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 September 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 November
14, 2005 was 110,986,643.

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 September 30, 2005                2
            Unaudited Statements of Operations for the Three Months
               Ended and Nine Months Ended September 30, 2005 and 2004      3
            Unaudited Statements of Cash Flows for the Nine Months
               Ended September 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 SEPTEMBER 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 September 30, 2005 and 2004,
and the related consolidated statements of operations, stockholders' deficit and
cash flows for the nine 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
November 7, 2005

                                      -1-
<PAGE>

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

<TABLE>
<CAPTION>
                                                               2005            2004
                                                           ------------    ------------
                                     ASSETS
Current
<S>                                                        <C>             <C>
    Cash                                                   $      9,988    $     52,827
    Accounts receivable - trade (net of allowance for           236,291         218,344
       doubtful accounts of $25,177, 2004, $17,629)
    Other receivables                                               705           2,974
    Prepaid and sundry assets                                    45,457          11,783
                                                           ------------    ------------


                                                                292,441         285,928
Long-term Prepaid Expenses                                       21,015          12,467
Equipment (note 3)                                              176,391         242,418
Deferred Financing Fees                                          28,423          41,051
                                                           ------------    ------------
                                                           $    518,270    $    581,864
                                                           ============    ============

                                   LIABILITIES
Current
    Bank indebtedness                                      $     24,307    $     15,571
    Trade accounts payable                                      148,679         215,502
    Advances from shareholder  (note 4)                         133,853            --
    Other payables and accrued liabilities                      990,338         654,820
    Billings in excess of costs on uncompleted contracts           --           396,062
    Notes payable - current portion                             166,800          71,000
                                                           ------------    ------------


                                                              1,463,977       1,352,955
Accrued Severance Pay (note 5)                                   48,520          16,238
Notes Payable (note 6)                                        1,751,893       1,790,997
                                                           ------------    ------------


                                                              3,264,390       3,160,190
                                                           ------------    ------------

                            STOCKHOLDERS' DEFICIENCY
Capital Stock (note 7)                                     $    134,307    $    118,162
Paid in Capital                                               7,397,721       6,889,881
Accumulated Deficit                                         (10,278,148)     (9,586,369)
                                                           ------------    ------------


                                                             (2,746,120)     (2,578,326)
                                                           ------------    ------------


                                                           $    518,270    $    581,864
                                                           ============    ============
</TABLE>
               (The accompanying notes of the financial statements
                    is an integral part of these statements)

                                      - 2 -

<PAGE>

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


<TABLE>
<CAPTION>
                                                           2005           2004
                                                      ------------    ------------
<S>                                                   <C>             <C>
Net Sales                                             $  1,976,469    $  1,134,179

Cost of Sales                                              436,559         173,002
                                                      ------------    ------------

Gross Profit                                             1,539,910         961,177
                                                      ------------    ------------

Expenses
    General and administrative                           1,278,200         782,634
    Research and development                               521,601         268,068
    Financial                                               23,458          15,080
                                                      ------------    ------------

                                                         1,823,259       1,065,782
                                                      ------------    ------------

Net Loss                                              $   (283,349)   $   (104,605)
                                                      ============    ============

Basic and Fully Diluted Earnings Per Share (note 7)   $       0.00            0.00
                                                      ============    ============

Basic Weighted Average Number of Shares                 72,300,957      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 September 30, 2005 and 2004




<TABLE>
<CAPTION>
                                                                  2005            2004
                                                              ------------    ------------
<S>                                                           <C>             <C>
Sales                                                         $    352,687    $    900,501

Cost of Sales                                                       79,186         125,628
                                                              ------------    ------------

Gross Profit                                                       273,501         774,873
                                                              ------------    ------------

Expenses
    General and administrative                                     693,617         241,261
    Research and development                                       166,073         129,093
    Financial                                                        4,937           4,415
                                                              ------------    ------------

                                                                   864,627         374,769
                                                              ------------    ------------

