----

----

**U.S.      SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-QSB**

**TISSERA,      INC.**

| **Washington**                                          | **91-2034750**                     |
|---------------------------------------------------------|------------------------------------|
| (State                or other jurisdiction of          | (I.R.S.                Employer    |
| incorporation                of organization)           | Identification                No.) |
|                                                    |                               |
|  **Maskit                8, 4th floor, Herzlia**   | **46733                Israel**    |
| (Address                of principal executive offices) | (Zip                Code)          |

**+**

----

**Tissera,      Inc.**

**INDEX**

| PART                  I. FINANCIAL INFORMATION | PAGE                  NUMBER                                                                                            |
|------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                    |   |
| Item                  1.                       | Financial                  statements                                                                                   |   |
|                                           | (unaudited)                                                                                                             |   |
|                                           |                                                                                                                    |   |
|                                           | Consolidated                  Balance Sheets                                                                            | 4 |
|                                           |                                                                                                                    |   |
|                                           | Consolidated                  Statements of Operations                                                                  | 5 |
|                                           |                                                                                                                    |   |
|                                           | Consolidated                  Statements of Changes in Stockholders’ Equity (Deficiency)                          | 6 |
|                                           |                                                                                                                    |   |
|                                           | Consolidated                  Statements of Cash Flows                                                                  | 7 |
|                                           |                                                                                                                    |   |
|                                           | Notes                  to Financial Statements                                                                          | 8-19 |
|                                           |                                                                                                                    |   |
| Item                  2.                       | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations | 20 |
|                                           |                                                                                                                    |   |
| Item                  3.                       | Controls                  and Procedures                                                                                | 26 |
|                                           |                                                                                                                    |   |
| PART                  II. OTHER INFORMATION    | 27                                                                                                                      |
|                                           |                                                                                                                    |   |
| Item 1.                                        | Legal                  Proceedings                                                                                      | 27 |
|                                           |                                                                                                                    |   |
| Item                  2.                       | Change                  in Securities                                                                                   | 28 |
|                                           |                                                                                                                    |   |
| Item                  3.                       | Defaults                  Upon Senior Securities                                                                        | 28 |
|                                           |                                                                                                                    |   |
| Item                  4.                       | Submission                  of Matters to Vote of Security Holders                                                      | 28 |
|                                           |                                                                                                                    |   |
| Item                  5.                       | Other                  Information                                                                                      | 28 |
|                                           |                                                                                                                    |   |
| Item                  6.                       | Exhibits                                                                                                                | 28 |
|                                           |                                                                                                                    |
| SIGNATURES                                     | 29                                                                                                                      |

----

----

**TISSERA      INC.**

**(A      development stage company)**

**CONSOLIDATED      BALANCE SHEETS **

----

**U.S.      dollars in thousands (except share and per share data)**

|                                                                                                                                                                                                                                                                                                                                            |   | **April                30,** |    | **July                31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|-----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                            |   | **2007**                     |    | **2006**                    |   |
|                                                                                                                                                                                                                                                                                                                                            |   | **Unaudited**                |    |                        |   |
| ASSETS                                                                                                                                                                                                                                                                                                                                          |   |                         |    |                        |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |
| CURRENT                ASSETS:                                                                                                                                                                                                                                                                                                                  |   |                         |    |                        |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                                                                        |   | $                            | 1,286   |                        | $      | 111 |   |
| Short-term                deposit                                                                                                                                                                                                                                                                                                               |   |                         | -       |                        |   | 844 |   |
| Accounts                receivable and prepaid expenses                                                                                                                                                                                                                                                                                         |   |                         | 145     |                        |   | 174 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                current assets                                                                                                                                                                                                                                                                                                             |   |                         | 1,431   |                        |   | 1,129 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| RESTRICTED                CASH                                                                                                                                                                                                                                                                                                                  |   |                         | 6       |                        |   | 5 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| SEVERANCE                PAY FUND                                                                                                                                                                                                                                                                                                               |   |                         | 46      |                        |   | 33 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| PROPERTY                AND EQUIPMENT, NET                                                                                                                                                                                                                                                                                                      |   |                         | 7       |                        |   | 13 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                assets                                                                                                                                                                                                                                                                                                                     |   | $                            | 1,490   |                        | $      | 1,180 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                                                                                             |   |                         |    |                        |   |   |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| CURRENT                LIABILITIES:                                                                                                                                                                                                                                                                                                             |   |                         |    |                        |   |   |   |
| Trade                payables                                                                                                                                                                                                                                                                                                                   |   | $                            | 16      |                        | $      | 4 |   |
| Other                accounts payable and accrued expenses                                                                                                                                                                                                                                                                                      |   |                         | 598     |                        |   | 626 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                current liabilities                                                                                                                                                                                                                                                                                                        |   |                         | 614     |                        |   | 630 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| ACCRUED                SEVERANCE PAY                                                                                                                                                                                                                                                                                                            |   |                         | 62      |                        |   | 44 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                |   |                         | 676     |                        |   | 674 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| STOCKHOLDERS'                EQUITY:                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Stock                capital (Note 5) -Common                stock of $ 0.0001 par value each - Authorized: 100,000,000 shares at                April 30, 2007 and July 31, 2006; Issued and outstanding: 44,314,332                and                27,814,332 shares at April 30, 2007 and July 31, 2006,                respectively |   |                         | 3       |                        |   | 3 |   |
| Preferred                stock of $ 0.0001 par value each - Authorized: 20,000,000 shares at                April 30, 2007 and July 31, 2006; Issued and outstanding: 0 shares                at                April 30, 2007 and July 31, 2006                                                                                      |   |                         | -       |                        |   | - |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                                       |   |                         | 30,668  |                        |   | 28,839 |   |
| Deferred                stock based compensation                                                                                                                                                                                                                                                                                                |   |                         | -       |                        |   | (4 | ) |
| Deficit                accumulated during the development stage                                                                                                                                                                                                                                                                                 |   |                         | (29,857 | )                           |   | (28,332 | ) |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                stockholders' equity                                                                                                                                                                                                                                                                                                       |   |                         | 814     |                        |   | 506 |   |
|                                                                                                                                                                                                                                                                                                                                            |   |                         |    |                        |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                                       |   | $                            | 1,490   |                        | $      | 1,180 |   |

