five years.

      e)    Equipment and Depreciation

            Equipment are stated at cost less accumulated depreciation.
            Depreciation is based on the estimated useful lives of the assets
            and is provided using the undernoted annual rates and methods:

                  Furniture and equipment      6-15%       Straight-line
                  Computer equipment             33%       Straight-line
                  Leasehold improvements                   Straight-line over
                                                           the term of the lease


                                       -7-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

      f)    Revenue Recognition

            The Company generates revenues from product sales, licensing,
            customer services and technical support.

            Revenues from products sales are recognized on a completed-contract
            basis, in accordance with Staff Accounting Bulletin No. 101 "Revenue
            Recognition in Financial Statements" ("SAB No. 101"), Statement of
            Position 97-2 "Software Revenue Recognition" and Statement of
            Position 81-1 "Accounting for Performance of Construction-Type and
            Certain Production-Type Contracts". The Company has primarily
            short-term contracts whereby revenues and costs in the aggregate for
            all contracts is expected to result in a matching of gross profit
            with period overhead or fixed costs similar to that achieved by use
            of the percentage-of-completion method. Accordingly, financial
            position and results of operations would not vary materially from
            those resulting from the use of the percentage-of-completion method.
            Revenue is recognized only after all three stages of deliverables
            are complete; installation, approval of acceptance test results by
            the customer and when the product is successfully put into real-life
            application. Customers are billed, according to individual
            agreements, a percentage of the total contract fee upon completion
            of work in each stage; approximately 40% for installation, 40% upon
            approval of acceptance tests by the customer and the balance of the
            total contract price when the software is successfully put into
            real-life application. The revenues, less its' associated costs, are
            deferred and recognized on completion of the contract and customer
            acceptance. Amounts received for work performed in each stage are
            not refundable.

            On-going service and technical support contracts are negotiated
            separately at an additional fee. The technical support is separate
            from the functionality of the products, which can function without
            on-going support.

            Technology license revenues are recognized in accordance with SAB
            No. 101 at the time the technology and license is delivered to the
            customer, collection is probable, the fee is fixed and determinable,
            a persuasive evidence of an agreement exists, no significant
            obligation remains under the sale or licensing agreement and no
            significant customer acceptance requirements exist after delivery of
            the technology.

            Revenues relating to customer services and technical support are
            recognized as the services are rendered ratably over the period of
            the related contract.

            The Company does not sell products with multiple deliverables. It is
            management's opinion that EITF 00-21, "Revenue Arrangements With
            Multiple Deliverables" is not applicable.

      g)    Research and Development Costs

            Research and development costs are expensed as incurred.


                                       -8-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

      h)    Use of Estimates

            The preparation of financial statements, in conformity with U.S.
            generally accepted accounting principles, 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 revenues and expenses during the reporting period. Actual
            results could differ from those estimates.

      i)    Concentration of Credit Risk

            SFAS No. 105, "Disclosure of Information About Financial Instruments
            with Off-Balance Sheet Risk and Financial Instruments with
            Concentration of Credit Risk", requires disclosure of any
            significant off-balance sheet risk and credit risk concentration.
            The Company does not have significant off-balance sheet risk or
            credit concentration. The Company maintains cash and cash
            equivalents with major Israel financial institutions.

            The Company's provides credit to its clients in the normal course of
            its operations. Depending on their size, financial strength and
            reputation, customers are given credit terms of up to 60 days. The
            Company carries out, on a continuing basis, credit checks on its
            clients and maintains provisions for contingent credit losses which,
            once they materialize, are consistent with management's forecasts.

            For other debts, the Company determines, on a continuing basis, the
            probable losses and sets up a provision for losses based on the
            estimated realizable value. For the periods ended March 31, 2005 and
            2004, all uncollectible amounts have been written off and there was
            no further provision for doubtful accounts.

