----

**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**

|                                                                                                                                             | PAGE NUMBER |
|--------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
| PART                I. FINANCIAL INFORMATION                                                                                                |             |
|                                                                                                                                             |             |
| Item                1. Financial statements                                                                                                      |             |
| (unaudited)                                                                                                                                      |             |
|                                                                                                                                             |             |
| Consolidated                Balance Sheets                                                                                                       | 3                |
|                                                                                                                                             |             |
| Consolidated                Statements of Operations                                                                                             | 4                |
|                                                                                                                                             |             |
| Consolidated                Statements of Changes in Stockholders’ Equity (Deficiency)                                                     | 5                |
|                                                                                                                                             |             |
| Consolidated                Statements of Cash Flows                                                                                             | 7                |
|                                                                                                                                             |             |
| Notes                to Financial Statements                                                                                                     | 8-17             |
|                                                                                                                                             |             |
| Item                  2. Management's Discussion and Analysis of Financial Condition                  and Results                  of Operations | 18               |
|                                                                                                                                             |             |
| Item                3. Controls and Procedures                                                                                                   | 23               |
|                                                                                                                                             |             |
| PART                II. OTHER INFORMATION                                                                                                        | 24               |
|                                                                                                                                             |             |
| Item                1. Legal Proceedings                                                                                                         | 24               |
|                                                                                                                                             |             |
| Item                2. Change in Securities                                                                                                      | 25               |
|                                                                                                                                             |             |
| Item                3. Defaults Upon Senior Securities                                                                                           | 25               |
|                                                                                                                                             |             |
| Item                4. Submission of Matters to Vote of Security Holders                                                                         | 25               |
|                                                                                                                                             |             |
| Item                5. Other Information                                                                                                         | 25               |
|                                                                                                                                             |             |
| Item                6. Exhibits                                                                                                                  | 25               |
|                                                                                                                                             |             |
| SIGNATURES                                                                                                                                       | 25               |

----

**TISSERA      INC.**

**(A      development stage company)**

**CONSOLIDATED      BALANCE SHEETS**

----

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

|                                                                                                                                                                                                    |   | **October 31,** |    | **July                31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|-----------------------------|--------|
|                                                                                                                                                                                                    |   | **2007**             |    | **2007**                    |   |
|                                                                                                                                                                                                    |   | **Unaudited**        |    |                        |   |
| ASSETS                                                                                                                                                                                                  |   |                 |    |                        |   |   |   |
| CURRENT                ASSETS:                                                                                                                                                                          |   |                 |    |                        |   |   |   |
| Cash                and cash equivalents                                                                                                                                                                |   | $                    | 711     |                        | $      | 999 |   |
| Accounts                receivable and prepaid expenses                                                                                                                                                 |   |                 | 183     |                        |   | 221 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                current assets                                                                                                                                                                     |   |                 | 894     |                        |   | 1,220 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| RESTRICTED                CASH                                                                                                                                                                          |   |                 | 6       |                        |   | 5 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| SEVERANCE                PAY FUND                                                                                                                                                                       |   |                 | 56      |                        |   | 47 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| PROPERTY                AND EQUIPMENT, NET                                                                                                                                                              |   |                 | 6       |                        |   | 7 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| LONG-TERM                PREPAID EXPENSES                                                                                                                                                               |   |                 | 4       |                        |   | 4 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                assets                                                                                                                                                                             |   | $                    | 966     |                        | $      | 1,283 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                                                                                                     |   |                 |    |                        |   |   |   |
| CURRENT                LIABILITIES:                                                                                                                                                                     |   |                 |    |                        |   |   |   |
| Trade                payables                                                                                                                                                                           |   | $                    | 27      |                        | $      | 12 |   |
| Other                accounts payable and accrued expenses                                                                                                                                              |   |                 | 652     |                        |   | 611 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                current liabilities                                                                                                                                                                |   |                 | 679     |                        |   | 623 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| ACCRUED                SEVERANCE PAY                                                                                                                                                                    |   |                 | 76      |                        |   | 64 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                liabilities                                                                                                                                                                        |   |                 | 755     |                        |   | 687 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| COMMITMENTS                AND CONTINGENCIES (Note 4)                                                                                                                                                   |   |                 |    |                        |   |   |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| STOCKHOLDERS'                EQUITY:                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Stock                capital -Common                stock of $ 0.0001 par value each -                                                                                                             |   |                 |    |                        |   |   |   |
| Authorized:                100,000,000 shares as of October 31, 2007 and July 31, 2007; Issued                and outstanding: 45,314,332 as of October 31, 2007 and July 31,                2007. |   |                 | 5       |                        |   | 5 |   |
| Preferred                stock of $ 0.0001 par value each -                                                                                                                                        |   |                 |    |                        |   |   |   |
| Authorized:                20,000,000 shares as of October 31, 2007 and July 31, 2007; Issued                and outstanding: 0 shares as of October 31, 2007 and July 31,                2007     |   |                 | -       |                        |   | - |   |
| Additional                paid-in capital                                                                                                                                                               |   |                 | 30,788  |                        |   | 30,788 |   |
| Deferred                stock based compensation                                                                                                                                                        |   |                 | -       |                        |   | - |   |
| Deficit                accumulated during the development stage                                                                                                                                         |   |                 | (30,582 | )                           |   | (30,197 | ) |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                stockholders' equity                                                                                                                                                               |   |                 | 211     |                        |   | 596 |   |
|                                                                                                                                                                                                    |   |                 |    |                        |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                                               |   | $                    | 966     |                        | $      | 1,283 |   |

