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 June 30, 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 LLP
                         600 Lexington Avenue, 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 August 10,
2005 was 75,235,867.

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 June 30, 2005                  2
               Unaudited Statements of Operations for the Three Months
                 Ended and Six Months Ended June 30, 2005 and 2004          3
               Unaudited Statements of Cash Flows for the Six Months
                 Ended June 30, 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

                      PERIODS ENDED JUNE 30, 2005 AND 2004



                                    CONTENTS

Report of Independent Registered Public Accounting Firm                     1

Consolidated Balance Sheets                                                 2

Consolidated Statements of Operations                                   3 - 4

Consolidated Statements of Changes in Stockholders' Deficit                 5

Consolidated Statements of Cash Flows                                       6

Notes to Consolidated Financial Statements                             7 - 18


<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 June 30, 2005 and 2004,  and the
related consolidated  statements of operations,  stockholders'  deficit and cash
flows for the six 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
August 2, 2005


                                     - 1 -
<PAGE>


m-Wise, Inc.
Balance Sheets
June 30, 2005 and 2004

<TABLE>
<CAPTION>
                                                                  2005           2004
                                     ASSETS
<S>                                                        <C>            <C>
Current
    Cash                                                   $        481   $     44,099
    Accounts receivable - trade (net of allowance for           131,135         70,933
       doubtful accounts of $25,177, 2004, $17,629)
    Other receivables                                             2,210          4,725
    Prepaid and sundry assets                                    15,980         14,693
                                                           ------------   ------------
                                                                149,806        134,450
Long-term Prepaid Expenses                                       10,195         12,426
Equipment (note 3)                                              196,401        235,932
Deferred Financing Fees                                          31,580         44,208
                                                           ------------   ------------
                                                           $    387,982   $    427,016
                                                           ============   ============
                                   LIABILITIES
Current
    Bank indebtedness                                      $      1,724   $     17,936
    Trade accounts payable                                       84,208        137,884
    Advances from shareholder  (note 4)                          75,192         15,000
    Other payables and accrued liabilities                      947,381        671,121
    Billings in excess of costs on uncompleted contracts             --        700,560
    Notes payable - current portion                             149,200         33,680
                                                           ------------   ------------
                                                              1,257,705      1,576,181
Accrued Severance Pay (note 5)                                   36,844         18,246
Notes Payable (note 6)                                        1,757,893      1,817,233
                                                           ------------   ------------
                                                              3,052,442      3,411,660
                                                           ------------   ------------
                            STOCKHOLDERS' DEFICIENCY
Capital Stock (note 7)                                     $    118,162   $    118,162
Paid in Capital                                               6,904,401      6,883,667
Accumulated Deficit                                          (9,687,023)    (9,986,473)
                                                           ------------   ------------
                                                             (2,664,460)    (2,984,644)
                                                           ------------   ------------
                                                           $    387,982   $    427,016
                                                           ============   ============
</TABLE>

(The accompanying notes of the financial statements is an integral part of these
statements)


                                     - 2 -
<PAGE>


m-Wise, Inc.
Consolidated Statements of Operations
Six Months Ended June 30, 2005 and 2004

<TABLE>
<CAPTION>
                                                                     2005           2004
<S>                                                          <C>            <C>
Net Sales                                                    $  1,623,782   $    233,678

Cost of Sales                                                     357,373         47,374
                                                             ------------   ------------

Gross Profit                                                    1,266,409        186,304
                                                             ------------   ------------

Expenses
    General and administrative                                    584,584        541,373
    Research and development                                      355,528        138,975
    Financial                                                      18,521         10,665
                                                             ------------   ------------
                                                                  958,633        691,013
                                                             ------------   ------------
Net Earnings (Loss)                                          $    307,776   $   (504,709)
                                                             ============   ============
Basic and Fully Diluted Earnings (Loss) Per Share (note 7)   $       0.00          (0.01)
                                                             ============   ============
Basic Weighted Average Number of Shares                        69,506,898     69,506,898
</TABLE>

(The accompanying notes of the financial statements is an integral part of these
statements)


                                     - 3 -
<PAGE>


m-Wise, Inc.
Consolidated Statements of Operations
Three Months Ended June 30, 2005 and 2004