            Concentration of credit risk arises when a group of clients having a
            similar characteristic such that their ability to meet their
            obligations is expected to be affected similarly by changes in
            economic or other conditions. The Company does not have any
            significant risk with respect to a single client.

      j)    Fair Value of Financial Instruments

            The estimated fair value of financial instruments has been
            determined by the Company using available market information and
            valuation methodologies. Considerable judgment is required in
            estimating fair value. Accordingly, the estimates may not be
            indicative of the amounts the Company could realize in a current
            market exchange. At March 31, 2005 and 2004, the carrying amounts of
            cash equivalents, short-term bank deposits, trade receivables and
            trade payables approximate their fair values due to the short-term
            maturities of these instruments.


                                       -9-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

      k)    Earnings per Common Share

            The Company calculates net earnings per share based on SFAS No. 128,
            "Earnings Per Share". Basic earnings per share is computed by
            dividing net earnings attributable to the common stockholders by the
            weighted average number of common shares outstanding. Fully diluted
            earnings per share is computed similar to basic earnings per share
            except that the denominator is increased to include the number of
            additional common shares that would have been outstanding if the
            potential common shares had been issued and if the additional common
            shares were dilutive.

      l)    Impact of Recently Issued Accounting Standards

            In December 2004, the FASB issued SFAS No. 153, "Exchanges of
            Non-monetary Assets - an amendment of APB Opinion No. 29" (Statement
            153). This Statement amends Opinion 29 to eliminate the exception
            for non-monetary exchanges of similar productive assets and replaces
            it with a general exception for exchanges of non-monetary assets
            that do not have commercial substance. A non-monetary exchange has
            commercial substance if the future cash flows of the entity are
            expected to change significantly as a result of the exchange. The
            adoption of FAS 153 will not have a material impact on the Company's
            consolidated financial statements.

            In December 2004, the FASB issued a revision to SFAS No. 123,
            "Share-Based Payment" (Statement 123R). This Statement requires a
            public entity to measure the cost of employee services received in
            exchange for an award of equity instruments based on the grant-date
            fair value of the award (with limited exceptions). That cost will be
            recognized over the period during which the employee is required to
            provide service in exchange for the award requisite service period
            (usually the vesting period). No compensation cost is recognized for
            equity instruments for which employees do not render the requisite
            service. Employee share purchase plans will not result in
            recognition of compensation cost if certain conditions are met;
            those conditions are much the same as the related conditions in
            Statement 123. This Statement is effective for public entities that
            do not file as a small business issuers as of the beginning of the
            first interim or annual reporting period that begins after June 15,
            2005. This Statement applies to all awards granted after the
            required effective date and to awards modified, repurchased, or
            cancelled after that date. The cumulative effect of initially
            applying this Statement, if any, is recognized as of the required
            effective date and is not expected to have a material impact on the
            Company's consolidated financial statements.


                                      -10-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

3.    EQUIPMENT

      Equipment is comprised as follows:

                                               2005                    2004
                                        ACCUMULATED             Accumulated
                                  COST DEPRECIATION       Cost Depreciation
                                -------------------------------------------
      Furniture and equipment     57,747     21,604       56,745     15,411
      Computer equipment        $531,490   $369,027     $467,399   $266,355
      Leasehold improvements      37,684     26,535       25,690     17,365
                                -------------------------------------------
                                $626,921   $417,166     $549,834   $299,131
                                -------------------------------------------
      Net carrying amount                  $209,755                $250,703
                                           --------                --------

4.    ACCRUED SEVERANCE PAY

      The Company accounts for its potential severance liability of its Israel
      subsidiary in accordance with EITF 88-1, "Determination of Vested Benefit
      Obligation for a Defined Benefit Pension Plan". The Company's liability
      for severance pay is calculated pursuant to applicable labour laws in
      Israel on the most recent salary of the employees multiplied by the number
      of years of employment as of the balance sheet date for all employees. The
      Company's liability is fully accrued and reduced by monthly deposits with
      severance pay funds and insurance policies. As at March 31, 2005 and 2004,
      the amount of the liabilities accrued were $76,728 and $61,988
      respectively. Severance pay expenses for the periods ended March 31, 2005
      and 2004 were $2,178 and $1,890 respectively.

