UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON~~Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(~~Mark One~~d) OF THE SECURITIES EXCHANGE ACT OF 1934

xFor the ~~QUARTERLY~~quarterly ~~REPORT~~period ~~PURSUANT~~ended: ~~TO SECTION 13 OR 15(d) OF THE SECURITIES~~October ~~EXCHANGE~~31, 2008

~~ACT OF 1934~~or

~~FOR THE~~¨ ~~QUARTERLY~~TRANSITION ~~PERIOD~~REPORT ~~ENDED~~PURSUANT ~~APRIL~~TO ~~30,~~SECTION ~~2008~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the transition period from: _____________ to _____________

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

FOR THE TRANSITION FROM _______ TO ________.

COMMISSION FILE NUMBER 000-32801

TISSERA, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in its ~~Charter~~charter)

Washington	910-~~2034750~~32801	91-2034750
(State or other jurisdiction of	(I.R.S. Employer
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
incorporation of organization)	Identification No.)
of Incorporation)	File Number)	Identification No.)
Maskit 8, 4th floor, Herzlia	46733 Israel
(Address of principal executive offices)	(Zip Code)

~~Issuer's~~Avner ~~telephone~~2 ~~number:~~Herzlia, Israel ~~+ 972-9-9561151~~46602

~~Indicate by check mark whether the registrant~~ (~~1) has filed all reports required to~~Address ~~be filed by Section 13 or 15(d)~~ of ~~the~~Principal ~~Securities~~Executive ~~Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports~~Office), ~~and~~ (2)Zip ~~has been subject to such filing requirements for the past 90 days. Yes x No ¨~~Code)

~~Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non~~+972-~~accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b~~9-~~2 of the Exchange Act.~~9561151

~~Large~~ (Registrant’s telephone ~~accelerated~~number, ~~filer~~including oarea ~~Accelerated filer o Non-accelerated filer o Smaller reporting company T~~code)

Indicate by check mark whether the registrant is(1) ahas ~~shell~~filed ~~company~~all ~~(as~~reports ~~defined~~required into ~~Rule~~be ~~12b-2~~filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes~~x TYes ¨ No o

~~APPLICABLE~~Indicate ~~ONLY~~by TOcheck ~~ISSUERS~~mark ~~INVOLVED~~whether INthe ~~BANKRUPTCY~~registrant ~~PROCEEDINGS~~is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

~~DURING THE~~Large ~~PRECEDING~~accelerated ~~FIVE~~filer ~~YEARS~~¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

Indicate by check mark whether the registrant ~~filed~~is ~~all~~a ~~documents~~shell ~~and~~company ~~reports~~(as ~~required to be~~defined ~~filed~~in byRule 12b-2 ~~Section 12, 13 or 15(d)~~ of the ~~Exchange~~ Act ~~after the distribution of securities under a plan confirmed by a court~~). ~~Yes~~ ¨ Yes x No ¨

~~APPLICABLE~~As of ~~ONLY~~January TO22, ~~CORPORATE~~2009, ~~ISSUERS~~there were 45,591,809 shares of the issuer's common stock, par value $0.001 per share, outstanding.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of June 15, 2008, there were 45,591,809 outstanding shares of the Registrant's Common Stock, $.0001 par value.

TISSERA, INC.

APRIL 30, 2008 QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Item 2. Management’s Discussion and Analysis or Plan of Operation 20 Item 3. Controls and Procedures 26 PART II - OTHER INFORMATION Item 1. Legal Proceedings 27 Item 1A. Risk Factors 27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27 Item 3. Defaults Upon Senior Securities 27 Item 4. Submission of Matters to a Vote of Security Holders 27 Item 5. Other Information 27 Item 6. Exhibits 27 SIGNATURES 28

- 2 -

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS\

TISSERA INC.

INDEX PAGE

	PAGE
Forward Looking Statements

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets	1

Consolidated Statements of Operations	2

Consolidated Statements of Changes in Stockholder Equity	3

Consolidated Statements of Cash Flows	5

Notes to the Unaudited Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation	11

Item 4t. Controls and Procedures	14

PART II - OTHER INFORMATION
Item 5. Other Information	14

Item 6. Exhibits	14

SIGNATURES	15

FORWARD LOOKING STATEMENTS

The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this quarterly report on Form 10-Q. We make forward-looking statements in this report, in other materials we file with the Securities and Exchange Commission (the “SEC”) or that we otherwise release to the public, and on our website. In addition, our senior management might make forward-looking statements orally to analysts, investors, the media, and others. Statements concerning our future operations, prospects, strategies, Financial Condition and Results of Operations, future economic performance (including growth and earnings) and demand for our products and services, and other statements of our plans, beliefs, or expectations, including the statements contained in Item 2, “Management’s Discussion and Analysis of financial condition,” regarding our future plans, strategies and expectations are forward-looking statements. In some cases these statements are identifiable through the use of words such as “anticipate,” “believe,” “estimate,” “predict,” “expect,” “intend,” “plan,” “project,” “target,” “continue,” “can,” “could,” “may,” “should,” “will,” “would,” and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements because these forward-looking statements we make are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual results to differ materially from those suggested by these forward-looking statements. Thus, our ability to predict results or the actual effect of our future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to, our inability to continue operations; our inability to obtain necessary financing; the effect of a going concern statement by our auditors; changes in: economic conditions generally and our specific market areas, changes in technology, legislative or regulatory changes that affect us, the availability of working capital, changes in costs and the availability of goods and services, the introduction of competing products, changes in our operating strategy or development plans, our ability to attract and retain qualified personnel, and changes in our acquisition and capital expenditure plans. These risks and uncertainties, together with the other risks described from time to time in reports and documents that we file with the SEC, should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and financial position will vary from those projected or implied in the forward-looking statements and the variances may be material. Moreover, we do not assume the responsibility for the accuracy and completeness of these forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

~~INTERIM~~ CONSOLIDATED ~~FINANCIAL STATEMENTS~~BALANCE SHEETS

ASU.S. OFdollars ~~APRIL~~in 30thousands, ~~2008~~except share and per share data

IN U.S. DOLLARS

	October 31,			July 31,
	2008			2008
	Unaudited
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	21		$	88
Accounts receivable and prepaid expenses		11			40

Total current assets		32			128

RESTRICTED CASH		-			7

SEVERANCE PAY FUND		-			78

Total assets	$	32		$	213

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
Trade payables	$	9		$	12
Other accounts payable and accrued expenses		351			260
Convertible debentures and warrants		236			200

Total current liabilities		596			472

ACCRUED SEVERANCE PAY		-			78

Total liabilities		596			550

STOCKHOLDERS' DEFICIENCY:
Stock capital -
Common stock of $ 0.0001 par value each - Authorized: 100,000,000 shares at October 31, 2008 and July 31, 2008; Issued and outstanding: 45,591,809 shares at October 31, 2008 and July 31, 2008		5			5
Preferred stock of $ 0.0001 par value each - Authorized: 20,000,000 shares at October 31, 2008 and July 31, 2008; Issued and outstanding: 0 shares at October 31, 2008 and July 31, 2008		-			-
Additional paid-in capital		30,793			30,793
Deficit accumulated during the development stage		(31,362	)		(31,135	)

Total stockholders' deficiency		(564	)		(337	)

Total liabilities and stockholders' deficiency	$	32		$	213

UNAUDITED

INDEX

	Page
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Statements of Changes in Stockholders' Equity (Deficiency)	6 - 7
Consolidated Statements of Cash Flows	8
Notes to Consolidated Financial Statements	9 - 19

- - - - - - - - - - -

- 3 -

TISSERA INC.

(A development stage company)

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

	April 30,			July 31,
	2008			2007
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	82		$	999
Marketable securities		74			-
Accounts receivable and prepaid expenses		24			221
Total current assets		180			1,220
RESTRICTED CASH		7			5
SEVERANCE PAY FUND		75			47
PROPERTY AND EQUIPMENT, NET		5			7
LONG-TERM PREPAID EXPENSES		5			4
Total assets	$	272		$	1,283
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Trade payables	$	11		$	12
Other accounts payable and accrued expenses		196			611
Total current liabilities		207			623
ACCRUED SEVERANCE PAY		100			64
Total liabilities		307			687
STOCKHOLDERS' EQUITY (DEFICIENCY):
Stock capital -
Common stock of $ 0.0001 par value each - Authorized: 100,000,000 shares at April 30, 2008 and July 31, 2007; Issued and outstanding: 45,591,809 and 44,314,332 shares at April 30, 2008 and July 31, 2007, respectively		5			5
Preferred stock of $ 0.0001 par value each - Authorized: 20,000,000 shares at April 30, 2008 and July 31, 2007; Issued and outstanding: 0 shares at April 30, 2008 and July 31, 2007		-			-
Additional paid-in capital		30,788			30,788
Deficit accumulated during the development stage		(30,828	)		(30,197	)
Total stockholders' equity (deficiency)		(35	)		596
Total liabilities and stockholders' equity (deficiency)	$	272		$	1,283

The accompanying notes are an integral part of the consolidated financial statements.