----

**TISSERA      INC.**

**(A      development stage company)**

**CONSOLIDATED**
**STATEMENTS      OF OPERATIONS **

----

**U.S.      dollars in thousands (except share and per share data)**

|                                                                                                                                  |   | **Nine                months ended****April                30,** |       | **Three                months ended****April                30,** |   | **Year                ended July 31,** |   | **From                May 31,****2000                (date of inception) through****April                30,** |       |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|------------|-------------------------------------------------------------------|--------|----------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|------------|
|                                                                                                                                  |   | **2007**                                                         |       | **2006**                                                          |   | **2007**                               |   | **2006**                                                                                                       |       | **2006** |   | **2007** |   |
|                                                                                                                                  |   | **Unaudited**                                                    |       |                                                              |   | **Unaudited**                          |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |
| Operating                expenses:                                                                                                    |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |
| Research                and development expenses *)                                                                                   |   | $                                                                | 898        |                                                              | $      | 824                                    |   | $                                                                                                              | 245        |   | $ | 235 |   | $ | 1,031 |   | $ | 15,962 |   |
| General                and administrative expenses **)                                                                                |   |                                                             | 624        |                                                              |   | 589                                    |   |                                                                                                           | 147        |   |   | 289 |   |   | 729 |   |   | 13,877 |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |                                                             | 1,522      |                                                              |   | 1,413                                  |   |                                                                                                           | 392        |   |   | 524 |   |   | 1,760 |   |   | 29,839 |   |
| Financial                income (expenses), net                                                                                       |   |                                                             | 4          |                                                              |   | 50                                     |   |                                                                                                           | (1         | ) |   | 5 |   |   | 55 |   |   | 129 |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations before income taxes                                                                    |   |                                                             | 1,518      |                                                              |   | 1,363                                  |   |                                                                                                           | 393        |   |   | 519 |   |   | 1,705 |   |   | 29,710 |   |
| Income                taxes                                                                                                           |   |                                                             | 7          |                                                              |   | 11                                     |   |                                                                                                           | 2          |   |   | 4 |   |   | 10 |   |   | 55 |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Loss                from continuing operations                                                                                        |   |                                                             | 1,525      |                                                              |   | 1,374                                  |   |                                                                                                           | 395        |   |   | 523 |   |   | 1,715 |   |   | 29,765 |   |
| Loss                from discontinued operations                                                                                      |   |                                                             | -          |                                                              |   | -                                      |   |                                                                                                           | -          |   |   | - |   |   | - |   |   | 92 |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Net                loss                                                                                                               |   | $                                                                | 1,525      |                                                              | $      | 1,374                                  |   | $                                                                                                              | 395        |   | $ | 523 |   | $ | 1,715 |   | $ | 29,857 |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Basic                and diluted net loss per share                                                                                   |   | $                                                                | 0.04       |                                                              | $      | 0.05                                   |   | $                                                                                                              | 0.009      |   | $ | 0.02 |   | $ | 0.06 |   |   |   |   |
|                                                                                                                                  |   |                                                             |       |                                                              |   |                                   |   |                                                                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Weighted                average number of shares used in computing basic and diluted net                loss per                share |   |                                                             | 35,248,398 |                                                              |   | 27,616,527                             |   |                                                                                                           | 44,314,352 |   |   | 27,687,673 |   |   | 27,662,795 |   |   |   |   |

| *) | Including                expenses (income) related to options granted to employees and warrants                granted to Yeda and to service providers in the amount of $ 268,                $ (25), $ 28, $ 0 and $ (20) for the nine months ended                April 30, 2007 and 2006, three months ended April 30, 2007 and 2006                and                for the year ended July 31, 2006,                respectively. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **) | Including                expenses related to warrants, options and shares granted to service                providers, employees, directors and compensation to investors in                the                amount of $ 141, $ 20, $ 5 $ 2 and $ 27 for the nine                months ended April 30, 2007 and 2006, for the three months ended                April 30, 2007 and 2006 and for the year ended July 31, 2006,                respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**STATEMENTS      OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) **