<TABLE>
<CAPTION>

                                                                      2005            2004

<S>                                                           <C>             <C>
Sales                                                         $    359,233    $    109,709

Cost of Sales                                                       51,919          39,107
                                                              ------------    ------------
Gross Profit                                                       307,314          70,602
                                                              ------------    ------------
Expenses
    General and administrative                                     277,817         262,458
    Research and development                                       203,081          83,986
    Financial                                                        3,869           9,764
                                                              ------------    ------------
                                                                   484,767         356,208
                                                              ------------    ------------
Net Earnings (Loss)                                           $   (177,453)   $   (285,606)
                                                              ============    ============
Basic and Fully Diluted  Earnings (Loss) Per Share (note 7)   $       0.00            0.00
                                                              ============    ============
Basic Weighted Average Number of Shares                         69,506,898      69,506,898
                                                              ============    ============
</TABLE>

(The accompanying notes of the financial statements is an integral part of these
statements)


                                     - 4 -
<PAGE>






m-Wise, Inc.
Consolidated Statements of Stockholders' Deficit
Six Months Ended June 30, 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)

Options vested for employee services              --              --          14,483              --

Net Loss                                          --              --              --        (504,709)
                                          ----------------------------------------------------------
Balance, June 30, 2004                    69,506,898   $     118,162   $   6,883,667   $  (9,986,473)
                                          ==========================================================
Balance, January 1, 2005                  69,506,898   $     118,162   $   6,894,664   $  (9,994,799)

Options vested for employee services              --              --           9,737              --

Net  earnings                                     --              --              --         307,776
                                          ----------------------------------------------------------
Balance, June 30, 2005                    69,506,898   $     118,162   $   6,904,401   $  (9,687,023)
                                          ==========================================================
</TABLE>

(The accompanying notes of the financial statements is an integral part of these
statements)


                                     - 5 -
<PAGE>




                                      - 1 -

m-Wise, Inc.
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2005 and 2004


                                                      2005          2004

Cash Flows from Operating Activities
    Net earnings (loss)                            $ 307,776    $(504,709)
    Adjustments required to reconcile net
       loss to net cash used in operating
       activities:
      Depreciation                                    57,122       58,320
      Wages and salaries paid by options               9,737       14,483
    Net Changes in Assets & Liabilities
      Accounts receivable - trade                     23,769      (20,968)
      Other receivables                               (1,751)      10,951
      Prepaid and sundry assets                       (8,972)      (2,451)
      Deferred revenue                              (669,890)     644,774
      Trade accounts payable                         (64,345)     (60,335)
      Other payables and accrued liabilities         140,504      (98,709)
      Long-term prepaid expenses                       4,400       (5,127)
      Deferred financing fees                          6,314        6,314
      Accrued severance pay                           20,327       (2,427)
                                                   -----------------------
                                                    (175,009)      40,116
                                                   -----------------------
Cash Flows from Investing Activities
      Acquisition of equipment                       (32,744)     (37,877)
                                                   -----------------------
Cash Flows from Financing Activities
      Advances from shareholder                       75,192           --
      Proceeds from issuance of Promissory Notes      23,200       11,354
      Bank indebtedness - net                        (15,012)      (2,032)
                                                   -----------------------
                                                      83,380        9,322
                                                   -----------------------
Net (Decrease) Increase in Cash                     (124,373)      11,561

Cash - beginning of  period                          124,854       32,538
                                                   -----------------------

Cash - end of period                               $     481    $  44,099
                                                   =======================
(The accompanying notes of the financial statements is an integral part of these
statements)


                                     - 6 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 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's  wholly-owned  subsidiary,  m-Wise Ltd., is located in
            Israel and 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  but there can be no
            assurance  that the Company  will be able to secure  financing  when
            needed or obtain financing 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.


                                     - 7 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 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)    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.

      b)    Basis of Consolidation

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

      c)    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
            4. The overdraft from the credit  facility is  non-interest  bearing
            and there are 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.

      d)    Equipment and Depreciation

            Equipment 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


                                     - 8 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


2.    Summary of Significant Accounting Policies (cont'd)

      e)    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.

      f)    Research and Development Costs

            Research and development costs are expensed as incurred.


                                     - 9 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


2.    Summary of Significant Accounting Policies (cont'd)

      g)    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.

      h)    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  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.

