SECURITIES AND EXCHANGE COMMISSIONFORM 8-K
Current report filing

Filing Date: 2008-02-14 | Period of Report: 2008-02-14
SEC Accession No. 0001144204-08-009799(HTML Version on secdatabase.com)

FILER
MORLEX INC /COCIK:795568| IRS No.: 841023977 | State of Incorp.:CO | Fiscal Year End: 1231
Type: 8-K | Act: 34 | File No.: 000-30144 | Film No.: 08619497
SIC: 6770 Blank checks

Mailing Address
31 PIERCE LANENORWICH VT 05055

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Business Address
31 PIERCE LANENORWICH VT 05055
802-649-2299

UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 14, 2008

MORLEX, INC.
(Exact name of registrant as specified in its charter)
Colorado(State or other jurisdiction of incorporation)

000-30144(Commission File Number)

420 Lexington Avenue, Suite 450, New York, New York
(Address of principal executive offices)84-1028977(I.R.S. Employer
Identification No.)

10170
(Zip Code)(212) 581-5150(Registrant’s telephone number, including area code)
31 Pierce Lane
Norwich, Vermont 05055(Former Address If Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below)oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Suchforward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future
revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words“expects”, “anticipates”, “intends”, “believes” and similar language. Our actual results may differ significantly from those projected in theforward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in thesection “Risk Factors.” We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events orcircumstances after the date of this report.
EXPLANATORY NOTESThe terms “the Company,” “we,” “us,” and “our” refer to Morlex, Inc., a Colorado corporation, unless otherwise stated or the context
clearly indicates otherwise. “RightSide” refers to RightSide Holdings, Inc., a Delaware corporation and our subsidiary. “Duncan” refers to
Duncan Media Group, Inc., a Delaware corporation and our subsidiary. “Superfly” refers to Superfly Advertising, Inc., an Indiana corporation
and a wholly owned subsidiary of Duncan. “AAA” refers to All Ad Acquisition, Inc., a Delaware corporation and our wholly owned subsidiary.
“Ad Authority” refers to Ad Authority, Inc., a Delaware corporation.
This Current Report on Form 8-K contains summaries of the material terms of various agreements executed in connection with thetransactions described herein. The summaries of these agreements are subject to, and qualified in their entirety by, reference to these agreements,
all of which are incorporated herein by reference.
All financial figures in this Current Report are denominated in U.S. Dollars unless stated otherwise.
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TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
EXPLANATORY NOTES
Item 1.01. Entry into Material Definitive Agreements
Item 2.01. Completion of Acquisition or Disposition of Assets
THE TRANSACTIONS
Overview of the Transactions
The Merger Transactions and Acquisition Transaction
RHI Merger
DMG Merger
Acquisition Transaction and Potential Purchase of Ad Authority Stock
Projected Corporate Structure
The Distribution
The Private Placement
Ownership of the Company
Contemplated Transactions
Tax and Accounting Treatment
Ancillary Agreements
Registration Rights Agreement
General Release Agreement
DESCRIPTION OF OUR BUSINESSThe Industry
Superfly
Generally
Outlook
RightSide
Generally
Outlook
Ad Authority
Generally
Outlook
History of the Company
Our History
History of Superfly
History of RightSide
History of Ad Authority
Customers and Market
Competition
Government Regulations
Employees
Properties
Available Information
RISK FACTORS
Risks Related To Our Business
Risks Related To Our Financial Condition
Risks Related To Our Industry
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Risks Related To Our Common Stock
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONSSECURITY OWNERSHIP OF CERTAIN STOCKHOLDERS AND MANAGEMENTDIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
Business Experience
Organizer
Code of Ethics
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Board Committees
Board Independence
EXECUTIVE COMPENSATION
Summary Compensation Table
Outstanding Equity Awards (Options) At Fiscal Year-End
Agreements With Officers and Directors
Compensation of Directors
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSDESCRIPTION OF SECURITIESCapital Stock
Description of Common Stock
Description of Convertible Notes
Registration Rights
Transfer Agent
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERSLEGAL PROCEEDINGSRECENT SALES OF UNREGISTERED SECURITIESINDEMNIFICATION OF OFFICERS AND DIRECTORSColorado Law
Bylaws
Articles of Incorporation
Indemnification Under The Securities Act
INDEX TO EXHIBITSDESCRIPTION OF EXHIBITS
Item 3.02
Unregistered Sales of Equity Securities
Item 4.01
Changes in Registrant’s Certifying Accountant
Item 5.01
Changes in Control of the Registrant
Item 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers
Item 5.06
Change in Shell Company Status
Item 9.01
Financial Statements and Exhibits
MORLEX, INC. FINANCIAL STATEMENTS
SIGNATURES
EXHIBIT INDEX
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Item 1.01. Entry into Material Definitive Agreements
The disclosure set forth in Item 2.01 to this Current Report is incorporated into this item by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets
THE TRANSACTIONS
Overview of the Transactions
As previously reported, on February 7, 2008 we entered into: (i) an Agreement and Plan of Merger (the “RHI Merger Agreement”) with
RightSide Holdings, Inc. (“RightSide”) and our wholly owned subsidiary RHI Merger Sub, Inc. (“RHI Merger Sub”), and (ii) an Agreement
and Plan of Merger (the “DMG Merger Agreement”, and together with the RHI Merger Agreement, the “Merger Agreements”) with Duncan
Media Group, Inc. (“Duncan”) and our wholly owned subsidiary DMG Merger Sub, Inc. (“DMG Merger Sub”). Also, on February 14, 2008
(the “Closing Date”) we entered into a Stock Purchase Agreement (the “AAA Stock Purchase Agreement”) with All Ad Acquisition, Inc., a
Delaware corporation (“AAA”), and all of the shareholders of AAA as listed in the AAA Stock Purchase Agreement, whereby we acquired
all of the outstanding shares of common stock of AAA. AAA is a party to that certain Stock Purchase Agreement, dated November 14, 2007,
among AAA, Iakona, Inc., a California corporation (“Iakona”), and Jason Kulpa, (as amended, the “Ad Authority Stock Purchase Agreement”)
providing for the purchase and sale of all of the issued and outstanding capital stock of Ad Authority, Inc., a Delaware corporation (“AdAuthority”), to AAA. Copies of the RHI Merger Agreement, DMG Merger Agreement, AAA Stock Purchase Agreement and Ad Authority
Stock Purchase Agreement are filed as Exhibits 2.1, 2.2, 2.3 and 2.4 to this Current Report, respectively, and are incorporated herein byreference.
On the Closing Date, the Company acquired RightSide and Duncan by closing the transactions contemplated by the Merger
Agreements (collectively, the “Merger Transactions”) and acquired AAA by closing the transactions contemplated by the AAA Stock Purchase
Agreement. In connection with the Merger Transactions, the Company will pay a cash distribution shortly after the Closing Date of $.2929 per
share to the holders of record of the common stock of the Company, par value $.001 per share (“Company Common Stock”), as of February
11, 2008, for a total distribution of approximately $375,000 (the “Cash Distribution”). Shortly after the Closing Date, the Company will also
distribute .2929 shares of Company Common Stock per share to the holders of record of Company Common Stock as of February 11, 2008,
for a total distribution of approximately 375,000 shares of Company Common Stock (the “Stock Distribution” and, together with the CashDistribution, the “Distribution”).
The Merger Transactions and Acquisition Transaction
RHI Merger
Pursuant to the RHI Merger Agreement, on the Closing Date RHI Merger Sub, our wholly owned subsidiary, merged with and into
RightSide, with RightSide being the surviving corporation (the “RHI Merger”). As a result of the RHI Merger, each share of common stock ofRightSide, par value $.001 per share, automatically converted into 0.4236 shares of Company Common Stock, or 8,548,655 shares of Company
Common Stock in the aggregate. The outstanding shares of non-convertible preferred stock of RightSide, par value $.001 per share, were notaffected by the RHI Merger and remain outstanding preferred stock of RightSide. Accordingly, we are not the sole stockholder of RightSide;
however, we own all of the outstanding RightSide Common Stock (which is the only voting stock of RightSide).
The RHI Merger Agreement contains customary representations, warranties and covenants of us, RightSide and RHI Merger Sub forsimilar transactions. The representations and warranties in the RHI Merger Agreement expired on the Closing Date.
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DMG Merger
Pursuant to the DMG Merger Agreement, on the Closing Date DMG Merger Sub, our wholly owned subsidiary, merged with and into
Duncan, with Duncan being the surviving corporation (the “DMG Merger”). As a result of the DMG Merger, each share of common stock of
Duncan, par value $.001 per share, automatically converted into 0.5433 shares of Company Common Stock, or 5,642,171 shares of Company
Common Stock in the aggregate. The outstanding shares of non-convertible preferred stock of Duncan, par value $.001 per share, were notaffected by the DMG Merger and remain outstanding preferred stock of Duncan. Accordingly, we are not the sole stockholder of Duncan;
however, we own all of the outstanding Duncan Common Stock (which is the only voting stock of Duncan). Duncan has no material assets or
liabilities other than the stock of its wholly-owned subsidiary Superfly Advertising, Inc. (“Superfly”).
The DMG Merger Agreement contains customary representations, warranties and covenants of us, Duncan and DMG Merger Sub forsimilar transactions. The representations and warranties in the DMG Merger Agreement expired on the Closing Date.
Acquisition Transaction and Potential Purchase of Ad Authority Stock
On the Closing Date, we bought all of the outstanding stock of AAA from the stockholders of AAA pursuant to the AAA Stock
Purchase Agreement in exchange for 4,200,000 shares of Company Common Stock. The only asset of AAA is the Ad Authority Stock Purchase
Agreement and certain related agreements. Pursuant to the Ad Authority Stock Purchase Agreement, AAA has the right and the obligation toacquire all of the issued and outstanding capital stock of Ad Authority (the “Stock Purchase”), subject to the terms and conditions in the Ad
Authority Stock Purchase Agreement. At the closing of the Stock Purchase, in consideration for the Ad Authority stock we will be obligated to
pay Iakona $8.0 million in cash and to issue shares of Company Common Stock to Iakona representing 20% of the then outstanding Company
Common Stock on a fully diluted basis. There can be no assurances that the Stock Purchase will be consummated.
The Ad Authority Stock Purchase Agreement contains customary representations, warranties and covenants of us and Ad Authority
for similar transactions. All representations and warranties survive for a period of two years from the closing, except for: (i) certain fundamental
representations and warranties which survive indefinitely, (ii) representations and warranties with respect to taxes, which survive until theapplicable statutes of limitations have run, and (iii) certain other representations and warranties, which survive for three years from the Closing
Date. All covenants survive until fulfilled. Iakona and Kulpa agree that, for a period of three years from the date of the closing of the transactions
contemplated by such Agreement, they will neither compete with Ad Authority nor solicit its employees with certain exceptions if Kulpa’s
employment with Ad Authority is terminated. AAA agreed to provide for employees of Ad Authority who are employed by us after the closing
to be eligible for participation in a common stock incentive plan for up to ten percent of our issued and outstanding common stock.
The Ad Authority Stock Purchase Agreement contains a mutual indemnification provision for breach of or inaccuracy in any
representation or warranty and any breach of failure to fully perform any covenant by any party to the agreement. Each party’s indemnification
obligations are subject to a threshold requirement of $100,000 in the aggregate. The parties’ indemnification obligations are also subject to acap. Iakona’s and Kulpa’s collective indemnification obligations are capped at $2 million in the aggregate; whereas, AAA’s indemnification
obligations are capped at $1 million in the aggregate. Iakona and Kulpa further agree to indemnify AAA from any and all damages relating tothat certain agreement among Valentino Vaschetto, Valosoft Corp and Ad Authority Incorporated, dated June 2, 2005.
The closing of the Stock Purchase is subject to the satisfaction of customary closing conditions. If the Stock Purchase has not been
consummated on or before February 29, 2008, either party to the Ad Authority Stock Purchase Agreement can terminate the agreement subject
to certain limitations.
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Projected Corporate Structure
As a result of the consummation of the Merger Transactions and the Acquisition Transaction, our current corporate structure is asfollows:

The Distribution
On February 8, 2008, the Board of Directors of the Company declared a cash distribution of $.2929 per share, payable to the holdersof record of Company Common Stock as of February 11, 2008. Also on February 8, 2008, the Board of Directors of the Company declareda distribution of .2929 shares of Company Common Stock per share, distributable to the holders of record of Company Common Stockas of February 11, 2008. The aggregate amount of the Distribution, which will be paid and distributed shortly after the Closing Date, will
be approximately $375,000 and approximately 375,000 shares of Company Common Stock, and the consummation of the Distribution was
contingent on the Company having sufficient equity to enable the Company to pay the Distribution in compliance with applicable Colorado
law. The purpose of the Distribution was to compensate the holders of Company Common Stock prior to the Merger Transactions and theAcquisition Transaction for the dilution that they experienced as a result of the consummation of such transactions.
The Private Placement
To satisfy the cash needs of the Company relating to the Merger Transactions and the Acquisition Transaction, to fund the CashDistribution and to provide working capital to the Company to fund its operations after the Merger Transactions and the Acquisition
Transaction, the Company intends to raise approximately $5 million through a private placement of Junior Convertible Unsecured Promissory
Notes (the “Convertible Notes”) and through a private placement of Company Common Stock (the “Private Placement” and, together with the
Merger Transactions and the Acquisition Transaction, the “Transactions”).
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Ownership of the Company
Following the consummation of the Transactions and the Distribution, a total of 20,045,985 shares of Company Common Stock was
issued and outstanding. The portion of the outstanding Company Common Stock owned by each constituency involved in the Transactions is
as follows:

Constituency
Former Owners of RightSide
Former Owners of DMG
Stockholders of AAA
Stockholders of Company before Transactions

Percentage
Interest
42.65
28.15
20.95

Total

8.25

%
%
%
%

100.00%If the Stock Purchase is consummated, the total number of shares of Company Common Stock issued and outstanding (without giving
effect to any shares of Company Common Stock that may be issued in a private placement in connection with the Stock Purchase) will be
26,445,985. The portion of the outstanding Company Common Stock owned by each constituency after the Stock Purchase will be as follows:
Percentage Constituency
Former Owners of RightSide
Former Owners of DMG
Stockholders of AAA
Stockholders of Ad Authority
Stockholders of Company before Transactions

Interest
32.32
21.33
15.88
24.20

Total

6.27

%
%
%
%
%

100.00%

As of the Closing Date, RightSide had $834,508.50 of Promissory Notes issued and outstanding and held by the former shareholders ofRightSide (the “RightSide Notes”). Of the RightSide Notes, $417,254 are Convertible Promissory Notes (the “Convertible RightSide Notes”).
Following consummation of the Merger Transactions, some of the Convertible RightSide Notes may become convertible into Company
Common Stock. As of the Closing Date, such Convertible RightSide Notes would have been convertible into up to 579,157 shares of Company
Common Stock, representing approximately 2.8% of the Company Common Stock on an as-converted basis. Certain of the RightSide Notes
are past due. We intend to repay all RightSide Notes with the proceeds of the Private Placement.
Contemplated Transactions
Now that the Transactions have been consummated, we intend to proceed with the closing of the Stock Purchase as soon as practicable.
We intend to finance the Stock Purchase with proceeds from a debt financing and the Private Placement. Following the completion of theStock Purchase, we plan to reincorporate in Delaware by merging into a newly formed Delaware corporation (the “Reincorporation”). In
connection with the Reincorporation, we intend to change our name to “Ad Authority Group, Inc.” assuming that the Stock Purchase has been
consummated. In addition, we plan to adjust our capitalization through the Reincorporation. This will have the same effect as a reverse stock
split. As part of the Reincorporation, we plan to create a class of “blank check” preferred stock, after which we plan to offer to exchange new
preferred stock of the Company having substantially similar terms to the preferred stock of RightSide and Duncan for the outstanding preferredstock of RightSide and Duncan, thereby making RightSide and Duncan wholly-owned subsidiaries of the Company. While we currently plan
to proceed with the Reincorporation, it is possible that we will elect not to proceed with the Reincorporation, in which case we expect that wewould effect some or all of the restructuring activities through an amendment to our Articles of Incorporation. Either the Reincorporation oran amendment to our Articles of Incorporation will require the approval of our shareholders. We also intend to merge Duncan into Superfly,
thereby making Superfly our direct wholly-owned subsidiary. Duncan has no separate operations and no material assets other than the stock ofSuperfly.
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There can be no assurance that we will be able to consummate the Stock Purchase. In the event that the Stock Purchase Agreement isterminated without the Stock Purchase being consummated, we intend to seek to acquire a different lead generation focused internet advertising
company to continue to expand our business and complete our plan of offering full internet marketing services to our customers.
Tax and Accounting Treatment
The Company believes that the Merger Transactions, the Acquisition Transaction, and the portion of the Stock Purchase with respect
to which the consideration will be shares of Company Common Stock (assuming that the Stock Purchase is consummated), and any equity
financing associated with the Stock Purchase will be treated in the aggregate as an exchange under Section 351 of the Internal Revenue Code,as amended (the “Code”). As a result, we believe that the Mergers will not result in taxation to the prior owners of RightSide and Duncan.
Also, the Stock Purchase will not result in taxation to Iakona or Kulpa except to the extent of the gain inherent in the $8.0 million of cash
consideration paid in connection with the Stock Purchase.
The RHI Merger is being accounted for as a “reverse merger,” and RightSide is deemed to be the acquirer in such reverse merger.
Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Merger
Transactions will be those of RightSide and will be recorded at its historical cost basis. The DMG Merger is being accounted for as an
acquisition of Duncan by RightSide, and the consolidated financial statements after completion of the Merger Transactions will include theconsolidated assets and liabilities of RightSide and Duncan, historical operations of RightSide and Duncan, and operations of RightSide andDuncan after the Closing Date. We continue to be a “small business issuer,” as defined under the Exchange Act, following the Transactions.
Ancillary Agreements
Registration Rights Agreement
On the Closing Date, we entered into a registration rights agreement (the “Registration Rights Agreement”) with certain of the original
holders of Company Common Stock and certain of the persons who received Company Common Stock in the Merger Transactions andAcquisition Transaction. We intend that the investors in the Private Placement will become parties to the Registration Rights Agreement. Under
the terms of the Registration Rights Agreement, we granted piggyback registration rights to such holders for a period of one year following the
Closing Date, such that, in the event that we file a registration statement covering Company Common Stock we would be obligated to include
their shares of Company Common Stock (or shares of Company Common Stock issuable upon the conversion of the Convertible Notes) in theregistration statement, subject to cutback provisions contained in the Registration Rights Agreement. We have also granted the investors in the
Private Placement one demand registration right. If we have not registered the shares for resale within one year after the Closing Date, the otherstockholders, including the original holders of Company Common Stock immediately prior to the Closing Date and those persons who received
Company Common Stock in the Merger Transactions and Acquisition Transaction, will also have one demand registration right. A copy of theRegistration Rights Agreement is filed as Exhibit 4.1 to this current report.
General Release Agreement
In conjunction with the Merger Agreement, we entered into a General Release Agreement (“General Release Agreement”) withMichael Miller, Jeanne Baer, Michelle Kaplan, Robert Kaplan, Helaine Kaplan (Michelle Kaplan, Robert Kaplan and Helaine Kaplan are
hereinafter collectively referred to as the “Kaplan Group”), our principal stockholders prior to the Merger Transactions and Acquisition
Transaction, whereby Mr. Miller, Ms. Baer and each member of the Kaplan Group pledged not to sue us, or any of our affiliates, and forever
released us and our affiliates and our present and former officers, directors, stockholders, employees and the like from any and all claims,
actions, obligations, liabilities and the like, incurred or suffered by Mr. Miller, Ms. Baer or any member of the Kaplan Group connected to any
act or omission that occurred or failed to occur at or prior to the Closing Date.
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DESCRIPTION OF OUR BUSINESSAs a result of the consummation of the Merger Transactions, we are an internet-focused customer acquisition company. We currently
have multiple revenue streams, including pay-per-click, list rental, subscription and general advertising. We own more than 1,000 domains
with approximately one million unique visitors per month. Our strategy is to acquire and build businesses in key vertical markets, specifically,to:·Acquire Ad Authority or another lead generation company and build an active internet customer base with “tagged” data,
including: name with contact information (e-mail, address, phone), demographics and buying behavior patterns;·

acquire smaller or under-performing web domain assets and apply economies of scale to leverage these assets and build volume
and value;·

focus on key vertical markets and build brand/domain value; and·own the domain/real estate and traffic/customer relationships.

We hope to capitalize on increasing trends toward direct digital advertising solutions through our ownership of significant domain
assets in key vertical markets, which we monetize through our proprietary systems and database. We believe that our Company strengths
include:·Ability to penetrate new verticals·

Diverse customer base·Multiple revenue sources (e.g., subscription, pay-per-load, pay-per-click)·

Domain ownership and customers in key advertising verticals·

Strategy shifting towards lesser reliance on search engine traffic through the use of proprietary company database (i.e., generate
an aimed traffic)·

Increasing trend towards higher spending on digital and direct advertising·

Unique value proposition for advertisers through broad product offering·

Critical mass with profitable operations from the onset·

Significant acquisition opportunities (both vertically and horizontally)·

International expansion opportunities

We believe that we have a first rate management team to acquire and integrate where appropriate other related acquired targets. Our
goal is to acquire cash flowing businesses in the marketing and media segment that utilize the Internet for distribution and communication. We
are not going to acquire e-commerce businesses but will focus on cash flowing business that deal directly with the Internet consumer for its
customer, thus focusing on the long tail of the Internet by aggregating many small transactions for no incremental cost, due to no inventory,
minimal receivables and minimal employees. The barriers to entry on these properties lie in its ownership of “real estate”, or the domains, aswell as the traffic, brand recognition and search rankings, all of which are very hard to duplicate at any cost.
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The Industry
Internet advertising revenues in the United States totaled nearly $10 billion for the first six months of 2007, which is an increase of
26.4% as compared to the same period in 2006. It is projected that by the year 2010, a majority of companies will obtain 10% or more of theirsales revenues from online channels. One third of companies that advertise online spend more than 10% of their advertising budgets in such
online advertising, indicating a potential market of untapped international expansion opportunities. Sixty percent of companies surveyed agree
that “paid keyword search” as a form of advertising is more efficient than traditional advertising.
Superfly
Generally
Superfly is an Internet advertising business focused on key search words and vertical markets. Superfly specializes in internet sales,
pay-per-click and internet advertising through approximately 1,000 owned domains. Superfly displays advertisements on the websites it
manages by utilizing internet ad feed providers such as Google and Yahoo!. Superfly currently does not contract directly with advertisers. We
believe that Superfly can successfully build or acquire web real estate “domains” and increase their traffic and therefore their revenue andprofitability.
The majority of the internet visitors to Superfly websites are acquired by purchasing keyword traffic from leading search engines. The
Company acquires internet traffic at a cost significantly less than the revenue it receives (“pay-for-click”). We believe that there is a potential forstrong growth in key advertising verticals such as finance, insurance and technology with approximately one million unique visitors per month.
We are developing several premium, content rich domain sites in key verticals such as Internetfrog.com (technology), Beauty.org (beautyand cosmetics), ezFinance.com (finance), eRisks.com (insurance). Our propriety process for arbitraging internet traffic is not easily replicable,
resulting in average return on investment exceeding 60%. We believe that our ability to “scale” with additional domains and resources willallow us to achieve profitability. Superfly plans to commence cross-selling and referral with the Ad Authority Database upon the acquisition of
Ad Authority.
Outlook
The Superfly business is an Internet advertising/media model. Superfly purchases keyword inventories on a daily basis from selected
search engines, which directs the user to Superfly-owned websites. Once the user is at the Superfly website, the user has the option to click
additional links that pertain to his/her keyword search. Superfly’s daily inventory is approximately 500 key words. Moreover, Superfly owns
approximately 1,000 parked domains related to verticals that can further be developed with content and generate advertising revenue as well.
Superfly plans on building this out to several thousand domains through an offshore production effort in key verticals. Superfly has alreadybegun to build out websites in these key growth verticals that will allow us to continue to build natural traffic. While there have been challenges
from Google and others to minimize parked page arbitrage, Superfly has been able to diversify its revenue, strengthen its site and add content,
and will continue to diversify its business away from landing pages.
RightSide
Generally
RightSide’s strategy involves acquisition and integration of cash-flow positive newsletters in order to expand an internet-based
investment news and publication platform with the goal of becoming the premiere active investor platform for the individual investor
community. RightSide leverages its customers and content through subscription, CPM, and pay-per-lead revenue streams. RightSide has anover 300,000 active email database with 5,600 paid subscribers. RightSide’s key brand message is “Professional Advice for the Individual
Investor.”

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Since RightSide’s acquisition of RightSide Advisors, Inc. in June 2006, RightSide has taken the following actions to grow its business:·

Signed Richard Suttmeier as Chief Market Strategist and launched three products around him (Small Stocks Report, Sector
Report, and free daily commentary) including video broadcast show.

·

Signed Matt Ragas and launched Value Raider Report.

·

Acquired Global Investing and obtained additional subscribers and e-mail addresses in database.

·Acquired 21st Century which resulted in additional active subscribers and a database of additional e-mail addresses.

·

Acquired Hot Stix, Inc.

·

Acquired Black Box Investing, Inc.

·

Moved Stock Addict social network community into beta stage (www.stockaddict.com).

·

Initial stages of marketing and/or distribution agreement with Yahoo Finance.