Net (Loss) Earnings                                           $   (591,126)   $    400,104
                                                              ============    ============

Basic and Fully Diluted  (Loss) Earnings Per Share (note 7)   $      (0.01)           0.01
                                                              ============    ============

Basic Weighted Average Number of Shares                         77,363,180      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
Nine Months Ended September 30, 2005 and 2004



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

Options vested for employee services           --             --           20,697            --

Net Loss                                       --             --             --          (104,605)
                                       ------------   ------------   ------------    ------------

Balance, September 30, 2004              69,506,898   $    118,162   $  6,889,881    $ (9,586,369)
                                       ============   ============   ============    ============

Balance, January 1, 2005                 69,506,898   $    118,162   $  6,894,664    $ (9,994,799)

Options vested for employee services           --             --           11,735            --

Shares issued for employee services       5,000,000          8,500        491,500            --

Exercise of stock options                 4,497,204          7,645           (178)           --

Net loss                                       --             --             --          (283,349)
                                       ------------   ------------   ------------    ------------

Balance, September 30, 2005              79,004,102   $    134,307   $  7,397,721    $(10,278,148)
                                       ============   ============   ============    ============
</TABLE>









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

                                      - 5 -

<PAGE>

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




<TABLE>
<CAPTION>
                                                                                  2005        2004
                                                                               ---------    ---------
Cash Flows from Operating Activities
<S>                                                                            <C>          <C>
    Net loss                                                                   $(283,349)   $(104,605)
    Adjustments required to reconcile net loss to net cash used in operating
       activities:
       Depreciation                                                               83,084       87,863
       Employee options vested                                                    11,735       20,697
       Wages and salaries paid by issuance of shares                             500,000         --
    Net changes in assets and liabilities
       Accounts receivable - trade                                               (81,387)    (168,378)
       Other receivables                                                            (246)      12,702
       Prepaid and sundry assets                                                 (38,449)         459
       Deferred revenue                                                         (669,890)     340,276
       Trade accounts payable                                                        126       17,284
       Other payables and accrued liabilities                                    183,461     (130,011)
       Long-term prepaid expenses                                                 (6,420)      (5,168)
       Amortization of deferred financing fees                                     9,471        9,471
       Accrued severance pay                                                      32,003       (4,435)
                                                                               ---------    ---------

                                                                                (259,861)      76,155
                                                                               ---------    ---------

Cash Flows from Investing Activities
    Acquisition of equipment                                                     (38,696)     (73,907)
                                                                               ---------    ---------

Cash Flows from Financing Activities
    Advances from shareholder                                                    133,853         --
    Proceeds from issuance of Promissory Notes                                    34,800       22,438
    Bank indebtedness - net                                                        7,571       (4,397)
    Proceeds from stock options exercised                                          7,467         --
                                                                               ---------    ---------

                                                                                 183,691       18,041
                                                                               ---------    ---------

Net (Decrease) Increase in Cash                                                 (114,866)      20,289

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

Cash - end of period                                                           $   9,988    $  52,827
                                                                               =========    =========
</TABLE>


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

                                      - 5 -

<PAGE>

m-Wise, Inc.
Notes to Financial Statements
September 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, has negative cash
            flows from operations with negative working capital 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
September 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
September 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
September 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'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.

            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 September 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
September 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
September 30, 2005 and 2004



3.    Equipment

      Equipment is comprised as follows:

                                                2005                 2004
                                         Accumulated          Accumulated
                                   Cost Depreciation   Cost  Depreciation
                                -----------------------------------------

      Furniture and equipm        57,747     24,737     57,550     18,467
      Computer equipment        $552,116   $415,247   $508,642   $317,216
      Leasehold improvemen        37,684     31,172     33,749     21,840
                                -----------------------------------------

                                $647,547   $471,156   $599,941   $357,523
                                -----------------------------------------
      Net carrying amount                  $176,391              $242,418
                                           --------              --------


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. To date, the
      Company has drawn $133,583 on the line of credit.