            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.

      i)    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 June 30, 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.


                                     - 10 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


2.    Summary of Significant Accounting Policies (cont'd)

      j)    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.

      k)    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".  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.


                                     - 11 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


3.    Equipment

      Equipment is comprised as follows:

                                           2005                        2004
                                        Accumulated                 Accumulated
                               Cost     Depreciation      Cost      Depreciation
                          -----------------------------------------------------
Furniture and equipment        57,747        23,170        56,412        16,924
Computer equipment        $   546,164   $   393,071   $   473,751   $   291,321
Leasehold improvements         37,684        28,953        33,749        19,735
                          -----------------------------------------------------
                          $   641,595   $   445,194   $   563,912   $   327,980
                          -----------------------------------------------------
Net carrying amount                     $   196,401                 $   235,932
                                        -----------                 -----------


4.    Advances from shareholder

      The advances from the major shareholder are non-interest  bearing and have
      no fixed terms of repayment. According to an agreement dated January 2003,
      the  shareholder  granted a credit  facility of $300,000 to the Company in
      return for preferred class C shares as described in note 7.


5.    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 June 30, 2005 and 2004,
      the  amount  of  the   liabilities   accrued   were  $82,935  and  $57,141
      respectively.  Severance  pay expenses for the periods ended June 30, 2005
      and 2004 were $4,688 and $550, 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
      June 30, 2005 and 2004 were  $46,091  and  $38,895,  respectively.  Income
      earned from the deposit funds for 2005 and 2004 was immaterial.


                                     - 12 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


6.    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                                        107,093       45,236
                                                                -----------------------
                                                                 1,907,093    1,845,236
           Less: Current portion                                   149,200       28,200
                                                                -----------------------
                                                                $1,757,893   $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.


7.    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
                                                 -----------------------


                                     - 13 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


7.    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 shares 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 warrants to purchase 180,441 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  warrants to purchase
      7,025,788 shares outstanding.


                                     - 14 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


7.    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 and 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 issued at par value, which approximates the
      fair  market  value of the  financing  fees  relating  to the credit  line
      facility.  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",  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 June 30, 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 June 30, 2005,  38,256 options under the Israel 2003 share
      option plan were not yet granted.


                                     - 15 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


7.    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

                               $            419,369

      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                                               --                --                --                --
   Preferred stock options converted to
   common                                                  --                --                --                --
   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           $           0.0   $           0.0   $           0.0   $         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                 $              0.0$              0.0$              0.0$         0.0017

Weighted average remaining contractual
life of common stock options                            6 years           8 years           7 years         9 years
                                             ----------------------------------------------------------------------
</TABLE>


                                     - 16 -
<PAGE>


m-Wise, Inc.
Notes to Financial Statements
June 30, 2005 and 2004


8.    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 Company has deferred income tax assets as follows:

                                                        2005         2004

      Deferred income tax assets
        Non-capital losses carried forward      $      2,310,000   2,500,000
        Valuation allowance for
          deferred income tax assets                  (2,310,000) (2,500,000)
                                                -----------------------------
                                                $            --          --
                                                =============================


      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.


                                     - 17 -
<PAGE>


8.    Income Taxes (cont'd)

      As at June 30,  2005,  the Company  has  approximately  $9,200,000  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.


9.    Related Party Transactions

      During the period,  the Company  incurred  directors  consulting  fees and
      salaries in the amount of $110,000 (2004,  $120,000). At June 30, 2005 and
      2004,  $462,000  and  $256,000,  respectively,  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.


10.   Major Customers

      In the six months ended June 30, 2005,  the Company had one major customer
      in Asia which primarily accounted for 63% of the total revenue.


11.   Commitments

      The  company  is  committed  under an  operating  lease  for its  premises
      expiring  June 30,  2006.  Minimum  annual  payment  exclusive  of  taxes,
      insurance, and maintenance costs under the lease is $42,000.


12.   Subsequent Events

      a)    On July 29, 2005,  the Company  registered  for  issuance  5,000,000
            common  shares  for  $500,000,  to be issued to the Chief  Financial
            Officer as compensation for services rendered.

      b)    On July 29, 2005, 728,969 stock options were exercised as follows:

            Israel 2001 share option plan                            112,518

            Israel 2003 share option plan                            419,711

            International 2003 share option plan                     196,740
                                                                     -------

            Total                                                    728,969
                                                                     =======


                                     - 18 -
<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


SIX MONTHS ENDED JUNE 30, 2005 COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2004.