Outlook
RightSide Advisors, Inc. and 21st Century Advisors, Inc. (both wholly owned businesses of RightSide) aim to be the leaders infinancial newsletter and proprietary media content, with the goal of becoming one of the top financial news web sites, generating a communityof loyal and committed users.
Ad Authority
In the event that we obtain the requisite financing and consummate the Stock Purchase, Ad Authority would become an important partof our business. If we do not acquire Ad Authority, we intend to acquire another lead generation internet advertising company that is generally
in the same business as Ad Authority.
Generally
Ad Authority is a lead generation company active in the following verticals: mortgage, student loan, auto, and debt consolidation. Ad
Authority’s plan is to expand into new verticals including: legal, tax, insurance, reverse mortgage, payday loan, and continuing education. Leadgeneration is a cost effective, low-risk method for advertisers to find and qualify potential customers on the internet. Ad Authority sells leads tomortgage loan officers and brokers, student loan consolidators, auto dealerships and other lead generation companies (resellers) who in turn sellto their clients. Ad Authority currently has 75 million consumer records, including 6 million customer records with over 15 data points (such as
demographic, geographic or contact information).
Ad Authority’s lead inventory is generated through its own organic websites and through direct purchases from other lead generators.
Ad Authority’s websites include financebox.com, thestudentbox.com, dotloan.com, NRleads.com and AdAuthority.com. Traffic is directed to
Ad Authority’s websites through a series of marketing strategies, including: affiliates, networks, email, search engine marketing, contextual ad
networks, and co-registration. Wherever possible, state-of-the-art search engine optimization techniques are employed.
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Leads directly purchased from other lead generators are “filtered” to conform to applicable laws (e.g. DNC) and through proprietary
verification processes, including demographics and client direct criteria, then are sold to clients at a premium price based on data filtering costs.
Ad Authority will custom filter data to meet the needs of its clients.
Such leads can be sold up to three times to create higher return on investment for Ad Authority. This is not true for live transfers,
which accounts for the higher fees associated with this direct customer to client phone contact.
LeadX and other proprietary software was developed to meet specific client needs. This reflects Ad Authority’s continued emphasis
on serving each client with quality leads that meet that particular client’s needs. Maximum client service and support enhanced with state-ofthe-art technology is the company motto.
Outlook
Ad Authority utilizes numerous websites to promote its products or services clearly and concisely. Ad Authority accumulates thisinformation to further qualify the person by demographic, geographic location, contact information and other information and other criteriathat is client driven. Ad Authority utilizes a lead filtering process to enhance the quality of leads to meet client needs. The most effective andpopular is the live transfer program. Leads are filtered to meet client requirements prior to the live transfer.
In early 2007, Ad Authority was looking to expand into different areas of the lead generation business. Previous attempts were notsuccessful due to the lower margins involved in establishing a strong presence in this industry. Efficiency was the main issue, as Ad Authority
has never had a way to move leads efficiently enough to justify the smaller margins associated with breaking into an extremely competitivemarket. Ad Authority sought to address this problem through two methods. The first method involved creating custom “Ping-X” software thatfully integrates into the existing Lead-X platform. Lead-X is the same technology platform that has made Ad Authority so successful in otherverticals. The software fully automated the distribution process of leads based around the industry-standard ping-post model. This effectively
created a real-time auction system with each lead going to the highest bidder while maintaining the target return on investment. With the entire
transaction from lead generation to lead distribution taking under 30 seconds, this was a big step forward in auto lead distribution. The second
method was creating an aggressive tiered pricing system, which has allowed Ad Authority to establish a solid foothold into the auto market.
Since the inception of Ping-X, Ad Authority has created a stable, profitable presence in the Automotive Finance Lead industry.
Ad Authority integrates internet traffic with our proprietary customer database and then further process such data using our proprietary
analytics.
History of the Company
Our History
We were incorporated in the State of Colorado on April 23, 1986, as what is commonly known as a blind pool. In January 1987,
the Company, in a stock-for-stock exchange, acquired America OnLine, Inc. (“AOL#1”), a then wholly owned subsidiary of InfoSource
Information Service, Inc. The Company changed its name from Morlex, Inc. to America Online, Inc. on July 17, 1987. AOL #1 was neveraffiliated with the well-known company of the same name. On December 28, 1992, the Company terminated the business of AOL #1. Since thetermination of the business of the former AOL#1, the Company sought the acquisition of, or merger with, an existing company. In May 1998,
the Company changed its name back to Morlex, Inc. The Company has had no active business and no employees from 1994 until the Closing
Date, and, until the Closing Date, and has been considered a development stage company.
On March 25, 2003, the Company’s board of directors (the “Board of Directors”) determined it was in the best interest of the Company
to cease its reporting obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On March 28, 2003, theCompany filed a Form 15 with the Securities and Exchange Commission (the “SEC”), thereby deregistering the Company’s securities under
the Exchange Act.
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On December 30, 2005, the Company filed a registration statement on Form 10-SB, which was thereafter amended on January 27,
2006. Since the effectiveness of its registration statement, the Company has begun efforts in consummating a business combination.
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Until the Closing Date, the Company was classified as a “blank check” company. The SEC defines those companies as “anydevelopment stage company that is issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange Act, and that has no specificbusiness plan or purpose, or has indicated that its business plan is to merge with an unidentified company or companies.” Many states haveenacted statutes, rules and regulations limiting the sale of securities of “blank check” companies in their respective jurisdictions. Until the
Closing Date, the Company, as defined in Rule 12b-2 under the Exchange Act, was also a “shell company,” defined as a company with no or
nominal assets (other than cash) and no or nominal operations.
The Company was organized as a vehicle to investigate and ultimately acquire a target company or business seeking the perceived
advantages of being a publicly held corporation. To that end, on the Closing Date, the Company consummated the Merger Transactions toacquire RightSide and Superfly and the Acquisition Transaction for the acquisition of AAA. The Company’s principal business objective forthe next 12 months and beyond such time will be to achieve long-term growth through the operation of such businesses rather than immediate,short-term earnings.
We believe that the Company will create significant incremental value by combining and leveraging the capabilities of the acquired
businesses, including the pay-per click expertise and high traffic assets of Superfly, the vertical market expertise of RightSide in the personal
finance market, and, if Ad Authority is acquired, the proprietary database marketing expertise of Ad Authority. The three companies havealready been performing live market tests which have generated incremental revenues and created incremental revenue opportunities withencouraging results. Additionally, management has identified significant cost savings that could be captured by consolidating the operations if
and when the Stock Purchase is consummated.
History of Superfly
In January 2007, Duncan Media Group acquired all of the issued and outstanding capital stock of Superfly, an Internet advertisingbusiness focused on key search words and vertical markets. Superfly specializes in internet sales pay-per-click and internet advertising throughapproximately 1,000 owned domains. Superfly displays advertisements on the websites it manages by utilizing internet ad feed providers such
as Google and Yahoo!. Superfly currently does not contract directly with advertisers.
The majority of the internet visitors to Superfly’s websites are acquired by purchasing keyword traffic from leading search engines.
Superfly displays targeted, high revenue-generating advertising on its websites which highlight a particular vertical or product offering. As aresult, Superfly is able to generate a profit from the spread between the cost to generate traffic and the revenue generated from advertising on
its websites.
If the Stock Purchase is consummated, Superfly intends to use the Ad Authority Database to drive free traffic to owned domains, withrecent tests indicating over 40% open rates on personalized campaigns and 25% click through. In addition, Superfly is currently developing its
own lead generation product in conjunction with Ad Authority in order to generate its own leads on the recently acquired domains. As a result,if the Stock Purchase is consummated, Superfly will be able to create additional residual value from the traffic originated at Superfly domains
by generating additional leads to add to the Superfly database.
Duncan was incorporated in Delaware on November 21, 2006. Duncan’s address is 131 E. Court Avenue, Suite 300, Jeffersonville,
Indiana 47130 and its phone number is (812) 282-2958. Superfly was incorporated in Indiana on November 15, 2004. Superfly’s address is 131
E. Court Avenue, Suite 300, Jeffersonville, Indiana 47130 and its phone number is (812) 282-2958.
History of RightSide
RightSide is an online publishing company that owns and markets several newsletters and websites targeting the highly valuable
personal finance and trading marketplace. With over 5,600 paid subscribers and a database of over 300,000 active e-mail addresses, RightSide
generates revenue through subscriptions, online advertising and list rental. RightSide is an example of the Company’s strategy of acquiring and/or developing premium content websites in targeted vertical markets.
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RightSide’s strategy involves acquisition and integration of cash-flow positive newsletters in order to expand an internet-based
investment news and publication platform with the goal of becoming the premiere active investor platform for the individual investor
community. RightSide leverages its customers and content through subscription, CPM, and pay per lead revenue streams. RightSide’s key brandmessage is “Professional Advice for the Individual Investor.”
In the last eighteen months, RightSide has expanded its product offering and customer base by acquiring two newsletter production
companies and partnering with leading investment executives to launch new products, including a daily video market update. In addition, during
the second half of 2007, RightSide began implementing a more aggressive list rental strategy which resulted in associated revenue growing
by over ten times in 2007E versus 2006. In 2008, RightSide will be expanding its main website to incorporate financial news, investing tools
and proprietary content to create a more comprehensive personal finance portal. This strategy will create a more active customer base andincrease RightSide’s organic internet traffic, thereby driving advertising and subscriber revenue. RightSide expects to drive additional list rental
revenue as its customer base increases. This will be the first complete vertical market business built out by the Company. RightSide has recently
launched and is currently building out several other vertical market businesses. If the Stock Purchase is consummated, these businesses will all
be powered by the Ad Authority Database. RightSide has identified and is in the process of seeking to employ experienced managers to run
these vertical market businesses, who will be responsible for their own respective profit and loss statements.
RightSide Advisors, Inc. and 21st Century Advisors, Inc. (both wholly owned businesses of RightSide Holdings, Inc.) aim to be theleaders in financial newsletter and proprietary media content, with the goal of becoming one of the top financial news web sites, generating acommunity of loyal and committed users.
RightSide was incorporated in Delaware on May 5, 2006. RightSide’s address is 6230 Wilshire Blvd, Ste. 49, Los Angeles, CA 90048
and its phone number is (800) 243-5859. RightSide maintains a website at http://www.rightsideadvisors.com. Information on such website is
not incorporated by reference into this report.
History of Ad Authority
Ad Authority is a data-driven, direct marketing company that has built a proprietary customer database containing over 75 million
records, 6 million of which have in excess of 15 data points (the “Ad Authority Database”). Ad Authority leverages this Ad Authority Databasein conjunction with its domain assets to generate leads in a growing list of vertical markets. Based in Southern California, Ad Authority has
approximately twenty-two full time employees.
Internet traffic is driven to Ad Authority’s websites through a comprehensive marketing strategy that includes affiliate networks, email marketing, search engine marketing, contextual ad networks and co-registration. Ad Authority’s lead inventory is generated through thistraffic to its own organic websites and through direct purchases from other lead generators. Once these leads have been run against the Ad
Authority Database, then filtered and qualified, they are sold to large and small clients, including mortgage loan officers and brokers, student
loan companies, auto dealerships and online education companies. Ad Authority primarily operates via the internet but recently has launched
a new telephonic product. Internet based leads may be sold up to three times each, thereby creating a very high return on investment to Ad
Authority. Ad Authority’s telephonic lead product was developed around a scalable VOIP infrastructure. Once a consumer has been prequalified by the automated system, the phone call is connected to one of Ad Authority’s clients to complete the sale. While telephonic leads
may only be sold once, they generate significantly higher revenue per lead. Whether via the internet or telephone, all leads are distributed by Ad
Authority’s proprietary software which optimizes the revenue generated from each lead. The system pings the Ad Authority Database to verify
the relevant information, at which point the system may add information to the consumer’s profile to improve the quality of the lead. Finally,
the system analyzes the client who would pay the highest price for the lead based on the client’s predetermined requirements. All of the leads
and associated information are added to the ever growing Ad Authority Database, creating what we believe is one of the largest proprietarydatabases dedicated to consumers who are active on the internet. In essence, the Company’s strategy is to develop a targetable audience on theinternet in various vertical markets in a way similar to what QVC, etc. have developed on TV in the home shopping segment.
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If Ad Authority is acquired by AAA, the founder and sole shareholder of Ad Authority has agreed to rollover a significant portionof his equity in Ad Authority into the Company, resulting in an equity stake in the Company of approximately 20%. He would also join the
Company as its Chief Executive Officer and a member of the Board of Directors.
Ad Authority was incorporated in Delaware on November 25, 2003. Ad Authority’s address is 2275 Rio Bonito Way, Suite 210, San
Diego, CA 92108 and its phone number is 619-270-8154. Ad Authority maintains a website at http://www.adauthority.com. Information onsuch website is not incorporated by reference into this report.
Customers and Market
RightSide has over 5,600 paid subscribers and also utilizes several sources for sale of its email database, resulting in multiple
customers, most of whom are repeat customers. No single customer represents over 10% of RightSide revenue.
Superfly receives the vast majority of its current revenue from Internet search providers. Specifically, Yahoo and its traffic partners
Google, and to a lesser extent smaller search companies, such as IAC (ask.com). While revenue fluctuates with campaigns and searches,currently Yahoo and its traffic partners represent approximately 60% of all revenue, Google 20%, and the others less than 5% each. See risk
factors for discussion of dependence upon key customers.
Ad Authority generally has its customers diversified over several vertical markets in areas such as auto, student loan, consumer finance,
mortgages, taxes, and medical. No one customer currently represents more than 10% of Ad Authority’s revenues.
Competition
The internet and direct media business is very competitive and dynamic. Large companies such as Google, Yahoo, and Microsoft willserve as both competitors and customers based upon the type of service or product sold. Most of the large Internet search companies are muchbetter capitalized than we are and have a significantly greater market share than we do. Therefore, we do not intend to directly compete withthem.
We do compete with private and public companies in various vertical markets. For example, street.com and “Motley Fool” competewith RightSide. Private companies such as Demand Media and Traffic Z compete with Superfly.
If we consummate the Ad Authority acquisition, we will be competing in the lead generation space with Azoogle and many smaller
competitors, many of whom have a niche market they serve.
Government Regulations
None of the businesses are subject to direct government regulation. However, email programs and marketing must comply with therules of the Federal Trade Commission, and RightSide serves as a newsletter business and does not give individual finance advice, which would
fall under the RIA regulations.
Employees
Prior to the Acquisition Transactions, neither we nor RHI Merger Sub or DMG Merger Sub had any employees. As a result of the
Merger Transactions, we currently have ten employees and employ consultants on a periodic basis. See “Executive Compensation - Agreementswith Officers and Directors” for a description of the employment agreements. In the future, if our activities grow, we may hire additional
personnel or consultants on an as-needed basis.
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Properties
The company does not own any real properties and has no material leases.
Available Information
We presently file annual and quarterly reports, and other reports, with the SEC which can be inspected and copied at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. Investors may obtain information on the operationof the public reference room by calling the SEC at 1-800-SEC-0330. Investors can request copies of these documents upon paymentof a duplicating fee by writing to the SEC. The reports we file with the SEC are also available free of charge on the SEC’s website(http://www.sec.gov).
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RISK FACTORSANY INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. ADDITIONAL RISKS AND
UNCERTAINTIES NOT CURRENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL MAY ALSOBECOME IMPORTANT FACTORS THAT MAY HARM OUR BUSINESS. THE TRADING PRICE OF OUR COMMON STOCK
COULD DECLINE DUE TO ANY OF THESE RISKS AND UNCERTAINTIES.
We are a new enterprise intending to engage in the business of internet-focused data and direct marketing. The business of providing
such products and services is inherently risky. This section is organized as follows:·

Risks related to our business·

Risks related to our financial condition·

Risks relating to our industry; and·Risks related to our common stock

Risks Related To Our Business
WE HAVE NO OPERATING HISTORY. ACCORDINGLY, YOU HAVE NO BASIS UPON WHICH TO EVALUATE OURABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES.
We are a development stage company and, prior to the Closing Date, we did not have any revenue from operations. As a company
without an operating history and, until recently, limited property interests or related assets, it is difficult for potential investors to evaluate ourbusiness. Our proposed operations are therefore subject to all of the risks inherent in the establishment of a new business enterprise and must be
considered in light of the expenses, difficulties, complications and delays frequently encountered in connection with the formation of any new
business, as well as those risks that are specific to the internet-focused data and direct marketing industry. Investors should evaluate us in lightof the delays, expenses, problems and uncertainties frequently encountered by companies developing markets for new products, services andtechnologies. We may never overcome these obstacles.
RELATIONSHIPS UPON WHICH WE MAY RELY ARE SUBJECT TO CHANGE, WHICH MAY DIMINISH OUR ABILITY TO
CONDUCT OUR OPERATIONS.
To develop our business, it will be necessary for us to establish business relationships which may take the form of joint ventures withprivate parties and contractual arrangements with other companies, including advertisers and those that supply equipment and other resourcesthat we expect to use in our business. We may not be able to establish these strategic relationships, or if established, we may not be able tomaintain them. In addition, the dynamics of our relationships may require us to incur expenses or undertake activities we would not otherwise
be inclined to in order to fulfill our obligations to these partners or maintain our relationships. If these relationships are not established or
maintained, our business prospects may be limited, which could diminish our ability to conduct our operations.
WE MAY NOT BE ABLE TO EFFECTIVELY ESTABLISH OPERATIONS OR MANAGE OUR GROWTH, WHICH MAY HARMOUR PROFITABILITY.
Our strategy envisions establishing and expanding our business. If we are not successful at establishing operations at RightSide,
Duncan and elsewhere, we may be unable to manage our growth. Growth may place a strain on our management systems and resources. We
must continue to refine and expand our business development capabilities, our systems and processes and our access to financing sources. As
we grow, we must continue to hire, train, supervise and manage new personnel. We cannot assure you that we will be able to:
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expand our systems effectively or efficiently or in a timely manner;·

allocate our human resources optimally;·

identify and hire qualified employees or retain valued employees; or·incorporate effectively the components of any business that we may acquire in our effort to achieve growth.

If we are unable to manage our growth, our operations and our financial results could be adversely affected by inefficiency, which
could diminish our profitability. These risks include, but are not limited to, our ability to:·maintain and increase our inventory of advertising space on publisher websites and with email list owners and newsletter
publishers;·

maintain and increase the number of advertisers that use our products and services;·

continue to expand the number of products and services we offer and the capacity of our systems;·

adapt to changes in Web advertisers’ promotional needs and policies, and the technologies used to generate Web advertisements;·

respond to challenges presented by the large and increasing number of competitors in the industry;·

adapt to changes in legislation or regulation regarding Internet usage, advertising and commerce;·

adapt to changes in technology related to online advertising filtering software; and·adapt to changes in the competitive landscape.

If we are unsuccessful in addressing these risks and uncertainties, our business, results of operations and financial condition could bematerially and adversely affected.
INTEGRATING OUR ACQUIRED OPERATIONS MAY DIVERT MANAGEMENT’S ATTENTION AWAY FROM OUR DAYTO-DAY OPERATIONS AND HARM OUR BUSINESS.
We have grown in part because of business combinations with other companies, and we expect to continue to evaluate and consider futureacquisitions. Acquisitions generally involve significant risks, including difficulties in the assimilation of operations, services, technologies, andcorporate culture of the acquired companies, diversion of management’s attention from other business concerns, overvaluation of the acquiredcompanies, and the acceptance of the acquired companies’ products and services by our customers. The integration of our acquired operations,products and personnel may place a significant burden on management and our internal resources. The diversion of management attention andany difficulties encountered in the integration process could harm our business. We consummated the acquisitions of RightSide, Duncan andAAA on the Closing Date. These acquisitions may present product, sales and marketing, customer support, research and development, facilities,
information systems, accounting, personnel, and other integration challenges and may delay or jeopardize the complete integration of theseacquired businesses.
COMPETITION IN THE INDUSTRY MAY IMPAIR OUR BUSINESS.
The internet data and direct marketing industry is highly competitive. Other companies may seek to compete with our products andservices.
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Additionally, other companies engaged in our line of business may compete with us from time to time in obtaining capital frominvestors. Competitors include larger companies, which, in particular, may have access to greater resources, may be more successful in the
recruitment and retention of qualified employees and may have more vertical markets which may give them a competitive advantage. If we areunable to compete effectively or adequately respond to competitive pressures, this inability may materially adversely affect our business.
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Development of new software products and technologies by our competitors could negatively impact the prices obtained for our
products and services.
OUR BUSINESS MAY SUFFER IF WE DO NOT ATTRACT AND RETAIN TALENTED PERSONNEL.
The successful integration of the companies we have acquired will depend in part on the retention of personnel critical to our combined
business operations due to, for example, unique technical skills or management expertise. As a result, our future success is substantiallydependent on the continued service of our key senior management. We do not currently have employment agreements with many of our key
personnel. We do not have key-person insurance on any of our employees.
We may be unable to retain existing personnel that are critical to the success of the integrated company, resulting in disruption ofoperations, loss of key information, expertise or know-how, unanticipated additional recruitment and training costs, and otherwise diminishinganticipated benefits of these acquisitions, including loss of revenue and profitability. The loss of the services of any member of our senior
management team, or of any other key employees, could divert management’s time and attention, increase our expenses and adversely affectour ability to conduct our business efficiently. Our future success also depends on our continuing ability to attract, retain and motivate highly
skilled employees. We may be unable to retain our key employees or attract, assimilate or retain other highly qualified employees in the future.
Our success will depend in large measure on the abilities, expertise, judgment, discretion integrity and good faith of our management
and other personnel in conducting our intended business. We presently have a small management team which we intend to expand in
conjunction with our planned operations and growth. The loss of a key individual or our inability to attract suitably qualified staff could
materially adversely impact our business.
Our success depends on the ability of our management to interpret market data correctly and to interpret and respond to economic,
market and other conditions in order to locate and adopt appropriate investment opportunities, monitor such investments, and ultimately, if
required, to successfully divest such investments. Our future success also depends on our ability to identify, attract, hire, train, retain andmotivate other highly skilled technical, managerial, and marketing personnel. Competition for such personnel is intense, and there can be noassurance that we will be able to successfully attract, integrate or retain sufficiently qualified personnel.
OUR MANAGEMENT TEAM DOES NOT HAVE EXTENSIVE EXPERIENCE IN PUBLIC COMPANY MATTERS, WHICH
COULD IMPAIR OUR ABILITY TO COMPLY WITH LEGAL AND REGULATORY REQUIREMENTS.
Our management team has had limited U.S. public company management experience or responsibilities, which could impair our ability
to comply with legal and regulatory requirements such as the Sarbanes-Oxley Act of 2002 and applicable federal securities laws, including filing
required reports and other information required on a timely basis. There can be no assurance that our management will be able to implement andaffect programs and policies in an effective and timely manner that adequately respond to increased legal, regulatory compliance and reporting
requirements imposed by such laws and regulations. Our failure to comply with such laws and regulations could lead to the imposition of finesand penalties and result in the deterioration of our business.
BECAUSE OUR OFFICERS HAVE OTHER BUSINESS INTERESTS, THEY MAY NOT BE ABLE TO DEVOTE A SUFFICIENTAMOUNT OF TIME TO OUR BUSINESS OPERATION, CAUSING OUR BUSINESS TO FAIL.
Our officers and directors presently possess adequate time to attend to our interests. In the future, our management will use their best
efforts to devote sufficient time to the management of our business and affairs and, provided additional staff may be retained on acceptableterms, to engage additional officers and other staff should additional personnel be required. However, it is possible that our demands on
management’s time could increase to such an extent that they come to exceed their available time, or that additional qualified personnel cannot
be located and retained on commercially reasonable terms. This could negatively impact our business development.
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SYSTEM FAILURES COULD SIGNIFICANTLY DISRUPT OUR OPERATIONS, WHICH COULD CAUSE US TO LOSECUSTOMERS OR ADVERTISING INVENTORY.
Our success depends on the continuing and uninterrupted performance of our systems. Sustained or repeated system failures thatinterrupt our ability to provide services to customers, including failures affecting our ability to deliver advertisements quickly and accurately
and to process visitors’ responses to advertisements, would reduce significantly the attractiveness of our solutions to advertisers and Web
publishers. Our business, results of operations and financial condition could also be materially and adversely affected by any systems damage
or failure that impacts data integrity or interrupts or delays our operations. Our computer systems are vulnerable to damage from a variety ofsources, including telecommunications failures, power outages, malicious or accidental human acts, and natural disasters. Therefore, any of theabove factors affecting any of these areas could substantially harm our business. Moreover, despite network security measures, our servers arepotentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems in part because we cannot control
the maintenance and operation of our third-party data centers. Despite the precautions taken, unanticipated problems affecting our systems
could cause interruptions in the delivery of our solutions in the future and our ability to provide a record of past transactions. Our insurance
policies may not adequately compensate us for any losses that may occur due to any failures in our systems.
WE COULD BE SUBJECT TO LEGAL CLAIMS, GOVERNMENT ENFORCEMENT ACTIONS AND DAMAGE TO OUR
REPUTATION AND HELD LIABLE FOR OUR OR OUR CUSTOMERS’ FAILURE TO COMPLY WITH FEDERAL, STATEAND FOREIGN LAWS, REGULATIONS OR POLICIES GOVERNING CONSUMER PRIVACY WHICH COULD MATERIALLY
HARM OUR BUSINESS.
Recent growing public concern regarding privacy and the collection, distribution and use of information about Internet users has led toincreased federal, state and foreign scrutiny and legislative and regulatory activity concerning data collection and use practices. The UnitedStates Congress currently has pending legislation regarding privacy and data security measures (e.g., S. 495, the “Personal Data Privacy
and Security Act of 2007”) and the New York Attorney General’s office has sued a major Internet marketer for alleged violations of legal
restrictions against false advertising and deceptive business practices related to spyware. Other laws and regulations have been adopted and may
be adopted in the future, and may address issues such as user privacy, spyware, “do not email” lists, pricing, intellectual property ownershipand infringement, copyright, trademark, trade secret, export of encryption technology, click-fraud, acceptable content, taxation, and quality of
products and services. This legislation could hinder growth in the use of the Web generally and could decrease the acceptance of the Web as
a communications, commercial and advertising medium. The Company does not use “spam” or spyware and has policies to prohibit abusive
Internet behavior, including prohibiting the use of “spam” and spyware by our Web publisher partners.
Any failure by us to comply with applicable federal, state and foreign laws and the requirements of regulatory authorities may result in,among other things, indemnification liability to our customers and the advertising agencies we work with, administrative enforcement actions
and fines, class action lawsuits, cease and desist orders, and civil and criminal liability. Recently, class action lawsuits have been filed alleging
violations of privacy laws by Internet Service Providers (“ISPs”). The European Union’s directive addressing data privacy limits our ability tocollect and use information regarding Internet users. These restrictions may limit our ability to target advertising in most European countries.
Our failure to comply with these or other federal, state or foreign laws could result in liability and materially harm our business.
In addition to government activity, privacy advocacy groups and the high-technology and direct marketing industries are consideringvarious new, additional or different self-regulatory standards. This focus, and any legislation, regulations or standards promulgated, may
impact us adversely. Governments, trade associations and industry self-regulatory groups may enact more burdensome laws, regulations andguidelines, including consumer privacy laws, affecting our customers and us. Since many of the proposed laws or regulations are just being
developed, and a consensus on privacy and data usage has not been reached, we cannot yet determine the impact these proposed laws or
regulations may have on our business. However, if the gathering of profiling information were to be curtailed, Internet advertising would beless effective, which would reduce demand for Internet advertising and harm our business.
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Third-parties may bring class action lawsuits against us relating to online privacy and data collection. We disclose our informationcollection and dissemination policies, and we may be subject to claims if we act or are perceived to act inconsistently with these publishedpolicies. Any claims or inquiries could be costly and divert management’s attention, and the outcome of such claims could harm our reputationand our business.
Our customers are also subject to various federal and state laws concerning the collection and use of information regarding individuals.
These laws include the Children’s Online Privacy Protection Act, the Federal Drivers Privacy Protection Act of 1994, the privacy provisionsof the Gramm-Leach-Bliley Act, the CAN-SPAM Act of 2003, as well as other laws that govern the collection and use of consumer credit
information. We cannot assure you that our customers are currently in compliance, or will remain in compliance, with these laws and their own
privacy policies. We may be held liable if our customers use our technologies in a manner that is not in compliance with these laws or their own
stated privacy policies.
ADDITIONAL ACQUISITIONS MAY DISRUPT OUR BUSINESS, DIVERT THE ATTENTION OF OUR MANAGEMENT AND
REQUIRE SIGNIFICANT CAPITAL INFUSIONS.
Our industry is characterized by growth through acquisitions. To compete effectively, we expect to make investments in complementarycompanies, technologies or assets and may consider a number of acquisitions, significant and otherwise, at any one time. Acquisitions could
disrupt our ongoing business, distract the attention of our small number of senior managers, make it difficult to maintain our network andoperational standards, controls and procedures and subject us to risks that are different, in nature and magnitude, than the risks we currently
face.
We also may not be able to successfully integrate the services, products and personnel of any acquisition into our operations. We may berequired to incur a significant amount of debt or issue a significant number of equity securities, which may dilute our stockholders' equity
interest substantially, to pay for acquisitions and may be required to invest a substantial amount of cash to support the further development of
any companies that we may acquire. Our acquisitions may not result in any return, or a sufficient return, on our investment and we may lose allor a substantial portion of our investment.
Risks Related To Our Financial Condition
WE HAVE INCURRED AND EXPECT TO CONTINUE TO INCUR OPERATING LOSSESFor the nine months ended September 30, 2007, after giving pro forma effect to the Merger Transactions, we would have had operating
losses of $1,120,000. As of September 30, 2007, RightSide had an accumulated deficit of approximately $1.0 million and Duncan had an
accumulated deficit of approximately $928,000. The Company expects that the operating losses will be incurred in the future as it continues
to pursue additional acquisitions related to the internet business. We can make no assurances that we will achieve or sustain profitability or
generate sufficient cash to meet our working capital and debt service requirements, which could have a material adverse effect on our business,financial condition and results of operations.
WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL IF NECESSARY TO FUND OUR OPERATIONS AND CAPITAL
MAY NEED TO BE RAISED ON TERMS THAT ARE NOT FAVORABLE
Our existing cash and cash generated by our operations may not be adequate to fund our operations and business plan, and additional
financing may not be available when needed or, if available, financing may not be able to be obtained on favorable terms. Having insufficient
funds may require us to delay, scale back or eliminate some or all of our operations. Failure to obtain adequate financing also may adversely
affect our ability to operate as a going concern. If we raise additional funds from the issuance of equity securities, substantial dilution to existing
stockholders may result. If we raise additional funds by incurring debt financing, the terms of the debt may involve significant cash payment
obligations as well as covenants and specific financial ratios that may restrict our ability to operate our business.

