================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

             For the Transition Period from          to
                                            ---------   --------

                          Commission File No.: 0-32523

                        DOBI MEDICAL INTERNATIONAL, INC.
                 (Name of small business issuer in its charter)


           DELAWARE                                      98-0222710
-------------------------------            -----------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)


          1200 MACARTHUR BLVD.
                 MAHWAH, NJ                                07430
---------------------------------------             -------------------
(Address of principal executive offices)                (Zip Code)


                                 (201) 760-6464
                           ---------------------------
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [ X ] Yes [ ] No

As of May 5, 2005, 65,257,155 shares of the issuer's Common Stock were
outstanding.

Transitional Small Business Disclosure Format (check one):  Yes       No  X
                                                               -----    -----


================================================================================


<PAGE>


                        DOBI MEDICAL INTERNATIONAL, INC.

                   MARCH 31, 2005 FORM 10-QSB QUARTERLY REPORT

                                TABLE OF CONTENTS

                                Table of Contents

Part I    Financial Information

 Item 1.  Financial Statements                                             Page

   Condensed Consolidated Balance Sheet at March 31, 2005                  3

   Condensed Consolidated Statements of Operations for the Three Month
      Periods ended March 31, 2005 and 2004 and for the Period from
      September 7, 1999 (Inception) to March 31, 2005                      4

   Condensed Consolidated Statements of Cash Flows for the Three Month
      Periods Ended March 31, 2005 and 2004 and for the Period from
      September 7, 1999 (Inception) to March 31, 2005                      5-6

   Notes to Condensed Consolidated Financial Statements                    7-10

 Item 2.  Management's Discussion and Analysis or Plan of Operation        11-16

 Item 3.  Controls and Procedures                                          17

Part II   Other Information

 Item 1.  Legal Proceedings                                                18

 Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds      18

 Item 3.  Defaults Upon Senior Securities                                  18

 Item 4.  Submission of Matters to a Vote of Security Holders              18

 Item 5.  Other Information                                                18

 Item 6.  Exhibits and Reports on Form 8-K                                 18-19

 Signatures                                                                19


                                       2
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)
                      Condensed Consolidated Balance Sheet
                                 March 31, 2005
                                   (Unaudited)

Part I    Financial Information

Item 1.   Financial Statements

<TABLE>
<CAPTION>

ASSETS
Current assets:
<S>                                                         <C>
     Cash and cash equivalents                              $ 10,250,625
     Accounts receivable                                          50,000
     Prepaid expenses and other current assets                    74,900
     Inventory                                                   524,230
                                                            ------------
Total current assets                                          10,899,755

Property and equipment, net                                      607,225
Intangible assets, net                                             9,847
Other assets                                                      45,529
                                                            ------------
Total assets                                                $ 11,562,356
                                                            ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                       $    245,896
     Accrued expenses                                            937,708
     Deferred revenue                                            127,245
                                                            ------------
Total current liabilities                                   $  1,310,849

Stockholders' Equity
     Preferred stock, $.0001 par value, 10,000,000 shares
        authorized, 186 issued and outstanding                        --
     Common stock, $.0001 par value, 140,000,000 shares
        authorized, 65,257,155 issued and outstanding              6,526
     Additional paid-in capital                               36,065,924
     Deficit accumulated during development stage            (25,820,943)
                                                            ------------
Total stockholders' equity                                    10,251,507
                                                            ------------
Total liabilities and stockholders' equity                  $ 11,562,356
                                                            ============

</TABLE>

See notes to consolidated financial statements


                                        3
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

                 Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                    Period from
                                                                                    September 7,
                                                        Three months ended              1999
                                                             March 31,             (inception) to
                                                    ----------------------------      March 31,
                                                         2005            2004           2005
                                                    ---------------------------------------------
<S>                                                 <C>             <C>             <C>
Revenue
   Product                                          $     45,014    $         --    $     361,330
   Service                                                17,400              --           22,350
                                                    ---------------------------------------------
                                                          62,414              --          383,680
                                                    ---------------------------------------------
Cost of sales
   Product                                               182,613              --          545,927
   Service                                                62,888              --           83,406
                                                    ---------------------------------------------
                                                         245,501              --          629,333
                                                    ---------------------------------------------
   Gross loss                                           (183,087)             --         (245,653)
                                                    ---------------------------------------------

Research and development expenses                        448,090         503,639        9,307,600
General and administrative expenses                      795,480         476,987        7,309,934
Clinical program expenses                                385,842         128,993        3,030,424
Sales and marketing expenses                             259,565         205,519        3,948,932
                                                    ---------------------------------------------
   Total operating expenses                            1,888,977       1,315,138       23,596,890
                                                    ---------------------------------------------

Operating (loss)                                      (2,072,064)     (1,315,138)     (23,842,543)

Other income (expense)

   Interest expense                                       (2,259)         (2,120)      (2,175,410)
   Interest income                                         4,341           3,925          197,009
                                                    ---------------------------------------------
Net loss                                              (2,069,982)     (1,313,333)     (25,820,944)
Deemed dividend on preferred stock                       (36,877)             --         (842,270)
Preferred Stock dividends                                (93,227)             --         (299,681)
                                                    ---------------------------------------------
Net loss applicable to common stock                 $ (2,200,086)   $ (1,313,333)   $ (26,962,895)
                                                    =============================================

