M-wise, Inc - The aggregate market value of the common stock held...

M-wise, Inc - Recent Material Event

Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. o

The Registrant's revenues for the fiscal year ended December 31, 2007 were $2,295,260.

The aggregate market value of the common stock held by non-affiliates of the Registrant, based upon the closing sale price of the common stock on April 7, 2008, was approximately $3,439,998. Shares of common stock held by each executive officer and director and by certain persons who own 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Number of shares of common stock outstanding as of April 7, 2008: 139,182,145

DOCUMENTS INCORPORATED BY REFERENCE

None

Transitional Small Business Disclosure Format (Check one):

Yes x; No o

TABLE OF CONTENTS

	PART I

1.	Description of Business
2.	Description of Property
3.	Legal Proceedings
4.	Submission of Matters to a Vote of Security Holders

	PART II

5.	Market for Common Equity and Related Stockholder Matters
6.	Management's Discussion and Analysis or Plan of Operation
7.	Financial Statements	F-1
8.	Changes in and Disagreements With Accountants on Accounting and Financial
	Disclosure
8A.	Controls and Procedure

	PART III

9.	Directors, Executive Officers, Promoters and Control Persons and Corporate Governance;
	Compliance With Section 16(a) of the Exchange Act
10.	Executive Compensation
11.	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters
12.	Certain Relationships and Related Transactions, and Director Independence
13.	Exhibits
14.	Principal Accountant Fees and Services

	Signatures

iii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This discussion in this Annual Report regarding m-Wise and our business and operations contains "forward-looking statements." These forward-looking statements use words such as "believes," "intends," "expects," "may," "will," "should," "plan," "projected," "contemplates," "anticipates," or similar statements. These statements are based on our beliefs, as well as assumptions we have used based upon information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. A reader, whether investing in our common stock or not, should not place undue reliance on these forward-looking statements, which apply only as of the date of this report.

When used in this Annual Report on Form 10-KSB, "m-Wise," "we," "our," and "us" refers to m-Wise, Inc., a Delaware corporation.

PART I

Item 1. Description of Business.

BACKGROUND

We were incorporated in Delaware in February 2000 under the name of Wireless Auctions, Inc. We develop, manufacture, market and support a software and hardware-based wireless application platform marketed under the brand MOMA platform. A platform, in the wireless industry, is an entry point for services and content from different types of media (such as the Internet, magazines, television) into the mobile networks, and through them to their customers- mobile phone users. The MOMA platform enables cellular operators and wireless application service providers to provide data and multimedia value-added services and content to their customers such as: person to person telephone calls, text messaging, ring tones, sports news and alerts, pictures and TV voting for contest shows, over wireless networks. Our platform is an end-to-end application and middleware platform that includes monitoring, billing, reporting, content management, customer care, application development, generic application engines, third-party provisioning and centralized third-party management tools. These services are called value-added services in the wireless industry. Our platforms have been utilized since March 2000 in over 300 applications across more than 50 European and Asian networks for over 50 various internationally known content and media providers. These include applications such as content delivery services, games, information services, alerts, advertising and promotions, which were developed and delivered on a hosted basis for content and media providers, through our wholly owned UK subsidiary and its Italian, French and Spanish subsidiaries. In the second half of 2002, we ceased operating and owning hardware infrastructure in order to concentrate on licenses and installed sales of our technology, and the operations of our UK subsidiary and its European subsidiaries were discontinued. Shay Ben-Asulin and Mordechai Broudo were the directors of our wholly owned UK subsidiary. Our UK subsidiary had three wholly owned subsidiaries: (i) m-Wise s.a.r.l. (France), which previously provided sales and customer support in France, the sole officer and director was Mordechai Broudo, our Chief Executive Officer; (ii) m-Wise S.r.l. (Italy), which previously provided sales and customer support in Italy, the sole officer and director was Shay Ben-Asulin, our Chairman and Secretary; and (iii) m-Wise Spain, S.L, which previously provided sales and customer support in Spain, the sole officer and director was Mordechai Broudo. Our Israeli subsidiary is legally active in its jurisdiction of incorporation, however, our UK subsidiary was dissolved pursuant to Section 652A of the Companies Act of 1985 on November 11, 2003. The liquidation of our UK subsidiary and its subsidiaries is not likely to affect our revenues in Europe as our European clients contract directly with us, or via a channel partner.