- 1 4 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

~~U.S. dollars~~CONSOLIDATED inSTATEMENTS ~~thousands (except share and per share data)~~OF OPERATIONS

	Nine months ended April 30,					Three months ended April 30,					Year endedJuly 31,			From May 31,2000 (date ofinception)throughApril 30,
	2008		2007			2008			2007		2007			2008
	Unaudited													Unaudited
Operating expenses (income)
Research and development *)	$	476	$	898		$	159		$	245	$	1,073		$	16,613
General and administrative **)		115		624			(288	)		147		812			14,180
		591		1,522			(129	)		392		1,885			30,793
Financial expenses (income), net		40		(4	)		(1	)		1		(37	)		(122	)
Loss (income) from continuing operations before income taxes		631		1,518			(130	)		393		1,848			30,671
Income taxes (tax benfit)		-		7			(7	)		2		17			65
Loss (income) from continuing operations		631		1,525			(137	)		395		1,865			30,736
Loss from discontinued operations		-		-			-			-		-			92
Net loss (income)	$	631	$	1,525		$	(137	)	$	395	$	1,865		$	30,828
Basic and diluted net loss (earnings) per share	$	0.014	$	0.04		$	(0.003	)	$	0.009	$	0.05
Weighted average number of shares used in computing basic net loss (earnings) per share		44,964,278		35,248,398			45,406,824			44,314,352		37,533,510
Weighted average number of shares used in computing diluted net loss (earnings) per share		44,964,278		35,248,398			52,835,723			44,314,352		37,533,510

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

*) Including expenses related to options granted to employees and warrants granted to Yeda and to service providers in the amount of $ 0, $ 268, $ 0 and $ 28 and $ 280 for the nine months ended April 30, 2008 and 2007, three months ended April 30, 2008 and 2007 and for the year ended July 31, 2007, respectively.

	Three months ended October 31,						Year ended July 31,			From May 31, 2000 (inception date) through October 31,
	2008			2007			2008			2008
	Unaudited									Unaudited

Operating expenses:
Research and development *)	$	73		$	158		$	608			16,818
General and administrative **)		121			201			249			14,435

		194			359			857			31,253
Financial income (expenses), net		(35	)		(22	)		(77	)		50

Loss from continuing operations before income taxes (tax benefit)		229			381			934			31,203
Income taxes (tax benefit)		(2	)		4			4			67

Net loss from continuing operations		227			385			938			31,270
Loss from discontinued operations		-			-			-			92

Net loss	$	227		$	385		$	938			31,362

Basic and diluted net loss per share	$	0.005		$	0.01		$	0.021

Weighted average number of shares used in computing basic and diluted net loss per share		45,591,809			44,553,462			45,215,568

**) Including expenses related to ~~warrants,~~ options ~~and shares~~ granted to ~~service providers,~~ employees and ~~directors~~warrants ~~and~~granted ~~compensation~~to Yeda and to ~~investors~~service providers in the amount of $ 830, $ ~~141, $~~ 0 and $ 5 ~~and $ 150~~ for the ~~nine months ended April 30, 2008 and 2007, for the~~ three months ended ~~April~~October 3031, 2008 and 2007 and for the year ended July 31, ~~2007~~2008, respectively. ~~In addition, including the cancellation of provisions in an amount aggregating to about $ 430 for the nine-month period ended April 30, 2008 (see Note 4d).~~

**)

Including expenses related to warrants, options and shares granted to service providers, employees and directors in the amount of $ 0, $ 28 and $ 101 for the three months ended October 31, 2008 and 2007 and for the year ended July 31, 2008, respectively. In addition, general and administrative expenses include the cancellation of provisions in an amount aggregating to about $ 430 for the year ended July 31, 2008 (see Note 4)

The accompanying notes are an integral part of the consolidated financial statements.

- 2 5 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

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

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

*) Represents an amount lower than $ 1.

The accompanying notes are an integral part of the consolidated financial statements.

- 3 6 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)

~~STATEMENTS~~U.S. OFdollars ~~CHANGES~~in INthousands, ~~STOCKHOLDERS'~~except ~~EQUITY~~share ~~(DEFICIENCY)~~data

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, 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

Issuance of shares granted to service providers in previous years		1,000,000		*) -		-			-			-			*) -
Exercise of options		277,477		*) -		-			-			-			*) -
Warrants granted to Yeda		-		-		5			-			-			5
Net loss		-		-		-			-			(938	)		(938	)

Balance as of July 31, 2008		45,591,809		5		30,793			-			(31,135	)		(337	)

Net loss		-		-		-			-			(227	)		(227	)

Balance as of October 31, 2008 (unaudited)		45,591,809	$	5	$	30,793		$	-		$	(31,362	)	$	(564	)

												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 August 1, 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
Issuance of shares granted to service providers in previous year		1,000,000		-	*)		-			-			-			-
Exercise of options		277,477		-	*)		-			-			-			-
Net loss		-		-			-			-			(631	)		(631	)
Balance as of April 30, 2008 (unaudited)		45,591,809	$	5		$	30,788		$	-		$	(30,828	)	$	(35	)

*) Represents an amount lower than $ 1.

The accompanying notes are an integral part of the consolidated financial statements.

- 4 7 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

	Nine months ended April 30,						Year endedJuly 31,			From May 31,2000 (date ofinception)through April 30,
	Three months ended October 31,								Year ended July 31,				From May 31, 2000 (inception date) through October 31,
	2008			~~2007~~	2007		~~2007~~		2008	~~2008~~			2008
	Unaudited									~~Unaudited~~			Unaudited
Cash flows from operating activities:
Net loss	$	(~~631~~227	)	$	~~(1,525~~$	)(385	$)	~~(1,865~~	)$	$(938	~~(30,828~~)	)	$	(31,362	)
Adjustments required to reconcile net loss to net cash used in continuing operating activities:
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation		2-			6	1		6		2	33			33
Expenses related to warrants granted to Yeda and to service providers		-			143			150			11,197
Increase of fair value of convertible debentures and warrants		36				-				-				36
Expenses related to options granted to employees and directors		-			266			271			1,604
Expenses related to warrants granted to Yeda and to service providers		-				-				5				11,202
Expenses related to shares granted to service providers and compensation to investors		83			-			9			9,438
Expenses related to options granted to employees and directors		-				-				-				1,604
Interest accrued on short-term deposit		-			17			-			(17	)
Expenses related to shares granted to service providers		-				28				101				9,456
Decrease (increase) in accounts receivable and prepaid expenses		113			29			54			(7	)
Interest accrued on short-term deposit		-				-				-				(17	)
Increase (decrease) in trade payables		(1	)		12			8			11
Decrease (increase) in accounts receivable and prepaid expenses		29				10				84				(7	)
Increase (decrease) in other accounts payable and accrued expenses		(415	)		(28	)		(15	)		196
Increase in trade payables		(3	)			15				-				9
Increase in accrued severance pay, net		8			5			6			25
Increase (decrease) in other accounts payable and accrued expenses		91				41				(351	)			351
Net cash used in continuing operating activities		(841	)		(1,075	)		(1,376	)		(8,348	)
Capital loss from fixed assets		-				-				4				4
Net cash provided by discontinued operating activities		-			-			-			75
Increase (decrease) in accrued severance pay, net		-				3				(17	)			-
Total net cash used in operating activities		(841	)		(1,075	)		(1,406	)		(8,273	)
Net cash used in continuing operating activities		(74	)			(287	)			(1,110	)			(8,691	)
Cash flows from investing activities:
Net cash provided by discontinued operating activities		-				-				-				75
Purchase of marketable securities, net		(74	)		-			-			(74	)
Total net cash used in operating activities		(74	)			(287	)			(1,110	)			(8,616	)
Short-term deposit		-			827			844			17
Cash flows from investing activities:
Sale of property and equipment		-			-			-			9
Short-term deposit		-				-				-				17
Purchase of property and equipment		-			-			-			(47	)
Sales of property and equipment		-				-				1				10
Restricted cash		-			(1	)		-			(5	)
Purchase of property and equipment		-				-				-				(47	)
Lease deposits		-			-			(4	)		(4	)
Restricted cash		7				(1	)			(2	)			-
Net cash provided by (used in) continuing investing activities		(74	)		826			840			(104	)
Lease deposits		-				-				-				(4	)
Net cash used in discontinued investing activities		-			-			-			(15	)
Net cash provided by (used in) continuing investing activities		7				(1	)			(1	)			(24	)
Total net cash provided by (used in) investing activities		(74	)		826			840			(119	)
Net cash used in discontinued investing activities		-				-				-				(15	)
Cash flows from financing activities:
Total net cash provided by (used in) investing activities		7				(1	)			(1	)			(39	)
Restricted cash		(2	)					-			(2	)
Cash flows from financing activities:
Issuance of shares and warrants, net		-			~~1,424~~	-		~~1,424~~		-	~~8,441~~			8,441
Net cash provided by (used in) continuing financing activities		(2	)		1,424			1,424			8,439
Issuance of convertible debentures and warrants		-				-				200				200
Net cash provided by discontinued financing activities		-			-			-			35
Net cash provided by continuing financing activities		-				-				200				8,641
Total net cash provided by (used in) financing activities		(2	)		1,424			1,424			8,474
Net cash provided by discontinued financing activities		-				-				-				35
Increase (decrease) in cash and cash equivalents		(917	)		1,175			888			82
Total net cash provided by financing activities		-				-				200				8,676
Cash and cash equivalents at beginning of period		999			111			111			-
Increase (decrease) in cash and cash equivalents		(67	)			(288	)			(911	)			21
Cash and cash equivalents at end of period	$	82		$	1,286		$	999			82
Cash and cash equivalents at beginning of period		88				999				999				-
Non-cash activity:
Cash and cash equivalents at end of period	$	21			$	711			$	88			$	21
Prepaid expense	$	-		$	-		$	101			101
Non-cash activity:
Prepaid expenses	$	-			$	-			$	(101	)		$	(101	)

*) Represents an amount lower than $ 1.