Basic and diluted loss per common share             $      (0.05)   $      (0.03)
                                                    ============================

Weighted average common shares, basic and diluted     44,308,225      37,539,363
                                                    ============================

See notes to consolidated financial statements

</TABLE>


                                        4
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                      Period from
                                                                         Three months ended           September 7,
                                                                              March 31,                    1999
                                                                      ----------------------------   (inception) to
                                                                        2005             2004        March 31, 2005
                                                                      ---------------------------------------------
<S>                                                                   <C>             <C>            <C>
Operating activities
Net loss                                                              $ (2,069,982)   $ (1,313,332)  $ (25,820,944)
Adjustments to reconcile net loss to net cash used in
operating activities:
   Depreciation and amortization                                            54,423          11,954         374,770
   Amortization of financing costs                                              --              --         854,343
   Loss on sale of equipment                                                    --              --             334
   Write-off of purchased in-process research and development costs             --              --       1,023,525
   Interest receivable in connection with share subscription
      notes charged to equity                                                   --              --         (14,625)
   Stock based compensation                                                    417           3,234         446,155
   Accrued interest converted to equity                                         --              --         340,454
   Accretion of discount on Series 1and 2 convertible notes                     --              --         808,113
   Common stock warrants in connection with
      the conversion of notes payable                                           --              --          61,806
   Changes in assets and liabilities:
     (Increase) in accounts receivable                                     (50,000)             --         (50,000)
     (Increase) in inventory                                              (144,818)             --        (524,230)
     (Increase) in other current assets                                     63,161        (125,821)        (74,678)
      Decrease in other assets                                                  --         (64,321)         42,996
      Increase (decrease) in accounts payable                              (24,699)        (16,323)        511,371
      Increase (decrease) in accrued expenses                              321,477         (20,018)        492,877
      Increase in deferred revenue                                          (9,250)             --         127,245
                                                                      --------------------------------------------
Net cash used in operating activities
                                                                        (1,859,271)     (1,524,627)    (21,400,488)
Investing activities
Purchase of business, net of cash received                                      --              --        (500,000)
Purchase of property and equipment                                          (9,712)        (61,538)       (845,294)
Patent costs                                                                    --              --         (43,022)
Proceeds from sale of equipment                                                 --              --             250
                                                                      --------------------------------------------
Net cash used in investing activities                                       (9,712)        (61,538)     (1,388,066)

Financing activities
Proceeds from founding members                                                  --              --         525,000
Cash paid for transaction costs associated with equity transactions       (835,000)             --      (2,843,107)
Cash paid for transaction costs associated with debt transactions               --              --        (719,485)
Deferred offering costs                                                         --              --         (75,000)
Proceeds from subscriptions receivable - Class A preferred shares               --              --         940,020
Dividends - Class A redeemable convertible preferred units                      --              --        (132,689)
Proceeds from share subscription note - related party                           --              --         239,625
Proceeds from Series 1 and Series 2 Convertible Notes - net                     --        (170,000)      4,386,000
Proceeds from notes payable, net                                                --              --       3,113,799
Proceeds from sale of common stock                                      10,500,000              --      23,626,149
Net proceeds from sale of preferred stock                                       --              --       4,208,167
Repayment of notes payable                                                      --              --        (229,300)
                                                                      --------------------------------------------
Net cash provided by financing activities                                9,665,000        (170,000)     33,039,179
Increase in cash and cash equivalents                                    7,796,017      (1,756,165)     10,250,625
Cash and cash equivalents at beginning of year/period                    2,454,608       2,627,887              --
                                                                      --------------------------------------------
Cash and cash equivalents at end of year/period                       $ 10,250,625    $    871,722    $ 10,250,625
                                                                      ============================================

</TABLE>

See notes to consolidated financial statements


                                        5
<PAGE>

                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

           Condensed Consolidated Statements of Cash Flows (continued)
                                   (unaudited)



<TABLE>
<CAPTION>
                                                                                                      Period from
                                                                         Three months ended           September 7,
                                                                              March 31,                    1999
                                                                      ----------------------------   (inception) to
                                                                        2005             2004        March 31, 2005
                                                                      ---------------------------------------------
<S>                                                                   <C>             <C>            <C>
Supplemental disclosures of cash flow information
Cash paid during the period for interest                              $      2,259    $      2,120   $     100,364
                                                                      ============================================
Income taxes paid                                                     $          -    $          -   $           -
                                                                      ============================================
Purchase of business, net of cash received:
   Fair value of assets purchased                                                -               -   $    (109,693)
   Acquisition of in-process research and development costs                      -               -      (1,023,525)
   Assumption of promissory notes                                                -               -         417,877
   Transaction costs                                                             -               -          56,250
   Issuance of shares                                                            -               -         159,091
                                                                      ============================================
Net cash used to acquire business                                                -               -        (500,000)
                                                                      ============================================
Non-cash investing and financing activities:
   Conversion of notes payable and accrued interest to common stock   $          -    $          -   $   8,026,451
                                                                      ============================================
   Conversion of Class A preferred shares to common stock             $          -    $          -   $   1,307,846
                                                                      ============================================
   Preferred stock dividends                                          $     93,227    $          -   $     299,681
                                                                      ============================================
   Deemed dividends to preferred stock shareholders                   $     36,877    $          -   $     842,270
                                                                      ============================================
   Share subscription note                                            $          -    $          -   $     239,625
                                                                      ============================================
   Issuance of common warrants for consulting                         $          -    $          -   $     326,348
                                                                      ============================================
   Accretion of Class A redeemable convertible preferred shares       $          -    $          -   $     364,334
                                                                      ============================================