      The deposit funds include profits accumulated up to the balance sheet date
      from the Israeli company. The deposited funds may be withdrawn only upon
      the fulfillment of the obligation pursuant to Israeli severance pay laws
      or labour agreements. Cash surrender values of the deposit funds as at
      March 31, 2005 and 2004 were $45,636 and $40,095 respectively. Income
      earned from the deposit funds for 2005 and 2004 was immaterial.


                                      -11-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

5.    NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                               2005            2004
<S>                                                                      <C>             <C>
      Syntek Capital AG - a significant shareholder until July 2002      $  900,000      $  900,000
      DEP Technology Holdings Ltd. - a significant shareholder
                                          until July 2002                   900,000         900,000
      Accrued interest                                                       95,493          45,236
                                                                         --------------------------
                                                                          1,895,493       1,845,236
      Less: Current portion                                                  85,300          28,200
                                                                         --------------------------
                                                                         $1,810,193      $1,817,036
                                                                         ==========================
</TABLE>

      The promissory notes are unsecured, bear interest at the per annum LIBOR
      rate offered by Citibank North America and are repayable on December 31,
      2007. Commencing January 1, 2004, the annual principal repayments are
      calculated as a total of 5% of annual prior year's revenues.

      Under the loan agreements, the Company is not allowed to declare dividends
      except for the purpose of redemption of common stock owned by Ogen LLC,
      one of the stockholders of the Company.

      The Company may not create a pledge, charge or other encumbrance over any
      or all of its assets for financing without the lenders' consent and must
      provide notice to the lender at least 10 days prior to any such action.

6.    CAPITAL STOCK

      Authorized
        210,000,000      Common shares
        170,000,000      Preferred shares
                         Series "A": convertible, voting, par value of $0.0017
                                     per share
                         Series "B": 10% non-cumulative dividend, redeemable,
                                     convertible, voting, par value of $0.0017
                                     per share
                         Series "C": 10% non-cumulative dividend, convertible,
                                     voting, par value of $0.0017 per share

                                                          2005           2004
      Issued and outstanding
         69,506,898      Common shares
                         (2004 - 69,506,898)        $  118,162     $  118,162
                                                    ==========     ==========


                                      -12-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

6.    CAPITAL STOCK (cont'd)

      Stock warrants and options:

      The Company accounted for its stock options and warrants in accordance
      with SFAS 123 "Accounting for Stock - Based Compensation" and SFAS 148
      "Accounting for Stock - Based compensation - Transition and Disclosure."
      Value of options granted has been estimated by the Black Scholes option
      pricing model. The assumptions are evaluated annually and revised as
      necessary to reflect market conditions and additional experience. The
      following assumptions were used:

                                        2005                      2004
                               Israel   International    Israel   International

      Interest rate                5%              5%        5%              5%
      Expected volatility         50%             50%       50%             50%
      Expected life in years       8              10         8              10

      Warrants:

      In April 2000, 56,180 warrants, equivalent to 337,080 after the 1 to 6
      forward stock split, were issued to one of the shareholders with his
      preferred Class "A" shares for a total investment of $750,000. Warrants
      will expire in the event of an initial public offering of the Company's
      securities. Warrants have an exercise price for preferred Class "A" shares
      of the Company at $4.45 per share, equivalent to $0.74 after the 1 to 6
      forward stock split. No value has been assigned to the warrants and the
      total investment net of par value of preferred Class "A" shares has been
      presented as additional paid in capital. The warrants for preferred Class
      "A" shares were converted into warrants for common shares on a 1 to 1
      basis during the year.

      In January 2003, the Company issued 180,441 warrants for the Class "B"
      preferred shares of the Company for deferral of debt for legal services
      rendered, which was valued at $10,000. The Warrants will expire in 2010.

      The warrants for preferred Class "B" shares have been converted into
      warrants for common shares during the year at a ratio of 1 to 6.3828125.
      After the conversion, the warrants were further split at the ratio of 1 to
      6 in accordance with the forward stock split of the common shares. After
      the conversion and the forward split, there were 7,025,778 warrants
      outstanding each convertible to 1 common share at par value.