REVENUES

License fees and  products.  Revenues  from license fees and products  increased
3,291% to $1,142,938 for the six months ended June 30, 2005 from $33,708 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.


                                     - 19 -
<PAGE>


Revenue share. Revenues from revenue share increased 739% to $64,689 for the six
months ended June 30, 2005 from $7,709 for the same period in 2004.

Customer  services and technical  support.  Revenues from customer  services and
technical  support  increased 116% to $416,155 for the six months ended June 30,
2005 from $192,261 for the same period in 2004. The increase primarily consisted
of revenues from ongoing  customers who were not our customers  during the first
six months of 2004.


Cost of revenues

Cost of revenues  increased  654% to $357,373  for the six months ended June 30,
2005 from $47,374 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 156% to
$355,528  for the six months  ended  June 30,  2005 from  $138,975  for the same
period in 2004.  This  increase  was  primarily  due to a $165,666  increase  in
payroll and related expenses and a $52,170  government grant received during the
six months ended June 30, 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 June  30,  2004  to 11 on June  30,  2005.  Research  and
development expenses,  stated as a percentage of revenues,  decreased to 22% for
the six months ended June 30, 2005 from 59% for the same period in 2004.

General and administrative.  General and administrative expenses increased 8% to
$584,584  for the six months  ended  June 30,  2005 from  $541,373  for the same
period in 2004.  This  increase  was  primarily  due to a $101,165  increase  in
marketing  expenses,  partially offset by a $53,335 decrease in travel expenses.
General  and  administrative  expenses,  stated  as a  percentage  of  revenues,
decreased  to 36% for the six months  ended June 30, 2005 from 232% for the same
period in 2004.

Financing expenses

Financing expenses.  Our financing expenses increased 74% to $18,521 for the six
months ended June 30, 2005 from $10,665 for the same period in 2004.

Liquidity and Capital Resources

Our principal  sources of liquidity  since our inception have been private sales


                                     - 20 -
<PAGE>


of equity securities,  stockholder loans,  borrowings from banks and to a lesser
extent,  cash from  operations.  We had cash and cash  equivalents of $481 as of
June 30, 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. As of June 30, 2005, $75,192 is outstanding under the
credit 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 six  months  ended  June 30,  2005 we used
$175,009 of cash in operating activities primarily due to a $669,890 decrease in
deferred  revenues,  partially  offset by our net  earnings  of  $307,776  and a
$140,504 increase in other payables and accrued liabilities.  In the same period
in 2004, we generated $40,116 of cash in operating activities primarily due to a
$644,774  increase  in  deferred  revenues  partially  offset by our net loss of
$504,709 and a $98,709 decrease in other payables and accrued liabilities.


Investing and financing activities.

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


      For the six  months  ended  June  30,  2005,  net cash  used in  investing
activities  was $32,744  consisting of an  investment in equipment.  In the same
period in 2004 net cash used in investing  activities was $37,877  consisting of
an investment in equipment.


                                     - 21 -
<PAGE>


      For the six months  ended June 30,  2005,  net cash  provided by financing
activities  was $83,380  primarily  due to a $75,192  increase in advances  from
shareholder.  In the  same  period  in  2004,  net cash  provided  by  financing
activities  was $9,322 due to a $11,354  increase  in notes  payables  partially
offset by a $2,032 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.


PART II
OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in  Securities  and Small  Business  Issuer  Purchases of Equity
Securities

On July 29, 2005, the Company issued to the Chief  Financial  Officer  5,000,000
common shares as compensation for services rendered.  The Company has determined
that the value of the  5,000,000  shares is $500,000  based on the closing stock
price on the date of authorization (June 21, 2005).

On July 29, 2005, options to purchase 728,969 shares were exercised.


                                     - 22 -
<PAGE>


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**

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**


                                     - 23 -
<PAGE>


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).


*** 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:  August 11, 2005        /s/ Shay Ben-Asulin
                              --------------------------------------
                              Name: Shay Ben-Asulin
                              Title: Chairman