</TABLE>

See notes to consolidated financial statements


                                        6
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


1.  Organization of Business

The consolidated financial statements include the accounts of DOBI Medical
International, Inc. and its wholly-owned subsidiary, DOBI Medical Systems, Inc.
All significant inter-company balances and transactions have been eliminated.

The Company was formed to acquire and further develop a new technology for
imaging of the human body, referred to as Dynamic Optical Breast Imaging ("DOBI"
(R)).

2. Basis of Presentation

The accompanying interim unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-QSB. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
cash flows for all periods presented have been made. The results of operations
for the three month period ended March 31, 2005 are not necessarily indicative
of the operating results that may be expected for the year ending December 31,
2005.

These consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Company's
2004 Annual Report on Form 10-KSB(as amended) filed with the U.S. Securities and
Exchange Commission.

The Company's principal activities to date have been in the research and
development of a medical diagnostic system known as the ComfortScan (TM) system,
which is an optically-based medical device for improved diagnosis of breast
cancer as an adjunct to mammography. The accompanying financial statements have
been prepared in accordance with Statement of Financial Accounting Standards No.
7, Development Stage Enterprises, since limited, principal operations only began
in the fourth quarter of 2004.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is currently a development
stage enterprise and its continued existence is dependent upon its ability to
resolve its liquidity problems, principally by obtaining additional debt and/or
equity financing The Company has yet to generate a positive internal cash flow,
and until meaningful sales of our product begin, we are totally dependent upon
debt and equity funding.

In the event that the Company is unable to obtain debt or equity financing or
unable to obtain such financing on terms and conditions that are acceptable to
the Company, we may have to cease or severely curtail our operations. These
factors raise substantial doubt about the Company's ability to continue as a
going concern. Management has so far been able to raise the capital necessary to
reach this stage of product development and has been able to obtain funding for
operating requirements to date, but there can be no assurance that the Company
will be able to continue to do so. There is no assurance that, if and when FDA
premarket approval is obtained, the ComfortScan system will achieve market
acceptance or that the Company will achieve a profitable level of operations.
The accompanying financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.

3.  Summary of Significant Accounting Policies

Equity-Based Compensation



                                       7
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


As permitted by FASB Statement No. 123, Accounting for Stock-Based Compensation
("FAS 123"), which establishes a fair value based method of accounting for
equity-based compensation plans, the Company has elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB
25") for recognizing equity-based compensation expense for financial statement
purposes. Under APB 25, no compensation expense is recognized at the time of
option grant if the exercise price of the employee stock option is fixed and
equals or exceeds the fair market value of the underlying common stock on the
date of grant and the number of shares to be issued pursuant to the exercise of
such options are known and fixed at the grant date.

The Company accounts for equity instruments issued to non-employees in
accordance with the provisions of FAS 123 and the Emerging Issues Task Force in
Issue No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or In Conjunction with Selling, Goods or Services which
require that such equity instruments are recorded at their fair value on the
measurement date, which is typically the date the services are performed.

In December 2002, the FASB issued Statement No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure ("FAS 148"). This standard amends the
disclosure requirements of FAS 123 for fiscal years ending after December 15,
2002 to require prominent disclosure in both annual and interim financial
statements about the method used and the impact on reported results. The Company
follows the disclosure-only provisions of FAS 123 which require disclosure of
the pro forma effects on net income (loss) as if the fair value method of
accounting prescribed by FAS 123 had been adopted, as well as certain other
information.

Option valuation models require the input of highly subjective assumptions
including the expected life of the option. Because the Company's employee stock
options have characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions can materially
affect the fair value estimate, in management's opinion, the existing models do
not necessarily provide a reliable single measure of the fair value of its
employee stock options.

During the three months ended March 31, 2005, the Board of Directors granted
stock options to purchase 187,500 shares of the Company's common stock. These
options have various exercise prices from $.66 to $.93 per share. They expire in
10 years from the date of grant. Options granted to non-employees are accounted
for under SFAS No. 123, whereby compensation measurement of equity awards is
based on their fair value. The weighted average fair market value per share of
these options was estimated to be $.68 per share at the date of grant using the
Black-Scholes option pricing model. Compensation expense generally must be
recorded based on the fair value of the stock options over the vesting period.