The accompanying notes are an integral part of the consolidated financial statements.

- 5 8 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

NOTE 1:-

GENERAL

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.

On September 4, 2003, the former president of the Company (and a former major shareholder) entered into a share purchase agreement ("the Agreement") with the Company's ~~existing~~ shareholders, who purchased 15,000,000 shares of the then issued and outstanding 18,036,000 shares of the Company's Common stock. In connection with the agreement, the president of the Company resigned as president and sole director of the Company. Also, in connection with the Agreement, the Company obtained forgiveness of the remaining promissory note of $ 10 and accrued interest of $ 2 that was due on May 31, 2004 in respect of the Company's license to sell Bit Error Rate Testers ("the License") and agreed to convert the License to a worldwide non-exclusive license. Also, in connection with the Agreement, the former president of the Company agreed to forgive his loan, in the amount of $ 1.

Subsequent to the Agreement, the management of the Company has decided to discontinue all activities related to the sales of Bit Error Rate Testers and to engage in the development of tissue transplant technologies. The discontinuation of this activity was accounted for under the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144").

The statements of operations for the year ended July 31, 2004, included a gain in the amount of $ 13, reported in discontinued operations, related to the forgiveness of the note and the loan described above.

On October 8, 2003, the Company entered into a research and license agreement with Yeda Research and Development Company Limited ("Yeda"), according to which Yeda provided the Company with a worldwide exclusive license to develop, manufacture and sell Yeda's tissue transplant technologies. Yeda is entitled to cancel the agreement under certain conditions determined in the agreement (see Note 2). The Company currently bases its entire operations on the license provided from Yeda. Should Yeda terminate the agreement with the Company, the Company will not be able to continue its current research operations. Regarding the extension of the research and development agreement, see Note 2.

On October 9, 2003, the Company's Board of Directors resolved to change the name of the Company from Bert Logic, Inc. to "Tissera, Inc".

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

~~- 9 -~~c. Going concern considerations:

~~TISSERA~~The ~~INC~~Company's accumulated deficit and net loss as of October 31, 2008 and for the three months then ended amounted to $ 31,362 and $ 227, respectively. The Company's ability to continue to operate as a going concern is dependent on its ability to generate sufficient cash flows to meet its obligations on a timely basis, to obtain additional financing and to ultimately attain profitability. The Company is in the development stage and, as such, has no revenues (and is not expected to generate revenues in the near future), has incurred recurring operating losses, and an accumulated deficit and has a negative cash flow from operating activities (amounting to $ 74 and $ 287 for the three months ended October 31, 2008 and 2007, respectively). The process of developing commercial products will require significant additional expenditures for research and development, maintaining the key technology license, pre-clinical testing and clinical trials, as well as obtaining regulatory approval. These activities, together with general and administrative expenses, are expected to result in substantial operating losses in the foreseeable future.

The Company needs to raise funds on an immediate basis. Since August 2008, the Company has significantly curtailed its design, development and marketing efforts and released all of its non-management employees. As of the date of this report, the Company has on its staff only its Chief Executive Officer and Chief Financial Officer. If the Company is unable to raise capital on an immediate basis, it will be forced to either restructure or cease operations entirely. The Company is continuing its efforts to raise additional capital in order to resume its activities and development projects. The Company currently has not received any financing commitment and there can be no assurance that funds will be available on terms acceptable to the Company, or at all.

- 6 -

TISSERA INC. AND ITS SUBSIDIARY

(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:

The Company's accumulated deficit and net loss as of April 30, 2008 and for the nine months then ended amounted to $ 30,828 and $ 631, respectively. The Company's ability to continue to operate as a going concern is dependent on its ability to generate sufficient cash flows to meet its obligations on a timely basis, to obtain additional financing and to ultimately attain profitability. The Company is in the development stage and, as such, has no revenues (and is not intended to generate revenues in the near future), has incurred recurring operating losses, and an accumulated deficit and has a negative cash flow from operating activities (amounting to $ 841 and $ 1,075 for the nine months ended April 30, 2008 and 2007, respectively). The process of developing commercial products will require significant additional expenditures for research and development, maintaining the key technology license, pre-clinical testing and clinical trials, as well as obtaining regulatory approval. These activities, together with general and administrative expenses, are expected to result in substantial operating losses in the foreseeable future.

The Company is making efforts to raise additional capital in order to continue its activities and development projects. Nevertheless, in the event the Company is unable to successfully raise capital and generate revenues, the Company will not have sufficient cash flows and liquidity to finance its business operations as currently contemplated. Accordingly, the Company will cease its activities and development projects until it is able to obtain sufficient financing. There can be no assurance that additional funds will be available on terms acceptable to the Company, or at all.

These conditions raise substantial doubt about the Company's ability to continue to operate as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effect on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainly.

Risk factors:

The Company depends on Yeda to conduct its research and development activities. As discussed in Note 2, the research services ~~were~~are to be provided until April ~~2008~~2009. ~~The Company~~Thereafter, ~~is negotiating with Yeda but no renewal of~~ the ~~research agreement has been concluded. In consideration of the fact that the~~ Company iswill ~~pursuing~~have ~~its efforts~~ to ~~secure~~negotiate for new ~~funds,~~research ~~Yeda~~services ~~has~~to ~~informally granted the Company an option~~be toreceived, ~~renew~~whether ~~the~~by ~~agreement~~Yeda ~~until~~or ~~about~~by ~~the~~other ~~end~~service ~~of June 2008~~providers. InIf ~~addition, according to a verbal agreement,~~ Yeda ~~continues~~fails to provide the research services ~~in consideration~~or ~~of a yearly amount of $ 200, under the assumption that the Company can raise funds until the end of June 2008. If Yeda~~ is unwilling to continue to provide research services after April 2009, at terms that are acceptable to the Company, the Company may be required to seek alternative sources of research services. A change in service provider could result in delays in the research activities, an increase in ~~expense~~expenses and could adversely affect the Company's results of operations and cash flows. In addition, as discussed in Note 2, Yeda may terminate the research and license agreement ("the Agreement") under certain conditions.

- 10 -

TISSERA INC.

(A development stage company)

NOTE 2:-

RESEARCH AND LICENSE AGREEMENT

On October 8, 2003, the Company entered into a research and license agreement ("the agreement") with Yeda. The Company conducted the research for a period of three years, at the Weizmann Institute of Science ~~(the commercialization company of Yeda)~~. On April 11, 2006, the Company signed an agreement with Yeda, extending the research period by one additional year, until April 2007. In April 2007, the agreement was further extended until April 2008, and in July 2008, the research period has been extended by one additional year, until April 2009. The research relates to an ~~invention~~ invention comprising methods of organ transplantation employing nephric tissues. ~~The~~ The license that was granted to the Company shall expire at the later of (i) the expiration of the patents in the country of sale, or (ii) 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. In addition, Yeda may terminate the agreement if the Company fails to achieve certain commercialization and development milestones, as defined in the agreement. Currently, the Company complies with all of the terms of the agreement.

The Company committed to grant Yeda, within 120 days of the date on which the agreement is signed, (i) a warrant, exercisable at an aggregate exercise price of $ 0.9 to purchase up to 2.23% of the issued and outstanding Common stock of the Company immediately following the exercise of such warrant, and (ii) a warrant, exercisable at an aggregate exercise price of $ 1.1 to purchase up to 2.67% of the issued and outstanding shares of the Company immediately following the exercise of such warrant, provided that the maximum number of shares of Common stock that Yeda may exercise under the warrants shall be 3,010,699 and 3,612,839, respectively (the number of shares of Common stock shall be appropriately adjusted in the event of stock splits, stock dividends, capital reorganizations, reclassifications, recapitalizations and the like as well as issuances or sales by the Company of shares for par value only, for a consideration of less than par value and for no consideration, all in accordance with the terms and conditions of said warrant). Each such warrant shall be exercisable for a period beginning one year after the date on which the agreement is signed, and ending at the later of (a) one year following the termination of the agreement and (b) October 7, 2013. As of the balance sheet date, 2,349,105 of the Company's shares of Common stock are underlying the warrants. The warrants ~~shall~~are be exercisable on a cashless basis.

~~The fair value~~- of the warrants was determined based on the number of shares underlying the warrants as of the balance sheet date. The number of shares underlying the warrants as of the balance sheet date was determined based on the actual issued and outstanding shares of the Company and any options to acquire Company's shares for a nominal consideration, totaling 2,578,961 shares of Common stock. Each such warrant shall be immediately exercisable until the later of (a) one year following the termination of the agreement and (b) October 7, ~~2013.~~-

~~Prior~~TISSERA ~~to the~~INC. ~~actual~~AND ~~issuance~~ITS of the warrants, the value of the warrants for recording the research and development expenses was remeasured at each reporting period based on the number of shares underlying the warrants as of each reporting period with the entire change in the fair value of the underlying shares reported in research and development expenses. SUBSIDIARY

- 11 -

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.)