5.    Accrued Severance Pay

      The Company accounts for its potential severance liability of its Israeli
      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 September 30, 2005 and
      2004, the amount of the liabilities accrued were $99,824 and $54,046,
      respectively. Severance pay expenses for the periods ended September 30,
      2005 and 2004 were $42,864 and $874, 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
      September 30, 2005 and 2004 were $51,304 and $37,808 respectively. Income
      earned from the deposit funds for 2005 and 2004 was immaterial.

                                      -12-
<PAGE>

m-Wise, Inc.
Notes to Financial Statements
September 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                                                              118,693       61,997
                                                                           ----------   ----------

                                                                            1,918,693    1,861,997
Less: Current portion                                                         166,800       71,000
                                                                           ----------   ----------

                                                                           $1,751,893   $1,790,997
                                                                           ==========   ==========
</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 the prior year's annual 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
<TABLE>
<CAPTION>
                                                                     2005          2004
<C>                                                               <C>          <C>
        Issued and outstanding
             79,004,102    Common shares (2004 - 69,506,898)      $ 134,307     $ 118,162
                                                                  =========     =========
</TABLE>

                                      -13-

<PAGE>

m-Wise, Inc.
Notes to Financial Statements
September 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."
      The 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 the 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.

      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.


                                      -14-
<PAGE>

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



7.    Capital Stock  (cont'd)

      Capital stock:

      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.

      On July 29, 2005, the Company issued 5,000,000 common shares, at par
      value, to its Chief Financial Officer as compensation for services
      rendered from September 2002 to December 2005. It was agreed upon by the
      parties that the fair value of such services was $500,000, of which
      $461,500 has been charged to wage expense and $38,500 has been included in
      prepaid expenses.

      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 September 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 September 30, 2005, 38,256 options under the Israel 2003
      share option plan were not yet granted.

      In the quarter ended September 2005, a total of 4,497,204 common stock
options were exercised by the employees.


                                      -15
<PAGE>

m-Wise, Inc.
Notes to Financial Statements
September 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
                  Period ended September 30, 2005             11,735
                                                        ------------
                                                        $    431,104
                                                        ------------

      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                                       (4,000,464)       (496,740)               --                 --
         Preferred stock options converted to
         common                                                --              --                  --                 --
         Forfeited                                           (3,797)         (1,404)               --                 --
                                                       ------------    ------------    ----------------   ----------------

      Outstanding, end of period                         14,451,589      24,862,950          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    $           0.00   $         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    $           0.00   $         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
September 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:

<TABLE>
<CAPTION>
                                                                      2005              2004
        Deferred income tax assets
<S>                                                              <C>                 <C>
          Non-capital losses carried forward                     $  2,460,000        2,500,000
          Valuation allowance for deferred income tax assets       (2,460,000)      (2,500,000)
                                                                 ------------       -----------
                                                                 $         --               --
                                                                 ============       ===========
</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.

      As at September 30, 2005, the Company has approximately $9,900,000 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 $165,000 (2004, $180,000). At September 30, 2005
      and 2004, $512,000 and $302,000 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.

                                      -17-
<PAGE>

10.   Major Customers

      In the nine months ended September 30, 2005, the Company had one major
      customer in Asia which accounted for 57% of the total revenue.


11.   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 $31,500. In addition,
      the Company is committed under operating vehicle leases as follows:

                 Twelve months ended September 30, 2006   $      89,000
                 Twelve months ended September 30, 2007          66,000
                 Twelve months ended September 30, 2008          21,000
                                                          -------------

                                                          $     176,000


12.   Subsequent Events

      On October 10, 2005, $31,982,541 stock options were exercised as follows:

                 Israel 2001 share option plan                  196,922
                 Israel 2003 share option plan                7,974,740
                 International 2003 share option plan        23,810,879
                                                          -------------

                  Total                                      31,982,541
                                                          -------------







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

                                      -18-
<PAGE>

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 required 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

NINE MONTHS ENDED SEPTEMBER 30, 2005 COMPARED WITH THE NINE MONTHS ENDED
SEPTEMBER 30, 2004.