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WE MAY EXPERIENCE CAPACITY CONSTRAINTS THAT COULD REDUCE OUR REVENUE.
Our future success depends in part on the efficient performance of our software and technologies, as well as the efficient performance ofthe systems of third-parties. As the numbers of Web pages and Internet users increase, our services and infrastructure may not be able to growto meet the demand. A sudden and unexpected increase in the volume of advertising delivered through our servers or in click rates could strain
the capacity of the software or hardware that we have deployed. Any capacity constraints we experience could lead to slower response times orsystem failures and adversely affect the availability of advertisements, the number of advertising views delivered and the level of user responses
received, which would harm our revenue. To the extent that we do not effectively address capacity constraints or system failures, our business,
results of operations and financial condition could be harmed substantially. We also depend on ISPs that provide consumers with access to thewebsites on which our customers’ advertisements appear. Internet users have occasionally experienced difficulties connecting to the Web due
to failures of their ISPs’ systems. Any disruption in Internet access provided by ISPs or failures by ISPs to handle the higher volumes of traffic
expected in the future could materially and adversely affect our revenue.
IT MAY BE DIFFICULT TO PREDICT OUR FINANCIAL PERFORMANCE BECAUSE OUR QUARTERLY OPERATINGRESULTS MAY FLUCTUATE.
Our revenue and operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond
our control. You should not rely on period-to-period comparisons of our results of operations as an indication of our future performance. Our
results of operations may fall below the expectations of market analysts and investors or our own forecasts in some future periods. If thishappens, the market price of our common stock may fall. The factors that may affect our quarterly operating results include, but are not limited
to, the following:·

fluctuations in demand for our advertising solutions or changes in customer contracts;

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Please Consider the Environment Before Printing This Document·fluctuations in click, lead, action, impression, and conversion rates;·

fluctuations in the amount of available advertising space, or views, on our networks;·

the timing and amount of sales and marketing expenses incurred to attract new advertisers;·

fluctuations in sales of different types of advertising; for example, the amount of advertising sold at higher rates rather thanlower rates;·

fluctuations in the cost of online advertising;·seasonal patterns in Internet advertisers’ spending;·fluctuations in our stock price which may impact the amount of stock-based compensation expense we are required to record;·changes in our pricing and publisher compensation policies, the pricing and publisher compensation policies of our competitors,
the pricing and publisher compensation policies of our advertiser customers, or the pricing policies for advertising on theInternet generally;·timing differences at the end of each quarter between our payments to Web publishers for advertising space and our collectionof advertising revenue for that space;·possible impairments of the recorded amounts of goodwill, intangible assets, or other long-lived assets;·

the timing and amount of expenses associated with future litigation or restructuring activities;·

new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner inwhich we account for, measure or disclose our results of operations, financial position or other financial measures;·

deterioration in the credit quality of our accounts receivable and an increase in the related provision;·changes in our effective income tax rate; and·costs related to acquisitions of technology or businesses.

Expenditures by advertisers also tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns.
Any decline in the economic prospects of advertisers or the economy generally may alter advertisers’ current or prospective spending priorities,
or may increase the time it takes us to close sales with advertisers, and could materially and adversely affect our business, results of operations
and financial condition.
WE MAY BE LIABLE FOR CONTENT DISPLAYED ON OUR NETWORKS OF PUBLISHERS WHICH COULD INCREASE OUR
EXPENSES.
We may be liable to third-parties for content in the advertising we deliver if the artwork, text or other content involved violates copyright,
trademark, or other intellectual property rights of third-parties or if the content is defamatory. Any claims or counterclaims could be timeconsuming, could result in costly litigation and could divert management’s attention.
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TECHNOLOGY AND AFFILIATE MARKETING SALES AND IMPLEMENTATION CYCLES MAY BE LENGTHY, WHICH
COULD DIVERT OUR FINANCIAL AND OTHER RESOURCES, AND ARE SUBJECT TO DELAYS, WHICH COULD RESULTIN DELAYED REVENUE.
If the sales and implementation cycles of our technology or affiliate marketing products and services are delayed, our revenue will
likewise be delayed. Our technology and affiliate marketing sales and implementation cycles are often lengthy, causing us to recognize revenue
long after our initial contact with a prospective customer. During our sales effort, we spend significant time educating prospective customers
on the use and benefits of our products and services. As a result, the sales cycle for these products and services may range from a few weeks toseveral months to over one year for our larger customers. The sales cycle is likely to be longer because we believe that prospective customers
may require more extensive approval processes related to integrating internal business information with their advertising campaigns. In addition,in order for technology customers or larger affiliate marketing customers to implement our services, they must commit a significant amountof resources over an extended period of time, and affiliate marketing customers must convert existing publishers and recruit and implement
new publishers on our technology platform. Furthermore, even after a customer purchases our products and services, the implementation cycle
is subject to delays. These delays may be caused by factors within our control, such as possible technology defects, as well as those outside
our control, such as customers’ budgetary constraints, internal acceptance reviews, functionality enhancements, lack of appropriate customer
personnel to implement our applications, and the complexity of customers’ advertising needs. Also, failure to deliver service or application
features consistent with delivery commitments could result in a delay in revenue recognition or cancellation of a customer agreement.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY FROM UNAUTHORIZED USE, WHICH COULDDIMINISH THE VALUE OF OUR PRODUCTS AND SERVICES, WEAKEN OUR COMPETITIVE POSITION AND REDUCEOUR REVENUE.
Our success depends in large part on our proprietary technologies, including tracking management software, our affiliate marketing
technologies, our display advertising technologies, our lead generation technologies, and our other systems technologies. In addition, we believethat our trademarks are key to identifying and differentiating our products and services from those of our competitors. We may be required
to spend significant resources to monitor and police our intellectual property rights. If we fail to successfully enforce our intellectual property
rights, the value of our products and services could be diminished and our competitive position may suffer.
We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures and licensing arrangements toestablish and protect our proprietary rights. Third-party software providers could copy or otherwise obtain and use our technologies withoutauthorization or develop similar technologies independently which may infringe upon our proprietary rights. We may not be able to detect
infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technologies ordevelop competing technologies. Intellectual property protection may also be unavailable or limited in some foreign countries.
We intend to enter into confidentiality or license agreements with our employees, consultants, vendors, customers, and corporate
partners, and generally control access to and distribution of our technologies, documentation and other proprietary information. Despite these
efforts, unauthorized parties may attempt to disclose, obtain or use our products and services or technologies. Our precautions may not prevent
misappropriation of our products, services or technologies, particularly in foreign countries where laws or law enforcement practices may notprotect our proprietary rights as fully as in the United States.
IF WE FAIL TO KEEP PACE WITH RAPIDLY CHANGING TECHNOLOGIES, OUR EXPENSES COULD INCREASE, AND WE
COULD LOSE CUSTOMERS AND ADVERTISING INVENTORY.
The Internet advertising market is characterized by rapidly changing technologies, evolving industry standards, frequent new product andservice introductions, and changing customer demands. The introduction of new products and services embodying new technologies and theemergence of new industry standards and practices can render existing products and services obsolete and unmarketable or require unanticipatedtechnology investments. Our success will depend on our ability to adapt to rapidly changing technologies, to enhance existing solutions andto develop and introduce a variety of new solutions to address our customers’ and Web publisher partners’ changing demands. For example,
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advertisers are increasingly requiring Internet advertising networks to have the ability to deliver advertisements utilizing new formats that
surpass stationary images and incorporate rich media, such as video and audio, interactivity, and more precise consumer targeting techniques.
Our systems do not support some types of advertising formats and some of the website publishers in our networks do not accept all types ofadvertising formats we support. In addition, an increase in the bandwidth of Internet access resulting in faster data delivery may provide new
products and services that will take advantage of this expansion in delivery capability. If we fail to adapt successfully to such developments,
we could lose customers or advertising inventory. We purchase most of the software used in our business. We intend to continue to acquire
technologies from third-parties necessary for us to conduct our business from third-parties. We cannot assure you that, in the future, thesetechnologies will be available on commercially reasonable terms, or at all. We may also experience difficulties that could delay or prevent thesuccessful design, development, introduction or marketing of new solutions. Any new solution or enhancement that we develop will need tomeet the requirements of our current and prospective customers and may not achieve significant market acceptance. If we fail to keep pacewith technological developments and the introduction of new industry and technology standards on a cost-effective basis, our expenses could
increase, and we could lose customers and advertising inventory.
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Risks Related To Our Industry
IF ADVERTISING ON THE INTERNET LOSES ITS APPEAL, OUR REVENUE COULD DECLINE.
The vast majority of our revenue for the year ended December 31, 2007 is for delivering advertisements that generate leads, impressions,click-throughs, and other actions to our advertiser customers’ websites. This business model may not continue to be effective in the future for anumber of reasons, including the following: click and conversion rates have always been low and may decline as the number of advertisements
and ad formats on the web increases; web users can install “filter” software programs which allow them to prevent advertisements fromappearing on their computer screens or email boxes; Internet advertisements are, by their nature, limited in content relative to other media;
companies may be reluctant or slow to adopt online advertising that replaces, limits or competes with their existing direct marketing efforts;
companies may prefer other forms of internet advertising we do not offer, including certain forms of search engine placements; companies may
reject or discontinue the use of certain forms of online promotions that may conflict with their brand objectives; companies may not utilize
online advertising due to concerns of “click-fraud”, particularly related to search engine placements; and, perceived lead quality. If the numberof companies who purchase online advertising from us does not continue to grow, we may experience difficulty in attracting publishers, andour revenue could decline.
IF OUR BUSINESS MODEL IS NOT ACCEPTED BY INTERNET ADVERTISERS OR WEB PUBLISHERS, OUR REVENUE
COULD DECLINE.
Our ability to continue to generate significant revenue from advertisers will depend, in part, on our ability to continue to demonstrate
the effectiveness of our various pricing models to advertisers and to web publishers; and, on our ability to attract and retain advertisers andweb publishers by differentiating our technologies, products and services from those of our competitors. One component of our strategy is
to enhance our advertiser customers’ abilities to measure their return on investment and track the performance and effectiveness of theiradvertising campaigns. To date, not all of our advertiser customers have taken advantage of the most sophisticated tools we offer for tracking
internet users’ activities after they have reached the advertisers’ websites. We will not be able to assure you that our strategy will succeed.
Intense competition among websites, internet search services and internet advertising services has led to the proliferation of a number ofalternative pricing models for internet advertising. These alternatives, and the likelihood that additional pricing alternatives will be introduced,
make it difficult for us to project the levels of advertising revenue or the margins that we, or the internet advertising industry in general, willrealize in the future. Moreover, an increase in the amount of advertising on the web may result in a decline in click and/or conversion rates.
Since we rely heavily on performance-based pricing models to generate revenue, any decline in click and/or conversion rates may make our
pricing models less viable or less attractive solutions for web publishers and advertisers, and our revenue could decline.
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OUR REVENUE COULD DECLINE IF WE FAIL TO EFFECTIVELY MANAGE OUR EXISTING ADVERTISING SPACE ANDOUR GROWTH COULD BE IMPEDED IF WE FAIL TO ACQUIRE NEW ADVERTISING SPACE.
Our success depends in part on our ability to effectively manage our existing advertising space. The Web publishers and email list owners
that list their unsold advertising space with us are not bound by long-term contracts that ensure us a consistent supply of advertising space,which we refer to as inventory. In addition, Web publishers or email list owners can change the amount of inventory they make available to us
at any time. If a Web publisher or email list owner decides not to make advertising space from its websites, newsletters or email lists available
to us, we may not be able to replace this advertising space with advertising space from other Web publishers or email list owners that havecomparable traffic patterns and user demographics quickly enough to fulfill our advertisers’ requests. This would result in lost revenue.
We expect that our advertiser customers’ requirements will become more sophisticated as the Web continues to mature as an advertising
medium. If we fail to manage our existing advertising space effectively to meet our advertiser customers’ changing requirements, our revenue
could decline. Our growth depends on our ability to expand our advertising inventory. To attract new customers, we must maintain a consistent
supply of attractive advertising space. We intend to expand our advertising inventory by selectively adding to our networks new Web publishers
and email list owners that offer attractive demographics, innovative and quality content and growing Web user traffic and email volume. Ourability to attract new Web publishers and email list owners to our networks and to retain Web publishers and email list owners currently in
our networks will depend on various factors, some of which are beyond our control. These factors include, but are not limited to: our ability tointroduce new and innovative products and services, our ability to efficiently manage our existing advertising inventory, our pricing policies,
and the cost-efficiency to Web publishers and email list owners of outsourcing their advertising sales. In addition, the number of competingintermediaries that purchase advertising inventory from Web publishers and email list owners continues to increase. We will not be able toassure you that the size of our advertising inventory will increase or even remain constant in the future.
WE MAY FACE INTELLECTUAL PROPERTY ACTIONS THAT ARE COSTLY OR COULD HINDER OR PREVENT OURABILITY TO DELIVER OUR PRODUCTS AND SERVICES.
We may be subject to legal actions alleging intellectual property infringement (including patent infringement), unfair competition orsimilar claims against us. Companies may apply for or be awarded patents or have other intellectual property rights covering aspects of ourtechnologies or businesses. Any litigation alleging intellectual property infringement by us could be costly, could require us to change ourbusiness practices, could potentially hinder or prevent our ability to deliver our products and services, and could divert management’s attention.
SEARCH PROVIDERS MAY CHANGE THEIR PROPRIETARY ALGORITHMS OR PROCESS
Because of Superfly’s dependence upon Google and Yahoo, changes in the pay-per-click model and search process can significantly
alter the profitability of our domain and arbitrage margin. These changes have occurred more frequently recently than in the past and may
substantially decrease the profitability of Superfly.
IF THE TECHNOLOGY THAT WE CURRENTLY USE TO TARGET THE DELIVERY OF ONLINE ADVERTISEMENTS AND
TO PREVENT FRAUD ON OUR NETWORKS IS RESTRICTED OR BECOMES SUBJECT TO REGULATION, OUR EXPENSES
COULD INCREASE AND WE COULD LOSE CUSTOMERS OR ADVERTISING INVENTORY.
Websites typically place small files of non-personalized (or “anonymous”) information, commonly known as cookies, on an Internet
user’s browser. Cookies generally collect information about users on a non-personalized basis to enable websites to provide users with a morecustomized experience. Cookie information is passed to the website through an Internet user’s browser software. We currently use cookies totrack an Internet user’s movement through our advertiser customer’s websites and to monitor and prevent potentially fraudulent activity on our
networks. Most currently available Internet browsers allow Internet users to modify their browser settings to prevent cookies from being stored
on their hard drive, and some users currently do so. Internet users can also delete cookies from their hard drives at any time. Some Internet
commentators and privacy advocates have suggested limiting or eliminating the use of cookies, and legislation has been introduced in somejurisdictions to regulate the use of cookie technology. The effectiveness of our technology could be limited by any reduction or limitation in
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the use of cookies. If the use or effectiveness of cookies were limited, we would have to switch to other technologies to gather demographic
and behavioral information. While such technologies currently exist, they are substantially less effective than cookies. We would also have todevelop or acquire other technology to prevent fraud on our networks. Replacement of cookies could require significant reengineering time andresources, might not be completed in time to avoid losing customers or advertising inventory, and might not be commercially feasible. Our useof cookie technology or any other technologies designed to collect Internet usage information may subject us to litigation or investigations in
the future. Any litigation or government action against us could be costly and time consuming, could require us to change our business practices
and could divert management’s attention.
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WE COULD LOSE CUSTOMERS OR ADVERTISING INVENTORY IF WE FAIL TO MEASURE IMPRESSIONS, CLICKS AND
ACTIONS ON ADVERTISEMENTS IN A MANNER THAT IS ACCEPTABLE TO OUR ADVERTISERS AND WEB PUBLISHERS.
We earn revenue from advertisers and make payments to Web publishers based on the number of impressions, clicks and actions fromadvertisements delivered on our networks of websites and email lists. Advertisers’ and Web publishers’ willingness to use our products andservices and join our networks will depend on the extent to which they perceive our measurements of impressions, clicks and actions to beaccurate and reliable. Advertisers and Web publishers often maintain their own technologies and methodologies for counting impressions, clicks
and actions, and from time to time we have had to resolve differences between our measurements and theirs. Any significant dispute over theproper measurement of user responses to advertisements could cause us to lose customers or advertising inventory.
IF WE FAIL TO COMPETE EFFECTIVELY AGAINST OTHER INTERNET ADVERTISING COMPANIES, WE COULD LOSECUSTOMERS OR ADVERTISING INVENTORY AND OUR REVENUE AND RESULTS OF OPERATIONS COULD DECLINE.
The Internet advertising markets are characterized by rapidly changing technologies, evolving industry standards, frequent new productand service introductions, and changing customer demands. The introduction of new products and services embodying new technologies andthe emergence of new industry standards and practices could render our existing products and services obsolete and unmarketable or require
unanticipated technology or other investments. Our failure to adapt successfully to these changes could harm our business, results of operations
and financial condition.
The market for Internet advertising and related products and services is highly competitive. We expect this competition to continue toincrease because there are no significant barriers to entry. Increased competition may result in price reductions for advertising space, reduced
margins and loss of our market share. Our principal competitors include other companies that provide advertisers with Internet advertisingsolutions and companies that offer pay-per-click search services. Large websites with brand recognition, such as Yahoo, AOL and MSN, havedirect sales personnel and substantial proprietary online advertising inventory that provide significant competitive advantages compared to our
networks and have a significant impact on pricing for online advertising overall. These companies have longer operating histories, greater namerecognition and have greater financial, technical, sales, and marketing resources than we have.
Competition for advertising placements among current and future suppliers of Internet navigational and informational services, hightraffic websites and Internet service providers (“ISPs”), as well as competition with other media for advertising placements, could result insignificant price competition, declining margins and reductions in advertising revenue. Google has made available offline public-domain works
through its search engine, which creates additional competition for advertisers. In addition, as we continue our efforts to expand the scopeof our Web services, we may compete with a greater number of Web publishers and other media companies across an increasing range ofdifferent Web services, including in vertical markets where competitors may have advantages in expertise, brand recognition and other areas. If
existing or future competitors develop or offer products or services that provide significant performance, price, creative or other advantages overthose offered by us, our business, results of operations and financial condition would be negatively affected. We also compete with traditional
advertising media, such as direct mail, television, radio, cable, and print, for a share of advertisers’ total advertising budgets. Many current andpotential competitors enjoy competitive advantages over us, such as longer operating histories, greater name recognition, larger customer bases,
greater access to advertising space on high-traffic websites, and significantly greater financial, technical, sales, and marketing resources. As aresult, we may not be able to compete successfully. If we fail to compete successfully, we could lose customers or advertising inventory andour revenue and results of operations could decline.
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OUR REVENUE AND RESULTS OF OPERATIONS COULD BE NEGATIVELY IMPACTED IF INTERNET USAGE AND THE
DEVELOPMENT OF INTERNET INFRASTRUCTURE DO NOT CONTINUE TO GROW.
Our business and financial results will depend on continued growth in the use of the Internet. Internet usage may be inhibited for anumber of reasons, such as: inadequate network infrastructure; security concerns; inconsistent quality of service; and, unavailability of costeffective, high-speed service.
If Internet usage grows, our infrastructure may not be able to support the demands placed on it and our performance and reliability
may decline. In addition, websites have experienced interruptions in their service as a result of outages and other delays occurring throughout
the Internet network infrastructure, and as a result of sabotage, such as electronic attacks designed to interrupt service on many websites.
The Internet could lose its viability as a commercial medium due to delays in the development or adoption of new technologies required toaccommodate increased levels of Internet activity. If use of the Internet does not continue to grow, or if the Internet infrastructure does noteffectively support our growth, our revenue and results of operations could be materially and adversely affected.
OUR REVENUE AND RESULTS OF OPERATIONS MAY BE MATERIALLY, ADVERSELY AFFECTED IF THE MARKET FOR
E-COMMERCE DOES NOT CONTINUE TO GROW OR GROWS SLOWER THAN EXPECTED.
Because many of our customers’ advertisements encourage online purchasing, our long-term success may depend in part on the continued
growth and market acceptance of e-commerce. Our business may be adversely affected if the market for e-commerce does not continue to growor grows slower than expected. A number of factors outside of our control could hinder the future growth of e-commerce, including, but notlimited to, the following:·

the network infrastructure necessary for substantial growth in Internet usage may not develop adequately and our performance andreliability may decline;·

insufficient availability of telecommunication services or changes in telecommunication services could result in inconsistentquality of service or slower response times on the Internet;· negative publicity and consumer concern surrounding the security of e-commerce; and· financial instability of e-commerce customers.
In particular, any well-publicized compromise of security involving Web-based transactions could deter people from purchasing items on
the Internet, clicking on advertisements, or using the Internet generally, any of which could cause us to lose customers and advertising inventory
and which could materially, adversely affect our revenue and results of operations.
WE MAY BE REQUIRED TO RECORD A SIGNIFICANT CHARGE TO EARNINGS IF OUR GOODWILL OR AMORTIZABLEINTANGIBLE ASSETS BECOME IMPAIRED.
We are required under accounting principles generally accepted in the United States to review our amortizable intangible assets for
impairment whenever events and circumstances indicate that the carrying value of such assets may not be recoverable. We are also required toreview goodwill for impairment on an annual basis, or between annual tests whenever events and circumstances indicate that the carrying valueof goodwill may not be recoverable. Events and circumstances considered in determining whether the carrying value of amortizable intangible
assets and goodwill may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating
results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the Company’s
stock price for a sustained period of time; and changes in the Company’s business strategy. We may be required to record a significant charge
to earnings in a period in which any impairment of our goodwill or amortizable intangible assets is determined.

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WE MAY INCUR LIABILITIES TO TAX AUTHORITIES IN EXCESS OF AMOUNTS THAT HAVE BEEN ACCRUED WHICH
MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The preparation of our consolidated financial statements requires estimates of the amount of income tax that will become payable in eachof the jurisdictions in which we operate. We may be challenged by the taxing authorities in these jurisdictions and, in the event that we are notable to successfully defend our position, we may incur significant additional income tax liabilities which may have an adverse impact on our
results of operations and financial condition.
NEW ACCOUNTING STANDARDS COULD IMPACT OUR RESULTS OF OPERATIONS, FINANCIAL CONDITION AND
OTHER FINANCIAL MEASURES.
From time to time, the Financial Accounting Standards Board, the SEC and other regulatory bodies may issue new and revised standards,
interpretations and other guidance that change Generally Accepted Accounting Principles in the United States (GAAP). The effects of suchchanges may include prescribing an accounting method where none had been previously specified, prescribing a single acceptable methodof accounting from among several acceptable methods that currently exist, or revoking the acceptability of a current method and replacing itwith an entirely different method, among others. Such changes to GAAP could impact our results of operations, financial condition and otherfinancial measures.
IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO
ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD AND OUR BUSINESS MAY BE HARMED AND
OUR STOCK PRICE MAY BE ADVERSELY IMPACTED.
Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability toprovide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management toevaluate and assess the effectiveness of our internal control over financial reporting. In order to continue to comply with the requirements of the
Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal controls.
If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny and investors could lose confidence
in the accuracy and completeness of our financial reports. We cannot assure you that in the future we will be able to fully comply with therequirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If wefail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.
DECREASED EFFECTIVENESS OF EQUITY COMPENSATION COULD ADVERSELY AFFECT OUR ABILITY TO ATTRACT
AND RETAIN EMPLOYEES AND HARM OUR BUSINESS, AND RECENTLY ADOPTED CHANGES IN ACCOUNTING FOR
EQUITY COMPENSATION WILL ADVERSELY AFFECT EARNINGS.
We will use stock options as a key component of our employee compensation program in order to align employees’ interests with theinterests of our stockholders, encourage employee retention, and provide competitive compensation packages. Volatility or lack of positive
performance in our stock price may adversely affect our ability to retain key employees or to attract additional highly-qualified personnel. At
any given time, a portion of our outstanding employee stock options may have exercise prices in excess of our then-current stock price. To
the extent these circumstances occur, our ability to retain employees may be adversely affected. Moreover, applicable listing standards relating
to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant stock options orother stock-based awards to employees in the future. As a result, we may incur increased compensation costs, change our equity compensation
strategy or find it difficult to attract, retain and motivate employees, any of which could materially, adversely affect our business.
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Risks Related To Our Common Stock
THERE IS NO ESTABLISHED TRADING MARKET FOR OUR COMMON STOCK WHICH MAY IMPAIR YOUR ABILITY TO
SELL YOUR SHARES.
Our common stock is currently quoted on the Over-the-Counter Bulletin Board under the symbol “MORX.” There has been no
established trading market for our common stock since our inception. The lack of an active market may make it difficult to obtain accurate
quotations of the price of our common stock and impair your ability to sell your shares at the time you wish to sell them or at a price that you
consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair ourability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies or technologies by using common
stock as consideration.
OUR STOCK PRICE IS LIKELY TO BE VOLATILE AND COULD DROP UNEXPECTEDLY.
The stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices of securities,
particularly securities of technology companies. Assuming we are able to establish and maintain an active trading market for our common stock,
the market price of our common stock is likely to be highly volatile and could be subject to wide fluctuations in response to a number of factorsthat are beyond our control, including:·announcements of acquisitions, reserve discoveries or other business initiatives by our competitors;·

changes in the demand for internet data and direct marketing, including changes resulting from the introduction or expansion ofalternative mediums or forms of advertising;·quarterly variations in our revenues and operating expenses;·

dilution caused by our issuance of additional shares of common stock and other forms of equity securities, which we expect tomake in connection with future capital financings to fund our operations and growth, to attract and retain valuable personnel andin connection with future strategic partnerships with other companies;·

significant sales of our common stock, including sales by selling stockholders and by future investors in future offerings we
expect to make to raise additional capital;·changes in analysts’ estimates affecting us, our competitors or our industry;·changes in the valuation of similarly situated companies, both in our industry and in other industries;·changes in the accounting methods used in or otherwise affecting our industry; or·fluctuations in interest rates and the availability of capital in the capital markets;

These and other factors are largely beyond our control, and the impact of these risks, singly or in the aggregate, may result in material
adverse changes to the market price of our common stock and our results of operations and financial condition. As a result, the market price ofour common stock may materially decline, regardless of our operating performance. In the past, following periods of volatility in the market
price of a particular company’s securities, securities class action litigation has often been brought against that company. We may become
involved in this type of litigation in the future. Litigation of this type is often expensive and diverts management’s attention and resources.
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OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, AND THESE FLUCTUATIONS MAY CAUSE OUR STOCKPRICE TO DECLINE.
Our operating results will likely vary in the future as the result of fluctuations in our revenues and operating expenses, including
expenses that we incur and other factors. If our results of operations do not meet the expectations of current or potential investors, the price ofour common stock may decline.
APPLICABLE SEC RULES GOVERNING THE TRADING OF “PENNY STOCKS” WILL LIMIT THE TRADING AND
LIQUIDITY OF OUR COMMON STOCK, WHICH MAY AFFECT THE TRADING PRICE OF OUR COMMON STOCK.
Our common stock is presently considered to be a “penny stock” and is subject to SEC rules and regulations which impose limitations
upon the manner in which such shares may be publicly traded and regulate broker-dealer practices in connection with transactions in suchstocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities
exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange orsystem).
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to delivera standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The brokerdealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.
In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written
determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomessubject to the penny stock rules which may increase the difficulty investors may experience in attempting to liquidate such securities.
NATIONAL ASSOCIATION OF SECURITIES DEALERS (“NASD”) SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A
STOCKHOLDER’S ABILITY TO BUY AND SELL OUR STOCK.
In addition to the penny stock rules described above, NASD has adopted rules that require that in recommending an investment to acustomer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about
the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the NASD believes
that there is a high probability that speculative low priced securities will not be suitable for at least some customers. NASD requirements makeit more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell ourstock and have an adverse effect on the market for our shares.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.
We do not intend to declare dividends for the foreseeable future, as we anticipate that we will reinvest any future earnings in thedevelopment and growth of our business. Therefore, investors will not receive any funds unless they sell their common stock, and stockholders
may be unable to sell their shares on favorable terms or at all. Investors cannot be assured of a positive return on investment or that they will
not lose the entire amount of their investment in the common stock.
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THE STOCK PURCHASE MAY NOT BE CONSUMMATED
Pursuant to the AAA Acquisition Agreement, on the Closing Date we acquired all outstanding shares of AAA from the shareholdersof AAA in exchange for 4,200,000 shares of Company Common Stock, representing 21.35% of the outstanding Company Common Stock asof the Closing Date. The only asset of AAA is the Ad Authority Stock Purchase Agreement, and certain related agreements. The transactions
contemplated pursuant to the Ad Authority Stock Purchase Agreement may not be consummated. However, shares issued to the shareholdersof AAA pursuant to the AAA Stock Purchase Agreement will remain outstanding regardless of whether the transactions contemplated pursuant
to the Ad Authority Stock Purchase Agreement are consummated.