The fair value of the warrants was determined based on the number of shares underlying the warrants as of the balance sheet date. The number of shares underlying the warrants as of the balance sheet date was determined based on the actual issued and outstanding shares of the Company and any options to acquire Company's shares for a nominal consideration, totaling 2,681,150 shares of Common stock. Each such warrant shall be immediately exercisable until the later of (a) one year following the termination of the agreement and (b) October 7, 2013.

Prior to the actual issuance of the warrants, the value of the warrants for recording the research and development expenses was remeasured at each reporting period based on the number of shares underlying the warrants as of each reporting period with the entire change in the fair value of the underlying shares reported in research and development expenses.

After the issuance of the warrants, since the warrants entitle the investors to a final percentage of the Company's shares (up to a certain maximum number of shares), with each change in the number of the Company's issued and outstanding shares or the number of options with a nominal exercise price, the fair value of the additional shares underlying the warrants will be recorded as research and development expenses. Once the number of shares underlying the warrants will reach the maximum number of shares that can be issued under the warrants, the warrants will cease to be further re-measured.

According to the agreement and addendums, regarding the first, second and third years of the research period commencing April 9, 2003, the Company paid Yeda an annual amount of $ 900.

In April 2006, the Company signed a third addendum to the agreement with Yeda extending the research period by one more year to April 9, 2007. In respect of this fourth year of research, the Company paid Yeda an amount of $ 600.

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. In respect of this ~~fourth~~fifth year of research, the Company paid Yeda an amount of $ 400.

NoIn August ~~renewal~~2008, of the ~~license~~Company ~~agreement~~signed ~~has~~a ~~been~~fifth ~~concluded~~addendum ~~(see~~to ~~Note 1(d)). In consideration of~~ the ~~fact~~agreement ~~that~~commencing ~~the~~April 2008, ~~Company~~with isYeda ~~pursuing~~and ~~its~~committed ~~efforts~~ to ~~secure new funds~~pay Yeda ~~has~~$ ~~informally~~200 ~~granted~~to ~~the~~be ~~Company~~paid anin ~~option~~four toequal installments ~~renew~~payable ~~the~~in ~~agreement until~~advance ~~about~~in ~~the~~respect ~~end~~ of ~~June~~this ~~2008,~~sixth ifyear ~~funds~~research ~~are~~for ~~raised and~~ the ~~agreement with~~ ~~Yeda~~period isending ~~consequently renewed, it will be in effect from~~ April 109, ~~2008~~ 2009.

The above annual payments to Yeda were recorded as research and development expenses in the amount of $ ~~289~~50 and $ ~~450~~100 for the ~~nine~~three months ended ~~April~~October 3031, 2008 ~~and~~ and 2007, respectively.

The Company undertook to make its best efforts to commercialize the licensed products. The Company also agreed to pay Yeda a license fee of (i) $ 50 per year, to be paid commencing the first year after the completion of the research and development period; (ii) 4% of net sales of all products using the licensed technology; (iii) 33% of all sublicense fees for all agreements entered into within one year following the agreement date, and (iv) 16% of all sublicense fees for all agreements entered into after such one-year period.

~~NOTE 3:~~- ~~SIGNIFICANT ACCOUNTING POLICIES~~8 -

aTISSERA INC. ~~The~~AND ~~significant~~ITS ~~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 d below.~~SUBSIDIARY

b. Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles 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.

- 12 -

TISSERA INC.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NOTE~~U.S. dollars ~~3:-~~in ~~SIGNIFICANT~~thousands, ~~ACCOUNTING~~except ~~POLICIES~~share ~~(Cont.)~~and per share data

c.NOTE ~~Marketable securities~~3:- CONVERTIBLE DEBENTURES AND WARRANTS

~~The Company~~a. ~~accounts~~On ~~for~~July ~~investments~~8, in2008, ~~debt~~the ~~securities~~Company inentered ~~accordance~~into ~~with~~a ~~Statement of~~Bridge ~~Financial~~Loan ~~Accounting~~Agreement, ~~Standards~~dated ~~No.~~June ~~115~~18, 2008 (the "~~Accounting~~Agreement"), ~~for~~which ~~Certain~~contemplated ~~Investments in~~an ~~Debt~~aggregate ~~and~~purchase ~~Equity~~price ~~Securities"~~of up to $1,650 ("~~SFAS~~the ~~115~~2008 financing") with an accredited investor. ~~Management~~On ~~determines~~that date the ~~appropriate~~ ~~classification~~Company ofcompleted its ~~investments~~initial inclosing ~~debt~~of ~~and~~$200 ~~equity securities at~~ ("the ~~time~~initial ofclosing"). ~~purchase~~Investors ~~and~~who ~~reevaluates~~were ~~such~~participants ~~determinations~~in atthe ~~each~~Company's ~~balance~~December ~~sheet date.~~2006 ~~The~~transaction ~~debt~~were ~~securities~~given ~~are~~the ~~classified~~first asopportunity ~~"trading~~to ~~securities"~~participate ~~since~~in the ~~Company~~ ~~does~~2008 ~~not~~financing; ~~have~~to the ~~intent~~extent tosuch ~~hold~~investors' ~~the~~subscriptions ~~securities~~are toless ~~maturity~~than the maximum, ~~and~~the ~~are stated~~Company atmay ~~fair~~accept ~~value.~~other investors as well.

d. In connection ~~July~~with ~~2006~~each closing of the financing, the ~~FASB~~Company issued ~~FASB~~to ~~Interpretation~~the ~~48,~~sole Investors a Bridge Note (the "~~Accounting~~Note") ~~for~~with ~~Uncertainty~~an inoriginal ~~Income~~issue ~~Taxes"~~discount of 14% (~~"FIN~~out of ~~48"~~which approximately 6% are issuance expenses). ~~FIN~~By 48their ~~defines~~terms, the ~~threshold~~Notes ~~for~~were to ~~recognizing~~become payable on the ~~benefits~~earlier of ~~tax~~(i) ~~return~~January ~~positions~~4, in2009 (the ~~financial~~"Scheduled ~~statements as~~ Maturity Date"~~more-likely-than-not"~~), towhich beis ~~sustained~~180 bydays from the ~~taxing~~initial ~~authority.~~closing, ~~The~~or ~~recently~~(ii) ~~issued~~the ~~literature~~consummation ~~also~~of the ~~provides~~transaction ~~guidance~~in onwhich ~~derecognition~~the Company receives, ~~measurement~~on ~~and~~a ~~classification~~cumulative basis, gross proceeds of ~~income~~at ~~tax~~least ~~uncertainties~~$2,000. ~~along~~The ~~with~~principal ~~any~~of ~~related~~the ~~interest~~note ~~and~~will ~~penalties.~~be ~~FIN~~convertible through 48the ~~also~~scheduled ~~includes~~maturity ~~guidance~~date ~~concerning~~at ~~accounting~~a ~~for~~conversion ~~income~~price ~~tax~~of ~~uncertainties~~$0.10 inper ~~interim~~share. The ~~periods~~Note ~~and~~was ~~increases~~subsequently ~~the~~exchanged ~~level~~for ofa ~~disclosures~~new ~~associated~~note ~~with~~in ~~any~~the ~~income~~principal ~~tax~~amount ~~uncertainties~~of $222 See Note 5.

~~Pursuant~~Additionally, toin connection with the ~~provisions~~closing of ~~FIN~~the 48financing, the ~~differences~~Company ~~between~~issued to the Investor ~~amounts~~warrants ~~recognized in~~ ("the ~~statements~~warrants") ofto ~~financial~~purchase ~~position~~a ~~prior~~number toof ~~the~~shares ~~adoption~~ of ~~FIN 48 and~~ the ~~amounts~~Company's ~~reported~~Common ~~after~~stock ~~adoption~~equal ~~would~~to be4,280,000 ~~accounted~~shares ~~for~~of asthe aCompany’s ~~cumulative-effect~~Common Stock. ~~adjustments~~The ~~recorded~~warrants towill ~~the~~be ~~beginning~~exercisable ~~balance~~until ofJuly 31, ~~retained~~2013, ~~earnings.~~at ~~FIN~~an 48exercise price ~~is effective~~of ~~for~~$ 0.185 ~~fiscal~~per ~~years~~share, ~~beginning~~and ~~after~~are ~~December~~exercisable ~~15,~~on ~~2006.~~a cashless basis.

The ~~Company~~Warrants ~~files U.S. federal income tax returns as well as income tax returns in Israel jurisdiction~~ and inthe ~~various~~conversion ~~foreign~~option ~~jurisdictions.~~within ~~The Company may be subject to examination by~~ the ~~U.S.~~Note ~~Internal~~have ~~Revenue~~an ~~Service~~anti-dilution mechanism ~~("IRS")~~ for ~~calendar years~~any ~~2003~~case ~~through~~of ~~2007.~~future ~~The~~modification ~~Israeli~~in ~~subsidiary may be subject to examination by~~ the ~~Israel tax authorities for calendar years 2004 through 2007~~Company's equity.