                                      -13-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

6.    CAPITAL STOCK (cont'd)

      Capital Stock:

      In January 2003, the Company issued 4,297,816 common shares, equivalent to
      25,786,896 after the 1 to 6 forward stock split, for $250,000 of offering
      costs with regard to the registration of its securities with the
      Securities Exchange Commission. In November 2003 it was agreed upon by the
      parties that the fair value of the offering costs was only $60,000 and
      therefore 19,786,896 of the post-split shares were forfeited. The offering
      costs have been charged to professional services expense in the year.

      In January 2003, the Company issued 6,315,258 Class "C" preferred shares
      to a shareholder for providing a non-interest bearing credit line facility
      of $300,000. These shares were issues at par value, which approximates the
      fair market value of the financing fees relating to the credit line
      facility. At December 31, 2003 the line of credit has not been utilized.
      The 6,315,258 Class "C" preferred shares were subsequently converted into
      37,891,548 common shares post forward stock split.

      On November 19, 2003, the Company, in accordance with the holders, agreed
      to convert all the 268,382 Class "A" and 489,456 Class "B" and 6,315,258
      Class "C" preferred shares into common shares. Following the conversion,
      the Company granted a 1 to 6 forward stock split of its common shares. The
      conversion has been recorded prospectively in the consolidated financial
      statements, while the forward stock split has been recorded retroactively.

      Stock Options:

      In February 2001 the Board of Directors of the Company adopted two option
      plans to allow employees and consultants to purchase ordinary shares of
      the Company.

      Under the Israel 2001 share option plan management authorized stock
      options for 2,403,672 common shares of the Company having a $0.0017
      nominal par value each and an exercise price of $0.0017, and under the
      International 2001 share option plan, stock options for 300,000 common
      shares having a $0.0017 nominal par value each and an exercise price of
      $0.0017. As of March 31, 2005, 3,672 options under the Israel 2001 share
      option plan for common stock were not yet granted.

      Under the Israel 2003 share option plan management authorized stock
      options (on a post conversion, post split basis) for 16,094,106 preferred
      Class "B" shares, which were converted to options for common shares of the
      Company having a $0.0017 nominal par value each and an exercise price of
      $0.0017, and under the International 2003 share option plan stock options
      (on a post conversion, post split basis) for 25,061,094 preferred Class
      "B" shares which were converted to options for common shares of the
      Company having a $0.0017 nominal par value each and an exercise price of
      $0.0017. As of March 31, 2005, 38,256 options under the Israel 2003 share
      option plan were not yet granted.


                                      -14-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

6.    CAPITAL STOCK (cont'd)

      The options vest gradually over a period of 4 years from the date of grant
      for Israel and 10 years (no less than 20% per year for five years for
      options granted to employees) for the International plan. The term of each
      option shall not be more than 8 years from the date of grant in Israel and
      10 years from the date of grant in the International plan. The outstanding
      options that have vested have been expensed in the statements of
      operations as follows:

                   Year ended December 31, 2001              $    9,000
                   Year ended December 31, 2002                      --
                   Year ended December 31, 2003                 384,889
                   Year ended December 31, 2004                  25,480
                   Quarter ended March 31, 2005                   5,420
                                                             ----------
                                                             $  424,789
                                                             ----------

      The following table summarizes the activity of common stock options during
      2005 and 2004:

<TABLE>
<CAPTION>
                                                            2005                                2004
                                                     Israel     International            Israel     International
                                               ------------------------------------------------------------------
<S>                                            <C>               <C>               <C>               <C>
      Outstanding, beginning of period           18,455,850        25,361,094        18,455,850        25,361,094
        Granted                                          --                --                --                --
        Exercised                                        --                --                --                --
        Cancelled                                        --                --                --                --
                                               ------------------------------------------------------------------
      Outstanding, end of period                 18,455,850        25,361,094        18,455,850        25,361,094
                                               ==================================================================
      Weighted average fair value of
      common stock options granted
      during the period                        $         --      $         --      $         --      $         --
                                               ==================================================================
      Weighted average exercise price
      of common stock options, beginning
      of period                                $     0.0017      $     0.0017      $     0.0017      $     0.0017
                                               ==================================================================
      Weighted average exercise price of
      common stock options granted in
      the period                               $         --      $         --      $         --      $         --
                                               ==================================================================
      Weighted average exercise price of
      common stock options, end of period      $     0.0017      $     0.0017      $     0.0017      $     0.0017
                                               ==================================================================
      Weighted average remaining
      contractual life of common stock
      options                                       6 years           8 years           7 years           9 years
                                               ==================================================================
</TABLE>


                                      -15-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

7.    INCOME TAXES

      The Company accounts for income taxes in accordance with SFAS No. 109,
      "Accounting for Income Taxes". This Standard prescribes the use of the
      liability method whereby deferred tax asset and liability account balances
      are determined based on differences between financial reporting and tax
      bases of assets and liabilities and are measured using the enacted tax
      rates. The effects of future changes in tax laws or rates are not
      anticipated.

      Under SFAS No. 109 income taxes are recognized for the following: a)
      amount of tax payable for the current year, and b) deferred tax
      liabilities and assets for future tax consequences of events that have
      been recognized differently in the financial statements than for tax
      purposes. Management determined that accounting values of its assets and
      liabilities recorded are not materially different from their tax values
      and therefore no deferred tax assets/liabilities have been setup to
      account for the temporary differences.

      The Israeli subsidiary maintains an investment program in hardware and
      software in the amount of $75,000 and has been granted the status of
      "Approved Enterprise" under the Law for the Encouragement of Capital
      Investments, 1959 in Israel. This status entitles the Company to an
      exemption from tax on income derived there from for a period of 10 years
      starting in the year in which the Company first generates taxable income,
      but not later than 14 years from the date of approval which was received
      on December 2002 or 12 years from commencement of operations. The
      tax-exempt profits that will be earned by the Company's "Approved
      Enterprises" can be distributed to shareholders, without imposing tax
      liability on the Company only upon its complete liquidation. If these
      retained tax-exempt profits are distributed in a manner other than in the
      complete liquidation of the Company they would be taxed at the corporate
      tax rate applicable to such profits as if the Company had not elected the
      alternative system of benefits (depending on the level of foreign
      investment in the Company) currently between 10% to 25% for an "Approved
      Enterprise". Under SFAS 109, a deferred tax liability normally would be
      recorded relating to taxes that would be owed on the distribution of
      profits even if management does not intend currently to declare dividends.
      As at March 31, 2005 the Israel subsidiary has not reported any taxable
      income and there was an accumulated deficit of approximately $324,000.
      There was no deferred tax liability to be recorded in the period.

      The Company has deferred income tax assets as follows:

<TABLE>
<CAPTION>
                                                                     2005           2004
<S>                                                            <C>             <C>
      Deferred income tax assets
        Non-capital losses carried forward                     $2,266,000      2,387,500
        Valuation allowance for deferred income tax assets     (2,266,000)    (2,387,500)
                                                               -------------------------
                                                               $       --             --
                                                               =========================
</TABLE>

      The Company provided a valuation allowance equal to the deferred income
      tax assets because it is not presently more likely than not that they will
      be realized.


                                      -16-
<PAGE>

M-WISE, INC.
Notes to Financial Statements
March 31, 2005 and 2004

7.    INCOME TAXES (cont'd)

      As at March 31, 2005, the Company has approximately $9,100,000 of tax
      losses carried forward in the parent company and no tax losses carried
      forward in the Israeli subsidiary. The loss carryforward, if not utilized,
      will expire in twenty years commencing from December 31, 2021 to December
      31, 2024.

8.    RELATED PARTY TRANSACTIONS

      During the year the Company incurred directors consulting fees and
      salaries in the amount of $50,000 (2004, $60,000). At the quarter-end,
      $407,000 (2004 - $302,000) was unpaid and included in other payables and
      accrued expenses.