----

**U.S.      dollars in thousands (except share data)**

|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                | **Deficit**                   |   |              |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|------------|-------------|--------|--------------------------------|--------|------------------|---------------------|-------------------------------|--------|-------------------|--------|
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                | **accumulated**               |   | **Total**         |   |
|                                                                                                                                        |   |                             |       |        |   | **Additional**                 |   | **Deferred**     |                | **during                the** |   | **stockholders'** |   |
|                                                                                                                                        |   | **Stock                capital** |       | **paid-in** |   | **stock                based** |   | **development**  |                | **equity**                    |   |
|                                                                                                                                        |   | **Number**                       |       | **Amount**  |   | **capital**                    |   | **compensation** |                | **stage**                     |   | **(deficiency)**  |   |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |
| Balance                as of May 31, 2000                                                                                                   |   |                             | -          |        | $      | -                              |   | $                | -                   |                          | $      | -                 |   | $ | - |   | $ | - |   |
| Stock                issued for cash on May 31, 2000                                                                                        |   |                             | 15,036,000 |        |   | 2                              |   |             | 8                   |                          |   | -                 |   |   | - |   |   | 10 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (5 | ) |   | (5 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2000                                                                                                  |   |                             | 15,036,000 |        |   | 2                              |   |             | 8                   |                          |   | -                 |   |   | (5 | ) |   | 5 |   |
| Stock                issued for cash on July 17, 2001                                                                                  |   |                             | 3,000,000  |        |   | *)                -            |   |             | 40                  |                          |   | -                 |   |   | - |   |   | 40 |   |
| Contribution                of capital                                                                                                      |   |                             | -          |        |   | -                              |   |             | 15                  |                          |   | -                 |   |   | - |   |   | 15 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (30 | ) |   | (30 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2001                                                                                                  |   |                             | 18,036,000 |        |   | 2                              |   |             | 63                  |                          |   | -                 |   |   | (35 | ) |   | 30 |   |
| Contribution                of capital                                                                                                      |   |                             | -          |        |   | -                              |   |             | 15                  |                          |   | -                 |   |   | - |   |   | 15 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (39 | ) |   | (39 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2002                                                                                                  |   |                             | 18,036,000 |        |   | 2                              |   |             | 78                  |                          |   | -                 |   |   | (74 | ) |   | 6 |   |
| Contribution                of capital                                                                                                      |   |                             | -          |        |   | -                              |   |             | 15                  |                          |   | -                 |   |   | - |   |   | 15 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (31 | ) |   | (31 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2003                                                                                                  |   |                             | 18,036,000 |        |   | 2                              |   |             | 93                  |                          |   | -                 |   |   | (105 | ) |   | (10 | ) |
| Stock                issued for cash related to PPM1, net of $ 176 of cash issuance                expenses                            |   |                             | 1,767,200  |        |   | *)                -            |   |             | 2,033               |                          |   | -                 |   |   | - |   |   | 2,033 |   |
| Stock                issued for cash related to PPM2, net of $ 517 of cash issuance                expenses                                 |   |                             | 3,142,858  |        |   | 1                              |   |             | 4,983               |                          |   | -                 |   |   | - |   |   | 4,984 |   |
| Stock                based compensation related to warrants granted to service                providers                                     |   |                             | -          |        |   | -                              |   |             | 11,429              |                          |   | -                 |   |   | - |   |   | 11,429 |   |
| Stock                based compensation related to options granted to employees and directors                                               |   |                             | -          |        |   | -                              |   |             | 1,130               |                          |   | -                 |   |   | - |   |   | 1,130 |   |
| Compensation                related to stock granted to service providers and to                employees                                   |   |                             | 3,067,090  |        |   | *)                -            |   |             | 7,366               |                          |   | -                 |   |   | - |   |   | 7,366 |   |
| Deferred                stock based compensation                                                                                            |   |                             | -          |        |   | -                              |   |             | 163                 |                          |   | (163              | )      |   | - |   |   | - |   |
| Exercise                of options                                                                                                          |   |                             | 1,543,766  |        |   | *)                -            |   |             | -                   |                          |   | -                 |   |   | - |   |   | *)                - |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (22,529 | ) |   | (22,529 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2004                                                                                                  |   |                             | 27,556,914 |        |   | 3                              |   |             | 27,197              |                          |   | (163              | )      |   | (22,634 | ) |   | 4,403 |   |
| Stock                based compensation related to warrants granted to                investors                                             |   |                             | -          |        |   | -                              |   |             | 1,980               |                          |   | -                 |   |   | - |   |   | 1,980 |   |
| Warrants                granted to Yeda and to service providers                                                                            |   |                             | -          |        |   | -                              |   |             | (362                | )                             |   | -                 |   |   | - |   |   | (362 | ) |
| Amortization                of stock based compensation related to options granted to employees                and                directors |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | 176               |   |   | - |   |   | 176 |   |
| Deferred                stock based compensation                                                                                            |   |                             | -          |        |   | -                              |   |             | 44                  |                          |   | (44               | )      |   | - |   |   | - |   |
| Exercise                of options                                                                                                          |   |                             | 25,200     |        |   | *)                -            |   |             | -                   |                          |   | -                 |   |   | - |   |   | - |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (3,983 | ) |   | (3,983 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2005                                                                                                  |   |                             | 27,582,114 |        |   | 3                              |   |             | 28,859              |                          |   | (31               | )      |   | (26,617 | ) |   | 2,214 |   |
| Exercise                of options                                                                                                          |   |                             | 232,218    |        |   | *)                -            |   |             | *)                - |                          |   | -                 |   |   | - |   |   | *)                - |   |
| Warrants                granted to service providers                                                                                        |   |                             | -          |        |   | -                              |   |             | (20                 | )                             |   | -                 |   |   | - |   |   | (20 | ) |
| Amortization                of stock based compensation related to options granted to employees                and                directors |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | 27                |   |   | - |   |   | 27 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (1,715 | ) |   | (1,715 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2006                                                                                                  |   |                             | 27,814,332 |        |   | 3                              |   |             | 28,839              |                          |   | (4                | )      |   | (28,332 | ) |   | 506 |   |
| Deferred                stock-based compensation                                                                                            |   |                             | -          |        |   | -                              |   |             | (4                  | )                             |   | 4                 |   |   | - |   |   | - |   |
| Issuance                of shares and warrants, net                                                                                         |   |                             | 16,500,000 |        |   | *)                -            |   |             | 1,424               |                          |   | -                 |   |   | - |   |   | 1,424 |   |
| Amortization                of stock based compensation related to options granted to employees                and                directors |   |                             | -          |        |   | -                              |   |             | 266                 |                          |   | -                 |   |   | - |   |   | 266 |   |
| Warrants                granted to Yeda                                                                                                     |   |                             | -          |        |   | -                              |   |             | 143                 |                          |   | -                 |   |   | - |   |   | 143 |   |
| Net                loss                                                                                                                     |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (1,525 | ) |   | (1,525 | ) |
|                                                                                                                                        |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of April 30, 2007 (unaudited)                                                                                     |   |                             | 44,314,332 |        | $      | 3                              |   | $                | 30,668              |                          | $      | -                 |   | $ | (29,857 | ) | $ | 814 |   |