----

**TISSERA      INC.**

**(A      development stage company)**

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

----

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

|                                                                                                                                        |   | **Three months ended****October 31,** |       | **Year ended****July 31,** |   | **From****May 31, 2000                  (inception date) through****October 31,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|------------|--------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                        |   | **2007**                                             |       | **2006**                             |   | **2007**                                                                                              |   | **2007** |   |
|                                                                                                                                        |   | **Unaudited**                                        |       |                                 |   | **Unaudited**                                                                                         |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |
| Operating                  expenses:                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Research                  and development *)                                                                                                |   | $                                                    | 158        |                                 | $      | 254                                                                                                   |   | $ | 1,073 |   | $ | 16,295 |   |
| General                  and administrative **)                                                                                             |   |                                                 | 201        |                                 |   | 274                                                                                                   |   |   | 812 |   |   | 14,266 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
|                                                                                                                                        |   |                                                 | 359        |                                 |   | 528                                                                                                   |   |   | 1,885 |   |   | 30,561 |   |
| Financial                  income (expenses), net                                                                                           |   |                                                 | (22        | )                                    |   | (2                                                                                                    | )      |   | 37 |   |   | 140 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Loss                  from continuing operations before income taxes                                                                        |   |                                                 | 381        |                                 |   | 530                                                                                                   |   |   | 1,848 |   |   | 30,421 |   |
| Income                  taxes                                                                                                               |   |                                                 | 4          |                                 |   | 3                                                                                                     |   |   | 17 |   |   | 69 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Net                  loss from continuing operations                                                                                        |   |                                                 | 385        |                                 |   | 533                                                                                                   |   |   | 1,865 |   |   | 30,490 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Loss                  from discontinued operations                                                                                          |   |                                                 | -          |                                 |   | -                                                                                                     |   |   | - |   |   | 92 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Net                  loss                                                                                                                   |   | $                                                    | 385        |                                 | $      | 533                                                                                                   |   | $ | 1,865 |   | $ | 30,582 |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Basic                  and diluted net loss per share from continuing operations                                                            |   | $                                                    | 0.01       |                                 | $      | 0.019                                                                                                 |   | $ | 0.05 |   |   |   |   |
|                                                                                                                                        |   |                                                 |       |                                 |   |                                                                                                  |   |   |   |   |   |   |   |
| Weighted                  average number of shares used in computing basic and diluted net                  loss per                  share |   |                                                 | 44,553,462 |                                 |   | 27,                  814,332                                                                          |   |   | 37,533,510 |   |   |   |   |