      These transactions were in the normal course of business and recorded at
      an exchange value established and agreed upon by the above mentioned
      parties.

9.    MAJOR CUSTOMERS

      In the quarter ended March 31, 2005, the Company had one major customer in
      Asia which primarily accounted for 81% of the total revenues.

10.   COMMITMENTS

      The company is committed under an operating lease for its premises
      expiring June 30, 2006. Minimum annual payments exclusive of taxes,
      insurance, and maintenance costs) under the lease are as follows:

                  2005                                   $ 31,500
                  2006                                     21,000
                                                         --------
                                                         $ 52,500
                                                         --------


                                      -17-
<PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATION

The following discussion should be read in conjunction with our consolidated
financial statements and related notes included elsewhere in this Report.

This filing contains forward-looking statements. The words "anticipate,"
"believe," "expect, "plan," "intend," "seek," "estimate," "project," "will,"
"could," "may," and similar expressions are intended to identify forward-looking
statements. These statements include, among others, information regarding future
operations, future capital expenditures, and future net cash flow. Such
statements reflect our management's current views with respect to future events
and financial performance and involve risks and uncertainties, including,
without limitation: (a) the timing of our sales could fluctuate and lead to
performance delays; (b) without additional equity or debt financing we cannot
carry out our business plan; (c) our stockholders have pre-emptive rights to
purchase securities of m-Wise , Which could impair our ability to raise capital;
(d) we operate internationally and are subject to currency fluctuations , which
could cause us to incur losses even if our operations are profitable; (e) we are
dependent upon certain major customers , and the loss of one or more of such
customers could adversely affect our revenues and profitability; (f) our
research and development facilities are located in Israel and we have important
facilities and resources located in Israel which could be negatively affected
due to military or political tensions; (g) certain of our officers and employees
are requires to serve in the Israel defense forces and this could force them to
be absent from our business for extended periods; (h) the rate of inflation in
Israel may negatively impact our costs if it exceeds the rate of devaluation of
the NIS against the Dollar. Should one or more of these risks or uncertainties
occur, or should underlying assumptions prove to be incorrect, actual results
may vary materially and adversely from those anticipated, believed, estimated or
otherwise indicated. These forward-looking statements speak only as of the date
of this prospectus. Subject at all times to relevant federal and state
securities law disclosure requirements, we expressly disclaim any obligation or
undertaking to disseminate any update or revisions to any forward-looking
statement contained herein to reflect any change in our expectations with regard
thereto or any changes in events, conditions or circumstances on which any such
statement is based. Consequently, all of the forward-looking statements made in
this Report are qualified by these cautionary statements and there can be no
assurance of the actual results or developments.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2005 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
2004.


                                      -18-
<PAGE>

REVENUES

License fees and products. Revenues from license fees and products increased
4,056% to $1,026,850 for the three months ended March 31, 2005 from $24,708 for
the same period in 2004. The increase primarily consisted of $1,026,850 revenues
derived from our contract with First Advanced Multi-Media Entertainment.

Revenue share. Revenues from revenue share increased 989% to $15,901 for the
three months ended March 31, 2005 from $1,460 for the same period in 2004.

Customer services and technical support. Revenues from customer services and
technical support increased 127% to $221,798 for the three months ended March
31, 2005 from $97,801 for the same period in 2004. The increase primarily
consisted of revenues from ongoing customers who were not our customers during
the first three months of 2004.

Cost of revenues

Cost of revenues increased 3,595% to $305,454 for the three months ended March
31, 2005 from $8,267 for the same period in 2004. This increase was primarily
due to higher revenues from License fees and products and revenues from customer
services and technical support.

Operating expenses

Research and development. Research and development expenses increased 177% to
$152,447 for the three months ended March 31, 2005 from $54,989 for the same
period in 2004. This increase was primarily due to a $57,144 increase in payroll
and related expenses and a $52,170 government grant received during the three
months ended March 31, 2004. The increase in payroll and related expenses was
primarily due to an increase in the number of employees involved in research and
development from 6 on March 31, 2004 to 11 on March 31, 2005. Research and
development expenses, stated as a percentage of revenues, decreased to 12% for
the three months ended March 31, 2005 from 44% for the same period in 2004.