| *) | Represents                an amount lower than $ 1. |
|----|----------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**CONSOLIDATED**
**STATEMENTS      OF CASH FLOWS **

----

**U.S.      dollars in thousands**

|                                                                                                                             |   | **Nine                months ended****April                30,** |   |                **Year                ended July 31,** |   | **From                May 31, 2000 (inception date) through April 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|------------------------------------------------------------|--------|-------------------------------------------------------------------------|--------|
|                                                                                                                             |   | **2007**                                                         |   | **2006**                                                   |   | **2006**                                                                |   | **2007** |   |
|                                                                                                                             |   | **Unaudited**                                                    |   |                                                       |   | **Unaudited**                                                           |   |
| Cash                flows from operating activities:                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |
| Net                loss                                                                                                          |   | $                                                                | (1,525 | )                                                          | $      | (1,374                                                                  | )      | $ | (1,715 | ) | $ | (29,857 | ) |
| Adjustments                required to reconcile net loss to net cash used in operating                activities:               |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Depreciation                                                                                                                     |   |                                                             | 6      |                                                       |   | 6                                                                       |   |   | 8 |   |   | 31 |   |
| Expenses                (income) related to warrants granted to Yeda and to service                providers                     |   |                                                             | 143    |                                                       |   | (25                                                                     | )      |   | (20 | ) |   | 11,190 |   |
| Expenses                related to options granted to employees and directors                                                    |   |                                                             | 266    |                                                       |   | 20                                                                      |   |   | 27 |   |   | 1,599 |   |
| Expenses                related to shares and warrants granted to service providers and                compensation to investors |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | 9,346 |   |
| Interest                accrued on short-term deposit                                                                            |   |                                                             | 17     |                                                       |   | -                                                                       |   |   | (17 | ) |   | - |   |
| Decrease                (increase) in accounts receivable and prepaid expenses                                                   |   |                                                             | 29     |                                                       |   | 166                                                                     |   |   | 91 |   |   | (145 | ) |
| Increase                (decrease) in trade payables                                                                             |   |                                                             | 12     |                                                       |   | 5                                                                       |   |   | (1 | ) |   | 16 |   |
| Increase                (decrease) in other accounts payable and accrued expenses                                                |   |                                                             | (28    | )                                                          |   | 41                                                                      |   |   | (34 | ) |   | 598 |   |
| Increase                in accrued severance pay, net                                                                            |   |                                                             | 5      |                                                       |   | 1                                                                       |   |   | 1 |   |   | 16 |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Net                cash used in continuing operating activities                                                                  |   |                                                             | (1,075 | )                                                          |   | (1,160                                                                  | )      |   | (1,660 | ) |   | (7,206 | ) |
| Net                cash provided by discontinued operating activities                                                            |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | 75 |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Total                net cash used in operating activities                                                                       |   |                                                             | (1,075 | )                                                          |   | (1,160                                                                  | )      |   | (1,660 | ) |   | (7,131 | ) |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Cash                flows from investing activities:                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Short-term                deposit                                                                                                |   |                                                             | 827    |                                                       |   | -                                                                       |   |   | (827 | ) |   | - |   |
| Sale                of property and equipment                                                                                    |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | 9 |   |
| Purchase                of property and equipment                                                                                |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | (47 | ) |
| Restricted                cash                                                                                                   |   |                                                             | (1     | )                                                          |   | -                                                                       |   |   | (5 | ) |   | (6 | ) |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing investing activities                                                    |   |                                                             | 826    |                                                       |   | -                                                                       |   |   | (832 | ) |   | (44 | ) |
| Net                cash used in discontinued investing activities                                                                |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | (15 | ) |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Total                net cash provided by (used in) investing activities                                                         |   |                                                             | 826    |                                                       |   | -                                                                       |   |   | (832 | ) |   | (59 | ) |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Cash                flows from financing activities:                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Issuance                of shares and warrants, net                                                                              |   |                                                             | 1,424  |                                                       |   | *)                -                                                     |   |   | *)                - |   |   | 8,441 |   |
| Receipts                on account of shares                                                                                     |   |                                                             | -      |                                                       |   | (5                                                                      | )      |   | - |   |   | - |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing financing activities                                                    |   |                                                             | 1,424  |                                                       |   | (5                                                                      | )      |   | *)                - |   |   | 8,441 |   |
| Net                cash provided by discontinued financing activities                                                            |   |                                                             | -      |                                                       |   | -                                                                       |   |   | - |   |   | 35 |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Total                net cash provided by (used in) financing activities                                                         |   |                                                             | 1,424  |                                                       |   | (5                                                                      | )      |   | *)                - |   |   | 8,476 |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Increase                (decrease) in cash and cash equivalents                                                                  |   |                                                             | 1,175  |                                                       |   | (1,165                                                                  | )      |   | (2,492 | ) |   | 1,286 |   |
| Cash                and cash equivalents at beginning of period                                                                  |   |                                                             | 111    |                                                       |   | 2,603                                                                   |   |   | 2,603 |   |   | - |   |
|                                                                                                                             |   |                                                             |   |                                                       |   |                                                                    |   |   |   |   |   |   |   |
| Cash                and cash equivalents at end of period                                                                        |   | $                                                                | 1,286  |                                                       | $      | 1,438                                                                   |   | $ | 111 |   | $ | 1,286 |   |