| *) | Including                expenses related to options granted to employees and warrants granted                to                Yeda and to service providers in the amount of $ 0, $ 47 and $                280 for the three months ended October 31, 2007 and 2006 and for                the year                ended July 31, 2007, respectively. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **) | Including                expenses related to warrants, options and shares granted to service                providers, employees and directors and compensation to investors                in the                amount of $ 28, $ 109 and $ 150 for the three months ended                October 31, 2007 and 2006 and for the year ended July 31, 2007,                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                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 |   |
| Reclassification                of deferred stock-based compensation into additional paid-in capital                upon                adoption of SFAS 123R |   |                             | -          |        |   | -                              |   |             | (4                  | )                             |   | 4                 |   |   | - |   |   | - |   |
| Issuance                of shares and warrants, net                                                                                                           |   |                             | 16,500,000 |        |   | 2                              |   |             | 1,422               |                          |   | -                 |   |   | - |   |   | 1,424 |   |
| Shares                granted to service providers                                                                                                            |   |                             | -          |        |   | -                              |   |             | 110                 |                          |   | -                 |   |   | - |   |   | 110 |   |
| Stock                based compensation related to options granted to employees and                directors                                                  |   |                             | -          |        |   | -                              |   |             | 271                 |                          |   | -                 |   |   | - |   |   | 271 |   |
| Warrants                granted to Yeda                                                                                                                       |   |                             | -          |        |   | -                              |   |             | 150                 |                          |   | -                 |   |   | - |   |   | 150 |   |
| Net                loss                                                                                                                                       |   |                             | -          |        |   | -                              |   |             | -                   |                          |   | -                 |   |   | (1,865 | ) |   | (1,865 | ) |
|                                                                                                                                                          |   |                             |       |        |   |                           |   |             |                |                          |   |              |   |   |   |   |   |   |   |
| Balance                as of July 31, 2007                                                                                                                    |   |                             | 44,314,332 |        |   | 5                              |   |             | 30,788              |                          |   | -                 |   |   | (30,197 | ) |   | 596 |   |

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

----

**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 July 31, 2007                                   |   |                             | 44,314,332 |        |   | 5                              |   |             | 30,788 |                          |       | -      |              |   | (30,197 | ) |   |   | 596 |   |
|                                                                         |   |                             |       |        |   |                           |   |             |   |                          |       |   |              |   |   |   |   |   |   |   |
| Issuance                of shares granted to service providers previous year |   |                             | 1,000,000  |        |   | *)                -            |   |             | -      |                          |       | -      |              |   | - |   |   |   | - |   |
| Net                loss                                                      |   |                             | -          |        |   | -                              |   |             | -      |                          |       | -      |              |   | (385 | ) |   |   | (385 | ) |
|                                                                         |   |                             |       |        |   |                           |   |             |   |                          |       |   |              |   |   |   |   |   |   |   |
| Balance                as of October 31, 2007 (unaudited)                    |   |                             | 45,314,332 |        | $      | 5                              |   | $                | 30,788 |                          | $          | -      |              | $      | (30,582 | ) |   | $ | 211 |   |