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MANAGEMENT’S DISCUSSION AND ANALYSISFINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with ourfinancial statements and related notes appearing elsewhere in this filing. In addition to historical information, this discussion and analysis
contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from thoseanticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors”
and elsewhere in this filing.
Overview
Background
This discussion and analysis consists of narrative on two of our subsidiaries, RightSide and Duncan. Both companies have operations
related to or operating on the internet. Substantially all of the transactions of RightSide and Duncan are conducted on the internet. RightSide
is a financial newsletter publisher and Duncan is in the business of search arbitrage. Prior to the Merger Transactions, RightSide and Duncan
shared the same majority shareholders.
RightSide was organized in May 2006 for the purpose of acquiring three affiliated operating companies (referred to as the“RightSide Advisors”) that provide financial newsletters to subscribers over the internet. The financial newsletters report and give opinions on
topics related to investing and the stock market. In addition, the operating companies receive fees for renting their customer lists and receive
fees for advertisements placed on their websites. In June 2007, RightSide acquired substantially all of the business assets owned by an unrelated
party, 21st Century Investors Publishing Corporation (“21st Century”), in a transaction accounted for as a purchase. The assets were merged
into the operations of RightSide. 21st Century is in the same business as the RightSide Advisors companies providing financial newsletters to
subscribers over the internet. Additionally, 21st Century provides some direct mail distribution of its products.
Duncan was organized in November 2006 to seek acquisitions in the internet business services sector and to provide management
services for companies owned by the investor group of common shareholders of RightSide and Duncan. In January 2007, Duncan acquired
all of the outstanding stock of Superfly, including its wholly-owned subsidiary, Treefrog Commerce, Inc. Superfly conducts search arbitrage
campaigns on the internet via popular search websites such as Google and Yahoo. In a typical search word campaign, the user or customer isredirected to a domain page owned by Superfly where upon clicking on a merchant link, a fee is earned from the merchant at a higher rate than
the fee paid to the search website by Superfly.
RightSide and Duncan have incurred considerable net losses since inception. As of September 30, 2007, RightSide had an accumulated
deficit of approximately $1.0 million and Duncan had an accumulated deficit of approximately $928,000. The Company expects that operating
losses will be incurred in the future as it continues to pursue additional acquisitions related to the internet business.
Revenues
RightSide generates revenue from subscriptions of its financial newsletters. Subscription revenues are recorded as deferred revenue
when cash is received at the initiation of the subscription period and is recognized ratably over the life of the subscription which generally
varies from one month to five years. Additionally, RightSide generates revenue from renting its customer lists to outside companies conducting
email campaigns marketing various financial products. Subscriptions for financial newsletters have a high turnover rate and are dependent on
the Company’s success with marketing efforts going forward in order to retain current customers and obtain new customers. Additionally, since
the financial newsletters are sold primarily to investors and traders, overall downturns or fluctuations in the financial markets can affect new
subscriptions and renewals.

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33

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Please Consider the Environment Before Printing This DocumentDuncan, through its subsidiary Superfly, generates revenue as customers click through advertisements used in the search word
campaigns described above. This is referred to as pay-per-click revenue. Pay-per-click revenues or search arbitrage, are highly uncertain in
today’s environment on the internet. Search engine providers such as Google and Yahoo are continually altering and varying the criteria for
conducting search word campaigns which alter the results that a user will experience doing a search. In the past, this has caused material
fluctuations in pay-per-click revenues and the Company expects this to continue in the future.
Cost of sales
Duncan’s cost of sales consists primarily of pay-per-click costs. As Superfly conducts search word campaigns, it incurs direct costs
related to the cost per word in each campaign. Each time a user searches for a word in the search word campaign, a cost is incurred basedon amounts bid for each word in the search word campaign. Additionally, costs are incurred for hosting services to host the domains which
Superfly maintains in order to redirect the user to the merchant.
Operating expenses
RightSide’s operating expenses consist primarily of consulting fees paid to the independent writers of the newsletters, employee
salaries and benefits, marketing expenses, professional fees, amortization of intangible assets, depreciation and other expense related to
RightSide’s operations. In addition, operating expenses include insurance and facilities costs.
Duncan’s operating expenses consist primarily of employee salaries and benefits, hosting expense, professional fees, amortization of
intangible assets, depreciation and other expense related to Duncan’s operations. In addition, operating expenses include insurance and facilities
costs.
The Company anticipates increases in operating expenses as it adds personnel and increases it efforts for marketing newsletters.
Additionally, as the Company becomes subject to more complex reporting obligations applicable to publicly-held companies, and continues toseek acquisitions of companies in the internet sector, professional fees will continue to increase in the future.
Income tax expense
Both RightSide and Duncan, prior to the merger, recorded income tax expense separately based on estimated federal and state taxes
rates. Each company files consolidated tax returns whereby RightSide files on a cash basis and Duncan files on an accrual basis. Differences in
net income per the books and records versus taxable income are accounted for using the asset and liability approach.
Purchase of subsidiaries and business assets
In June 2006, RightSide acquired the RightSide Advisors companies as noted above. The acquisition was financed by private capitalraised from the sale of stock and notes issued to the sellers. The activities of RightSide Advisors has been included in the operations of RightSide
since the acquisition date. Total purchase price was $4,046,506, with $2,489,639 paid in cash and $1,556,867 given in notes. The following isa summary of assets acquired and liabilities assumed:
Cash
Other assets
Property and equipment
Software
Customer lists and Domains
Goodwill
Deferred revenue
Other liabilities$374,507
27,451
128,493
400,000
346,267
3,505,386(472,959(262,639))

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Net purchase price$4,046,506

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In June 2007, RightSide acquired the 21st Century assets as noted above. The acquisition was financed by private capital raised fromthe sale of stock and with equity issued to the seller. The activities of 21st Century have been included in the operations of RightSide since
the acquisition date. Total purchase price was $1,200,000 with $700,000 paid in cash and $500,000 given in common stock of RightSide. The
following is a summary of assets acquired and liabilities assumed:
Customer lists, domains & trade names
Non-compete agreements
Goodwill
Deferred revenue$609,144
201,147
785,040

Net purchase price$1,200,000(395,331)

In January 2007, Duncan acquired Superfly as noted above. The acquisition was financed by private capital raised from the sale ofstock and with notes issued to the sellers. The activities of Superfly have been included in the operations of Duncan since the acquisition date.
Total purchase price was $5,000,000 with $3,500,000 paid in cash and $1,500,000 given in notes. The following is a summary of assets acquired
and liabilities assumed:Cash$171,111

Accounts and other receivables
Other current assets
Property and equipment
Domain names
Non-compete agreements
Goodwill
Accounts payable and accrued expenses

328,694
9,226
46,723
1,900,624
1,079,708
1,543,129

Net purchase price$5,000,000(79,215)

Application of Critical Accounting Policies and Estimates
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Long-Lived Assets
Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that theircarrying amount may not be recoverable. The carrying amount is not recoverable if it exceeds the sum of the undiscounted cash flows expected
to result from the use and eventual disposition of the asset. If the carrying amount is not recoverable, an impairment loss is recognized for theamount by which the carrying amount of the asset exceeds its fair value.
Deferred Revenue/Revenue Recognition
RightSide deferred revenue represents funds received in advance of providing subscriptions where the term of the subscription
extends past the reporting period. Subscription revenue is recognized over the terms of the subscription. List rental and advertising revenues
on RightSide are recognized at the time of placement. Cash payment for subscriptions and list rental are generally received before revenue
recognition. Returns or chargebacks for subscriptions are recorded immediately and are immaterial to total revenues.
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Please Consider the Environment Before Printing This DocumentDuncan revenues consist of pay-per-click and are recognized as websites are visited on a per-click basis. For Duncan, three customers
were considered more than 10% customers, individually, for the periods presented.

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Net Operating Losses and Tax Credit Carryforwards
At September 30, 2007, RightSide and Duncan had federal and state net operating loss carryforwards of approximately $222,000
and $45,000, respectively, which will expire in years 2028 through 2029. A valuation allowance has been established to reserve the potential
benefits of these carryforwards in the financial statements to reflect the uncertainty of future taxable income required to utilize available tax
loss carryforwards and other deferred tax assets. If a change in RightSide’s or Duncan’s ownership is deemed to have occurred or occurs in the
future, the Company’s ability to use its net operating loss carryforwards in any fiscal year may be limited.
Results of Operations
RightSide and Duncan have only had operations for partial portions of the periods presented herewith, the nine months ended
September 30, 2007 and September 30, 2006, and the years ended December 31, 2006 and December 31, 2005. Therefore, this discussion
and analysis will include RightSide’s and Duncan’s acquired companies for the respective nine month and full year periods. We will provide
discussion below of each of the operating companies acquired by RightSide and Duncan. The companies acquired by RightSide are RightSide
Advisors, which includes a combined group of companies in the financial newsletter business, and 21st Century Publishing, Inc. Duncan, since
its inception, has acquired one company, Superfly. See above for acquisition dates. Also, see financial statements filed as Exhibits to thisCurrent Report.
Nine Months Ended September 30, 2007 and September 30, 2006
RightSide
Revenues. RightSide was incorporated in May of 2006 and for the remainder of the calendar year 2006 remained a holding company
for RightSide Advisors. There is no revenue for RightSide for the nine months ended September 30, 2007 and September 30, 2006.
Operating Expenses. Operating expenses for RightSide consist of general and administrative costs such as professional fees,
management, rent and amortization of intangibles. For RightSide, operating expenses for the nine months ended September 30, 2007 wereapproximately $299,000, compared to $427,000 for the period beginning May 6, 2006 (inception) and ended September 30, 2006. The decreasein expenses is due primarily to decreases in advisory fees paid to a related party in connection with the acquisition of RightSide Advisors.
Amortization and deprecation expenses have increased in 2007 due to the longer period.
Interest expense. For the nine month period ended September 30, 2007 interest expense was approximately $133,000, related to seller
notes provided to previous owners of Rightside Advisors. For 2006, interest expense was $30,000.
Income tax expense. For both periods, no income tax expense has been recorded due to cumulative net operating losses and theuncertainty of future utilization of tax loss carryforwards.
RightSide Advisors
Newsletter Revenues. Revenues for the financial newsletter businesses consist of subscriptions, list rental and advertising revenue.
For RightSide Advisors, total newsletter revenues for the nine months ended September 30, 2007 were approximately $1,786,000 compared
to $1,838,000 for the same period ended September 30, 2006. The decrease is due primarily to decreased subscription revenues from a lower
number of subscribers. This is offset by an increase in list rental revenues, which have increased due to focus by management. New managementof RightSide Advisors has placed more emphasis and effort on growing list rentals. The newsletter subscription business faces increased
competition and for RightSide Advisors is relatively flat period over period.

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Direct newsletter expenses . Direct newsletter expenses consists of contributor/writer costs, merchant card fees, and fulfillment costs.
For RightSide Advisors, total direct expenses for newsletters for the nine months ended September 30, 2007 were approximately $674,000
compared to $360,000 for the same period ended September 30, 2006.

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Operating Expenses. Operating expenses consist of general and administrative costs such as payroll, payroll taxes, professional fees,
rent and management fees. For RightSide Advisors, operating expenses for the nine months ended September 30, 2007 were approximately$846,000 compared to $819,000 for the same period ended September 30, 2006. [ The decrease was due primarily to decreases in payroll costs
which were offset by increases in management fees.] Payroll expense in 2006 was elevated due to bonus payments made to the former ownersof the RightSide prior to the sale to RightSide. The decrease in payroll expense in 2006 is offset by increases of management fees paid foradvisory services and management fees paid to Duncan Media Group, Inc.
Non-controlling Interest in Income of Consolidated Subsidiary expense. RightSide Advisors is a partner with a third party in one ofits operating subsidiaries, Option Investors LLC. Since RightSide Advisors has control of Option Investors LLC, all revenues and expenses
are consolidated with RightSide Advisors and distributions due to the third party are recorded as Non-controlling Interest in Income ofConsolidated Subsidiary. For RightSide Advisors, Non-controlling Interest in Income of Consolidated Subsidiary expense for the nine months
ended September 30, 2007 was approximately $203,000 compared to $236,000 for the same period ended September 30, 2006, which iscomparable period to period.
Income tax expense. For the periods prior to purchase by RightSide, RightSide Advisors was organized as an S Corporation and no
income tax expense is recorded. Taxes are incurred and paid by the owners.
21st Century
Newsletter Revenues. Revenues for the financial newsletter businesses consist of subscriptions, list rental and advertising revenue. For
21 Century, total newsletter revenues for the nine months ended September 30, 2007 was approximately $901,000 compared to $1,334,000
for the same period ended September 30, 2006. The decrease is due primarily to decreased subscriptions. List rental and advertising revenues
have remained consistent period over period. We believe that the former management of 21st Century decreased its marketing efforts during theperiods which caused the decrease. Additionally, the newsletter subscription business faces increased competition.
st

Direct newsletter expenses. Direct newsletter expenses consist of contributor/writer costs, merchant card fees, and fulfillment costs.
For 21 Century, total direct expenses for newsletters for the nine months ended September 30, 2007 were approximately $577,000 compared
to $506,000 for the same period ended September 30, 2006. The increase is due primarily to additional postage mail promotions which havea higher cost of fulfillment. In the 2007 period, after the purchase of 21st Century by RightSide, marketing promotions were done via email
distribution which has a lower cost.
st

Operating Expenses. Operating expenses consist of general and administrative costs such as payroll, payroll taxes, professional fees,
rent and management fees. For 21st Century, operating expenses for the nine months ended September 30, 2007 were approximately $196,000,
compared to $1,239,000 for the same period ended September 30, 2006. The decrease was due primarily to decreases in management andpayroll costs, facilities and other office expenses. The previous owners of 21st Century had more personnel and head count related costs tooperate the business versus ownership by RightSide. The purchase of 21st Century by RightSide enabled the elimination of duplicate facilities
and infrastructure cost as well as a significant decrease in personnel.
Income tax expense. For the periods prior to purchase by RightSide, 21st Century was organized as an S Corp. and no income tax
expense is recorded. Taxes are incurred and paid by the owners.
DuncanManagement services revenues. Duncan operates as the holding company for Superfly and also provides management services to
RightSide and RightSide Advisors related to corporate and operational matters. Duncan and Rightside share the same officers and directors.
Additionally, Duncan performs analysis and due diligence related to potential acquisitions for internet related companies. Duncan management
fees for the nine months ended September 30, 2007 were approximately $235,000. Since Duncan was incorporated in November of 2006, there
are no revenues for the nine month period ended September 30, 2006. Management services fees were charged to RightSide.
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General and administrative expenses. General and administrative expenses consist primarily of payroll expenses, advisory fees
(paid to a related party), and professional fees. General and administrative expenses for the nine months ended September 30, 2007 wasapproximately $956,000. Since Duncan was incorporated in November of 2006, there are no revenues for the nine months ended September 30,
2006.
Income tax expense. Since its inception, Duncan has generated net operating losses and thus has no tax expense for the periods.
SuperflyPay-per-click Revenues. Superfly records revenues on a pay-per-click basis as it conducts search word campaigns (also referred to as
search arbitrage) via internet web sites such as Google and Yahoo and redirects the user to a domain page. In the search word campaign, theuser or customer is redirected to a domain page owned by Superfly where upon clicking on a merchant link, a fee is earned from the merchantat a higher rate than paid for by Superfly in the search word campaign. Pay-per-click revenues for the nine months ended September 30, 2007
were approximately $3,625,000 compared to $3,382,000 for the same period ended September 30, 2006, which are consistent period to period.
Pay-per-click expenses. Pay-per-click expenses for the nine months ended September 30, 2007 were approximately $2,154,000
compared to $1,445,000 for the same period ended September 30, 2006. The increase is due primarily to increased costs related to the searchword campaigns as described above. In order to maintain favorable results in a user search, higher amounts are required for bidding key word
searches. In addition, Superfly has entered into a joint venture agreement with one of the former stockholders of Superfly that allows the use of
the former stockholder’s websites and domains for the purpose of search arbitrage. The profits generated on searches using these websites sharea percentage of those profits with the former shareholder. This additional cost for conducting searches has increased pay-per-click expenses
period over period.
General and administrative expenses. General and administrative costs for Superfly consist primarily of payroll expense and toa lesser extent professional fees, domain expense and rent. For Superfly, general and administrative expenses for the nine months ended
September 30, 2007 was approximately $201,000 compared to $116,000 for the same period ended September 30, 2006. The increase was due
primarily to increases in payroll costs.
Amortization expense. Amortization expense for Superfly relates to the amortization of intangible assets recorded as part of theacquisition of Superfly by Duncan. Duncan utilized push-down accounting for the excess of purchase price over book basis of assets andliabilities at the time of purchase. Accordingly, amortization expense began in 2007. Amortization expense for the nine months ended
September 30, 2007 was approximately $1,039,000. There was no amortization expense in the 2006 comparable period.
Interest expense. For the nine month period ended September 30, 2007 interest expense was approximately $49,000, related to seller
notes provided to previous owners of Superfly.
Income tax expense. Income tax expense for the nine months ended September 30, 2007 was approximately $149,000. There was no
expense for the same period ended September 30, 2006. Prior to purchase by Duncan, Superfly was organized as an S Corporation, and no
income tax expense is recorded due to taxes being incurred and paid by the owners at that time. In 2007, a tax expense is recorded due todifferences in the deductibility of amortization expense for book purposes versus tax.
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Years Ended December 31, 2006 and 2005
RightSide
Revenues. RightSide was incorporated in May of 2006 and for the remainder of the calendar year 2006 remained a holding company
for RightSide Advisors. There is no revenue for RightSide for the years ended December 31, 2006 and December 31, 2005.
Operating Expenses. Operating expenses for RightSide consist of general and administrative costs such as professional fees,
management, rent and amortization of intangibles. For RightSide, operating expenses for the period beginning May 6, 2006 (inception) andended December 31, 2006 were approximately $485,000. There is no comparable period for 2005. Professional fees of $320,000 were paid to a
related party for advisory fees. Amortization expense for the 2006 period was $90,000.
Interest expense. For the period beginning May 6, 2006 (inception) and ended December 31, 2006 interest expense was approximately$55,000, related to seller notes provided to previous owners of Rightside Advisors.
Income tax expense. For both periods, no income tax expense has been recorded due to cumulative net operating losses and theuncertainty of future utilization of tax loss carryforwards.
RightSide Advisors
Newsletter Revenues. Revenues for the financial newsletter businesses consist of subscriptions, list rental and advertising revenue. For
RightSide Advisors, total newsletter revenues for the year ended December 31, 2006 were approximately $2,546,000 compared to $2,311,000
for the year ended December 31, 2005. The increase is due primarily to increased subscription and list rentals. In 2006, RightSide Advisors
began its list rental operations.
Direct newsletter expense . Direct newsletter expenses consist of contributor/writer costs, merchant card fees, and fulfillment costs.
For RightSide Advisors, total direct expenses for newsletters for the year ended December 31, 2006 were approximately $856,000 compared to$969,000 for the year ended December 31, 2005. The decrease in expense is due primarily to fewer costs in 2006 related to contributors/writers.
Operating Expenses. Operating expenses consist of general and administrative costs such as payroll, payroll taxes, professional fees,
rent and management fees. For RightSide Advisors, operating expenses for the year ended December 31, 2006 were approximately $1,205,000
compared to $966,000 for the year ended December 31, 2005. The increase was due primarily to bonuses paid to the former owners of RightSide
Advisors prior to selling the business to RightSide. Additional professional fees were incurred related to the selling of the business.
Non-controlling Interest in Income of Consolidated Subsidiary expense. RightSide Advisors is a partner with a third party in one ofits operating subsidiaries, Option Investors LLC. Since RightSide Advisors owns 50% of Options Investors LLC and has control of Option
Investors LLC, all revenues and expenses are consolidated with RightSide Advisors and distributions due to the third party are recorded as
Non-controlling Interest in Income of Consolidated Subsidiary. For RightSide Advisors, Non-controlling Interest in Income of Consolidated
Subsidiary expense for the year ended December 31, 2006 was approximately $239,000 compared to $456,000 for the same period ended
December 31, 2005. The decrease in expense from 2005 is due to a decreasing scale of distributions due to the third party under the distributionagreement of the LLC. Profits earned on newsletters are distributed based on a formula contained in the agreement that decreases over time infavor of RightSide Advisors.
Income tax expense. No tax expense was recorded in 2006 due to net operating losses for book and tax purposes. In addition, for theperiods prior to purchase by RightSide, RightSide Advisors was organized as an S corporation and no income tax expense is recorded. Taxes
are incurred and paid by the owners.

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21st Century
Newsletter Revenues. Revenues for the financial newsletter businesses consist of subscriptions, list rental and advertising revenue. For
21 Century, total newsletter revenues for the year ended December 31, 2006 was approximately $1,750,000 compared to $2,421,000 for thesame period ended December 31, 2005. The decrease is due to decreased subscriptions and decreased list rental revenues. We believe that theformer management of 21st Century decreased its marketing efforts during the periods which caused the decrease. Additionally, the newsletter
subscription business faces increased competition.
st

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Direct expenses for newsletters. Direct expenses related to newsletters consist of contributor/writer costs, merchant card fees, andfulfillment costs. For 21st Century, total direct expenses for newsletters for the year ended December 31, 2006 was approximately $633,000
compared to $1,190,000 for the year ended December 31, 2005. The decrease is due in part from lower revenues and related expenses.
Additionally, marketing and promotion expense decreased significantly.
Operating Expenses. Operating expenses consist of general and administrative costs such as payroll, payroll taxes, professionalfees, rent and management fees. For 21st Century, operating expenses for the year ended December 31, 2006 was approximately $1,154,000
compared to $1,513,000 for the year ended December 31, 2005. The decrease was due primarily to lower payroll costs.
Income tax expense. For the periods prior to purchase by RightSide, 21st Century was organized as an S corporation and no income
tax expense is recorded. Taxes are incurred and paid by the owners.
DuncanManagement services revenues. Duncan operates as the holding company for Superfly and also provides services to RightSide andRightSide Advisors related to corporate and operational matters. Additionally, Duncan performs analysis and due diligence related to potential
acquisitions for internet related companies. Duncan had no management revenues from inception (November 2006) to December 31, 2006.
General and administrative expenses. General and administrative expenses consist primarily of payroll expenses and professional
fees. General and administrative expense for the year ended December 31, 2006 was approximately $112,000. Since Duncan was incorporated
in November of 2006, there are no expenses for the year ended December 31, 2005.
Income tax expense. Since its inception, Duncan has generated net operating losses and thus no tax expense for the periods.
SuperflyPay-per-click Revenues. Superfly records revenues on a pay-per-click basis as it conducts search word campaigns (also referred toas search arbitrage) via internet web sites such as Google and Yahoo and redirects the user to a domain page. In the search word campaign,
the user or customer is redirected to a domain page owned by Superfly where upon clicking on a merchant link, a fee is earned from themerchant at a higher rate than paid for by Superfly in the search word campaign. Pay-per-click revenues for the year ended December 31, 2006
were approximately $4,756,000, compared to $1,370,000 for the year ended December 31, 2005. The significant increase is due primarily toincreased knowledge and efficiency of the search arbitrage business by management. Superfly began operations in November 2004 and in 2005
learned to perform search word campaigns on the various internet search websites. As Superfly increased its proficiency and methods with thesearch word campaigns, revenues increased.
Pay-per-click expenses. Pay-per-click expenses for the year ended December 31, 2006 were approximately $2,183,000 compared to$602,000 for the same period ended December 31, 2005. The increase is due primarily to increased costs related to the additional search word
campaigns as described above.
General and administrative expenses. General and administrative costs for Superfly consist primarily of payroll expense, professionalfees, domain expense and rent. For Superfly, general and administrative expense for the year ended December 31, 2006 was approximately$199,000 compared to $249,000 for the same period ended December 31, 2005. The decrease was due primarily to decreased payroll costs.

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Income tax expense. There was no income tax expense for the year ended December 31, 2005 and for the year ended December 31,
2005. Prior to purchase by Duncan, Superfly was organized as an S corporation and no income tax expense is recorded due to taxes being
incurred and paid by the owners at that time.
Liquidity and Capital Resources
Since its inception, each of RightSide’s and Duncan’s operations have been financed through the private placement of its equity anddebt securities. Through September 30, 2007, RightSide had received net proceeds of approximately $4.1 million from the sale of shares ofpreferred stock and common stock and from the issuance of short-term bridge notes. Through September 30, 2007, Duncan had received net
proceeds of approximately $4.2 million from the sale of shares of preferred stock and common stock.
As part of the acquisitions of subsidiaries, Rightside and Duncan have both incurred debt related as part of the purchases. Servicing
this debt, referred to as seller notes, will continue to negatively affect the cash flow of the Company.
As of September 30, 2007, RightSide had $278,000 in cash and Duncan had $336,000 in cash.
For the nine months ended September 30, 2007, net cash used in operating activities for RightSide was $41,000, compared to $377,000
for the period May 6, 2006 (inception) to September 30, 2006. For the nine months ended September 30, 2007, net cash provided by operating
activities for Duncan was $198,000. There is no comparable period for 2006. The decrease in RightSide net cash used in operating activities
was due primarily to less expenses related to the purchase of RightSide Advisors companies.
Our future capital uses and requirements depend on numerous forward-looking factors. These factors include but are not limited to thefollowing:•

RightSide’s ability to maintain and keep customers as subscribers in the financial newsletter business;•

RightSide’s ability to establish and maintain strategic partnerships with firms that rent our customer lists;•

the financial markets’ and consumers’ attitudes towards investing and trading;•

RightSide’s ability to operate its business on the internet in a constantly changing environment;•

Duncan’s ability to perform successful search word campaigns in the search arbitrage business through its subsidiary Superfly;•

Changes made by the popular internet search websites (e.g. Google and Yahoo) and how they regard search arbitragers; and•RightSide’s and Duncan’s ability to raise capital through equity and debt financings.

Each of RightSide and Duncan believes that its existing cash and future equity and debt financings will be sufficient to meet theirprojected operating requirements at least through December 2008.

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Until RightSide and Duncan combined can begin generating consistent revenues and cash from its operations, RightSide and Duncan
expect to continue to fund operations with existing cash resources and cash generated from operations. In addition, to a lesser extent, RightSide
and Duncan may finance future cash needs through the sale of other equity securities of the Company, strategic collaboration agreements
and debt financing. However, they may not be successful in obtaining additional financing. In addition, RightSide and Duncan cannot be
sure that their existing cash and investment resources will be adequate or that additional financing will be available when needed or that,
if available, financing will be obtained on terms favorable to RightSide, Duncan or the Company. Having insufficient funds may require
RightSide and Duncan to delay, scale back or eliminate some or all of their operations. Failure to obtain adequate financing also may adversely
affect RightSide and Duncan’s ability to operate as a going concern. If RightSide and Duncan raise additional funds from the issuance of equity
securities by the Company, substantial dilution to existing stockholders of the Company could result. If RightSide and Duncan raise additional
funds by incurring debt financing, the terms of the debt may involve significant cash payment obligations as well as covenants and specificfinancial ratios that may restrict the ability to operate its business.
Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS 157, Fair Value Measurements. The statement defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This standard iseffective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating theimpact the adoption of SFAS 157 will have on the consolidated financial statements.
In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides
companies with an option to report selected financial assets and liabilities at fair value. The objective of SFAS 159 is to reduce both complexity
in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS 159
does not eliminate disclosure requirements of other accounting standards, including fair value measurement disclosures in SFAS 157. This
standard is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. We are currently evaluating theimpact the adoption of SFAS 159 will have on our consolidated financial statements.
In December 2007, the FASB issued SFAS 141(R), Business Combinations. The statement establishes principles and requirements forrecognizing and measuring identifiable assets and goodwill acquired, liabilities assumed and any noncontrolling interest in an acquisition, attheir fair value as of the acquisition date. This standard is effective for annual reporting periods beginning after December 15, 2008. We are
currently reviewing the pronouncement to determine its effects on business acquisitions we may make in the future.
Quantitative and Qualitative Disclosures About Market Risk
The primary objective of RightSide’s and Duncan’s investment activities is to preserve their capital for the purpose of funding
operations, while at the same time maximizing the income RightSide and Duncan receive from their investments without significantly
increasing risk. RightSide and Duncan’s cash and investments at September 30, 2007 consisted primarily of cash in bank accounts. Neither
RightSide nor Duncan has engaged in hedging activities or other derivative transactions.