~~Effective~~The ~~August~~Company 1,recorded ~~2007~~the Note in fair value in accordance with SFAS 155. In February 2006, the ~~Company~~FASB ~~adopted~~issued ~~the~~SFAS ~~provisions~~No. 155, "Accounting for Certain Hybrid Financial Instruments," an amendment of ~~FIN~~SFAS 48No. ~~The~~133, ~~adoption~~"Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS No. ~~FIN~~155 48permits ~~had~~fair novalue ~~cumulative~~re-measurement ~~effect~~for onany ~~tax~~hybrid ~~provisions~~financial orinstrument onthat contains ~~the~~an ~~accumulated~~embedded ~~deficit~~derivative that otherwise would require bifurcation. SFAS inNo. ~~the~~155 ~~Company’s~~is effective for all financial ~~statements~~instruments acquired or issued after August 1, 2007.

~~There~~The ~~was no~~Company ~~material~~classified ~~amount of interest or penalty recognized in~~ the ~~nine~~Warrants ~~months~~as ~~ended April~~a ~~30,~~liability ~~2008.~~according ~~It is the Company's policy~~ to ~~classify~~SFAS ~~the~~150 ~~expense~~and ~~related~~EITF ~~to interest~~00-19 orand ~~penalty~~recorded ~~to be paid within~~ the ~~tax~~Warrants ~~expense~~ in ~~the~~fair ~~statement of operations~~value.

b. Under the terms of the Bridge Loan Agreement, the Company is required to pay a penalty for the non- ~~13 -~~timely filings of periodic reports under The Exchange Act of 1934, as amended.

~~TISSERA~~In ~~INC~~respect of the filing of the annual report on Form 10-K for the year ended July 31, 2008, and for Form 10-Q for the three months ended October 31, 2008, the total amount of such penalty is approximately $140. The Company has accrued $76 in the financial statements for the three months ended October 31, 2008. The company recorded a provision for such penalty in the General and administrative expenses.

The Company and the Investor have reached an agreement-in-principle to waive these penalties; however, no assurance can be provided that the Company and the investor will in fact enter into a legally binding written.

- 9 -

TISSERA INC. AND ITS SUBSIDIARY

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~NOTE~~U.S. dollars ~~3:-~~in ~~SIGNIFICANT~~thousands, ~~ACCOUNTING~~except ~~POLICIES~~share ~~(Cont.)~~and per share data

e. 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).

SFAS 123(R) requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company's consolidated income statement. Prior to the adoption of SFAS 123(R), the Company accounted for equity-based awards to employees and directors using the intrinsic value method in accordance with APB 25 as allowed under Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123").

The Company adopted SFAS 123(R) using the modified prospective transition method, which requires the application of the accounting standard starting from August 1, 2006, the first day of the Company's fiscal year 2007. Under that transition method, compensation cost recognized in the year ended July 31, 2007, includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of August 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of Statement 123, and (b) compensation cost for all share-based payments granted subsequent to August 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of Statement 123(R). Results for prior periods have not been restated.

The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on the straight-line method over the requisite service period of each of the awards.

Prior to August 1, 2006, the Company applied the intrinsic value method of accounting for stock options as prescribed by APB 25, whereby compensation expense is equal to the excess, if any, of the quoted market price of the stock over the exercise price at the grant date of the award.

Shares and options to employees and directors

The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are, expected stock price volatility, and the expected option term. Expected volatility was calculated based upon actual historical stock price movements over the most recent periods ending on the grant date, equal to the expected option term.

- 14 -

TISSERA INC.

(A development stage company)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The expected option term represents the period that the Company's stock options are expected to be outstanding and was determined based on historical experience of similar options, giving consideration to the contractual terms of the stock options. The Company has historically not paid dividends and has no foreseeable plans to issue dividends. The risk-free interest rate is based on the yield from U.S. Treasury zero-coupon bonds with an equivalent term.

The fair value of the Company's stock options granted to employees and directors was estimated using the following weighted average assumptions:

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

During the nine months ended April 30, 2008 and 2007, and during the year ended July 31, 2007, no options were granted.

	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 April 30, 2008 (unaudited)		2,646,206	$	0.301		1.175		-
Exercisable at April 30, 2008 (unaudited)		2,646,206	$	0.301		1.175		-
Vested and expected to vest		2,646,206	$	0.301		1.175		-

*) As of reporting date, all of the options are out-of-the-money.

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the nine months ended April 30, 2008 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on April 30, 2008. This amount changes based on the fair market value of the Company's stock. As of April 30, 2008, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company's stock option plans.

- 15 -

TISSERA INC.

(A development stage company)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

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 April 30, 2008. In addition, as of April 30, 2008 and 2007, there were 277,477 warrant, respectively exercised into shares of Common stock.

The Company accounted for such warrants and shares under the provisions of EITF 96-18. The fair value of fully vested warrants and shares was recorded as research and development expenses and general and administrative expenses at the grant date. The fair value of the warrants that vest over the three-year period is amortized as an expense over the vesting period.

The fair value for these options was estimated at the grant date and at each subsequent vesting date using the Black-Scholes option-pricing model with the following weighted-average assumptions: expected volatility of 90%, risk-free interest rates of 1.5% - 5.34%, dividend yields of 0% and an expected life equal to the options' contractual life.

b) The Company granted 2,578,961 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 c) below), respectively.

c) On June 26, 2007, the Company signed an agreement with a consultant ("the Consultant"), effective July 1, 2007, according to 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.

In consideration of the services, on October 9, 2007, the Company issued to the Consultant 1,000,000 shares of Common stock of $ 0.0001 par value per share. As of July 31, 2007, the fair value of the services was recorded at the fair value of the shares on the agreement's effective date, and the relative portion of the expense was recorded in the statement of operations.

- 16 -

TISSERA INC.

(A development stage company)

NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)

d) A summary of the activity in warrants to service providers as of April 30, 2008, and changes during the nine months ended April 30, 2008, 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 April 30, 2008 (unaudited)		5,880,880	$	0.06		4.44		180,660
Exercisable at April 30, 2008 (unaudited)		5,880,880	$	0.06		4.44		180,660
Vested and expected to vest		5,880,880	$	0.06		4.44		180,660

The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the Company's closing stock price on the last trading day of the nine months ended April 30, 2008 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on April 30, 2008. This amount changes based on the fair market value of the Company's stock. As of April 30, 2008, there was no compensation cost related to non-vested warrants issued to service providers.

NOTE 4:-

COMMITMENTS AND CONTINGENCIES

a.On September 7, ~~The~~2004, ~~facilities~~the ~~and~~Board ~~motor~~of ~~vehicles~~Directors decided to terminate the employment of the ~~Company~~Chief ~~are~~Executive ~~rented~~Officer ~~under~~of ~~operating~~the ~~leases~~Company ("the Former CEO"). ~~Minimum~~On December 21, ~~rental~~2004, ~~commitments~~a ~~under~~claim against the ~~non-cancelable~~Company ~~lease~~was asfiled with the Israeli Labor Court by the Former CEO for a payment of ~~April~~approximately ~~30,~~$ 141 (NIS 564 ~~2008~~thousand) ~~amount~~in respect of payments allegedly due to her. The Company filed a counterclaim against its Former CEO in the amount of approximately $ 2,371 31(NIS 9,405 thousand).

b.On ~~The~~March 31, ~~Company's~~2008, ~~subsidiary~~the ~~obtained~~Company aand ~~bank~~its ~~guarantee~~former inCEO ~~the~~reached ~~amount~~a ofsettlement $which 7was toapproved by ~~secure~~the aIsraeli ~~rent agreement~~court.

- 17 -

TISSERA INC.

(A development stage company)

NOTE 4:- COMMITMENTS AND CONTINGENCIES (Cont.)

c. On September 7, 2004, the Board of Directors decided to terminate the employment of the Chief Executive Officer of the Company ("the Former CEO"). 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 and filed a counterclaim against its Former CEO in the amount of approximately $ 2,371 (NIS 9,405 thousand).

- 18 -

TISSERA INC.

(A development stage company)

NOTE 4:- COMMITMENTS AND CONTINGENCIES (Cont.)

d. On March 31, 2008, the Company and its former CEO reached a settlement which was approved by the Israeli court.

According to the settlement, the former CEO is responsible for paying all taxes and related costs owed in the United States and Israel in connection with her profits deriving from the exercise of certain options granted to her by the Company. The Company shall provide the former CEO with a Form W-2 for the 2004 evidencing any tax payments made by the Company in connection with her exercise of options.

Moreover, the reported bonus to the former CEO in the amount of $ 110, which was previously paid to the former CEO and cancelled by the Company’'s board of directors, will be re-approved. Any applicable taxes related to such bonus, in excess of the amount of about $ 26, which was already paid by the Company to the tax authorities in the U.S., shall be borne by, and be the sole responsibility of, the former CEO.

In addition, within 14 days of the Israeli court’'s approval of the settlement, the former CEO shall pay the Company about $ 63. In addition, the Company shall also release to the former CEO her social benefits funds.

In view of the above, the Company cancelled provisions in an amount of approximately $ 430 and recorded this cancellation in the statement of operations as general and administrative income for the year ended July 31, 2008.