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

----

**TISSERA      INC.**

**(A      development stage company)**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

----

**U.S.      dollars in thousands**

|                                                                                                                             |   | **Three                months ended****October                31,** |   | **Year                ended****July                31,** |   | **From May 31,                2000 (inceptiondate) throughOctober 31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|--------|----------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|
|                                                                                                                             |   | **2007**                                                            |   | **2006**                                                 |   | **2007**                                                                                         |   | **2007** |   |
|                                                                                                                             |   | **Unaudited**                                                       |   |                                                     |   | **Unaudited**                                                                                    |   |
| Cash                flows from operating activities:                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Net                loss                                                                                                          |   | $                                                                   | (385   | )                                                        | $      | (533                                                                                             | )      | $ | (1,865 | ) | $ | (30,582 | ) |
| Adjustments                required to reconcile net loss to net cash used in operating                activities:               |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Depreciation                                                                                                                     |   |                                                                | 1      |                                                     |   | 2                                                                                                |   |   | 6 |   |   | 32 |   |
| Expenses                related to warrants granted to Yeda and to service                providers                              |   |                                                                | -      |                                                     |   | 47                                                                                               |   |   | 150 |   |   | 11,197 |   |
| Expenses                related to options granted to employees and directors                                                    |   |                                                                | -      |                                                     |   | 109                                                                                              |   |   | 271 |   |   | 1,604 |   |
| Expenses                related to shares and warrants granted to service providers and                compensation to investors |   |                                                                | 28     |                                                     |   | -                                                                                                |   |   | 9 |   |   | 9,383 |   |
| Interest                accrued on short-term deposit                                                                            |   |                                                                | -      |                                                     |   | (9                                                                                               | )      |   | - |   |   | (17 | ) |
| Decrease                (increase) in accounts receivable and prepaid expenses                                                   |   |                                                                | 10     |                                                     |   | 13                                                                                               |   |   | 54 |   |   | (110 | ) |
| Increase                in trade payables                                                                                        |   |                                                                | 15     |                                                     |   | -                                                                                                |   |   | 8 |   |   | 27 |   |
| Increase                (decrease) in other accounts payable and accrued expenses                                                |   |                                                                | 41     |                                                     |   | 21                                                                                               |   |   | (15 | ) |   | 652 |   |
| Increase                in accrued severance pay, net                                                                            |   |                                                                | 3      |                                                     |   | 3                                                                                                |   |   | 6 |   |   | 20 |   |
| Net                cash used in continuing operating activities                                                                  |   |                                                                | (287   | )                                                        |   | (347                                                                                             | )      |   | (1,376 | ) |   | (7,794 | ) |
| Net                cash provided by discontinued operating activities                                                            |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | 75 |   |
| Total                net cash used in operating activities                                                                       |   |                                                                | (287   | )                                                        |   | (347                                                                                             | )      |   | (1,406 | ) |   | (7,719 | ) |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Cash                flows from investing activities:                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Short-term                deposit                                                                                                |   |                                                                | -      |                                                     |   | 661                                                                                              |   |   | 844 |   |   | 17 |   |
| Sales                of property and equipment                                                                                   |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | 9 |   |
| Purchase                of property and equipment                                                                                |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | (47 | ) |
| Restricted                cash                                                                                                   |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | (5 | ) |
| Lease                deposits                                                                                                    |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | (4 | ) |   | (4 | ) |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing investing activities                                                    |   |                                                                | -      |                                                     |   | 661                                                                                              |   |   | 840 |   |   | (30 | ) |
| Net                cash provided by (used in) discontinued investing                activities                                   |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | (15 | ) |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Total                net cash provided by (used in) investing activities                                                         |   |                                                                | -      |                                                     |   | 661                                                                                              |   |   | 840 |   |   | (45 | ) |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Cash                flows from financing activities:                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Restricted                cash                                                                                                   |   |                                                                | (1     | )                                                        |   | -                                                                                                |   |   | - |   |   | (1 | ) |
| Issuance                of shares and warrants, net                                                                              |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | 1,424 |   |   | 8,441 |   |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Net                cash provided by (used in) continuing financing activities                                                    |   |                                                                | (1     | )                                                        |   | -                                                                                                |   |   | 1,424 |   |   | 8,440 |   |
| Net                cash provided by discontinued financing activities                                                            |   |                                                                | -      |                                                     |   | -                                                                                                |   |   | - |   |   | 35 |   |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Total                net cash provided by (used in) financing activities                                                         |   |                                                                | (1     | )                                                        |   | -                                                                                                |   |   | 1,424 |   |   | 8,475 |   |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Increase                (decrease) in cash and cash equivalents                                                                  |   |                                                                | (288   | )                                                        |   | 314                                                                                              |   |   | 888 |   |   | 711 |   |
| Cash                and cash equivalents at beginning of period                                                                  |   |                                                                | 999    |                                                     |   | 111                                                                                              |   |   | 111 |   |   | - |   |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Cash                and cash equivalents at end of period                                                                        |   | $                                                                   | 711    |                                                     | $      | 425                                                                                              |   | $ | 999 |   | $ | 711 |   |
|                                                                                                                             |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Non-cash                activity:                                                                                                |   |                                                                |   |                                                     |   |                                                                                             |   |   |   |   |   |   |   |
| Prepaid                expenses                                                                                                  |   | $                                                                   | -      |                                                     | $      | -                                                                                                |   | $ | 101 |   | $ | 101 |   |