| *) | Represents                an amount lower than $ 1. |
|----|----------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

| **NOTE                1:-** | **GENERAL** |
|-----------------------------|-------------|

|   | a. | Tissera                Inc. ("the Company") was incorporated under the laws of the State                of                Washington on May 31, 2000. The Company is in the development stage.                The Company is engaged in developing and testing organ transplantation                therapies based on an approach employing organ-specific precursor                tissues. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | The                accompanying unaudited interim consolidated financial statements                have been                prepared as of April 30, 2007 and for the nine months then ended,                in                accordance with accounting principles generally accepted in the United                States relating to the preparation of financial statements for interim                periods. Accordingly, they do not include all the information and                footnotes required by generally accepted accounting principles for                complete financial statements. In the opinion of management, all                adjustments (consisting of normal recurring accruals) considered                necessary                for a fair presentation have been included. Operating results for                the nine                months ended April 30, 2007 are not necessarily indicative of the                results                that may be expected for the year ending July 31,                2007. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | Going                concern considerations: |
|--------|----|----------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                1:-** | **GENERAL                (Cont.)** |
|-----------------------------|------------------------------------|

|   | d. | Risk                factors: |
|--------|----|------------------------------|

| **NOTE                2:-** | **RESEARCH                AND LICENSE AGREEMENT** |
|-----------------------------|---------------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                2:-** | **RESEARCH                AND LICENSE AGREEMENT                (Cont.)** |
|-----------------------------|--------------------------------------------------------------------------|

----

**TISSERA      INC.**

**(A        development stage company)**

| **NOTE                2:-** | **RESEARCH                AND LICENSE AGREEMENT                (Cont.)** |
|-----------------------------|--------------------------------------------------------------------------|

|   |   | In                April 2007, the Company signed a fourth addendum to the agreement                with                Yeda and committed to pay Yeda an amount of $ 400 to be paid in four                equal                installments payable in advance in respect of the fifth year of the                research period ending April 9,                2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES** |
|-----------------------------|----------------------------------------------------|

|   | a. | The                significant accounting policies followed in the preparation of these                financial statements are identical to those applied in the preparation                of                the latest annual financial statements except as detailed in c                below. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Use                of estimates: |
|--------|----|----------------------------------|

|  | c. | On                  August 1, 2006, the Company adopted Statement of Financial Accounting                  Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS                  123(R)") which requires the measurement and recognition of compensation                  expense based on estimated fair values for all share-based payment                  awards                  made to employees and directors. SFAS 123(R) supersedes Accounting                  Principles Board Opinion No. 25, "Accounting for Stock Issued to                  Employees" ("APB 25"), for periods beginning in fiscal 2006. In                  March                  2005, the Securities and Exchange Commission issued Staff Accounting                  Bulletin No. 107 ("SAB 107") relating to SFAS 123(R). The Company has                  applied the provisions of SAB 107 in its adoption of SFAS 123(R). |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES                (Cont.)** |
|-----------------------------|---------------------------------------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                  3:-** | **SIGNIFICANT                  ACCOUNTING POLICIES                  (Cont.)** |
|-------------------------------|-------------------------------------------------------------------------------|

*Share      and options to employees and directors*

| Risk                  free interest       |   | 3.84% |
|-------------------------------------------|--------|-------|
| Dividend                  yields          |   | 0%    |
| Volatility                                |   | 217%  |
| Expected                  term (in years) |   | 5     |
| Forfeiture                  rate          |   | 0%    |

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES                (Cont.)** |
|-----------------------------|---------------------------------------------------------------------------|

|                                         |   | **Number                of options** |      | **Weighted-average                exercise price** |   | **Weighted-                average remaining contractual term (in years)** |   | **Aggregate                intrinsic****value                *)** |   |
|----------------------------------------------|--------|--------------------------------------|-----------|----------------------------------------------------|--------|----------------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                         |   | **Unaudited**                        |      |
|                                         |   |                                 |      |                                               |   |                                                                       |   |                                                              |   |
| Outstanding                at August 1, 2006 |   |                                 | 2,646,206 |                                               | $      | 0.301                                                                      |   |                                                              |   |   |   |   |   |
| Granted                                      |   |                                 | -         |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
| Exercised                                    |   |                                 | -         |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
| Forfeited                                    |   |                                 | -         |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
|                                         |   |                                 |      |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
| Outstanding                at April 30, 2007 |   |                                 | 2,646,206 |                                               | $      | 0.301                                                                      |   |                                                              | 2.18   |   |   | - |   |
|                                         |   |                                 |      |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
| Exercisable                at April 30, 2007 |   |                                 | 2,636,206 |                                               | $      | 0.301                                                                      |   |                                                              | 2.18   |   |   | - |   |
|                                         |   |                                 |      |                                               |   |                                                                       |   |                                                              |   |   |   |   |   |
| Vested                and expected to vest   |   |                                 | 2,646,206 |                                               | $      | 0.301                                                                      |   |                                                              | 2.18   |   |   | - |   |