                                       8
<PAGE>


                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


The following table summarizes relevant information as to reported results under
the Company's intrinsic value method of accounting for stock awards, with
supplemental information as if the fair value recognition provisions of FAS 123
had been applied for the following three months ended March 31:

<TABLE>
<CAPTION>
                                                                    2005                 2004
                                                               ---------------------------------
<S>                                                            <C>                  <C>
Net loss applicable to common stock, as reported               $ (2,200,086)        $ (1,313,333)

Add total stock-based compensation, as reported                         417                3,234
Deduct total stock-based compensation determined
   under fair value based method for all awards                    (173,114)             (73,467)
                                                               ---------------------------------
Pro forma net loss applicable to common stock                  $ (2,372,783)        $ (1,383,566)
                                                               =================================
Basic and diluted loss per common share - as reported          $     ( 0.05)        $      (0.03)
                                                               =================================
Pro forma loss per share basic and diluted                     $     ( 0.05)        $      (0.04)
                                                               =================================
</TABLE>

Net Loss Per Common share

Basic net loss per common share is computed using the weighted average number of
common shares outstanding during the periods presented. There were no common
stock equivalents consisting of options, warrants and convertible preferred
shares which were required to be included in the calculation of diluted loss per
share for the periods presented since their inclusion would be antidilutive. The
total number of stock options, warrants and convertible preferred shares
outstanding as of March 31, 2005 was 4,731,500, 34,031,719 and 3,558,276,
respectively.

Recently issued Accounting Standards

In December 2004, the FASB issued Statement of Financial Accounting Standard
("SFAS") No. 123R "Share Based Payment". This statement is a revision of SFAS
Statement No. 123, "Accounting for Stock-Based Compensation" and supersedes APB
Opinion No. 25, Accounting for Stock Issued to Employees and its related
implementation guidance. SFAS 123R addresses all forms of share based payment
("SBP") awards including shares issued under employee stock purchase plans,
stock options, restricted stock and stock appreciation rights. Under SFAS 123R,
SBP awards result in a cost that will be measured at fair value on the awards
grant date, based on the estimated number of awards that are expected to vest.
This statement is effective for public entities that file as small business
issuers as of the beginning of the first fiscal year that begins after December
15, 2005. The Company is currently in the process of evaluating the effect that
the adoption of this pronouncement may have on its financial statements.

4.  Common Stock

On March 30, 2005, the Company completed a private placement for 21,000,000
shares of its common stock at a purchase price of $.50 per share, for gross
proceeds of $10,500,000 and net proceeds of approximately $9,665,000 (net of
transaction costs totaling $835,000). The investors also received 5,250,000
five-year warrants to purchase shares of common stock at an exercise price of
$.75 per share and 5,250,000 five-year warrants to purchase shares of common
stock at an exercise price of $1.25. In addition the placement agent received
840,000 four-year warrants to purchase shares of common stock at an exercise
price of $.88 per share.

On January 31, 2005, the Company issued 227,641 shares of common stock in
payment of accrued preferred stock dividends totaling 206,454.



                                       9
<PAGE>



                 DOBI Medical International, Inc. and Subsidiary
                          (A Development Stage Company)

              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)


On February 1, 2005, the Company issued 281,220 shares of common stock to a
series A preferred stockholder converting 20 shares of outstanding series A
preferred shares into shares of common stock.

5. Series A Preferred Convertible Shares

On July 30, 2004, the Company completed a private placement financing in which
it sold 206.45 series A preferred shares, which are convertible into 2,580,667
shares of common stock, for $25,000 per share. Proceeds from the transaction
were $4,208,167 net of fees. The Company also issued 2,580,667 four year
investor warrants to purchase common stock at a price of $3.00 per share. Deemed
dividends of $36,877 for the three months ended March 31, 2005 consisted of
imputed dividends resulting from increasing rate preferred stock in accordance
with Emerging Issue Task Force ("EITF") 98-5 and Staff Accounting Bulletin
("SAB") Topic 5.Q "Increasing Rate Preferred Stock". In connection with the
December 17, 2004 sale of 6,000,000 shares of common stock and the March 30,
2005 sale of 21,000,000 shares of common stock, as a result of anti-dilution
adjustments, we reduced the conversion price of series A preferred stock from
$2.00 per share to $1.31 per share, increasing the number of common shares into
which the series A preferred stock is convertible to 3,839,496 shares.

6.  Legal Proceedings

In the ordinary course of business, we may become a party to legal or regulatory
proceedings resulting from litigation, claims, or other disputes. There can be
no assurance that one or more future actions, if they occur, would not have a
material adverse effect on our business. As of the filing of this report, except
as follows, there is no material litigation, threatened or pending, involving
us. On April 15, 2005, we filed suit in the Supreme Court of the State of New
York, County of New York, Index No. 601348/05, against Brian Vodicka, a former
member of our board of directors, alleging breach of contract and breach of
fiduciary duty and seeking specific performance and injunctive relief preventing
the disclosure and requiring the return of certain confidential and proprietary
documents. In addition, we have received a copy of a Verified Petition to Take
Depositions before Suit from a Robin Chiswell allegedly filed in the Harris
County, Texas District Court, apprising us that the petitioner wished to take
deposition of a custodian of our records to investigate whether there have been
possible violations of the Texas Securities Act. The Company will aggressively
defend any proceedings and suits brought against it.