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

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

| **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. | On                October 27, 2003, the Company incorporated a wholly-owned subsidiary                in Israel, Tissera Ltd. ("the subsidiary"), which is engaged in research                and development. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

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

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

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

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

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

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

| **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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | The                above annual payments to Yeda were recorded as research and development                expenses in the amount of $ 100 and $ 150 for the three months ended                October 31, 2007 and 2006,                respectively. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **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: |
|--------|----|----------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

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

|   | c. | In                July 2006, the FASB issued FASB Interpretation 48, "Accounting for                Uncertainty in Income Taxes" ("FIN 48"). FIN 48 defines the threshold                for                recognizing the benefits of tax return positions in the financial                statements as "more-likely-than-not" to be sustained by the taxing                authority. The recently issued literature also provides guidance                on                derecognition, measurement and classification of income tax uncertainties,                along with any related interest and penalties. FIN 48 also includes                guidance concerning accounting for income tax uncertainties in interim                periods and increases the level of disclosures associated with any                income                tax uncertainties. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | 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)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

| **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)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

| **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, 2007   |   |                          | 2,646,206 |                                            | $      | 0.301                                                                                                   |   |                                                  |   |   |   |   |   |
| Granted                                        |   |                          | -         |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
| Exercised                                      |   |                          | -         |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
| Forfeited                                      |   |                          | -         |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
|                                           |   |                          |      |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
| Outstanding                at October 31, 2007 |   |                          | 2,646,206 |                                            | $      | 0.301                                                                                                   |   |                                                  | 1.67   |   |   | - |   |
|                                           |   |                          |      |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
| Exercisable                at October 31, 2007 |   |                          | 2,646,206 |                                            | $      | 0.301                                                                                                   |   |                                                  | 1.67   |   |   | - |   |
|                                           |   |                          |      |                                            |   |                                                                                                    |   |                                                  |   |   |   |   |   |
| Vested                and expected to vest     |   |                          | 2,646,206 |                                            | $      | 0.301                                                                                                   |   |                                                  | 1.67   |   |   | - |   |

*Shares      and warrants to service providers*

|   | a) | The                Company granted in prior years 2,429,722 warrants to purchase Common                stock                at an exercise price of $ 0.0001 per share, 150,000 warrants to                purchase Common stock at an exercise price of $ 0.01 per share, 600,000                warrants to purchase 600,000 shares of Common stock at an exercise                price                of $ 1 per share and 2,777,000 shares of Common stock at no                consideration. The warrants and shares were granted to service providers                and to advisory board members, in exchange for research and development                services and general and administrative services. 3,040,984 warrants                are                fully vested as of October 31, 2007. In addition, as of                October 31, 2007 and 2006, there were no warrants exercised into                shares of Common stock. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