We operate mainly through m-Wise Ltd., our wholly owned subsidiary in Israel. The officers of our Israeli subsidiary are Mordechai Broudo, Chairman, Zach Sivan, Chief Executive Officer, Asaf Lewin, Chief Technology Officer, and Gabriel Kabazo, Chief Financial Officer, and the directors are Shay Ben-Asulin and Mordechai Broudo. We currently sell our MOMA Platform directly, through potential channel partners and through regional representatives in Taiwan, Philippines, Colombia, Brazil and the United States.

INDUSTRY BACKGROUND

GROWING MARKET FOR VALUE-ADDED SERVICES.

The wireless communications market primarily consists of cellular telephone networks, but also includes pagers, personal digital assistants, and private mobile networks such as those used by utility companies and delivery services. Value added services constitute significant additional revenue sources for wireless networks and wireless application service providers (WASPs), and have become essential components of cellular services in only a few years. This has been documented by industry analysts and journalists, as well as by the financial reports from various cellular operators that describe data services as a growing percentage of the carriers' revenues.

Originally utilized solely for telephone communications, the wireless phone networks have added data and multimedia content for the benefit of their subscribers, such as:

X SMS - short messaging service - enables subscribers to send and receive short (160 character) text messages and graphics images;

X EMS - enhanced message service - enables subscribers to send and receive high quality images and graphics;

X MMS - multimedia messaging service - enables the delivery of further enhanced images and audio files;

X WAP - web application protocol - enables subscribers to access the Internet and send and receive email;

X - Content download - enables subscribers to download digital content such as ringtones, pictures, animations, games and video files to their mobile handsets;

X Interactive media, such as quizzes and online gaming, enabled, inter alia, by Java (J2ME) technology;

X Subscriber information, such as stock quotes or sports news;

X "Push" technology, enabling content providers to broadcast advertisements to subscribers;

X Community services such as chat and dating; and

X Entertainment media, including radio stations, music and magazines.

Our technology is referred to as middleware or a Content and Service Delivery Platform as it integrates the wireless telecommunications providers with mainstream information technology industries. Providers developing middleware technology supply a means of integrating the wireless telecommunications providers, mainstream IT, and content and media provider industries to deliver value added services to wireless subscribers. The introduction of the wireless value added services industry has put an onus on cellular operators and service providers to use their internal operational infrastructure as an externally facing, strategic service delivery platform. Wireless middleware technology seeks to form a crucial part of this platform, thus facilitating the cellular operators and service providers’ efforts to connect to content partners and then deliver compelling services to their wireless subscriber base, regardless of the device used by the subscribers.

GROWING IMPORTANCE OF MIDDLEWARE AND CONTENT DELIVERY SOLUTIONS

Our MOMA Platform plays the role of content and service delivery Platform provides a centralized approach to middleware. We view the role of our middleware as central to the service offering by reducing the complexity in the supply chain. Wireless operators and wireless application service providers currently negotiate with a large number of industry players to deliver content, including access providers, payment providers, content aggregators and applications developers. We emphasize our business value as reducing service development costs for wireless operators and wireless application service providers by providing a single horizontal platform on which to build and deliver value added services, and on which to manage value added services, content, and billing relationships. We believe that the single middleware solution reduces the time spent negotiating with third parties to implement and run new services, and then manage those agreements.

We believe that middleware and content delivery solutions will play a central role in the wireless operator and wireless application service providers' service delivery offering. The core middleware will be installed on the operator and wireless application service provider’s network to fulfill the functions of service development and management, with smaller versions of the platform installed at the operator or wireless application service providers' subsidiaries in additional geographic markets to share central sources of information. This approach lowers the costs for the operator by centralizing the processes that are currently built individually by content providers, geographic market, and other criteria.

THE M-WISE STRATEGY

We believe that we were early to recognize the role of middleware and content delivery solutions in an increasingly complex platform strategy, and that we positioned ourselves to successfully prove the capacity of our content and service delivery platform to act as middleware for wireless value added services regardless of different standards, device types and/or billing infrastructures. One of the ways in which we are promoting our middleware technology is by addressing wireless operators and wireless application service providers requirements for a centralized platform on which to build and manage value added services content and applications from a number of different providers. In a similar approach, we are targeting wireless application service providers in order to provide them with a centralized platform on which to develop and deliver their own service offering. We believe that a strong synergy underlies for us in acquiring a mobile content provider that sells directly to consumers. With the power of our current technology and geographical reach, a direct approach to consumers can have a tremendous effect on our revenues and profitability.