NOTE 5:- ~~19 -~~ SUBSEQUENT EVENTS

~~TISSERA INC~~a. Between November 18, 2008 and January 9, 2009, a previous investor in the Company and the holder of the Note referred to in Note 3 advanced to the Company loans in the aggregate amount of $ 60 of which $ 30 was advanced on November 18, 2008 and an additional $30 was advanced on January 9, 2009. The loans are evidenced by two promissory notes issued by the Company, in the aggregate principal amount of $ 68 and are scheduled to become due at the earlier to occur of (i) the date we consummate a financing where it raises minimum gross proceeds of $2000 or (ii) April 14, 2009. These proceeds from the above loans were used for general corporate purposes.

b. The investor and holder of the Note referred to in Note 3 that became due by its terms on January 4, 2009 and the Company agreed to exchange such note for a new promissory note, issued by the Company, in the principal amount of $ 222 The new note becomes due at the earlier to occur of (~~A development~~i) ~~stage~~the ~~company~~date we consummate a financing where it raises minimum gross proceeds of $ 2000 or (ii) April 14, 2009.

~~ITEM 2~~c. ~~MANAGEMENT'S~~In ~~DISCUSSION~~connection ~~AND~~with ~~ANALYSIS~~the ORabove ~~PLAN~~transactions, OFthe ~~OPERATION~~ Company issued to the investor warrants, exercisable through January 31, 2014, to purchase up to 1,359,344 shares of the Company’s Common Stock at a per share exercise price of $0.185.

~~The following~~- ~~discussion~~- ~~and~~- ~~analysis~~- ~~of our financial condition and results of~~- ~~operations~~- ~~should~~- be- read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. References in this section to "TISSERA, Inc.," “TISSERA,” the "Company," "we," "us," and "our" refer to TISSERA, Inc. and our direct and indirect subsidiaries on a consolidated basis unless the context indicates otherwise.-

This quarterly report contains forward looking statements relating to our Company's future economic performance, plans and objectives of management for future operations, projections of revenue mix and other financial items that are based on the beliefs of, as well as assumptions made by and information currently known to, our management. The words "expects, intends, believes, anticipates, may, could, should" and similar expressions and variations thereof are intended to identify forward-~~looking~~ ~~statements. The cautionary statements set forth~~10 ~~in this section are intended to emphasize that actual results may differ materially from those contained in any forward looking statement.~~-

~~The following~~ITEM ~~discussion~~2 ~~and~~MANAGEMENT'S ~~analysis~~DISCUSSION ~~should~~AND beANALYSIS ~~read~~OF inFINANCIAL ~~conjunction~~CONDITION ~~with~~AND ~~the consolidated~~RESULTS ~~financial~~OF statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.OPERATION

Overview

~~You~~We were ~~should~~incorporated ~~read~~under the ~~following~~laws ~~discussion~~of ~~and~~the ~~analysis~~State of ~~our~~Washington ~~financial~~on ~~condition~~May 31, 2000. We develop, test and ~~results~~ ofintend ~~operations~~to ~~together~~commercialize ~~with~~solid ~~our~~organ ~~financial~~transplantation ~~statements~~therapies based ~~and~~on ~~the~~an ~~related notes~~approach ~~appearing~~employing inorgan-specific ~~this~~precursor ~~Report~~tissues. ~~Some~~ ofOur approach involves harvesting embryonic mammalian tissue at the ~~information~~most ~~contained~~appropriate instage ~~this~~after ~~discussion~~which ~~and~~stem ~~analysis~~cells orcommit ~~set~~to ~~forth~~becoming ~~elsewhere~~organ-specific precursor tissues and transplanting them in ~~this~~target ~~Report,~~human ~~including~~organ systems. The optimal windows for ~~information~~embryonic ~~with~~tissue ~~respect~~transplantation towere ~~our~~defined ~~plans~~by ~~and~~Prof. ~~strategy~~Reisner's ~~for~~lab ~~our~~at ~~business~~the Weizman Institute. On October 8, 2003, we entered into a Research and ~~related~~License ~~financing~~Agreement with Yeda, ~~includes~~whereby ~~forward-looking~~Yeda ~~statements~~procures ~~that~~the ~~involve~~performance ~~risks~~of ~~and~~research at the ~~uncertainties. You~~Weizman ~~should~~Institute ~~review~~of Science, under the ~~“Risk~~supervision ~~Factors”~~of ~~section~~Professor Reisner of ~~this~~the ~~Report~~Department ~~for~~of aImmunology. ~~discussion~~We ofhave ~~important~~a ~~factors~~world wide license that ~~could~~shall ~~cause~~expire ~~actual~~in ~~results~~each country with respect to ~~differ~~ ~~materially~~each ~~from~~product at the ~~results~~later ~~described~~of (i) the expiration of the patents covering such product in the country of sale, or ~~implied~~(ii) by15 years from the ~~forward-looking~~date ~~statements~~of ~~contained~~receipt of FDA New Drug Approval in the ~~following~~United ~~discussion~~States ~~and~~for such product, ~~analysis~~or the equivalent in any other country in which the products are sold.

We were incorporated under the laws of the State of Washington on May 31, 2000. We develop, test and intend to commercialize solid organ transplantation therapies based on an approach employing organ-specific precursor tissues. Our approach involves harvesting embryonic mammalian tissue at the most appropriate stage after which stem cells commit to becoming organ-specific precursor tissues and transplanting them in target human organ systems. The optimal windows for embryonic tissue transplantation were defined by Prof. Reisner's lab at the Weizman Institute. We entered into a Research and License Agreement with Yeda, whereby Yeda procures the performance of research at the Weizman Institute of Science, under the supervision of Professor Reisner of the Department of Immunology. We have a world wide license that shall expire in each country with respect to each product at the later of (i) the expiration of the patents covering such product in the country of sale, or (ii) 15 years from the date of receipt of FDA New Drug Approval in the United States for such product, or the equivalent in any other country in which the products are sold.

We are at development stage and devoting substantially all of our efforts toward conducting R&D activities, raising capital, pursuing regulatory approval, recruiting personnel and building infrastructure. Our former line of business was selling bit error testers. Our license in connection with bit error testers expired in May 2004.

-We need 20to raise additional funds on an immediate basis in order to meet our operating requirements and to fulfill our business plan as well as satisfy the working capital loans that mature in January 2009. Since August 2008, we have significantly curtailed all of our product design, development and marketing efforts and released all of our non-management employees. As of the date of this report, we have on staff only our Chief Executive Officer and Chief Financial Officer. If we are unable to raise capital on an immediate basis, we will be forced to either restructure or cease operations entirely. While we continue to attempt to raise funds, we have no funding commitment and assurance can be given that we will be able to raise funds. These conditions raise substantial doubt about our ability to continue as a going concern.

TISSERA INC.

(A development stage company)

Research and License Agreement

On October 8, 2003, we entered into a Research and License Agreement (the "Research Agreement") with Yeda. The ~~Research~~agreement ~~Agreement~~ relates to the rights of our company to have the license from Yeda related to research conducted and to be conducted at the Weizmann Institute of Science, under the supervision of Professor Reisner of the Department of Immunology, and relates to an invention comprising methods of organ transplantation utilizing developing ~~nephric~~pancreatic and other tissues. The License ~~license~~ granted to us shall expire in each country with respect to each product at the later of the following:

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.

In addition, Yeda may terminate the Research and License Agreement if we are in breach thereof and Yeda may, at its option, terminate the Research and License Agreement, in whole or in part, or make it non-exclusive if we fail to reach certain commercialization and development goals as set out in the Research and License Agreement. Yeda is entitled to unilaterally amend the license so that it is non-exclusive or terminate the license in the event that we fail to achieve commercialization of at least one product within certain time limits, fail to commence various phases of clinical trials within certain time limits or fail to sell a product after certain milestones. Further, if we contest the validity of the patents, Yeda may terminate the license. In the event that Yeda would like to pursue sponsored research with respect to, or the commercialization of, a given product that would otherwise be subject to the Research and License Agreement that we have not already commenced developing, then Yeda may provide us with notice of its intention. Upon receipt of such notice, we will then have three months to submit a product development program. If we do not submit such program, the license will be terminated with respect to said given product.

As part of the Research and License Agreement, on February 24, 2005, the Company agreed to issue to Yeda the following:

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.

- 11 -

However, the Research and License Agreement provides that the maximum number of shares of common stock that Yeda may exercise into for each warrant is 3,010,699 and 3,612,839, respectively (in each case as such number of shares of common stock shall be appropriately adjusted in the event of stock splits, stock dividends, capital reorganizations, reclassifications, recapitalizations and the like as well as issuances or sales by us of shares for par value only, for consideration less than par value and for no consideration, all in accordance with the terms and conditions of said warrant, which shall be satisfactory to Yeda and us). The share amounts described above are adjusted to reflect the three for one split, but not the other adjustment events described above that have occurred through the date hereof. Each such warrant shall be exercisable for a period beginning on the date of its issuance and ending at the later of the following:

- 21 -

TISSERA INC.

(A development stage company)

one year following the termination of the Research and License Agreement; and

October 7, 2013.