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SECURITY OWNERSHIP OF CERTAIN
STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of Company Common Stock as the Closing
Date by (i) each person who, to our knowledge, owns more than 5% of the Company Common Stock; (ii) each of the directors and executive
officers of the Company; and (iii) all of our officers and directors as a group. Unless otherwise indicated in the footnotes to the following table,
each person named in the table has sole voting and investment power. Shares of Company Common Stock and RightSide Convertible Notes
convertible within 60 days of the Closing Date are deemed outstanding for computing the share ownership and percentage of the person holding
such Convertible Notes and RightSide Convertible Notes, but are not deemed outstanding for computing the percentage of any other person.
Except as otherwise indicated, the address of all owners listed below is c/o Morlex, Inc., 420 Lexington Avenue, Suite 450, New York, NewYork 10022.
Amount ofBeneficial
Ownership

Name of Beneficial Owner

Percentage of Class

Michael Crow (1)2,766,499

13.8011

Richard Berman
DCI Master LDC
Alex Clug, as Trustee of the Crow 2001 Children’s Trust (2)MW Crow Family LP
Drake Investments, Ltd.
Nick Hensgen
Kevin Crow
Richard Keyes
Gianluca Cicogna
E. Chadwick MooneyAll officers and directors as a group (6 persons)2,602,140
2,097,000
1,884,628
1,395,342
1,290,638000002,602,140

13.2286
10.6606
9.4018(3) 6.9609
6.438500000
13.2286(3)

Michael Crow is (i) the general partner of MW Crow Family LP, (ii) a principal of Aberdeen Holdings, Ltd. and (ii) the husband of
Trevor Crow. By reason of such relationships, Mr. Crow may be deemed to share dispositive and/or voting control over the securities
beneficially owned by each of MW Crow Family LP, Aberdeen Holdings, Ltd and Trevor Crow. As a result, Mr. Crow may be deemed(1)
to be a beneficial owner of such securities, which include 1,395,342 shares held by MW Crow Family LP, 850,000 shares held byAberdeen Holdings, Ltd and 71,157 shares held by Trevor Crow, all of which are included in the 2,766,499 shares reported to bebeneficially owned by Michael Crow.
Alex Clug serves as the trustee, and therefore has voting and/or dispositive control over the securities beneficially owned by, each of
Crow 2001 Children’s Trust FBO Michelle Crow, Crow 2001 Children’s Trust FBO Spencer Crow, Crow 2001 Children’s Trust FBO(2) Olivia Crow and Crow 2001 Children’s Trust FBO Duncan Crow, which each beneficially own 471,157 shares of Company Common
Stock. Therefore, by reason of each such trust’s relationship to Mr. Clug, Mr. Clug may be deemed to beneficially own a total of
1,884,628 shares of Company Common Stock.

(3)

The shares owned by MW Crow Family LP are also included in those shares deemed beneficially owned by Mr. Crow, as set forth inFootnote (1) above.
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DIRECTORS AND EXECUTIVE OFFICERS,PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
As of the Closing Date, our prior directors and officers resigned. The following table sets forth certain information, as of the date ofthis report, with respect to our directors and executive officers appointed as of the Closing Date.
Name
Richard Berman
Nick Hensgen
Kevin Crow
Richard Keyes
Gianluca Cicogna
E. Chadwick Mooney

Position with the Company
Chief Executive Officer, Director
Vice President
Vice President
Director
Director
Director

Age

Date Appointed

65
37
46
55
44
56

February 14, 2008
February 14, 2008
February 14, 2008
February 14, 2008
February 14, 2008
February 14, 2008

Business Experience
The following is a summary of the education and business experience during at least the past five years of each of the directors andexecutive officers of the Company:
Richard Berman is our Chief Executive Officer and a member of the Board. Mr. Berman is also acting as an organizer in connection
with the Transactions. Mr. Berman has served as the Vice Chairman and director of Duncan Media Group, Inc. since January 2007. Mr.
Berman’s business career spans over 35 years of venture capital, management and merger & acquisitions experience. In the last five years, hehas served as a director and/or officer of about a dozen public and private companies. Mr. Berman is currently CEO of Nexmed, a small publicbiotech company; Chairman of National Investment Managers, a public company in pension administration and investment management; andChairman of Secure Fortress Technology Systems (homeland security). He is a director of eight public companies: Dyadic International, Inc.,
Broadcaster, Inc., Easylink Services International, Inc., NexMed, Inc., National Investment Managers Advaxis, Inc., NeoStem, Inc. and Secure
Fortress Technology Systems. From 1998-2000, he was employed by Internet Commerce Corporation as Chairman and CEO. Previously, Mr.
Berman worked at Goldman Sachs; was Senior Vice President of Bankers Trust Company, where he started the Mergers & Acquisitions andLeveraged Buyout Departments; created the largest battery company in the world by merging Prestolite, General Battery and Exide to form
Exide (NYSE); helped create what is now Soho (NYC) by helping to create five buildings, and advised on over $4 billion of M&A transactions.
He is a past Director of the NYU Stern School of Business where he obtained his Bachelor of Science and Masters in Business Administration.
Mr. Berman also has U.S. and foreign law degrees from Boston College and The Hague Academy of International Law, respectively.
Nick Hensgen is a Vice President. Mr. Hensgen has been the President and General Manager of Superfly since December 2006. Prior
to leaving to join as President of Superfly and since November 2001, Mr. Hensgen was Vice President of Risk Management at ResCare, where
he was responsible for managing all aspects of the company’s $37 million risk and insurance budget. In this role, Mr. Hensgen structured
risk financing programs, directed analysis of risk exposures and oversaw appropriate risk control and safety programs. From August 1997 toNovember 2001, he was Manager of Risk Finance and Risk Information Systems at Yum! Brands, where he developed Yum!’s Global Risk
and Insurance Program, oversaw Yum!’s Captive Insurance Company and managed a staff of risk analysts and property specialists responsible
for analyzing data for key risk exposures and trends. Mr. Hensgen has also been an active minority shareholder in the entity proposed to beacquired in the Proposed Transactions since January 2005 and helped the founder of such entity formulate the opportunity and develop its
strategy. Mr. Hensgen has a Bachelor of Science in Operations Management from Indiana University School of Business and a Masters ofBusiness Administration from Indiana University Southeast.
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Kevin Crow is a Vice President and is the brother of Mr. Michael Crow, an organizer of the Company. Kevin Crow has been a Vice
President of RightSide since December 1, 2006. From May 2006 through November 2006, Mr. Crow was a Managing Director at Duncan
Capital Partners, responsible for new investment opportunities, including Internet related businesses. From June 2004 through April 2006, Mr.
Crow was the President of Diversified Corporate Solutions, which provided business solutions for new companies. From October 2000 throughMay 2004, he was the Chief Operating Officer of Women’s United Soccer Association where he served a dual role in managing the daily
business affairs of the league office, including an annual budget of $34 million and an in-house staff of 17, and directed responsibilities for eightteam operations and over 300 employees. Prior to United Soccer, since February 1994, Mr. Crow was President of ZipDirect in San Diego,
California, where he oversaw and managed all business operations during an expansive acquisition growth period. At the time, ZipDirect had
revenues of $18 million and 350 employees. Mr. Crow was also a professional soccer player, playing on the U.S. National Team, and was a
two-time Olympic Athlete between 1983 and 1992. Mr. Crow has a Bachelor of Science in Finance from San Diego State University.
Richard Keyes is a member of our Board of Directors. Mr. Keyes is the principal of Keyes Capital Group, a merchant banking
company formed in 1993. Keyes Capital has been involved in securitizations, debt restructuring and capital raising for various public andprivate companies. Since May 2007, he has also been the Chief Executive Officer of Merus Solutions, Inc., a San Diego based customer
relationship management software company. In 1991 Mr. Keyes opened the West Coast mortgage securities trading office of Daiwa Securities
and served as its Managing Director through 1993. Mr. Keyes received his Masters in Business Administration from the University of Southern
California and his Bachelor of Business Administration from the University of Iowa.
Gianluca Cicogna is a member of our Board of Directors. Since 2006, Mr. Cicogna has served as a Managing Director at Milbank
Roy and is partly responsible for the development of its asset management practice. Since 1994, Mr. Cicogna has also served as an advisor for
Zannett Group, which engages in fund management, where he advised on the successful Zanett Lombardier hedge fund that invested in earlystage public companies. During 1986 through 1994, he co-founded Casco Track Limited, a boutique investment bank based in Hong Kongthat represented clients in over $600 million of cross border Mergers & Acquisitions transactions. While at Casco Track, Mr. Cicogna and his
partners invested in telecoms transactions across Asia, including launching Cavite Cable Corporation, the first optic cable TV business in thePhilippines. Mr. Cicogna was a founding partner in Southern Farms, South Africa's premier table grape production and export company. Mr.
Cicogna graduated from Buckingham University in Economics (with Honors).
E. Chadwick Mooney is a member of our Board of Directors. Since March 2006, Mr. Mooney has been the Chairman of Mooney
Capital Advisors, which is engaged in money management. From September 2004 to March 2006, Mr. Mooney served as a director-investmentsof Wachovia Securities. Prior to that, since September 1990, Mr. Mooney acted as a director-investments of Smith Barney. Overall, Mr. Mooneyhas 30 years experience working for Wall Street companies of which 16 years were at Citigroup. Mr. Mooney’s business at Smith Barney, at its
peak, grew to be the 8th largest practice, managing over $2 billion in assets. Mr. Mooney chaired the Smith Barney Director Advisory Groupfor 3 years. He worked very closely with Jamie Dimon, current Chairman and Chief Executive Officer of JP Morgan. Mr. Mooney was involvedin the sale of U.S. Filter to Vivendi for $8.1 billion in cash. Since July of 2006, Mr. Mooney has served as the Chairman and Chief Executive
Officer of Clear Choice Financial in Scottsdale, AZ and since October 2007, he has served as a Director for Next Image Medical in San Diego,
CA. Mr. Mooney holds a Series 7 and 63 license.
Directors serve until the next annual meeting of the stockholders; until their successors are elected or appointed and qualified, or until
their prior resignation or removal. Officers serve for such terms as determined by our Board of Directors. Each officer holds office until suchofficer’s successor is elected or appointed and qualified or until such officer’s earlier resignation or removal. No family relationships exist
between any of our present directors and officers.
Organizer
Michael Crow has acted as an organizer in connection with the Transactions. Mr. Crow has been the President of DC Associates LLC,
an investment advisor to its fund Duncan Capital Partners, as well as a financial and business advisory firm, since 2004. Prior to founding
Duncan Capital Partners LLC, Mr. Crow was a co-manager of Bridges & PIPES LP and co-founder of DC Opportunity Fund. Mr. Crow
was a principal investor in several private companies and served as President of Aberdeen Holdings Ltd, a private venture fund. Mr. Crow
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also served as a Senior Vice President of Security Pacific Corporation and Deputy to the Vice Chairman of Security Pacific Corporation. His
senior-management responsibilities included operations in consumer finance, leasing, securities brokerage and asset management, asset-based
lending, insurance, venture capital and merchant banking. Mr. Crow was the Senior Vice President and Chief Financial Officer of Security
Pacific International, the holding company for the bank's international corporate subsidiaries. Mr. Crow started his career at Price Waterhouse
as a senior management consultant and Certified Public Accountant with the International Department in San Francisco and in Amsterdam, The
Netherlands. Mr. Crow holds a Bachelor of Science in Accounting from San Diego State University, and is a graduate of Harvard Business
School’s three-year Owner President Manager program. He is a past member of the Young Presidents Organization and serves on several private
and non-profit Boards, including New York University’s Hospital for Joint Disease. In 1998, Mr. Crow voluntarily signed a consent decreewith the Securities and Exchange Commission and agreed not to be an officer or director of a public company or practice as an accountant
before the Securities and Exchange Commission. On May 15, 2007, the Securities and Exchange Commission filed a civil action against Mr.
Crow and others alleging that in 2004 Mr. Crow purportedly exercised control over an openly affiliated broker-dealer which failed to makeregulatory filings disclosing his involvement. The Securities and Exchange Commission seeks injunctive relief, disgorgement and monetary
penalties. Mr. Crow has informed the Company that he disputes the allegations and that he will vigorously defend his position.
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Code of Ethics
Following the Merger Transactions, our new Board of Directors will adopt a written code of ethics. We believe that the code of ethics
will be reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable
disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability foradherence to the code.
Board Committees
We presently have no board committees. We intend to appoint such persons and form such committees as are required to meet thecorporate governance requirements imposed by the national securities exchanges at such time, if ever, we become subject to such requirements.
Therefore, we intend that a majority of our directors will eventually be independent directors and at least one director will qualify as an “audit
committee financial expert.” Additionally, we expect to appoint an audit committee, nominating committee and compensation committee, andto adopt charters relative to each such committee. Until further determination, the full board will undertake the duties of the audit committee,
compensation committee and nominating committee. Richard Keyes will serve as an audit committee chairman, once an audit committee is put
in place.
Board Independence
We believe that Messrs. Keyes, Cicogna and Mooney are independent directors as that term is defined under Rule 4200(a) (15) of the
Nasdaq Marketplace Rules, even though such definition does not currently apply to us, because we are not listed on Nasdaq.

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EXECUTIVE COMPENSATION
Summary Compensation Table
The table below sets forth compensation received by our three executive officers during the calendar years ended December 31, 2007
and 2006 pursuant to employment agreements that each had with either Duncan or Superfly. Prior to the Closing Date, none of these individuals
received any compensation from either us, RHI Merger Sub or DMG Merger Sub. The agreements these individuals had with Duncan orSuperfly were terminated on the Closing Date and are expected to be replaced by employment agreements with us.
NameAnd
Principal Position
Richard Berman, Chief Executive Officer and Director
Nick Hensgen, Vice President
Kevin Crow, Vice President

Bonus
($)

All Other
Compensation
($)

Year

Salary
($)

Total
($)

2007
2006
2007
2006
2007

0
0
$110,000$9,000$114,00000$42,513$36,666$7,5000000$ 20,133 (100$152,5130) $141,633

2006$9,50000$9,500(1) Other compensation for Kevin Crow, 2007, consists of moving expenses of $20,133.
Information concerning compensation of our officers and directors prior to the Closing Date for the year ended December 31, 2006 isincorporated by reference to the Company’s Annual Report on Form 10-KSB, previously filed with the SEC on February 1, 2008.
Outstanding Equity Awards (Options) At Fiscal Year-End
Name

Stock Options Awards: Number of Shares of Stock Options
Option Price Per
Stock GrantedAwards: Number of Share
Shares of Stock
Vested as ofDecember 31, 2007

Kevin Crow

75,000 shares of Duncan

25,000$0.01

135,800 shares of RightSide

45,267$0.01

180,000 shares of Duncan

60,000$0.01

325,920 shares of RightSide

108,640$0.01

50,000 shares of RightSide

15,625$0.01

Larry Fiore

Richard Suttmeier
Agreements With Officers and Directors

An employment agreement, which became effective upon the consummation of the Merger Transactions, between AAA and Richard J.
Berman (the “Berman Employment Agreement”) will be assigned to and assumed by the Company promptly following the Closing Date. Under
the Berman Employment Agreement, Mr. Berman agrees to serve as the Executive Chairman of the Company in San Diego, California for an
initial term of two years. The Company agrees to pay Mr. Berman an annual base salary of $180,000, which may be increased annually by our
Board of Directors. Mr. Berman will also receive an annual performance bonus in an amount determined by our Board of Directors. Mr. Berman
is entitled to receive standard benefits of our senior management employees. We are obligated to grant a stock option for the right to purchase
250,000 shares of Company Common Stock to Mr. Berman within 90 days of the closing of the transactions contemplated by the AAA Stock
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Purchase Agreement. Mr. Berman is entitled to a seat on our Board of Directors during his term of employment with us. Mr. Berman agrees
to enter into a Proprietary Interests and Inventions Agreement, an Arbitration Agreement and a Non-Competition/Non-Solicitation Agreement.
In the event that Mr. Berman’s employment with the Company is terminated without cause or for good reason upon a change of control, thenMr. Berman’s non-competition obligations will be limited and he will be entitled to, among other things, a lump sum payment in an amountequal to the aggregate of twelve months of his then current base salary and two times (1) the greater of his performance bonus for the yearof termination or (2) the largest bonus paid to him over the past three years and his options shall become fully vested and exercisable. If Mr.
Berman’s employment is terminated voluntarily or for cause, then Mr. Berman shall not be entitled to the lump sum described above; however,
his options will still become fully vested and exercisable. A copy of the Berman Employment Agreement is filed as Exhibit 10.1 to this Current
Report.
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Compensation of Directors
On and after the Closing Date, our directors will receive cash compensation in the amount of $1,000 per Board meeting, and they are
reimbursed for travel expenses incurred in connection with their attendance. In addition, directors will be entitled to receive annual grants ofstock options. Upon the formation of an audit committee, our audit committee chairman will be compensated an additional $3,000 per month.
Prior to the Closing Date, none of our three non-employee directors received any compensation from any of us, RHI Merger Sub or
DMG Merger Sub.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RightSide was a party to two advisory agreements (collectively, the “RightSide Advisory Agreement”) with affiliated entities: (i)an Advisory Agreement, dated June 7, 2006, between RightSide and Duncan Capital Group LLC, whereby Duncan Capital Group agreed toserve as a financial consultant to RightSide on a non-exclusive basis in connection with arranging any equity or debt financings, mergers or
acquisitions, or with respect to any other financial matter of RightSide in exchange for payment of fees as set forth therein, and (ii) an Advisory
Agreement, dated June 9, 2006, between RightSide and DC Associates LLC, whereby Duncan Capital Group agreed to serve as a financial
consultant to RightSide on a non-exclusive basis in connection with arranging any equity or debt financings, mergers or acquisitions, or withrespect to any other financial matter of RightSide in exchange for payment of fees as set forth therein. Such RightSide Advisory Agreements
were terminated by RightSide on the Closing Date.
In 2007, RightSide leased office space from DC Associates, LLC in exchange for rental payments of $2,500 per month.
DC Associates, LLC and Duncan Capital Group are owned by MW Crow Family LP, a former shareholder of RightSide and Duncan
and a shareholder of the Company.
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DESCRIPTION OF SECURITIESCapital Stock
Our Articles of Incorporation authorize the issuance of 1 billion (1,000,000,000) shares of common stock, $.001 par value per share.
We do not have any authorized preferred stock. As of the Closing Date, there were 20,045,985 shares of Company Common Stock issued andoutstanding. As of the Closing Date, there were slightly more than 300 holders of record of Company Common Stock.
Description of Common Stock
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a stockholder vote. Holders of
our common stock do not have cumulative voting rights. Therefore, holders of a majority of our shares of common stock voting for the electionof directors can elect all of the directors. Holders of our common stock representing a majority of the voting power of the capital stock issued,
outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A voteby the holders of a majority of our outstanding shares of common stock is required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to the Articles of Incorporation.
Holders of common stock are entitled to share in all distributions that our Board or Directors, in its discretion, declares from legallyavailable funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all
assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over our common stock.
Holders of our common stock have no pre-emptive rights, conversion rights, and there are no redemption provisions applicable to our common
stock.
Description of Convertible Notes
As of the Closing Date, RightSide had $834,508.50 of Promissory Notes issued and outstanding and held by the former shareholders ofRightSide (the “RightSide Notes”). Of the RightSide Notes, $417,254 are Convertible Promissory Notes (the “Convertible RightSide Notes”).
Following consummation of the Merger Transactions, some of the Convertible RightSide Notes may become convertible into Company
Common Stock. As of the Closing Date, such Convertible RightSide Notes would have been convertible into up to 579,157 shares of Company
Common Stock, representing approximately 2.8% of the Company Common Stock on an as-converted basis. Certain of the RightSide Notes
are past due.
Registration Rights
On the Closing Date, we entered into the Registration Rights Agreement with certain of the original holders of Company Common
Stock and certain of the persons who received Company Common Stock in the Merger Transactions and Acquisition Transaction. We intend
that the investors in the Private Placement will become parties to the Registration Rights Agreement. Under the terms of the Registration
Rights Agreement, we granted piggyback registration rights to such investors for a period of one year following the Closing Date, such that,in the event that we file a registration statement covering Company Common Stock we would be obligated to include their shares of Company
Common Stock (or shares of Company Common Stock issuable upon the conversion of the Convertible Notes) in the registration statement,
subject to cutback provisions contained in the Registration Rights Agreement. We have also granted the investors in the Private Placement one
demand registration right. If we have not registered the shares for resale within one year after the Closing Date, the other stockholders, including
the original holders of Company Common Stock immediately prior to the Closing Date and those persons who received Company Common
Stock in the Merger Transactions and Acquisition Transaction, will also have one demand registration right. A copy of the Registration Rights
Agreement is filed as Exhibit 4.1 to this Current Report.
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Transfer Agent
Our transfer agent is Corporate Stock Transfer, Inc., located at 3200 Cherry Creek Drive South, Suite 430, Denver, Colorado 80209.
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Market for Company Common Stock
Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “MORX.” On February 13, 2008, our closing
bid price was $0.27 per share. As of February 13, 2008, the last reported trade of Morlex Common Stock occurred on December 26, 2007 at a
price of $0.27 per share.
Distributions
Prior to the declaration and payment of the Cash Distribution in connection with the Merger Transactions, we had never declared or
paid any cash distributions with respect to Company Common Stock. Future payment of distributions is within the discretion of our Board of
Directors and will depend on our earnings, capital requirements, financial condition and other relevant factors. Although there are no material
restrictions limiting, or that are likely to limit, our ability to pay distributions on Company Common Stock, we presently intend to retain future
earnings, if any, for use in our business and have no present intention to pay cash distributions on Company Common Stock.
LEGAL PROCEEDINGS
From time to time we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings or claims
are pending against or involve us that, in the opinion of management, could reasonably be expected to have a material adverse effect on ourbusiness or financial condition.
RECENT SALES OF UNREGISTERED SECURITIESOn the Closing Date, the Company issued an aggregate of 18,390,825 shares of Company Common Stock in connection with the
Merger Transactions and the Acquisition Transaction. The issuance of shares of Company Common Stock to the prior owners of Duncan,
RightSide and AAA in connection with the Merger Transactions and Acquisition Transaction was not registered under the Securities Act, inreliance upon the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated by the SEC underthat section, which exempts transactions by an issuer not involving any public offering. As a result, such shares of Company Common Stock
may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
INDEMNIFICATION OF OFFICERS AND DIRECTORSColorado Law
Title 7 of the Colorado Revised Statutes, as amended from time to time, provides that a corporation may indemnify directors andofficers, as well as other employees and individuals, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement
in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests ofthe corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses, including attorneys' fees,
incurred in connection with the defense or settlement of such actions, and the applicable statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable to the corporation. The applicable statute provides that it is not
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exclusive of other indemnification that may be granted by a corporation's articles of incorporation, by-laws, agreement, a vote of stockholders
or disinterested directors or otherwise.
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The Colorado Revised Statutes permit a corporation to provide in its articles of incorporation that a director of the corporation shall not
be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liabilityfor:·

any breach of the director's duty of loyalty to the corporation or its stockholders;·

acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;·

payments of unlawful dividends or unlawful stock repurchases or redemptions; or·any transaction from which the director derived an improper personal benefit.

BylawsWe intend to amend our Bylaws to provide for indemnification of our officers, directors, employees and other agents to the fullest
extent permitted by Colorado law. We also intend to take out a directors and officers liability insurance policy.
Articles of Incorporation
Our Articles of Incorporation provide a limitation of liability in that our directors and officers shall be indemnified against personal
liability to us or any of our shareholders for damages for breach of fiduciary duty as director or officer, involving any act or omission of any
such director or officer, to the fullest extent allowed under Colorado law and the Company’s bylaws.
Indemnification Under The Securities Act
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controllingpersons under Colorado law or otherwise, we have been advised the opinion of the SEC is that such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the event a claim for indemnification against such liabilities (otherthan payment by us for expenses incurred or paid by our director, officer or controlling person in successful defense of any action, suit, or
proceeding) is asserted by our director, officer or controlling person in connection with the securities being registered, we will, unless in theopinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction, the question of whether
such indemnification by us is against public policy in the Securities Act and will be governed by the final adjudication of such issue.
INDEX TO EXHIBITS
See Item 9.01(d) below, which is incorporated by reference.
DESCRIPTION OF EXHIBITSSee Exhibit Index below and the corresponding exhibits, which are incorporated by reference herein.
Item 3.02

Unregistered Sales of Equity Securities

The disclosure set forth in Item 2.01 to this Current Report is incorporated into this item by reference.
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Item 4.01

Changes in Registrant’s Certifying Accountant

The disclosure set forth in Item 2.01 to this Current Report is incorporated into this item by reference.
Item 5.01

Changes in Control of the Registrant

As a result of the Merger Transactions and Acquisition Transaction, the Company experienced a change in control, with the former
owners of RightSide, Duncan and AAA acquiring control of the Company. The disclosure set forth in Item 2.01 to this Report is incorporated
into this item by reference.
Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.

The disclosure set forth in Item 2.01 to this Report is incorporated into this item by reference.
Item 5.06

Change in Shell Company Status

The disclosure set forth in Item 2.01 to this Report is incorporated into this item by reference. As a result of the completion of the
Merger Transactions, we believe that we are no longer a shell company, as defined in Rule 405 of the Securities Act and Rule 12b-2 of the
Exchange Act.
Item 9.01

Financial Statements and Exhibits

Reference is made to the disclosure set forth under Item 9.01 of this Report, which disclosure is incorporated into this item byreference.
(a) Financial Statements of Business Acquired
In accordance with Item 9.01(a), financial statements are included with this Report beginning on Page F-1, as follows:·

Unaudited consolidated financial statements of RightSide Holdings, Inc. for the nine months ended September 30, 2007 and 2006.

·

Audited consolidated financial statements of RightSide Holdings, Inc. for the year ended December 31, 2006.

·

Audited financial statements of 21st Century Publishing Corporation for the years ended December 31, 2006 and 2005.

·

Unaudited consolidated financial statements of Duncan Media Group, Inc. for the nine months ended September 30, 2007.

·

Audited consolidated financial statements of Duncan Media Group, Inc. for the period from November 21, 2006 (inception) to
December 31, 2006.

·

Unaudited consolidated financial statements of Superfly Advertising, Inc. for the nine months ended September 30, 2007 and 2006.

·

Audited consolidated financial statements of Superfly Advertising, Inc. for the year ended December 31, 2006 and the period
from December 31, 2005 (inception) to December 31, 2006.

(b) Pro forma financial information

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In accordance with Item 9.01(b), unaudited pro forma consolidated financial statements are included with the Report beginning on
Page F-111, as follows:·

Unaudited condensed combined Pro Forma Financial Statements of Morlex, Inc., RightSide Holdings, Inc. and Duncan Media Group,
Inc. for the nine months ended September 30, 2007.
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(c) Exhibits
Exhibit No.

Description

2.1

Agreement and Plan of Merger, dated February 7, 2008, by and among the Registrant, RightSide Holdings, Inc. and RHI Merger Sub,
Inc.*

2.2

Agreement and Plan of Merger, dated February 7, 2008, by and among the Registrant, Duncan Media Group, Inc. and DMG Merger
Sub, Inc.**

2.3

Stock Purchase Agreement, dated February 14, 2008, by and among the Registrant, All Ad Acquisition, Inc. and certain other parties
thereto.

2.4(b)

Stock Purchase Agreement, dated November 14, 2007, by and among All Ad Acquisition, Inc., Iakona, Inc. and Jason Kulpa.

2.4(b)

Amendment to Stock Purchase Agreement, dated January 11, 2008, by and among All Ad Acquisition Inc., Iakona, Inc. and Jason
Kulpa.

4.1

Registration Rights Agreement, dated February 14, 2008, by and among the Registrant and certain other parties thereto.

10.1

Employment Agreement, dated February 7, 2008, by and between All Ad Acquisition Inc. and Richard J. Berman.

17.1

Letter of Resignation as a director and officer of the Registrant, dated February 14, 2008, submitted by Michael Miller.