                                       10
<PAGE>


Item 2.  Management's Discussion and Analysis or Plan of Operation

         We completed a reverse merger transaction on December 9, 2003 with
Lions Gate Investment Limited, a Nevada corporation formed on October 29, 1999.
Until the merger, Lions Gate engaged in oil and gas exploration activities,
which Lions Gate discontinued following the merger and succeeded to the business
of DOBI Medical Systems, Inc. The directors and management of DOBI Medical
Systems thereupon became the directors and management of Lions Gate. On January
30, 2004, we changed our corporate name from Lions Gate Investment Limited to
DOBI Medical International, Inc. and changed our state of incorporation from
Nevada to Delaware pursuant to an Agreement and Plan of Merger, dated as of
January 29, 2004, between Lions Gate and DOBI Medical International. DOBI
Medical Systems currently remains a wholly-owned subsidiary of DOBI Medical
International.

         DOBI Medical Systems, LLC was formed as a Delaware limited liability
company in October 1999. In December 1999, DOBI Medical Systems, LLC acquired
substantially all the assets of Dynamics Imaging, Inc., including a number of
patents and trade secrets that form the basis for its current proprietary
technology. On January 1, 2003, DOBI Medical was incorporated in Delaware and
became DOBI Medical Systems, Inc. Since the reverse merger transaction on
December 9, 2003, DOBI Medical Systems, Inc. has been a wholly-owned subsidiary
of DOBI Medical International, Inc.

         Since our future business will be that of DOBI Medical only, the
information in this report is that of DOBI Medical International as if DOBI
Medical Systems. had been the registrant for all the periods presented in this
report. Management's Discussion and Analysis or Plan of Operation presented in
this Item 2 and the audited consolidated financial statements presented in Item
1 of this report include those of DOBI Medical Systems prior to the reverse
merger, as these provide the most relevant information for us on a continuing
basis.

         For accounting purposes DOBI Medical Systems was the acquirer in the
reverse merger transaction, and consequently the transaction is treated as a
recapitalization of the company. DOBI Medical's financial statements are the
historical financial statements of the post-merger entity, DOBI Medical
International.

OVERVIEW

         We are a developmental-stage company with no significant revenues. Our
goal is to establish the ComfortScan(TM) system as the new standard of breast
imaging diagnostic care in the United States and international medical
community. The first steps in attaining this goal are to receive U.S. Federal
Food and Drug Administration ("FDA") approval for our ComfortScan(TM) system as
an adjunct to mammography and establish our ComfortScan system as a recognized
and widely utilized technology to aid physicians in the effective diagnosis of
breast cancer.

         During 2004, we released version 1.0 of our ComfortScan system, renewed
our CE Mark, established FDA and quality systems standards, invested in
production-level tooling, established a manufacturing facility compliant with
good manufacturing practices, received our FDA Export Certificate, finalized
agreements with several international distributors in select countries in Latin
America, Europe and the Asia-Pacific regions, verified and validated our first
release of the ComfortScan system, and sold and shipped 12 revenue-producing and
production level ComfortScan investigative units to international markets for
the purpose of conducting local clinical regulatory and marketing studies. In
addition, our PMA clinical trial protocol was accepted by the FDA, we delivered
and installed our first ComfortScan system in our first three PMA sites, and we
trained and commenced the collection of patient scan data pursuant to our PMA
clinical trial protocol.

         In 2005, we intend to complete our PMA clinical trial and submit our
PMA application to the FDA, sell ComfortScan systems through our international
distributors in order to generate clinical results supporting the use of our
ComfortScan system as an adjunct to mammography. We plan to continue to seek
distribution alliances in international markets in order to obtain local
regulatory approval and acquire patient scans in our research and development
efforts. We will continue to develop and enhance our ComfortScan system by
releasing new versions of our software and perhaps hardware to the international
marketplace. We intend to place added emphasis internationally in developing
clinical research sites with physicians, and have them publish peer review


                                       11
<PAGE>


clinical papers so as to better seed the international market and more quickly
gain physician adoption, assuming the ComfortScan system obtains local
regulatory approval for commercial sale as a medical device.

         In November 2004, after successful completion of verification and
validation testing in accordance with current quality systems regulations, and
with outside, independent physicians as readers, we released our first
production level version 1.0 ComfortScan system as an investigational device. In
late 2004, we sold and shipped 12 revenue producing, production level
ComfortScan investigational systems to international distributors for conducting
local clinical studies. Subsequently, in January 2005, in connection with the
development of version 2.0 of our ComfortScan system, internal testing by
non-physician employees raised concerns about scan acceptance rates,
repeatability performance, and the overall diagnostic accuracy. With the
assistance of leading academic and clinical experts, we have made significant
progress towards successfully resolving these concerns. We have released our
ComfortScan 2.0 acquisition software to our PMA sites, and we have installed our
beta ComfortView 2.0 reading software for testing in a few international
clinical sites. We have substantially resolved the acceptance rate issue and
have made substantial progress towards resolving the repeatability issue. We are
currently on target to release version 2.0 of our ComfortScan system in the 2005
second quarter, although there can be no assurance that we will do so. We
believe that the emergence and resolution of concerns such as these arise within
the ordinary course of medical device product development efforts and result in
the continued improvement of the medical device and its underlying technology.
We do not currently believe that the improvements we have made to our software
and hardware in connection with the development of ComfortScan system 2.0 will
require reinitiating our PMA clinical trial. If there were to be such a delay,
our best estimate is that our PMA submission to the FDA may be delayed by up to
twelve months.