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES                (Cont.)** |
|-----------------------------|---------------------------------------------------------------------------|

|                                                                                                                                 |   | **Nine                months****ended****April                30,****2006** |       | **Three                months ended****April                30,****2006** |   | **Year                ended****July                31,****2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|------------|---------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|
|                                                                                                                                 |   | **Unaudited**                                                               |       |                                                                      |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |
| Net                loss as reported                                                                                                  |   | $                                                                           | 1,374      |                                                                      | $      | 523                                                              |   | $ | 1,715 |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |   |   |   |
| Add                (deduct): stock-based compensation income (expense) recognized under                APB                25         |   |                                                                        | 5          |                                                                      |   | (2                                                               | )      |   | (7 | ) |
| Add:                stock-based compensation expense determined under fair value method                for                all awards |   |                                                                        | 768        |                                                                      |   | 256                                                              |   |   | 1,027 |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |   |   |   |
| Pro                forma net loss                                                                                                    |   | $                                                                           | 2,147      |                                                                      | $      | 777                                                              |   | $ | 2,735 |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |   |   |   |
| Basic                and diluted loss per share, as reported                                                                         |   | $                                                                           | 0.05       |                                                                      | $      | 0.02                                                             |   | $ | 0.06 |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |   |   |   |
| Pro                forma basic and diluted loss per share                                                                            |   | $                                                                           | 0.08       |                                                                      | $      | 0.03                                                             |   | $ | 0.1 |   |
|                                                                                                                                 |   |                                                                        |       |                                                                      |   |                                                             |   |   |   |   |
| Weighted                average number of shares used in computing pro forma basic and diluted                earnings per share     |   |                                                                        | 27,616,527 |                                                                      |   | 27,687,673                                                       |   |   | 27,662,795 |   |

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES                (Cont.)** |
|-----------------------------|---------------------------------------------------------------------------|

*Shares      and warrants to service providers*

| Risk                free interest       |   | 4.85% |
|-----------------------------------------|--------|-------|
| Dividend                yields          |   | 0%    |
| Volatility                              |   | 155%  |
| Expected                term (in years) |   | 5     |

|                                         |   | **Number                of warrants** |      | **Weighted-average                exercise price** |   |  **Weighted-                average remaining contractual term (in years)** |   | **Aggregate                intrinsic****value** |   |
|----------------------------------------------|--------|---------------------------------------|-----------|----------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                         |   | **Unaudited**                         |      |
|                                         |   |                                  |      |                                               |   |                                                                             |   |                                            |   |
| Outstanding                at August 1, 2006 |   |                                  | 1,570,861 |                                               | $      | *)                -                                                              |   |                                            |   |   |   |   |   |
| Granted                                      |   |                                  | 4,255,839 |                                               | $      | 0.08                                                                             |   |                                            |   |   |   |   |   |
| Exercised                                    |   |                                  | -         |                                               | $      | -                                                                                |   |                                            |   |   |   |   |   |
| Forfeited                                    |   |                                  | -         |                                               | $      | -                                                                                |   |                                            |   |   |   |   |   |
|                                         |   |                                  |      |                                               |   |                                                                             |   |                                            |   |   |   |   |   |
| Outstanding                at April 30, 2007 |   |                                  | 5,826,700 |                                               | $      | 0.06                                                                             |   |                                            | 5.47   |   |   | 747,940 |   |
|                                         |   |                                  |      |                                               |   |                                                                             |   |                                            |   |   |   |   |   |
| Exercisable                at April 30, 2007 |   |                                  | 2,526,700 |                                               | $      | *)                -                                                              |   |                                            | 6.51   |   |   | 467,440 |   |
|                                         |   |                                  |      |                                               |   |                                                                             |   |                                            |   |   |   |   |   |
| Vested                and expected to vest   |   |                                  | 5,826,700 |                                               | $      | 0.06                                                                             |   |                                            | 5.47   |   |   | 747,940 |   |

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                3:-** | **SIGNIFICANT                ACCOUNTING POLICIES                (Cont.)** |
|-----------------------------|---------------------------------------------------------------------------|

| **NOTE                4:-** | **COMMITMENTS                AND CONTINGENCIES** |
|-----------------------------|--------------------------------------------------|

|   | a. | The                facilities and motor vehicles of the Company are rented under operating                leases. Minimum rental commitments under the cancelable lease as                of                April 30, 2007 are for three additional years and amount to                $ 75. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | The                Company's subsidiary obtained a bank guarantee in the amount of $ 6                to secure a rent agreement. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | On                September 7, 2004, the Board of Directors decided to terminate the                employment of the Chief Executive Officer of the Company ("the Former                CEO"). According to the Former CEO's employment agreement, the Former                CEO                is entitled to payments totaling approximately $ 75 upon termination                of employment with the Company. On December 21, 2004, a claim against                the Company was filed with the Israeli Labor Court by the Former                CEO for a                payment of approximately $ 141 (NIS 564 thousand) in respect of                payments allegedly due to her. The Company has filed a statement                of                defense against the Former CEO's claim. The Company's management                and its                legal advisors are of the opinion that the Company has good defense                arguments against the claim. In the year ended July 31, 2005, a                provision in the amount of $ 100, in respect of net salary expenses                was recorded under operating expenses, with respect to the Former                CEO. As                of April 30, 2007, this provision is in                place. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                4:-** | **COMMITMENTS                AND CONTINGENCIES (Cont.)** |
|-----------------------------|----------------------------------------------------------|