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

|   | b) | The                Company granted 2,580,829 warrants to Yeda (see Note 2), out of which                955,839 and 54,180 were issued during the year ended July 31, 2007                due to                issuance of Common stock on December 28, 2006 and October 9, 2007                (see                Note 3c), respectively. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | On                June 26, 2007, the Company signed an agreement with a consultant                ("the                Consultant"), effective July 1, 2007 in which the Consultant will                provide                the Company consulting and advisory services in connection with strategic                business planning, corporate finance, investor support, broker relations                and related matters ("the Services"), for one year commencing July                1,                2007. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | A                summary of warrants to service providers activity as of October 31,                2007,                and changes during the three months ended October 31, 2007, are as                follows: |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | **Number of****warrants** |      | **Weighted-****average****exercise price** |   | **Weighted-****average****remaining****contractual term****(in                years)** |   | **Aggregate****intrinsic****value** |   |
|------------------------------------------------|--------|--------------------------------|-----------|-------------------------------------------------|--------|---------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                           |   |                           |      |                                            |   |                                                                                        |   |                                |   |
| Outstanding                at August 1, 2007   |   |                           | 5,880,880 |                                            | $      | 0.06                                                                                        |   |                                |   |   |   |   |   |
| Granted                                        |   |                           | -         |                                            | $      | -                                                                                           |   |                                |   |   |   |   |   |
| Exercised                                      |   |                           | -         |                                            | $      | -                                                                                           |   |                                |   |   |   |   |   |
| Forfeited                                      |   |                           | -         |                                            | $      | -                                                                                           |   |                                |   |   |   |   |   |
|                                           |   |                           |      |                                            |   |                                                                                        |   |                                |   |   |   |   |   |
| Outstanding                at October 30, 2007 |   |                           | 5,880,880 |                                            | $      | 0.06                                                                                        |   |                                | 4.94   |   |   | 245,184 |   |
|                                           |   |                           |      |                                            |   |                                                                                        |   |                                |   |   |   |   |   |
| Exercisable                at October 30, 2007 |   |                           | 5,880,880 |                                            | $      | 0.06                                                                                        |   |                                | 4.94   |   |   | 245,184 |   |
|                                           |   |                           |      |                                            |   |                                                                                        |   |                                |   |   |   |   |   |
| Vested                and expected to vest     |   |                           | 5,880,880 |                                            | $      | 0.06                                                                                        |   |                                | 4.94   |   |   | 245,184 |   |

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

| **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 non-cancelable lease                as of                October 31,2007 amounts to                $ 37. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | c. | On                October 29, 2007 the Company received a notice from the tax authorities                requiring the company to pay an amount of $ 118 with respect to the                year ended December 31, 2004. The Company and its tax advisors are                of the                opinion that the notice is an erroneous. In respect of the above                no                provision was made. |
|--------|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d. | 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 $ 78 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 reasonably                good                defense 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 October 31, 2007, this provision is in place. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**TISSERA      INC.**

**(A      development stage company)**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

----

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

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

|   | e. | 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. In addition, the                Company cannot, at this time, predict the out come of this                claim. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f. | 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. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | g. | 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. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

**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 1, 2007,                with                regard to the fifth year of research we committed to pay an amount                of                $400,000 of which $100,000 was paid on April 2007, $100,000 was paid                on                July 10, 2007 and $100,000 was paid on October 11, 2007. The termination                of the research period was extended from April 9, 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

**Plan        of Operation**

*Cash        Requirements*

| **Expense**                                                  |   | **Cost** |    |
|--------------------------------------------------------------|--------|----------|---------|
| General                  and Administrative                  |   | $        | 800,000 |   |
| Professional                  Fees                           |   | $        | 150,000 |   |
| Research                  and Development activity with Yeda |   | $        | 650,000 |   |

**Results        of Operations for the Three Months Ended October 31, 2007 Compared to the        Three        Months Ended October 31, 2006**

**Revenues        and Cost of Goods Sold**

**Operating        Expenses **

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**FINANCIAL        INCOME**

**Taxes          on Income **

**Net        Loss**

**LIQUIDITY        AND CAPITAL RESOURCES **

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**Item        3. Controls and Procedures **

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**Part        II: OTHER INFORMATION**

**Item        1. Legal Proceedings**

**ITEM        3. LEGAL PROCEEDINGS**

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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 **

| (a)    | Exhibit | Description                                                                                                                                                                                          |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                 |
|   | 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. |

**SIGNATURES**

|                                                   |                                                  |                               |
|--------------------------------------------------------|-------------------------------------------------------|------------------------------------|
|                                                   | TISSERA,                  INC.                        |
|                                              |                                             |                          |
| Dated:                December                13, 2007 | By:                                         | /s/ Amos                Eiran |
|                                                   | Amos                Eiran                             |
|                                                   | Chief                Executive                Officer |

|                                                   |                                     |                                |
|--------------------------------------------------------|------------------------------------------|-------------------------------------|
| Dated:                December                13, 2007 | By:                            | /s/ Alex                Werber |
|                                                   | Alex                  Werber             |
|                                                   | Chief                  Financial Officer |

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