We are always actively seeking to expand the range of our value proposition by recruiting channel partners with the needed synergy for promoting products in the nature of our solutions and with a strategic position to market our products to an identified potential customer base.

We are also working consistently in the expansion of the range of the solutions that can be based on our technology. Recently we have started certain proactive moves with the objective of expanding implementations of wireless marketing solutions, such as advertising and customer loyalty programs based on our middleware and content delivery solutions.

PRODUCTS

We develop , manufacture, market and support a software and hardware-based Content and Service Delivery Platform marketed under the brand MOMA Platform (MOMA is a middleware, i.e. a bundle of hardware and software parts that together provide all the functionalities described herein). The hardware consists of off-the-shelf products, which include an array of servers, network switches, high availability power supply and digital storage devices, that our customers purchase per our specifications or that we may purchase on their behalf, typically for no additional consideration other than the cost of such hardware components. Other customers may use an extension of the MOMA platform that is hosted by us, as an outsourced service for content and service delivery. The main software that runs these hardware components consists of the MOMA proprietary software code which we have developed. In addition, we use standard off-the-shelf software for which we purchase licenses for our use or on behalf of our customers and freeware (such as Linux, JSP, Microsoft SQL, Checkpoint's firewall solutions, Tomcat).

Our MOMA Platform provides operators and service providers of wireless data systems an end-to-end range of functionalities necessary to develop, manage and launch wireless value added services and transactions. These functionalities include, among others, the ability to:

Minimize the capital, commercial, training and technical

requirements by providing a common platform for the operator

or wireless application service provider's IT, marketing,

customer care and billing departments to manage current and

next-generation wireless value added services;

Minimize costs by providing a common platform for all

third-party content and service providers to connect and bill

through the operator or wireless application service

provider's wireless network;

Increase value added services revenues by accelerating the

time to market for third-parties, and by increasing the number

of content providers, media companies and other enterprises

able to enter the wireless value added services market;

Centralize and itemize the operator or wireless application

service provider's reporting and billing for all value added

services by third party, delivery channel (e.g. SMS, MMS or

other) or billing mechanism (e.g. premium messaging, IVR,

pre-paid data-card or other);

Mitigate many typical problems, such as real-time billing,

anti-spam policies, itemized value added services billing and

adequate customer support, through the delivery of a live

window and centralized controls for all value added services,

billing modules and third-party providers;

Manage and deliver mobile oriented content catalogues and

adapt such content to the large variety of mobile handsets by

automatically identifying handsets while downloading the

content and transcoding the content to comply with handsets'

specifications; and

Allow third parties to customized presentation layers such as

web and WAP interfaces to display content and applications and

link value added services with such IP based interfaces.

One example of how our middleware or MOMA Platform works is as follows:

(i)

a consumer watching television sees an advertisement inviting

the consumer to purchase and download a new ring tone for

their cellular phone, by sending a SMS via their cellular

phone;

(ii)

our customer, the mobile operator, will then send back to the

consumer a SMS or a WAP Push message, redirecting them to a

download site on the Internet, where the consumer may retrieve

the requested ring tone.

To enable this type of service, a middleware, such as our MOMA Platform performs the following:

(a)

the platform receives the consumer's SMS from the network, in

this case the request to download a certain ring tone;

(b)

the platform then composes the response SMS to the consumer;

(c)

the platform hosts the download site for the new ring tone and

enables the mobile operator to monitor the response to the

advertisement offering the new ring tone in real time;

(d)

the platform identifies the type of handset approaching for

the ringtone download and adapt to selected ringtone to the

given handset prior to the download event by such handset

(e)

the platform enables the mobile operator to issue a variety of

reports regarding its services, including revenue breakdown,

billing and settlement;

(f)

the platform enables our client to modify the content of their

services, i.e. edit language of messages, add new content

items for sale; and

(g)

the platform interfaces with the mobile operator's network and

can flexibly determine the billing and pricing arrangement

between the consumer and mobile operator.

The functions described above are performed by the MOMA Platform proprietary code that we have developed, which requires standard operating systems and hardware (mainly servers) to operate.

We provide our customers with various services, such as standard-level product support and maintenance, product upgrades (typically at an annual fee of 15% of initial license price), and remote management and service monitoring, that are priced separately. The MOMA Platform software is designed to enable its users to customize and manage certain aspects of the product, such as the "look and feel" of the user interface, the language of the user interface, and the connection of the MOMA Platform to external services. Further customization, when required, is also priced in addition to the license fee.