General and administrative. General and administrative expenses increased 10% to
$306,766 for the three months ended March 31, 2005 from $278,915 for the same
period in 2004. This increase was primarily due to a $49,930 increase in
marketing expenses, partially offset by a $29,099 decrease in consulting
expenses. General and administrative expenses, stated as a percentage of
revenues, decreased to 24% for the three months ended March 31, 2005 from 225%
for the same period in 2004.


                                      -19-
<PAGE>

Financing expenses

Financing expenses. Our financing expenses increased 1,526% to $14,652 for the
three months ended March 31, 2005 from $901 for the same period in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity since our inception have been private sales
of equity securities, stockholder loans, borrowings from banks and to a lesser
extent, cash from operations. We had cash and cash equivalents of $ 28,618 as of
March 31, 2005 and $124,854 as of December 31, 2004. Our initial capital came
from an aggregate investment of $1.3 million from Cap Ventures Ltd. To date, we
have raised an aggregate of $5,300,000 from placements of our equity securities
(including the investment by Cap Ventures and a $4,000,000 investment by Syntek
Capital AG and DEP Technology Holdings Ltd.). We have also borrowed an aggregate
of $1,800,000 from Syntek Capital AG and DEP Technology Holdings Ltd. (See
"Certain Transactions") and as of the date of this prospectus we have no funds
available to us under bank lines of credit. We have a credit line agreement with
Miretzky Holdings Limited. There is no amount currently outstanding under the
line. The credit line is for $300,000.The credit line has no termination date
and does not provide for interest payments.

Other than the said credit line agreement with Miretzky we do not have any
Commitments from any of our affiliates or current stockholders, or any other
Non-affiliated parties, to provide additional sources of capital to us. We will
need approximately $1.0 million for the next twelve months for our operating
costs which mainly include salaries, office rent and network connectivity, which
total approximately $60,000 per month, and for working capital. We intend to
finance this amount from our ongoing sales and through the sale of either our
debt or equity securities or a combination thereof, to affiliates, current
stockholders and/or new investors. Currently we do not believe that our future
capital requirements for equipment and facilities will be material.

      Operating activities. For the three months ended March 31, 2005 we used
$90,393 of cash in operating activities primarily due to a $614,104 decrease in
deferred revenues, partially offset by our net earnings of $485,230. In the same
period in 2004, we generated $67,023 of cash in operating activities primarily
due to a $353,994 increase in deferred revenues partially offset by our net loss
of $219,103.


                                      -20-
<PAGE>

Investing and financing activities.

      Property and equipment consist primarily of computers, software, and
office equipment.

      For the three months ended March 31, 2005, net cash used in investing
activities was $18,070 consisting of an investment in equipment. In the same
period in 2004 net cash used in investing activities was $23,799 consisting of
an investment in equipment.

      For the three months ended March 31, 2005, net cash provided by financing
activities was $12,227 due to a $11,600 increase in notes payables and a $627
increase in bank indebtedness. In the same period in 2004, net cash provided by
financing activities was $1,469 due to a $5,677 increase in notes payables
partially offset by a $4,208 decrease in bank indebtedness.

DIVIDENDS

We have not paid any dividends on our common stock. We are prohibited from
paying dividends under certain promissory notes in the aggregate principal
amount of $1.8 million held by Syntek Capital AG and DEP Technology Holdings
Ltd. We currently intend to retain any earnings for use in our business, and
therefore do not anticipate paying cash dividends in the foreseeable future.

OFF BALANCE SHEET ARRANGEMENTS

None.

Item 3. CONTROLS AND PROCEDURES

With the participation of management, our Chief Executive Officer and Chief
Financial Officer evaluated our disclosure controls and procedures within the 90
days preceding the filing date of this quarterly report. Based upon this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in ensuring that
material information required to be disclosed is included in the reports that we
file with the Securities and Exchange Commission.