         In connection with our 2005 goals, we expect our expenses to be
approximately $1.8 million per quarter. In addition, we expect that PMA clinical
trial project costs, including PMA site fees, clinical research organization
fees, PMA site monitoring fees, and physician fees will be approximately $3.0
million in 2005. While we believe that we will achieve these goals, there can be
no assurance that we will do so.

         We have generated insignificant ComfortScan system revenues to date
and, therefore, can draw no conclusions regarding the seasonality of our
business.

         The accompanying financial statements in Item 1 of this report have
been prepared assuming that we will continue as a going concern. We are
currently a development stage enterprise and, as such, our continued existence
is dependent upon our ability to resolve our liquidity problems, principally by
obtaining additional debt or equity financing. We have yet to generate a
positive internal cash flow and, until meaningful sales of our product begin, we
are totally dependent upon debt and equity funding.

         In the event that we are unable to obtain debt or equity financing or
we are unable to obtain financing on terms and conditions that are acceptable to
us, we may have to cease or severely curtail our operations. These factors raise
substantial doubt about our ability to continue as a going concern.. So far we
have been able to raise the capital necessary to reach this stage of product
development and have been able to obtain funding for operating requirements, but
there can be no assurance that we will be able to continue to do so. Moreover,
there is no assurance that if and when FDA premarket approval is obtained, that
our ComfortScan system will achieve market acceptance or that we will achieve a
profitable level of operations. The accompanying financial statements in Item 1
of this report do not include any adjustments that might be necessary should we
be unable to continue as a going concern.

APPLICATION OF CRITICAL ACCOUNTING POLICIES

         We generally recognize revenue upon the shipment of our product to our
customers except for the initial maintenance component. That component is
deferred and is recognized on a straight-line basis over the initial maintenance
term.

         In order to achieve our goals, we incur research and development
expenses, general and administrative expenses, clinical expenses and sales and
marketing expenses.


                                       12
<PAGE>


         Research and development expenses consist primarily of compensation,
benefits and related expenses for personnel engaged in research and development
activities, outside contract and consulting expenses, material and supplies, and
personnel costs to produce prototype units and develop manufacturing processes,
methods and templates.

         General and administrative expenses consist of compensation, benefits
and related expenses for personnel engaged in general management, finance and
administrative positions. They also include expenses for financial advisory,
legal and accounting fees, medical and scientific advisory board expenses,
insurance and other expenses.

         Clinical program expenses consist of compensation, benefits and related
expenses for personnel engaged in clinical related activities. These expenses
also include costs of developmental studies, consultants, and that portion of
travel and general corporate expenses allocated to that department.

         Sales and marketing expenses consist of compensation, benefits and
related expenses for personnel engaged in sales, marketing, and related business
development activities. These expenses also include consultants, printing of
promotional materials, trade shows and that portion of travel and general
corporate expenses allocated to that department.

         We account for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes ("SFAS No. 109). SFAS No. 109
requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and tax basis of
assets and liabilities, and for the expected future tax benefit to be derived
primarily from tax loss carry forwards. The Company has established a valuation
allowance related to the benefits of net operating losses for which utilization
in future periods is uncertain. We believe it is more likely than not that we
will not realize the benefits of these deductible differences in the near future
and therefore a full valuation allowance of approximately $4,900,000 is
provided.

         As of December 31, 2004, we had approximately $12,000,000 of federal
net operating losses available to offset future taxable income, which if not
utilized will expire in 2024. No provision for income taxes has been recorded in
the financial statements as a result of continued losses. Any benefit for income
taxes as a result of utilization of net operating losses may be limited as a
result of change in control.

         The preparation of financial statements are in conformity with
accounting principles generally accepted in the United States and requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates. As a development stage enterprise, we have not had to make
material estimates which have an effect on financial presentation.

OFF-BALANCE SHEET ARRANGEMENTS

         Our office facilities are subject to a five-year operating lease
requiring monthly lease payments of approximately $20,000 per month. We have no
other material off-balance sheet arrangements or liabilities.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2005 AND 2004

         Revenues for the quarter ended March 31, 2005 was approximately
$62,000. Limited sales began in the quarter ended December 31, 2004 and
therefore, there were no sales to compare with for the prior year.

         Cost of sales was approximately $246,000 for the three months ended
March 31, 2005 creating a gross loss of approximately $183,000 due to the
limited sales for the period. We maintain a manufacturing facility with a
break-even point of approximately 15 devices per quarter. Production volumes of
less than 15 units per quarter will continue to negatively affect gross profit
margins. In 2005, we plan to produce approximately 40 devices in order to meet
our PMA clinical site and international sales requirements.


                                       13
<PAGE>


         Research and development expenses decreased approximately $56,000, or
11%, from $504,000 to approximately $448,000 for the three months ended March
31, 2005 compared to the prior year. Approximately $82,000 in various resources
that were within the research and development group in the 2004 have been
reassigned to manufacturing as part of the establishment of the production
facilities. We expended approximately $20,000 more for the three months ended
March 31, 2005 compared to the prior year for additional personnel as part of
the upgrading and documentation of our investigational prototypes of the
ComfortScan system for developmental testing and for refining the engineering of
the hardware and software. In addition, we expended an additional $78,000 over
the prior year's corresponding period to obtain clinical scans solely for
research and development purposes, to upgrade previously built prototypes, to
modify initial tooling for pre-production units, and for other research and
development purposes. Costs related to design and materials for construction of
prototype equipment decreased approximately $81,000 for the three months ended
March 31, 2005 compared to the comparative prior year.