Our MOMA Platform, embodied in hardware and software technology, provides operators of mobile data systems the capability to offer the above services and other interactive content services. Our technology facilitates necessary billing and customer service functions and interfaces with commercially available media content.

CUSTOMERS

Our current wireless data customers include prominently global wireless application service providers and wireless operators. For 2002, 36% of our revenues were derived from our contract with one customer and 73% with three customers. For the year ended December 31, 2002, iTouch Plc represented 36% of our sales; Comtrend Corporation represented 25% of our sales and Vodafone Omnitel represented 12% of our sales. For the year ended December 31, 2003, iTouch Plc represented 78% of our sales. For the year ended December 31, 2004, Unefon S.A., represented 54% of our sales. For the year ended December 31, 2005, First Advanced Multi-Media Entertainment represented 52% of our sales. For the year ended December 31, 2006, Thumbplay represented 29% of our sales, Unefon S.A. represented 24% of our sales and Supportcomm represented 14% of our sales. For the year ended December 31, 2007, Thumbplay represented 46% of our sales, Comtrend Corporation represented 14% of our sales and Supportcomm represented 13% of our sales.

None of our customers are affiliated with us, our subsidiary, or any of our officers, directors or principal shareholders.

SALES CHANNELS

We primarily operate through international and regional sales representatives to distribute and sell our products on a project-by-project basis. For example, we recently signed an OEM agreement with Comverse Technologies where according to this agreement, Comverse will distribute our content delivery solutions to their customer base which consists of a few hundred wireless operators. In this framework, we cooperate with Comverse in RFP processes and demonstrations to potential customers. The agreement with Comverse states a transfer price between m-Wise and Comverse consisting of volume-based license fees, labor-based professional services, and annual support and maintenance services.

RESEARCH AND DEVELOPMENT

We devote significant resources to research and development. In January 2003, we were jointly awarded with Hewlett Packard an SIIRD Grant (Singapore-Israel Research and Development Foundation government grant of $186,343 USD) to upgrade the MOMA platform to support MMS and J2ME (Java technology for wireless applications) for wireless carriers in the Far East.

This grant was funded during the years ended December 31, 2003, and 2004, and is reflected in our consolidated financial statements. We expect to continue significant research and development activities to integrate new technologies into our platform. During the years ended December 31, 2003, and 2004, we expended $282,845 and $295,996, respectively, on research and development activities. During the year ended December 31, 2005, we expended $534,933 on research and development activities. During the year ended December 31, 2006, we expended $455,160 on research and development activities. During the year ended December 31, 2007, we expended $642,766 on research and development activities.

INTELLECTUAL PROPERTY

Our intellectual property rights are important to our business. We protect our intellectual property rights with a combination of copyright processes, the use of contractual provisions with our customers and partners embodied in our license and partnership agreements, and procedures to maintain the confidentiality of trade secrets. Most of our intellectual property is embodied in software. The functionality of all software can eventually be reverse engineered, given enough time and resources. We rely on common law for protection of our trademarks "MOMA Gateway" and "m-Wise".

COMPETITION

We encounter competition from numerous competitors, including dozens of smaller companies addressing niche content markets. Our larger competitors include Unipier Ltd. in SMS and MMS, Mobilitech, Inc. in J2ME and centralized technology platforms (middleware), Akumitti, End2end, Openwave Systems Inc. in application platforms, and LogicaCMG and Materna GmbH Information & Communications in the middleware arena. We believe our competitive strengths are our superior technology, which has been greatly enhanced since its release, and our technical experience in integrating our middleware with various third-party technologies already existing within the cellular operator or wireless application service providers network (e.g. SMSCs, MMSCs and legacy billing systems). We also believe our competitive strengths are further enhanced by our presence in the market through our sales to large local and global wireless service providers in each of the relevant vertical markets, partnering with industry-leading global and regional OEM/channel partners as well as local sales representatives, flexibility, and commercial experience in the industry.

EMPLOYEES

Along with our subsidiary we employ a total of 17 employees, including our officers. 4 employees are employed by m-Wise and 13 employees are employed by m-Wise Israel, two of whom also provide their services to us (Messrs. Sivan and Lewin). All employment agreements with officers and directors are described under the caption "Executive Compensation." We believe our employee relations to be excellent. None of our employees is represented by a labor union, and all are employed on a full-time basis.