17.2

Letter of Resignation as a director of the Registrant, dated February 14, 2008, submitted by Jeanne Baer.

17.3

Letter of Resignation as a director of the Registrant, dated February 14, 2008, submitted by Michelle Kaplan.

23.1

Consent of Peterson Sullivan PLLC, dated February 14, 2008.

*

Incorporated by reference to Ex. 2.1 to the Report on Form 8-K, previously filed with the SEC on February 11, 2008.

**

Incorporated by reference to Ex. 2.2 to the Report on Form 8-K, previously filed with the SEC on February 11, 2008.
53

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FINANCIAL STATEMENTSCONTENTS
Unaudited consolidated financial statements of RightSide Holdings, Inc. for the nine months ended September 30, 2007 and 2006.

F-1

Audited consolidated financial statements of RightSide Holdings, Inc. as of December 31, 2006, and for the period from May 5,
2006 to December 31, 2006.

F-19

Audited financial statements of 21st Century Publishing Corporation for the years ended December 31, 2006 and 2005.

F-39

Unaudited consolidated financial statements of Duncan Media Group, Inc. for the nine months ended September 30, 2007.

F-50

Audited consolidated financial statements of Duncan Media Group, Inc. as of December 31, 2006, and for the period from
November 21, 2006 to December 31, 2006.

F-61

Unaudited consolidated financial statements of Superfly Advertising, Inc. for the nine months ended September 30, 2007 and 2006.

F-72

Audited consolidated financial statements of Superfly Advertising, Inc. as of and for the years ended December 31, 2006 andDecember 31, 2005.

F-89

Pro Forma Financial Statements

F-111
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.

MORLEX, INC.

Dated: February 14, 2008

By: /s/ Richard Berman
Name: Richard Berman
Title: Chief Executive Officer

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EXHIBIT INDEXExhibit No.

Description

2.1

Agreement and Plan of Merger, dated February 7, 2008, by and among the Registrant, RightSide Holdings, Inc. and RHI Merger Sub,
Inc.*

2.2

Agreement and Plan of Merger, dated February 7, 2008, by and among the Registrant, Duncan Media Group, Inc. and DMG Merger
Sub, Inc.**

2.3

Stock Purchase Agreement, dated February 14, 2008, by and among the Registrant, All Ad Acquisition, Inc. and certain other parties
thereto.

2.4(b)

Stock Purchase Agreement, dated November 14, 2007, by and among All Ad Acquisition, Inc., Iakona, Inc. and Jason Kulpa.

2.4(b)

Amendment to Stock Purchase Agreement, dated January 11, 2008, by and among All Ad Acquisition Inc., Iakona, Inc. and Jason
Kulpa.

4.1

Registration Rights Agreement, dated February 14, 2008, by and among the Registrant and certain other parties thereto.

10.1

Employment Agreement, dated February 7, 2008, by and between All Ad Acquisition Inc. and Richard J. Berman.

17.1

Letter of Resignation as a director and officer of the Registrant, dated February 14, 2008, submitted by Michael Miller.

17.2

Letter of Resignation as a director of the Registrant, dated February 14, 2008, submitted by Jeanne Baer.

17.3

Letter of Resignation as a director of the Registrant, dated February 14, 2008, submitted by Michelle Kaplan.

23.1

Consent of Peterson Sullivan PLLC, dated February 14, 2008.

*

Incorporated by reference to Ex. 2.1 to the Report on Form 8-K, previously filed with the SEC on February 11, 2008.

**

Incorporated by reference to Ex. 2.2 to the Report on Form 8-K, previously filed with the SEC on February 11, 2008.
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RIGHTSIDE HOLDINGS, INC.
FINANCIAL REPORT(A Review)
SEPTEMBER 30, 2007 AND 2006

F-1

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CONTENTS
Page
ACCOUNTANTS' REVIEW REPORT

F-3

FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYCONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

F-2

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F-4
F-5
F-6
F-7 and F-8
F-9 - F-18

ACCOUNTANTS' REVIEW REPORTTo the Board of Directors
RightSide Holdings, Inc.
Roseville, California

We have reviewed the accompanying consolidated balance sheets of RightSide Holdings, Inc. and Subsidiaries as of September 30, 2007 and2006, and the related consolidated statements of operations, shareholders' equity, and cash flows for the nine-month period ended September 30,
2007, and the period from May 6, 2006 (date of inception), to September 30, 2006, in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public Accountants. All information included in these consolidated financial
statements is the representation of the management of RightSide Holdings, Inc.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less inscope than an audit in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial
statements in order for them to be in conformity with accounting principles generally accepted in the United States.
/S/ PETERSON SULLIVAN PLLC
January 28, 2008
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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS(See Accountants' Review Report)
September 30, 2007 and 2006ASSETS2007

2006$277,755
37,16854,701
17,750212,500
82,387$202,744
37,094
15,10025,000-61,109-743,370279,938

398,158

502,175

4,290,426

3,505,386

869,432
154,191

317,411-62,894

4,894

5,376,943

3,827,691$6,518,471$4,609,804$290,774
28,583200,833
798,435
1,362,841$285,771
30,214359,979
231,867

635,887

402,090

Total current liabilities
Long-Term Debt, net of current portion

3,317,353

1,309,921

544,333

947,910

Total liabilities
Stockholders' Equity
Preferred stock (liquidation preference of $286,000,000)
Common stock
Additional paid-in capital
Retained earnings (deficit)

3,861,686

2,257,831

5,720
20,012
3,634,268

5,400
14,1332,680,467

Current Assets
Cash
Card service reserves
Accounts receivable
Prepaid expenses
Prepaid interest
Income taxes receivable
Other current assets
Total current assets
Property and Equipment, net of accumulated
depreciation of $132,507 in 2007 and $26,319 in 2006
Other Assets
Goodwill
Amortizable intangible assets, net of accumulated amortization of$207,935 in 2007 and $28,856 in 2006
Non-amortizable intangible assets
Deposits

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities
Accounts payable and accrued expenses
Interest payable
Dividend payable
Deferred revenue
Short-term notes payable - related parties
Current portion of long-term debt

Total stockholders' equity

See Notes to Consolidated Financial Statements
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2,656,785

2,351,973$6,518,471$4,609,804

)

F-4

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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS(See Accountants' Review Report)
For the Nine-Month Period Ended September 30, 2007
And the Period from May 6, 2006 (Inception), to September 30, 2006

Revenues
Subscription, net
Advertising
List rental
Research
Total revenues
Operating expenses
Management fees
Consulting fees
PayrollMarketing / advertising
Professional fees
Amortization
Depreciation
Contributors
Merchant fees
Rent
Postage
Travel and entertainment
Technology
Payroll tax
Insurance
Telephone
Other
Total operating expenses
Loss from operations
Interest expense

2007

2006

$1,437,200
29,108571,038$563,042
24,92372,50015,585

6,747

2,052,931

667,212350,000
469,096334,897
296,993
89,541150,224
79,87097,52854,551
32,15021,343
20,32575,162
27,05020,083
10,050290,000
135,217
119,778
120,875
102,820
28,85626,31924,55618,99919,1412,880
14,58914,988
11,242
10,022
5,423

31,181

9,320

2,160,044

955,025(107,113)

139,396

Loss before non-controlling interest inincome of consolidated subsidiaryNon-controlling interest in income of
consolidated subsidiary
Net loss
See Notes to Consolidated Financial Statements
F-5

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30,214(246,509)(318,027)(203,369)(30,000)$(449,878) $(348,027)

RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(See Accountants' Review Report)
For the Nine-Month Period Ended September 30, 2007
And the Period from May 6, 2006 (Inception), to September 30, 2006

Preferred

CommonAdditional
Paid-in

Stock

Stock

CapitalBalances, May 6, 2006
Issuances of stock as part of incorporation
Net loss for the period from May 6, 2006,
to September 30, 2006

$5,400

Balances, September 30, 2006

$ 5,400$ 14,133

Balances, January 1, 2007
Issuance of shares for prepayment of interest$ 5,720

Issuance of shares for acquisition of assets
Net loss for the nine-month period ended
September 30, 2007
Balances, September 30, 2007

$ 5,720$14,133(Deficit)

Total

$-

$2,700,000(348,027) (348,027$ 2,680,467$ (348,027) $ 2,351,973$ 18,107714$ 2,836,173
299,286$ (553,337) $ 2,306,663
300,000

1,191

498,809$ 20,012$2,680,467

Retained
Earnings$ 3,634,268

See Notes to Consolidated Financial Statements
F-6

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500,000(449,878) (449,878$ (1,003,215) $ 2,656,785)

RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS(See Accountants' Review Report)
For the Nine-Month Period Ended September 30, 2007
And the Period from May 6, 2006 (Inception), to September 30, 2006
2007

2006

$(449,878) $(348,027

150,224
79,87087,500203,369

28,85626,31930,00095,991(18,775(82,387(7,750(58,600(61,109
101,796(26,449))(37,094
7,456(25,000
23,13230,214(54,919)(112,980)

Net cash flows from operating activities
Cash Flows From Investing Activity
Acquisition of subsidiaries, net of cash acquiredof $374,507
Acquisition of business assets of 21st Century
Purchase of equipment(41,117)(377,124)(700,000))(2,115,132-(12,172)-

Net cash flows form investing activities
Cash Flows From Financing Activities
Proceeds from stock issuances
Proceeds from short-term notes payable - related parties
Payment on short-term notes payable - related parties
Payment on long-term debt
Distribution of non-controlling interest in incomeof consolidated subsidiary(712,172)(2,115,132)

2,700,000
50,000(25,000)(30,000)

Cash Flows From Operating Activities
Net loss
Adjustments to reconcile net loss to net
cash flows from operating activities
Amortization of intangible assets
Depreciation of property and equipment
Amortization of prepaid interest
Non-controlling interest in income of consolidated subsidiary
Changes in operating assets and liabilities,
net of effects of acquisitions
Card service reserves
Accounts receivable
Income tax refund receivable
Prepaid expense
Deposits
Other assets
Accounts payable and accrued expenses
Interest payable
Deferred revenue

)
)
)
)
)

1,245,000(89,026(234,780))(203,369)

Net cash flows from financing activities

717,825

Increase (decrease) in cash
Cash at beginning of period(35,464
313,219-

Cash at end of period$277,755$202,744

Cash paid for interest$53,527$-

Cash paid for income taxes$82,387$-

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2,695,000)

202,744))

See Notes to Consolidated Financial Statements
F-7

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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS(See Accountants' Review Report)
For the Nine-Month Period Ended September 30, 2007
And the Period from May 6, 2006 (Inception), to September 30, 2006
(Continued)
2007
Noncash investing and financing activities:
Acquisition of subsidiaries financed with debt

2006

$-

$1,556,867

Debt issued for purchase of intangible assets$65,000$-

Common stock issued for acquisition of assets$500,000$-

Common stock issued for prepayment of interest$300,000$-

See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
RightSide Holdings, Inc. ("RSH") was organized on May 6, 2006, to acquire three companies that provide financial newsletters to subscribers
over the internet. RSH acquired these three companies in June 2006 (see Note 3 for more information). In addition, the three companies charge
for advertising on their websites and receive fees for renting customer lists.

In June 2007, RSH acquired substantially all business assets owned by an unrelated party, 21st Century Investors Publishing Corporation ("21stCentury") in a transaction more fully described in Note 4. 21st Century provided the similar services as the Company's subsidiaries, which aredescribed above. The assets of 21st Century were merged into those of RSH.

Some of the shareholders of RSH are related to other entities in the newsletter and list rental business conducted via the internet. While there
have not been significant transactions between RSH (and its subsidiaries) and these other entities, results of operations could be affected bythese relationships.
Principles of Consolidation
The consolidated financial statements include the accounts of RSH and the three wholly-owned subsidiaries it acquired: RightSide Advisors,
Inc. ("RSA"), Hot Stix, Inc. ("HS"), and Black Box Investing, Inc. ("BB"). RSA also owns a 50% interest in an entity called Option Investor,
LLC ("OI"). Due to the level of control that RSH has (through RSA), OI is consolidated into these financial statements. OI's income (and equity)
is distributed to the owners each quarter, so there is no non-controlling interest presented on the balance sheets. (See Note 2 for additional
information.) HS owns a 99% interest in an entity called Synergy Trader LLC ("Synergy"). The other one-percent ownership is consideredinsignificant. Collectively, these various entities are referred to as "the Company". All material intercompany accounts and transactions havebeen eliminated in consolidation.
Cash
The Company maintains its cash balances in financial institutions. At various times, the Company's cash balances exceeded the Federal Deposit
Insurance Corporation coverage of $100,000.
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Card Service Reserves
These reserves represent cash deposits on account with various credit card servicers. These credit card servicers process a significant percentageof the Company's sales transactions.
Accounts Receivable
Accounts receivable include outstanding deposits due from credit card transactions (and are due from credit card servicers) and amounts due
directly from customers. Accounts receivable are stated at their net realizable value and are due within thirty days of billing. Based on historicalcollections, management believes the accounts are fully collectible. Accordingly, no allowance has been established at September 30, 2007 and2006. Accounts receivable are generally unsecured and do not bear interest.
Prepaid Interest
As discussed in Note 6, the Company borrowed $1,000,000 as a short-term loan from a shareholder (and Chairman of the Board of Directors).
Under the terms of this note, the Company agreed to pay $300,000 of interest in advance upon receipt of the loan proceeds. The Company
issued common stock to pay for the interest, and the expense is being amortized over one year (the original loan term).
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Property and equipment is reviewed at least annually for possible
impairment (none was necessary in the periods ended September 30, 2007 and 2006). The Company provides for depreciation as follows:

AssetsComputer software
Office and computer equipment
Furniture and fixtures

Estimated
Useful Lives

Method3years
5years
7yearsStraight-line
Straight-line
Straight-line

Goodwill
In May 2006, as part of the purchase of the four companies described earlier, the Company acquired $3,505,386 of goodwill. Also, in June
2007, the Company acquired $785,040 of goodwill as a result of the purchase of the business assets owned by 21st Century as described earlier.
Management reviews goodwill at least annually (but more often if circumstances indicate an impairment) for indicators of impairment. No
impairment was considered necessary during the period ended September 30, 2007 or 2006.
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Intangibles
Intangibles are stated at cost less accumulated amortization. At September 30, 2007, amortizable intangible assets consisted of the following:

AssetsCustomer lists
Domains
Non-Compete
Agreement

Accumulated
Amortization

Cost

Net Book
Value

Estimated
Useful Lives

Method$ 599,976
276,244$ 158,870
37,331$ 441,106
238,9133 - 4 years
3 - 4 years

Straight-line
Straight-line

201,147

11,734

189,4133 - 5 years

Straight-line$ 1,077,367$ 207,935$ 869,432

At September 30, 2007, the Company also has an intangible asset (trade names) that has an indefinite life and is therefore not subject toamortization.
At September 30, 2006, amortizable intangible assets consisted of the following:

AssetsCustomer Lists
Domains

Accumulated
Amortization

Cost

Net Book
Value

Estimated
Useful Lives

Method$ 296,267$ 24,689$ 271,578

3 years

Straight-line

50,0004,137

45,833

3 years

Straight-line$ 346,267$ 28,856$ 317,411

Intangibles are tested for impairment (none was necessary in the periods ended September 30, 2007 and 2006) at least annually (but more often
if circumstances indicate an impairment). Amortization expense for the nine-month period ended September 30, 2007, and the period ended
September 30, 2006, was $150,224 and 28,856, respectively. Amortization expense is expected to amount to the following totals for the years
ending September 30:
2008
2009
2010
2011
2012

$294,390
265,534
160,218
120,793
28,497$869,432
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Deferred Revenue/Revenue Recognition
Deferred revenue represents funds the Company has received in advance of providing advertising services on its website or for subscriptions
where the term of the subscription extends past the end of the period. Advertising revenue is recognized when the advertisement is posted.
Subscription revenue is recognized over the term of the subscription agreements on the straight-line basis.
Advertising Costs
The Company incurs advertising costs to obtain customer names and generate mailings. These advertising costs are expensed as incurred.
Payments to two and three vendors represented 39% and 49% of the advertising costs for the nine-month period ended September 30, 2007,
and the period ended September 30, 2006, respectively.
Income Taxes
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted
tax laws and rates applicable to periods in which the differences are expected to affect taxable income. Valuation allowances are establishedwhen necessary to reduce deferred tax assets to the amounts expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from the estimated amounts.
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Note 2. Option Investors, LLC
As described in Note 1, the Company owns a 50% interest in OI. Profits are distributed to the LLC members of OI based on an operating
agreement dated August 22, 2004. The income due to the other 50% owner under the operating agreement is distributed quarterly based on
certain percentages of net subscription revenue from existing customers as of August 2004, and certain percentages of net subscription revenue
from new customers after this date, minus certain costs described in OI's operating agreement. Distributions to the other owner are not requiredat the earlier of total distributions reaching $1,590,000 or September 1, 2009. During the nine-month period ended September 30, 2007, a totalof $203,369 of distributions were made to the other owner. During the period from May 6, 2006, to September 30, 2006, the total distribution
made to the other owner was $30,000.
Note 3. Acquisition of Subsidiaries
In June 2006, RSH acquired the three companies (and their subsidiaries) described earlier. The acquisition was financed by capital raised fromthe sale of stock and notes issued to the sellers. The acquisition is part of the Company's plan to expand into the financial newsletter and list
rental business, all conducted via the internet. The activities of the acquired companies have been included in these financial statements since
the acquisition date. The following is a summary of the fair values of assets acquired and liabilities assumed.
Assets acquired
Cash
Other current assets
Property and equipment
Software
Customer lists
Domains
Other noncurrent assets$374,507
22,557
128,493
400,000
296,267
50,0004,894
1,276,718

Liabilities assumed
Deferred revenue
Other current liabilities
Fair value of net assets acquired(472,959)(262,639)$541,120

The purchase price amounted to $4,046,506 (in addition to the liabilities assumed above) and was paid with $2,489,639 in cash and $1,556,867
in debt issued. The difference between the purchase price and the fair value of the net assets acquired was $3,505,386 and has been recognized
as goodwill.
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Note 4. Purchase of Business Assets from 21st Century
In June 2007, RSH purchased substantially all of the assets of 21st Century, a company with operations similar to RSH. The acquisition ispart of the Company's plan to expand into the financial newsletter and list rental business, all conducted via the internet. The activities of 21stCentury have been included in these financial statements since the acquisition date. The following is a summary of the fair values of the assets
acquired and the liabilities assumed.
Assets acquired
Customer lists
Domains
Non-Compete Agreements
Trade Names$228,709
226,244
201,147
154,191
810,291

Liabilities assumed
Deferred subscription revenue(395,331

Fair value of net assets acquired$414,960)

The purchase price amounted to $1,200,000 (in addition to the liabilities assumed above) and was paid with $700,000 of cash and $500,000 incommon stock issued by the Company (representing 1,190,476 shares). The difference between the purchase price and the fair value of the net
assets acquired was $785,040 and has been recognized as goodwill.
Note 5. Property and Equipment
Details of property and equipment at September 30 are as follows:
2007
Computer software
Office computer and equipment
Furniture and fixtures
Less accumulated depreciation

2006$ 400,000
126,463$ 400,000
121,055

4,202

7,439

530,665

528,494(132,507$ 398,158)(26,319)$ 502,175

Depreciation expense was $79,870 and $26,319 during the nine-month period ended September 30, 2007, and the period ended September 30,
2006, respectively.
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Note 6. Related Party Transactions
Short-Term Notes Payable - Related Parties
2007
Short-term promissory note payable to a shareholder/Chairman of the Board of Directors. The notebears interest at a rate of 30% and is due in June 2008. If paid early, interest is still calculated as if thenote had been outstanding for one full year. See additional discussion below.

$1,000,000

Short-term promissory notes payable to four shareholders. The notes bear interest at a rate of 12%
which is payable monthly. Due on demand. Convertible to common stock of the Company at a 20%
discount from the value determined by the Company's board of directors.

125,000

Short-term promissory notes payable to two shareholders. The notes bear interest at a rate of 12%
which is payable monthly. Due on demand. One of the notes (for $60,000) payable to a shareholder/
Chairman of the Board of Directors is convertible to common stock of the Company at a 30% discountfrom the value determined by the Company's board of directors.

120,000

Note payable to a shareholder's family partnership. The note bears interest at a rate of 12% which ispayable monthly. Due on demand. Convertible to common stock of the Company at a 20% discountfrom the value determined by the Company's board of directors.

25,000Notes payable to three shareholders, former owners of the subsidiaries acquired in June 2006. The
notes are non-interest bearing and due on demand.

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2006

$-

25,00092,841

206,867$1,362,841$231,867

Regarding the $1,000,000 note, interest on this note is payable in shares of common stock of the Company. The Company issued 714,825 sharesof common stock and recorded the issuance (valued at $300,000) as prepaid interest. This amount is being amortized over one year, the lifeof the note. As of September 30, 2007, the amortization of the prepaid interest was $87,500 and was recorded as interest expense. The note issenior in repayment rights to all notes of the Company and is collateralized by all assets of the Company including investments in subsidiaries.
Interest expense on related party debt was $132,738 during the nine-months ended September 30, 2007, and $30,213 during the period ended
September 30, 2006. This includes interest from related party debt also discussed in Note 7.
The beneficial conversion feature associated with the discount on potential conversion of convertible debt is not considered material to thesefinancial statements.
Other Related Party Transactions
The Company has a management agreement with affiliate companies owned by a shareholder in which the affiliates provide managementadvisory services to the Company. The Company incurred total advisory fees of $350,000 and $150,000 for the nine-month period ended
September 30, 2007, and the period from May 6, 2006, to September 30, 2006, respectively. The 2006 amount was paid with company stock
after the period ended September 30, 2006.
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Note 7. Long-Term Debt
The following long-term debt was outstanding to related parties and others at September 30:
2007

2006

Note payable to related parties in quarterly payments of $62,625, including interest at 5%, with notes
maturing on September 30, 2009. The Company did not make all scheduled payments during 2007.
However, all note payments are current as of October 2007.

$529,955$675,000

Convertible notes payable to related parties in quarterly payments of $62,625, including interest at
5%, with notes maturing on September 30, 2009. These notes are convertible at the holder's sole
discretion on a payment date to convert all or a portion of the outstanding principal to common stockin increments of not less than $20,000 at the greater of $0.31 per share or a conversion price as definedin the notes. The Company did not make all scheduled payments during 2007. However, all notepayments are current as of October 2007.

585,265

675,000

Loan payable to unrelated party for use of subscriber and intellectual property, loan is non-interest
bearing and payable in quarterly payments of $5,416, with the unpaid balance due in full on December
31, 2009. Loan payments can be accelerated depending on the amount of net revenue generated fromthe use of the subscriber and intellectual property.

65,0001,180,220

Less current portion(635,887$544,333

Principal payments on long-term debt are due as follows for the years ending September 30:
2008
2009
2010

$635,887
522,667
21,666$1,180,220

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1,350,000)(402,090$947,910)

Note 8. Stockholders' Equity
The Company has 30,000,000 authorized shares of preferred stock (par value $0.001, liquidation preference of $50 per share), of which
5,720,000 and 5,400,000 shares are issued and outstanding at September 30, 2007 and 2006, respectively. The Company has designated
15,000,000 shares of the 30,000,000 shares as Series A 12% Cumulative Preferred Stock. The remaining 15,000,000 shares are undesignated.
All outstanding preferred stock is Series A. Dividends on the Series A Preferred Stock shall be cumulative from the date of issuance and are
fully participating. The accrued dividend of $200,833 and $0 was outstanding at September 30, 2007 and 2006, respectively.
The Company has 100,000,000 authorized shares of common stock (par value $0.001), of which 20,011,666 and 14,133,333 shares are issued
and outstanding as of September 30, 2007 and 2006, respectively.
Note 9. Income Taxes
The Company files a consolidated income tax return which includes its four wholly-owned subsidiaries described in Note 1. Because the tax
return is filed on the cash basis of accounting and because there are significant differences between financial statement reporting and income
tax reporting for goodwill and other intangible assets, the financial statement income or loss can be significantly different than income or loss
for tax purposes.
Based on losses for 2007 and 2006, there is no current or deferred tax provisions included in these financial statements. The Company hasdeferred tax assets (and to a lesser extent, deferred tax liabilities) resulting from using the cash basis of accounting and from unused net
operating tax loss carryforwards. It also has deferred tax liabilities resulting from the amortization of intangible assets. Deferred tax assets arelarger than deferred tax liabilities, but the net benefit has been fully reserved (which is why the statutory rate is different than the rate in these
consolidated financial statements). The increase in the valuation allowance was $11,000 for the period ended September 30, 2007, and $320,000
for the period ended September 30, 2006.
As of September 30, 2007, the Company has taxable loss carryforwards of approximately $222,000 which will expire in years 2028 through2029.
Note 10. Subsequent Event
In October 2007, The Company issued a promissory note of $85,000 to an affiliated company that has substantially the same ownership as theCompany. The note bears interest at 12% and was payable in 90 days (now due on demand).
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RIGHTSIDE HOLDINGS, INC.
FINANCIAL REPORTDECEMBER 31, 2006
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CONTENTS
Page
INDEPENDENT AUDITORS' REPORT

F-21

FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETCONSOLIDATED STATEMENT OF OPERATIONSCONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITYCONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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F-23
F-24
F-25
F-26 - F-31

SUPPLEMENTARY INFORMATIONINDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATIONCOMBINED BALANCE SHEETSCOMBINED STATEMENTS OF OPERATIONSCOMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)COMBINED STATEMENTS OF CASH FLOWSNOTE TO SUPPLEMENTARY INFORMATION
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F-33
F-34
F-35
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INDEPENDENT AUDITORS' REPORTTo the Board of Directors
RightSide Holdings, Inc.
Roseville, California
We have audited the accompanying consolidated balance sheet of RightSide Holdings, Inc. ("the Company") as of December 31, 2006, and therelated consolidated statements of operations, stockholders' equity, and cash flows for the period from May 5, 2006 (inception), to December
31, 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RightSide
Holdings, Inc. as of December 31, 2006, and the results of operations, changes in its stockholders' equity, and cash flows for the period fromMay 5, 2006 (inception), to December 31, 2006, in conformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN PLLC

April 20, 2007
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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
December 31, 2006ASSETS
Current Assets
Cash
Card service reserves
Accounts receivable
Prepaid expenses$313,219
133,159
35,926
10,000Total current assets

492,304

Property and Equipment, net of accumulated
depreciation of $12,637

115,856

Other Assets
Goodwill
Intangibles, net of accumulated amortization of $97,711
Security deposits

3,505,386
648,556
4,294
4,158,236$4,766,396

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities
Accounts payable and accrued expenses
Interest payable
Dividend payable
Deferred revenue
Current portion of long-term debt

$188,97855,032200,833
458,023
722,357

Total current liabilities

1,625,223

Long-Term Debt, net

834,510

Total liabilities

2,459,733

Stockholders' Equity
Preferred stock
Common stock
Additional paid-in capital
Retained earnings (deficit)

5,720
18,107
2,836,173(553,337

Total stockholders' equity

2,306,663$4,766,396

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See Notes to Consolidated Financial Statements
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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the Period from May 5, 2006 (inception), to December 31, 2006
Revenues
Subscription, net
Advertising
RentalResearch$1,017,767
159,504
51,446
11,371

Total revenues

1,240,088

Operating Expenses
Consulting fees
PayrollMarketing / advertising

555,969
234,773
175,299

Professional fees
Amortization
Contributors
Merchant fees
Rent
Travel and entertainment
Other
Technology
Payroll tax
Insurance
Depreciation
Telephone

131,651
97,71145,935
36,11735,06826,664
23,342
21,951
20,015
17,972
12,637
9,738

Total operating expenses

1,444,842

Loss from Operations(204,754

Interest Expense)

55,032

Loss before non-controlling interest in incomeof consolidated subsidiary(259,786)

Non-controlling interest in income of consolidated subsidiary(92,718)$(352,504)

Net loss
See Notes to Consolidated Financial Statements
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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from May 5, 2006 (inception), to December 31, 2006

Preferred

CommonAdditional
Paid-in

Stock

Stock

CapitalRetained
Earnings(Deficit)

Total

Balances, May 5, 2006

$-

$-

$-

$-

$-

Issuances of stock as part of incorporation

5,400

17,467

2,677,133

2,700,000

Issuance of shares for advisory services

320

640

159,040

160,000

Net loss for the period(352,504)(352,504)