We also agreed to pay or have paid to Yeda the following:

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~~Pursuant to the third addendum of the Research Agreement dated April 11, 2006, with regard to the fourth year of research we ~~committed~~paid ~~to pay~~ an amount of US $600,000 of which $150,000 was paid on May 2, 2006; and $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 11, 2007, $100,000 was paid on July 10, 2007, and$100,000 was paid on October 11, 2007~~, and S100,000 was paid in January 10, 2008~~. The termination of the research period was extended from April 9, 2007 to April 9, 2008.

~~Up to now,~~· noPursuant ~~renewal~~to of the ~~license~~fifth ~~agreement~~addendum ~~has~~of ~~been concluded. In consideration for~~ the ~~fact~~Research ~~that~~Agreement ~~the~~dated ~~Company~~July is10, ~~pursuing its efforts to secure new funds~~2008, ~~Yeda has~~ ~~informally~~with ~~granted~~regard ~~the Company an option~~ to ~~renew~~ the ~~agreement~~sixth ~~until~~year ~~about the end~~ of ~~June~~research ~~2008.~~we Ifcommitted ~~funds~~to ~~are~~pay ~~raised~~an ~~and~~amount ~~the~~of ~~agreement~~$200,000 ~~with~~of ~~Yeda~~which ~~is consequently renewed~~$50,000 itwas ~~will~~paid beon inJuly ~~effect from April~~ 10, 2008~~. . In addition~~, ~~according~~ toThe atermination ~~verbal~~of ~~agreement,~~the ~~Yeda continues to provide~~ research ~~services in consideration~~period ofwas aextended ~~yearly~~from ~~amount~~April ~~of $ 200~~10, ~~under~~2008 ~~the~~to ~~assumption~~April ~~that~~9, ~~the Company can raise funds until the end of June 2008~~2009.

We have also agreed that within one year from the date of the Research and License Agreement, we will submit a development program to Yeda for its approval, and eventually a progress report every 6 months, in every December and June. In agreement with Yeda, the product development plan was submitted to Yeda in September 2005, and eventual progress reports were submitted at the appropriate dates. The last progress report was timely submitted in ~~December~~June ~~2007~~2008. We ~~further~~ further undertook to use our best efforts to commercialize the licensed products. We also agreed to pay Yeda a license fee as follows:

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

- 22 -

TISSERA INC.

(A development stage company)

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.

~~Significant Accounting~~- ~~Policies~~12 -

a.RESULTS OF ~~Marketable~~OPERATIONS ~~securities:~~– COMPARISON OF THE THREE MONTHS ENDED OCTOBER 31, 2008 COMPARED TO OCTOBER 31, 2007

~~The~~REVENUES ~~Company~~AND ~~accounts~~COSTS ~~for~~OF ~~investments~~GOODS in debt securities in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"). Management determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. The debt securities are classified as "trading securities " since the Company does not have the intent to hold the securities to maturity, and are stated at fair value. SOLD

b. 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.

Pursuant to the provisions of FIN 48, the differences between the amounts recognized in the statements of financial position prior to the adoption of FIN 48 and the amounts reported after adoption would be accounted for as a cumulative-effect adjustments recorded to the beginning balance of retained earnings. FIN 48 is effective for fiscal years beginning after December 15, 2006.

The Company files U.S. federal income tax returns as well as income tax returns in Israel jurisdiction and in various foreign jurisdictions. The Company may be subject to examination by the U.S. Internal Revenue Service ("IRS") for calendar years 2003 through 2007. The Israeli subsidiary may be subject to examination by the Israel tax authorities for calendar years 2004 through 2007.

Effective August 1, 2007, the Company adopted the provisions of FIN 48. The adoption of FIN 48 had no cumulative effect on tax provisions or on the accumulated deficit in the Company’s financial statements.

There was no material amount of interest or penalty recognized in the nine months ended April 30, 2008. It is the Company's policy to classify the expense related to interest or penalty to be paid within the tax expense in the statement of operations.

- 23 -

TISSERA INC.

(A development stage company)

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

The Company recognizes compensation expenses for the value of its awards, which have graded vesting based on the straight line method over the requisite service period of each of the awards.

Use of Estimates –

RESULTS OF OPERATIONS

Results of Operations for the Nine Months Ended April 30, 2008 Compared to the Nine Months Ended April 30, 2007

Revenues and Cost of Goods Sold

We are in a development stage and, therefore, have no revenues and cost of goods sold.

~~Operating~~OPERATING ~~Expenses~~EXPENSES

Operating expenses for the ~~period~~three months ended ~~April~~October 3031, 2008 amounted to $~~591~~194,000 ~~compared~~ compared to $1359,~~522,~~000 for the ~~period~~corresponding ended April 30, 2007. This decrease is attributed to a decrease in R&D expenses related to Yeda (see Note 2 in the Financial Statement - Research Agreement) and to a decrease in expenses related to options and warrants granted to employees and service providers totaling $83,000 in the period ~~ended April 30, 2008 as compared to $409,000~~ in ~~the period ended April 30,~~ 2007. InSince ~~addition~~August ~~on March 31,~~ 2008, ~~the Company and its former CEO reached~~we ahave ~~settlement~~curtailed ~~agreement~~our ~~which~~operations ~~was~~resulting ~~approved by the Israeli court (see note 4d~~ in ~~the~~ ~~Financial Statement) as~~ a ~~result~~significant ~~the~~decrease ~~Company cancelled provisions of approximately $ 430,000 and recorded this cancellation~~ in ~~the statement of~~operating ~~operations as general and administrative income~~cost.

The ~~R&D~~research and development expenses amounted to $~~476~~76,000 infor the ~~period~~three months ended October ~~April 30~~31, ~~2008 compared~~2008compared to ~~$898~~158,000 infor the ~~period~~three months ended ~~April~~October ~~30.~~ 31, 2007. This decrease in ~~the R&D~~research and development expenses is ~~attributed~~mainly attributable to a decrease in expenses related to Yeda. ~~which were~~In ~~decreased~~the ~~from~~fiscal ~~approximately~~year ~~$450~~2008,~~000~~ we incommitted ~~the~~to ~~period~~pay ~~ended~~Yeda ~~April 30~~$200,000 ~~2007~~ compared to ~~approximately~~ $~~289~~400,000 in the ~~period ended April 30, 2008 and to~~previous ~~a decrease~~fiscal year. inIn ~~expenses~~addition ~~related~~our toformer ~~options~~vice ~~and~~president ~~warrants~~for ~~granted~~research ~~to employees~~ and ~~service~~development ~~providers~~has ~~amounted~~left ~~to $0 in~~ the ~~period~~Company ~~ended~~on ~~April~~July 3031, 2008 ~~compared to $268~~,~~000~~ which resulted in ~~the~~a decrease ~~period~~in ~~ended~~Research ~~April~~and ~~30,~~development ~~2007~~expenses.

-We had 24general and administrative expenses of $121,000 during the three months ended -October 31, 2008 compared to $201,000 for the three months ended October 31, 2007. Since August 2008, we have significantly curtailed our general and administrative expenses relating to salaries, rent, legal, accounting and other general and administrative expenses, thereby resulting in a significant decrease general and administrative expenses during the three month period ended October 31, 2008 as compared to the corresponding period in 2007.

~~TISSERA~~The ~~INC~~general and administrative expenses also contain a provision for penalties with respect to the late filing of our quarterly report for the three months ended October 31, 2008 in the aggregate amount of $76,000. We and the investor have reached an agreement-in-principle to waive these penalties; however, no assurance can be provided that we and the investor will in fact enter into legally binding written agreements waiving these penalties.

(ANET ~~development stage company)~~LOSS

~~The~~As a ~~Company~~result ~~had general and administrative expenses~~ of ~~$115,000 in~~ the ~~period ended April 30~~above, ~~2008~~we ~~compared~~incurred ~~to $624,000 in the period ending April 30, 2007. The decrease is mainly attributed to the settlement agreement with the Company former CEO which generated~~ a ~~decrease in G&A~~net ~~expenses~~loss of ~~approximately~~ $ ~~430~~227,000, ~~and~~for tothe athree ~~decrease in expenses~~months ~~related~~ended toOctober ~~shares~~31, ~~options~~2008, ~~and~~compared ~~warrants granted~~ to ~~employees~~a ~~and~~net ~~service providers~~loss ~~totaling~~of $~~141~~385,000 infor the corresponding period ~~ended April 30, 2007 as compared to $83,000~~ in ~~the period ended April 30, 2008~~2007.

FINANCIAL INCOME

We had a net financial expense in the amount of $4,000 for the period ended April 30, 2007 compared to net financial expenses of $40,000 for the period ended April 30, 2008. The increase in financial expenses is attributed mainly to devaluation of the US dollar against the NIS which generated a net financial expense.

Taxes on Income

We had a tax expense amounting to $7,000 in the period ended April 30, 2007 and no tax expenses in the period ended April 30, 2008. The Tax expense is resulting from tax liability of our wholly owned subsidiary Tissera Ltd. Our company has an agreement with our subsidiary to which we will provide services related to our Research and Development activities. We will reimburse Tissera Ltd. for expenses on a cost plus basis which creates a taxable income in our subsidiary.

Net Loss

As a result of the above, we incurred a net loss of $631,000 for the period ended April 30, 2008, as compared to a net loss of $1,525,000 for the period ended April 30, 2007.