Since we have determined to pursue an aggressive objective, which will require us to maintain competitive advantages in a range of areas, we intend to maintain a small core of highly skilled technical experts in key areas. This team will be responsible for maintaining the leadership of the technology platform, designing the future technology upgrades and products, and utilizing outsourced development firms on an as-needed basis to implement the necessary codes and assist in dealing with peaks derived from sales and projects.

We anticipate that managing potential growth during 2008-2009 while maintaining a small core team will require us to hire additional personnel, as required by growing sales volumes. In the event that the level of our business increases we may have to hire additional personnel. We would expect that such personnel would include a few additional personnel for technical support, account management and sales support for the distribution channels. Israeli law and certain provisions of the nationwide collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordinating Bureau of Economic Organizations (the Israeli federation of employers’ organizations) apply to our Israeli employees. These provisions principally concern the maximum length of the workday and the workweek, minimum wages, paid annual vacation, contributions to a pension fund, insurance for work-related accidents, procedures for dismissing employees, determination of severance pay and other conditions of employment. We provide our employees with benefits and working conditions above the required minimum. Furthermore, pursuant to such provisions, the wages of most of our employees are subject to cost of living adjustments, based on changes in the Israeli CPI (Consumer Price Index). The amounts and frequency of such adjustments are modified from time to time.

Israeli law generally requires the payment of severance pay upon the retirement or death of an employee or upon termination of employment by the employer or, in certain circumstances, by the employee. We typically fund our ongoing severance obligations for our Israeli employees by making monthly payments for managers' insurance policies and severance funds.

Israeli law provides that employment arrangements with employees who are not in senior managerial positions or positions who require a special degree of personal trust, or whose working conditions and circumstances do not facilitate employer supervision of their hours of work, must provide for compensation which differentiates between compensation paid to employees for a work week (as defined under Israeli law) or for maximum daily work hours and compensation for overtime work. The maximum number of hours of overtime is limited by law. Certain of our employment compensation arrangements are fixed and do not differentiate between compensation for regular hours and overtime work. Therefore, we may face potential claims from these employees asserting that the fixed salaries do not compensate for overtime work, however, we do not believe that these claims would have a material adverse effect on us.

Item 2. Description of Property.

Our offices are located at 3 Sapir Street, Herzeliya Pituach, Israel 46852, in leased office space of approximately 300m2, which we believe is adequate for our current and future operating activities. Our monthly rent is $4,500.

Item 3. Legal Proceedings.

We are currently not involved in any material legal proceedings.

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

There were no matters submitted for a vote of the stockholders during the year ended December 31, 2007.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters Small Business Issuer Purchases of Equity Securities

MARKET FOR COMMON STOCK

As of April 7, 2008, there were 28 owners of record of our common stock, which on March 1, 2005, started trading on the OTC Bulletin Board under the symbol "MWIS".

Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect interdealer prices, without retail mark-up, mark down or commissions and may not necessarily represent actual transactions.

Quarter Ending	High	Low
3/31/05	$0.72	$0.15
6/30/05	$0.46	$0.10
9/30/05	$0.30	$0.10
12/31/05	$0.25	$0.12
3/31/06	$0.21	$0.14
6/30/06	$0.14	$0.06
9/30/06	$0.07	$0.04
12/31/06	$0.07	$0.04
3/31/07	$0.24	$0.05
6/30/07	$0.17	$0.11
9/30/07	$0.14	$0.10
12/31/07	$0.13	$0.09
3/31/08	$0.11	$0.04

On April 7, 2008, the closing bid price of the Company's common stock was $0.05 per share.

There are currently outstanding warrants for the purchase of 17,383,442 shares of common stock and 34,986,564 shares of common stock reserved under employee stock option plans pursuant to which additional shares may be issued. As of April 7, 2008, 139,182,145 shares of common stock are issued and Outstanding.

Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of shares of common stock have no cumulative voting rights. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time by the Board of Directors in its discretion, from funds legally available therefore and subject to any preferential rights conferred to the holders of preferred stock, if any. In the event of a liquidation, dissolution or winding up of m-Wise, the holders of shares of common stock shall be entitled to receive all of the assets of m-Wise available for distribution to the holders of common stock ratably in proportion to the number of shares of common stock held by them. There are no conversion rights, redemption or sinking fund provisions with respect to the common stock.