REVENUES

License fees and products. Revenues from license fees and products increased
107% to $1,251,438 for the nine months ended September 30, 2005 from $605,000
for the same
period in 2004. The increase primarily consisted of $1,135,350 revenues derived
from our contract with First Advanced Multi-Media Entertainment.

Revenue share. Revenues from revenue share increased 578% to $102,637 for the
nine months ended September 30, 2005 from $15,143 for the same period in 2004.
The increase primarily consisted of revenues from current customers who were not
our customers during the first nine months of 2004 and from customers that did
not generate revenues from selling services to end users previously.

Customer services and technical support. Revenues from customer services and
technical support increased 21% to $622,394 for the nine months ended September
30, 2005 from $514,036 for the same period in 2004. The increase primarily
consisted of revenues from ongoing customers who were not our customers during
the first nine months of 2004.


                                      -19-
<PAGE>

Cost of revenues

Cost of revenues increased 152% to $436,559 for the nine months ended September
30, 2005 from $173,002 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 95% to
$521,601 for the nine months ended September 30, 2005 from $268,068 for the same
period in 2004. This increase was primarily due to a $218,414 increase in
payroll and related expenses and a $52,170 government grant received during the
nine months ended September 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 7 on September 30, 2004 to 10 on September 30,
2005 and from the restorment of salaries of some of the employees. Research and
development expenses, stated as a percentage of revenues, increased to 26% for
the nine months ended September 30, 2005 from 24% for the same period in 2004.

General and administrative. General and administrative expenses increased 63% to
$1,278,200 for the nine months ended September 30, 2005 from $782,634 for the
same
period in 2004. This increase was primarily due to a $461,500 wage expense due
to common shares issued for services rendered and a $110,725 increase in
marketing expenses, partially offset by a $49,386 decrease in travel expenses.
General and administrative expenses, stated as a percentage of revenues,
decreased to 65% for the nine months ended September 30, 2005 from 69% for the
same period in 2004.

Financing expenses

Financing expenses. Our financing expenses increased 56% to $23,458 for the nine
months ended September 30, 2005 from $15,080 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 $9,988 as of
September 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

                                      -20-

<PAGE>

Miretzky Holdings Limited. As of September 30, 2005, $133,853 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 nine months ended September 30, 2005 we used
$259,861 of cash in operating activities primarily due to a $669,890 decrease in
deferred revenues and our net loss of $283,349, partially offset by $500,000
wages and salaries paid by issuance of shares and a $183,461 increase in other
payables and accrued liabilities. In the same period in 2004, we generated
$76,155 of cash in operating activities primarily due to a $340,276 increase in
deferred revenues, partially offset by a $168,378 increase in accounts
receivables and a $130,011 decrease in other payables and accrued liabilities.


Investing and financing activities.

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


      For the nine months ended September 30, 2005, net cash used in investing
activities was $38,696 consisting of an investment in equipment. In the same
period in 2004 net cash used in investing activities was $73,907 consisting of
an investment in equipment.


      For the nine months ended September 30, 2005, net cash provided by
financing activities was $183,691 primarily due to a $133,853 increase in
advances from shareholder and a $34,800 increase in notes payables. In the same
period in 2004, net cash provided by financing activities was $18,041 due to a
$22,438 increase in notes payables partially offset by a $4,397 decrease in bank
indebtedness.



Dividends

                                      -21-
<PAGE>

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


In October 2005, options to purchase 31,982,541 shares were exercised.


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

                                      -22-
<PAGE>

(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**
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.*

                                      -23-
<PAGE>

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:  November 14, 2005                    /s/ Shay Ben-Asulin
                                            --------------------------------
                                            Name:  Shay Ben-Asulin
                                            Title: Chairman


























                                      -25-