Preferred stock dividend(200,833)(200,833)$(553,337) $2,306,663

Balances, December 31, 2006

$5,720$18,107$2,836,173

See Notes to Consolidated Financial Statements
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RIGHTSIDE HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWSFor the Period from May 5, 2006 (inception), to December 31, 2006
Cash Flows From Operating Activities
Net loss
Adjustments to reconcile net loss to net
cash flows from operating activities
Stock issued for services
Amortization
Depreciation
Non-controlling interest in income
Changes in operating assets and liabilities, net of effects of acquisitions
Card service reserves
Accounts receivable
Prepaid expenses
Security deposits
Accounts payable and accrued expenses
Interest payable
Deferred revenue$(352,504)

160,000
97,711
12,637
92,718(133,159(13,369(10,000
600(73,661
55,032)))(14,936)

Net cash flows from operating activities(178,931)

Cash Flows From Investing Activity
Acquisition of subsidiaries, net of cash acquired of $374,507(2,115,132)

Cash Flows From Financing Activities
Proceeds from stock issuances
Distribution of non-controlling interest in income

2,700,000

Net cash flows from financing activities

2,607,282

Increase in cash and cash balance, end of year

$313,219(92,718

Noncash investing and financing activities:
Acquisition of subsidiaries financed with debt

$1,556,867

Preferred stock dividend (accrued but not paid)$200,833

See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization
RightSide Holdings, Inc. ("RSH") was organized during 2006 to acquire three companies that provide financial newsletters to subscribers overthe internet. In addition, the three companies charge for advertising on their websites and receive fees for customer list rental.
Principles of Consolidation
The consolidated financial statements include the accounts of RSH and three wholly-owned subsidiaries it acquired: RightSide Advisors, Inc.
("RSA"), Hot Stix, Inc. ("HS"), and Black Box Investing, Inc. ("BB"). RSA also owns a 50% interest in an entity called Option Investor, LLC("OI"). Due to the level of control that RSH has (through RSA), OI is consolidated into these financial statements. OI's income (and equity) is
distributed to the owners each year, so there is no non-controlling interest presented on the balance sheet. HS owns a 99% interest in an entity
called Synergy Trader LLC ("Synergy"). The other one-percent ownership is considered insignificant. Collectively, these various entities arereferred to as "the Company". All material intercompany accounts and transactions have been eliminated in consolidation.
Cash
The Company maintains its cash balances in financial institutions. At various times during the year ended December 31, 2006, the Company's
cash balances exceeded the Federal Deposit Insurance Corporation coverage of $100,000.
Card Service Reserves
These reserves represent cash deposits on account with various credit card services. These credit card services process a significant percentageof the Company's sales transactions.
Accounts Receivable
Accounts receivable include outstanding deposits due from credit card services and amounts due directly from customers. Accounts receivable
are stated at their net realizable value and are due within thirty days of billing. Based on historical collections, management believes the accounts
are fully collectible. Accordingly, no allowance exists at December 31, 2006. Account receivable are generally unsecured and do not bearinterest.
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Property and Equipment
Property and equipment is stated at cost less accumulated depreciation. Property and equipment is reviewed for possible impairment (none wasnecessary in the period ended December 31, 2006) at least annually. The Company provides for depreciation as follows:

AssetsEstimated
Useful Lives

MethodOffice and computer equipment
Furniture and fixtures

5years
7yearsStraight-line
Straight-line

Goodwill
As part of the purchase of the three companies described earlier, the Company acquired $3,505,386 of goodwill. Management reviews goodwill
at least annually for indicators of impairment. No impairment was considered necessary during the period ended December 31, 2006.
Intangibles
Intangibles are stated at cost less accumulated amortization. The Company provides for amortization as follows:

AssetsCost

Software
Customer Lists
Domains$400,000$296,267$50,000

Accumulated
Amortization(December 31,

Estimated
Useful

2006)

Lives

Method5 years
3 years
3 years

Straight-line
Straight-line
Straight-line$40,000$49,378$8,333

Intangibles are tested for impairment (none was necessary in the period ended December 31, 2006) at least annually. Amortization expense forthe period ended December 31, 2006, was $97,711. Amortization expense is expected to approximate at the years ending December 31:
2007
2008
2009
2010
2011

$195,400
195,400
137,700
80,00040,000$648,500
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Deferred Revenue
Deferred revenue represents monies received in advance for advertising on its website or for subscriptions where the term of the subscription
extends into the following calendar year. The subscription revenue is recorded over the term of the subscription agreements on the straight-line
basis.
Income Taxes
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities
that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted
tax laws and rates applicable to periods in which the differences are expected to affect taxable income. Valuation allowances are establishedwhen necessary to reduce deferred tax assets to the amounts expected to be realized.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from the estimated amounts.
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Note 2. Acquisition of Subsidiaries
During June 2006, RSH acquired the three companies (and their subsidiaries) described earlier. The acquisition was financed by capital raised
from the sale of stock and notes issued to the sellers. The acquisition is part of RSH's plan to expand into the internet media industry. The
activities of the acquired companies have been included in these financial statements since the acquisition date (inception of the Company). The
following is a summary of assets acquired, liabilities assumed, and related costs.
Assets acquired
Cash
Other current assets
Property and equipment
Software
Customer lists
Domains
Other noncurrent assets$374,507
22,557
128,493
400,000
296,267
50,0004,894
1,276,718

Liabilities assumed
Deferred revenue
Other current liabilities(472,959)(262,639)

Net assets acquired

541,120

Purchase priceCash paid
Debt issued

2,489,639
1,556,867
4,046,506

Excess of purchase price over fair valueof net assets acquired-Goodwill$3,505,386

Note 3. Property and Equipment
Details of property and equipment at December 31, 2006, are as follows:
Office and computer equipment
Furniture and fixtures$121,054
7,439
128,493

Less accumulated depreciation

12,637$115,856

Depreciation expense of $12,637 was recognized during 2006.
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Note 4. Related Party Transactions
During 2006, a Company affiliate advanced the Company $50,000 to pay operating costs. At December 31, 2006, $25,000 remained
outstanding, and is included in accounts payable and accrued expenses.
The Company also incurred $320,000 of advisory services provided by a shareholder, of which $150,000 was compensated in shares of stock.
Shares of stock were also issued to the shareholder for $10,000 of prepaid advisory services.
Interest expense of $55,032 was incurred on related party debt (see Note 5), all of which was payable at December 31, 2006. Accordingly, nointerest was paid on a cash basis during the period for May 5, 2006, to December 31, 2006.
Note 5. Long-Term Debt
The following long-term debt was outstanding to related parties at December 31, 2006:
Working capital loans payable to related parties; loans are non-interest bearing and payable upon demand.

$206,867

Note payable to related parties, quarterly payments due of $62,625, including interest at 5%, with notes maturing on
September 30, 2009.

675,000

Convertible notes payable to related parties, quarterly payments due of $62,625, including interest at 5%, with notes
maturing on September 30, 2009. These notes are convertible at the holder's sole discretion on a payment date to convert
all or a portion of the outstanding principal to common stock in increments of not less than $20,000 at the greater of $0.31
per share or a conversion price as defined in the notes.

675,000
1,556,867

Less current portion(722,357$834,510

Principal payments on long-term debt are due as follows for the years ending December 31:
2007
2008
2009

$722,357
467,958
366,552$1,556,867
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Note 6. Stockholders' Equity
The Company has 30,000,000 authorized shares of preferred stock (par value $0.001), of which 5,720,000 shares are issued and outstanding at
December 31, 2006. The Company has designated 15,000,000 shares of the 30,000,000 shares as Series A 12% Cumulative Preferred Stock.
Dividends on the Series A Preferred Stock shall be cumulative from the date of issuance and are fully participating. The accrued dividend of$200,833 was outstanding at December 31, 2006.
The Company has 100,000,000 authorized shares of common stock (par value $0.001), of which 18,106,666 shares are issued and outstanding.
Note 7. Income Taxes
The Company files a consolidated income tax return which includes its three wholly-owned subsidiaries described in Note 1. The tax return isfiled on a cash basis of accounting, so the financial statement income or loss can be significantly different than income or loss for tax purposes.
Management does not expect significant income or loss for tax return purposes for 2006.
The deferred tax asset associated with deferred revenue (and other similar deferred tax assets and liabilities associated with using the cash
basis of accounting for income tax purposes) have been fully reserved. The reserve (and the increase in the reserve) at December 31, 2006, isapproximately $66,000.
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SUPPLEMENTARY INFORMATION
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INDEPENDENT AUDITORS' REPORTON SUPPLEMENTARY INFORMATION
To the Board of Directors
RightSide Holdings, Inc.
Roseville, California
Our report on our audit of the financial statements of RightSide Holdings, Inc. for the period from May 5, 2006, to December 31, 2006, appears
on page 1. That audit was conduced for the purpose of forming an opinion on the financial statements taken as a whole. The combined financial
statements (excluding the statement of cash flows) of RSH's subsidiaries for the year ended December 31, 2006, on pages 14 - 17, is not arequired part of the basic financial statements, but is supplementary information. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
The 2005 combined financial statements of RSH's subsidiaries were audited by other auditors whose report dated March 28, 2006, expressed an
unqualified opinion on those statements. The supplementary information included in the combined financial statements (excluding the statementof cash flows) of RSH's subsidiaries for 2005 was derived for those statements.

/S/ PETERSON SULLIVAN PLLC

April 20, 2007
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RIGHTSIDE ADVISORS, INC.
COMBINED BALANCE SHEETS
December 31, 2006 and 2005ASSETS

2006

Current Assets
Cash
Card service reserves
Accounts receivable
Prepaid expenses

2005$312,738
133,159
35,926$399,401
36,696
19,455

Total current assets

481,823455,552

95,224

125,826

22,34638,080

4,294

4,894

26,64042,974$603,687$624,352$153,921$166,226
95,644

458,023

516,724

Total current liabilities

611,944778,594

Stockholders' Equity (Deficit)
Common stock
Additional paid-in capital
Retained earnings (deficit)

23,2805,961

23,2805,961(37,498)(183,483)

Total stockholders' equity (deficit)(8,257)(154,242)

Property and Equipment, net of accumulated
depreciation of $109,079 in 2006 and $74,123 in 2005
Other Assets
Customer list, net of accumulated amortization of$51,716 in 2006 and $32,277 in 2005
Security deposits

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable and accrued expenses
Accrued payroll and related liabilities
Deferred revenue$603,687
See Note to Supplementary Information
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RIGHTSIDE ADVISORS, INC.
COMBINED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2006 and 2005
2006

2005

$1,945,183
483,125
98,873$1,898,792
401,539

19,007

10,876

Total revenues

2,546,188

2,311,207

Operating Expenses
Payroll
Consulting fees
Marketing / advertising
Professional fees
Contributors
Merchant fees
Rent
Payroll tax
Technology
Depreciation
Other
Insurance
Amortization
Telephone
Travel and entertainment
Other taxes

753,368
392,567
315,561
161,091
75,151
72,62556,24843,40340,03834,95634,161
20,871
19,43915,865
14,365600,684
459,116
346,876
48,78078,912
84,182
52,21434,21643,22437,73973,493
21,792
23,45011,043

8,069

Total operating expenses

2,060,752

1,935,282

Income from operations

485,436

375,925

Revenues
Subscription, net of refunds of $129,817 for 2006
Advertising
RentalResearch

Non-controlling Interest in Incomeof Consolidated Subsidiary(239,481

Net income (loss)$245,955
See Note to Supplementary Information
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22,535)(455,960)$(80,035)

RIGHTSIDE ADVISORS, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2006 and 2005

Balances, December 31, 2004

CommonAdditional
Paid-inAccumulated

Stock

CapitalDeficit$(75,509) $(46,268)

Net loss(80,035)(80,035)

Distributions(27,939)(27,939)(183,483)(154,242)

Balances, December 31, 2005

$23,280

23,280$5,961

Total

5,961

Net income

245,955

Distributions(99,970)(99,970)$(37,498) $(8,257)

Balances, December 31, 2006

$23,280$5,961

See Note to Supplementary Information
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RIGHTSIDE ADVISORS, INC.
COMBINED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2006 and 2005
2006
Cash Flows From Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net
cash flows from operating activities
Depreciation and amortization
Non-controlling interest in income
Changes in operating assets and liabilities
Card service reserves
Accounts receivable
Prepaid expenses
Contingency payments made in advance
Accounts payable and accrued expenses
Accrued payroll and related liabilities
Accrued pension plan payable
Deferred revenue

2005$245,955$(80,035

54,395
239,481

61,189455,960(96,463(35,926
19,455))(12,305(95,644))(58,701

)

)

(917

)

23,881
68,41097,572
95,644(60,000)

63,620Cash flows from operating activities

260,247

Cash Flows From Investing Activities
Purchase of property and equipment
Payment of security deposits
Contingency payments related to customer list

(4,354600)(11,487(2,000))(3,705)(17,153)

Cash flows from investing activities(7,459)(30,640)(99,970)(27,939)(239,481)(455,960)

Cash flows from financing activities(339,451)(483,899)

Increase (decrease) in cash

(86,663)

210,785

Cash Flows From Financing Activities
Stockholder distributions
Distribution of non-controlling interest in income

725,324

Cash, beginning of year

399,401

188,616

Cash, end of year

$312,738$399,401

See Note to Supplementary Information
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NOTE TO SUPPLEMENTARY INFORMATION(Selected Disclosure - Basis of Presentation)
Note 1. Basis of Presentation
The supplementary information represents the combined financial statements (excluding the statement of cash flows) of RightSide Advisors,
Inc. ("RSA"), Hot Stix, Inc. ("HS"), Black Box Investing, Inc. ("BB"), Option Investor, LLC ("OI"), and Synergy Trader LLC ("Synergy").
These entities are presented as a combined entity based on common ownership. During 2006, RSA, HS, and BB were purchased by a company
called RightSide Holdings, Inc. ("RSH"). RSA owns 50% of OI and HS owns 99% of Synergy. All of OI's and Synergy's financial activities
are included in these financial statements. The basis of the assets and liabilities have not been adjusted as a result of RSH acquisition. RSH
is not included in this combined supplementary information. Note that the entities presented had common ownership both before and after theacquisition by RightSide Holdings, Inc.
Note that RSA, HS, and BB file a consolidated tax return with RSH. No tax benefit or expense has been included in these financial statements.
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21ST CENTURY INVESTORSPUBLISHING CORPORATIONFINANCIAL REPORTDECEMBER 31, 2006 and 2005
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CONTENTS
Page
INDEPENDENT AUDITORS' REPORT

F-41

FINANCIAL STATEMENTS
BALANCE SHEETSSTATEMENTS OF OPERATIONSSTATEMENTS OF SHAREHOLDERS' DEFICIT
STATEMENTS OF CASH FLOWSNOTES TO FINANCIAL STATEMENTS

F-42
F-43
F-44
F-45
F-46 - F-49
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INDEPENDENT AUDITORS' REPORTTo the Board of Directors RightSide Holdings, Inc. Roseville,
California
We have audited the accompanying balance sheets of 21st Century Investors Publishing Corporation ("the Company") as of December 31, 2006
and 2005, and the related statements of operations, shareholders' deficit, and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of 21st Century Investors
Publishing Corporation as of December 31, 2006 and 2005, and the results of its operations and cash flows for the years then ended, inconformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN PLLC

December 31, 2007

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21ST CENTURY INVESTORS PUBLISHING CORPORATIONBALANCE SHEETS
December 31, 2006 and 2005ASSETS

2006

2005

Current Assets
Cash
Accounts receivable
Prepaid expenses
Receivable from related parties
Receivable from shareholder$84,569
63,152
9,027
19

Total current assets$156,767$458,306$11,891
471,177$32,513586,451

250,000

280,125

733,068

899,089

30
9,970

30
9,970

$108,991
65,8689,800
195,000
78,647

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses
Deferred subscription revenue
Payable to related parties
Total current liabilities
Shareholders' Deficit
Common stock (par value $0.10; authorized 6,000 shares;
issued and outstanding 300 shares)
Additional paid-in capital
Retained deficit
Total shareholders' deficit(586,301)(450,783)(576,301)(440,783)$156,767
See Notes to Financial Statements
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21ST CENTURY INVESTORS PUBLISHING CORPORATIONSTATEMENTS OF OPERATIONS
For the Years Ended December 31, 2006 and 2005
2006

2005

Revenue
Subscription
Customer list rental
Advertising
Other$1,287,030
397,431
65,223$1,786,622
517,444
77,734

Total revenue

1,749,684

2,420,797

396,613605,676

1,353,071

1,815,121

939,595
97,3258,779
50,88074,362
43,16536,91260,00865,841

1,247,126
109,811353,396
14,812
162,776
57,66751,78388,8152,225

14,21010,049Total operating expenses

1,391,077

2,098,460

Net loss$(38,006

38,997

Cost of Revenue
Gross profit
Operating Expenses
Payroll
Rent
Commissions
Advertising
Licenses and permits
Professional fees
Bank charges
Web hosting
Promotions
Other

See Notes to Financial Statements
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21ST CENTURY INVESTORS PUBLISHING CORPORATIONSTATEMENTS OF SHAREHOLDERS' DEFICIT
For the Years Ended December 31, 2006 and 2005
Common Stock

SharesBalances, December 31, 2004

300

Amount$30

Additional
Paid-in
Capital$9,970Retained
Earnings(Deficit)

Total$334,836$344,836

Net loss(283,339)(283,339)

Distributions to shareholders(502,280)(502,280)(450,783)(440,783)

Net loss(38,006)(38,006)

Distributions to shareholder(97,512)(97,512)$(586,301) $(576,301)

Balances, December 31, 2005

Balances, December 31, 2006

300

30

300

$30

9,970

$9,970

See Notes to Financial Statements
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21ST CENTURY INVESTORS PUBLISHING CORPORATIONSTATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2006 and 2005
2006
Cash Flows From Operating Activities
Net loss
Adjustments to reconcile net income (loss) to net
cash flows from operating activities
Changes in operating assets and liabilities
Accounts receivable
Prepaid expenses
Receivable from related parties
Receivable from shareholders
Accounts payable and accrued expenses
Deferred subscription revenue
Payable to related parties
Net cash flows from operating activities

2005$(38,006) $(283,339

2,716
773
194,981
78,647(20,622(115,274))

57,681
14,924(87,910
521,886(11,282(229,981(30,125)

262,891

73,090Cash Flows From Financing Activity
Distributions to shareholders
Net change in cash)

(262,813)(24,422)(17,943)

126,934

Cash, end of year

$84,569$108,991

Supplemental Non-Cash Financing Activity
Distribution to shareholder through reduction ofreceivable from shareholder$-$239,467

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244,870

Cash, beginning of year

See Notes to Financial Statements)

NOTES TO FINANCIAL STATEMENTS
Note 1. Organization and Significant Accounting Policies
Organization
21st Century Investors Publishing Corporation ("the Company") was incorporated in Florida in October 1998. Until its business was acquiredin June 2007, the Company provided financial newsletters primarily to subscribers over the internet. In addition, the Company charged foradvertising on its websites and received fees for customer list rental.
On June 15, 2007, the Company sold substantially all of its business assets in a transaction more fully described in Note 3. This sale allowed theCompany to pay off certain creditors. The Company's shareholders have decided to distribute its remaining cash and shut down the Company.
This shut down is expected to be finalized in early 2008. The accompanying financial statements have not been prepared on the liquidationbasis of accounting because the decision to liquidate was not made until 2007.
Cash
The Company maintains its cash balances in financial institutions. The Company's cash balances occasionally exceed the Federal Deposit
Insurance Corporation coverage of $100,000.
Accounts Receivable
Accounts receivable include amounts due directly from customers. Accounts receivable are stated at their net realizable value and are due within
forty or sixty days of billing. Based on historical collections, management believes the accounts are fully collectible. Accordingly, there is noallowance at December 31, 2006 and 2005. Accounts receivable are generally unsecured and do not bear interest. As of December 31, 2006,
amounts due from three customers accounted for 75% of accounts receivable. As of December 31, 2005, amounts due from five customers
accounted for 80% of accounts receivable.
Deferred Subscription Revenue
Deferred subscription revenue represents cash received in advance for subscriptions where the term of the subscription extends into thefollowing calendar year. The subscription revenue is recorded over the term of the subscription agreements on the straight-line basis.
Income Taxes
The Company has elected to be taxed under Subchapter S of the Internal Revenue Code. As a result, income is taxed at the shareholder level.
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Advertising
Advertising costs are expensed as incurred.
Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from the estimated amounts.
Note 2. Related Party Transactions
The Company made advances to a shareholder in a prior year of which $78,647 was still receivable of December 31, 2005. This amount was
repaid in 2006.
The Company's majority shareholder during the years ended December 31, 2006 and 2005, was also the majority shareholder of several
companies that do business with the Company. The Company and these affiliates split the costs associated with shared office facilities andemployees. The Company has various other transactions with affiliates for which it may receive or pay fees. A summary of the transactions is
as follows for the years ended December 31:
2006
Payroll paid to James DiGeorgia &Associates, Inc.
Office rent paid to James DiGeorgia &Associates, Inc.
Advertising income received from:21st Century Futures, LLC
Erlanger Squeeze Play, LLC
Tactical Trading, LLC
Torpedo Watch, LLC
Commissions paid to:
21st Century Options Corporation
Erlanger Squeeze Play, LLC
Silver and Gold Report, LLC

2005$939,595$1,247,126

97,325

109,811

9,497
6,156
13,1601,339

24,6099,346
27,912
5,130

1,654

60,515
11,019280,000

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A summary of amounts receivable from related parties is as follows as of December 31:
2006
James DiGeorgia & Associates, Inc.
Finestknown, Inc.
Renaissance Health Publishing, LLC

$19

2005
$15,000
180,000$19$195,000

A summary of amounts payable to related parties is as follows as of December 31:
2006
Silver and Gold Report, LLC
Erlander Squeeze Play, LLC

2005$250,000$279,424$250,000$280,125

701

The Company and its affiliates share office facilities under an operating lease for which James DiGeorgia & Associates, Inc. is the contractual
tenant. The lease expires in March 2013. The Company reimburses James DiGeorgia & Associates, Inc. for its share of the office space undera verbal agreement between the two parties. The amount allocated to the Company is based on the number of subscribers of the Company's
newsletters compared to the total number of subscribers from all affiliates' newsletters. The future minimum payments required by the parties
under this lease for the years ending December 31 are as follows (allocated amounts are estimated based on current subscribers):

2007
2008
2009
2010
2011
Thereafter

Total Lease

Allocation to

Obligation

the Company$269,197
279,965
291,163
302,810
314,922$104,987
109,186
113,554
118,096
122,820

410,733

160,186$1,868,790$728,829

There were no other material transactions between the Company and its affiliates. However, the existence of common ownership could resultin the future operating results or financial position of the companies being significantly different from those that would be obtained if thecompanies were autonomous.
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Note 3. Sale of Assets
On June 15, 2007, the Company sold substantially all of its assets and assigned substantially all of its outstanding contracts to RightSide
Holdings, Inc. ("RightSide"), a company with similar operations. Pursuant to the terms of the purchase agreement between the parties, RightSide
paid $700,000 in cash and $500,000 in the form of 1,190,476 shares of RightSide common stock to the Company's former shareholder.
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DUNCAN MEDIA GROUP, INC.
AND SUBSIDIARYCONSOLIDATED FINANCIAL REPORT(UNAUDITED)
September 30, 2007

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DUNCAN MEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEET
September 30, 2007
Unaudited

ASSETS
Current assets
Cash
Accounts receivable
Due from related parties
Prepaid income taxes
Prepaid expenses$335,908
450,380
39,032
157,690
9,787

Total current assets

992,797

Property and equipment, net of accumulated
depreciation of $7,683

53,448Intangible assets, net of accumulated
amortization of $1,039,457
Goodwill

1,940,875
1,543,129$4,530,249

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities
Accounts payable
Due to related party
Accrued expenses
Current portion of long-term debt

$213,494
35,04759,315500,000

Total current liabilities

807,856

Long-term debt, net

749,999

Total liabilities
Stockholders' equity
Preferred stock (par value $0.001; authorized 100,000,000 shares; issued and outstanding 4,150,000 shares; liquidationpreference of $4,108,500)
Common stock (par value $0.001; authorized 100,000,000 shares; issued and outstanding 10,300,000 shares)
Additional paid-in capital
Retained deficit

1,557,855

Total stockholders' equity

4,150
10,3003,885,550(927,606
2,972,394$4,530,249

See Notes to the Consolidated Financial Statements
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DUNCAN MEDIA GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the nine-month period ended September 30, 2007
Unaudited

Pay per click revenues
Management services fees

$3,333,748
235,000

Total revenues

3,568,748

Expenses
Pay per click expenses
Selling, general, and administrative
Depreciation of property and equipment
Amortization of intangible assets

1,999,620
1,135,338
7,683

Total operating expenses

4,182,098

Loss from operations(613,350

1,039,457

Other income (expense)
Interest income
Interest expense

)

2,111
(54,941)

Total other income (expense)(52,830)

Loss before income tax expense(666,180)(149,310)$(815,490)

Income tax provision
Net loss
See Notes to the Consolidated Financial Statements
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DUNCAN MEDIA GROUP, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
For the nine-month period ended September 30, 2007
Unaudited

Preferred

CommonAdditional
Paid-in

Stock

Stock

CapitalSharesAmountSharesRetained
Deficit

Total

AmountBalances,
January 1, 2007

1,900,000 $ 1,900

3,800,000$ 3,800

Issuance of stock, net of$250,000 fees

2,150,000

2,150

6,300,000

6,300

1,891,550-

1,900,000

Issuance of stock foradvisory services

100,000

100

200,000200

99,700-100,000--(815,490 )(815,490 )Net loss for the period
Balances,
September 30, 2007-

4,150,000 $ 4,150

10,300,000 $ 10,300

See Notes to the Consolidated Financial Statements
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Please Consider the Environment Before Printing This Document$ 1,894,300 $ (112,116 ) $ 1,787,884$ 3,885,550 $ (927,606 ) $ 2,972,394

DUNCAN MEDIA GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWSFor the nine-month period ended September 30, 2007
Unaudited
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash flows fromoperating activities:
Amortization
Depreciation
Issuance of stock for advisory services
Changes in operating assets and liabilities:
Accounts receivable
Due from related parties
Prepaid expenses
Prepaid income taxes
Accounts payable
Due to related party
Accrued expenses$(815,490)

1,039,457
7,683
100,000(152,242(39,032
34,829(157,690
55,67465,603)))59,315

Net cash provided by operating activities

198,107

Cash flows from investing activity
Acquisition of subsidiary, net of cash acquired of $171,111
Purchase of property and equipment(3,078,889)(6,383)(3,085,272)

1,854,000
450,000(450,000)(250,001)

Net cash used by investing activities
Cash flows from financing activities
Proceeds from issuance of stock, net
Proceeds from short-term note payable
Repayment of Short-term note payable
Principal payments on long-term debt
Net cash provided by financing activities

1,603,999

Net change in cash

(1,283,166

Cash, beginning of period

1,619,074

Cash, end of period$335,908

Noncash investing and financing activities:
Acquisition of subsidiaries by incurrence of debt

$1,500,000

Conversion of note payable to officer to stock$46,000

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See Notes to the Consolidated Financial Statements
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DUNCAN MEDIAN GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
Unaudited
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Duncan Media Group, Inc. (the “Company”) is an internet media investment and management services company that focuses its investments
primarily on the internet business services and media sector. The Company was incorporated in Delaware on November 21, 2006. The
Company’s involvement with internet media is through its wholly-owned subsidiary, Superfly Advertising, Inc.(“Superfly”). Management
services are provided to Rightside Holdings, Inc. (“Rightside”), an affiliated company with common shareholders and the same officers anddirectors of the Company.
On January 22, 2007, the Company purchased all of Superfly's common stock from an unrelated party, for $5,000,000. $3,500,000 was
payable immediately in cash and the remaining $1,500,000 was payable in the form of notes payable to the former owners/shareholders. See
Note 4 for allocation of the purchase price.
Superfly along with its wholly-owned subsidiary, Treefrog Commerce, Inc. ("Treefrog") was incorporated in Indiana in November 2004.
Superfly performs keyword searches, purchasing advertisements on various internet search engines. Consumers are directed to domain web
pages Superfly owns containing keyword-based links to higher-priced cost-per-click ("CPC") syndicated advertisements. The consumer clicks
on one of the higher-priced advertisements and Superfly earns fees on the click-through (known as pay-per-click, or "PPC") from themerchant placing the advertisement. Superfly nets the difference between the low price paid for the CPC advertisement on the search results
page and the higher price it generates when the consumer clicks on an advertisement on the domain web page.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and Superfly with its wholly-owned subsidiary.
All significant intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from estimated amounts.