         General and administrative expenses increased approximately $318,000,
or 67%, from $477,000 to approximately $795,000 for the three months ended March
31, 2005 compared to the prior year. This increase was primarily due to higher
payroll costs including performance bonuses to the Chief Executive Officer and
Chief Financial Officer of approximately $173,000 and other payroll costs of
approximately $83,000 related to the increase staffing compared to the prior
year. In addition, outside consulting and board of director costs of
approximately $56,000.

         Clinical program expenses increased approximately $257,000, to $386,000
for the three months ended March 31, 2005 compared to the prior year due to the
commencement of the PMA clinical trials. These additional costs included device
costs, site costs, personnel and consulting costs and travel expenses.

         Sales and marketing expenses of approximately $260,000 for the three
months ended March 31, 2005 reflect an increase of approximately $54,000
compared to the three months ended March 31, 2004. This was primarily due to
having additional costs for participation it exhibits increasing an awareness of
the Company and its products of $56,000, additional personnel costs in the
amount of $76,000, offset by a decreased costs of approximately $93,000 in
investor relations programs.

         Interest expense for the three months ended March 31, 2005 and March
31, 2004 was insignificant.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations since inception through private
issuances of equity and debt securities, generating approximately $38,500,000 in
gross proceeds to date, described chronologically below.

         Prior to its merger into a publicly traded company in December 2003,
DOBI Medical raised approximately $14.58 million in gross proceeds through the
sale of common stock, preferred stock and convertible debt, which were converted
into shares of the publicly-traded company, DOBI Medical International, Inc. in
December 2003.

         In December 2003, DOBI Medical Systems merged into a publicly-traded
company, Lions Gate Investment Limited, which became the surviving entity (in
January, 2004 Lions Gate changed its corporate name to DOBI Medical
International, Inc.), and simultaneously completed the first tranche of a
two-tranche private placement in which we issued 5,500,000 shares of common
stock at a price of $1.00 per share and three-year warrants to purchase
2,750,000 shares of common stock at an exercise price of $1.54 per share,
generating gross proceeds of $5,500,000.

         In July 2004, we completed the private placement of approximately $5.16
million in shares of our series A preferred convertible stock and associated
warrants. The shares of series A preferred stock sold in the private placement
carry a dividend of 8% per year and were initially convertible into 2,580,667
shares of common stock. We also issued four-year investor warrants to purchase
2,580,667 shares of common stock at a price of $3.00 per share. In connection
with the closing of the second tranche of the December 2003 private placement
and the March 2005 private placement, the number of common shares into which the
series A preferred stock is convertible was increased to approximately 3,839,496
shares, reflecting anti-dilution adjustments.


                                       14
<PAGE>


         At the closing of the performance milestone-based second tranche in
December 2004, we issued 6,000,002 shares of common stock at a price of $.50 per
share, generating gross proceeds of approximately $3,000,000. In that
connection, we issued three-year warrants to purchase 3,000,000 shares of common
stock at an exercise price of $1.54 per share.

On March 30, 2005, we completed a private placement of 21,000,000 shares of our
common stock at a price of $.50 per share, and warrants to purchase 10,500,000
shares of our common stock at an exercise price of $.75 for the first 5,250,000
warrant shares and $1.25 for the next 5,250,000 warrant shares, resulting in
aggregate gross cash proceeds of $10,500,000 and approximate net cash proceeds
of $9,665,000. We believe that with these proceeds we will meet our funding
needs into the first half of July 2006.

As of March 31, 2005, we had cash and cash equivalents of approximately
$10,250,000. Net cash used in operating activities during 2004 totaled
approximately $6,500,000, and capital expenditures totaled approximately
$720,000. For 2005, we have no significant capital expenditure commitments. Our
goals for 2005 are to submit our PMA application for the ComfortScan system as
an adjunct to mammography to the FDA by the end of 2005 and sell ComfortScan
systems through our international distributors. In connection with our 2005
goals, we expect our expenses to be approximately $1.8 million per quarter. In
addition, we expect that PMA clinical trial project costs, including PMA site
fees, clinical research organization fees, PMA site monitoring fees, and
physician fees will be approximately $3.0 million in 2005. While we believe that
we will achieve these goals, we cannot guarantee that we will do so.


                                       15
<PAGE>


CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

Statements in this report contain information that includes or is based upon
certain "forward-looking statements" relating to our business. These
forward-looking statements represent management's current judgments and
assumptions as of the date of this report. Forward-looking statements can be
identified by the fact that they do not relate strictly to historical or current
facts, and are frequently accompanied by the use of such words as "may," "will,"
"anticipates," "plans," "believes," "expects," "projects," "intends," "seeks,"
"anticipates," and similar expressions. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors, including without
limitation, successful verification and validation for release of our
ComfortScan 2.0 system; those relating to our ability to timely and successfully
complete our patient clinical trials; our ability to timely and successfully
complete and submit our premarket approval application to the FDA; the timely
and final approval by the FDA of our ComfortScan system as a adjunct to
mammography, which approval in the U.S. cannot be assured; the submission and
final approval of our ComfortScan system in various international markets, which
approval cannot be assured; the success and continued improvements in our
product development and research efforts; our ability to timely meet U. S. and
foreign government laws and industry standards; our ability to meet U.S. and
foreign medical device quality regulation standards required to maintain our CE
Mark, and to maintain our ISO, UL and FDA export certifications; our ability to
timely and successfully ship and deliver our products into international
markets; the acceptance and use of our ComfortScan system by physicians,
hospitals, imaging clinics, and patients; and our ability to obtain adequate
third party coverage, coding and reimbursement from U.S. and foreign government
and private payers.