There were no significant changes in our internal control over financial
reporting to the knowledge of our management, or in other factors that have
materially affected or are reasonably likely to materially affect these internal
controls over financial reporting subsequent to the evaluation date.


                                      -21-
<PAGE>

PART II
OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

Not applicable.

Item 2.  CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
         SECURITIES

Not applicable

Item 3.  DEFAULT UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

Item 5.  OTHER INFORMATION

Not applicable.

Item 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

3.1      Amended and restated Certificate of Incorporation**
3.2      Bylaws**
4.1      Purchase and registration rights agreement and schedule of details**
10.1     Amended and Restated Employment Agreement with Mordechai Broudo**
10.2     Amendment to Amended and Restated Employment Agreement with Mordechai
         Broudo**
10.3     Amended and Restated Employment Agreement with Shay Ben-Asulin**
10.4     Amendment to Amended and Restated Employment Agreement with Shay
         Ben-Asulin**
10.5     Employment Agreement, Gabriel Kabazo**
10.6     Confidentiality rider to Gabriel Kabazo Employment Agreement**
10.7     Employment Agreement Asaf Lewin**
10.8     2003 International Share Option Plan**
10.9     Form of Option Agreement, 2003 International Share Option Plan**
10.10    2001 International Share Option Plan**
10.11    Form of Option Agreement, 2001 International Share Option Plan**


                                      -22-
<PAGE>

10.12    2003 Israel Stock Option Plan**
10.13    Form of Option Agreement, 2003 Israel Stock Option Plan**
10.14    2001 Israel Share Option Plan**
10.15    Form of Option Agreement, 2001 Israel Share Option Plan**
10.16    Investors' Rights Agreement dated January 11, 2001**
10.17    Stockholders Agreement**
10.18    Agreement for Supply of Software and Related Services dated October 14,
         2002, by and between i Touch plc and m-Wise, Inc.**
10.19    Purchase agreement between m-Wise, Inc. and Comtrend Corporation dated
         May 22, 2002**
10.20    Amended and Restated Consulting agreement between Hilltek Investments
         Limited and m-Wise dated November 13, 2003**
10.21    Consulting agreement between Hilltek Investments Limited and m-Wise
         dated June 24, 2003, subsequently amended see exhibit 10.20 above**
10.22    Amendment to Investors' Rights Agreement dated October 2, 2003**
10.23    Appendices to 2003 Israel Stock Option Plan**
10.24    Appendices to 2001 Israel Share Option Plan**
10.25    Credit Line Agreement between m-Wise, Inc. and Miretzky Holdings,
         Limited dated January 25, 2004**
21.      List of Subsidiaries**
31.1     Rule 13a-14(a)/15d-14(a) Certification.*
31.2     Rule 13a-14(a)/15d-14(a) Certification.*
32.1     Certification by the Chairman Relating to a Periodic Report Containing
         Financial Statements. ***
32.2     Certification by the Chief Financial Officer Relating to a Periodic
         Report Containing Financial Statements. ***

-------------
*     Filed herewith.

**    Incorporated by reference from the registration statement filed with the
      Securities and Exchange Commission Registration Statement on Form SB-2
      (Reg. No. 333-106160).


                                      -23-
<PAGE>

***   The Exhibit attached to this Form 10-QSB shall not be deemed "filed" for
      purposes of Section 18 of the Securities Exchange Act of 1934, as amended
      (the "Exchange Act"), or otherwise subject to liability under that
      section, nor shall it be deemed incorporated by reference in any filing
      under the Securities Act of 1933, as amended, or the Exchange Act, except
      as expressly set forth by specific reference in such filing.

(b)   Reports on Form 8-K

      None


                                      -24-
<PAGE>

                                   SIGNATURES

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

                                                m-Wise, inc.
                                                ----------------------
                                                (Registrant)


Date: May 20, 2005                          /s/ Shay Ben-Asulin
                                            --------------------------
                                                Name: Shay Ben-Asulin
                                                Title:  Chairman


                                      -25-