|  | d. | On                  July 11, 2005, the Former CEO submitted to the Company a letter                  claiming that the Company included in its Form 10-QSB filed on                  June 24, 2005 slanderous allegations regarding the Former CEO. The                  Former CEO demanded a retraction and asserted damages of at least                  $ 23. The Company's management denies the                  claim. |
|--|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e. | In                March 2004, the Former CEO was granted 2,267,046 options to purchase                a                total of 2,267,046 shares of Common stock, out of which 270,000 options                were exercised into 249,859 shares of Common stock on a cashless                basis.                The total number of options to which the Former CEO is entitled should                have been based on a formula that was determined in the agreement                with the                Former CEO. However, the number of options that were granted in March                2004                was incorrect. In November 2004, the Company's Board of Directors                decided                to amend the number of options granted to the Former CEO to a total                of                2,042,551 options to purchase a total of 2,042,551 shares of Common                stock.                The amended calculation is based on the formula determined in the                agreement. Under the Former CEO’s Employment agreement upon termination                the options become fully vested and shall become immediately exercisable                for a period of twelve months after the effective date of termination.                The                options terminated on February                2006. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | f. | On                  September 7, 2004, certain shareholders demanded from the Former CEO                  to repay the Company the amount of $ 1,074 (which is the value of the                  shares that the Company issued as a result of the Former CEO's                  cashless                  exercise of the abovementioned options, at the date of exercise,                  and which                  were sold by the Former CEO), claiming that the exercise of the                  options                  was executed before the end of the vesting period. In addition,                  the                  shareholders demanded that the Former CEO pays the Company compensation                  in                  the amount of $ 645 for damages. The Company's management and its                  legal advisors are of the opinion that the vast majority of the                  assertions                  are against the Former CEO and not against the Company. The Company                  denies                  the assertions that may imply to the Company's responsibility and,                  accordingly, no provision has been made in the financial statements. |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA        INC.**

**(A        development stage company)**

| **NOTE                  5:-** | **STOCK                  CAPITAL** |
|-------------------------------|------------------------------------|

|   | a. | On                  December 28, 2006, the Company has completed a private placement for                  the sale of 16,500,000 shares of Common stock ("the shares") at                  a price of                  $ 0.1 per share. For each two shares of Common stock purchased,                  each                  investor will receive a Series E Common Stock Purchase Warrant                  to purchase                  one share of Common stock of the Company (the "Series E Warrants")                  and a                  Series F Common Stock Purchase Warrant to purchase one share of                  Common                  stock of the Company (the "Series F Warrants"). The Series E Warrants                  shall be exercisable for a period commencing six months from the                  issue                  date through five years from the issue date at an exercise price                  of $                  0.165 per share. The Series F Warrants shall be exercisable for                  a period                  commencing six months from the issue date through five years from                  the                  issue date at an exercise price of $ 0.1815 per share. The Series                  E                  Warrants and the Series F Warrants are exercisable on a cashless                  basis. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | The                Company has agreed to file a registration statement registering the                shares                within 180 days after the closing date and have such registration                statement declared effective within 270 days from the closing date.                The                Company's registration statement has been declared effective as of                May 25, 2007. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c. | In                connection with the above closing, the Company paid $ 165 to Burstein                & Lindsay Security Corp. ("the finder") for its services as a finder                in connection with this transaction and agreed to pay the finder                10% of                all cash proceeds, if any, generated as a result of the exercise                of the                Series E warrants and the Series F warrants. In addition, the finder                also                received a Common stock purchase warrant to purchase 3,300,000 shares                of                Common stock at an exercise price of $ 0.10 per share exercisable for                a period commencing six months from the issuance date through five                years                from the issuance date. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **NOTE                6:-** | **RELATED                PARTIES TRANSACTIONS** |
|-----------------------------|-------------------------------------------------|

----

**Overview**

----

**Research      and License Agreement**

| ·   | the                expiration of the patents covering such product in the country of                sale;                or |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·   | 15                years from the date of receipt of FDA New Drug Approval (in the United                States), or the equivalent in any other country in which the products                are                sold. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                warrant, exercisable at an aggregate exercise price of US $900 to                purchase                up to 2.23% of the issued and outstanding shares of common stock                of our                company immediately following the exercise of such warrant; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a                warrant, exercisable at an aggregate exercise price of US $1,100                to                purchase up to 2.67% of the issued and outstanding shares of our                company                immediately following the exercise of such warrant. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | one                year following the termination of the Research and License Agreement;                and |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | October                7, 2013. |
|--------------------|---------------------------------|

| ·   | with                regard to the first year of the research period (commencing on April                9,                2003), we paid the amount of US $450,000 of which a non-refundable                installment of US $450,000 was paid on December 23, 2003. This amount                is                in addition to the $450,000 paid to Yeda in connection with researched                performed by Yeda during the first year; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | with                regard to the second year of research we paid an amount of US $900,000                of                which $225,000 was paid on April 23, 2004; $225,000 was paid on July                8,                2004; $225,000 was paid on October 8, 2004; and $225,000 was paid                on                January 10, 2005; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | with                regard to the third year of research we paid an amount of US $900,000                of                which $225,000 was paid on April 18, 2005; $225,000 was paid on July                11,                2005; $225,000 was paid on October 12, 2005 and $225,000 was paid                on                January 9, 2006. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | pursuant                to the third addendum of the Research Agreement dated April 11, 2006,                with                regard to the fourth year of research we committed to pay an amount                of US                $600,000 of which $150,000 was paid on May 2, 2006; $150,000 was                paid on                July 19, 2006; $150,000 was paid on October 13, 2006, and $150,000                was                paid on January 17, 2007. Further, the termination for the research                period                was extended from April 10, 2006 to April 9, 2007. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | pursuant                to the fourth addendum of the Research Agreement dated April 11,                2007,                with regard to the fifth year of research, we committed to pay an                amount                of US $400,000 of which $100,000 was paid on April 11, 2007. Further,                the                termination for the research period was extended from April 10, 2007                to                April 9, 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | $50,000                per year commencing from the end of the license period, which has                been                extended until April 9, 2008; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | 4%                of net sales of all products covered by the Research and License                Agreement; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | 33%                of all sublicense fees for all agreements entered into within one                year of                the Agreement; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 16%                of all sublicense fees for all agreements entered into after such                one year                period. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