LIQUIDITY AND CAPITAL RESOURCES

Our cash equivalents and ~~Marketable~~short ~~securities~~term deposits were ~~$156~~21,000 as of ~~April~~October 3031, 2008, ~~compared~~ compared to ~~$999~~88,000 as of July 31, ~~2007~~2008. We had a negative working capital of $27564,000 as of ~~April~~October 3031, 2008, compared to ~~positive~~negative working capital of $~~597~~344,000 as of July 31, ~~2007~~2008. We plan to continue to consume cash in our research and development activities by payments of salaries, payments for services received from Yeda and other costs. We also plan to continue financing our operations through a combination of private placement, stock issuances, debt issuances, mutual development with possible milestone license payments and research and development programs. There are no assurances, however, that we will be successful in obtaining an adequate level of financing required for the long-term development and commercialization of our planned products.

~~Due~~As noted above, we need to raise additional funds on an immediate basis in order to meet our ~~being~~operating arequirements ~~development~~and ~~stage~~to ~~company~~fulfill ~~and~~our ~~not~~business ~~having~~plan ~~generated~~as ~~revenues~~well as satisfy the working capital loans that mature in April 2009. We continue in our efforts to raise funds. However, we may not be successful in our efforts to raise additional funds. Even if we are able to raise additional funds through the ~~consolidated~~issuance ~~financial~~of ~~statements~~debt ~~for~~or other means, our cash needs could be heavier than anticipated in which case we could be forced to raise additional capital. At the present ~~period~~time, ~~ended~~we ~~April~~have 30no commitments for any additional financing, ~~2008~~and there can be no assurance that, weif needed, additional capital will be available to us on ~~included~~commercially anacceptable ~~explanatory~~terms ~~paragraph~~or ~~regarding~~at ~~concerns~~all. ~~about~~These conditions raise substantial doubts as to our ability to continue as a going concern., ~~Our~~which ~~consolidated~~may ~~financial~~make ~~statements~~it ~~contain~~more difficult for us to raise additional ~~note~~capital ~~disclosures~~when ~~describing~~needed. ~~the~~Additional ~~circumstances~~equity financings ~~that~~are ~~lead~~likely to ~~this~~be dilutive to holders of our Common Stock and debt ~~disclosure~~financing, if available, may involve significant payment obligations and covenants that restrict how we operate our business.

~~The~~Due to ~~continuation~~our ofbeing ~~our~~a ~~business~~development isstage ~~dependent~~company ~~upon~~and usnot ~~raising~~having ~~additional~~generated ~~financial~~revenues, in the ~~support.~~consolidated ~~The~~financial ~~issuance~~statements offor ~~additional~~the ~~equity~~year ~~securities~~ended byJuly us31, ~~could~~2008, ~~result~~we inincluded ~~a significant~~an ~~dilution~~explanatory inparagraph ~~the~~regarding ~~equity~~concerns ~~interests~~about of our ~~current~~ability ~~stockholders. Obtaining~~to ~~commercial~~continue ~~loans,~~as ~~assuming~~a going ~~those~~concern. ~~loans~~Our ~~would~~consolidated befinancial ~~available,~~statements ~~will~~contain additional note ~~increase~~disclosures ~~our~~describing ~~liabilities~~the ~~and~~circumstances ~~future~~that ~~cash~~lead ~~commitments~~to this disclosure.

- 13 25 -

TISSERA INC.

(A development stage company)

APPLICATION OF CRITICAL ACCOUNTING POLICIES

Going Concern

~~The~~Our ~~Company~~period isfinancial ~~making~~statements ~~efforts~~have tobeen ~~raise~~prepared ~~additional~~on ~~capital~~the ingoing ~~order~~concern tobasis, ~~continue~~which ~~its activities~~assumes the realization of assets and ~~development~~liquidation ~~projects.~~of ~~Nevertheless,~~liabilities in the ~~event the Company~~normal ~~is unable~~course toof ~~successfully~~operations. ~~raise~~The ~~capital~~financial ~~before~~statements ~~the~~have ~~end~~been ofprepared ~~June~~assuming ~~2008, the Company~~we will ~~not~~continue ~~have~~as ~~sufficient~~a ~~cash~~going ~~flows~~concern. ~~and~~However, ~~liquidity~~certain toconditions ~~finance~~which ~~its~~exist ~~business~~are ~~operations~~raising asdoubt ~~currently~~about ~~contemplated.~~our ~~Accordingly,~~ability ~~the~~to ~~Company~~continue ~~will~~as ~~cease~~a ~~its activities~~going ~~and~~concern. ~~development~~We ~~projects~~have ~~until~~suffered recurring itlosses isfrom ~~able~~operations toand ~~obtain~~have ~~sufficient financing.~~accumulated ~~There~~deficit ~~can~~during bethe development nostage ~~assurance~~of ~~that~~approximately ~~additional~~$31,362,000 ~~funds~~since ~~will~~inception bethrough ~~available~~the ~~on terms~~period ~~acceptable~~ended toOctober ~~the Company~~31, ~~or at all~~2008.

~~OFF~~ITEM ~~BALANCE~~4T. ~~SHEET~~CONTROLS ~~ARRANGEMENTS~~AND PROCEDURES

We domaintain ~~not have~~disclosure ~~any~~controls ~~off~~and ~~balance~~procedures ~~sheet arrangements~~ that are ~~reasonably~~designed ~~likely~~ to ~~have~~ensure that ~~a current~~information orrequired ~~future~~to ~~effect~~be ondisclosed in our ~~financial~~Exchange ~~condition~~Act reports is recorded, processed, ~~revenues~~summarized and reported within the time periods specified in the SEC's rules and forms, ~~results~~and ofthat such information is accumulated and communicated ~~operations~~to management, ~~liquidity~~including orour ~~capital~~President ~~expenditures~~and Chief Executive Officer (who also serves as our principal executive officer and principal financial and accounting officer) to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e).

~~ITEM~~As of the 3end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of management, including our Chief Executive Officer and Chief Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. ~~QUANTITATIVE~~Based ~~AND~~on ~~QUALITATIVE~~the ~~DISCLOSURES~~foregoing, our ~~ABOUT~~acting ~~MARKET~~Chief Executive Officer and Chief Financial Officer concluded that ~~RISK~~our disclosure controls and procedures were effective.

~~N/A~~During the quarter ended October 31, 2008, there have been no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, these controls.

~~ITEM~~PART 4.II ~~CONTROLS~~- ~~AND~~OTHER ~~PROCEDURES.~~INFORMATION

AsITEM of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act)5. OTHER Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.INFORMATION

-(i) 26Between November 18, 2008 and January 9, 2009, a previous investor in our -company advanced to us loans in the amount of $60,000, of which $30,000 was advanced on November 18, 2008 and an additional $30,000 was advanced on January 9, 2009. The loans are evidenced by two promissory notes issued by us, in the aggregate principal amount of $67,967.22, and are scheduled to become due at the earlier to occur of (i) the date we consummate a financing where it raises minimum gross proceeds of $2 million or (ii) April 14, 2009. These proceeds from the above loans were used for general corporate purposes.

~~TISSERA~~(ii) The ~~INC~~investor is the holder of a promissory note issue by us that became due by its terms on January 4, 2009. We and the investor agreed to exchange such note for a new promissory note, issued by the Company, in the principal amount of $222,322.22. The new note becomes due at the earlier to occur of (i) the date we consummate a financing where it raises minimum gross proceeds of $2 million or (ii) April 14, 2009.

(Aiii) In ~~development~~connection ~~stage~~with ~~company)~~the above transactions, the Company issued to the investor warrants, exercisable through January 31, 2014, to purchase up to 1,359,344 shares of the Company’s Common Stock at a per share exercise price of $0.185.

~~PART~~The Notes IIwere issued in accordance with Section 4(2) under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

~~OTHER~~ITEM ~~INFORMATION~~6. EXHIBITS

ITEM 1 - LEGAL PROCEEDINGS

Exhibit No.		Description

31.1		Certification of the Acting 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 Acting 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

~~We are not~~- ~~a party to any pending legal proceeding, nor is our property the subject~~14 of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business. -

ITEM 1A. RISK FACTORS

There have been no material changes from the Risk Factors described in our Annual Report on Form 10-KSB for the fiscal year ended July 31, 2007.

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 VOTE OF SECURITY HOLDERS

None.

ITEM 5 - OTHER INFORMATION

None.

There were no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

ITEM 6 - EXHIBITS

Exhibit Number		Description
31.1		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
31.2		Certification by Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.
32.1		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.
32.2		Certification by Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code.

- 27 -

TISSERA INC.

(A development stage company)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TISSERA, INC.		~~TISSERA, INC.~~
Dated: June 20, 2008	By:	/s/ Amos Eiran
By:	/s/ Amos Eiran		By:	/s/ Alex Weber
	Amos Eiran	~~Amos Eiran~~		Alex Weber
		Chief Executive Officer
	Chief Executive Officer (Principal Executive Officer)			Chief Financial Officer (Principal Financial Officer)
Date: January 22, 2009			Date: January 22, 2009

Dated: June 20, 2008	By:	/s/ Alex Werber
		Alex Werber
		Chief Financial Officer

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