Any one of these or other risks, uncertainties, other factors or any inaccurate
judgments and assumptions could cause actual results to be materially different
from those described herein or elsewhere by us. We caution readers not to place
undue reliance on any such forward-looking statements, which speak only as of
the date any such statements were made. Certain of these risks, uncertainties,
and other factors are described in greater detail in our filings from time to
time with the U.S. Securities and Exchange Commission, which we strongly urge
you to read and consider, including the "Investment Considerations" and the
"Cautionary Factors That May Affect Future Results" as set forth in our 2004
Annual Report on Form 10-KSB(as amended) and our Registration Statement on Form
SB-2 filed with the U.S. Securities and Exchange Commission, all of which may be
accessed from our website at www.dobimedical.com. Subsequent written and oral
forward-looking statements attributable to us or to persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements set forth
above and elsewhere in our reports filed with the Securities and Exchange
Commission. We expressly disclaim any intent or obligation to update any
forward-looking statements.


                                       16
<PAGE>


Item 3.  Controls and Procedures

         Evaluation of disclosure, controls and procedures. At the period end of
this Quarterly Report on Form 10-QSB, the Company's management, including the
Company's Chief Executive Officer and Chief Financial Officer evaluated the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's Chief Executive Officer
and Chief Financial Officer have concluded, as of the end of the quarter covered
by this report, that:

         The Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports it files
or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified.

         That Company's disclosure controls and procedures are effective to
ensure that such information is accumulated and communicated to the Company's
management, and made known to the Company's Chief Executive Officer and Chief
Financial Officer, to allow timely decision regarding the required disclosure.

         There have been no changes in the Company's internal controls over
financial reporting that have materially affected, or is reasonably likely to
materially affect the Company's internal controls over financial reporting
during the period covered by this Quarterly Report.


                                       17
<PAGE>


Part II  Other Information

Item 1.   Legal Proceedings.

          In the ordinary course of business, we may become a party to legal or
regulatory proceedings resulting from litigation, claims, or other disputes.
There can be no assurance that one or more future actions, if they occur, would
not have a material adverse effect on our business. As of the date of this
report, except as follows, there is no material litigation, threatened or
pending, involving us. On April 15, 2005, we filed suit in the Supreme Court of
the State of New York, County of New York, Index No. 601348/05, against Brian
Vodicka, a former member of our board of directors, alleging breach of contract
and breach of fiduciary duty and seeking specific performance and injunctive
relief preventing the disclosure and requiring the return of certain
confidential and proprietary documents. In addition, we have received a copy of
a Verified Petition to Take Depositions before Suit from a Robin Chiswell
allegedly filed in the Harris County, Texas District Court, apprising us that
the petitioner wished to take the deposition of a custodian of our records to
investigate whether there have been possible violations of the Texas Securities
Act. The Company will aggressively defend any proceedings and suits brought
against it.

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

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         None

Item 5.  Other Information

         None

Item 6.  Exhibits and Reports on Form 8-K

         a) Exhibits

               31.1  Certification of C.E.O. Pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

               31.2  Certification of C.F.O. Pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

               32.1  Certificate Pursuant To 10 U.S.C. Section 1350, Section
                     906 of the Sarbanes-Oxley Act of 2002.

         b) Reports on Form 8-K
                  1. We filed a Current Report on Form 8-K on May 3, 2005,
regarding the election of Steve M. Barnett to our Board of Directors.

                  2. We filed a Current Report on Form 8-K on March 31, 2005,
regarding the closing of our private placement of common stock and warrants.

                  3. We filed a Current Report on Form 8-K on March 3, 2005,
regarding the resignation of Denis O'Connor as Senior Vice President, Marketing,
Sales and Services to accept a CEO position with another publicly-traded medical
device company.


                                       18
<PAGE>


                  4. We filed a Current Report on Form 8-K on February 9, 2005,
regarding the departure of Brian Vodicka from our board of directors.

                  5. We filed a Current Report on Form 8-K on January 25, 2005,
regarding our product shipment guidance for 2005.


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:  May 16, 2005


                                          DOBI MEDICAL INTERNATIONAL, INC.


                                          By:   /s/Phillip C. Thomas
                                                --------------------------------
                                                Phillip C. Thomas
                                                Chief Executive Officer
                                                (principal executive officer)


                                          By:   /s/Michael R. Jorgensen
                                                --------------------------------
                                                Michael R. Jorgensen
                                                Executive Vice President and
                                                Chief Financial Officer
                                                (principal financial and
                                                accounting officer)


                                       19