**Results      of Operations for the Three Months Ended April 30, 2007 Compared to the Three      Months Ended April 30, 2006**

**Revenues      and Cost of Goods Sold**

**Operating      Expenses **

**FINANCIAL      INCOME**

----

**Taxes      on Income **

**Net      Loss**

**Results      of Operations for the Nine Months Ended April 30, 2007 Compared to the Nine      Months Ended April 30, 2006**

**REVENUES      AND COSTS OF GOODS SOLD **

**OPERATING      EXPENSES **

----

**FINANCIAL      INCOME**

**Taxes      on Income **

**NET      LOSS**

**LIQUIDITY      AND CAPITAL RESOURCES **

----

**Item      3. Controls and Procedures **

----

**Part      II: OTHER INFORMATION**

**Item      1. Legal Proceedings**

| ·   | On                December 21, 2004, Dr. Rabenou, our former CEO and a director, filed                claim                in the District Labor Court located in Tel Aviv Israel ("Labor Court")                against the Company alleging that the Company owed Dr. Rabenou a                sum of                NIS 564,140 (approximately $141,000) pursuant to the terms of her                employment agreement. This claim remains pending, and the Company                intends                to continue its current defense efforts with respect to such claim.                In                addition, the Company, filed a counterclaim against Dr. Rabenou in                the                Labor Court based on damages incurred to the Company pursuant to                certain                of Dr. Rabenou's actions or omissions, during her tenure as the Company's                CEO. The counterclaim seeks damages against Dr. Rabenou in the amount                of                NIS 9,405,491 (approximately $2,351,000). These damages are based                primarily on certain actions taken by Dr. Rabenou as follows: (i)                the                issuance of an unauthorized bonus to Dr. Rabenou while she was CEO                in the                amount of $110,000 upon completion of the private offering in the                amount                of $5,500,000 in March 2004; (ii) the issuance of 280,000 shares                of common                stock to Pini Rabenou, the brother of Dr. Rabenou, for which the                Company                did not receive any discernable consideration; (iii) the failure                to                withhold Israeli income taxes with respect to the exercise of options                by                Dr. Rabenou; and (iv) the issuance of shares to Biogreen Ltd. as                more                fully described below. On January 15, 2004, when Dr. Rabenou recommended                the issuance of Company shares to number of specified entities and                individuals, including a company known as BioGreen Ltd. ("BioGreen"),                to                which the Company issued 397,000 shares (the "BioGreen Shares").                The                issuance of the BioGreen Shares gave rise to a Company expense of                $833,700. After Dr. Rabenou resigned as CEO, the Company commenced                an                internal investigation into all corporate actions taken during Dr.                Rabenou's tenure, including the BioGreen matter. The Company's management                attempted, unsuccessfully, to identify the specific services that                served                as the basis for BioGreen's compensation, and Dr. Rabenou refused                to                cooperate with the Company's investigation. Notwithstanding, in response                to the Company's counterclaim, Dr. Rabenou filed a reply brief within                which she denied our claims and asserted that she assigned her right                to                the BioGreen Shares to an unnamed offshore company incorporated in                the                Bahamas (that the Company believes is BioGreen), and asserting a                number of                new defenses and mitigating factors, which were not disclosed either                during or immediately subsequent to the January 15, 2004 Board of                Directors Meeting. The Company initially described the above litigation                proceedings, within its Form 10-QSB filed for the quarter ended April                30,                2005. Subsequent to the filing of such Form 10-QSB, Dr. Rabenou's                legal                counsel: (a) communicated to the Company that it believed that the                statements in such 10-QSB constituted libel; (b) threatened legal                action                against the Company if such statements were not withdrawn; and (c)                claimed                damages of approximately $23,000 related to such alleged libel. The                Company, based on the opinion of its legal advisors, does not intend                to                retract any of its public statements regarding the above matters.                The                Company attorneys are negotiating with Rabenou's attorneys to reach                a                settlement on this dispute of which there is no                guarantee. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds,**

**Item      3. Defaults Upon Senior Securities**

**Item      4. Submission of Matters to Vote of Security Holders**

**Item      5. Other Information**

**Item      6. Exhibits **

|  | 31.1 | Certification                of the Chief Executive Officer of Tissera, Inc. pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                of the Chief Financial Officer of Tissera, Inc. pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 32.1 | Certification                of the Chief Executive Officer of Tissera, Inc. pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification                of the Chief Financial Officer of Tissera, Inc. pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

|                 |                                 |                             |
|----------------------|--------------------------------------|----------------------------------|
|                 | TISSERA, INC.                        |
|            |                            |                        |
| Dated: June 14, 2007 | By:                        | /s/ Amos              Eiran |
|                 | Amos              Eiran              |
|                 | Chief              Executive Officer |
|                              |                          |                              |
|-----------------------------------|-------------------------------|-----------------------------------|
|                              |                          |
|                         |                     |                         |
| Dated:              June 14, 2007 | By:                 | /s/ Alex              Werber |
|                              | Alex              Werber      |
|                              | Chief Financial Officer  |

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