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Cash
The Company maintains its cash balances in financial institutions. Cash balances occasionally exceed federal banking insurance limits.
Accounts Receivable
Accounts receivable are stated at their outstanding balances. Management reviews the collectability of accounts receivable on a periodic basis
and determines the appropriate amount of any allowance. No allowance was deemed necessary at September 30, 2007. The Company charges
off receivables to an allowance (if any) when management determines that a receivable is not collectible. Accounts receivable are notcollateralized.
Three customers accounted for 99% of accounts receivable at September 30, 2007.
Property and Equipment
Property and equipment consists of office furniture and equipment and are stated at historical cost less accumulated depreciation. Maintenancecosts are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, whichrange from three to five years.
GoodwillManagement reviews goodwill at least annually for indicators of impairment, or more frequently upon occurrence of an event or whencircumstances indicate the carrying value is greater than fair value. No impairment was considered necessary during the period ended
September 30, 2007.
Intangible Assets
Intangible assets other than goodwill are subject to amortization. Accordingly, they are stated at cost less accumulated amortization.
Intangible assets are reviewed for potential impairment at least annually or whenever events or circumstances occur that indicate the carrying
amounts may not be recoverable. No impairment was considered necessary during the period ended September 30, 2007.
Advertising Costs
The Company incurs advertising costs to place customers' websites on the third-party informational websites. These advertising costs are
expensed as incurred. The Company incurred $1,774,617 for the period ended September 30, 2007. One vendor represented 89% of
advertising costs for the period ended September 30, 2007. Advertising costs
are reported as pay per click expenses in the consolidated statement of operations.

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Income Taxes
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities
for expected future tax consequences of events that have been recognized in the Company’s financial statements or income tax returns. In
estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax
laws or rates.
Note 2. Property and Equipment
Property and equipment consists of office furniture and equipment and are stated at cost of $61,131 less accumulated depreciation of $ 7,683.
Note 3. Notes Payable to Officer
In 2006, the Company issued an unsecured on demand note payable to an officer totaling $46,000. Interest on the note accrued at a rate of
12%. In January 2007, the note payable with accrued interest was converted to a capital contribution for 50,000 shares of preferred stock and
100,000 shares of common stock.
Note 4. Acquisition of Superfly Advertising, Inc.
On January 22, 2007, the Company acquired 100% of the outstanding stock of Superfly including its wholly-owned subsidiary, Treefrog fromunrelated parties. Superfly places advertising on third-party informational and referral source internet websites specific to the industries inwhich their customers operate, and then charges customers for coordinating their advertising services. The acquisition of Superfly is in linewith the nature of operations of the Company.
The Company purchased Superfly for $5,000,000. Total consideration for the purchase included a $250,000 deposit paid in 2006, a cash
payment of $3,250,000 paid at closing, and the issuance of two notes payable totaling $1,500,000 in favor of Superfly's former owners/
shareholders (see Note 6).
The results of operations for the Company include Superfly as of the acquisition date January 2, 2007. An allocation of the purchase price,based on the relative fair values at the time of purchase, was recorded at January 22, 2007, as follows:
Cash
Accounts and other receivables
Other current assets
Property and equipment
Intangible assets (see Note 5)
Goodwill
Accounts payable and accrued expenses
Total$ 171,111
328,694
9,226
46,7232,980,332
1,543,129(79,215$ 5,000,000)

Intangible assets include domain name rights and non-compete agreements and are amortized over their estimated useful lives; see Note 5.
Goodwill is not amortizable.

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The Company financed the cash portion of the purchase price consideration through the issuance of preferred and common stock. In addition,
the Company issued a note payable to an unrelated company for $450,000. Interest on this note accrued at a rate of 5.5%. The note was
repaid in April 2007.
Goodwill is not expected to be deductible for income tax purposes. Domain name rights and noncompete agreements are expected to beamortized over a weighted-average period of 3.8 and 3.0 years, respectively.
Note 5. Intangible Assets
The Company provides for amortization of intangible assets as follows:

Assets
Domain names-Commodity
Domain names-Long Life
Non-Compete Agreements

Cost

Accumulated
Amortization
as of
September 30,
2007$ 1,018,691
881,933$ (703,773(87,042

1,079,708(248,642$ 2,980,332$ (1,039,457

Net Book
Value

Estimated
Useful
Life

Method) $ 314,918) 794,891

1 year
7 years

Straight-line
Straight-line)

3 years

Straight-line

831,066) $ 1,940,875

Amortization expense was $1,039,457 for the period ended September 30, 2007. Amortization expense is estimated to be the following foreach of the years ended September 30th, respectively, $827,811 in 2008, $485,893 in 2009, $297,250 in 2010, $125,990 in 2011, and $125,990
in 2012.
Note 6. Long-Term Debt
The Company issued two long-term notes payable to former stockholders (“the Acquisition Notes”) totaling $1,500,000 to finance theacquisition of Superfly. The Acquisition Notes are being repaid starting in March 2007 in equal monthly installments totaling $41,667, plus
interest at 7% with maturity in February 2010. The notes must be repaid immediately in the event of change in control or initial public
registration of the Company's or Superfly’s common stock with proceeds that exceed $20,000,000. Additionally, note installments are subject
to deferral in any month during the term of the notes the Company does not reach a certain earnings amount, as defined, the installments shallnot be paid in that month and the payment of principal and interest is deferred to the end of the term. Further, for any month the Company
produces excess earnings, as defined, the installment payment will increase. The notes are secured by the Company’s assets.

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Required principal payments for the years ended September 30th, respectively are $500,000 in 2008, $500,000 in 2009, and $249,999 in 2010.
Interest expense of $49,247 was paid on these notes from January 22, 2007, to September 30, 2007. There was no unpaid interest as of
September 30, 2007.
Note 7. Income Taxes
In 2006, the Company did not record an income tax benefit for its net loss due to the uncertainty of future taxable income. The deferred tax
asset of approximately $45,000 associated with the net operating loss carryforward from 2006 was fully reserved. This loss carryforward will
be utilized as estimated upon completion of the 2007 consolidated tax return and is fully reserved as of September 30, 2007.
At September 30, 2007, the Company did not have any deferred tax assets or liabilities with the primary difference between income taxes,
calculated at the statutory rate and income taxes recorded in the Statement of Operations, relating to the amortization of intangible assets
under generally accepted accounting principles that is not allowable for tax purposes. This difference results in taxable income and a tax
expense on the books.
The 2007 income tax provision consists of:Current provision:FederalState$76,31073,000$149,310

Note 8. Preferred Stock
Preferred stock is subordinated to existing senior debt of the Company, but senior to common stock. The stock has a 10% dividend rate
accrued annually and paid quarterly. Preferred stock has no voting rights and is not convertible into common stock. Upon liquidation,
preferred stockholders will receive return of capital (at $0.999 per share) plus any accrued and unpaid dividends.
Note 9. Relationship with Rightside Holdings, Inc.
The Company shares office facilities with Rightside. Rightside is the sublessee on an operating sublease agreement for the office facilities for
the Company which expires in July 2010. The Company pays the sublessor directly each month for use of the office space under a verbal
agreement. The future minimum payments required by the Company under this lease for the years ended September 30th are as follows:$33,932 in 2008, $34,823 in 2009 and $20,790 in 2010 totaling $89,545. Rent and security deposits on the lease agreement during this time
were paid by RightSide. The rent expense for the period ended September 30, 2007 was $24,725.
During the nine-month period ended September 30, 2007, the Company received $235,000 in fees from Rightside Holding, Inc. under amanagement services agreement.

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Note 10. Relationship with Hello Metro, Inc.
Superfly's former majority shareholder prior to January 22, 2007, is also the sole shareholder of Hello Metro, Inc., a company that operates
websites on the internet and has some similar operations. Superfly and Hello Metro, Inc. share office facilities under an operating lease forwhich Hello Metro, Inc. is the contractual tenant. The operating lease expires in October 2008. Superfly reimburses Hello Metro, Inc.
monthly for its share of the office space under a verbal agreement between the two parties. The future minimum payments required by theparties under this lease for the year ending September 30, 2008, is $51,996 (to be paid by Hello Metro, Inc.) of which the Company is toreimburse $6,000. Rent expense amounted to $4,240 for the period from January 22, 2007 to September 30, 2007.
There were no other material transactions between these two companies. However, the relationship could result in the future operating results
or financial position of the companies being significantly different from those that would be obtained if the companies were autonomous.
Note 11. Relationship with DC Associates, LLC
One of the Company’s majority shareholders controls DC Associates, LLC for which the Company pays a monthly management fee of$13,000 under an Advisory Agreement for financial services. For the nine-month period ended September 30, 2007, the Company expensed a
total of $216,199 relating to DC Associates, LLC. The expense is included in general & administrative expenses.
Note 12. Joint Venture Agreement
In June 2007, Superfly entered into a Joint Venture Agreement with one of the former stockholders to use his local city guide websites for the
purpose of internet traffic arbitrage. In exchange for the use of his websites, the Company pays a portion (40%) of the internet traffic
arbitrage profits to him as a Domain Leasing Fee. Funds can be advanced to the venture, as well. As of September 30, 2007, the Company
had a payable of $35,047 to the venture. Revenue earned and expenses incurred under this agreement are approximately $630,000 and$370,000 for the nine-month period ended September 30, 2007.
Note 13. Subsequent Events
In December 2007, the Joint Venture Agreement discussed in Note 12 was amended to change the Domain Leasing Fee currently paid to theformer stockholder to 10%. He will receive the remaining 30% of the profit in the form of an accelerated note payment on the Acquisition
Notes described earlier. The other note holder will also automatically receive accelerated note payments.
In October 2007, the Company loaned $85,000 to Rightside by receipt of a promissory note. The note bears interest at 12% and was payable in
90 days and is now due on demand.

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DUNCAN MEDIA GROUP, INC.
FINANCIAL REPORTDECEMBER 31, 2006
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CONTENTS
Page
INDEPENDENT AUDITORS' REPORT

F-63

FINANCIAL STATEMENTS
BALANCE SHEETSTATEMENT OF OPERATIONSSTATEMENT OF STOCKHOLDERS' EQUITYSTATEMENT OF CASH FLOWSNOTES TO FINANCIAL STATEMENTS

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F-65
F-66
F-67
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INDEPENDENT AUDITORS' REPORTTo the Board of Directors
Duncan Media Group, Inc.
Roseville, California
We have audited the accompanying balance sheet of Duncan Media Group, Inc. as of December 31, 2006, and the related statements ofoperations, stockholders' equity, and cash flows for the period from November 21, 2006 (date of inception) to December 31, 2006. These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Duncan Media Group,
Inc. as of December 31, 2006, and the results of its operations and its cash flows for the period from November 21, 2006 (date of inception) to
December 31, 2006, in conformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN PLLC

January 21, 2008

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DUNCAN MEDIA GROUP, INC.
BALANCE SHEET
December 31, 2006ASSETS
Current Assets
Cash
Prepaid expenses
Prepaid acquisition costs
Deposit on acquisition of subsidiary$1,619,074
10,00025,390Total current assets

1,904,464

250,000

Property and Equipment

8,025

Total assets$1,912,489
LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities
Accounts payable
Notes payable to officer$78,605
46,000Total current liabilities

124,605

Stockholders' Equity
Preferred stock (par value $0.001; authorized 100,000,000 shares; issued
and outstanding 1,900,000 shares; liquidation preference of $1,898,100)
Common stock (par value $0.001; authorized 100,000,000 shares; issued
and outstanding 3,800,000 shares)
Additional paid-in capital
Accumulated deficit

1,900
3,800
1,894,300(112,116

Total stockholders' equity

1,787,884

Total liabilities and stockholders' equity$1,912,489
See Notes to Financial Statements
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DUNCAN MEDIA GROUP, INC.
STATEMENT OF OPERATIONS
For the Period from November 21, 2006 (date of inception) to December 31, 2006
Operating Expenses
General and administrative$112,172

Loss from operations(112,172Interest Income
Other Expense)

108

Net loss
See Notes to Financial Statements
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DUNCAN MEDIA GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from November 21, 2006 (date of inception) to December 31, 2006
Preferred Stock

Issuance of stock

Common Stock

SharesAmountSharesAmountAdditonal
Paid-in
Capital1,900,000$1,9003,800,000$3,800$1,894,300

Net loss
Balances at December 31, 2006

1,900,000$1,9003,800,000$3,800$1,894,300

See Notes to Financial Statements
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Accumulated
Deficit

Total
Stockholders'Equity$-$1,900,000(112,116)$(112,116) $1,787,884(112,116)

DUNCAN MEDIA GROUP, INC.
STATEMENT OF CASH FLOWSFor the Period from November 21, 2006 (date of inception) to December 31, 2006
Cash Flows From Operating Activities
Net loss
Adjustments to reconcile net loss to net cashused by operating activities
Changes in operating assets and liabilities:
Prepaid expenses
Accounts payable$(112,116)(10,000)

78,605

Net cash used by operating activities
Cash Flows From Investing Activities
Prepaid acquisition costs
Deposit on acquisition of subsidiary
Purchases of property and equipment
Net cash used by investing activities
Cash Flows From Financing Activities
Proceeds from notes payable to officer
Proceeds from issuance of stock(43,511)(25,390)(250,000)(8,025)(283,415)

46,0001,900,000

Net cash provided by financing activities

1,946,000

Net change in cash and cash at end of period$1,619,074

See Notes to Financial Statements
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NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Duncan Media Group, Inc. ("the Company") is an internet media investment and management firm that focuses its investments primarily oninternet business services and media sectors. The Company was incorporated in Delaware on November 21, 2006, as Duncan Capital MediaGroup, Inc., to raise capital towards investments. The Company changed its name to Duncan Media Group, Inc. on December 13, 2006. The
Company is located in California, but seeks business investments nationwide.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from estimated amounts.
Cash
The Company maintains its cash balances in financial institutions. Cash balances may occasionally exceed federal banking insurance limits.
Property and Equipment
Property and equipment are stated at historical cost less accumulated depreciation. Maintenance costs are expensed as incurred. Depreciation iscomputed using the straight-line method over the estimated useful lives of the assets, which range from three to five years.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets andliabilities, applying enacted statutory rates in effect for the year in which the differences are expected to reverse. The Company provides
valuation allowances for deferred tax assets for which realization of such assets is not considered more likely than not.
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Note 2. Property and Equipment
Property and equipment consists of office furniture and equipment at December 31, 2006. No depreciation of property and equipment wasrecorded for the period from November 21, 2006 (date of inception) to December 31, 2006, since it would not have been material.
Note 3. Notes Payable to Officer
The Company issued three notes payable to an officer totaling $46,000 in 2006. Interest on the notes accrued at a rate per annum equal to 12%.
Notes payable to officer were payable on demand and are unsecured. In January 2007, the notes payable plus accrued interest were converted
to a capital contribution for 50,000 shares of preferred stock and 100,000 shares of common stock.
Note 4. Income Taxes
The Company did not record an income tax benefit for its net loss in 2006 due to the uncertainty of future taxable income. The deferred tax
asset of approximately $45,000 associated with the net operating loss carryforward has been fully reserved. The most significant component of
the difference between the effective tax rate and the statutory tax rate is the change in the valuation allowance of $45,000. The Company's tax
net operating loss carryforward was approximately $112,000 at December 31, 2006, and expires in 2026.
Note 5. Preferred Stock
Preferred stock is subordinated to existing senior debt of the Company, but senior to common stock. The stock has a 10% dividend rate
accrued annually and paid quarterly. Preferred stock has no voting rights and is not convertible into common stock. Upon liquidation, preferredstockholders will receive return of capital (at $0.999 per share) plus accrued and unpaid dividends.
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Note 6. Relationship with RightSide Holdings, Inc.
The Company shares office facilities with RightSide Holdings, Inc. ("RightSide"). The Company and RightSide share the same officers andboard of directors. RightSide is the sublessee on an operating sublease agreement for the office facilities. The operating sublease agreement
expires in July 2010. The Company pays the sublessor directly each month for use of the office space under a verbal agreement. The future
minimum payments required by the Company under this lease for the years ending December 31 are as follows:
2007
2008
2009
2010

$33,041
33,932
34,823
20,790$122,586

There was no rent expense recorded for the period ended December 31, 2006. Rent and security deposits on the lease agreement during thistime were paid by RightSide.
On October 1, 2007, the Company issued a note payable in the amount of $85,000 to RightSide. Interest on the note accrues at a rate per annum
equal to 12%. The note is unsecured and due on January 1, 2008.
Note 7. Subsequent Acquisition of Subsidiary
On January 22, 2007, the Company acquired 100% of the stock of Superfly Advertising, Inc. and its wholly-owned subsidiary, Treefrog
Commerce, Inc. (collectively, "Superfly"). Superfly places advertising on third-party informational and referral source Internet websites specificto the industries in which their customers operate, and then charges customers for coordinating their advertising services. The acquisition ofSuperfly is in line with the nature of operations of the Company.
The Company paid a total of $5,000,000 for the purchase of Superfly. The consideration included a $250,000 deposit paid in 2006, a cash
payment of $3,250,000 paid at the closing of the purchase, and the issuance of two notes payable totaling $1,500,000 in favor of Superfly's
shareholders.
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The results of operations of Superfly prior to the acquisition date have not been included in these financial statements since control did not exist
until the acquisition date. The following table summarizes the carrying value of Superfly's assets acquired and liabilities assumed as of January
22, 2007, the acquisition date:Current assets
Property and equipment, net
Domain name rights
Noncompete agreements
Goodwill$509,031
46,723
1,900,624
1,079,708

Total assets acquired

5,079,215

1,543,129

Current liabilities

79,215

Net assets acquired$5,000,000

Goodwill is not expected to be deductible for income tax purposes. Domain name rights and noncompete agreements are expected to beamortized over a weighted-average period of 3.8 and 3.0 years, respectively.
The Company obtained additional cash in 2007 for the purchase price consideration through the issuance of 2,100,000 shares of preferred stockand 4,200,000 shares of common stock for $2,100,000. In addition, the Company issued a note payable to an unrelated company for $450,000.
Interest on this note accrued at a rate per annum equal to 5.5%. The note was repaid in full in April 2007.
The two notes payable to the former Superfly shareholders totaling $1,500,000 bear interest at a rate per annum equal to 7%. The notes are
unsecured and mature in February 2010. Principal payments are due monthly in equal installments of $41,667 plus interest (this is the payment
total for both notes each month) until maturity. All principal is due immediately, however, in the event of a change in control of Superfly or
an initial public offering of Superfly's shares that exceeds $20,000,000. In addition, the required principal payments are adjusted up or down
monthly if Superfly's net income is above or below specific thresholds.
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SUPERFLY ADVERTISING, INC.
AND SUBSIDIARYCONSOLIDATED FINANCIAL REPORT(A Review)
SEPTEMBER 30, 2007
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CONTENTS
Page
ACCOUNTANTS' REVIEW REPORT

F-74

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETCONSOLIDATED STATEMENT OF OPERATIONSCONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITYCONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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SUPPLEMENTARY INFORMATIONACCOUNTANTS' REVIEW REPORT ON SUPPLEMENTARY INFORMATIONCONSOLIDATED STATEMENTS OF OPERATIONSNOTE TO SUPPLEMENTARY INFORMATION

F-85
F-86
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ACCOUNTANTS' REVIEW REPORTTo the Board of Directors
Duncan Media Group, Inc.
New York, New YorkWe have reviewed the accompanying consolidated balance sheets of Superfly Advertising, Inc. and Subsidiary as of September 30, 2007, andthe related consolidated statements of operations, shareholders' equity, and cash flows for the period from January 22, 2007, to September
30, 2007, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified
Public Accountants. All information included in these consolidated financial statements is the representation of the management of Superfly
Advertising, Inc.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less inscope than an audit in accordance with auditing standards generally accepted in the United States, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements
in order for them to be in conformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN PLLC

December 30, 2007

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEET(See Accountants' Review Report)
September 30, 2007ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Prepaid expenses$300,036
450,380
2,000

Total current assets

752,416

Property and Equipment, net

43,665

Other Assets
Intangible assets, net
Goodwill

1,940,875
1,543,129
3,484,004

Total assets$4,280,085
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities
Accounts payable
Due to related party
Accrued expenses
Income taxes payable
Current portion of long-term notes payable
Total current liabilities$198,483
35,047
5,995
55,000500,000
794,525

Long-Term Notes Payable, net of current potion
Total liabilities

749,999
1,544,524

Shareholders' Equity
Common stock (no par or stated value; authorized, issued,and outstanding 100 shares)
Additional paid-in capital
Retained earnings (deficit)
Total shareholders' equity

200
3,499,800(764,439
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Total liabilities and shareholders' equity$4,280,085

See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF OPERATIONS(See Accountants' Review Report)
For the Period from January 22, 2007 to September 30, 2007
Revenue
Cost of sales$3,333,747
1,999,620

Gross profit

1,334,127

Operating expenses
Management fees
Selling, general, and administrative
Depreciation of property and equipment
Amortization of intangible assets

319,000
178,886
5,677

Total operating expenses

1,543,020

Loss from operations(208,893

1,039,457

Other income (expense)
Interest income
Interest expense

)

2,110
(49,247)

Total other income (expense)(47,137)

Loss before income tax expense(256,030)(362,000)$(618,030)

Income tax provision
Net loss
See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY(See Accountants' Review Report)
For the Period from January 22, 2007 to September 30, 2007
Common Stock

SharesAmountBalances at January 22, 2007

Additional
Paid-In
CapitalRetained
Earnings(Deficit)

Total
Stockholders'Equity

$-

$-

$-

$-

3,500,000

Contribution of net assets and liabilities
in the form of contributed capital

100

200

3,499,800-

Net loss---(618,030)(618,030)

Dividends---(146,409)(146,409)

Balances at September 30, 2007

100

$200

$3,499,800$(764,439) $2,735,561

See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF CASH FLOWS(See Accountants' Review Report)
For the Period from January 22, 2007 to September 30, 2007
Cash Flows From Operating Activities
Net loss
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation of property and equipment
Amortization of information assets
Changes in operating assets and liabilities
Accounts receivable
Prepaid expenses
Accounts payable
Due to related party
Accrued expenses
Income taxes payable$(618,030)

5,677
1,039,457(121,686
7,226
127,050
35,047(1,787))55,000Net cash provided by operating activities

527,954

Cash Flows From Investing Activities
Purchases of property and equipment
Cash acquired as part of acquisition(2,619)171,111

Net cash provided by investing activities

168,492

Cash Flows From Financing Activities
Repayment on long-term debt
Dividends paid

(250,001)(146,409)

Net cash used by financing activities(396,410)

Net change in cash and cash equivalents, and cash
and cash equivalents, end of period$300,036

Cash paid for interest$49,247

Cash paid for income taxes$307,000
See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Superfly Advertising, Inc. ("Superfly"), along with its wholly-owned subsidiary, Treefrog Commerce, Inc. ("Treefrog") (collectively, "theCompany"), was incorporated in Indiana in November 2004. The Company performs keyword searches, purchasing advertisements on various
internet search engines. Consumers are directed to domain web pages the Company owns containing keyword-based links to higher-priced
cost-per-click ("CPC") syndicated advertisements. The consumer clicks on one of the higher-priced advertisements and the Company earns
fees on the click-through (known as pay-per-click, or "PPC") from the merchant placing the advertisement. The Company nets the difference
between the low price paid for the CPC advertisement on the search results page and the higher price it generates when the consumer clicks onan advertisement on the domain web page.
On January 22, 2007, the shareholders of the Company collectively sold all of the Company's common stock to Duncan Media Group, Inc.
("the Parent"), an unrelated party, for $5,000,000. Part of the purchase price ($3,500,000) was payable immediately in cash. The remaining$1,500,000 was payable in the form of notes payable by the Company to the former shareholders.
As a result of the purchase, the Company became a wholly-owned subsidiary of the Parent. In connection with the acquisition, the accountsof the Company were adjusted using the pushdown accounting method (which means the basis of the Company's assets and liabilities werechanged to the basis used by the Parent). An allocation of the purchase price, based on the relative fair values, was recorded at January 22,
2007, as follows by the Parent:
CashAccounts and other receivables
Other current assets
Property and equipment
Intangible assets (see Note 3)
Goodwill
Accounts payable and accrued expenses
Long-term debt assumed in the acquisition
Total$171,111
328,694
9,226
46,7232,980,332
1,543,129(79,215)(1,500,000)$3,500,000

Because the accounts of the Company are now recorded on the basis used by the Parent, prior year asset and liability balances have changed
significantly. Also, these financial statements present the Company's operations from January 22, 2007 (the date of acquisition), to September
30, 2007.
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Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Superfly and its wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from estimated amounts.
Revenue Recognition
Revenue from advertisements is recognized as customer websites are visited through the Company's websites on a per click basis. Threecustomers represented 98% of revenue for the period ended September 30, 2007.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments with original maturities of less than three months. Cash balances may occasionally exceed
federal banking insurance limits.
Accounts Receivable
Accounts receivable are stated at their outstanding balances. Management reviews the collectibility of accounts receivable on a periodic
basis and determines the appropriate amount of any allowance. No allowance was deemed necessary at September 30, 2007. The Company
charges off receivables to an allowance (if any) when management determines that a receivable is not collectible. Accounts receivable are notcollateralized.
Three customers accounted for 99% of accounts receivable at September 30, 2007.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Maintenance costs are expensed as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets, which range from three to five years.
Goodwill
As part of the purchase of Superfly described earlier, the Parent acquired $1,543,129 of goodwill. This amount has been "pushed down" to theCompany's records as previously described. Management reviews goodwill at least annually for indicators of impairment, or more frequently
upon occurrence of an event or when circumstances indicate the carrying value is greater than fair value. No impairment was considerednecessary during the period ended September 30, 2007.
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Intangible Assets
Intangible assets other than goodwill are subject to amortization. Accordingly, they are stated at cost less accumulated amortization. Intangible
assets are reviewed for potential impairment whenever events or circumstances occur that indicate the carrying amounts may not be recoverable(but at least annually). No impairment was considered necessary during the period ended September 30, 2007.
Income Taxes
Because the Company was purchased by the Parent, a "C" corporation for tax purposes, the Company will file a consolidated federal tax returnwith the Parent and records its share of the consolidated federal tax expense on a separate return basis.
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities
for expected future tax consequences of events that have been recognized in the Company's financial statements or income tax returns. In
estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax laws
or rates. At September 30, 2007, the Company did not have any deferred tax assets or liabilities. No deferred tax assets have been recognized
related to the amortization of intangible assets because tax benefits can be only recognized by the Parent upon liquidation or sale of its interestin the Company.
The 2007 income tax provision consists of:Current provision
FederalState$285,000
77,000$362,000

The primary reason income tax expense varies from the statutory rate is because the amortization discussed in Note 3 is not deductible forincome tax purposes.
Advertising Costs
The Company incurs advertising costs to place customers' websites on the third-party informational websites. These advertising costs are
expensed as incurred. The Company incurred $1,774,617 for the period ended September 30, 2007. One vendor represented 89% of advertisingcosts for the period ended September 30, 2007. Advertising costs are reported as cost of sales in the consolidated statement of operations
because management believes these are direct costs of revenue.
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Note 2. Property and Equipment
Property and equipment consists of the following at September 30, 2007:
Office equipment
Less accumulated depreciation$49,342(5,677)$43,665
Depreciation of property and equipment totaled $5,677 for the period ended September 30, 2007.
Note 3. Intangible Assets
The Company provides for amortization as follows:

Assets

Cost

Accumulated
Amortization
as of
September
30, 2007Net Book
Value

Estimated
Useful
Life

MethodDomain Names Commodity
PortionStraight$1,018,691$(703,773)(87,042)$314,918

1 year

Domain Names Long-life Portion
Non-competeagreements

line
Straight-

881,933

794,891

7 yearline
Straight-

1,079,708(248,642)$2,980,332$(1,039,457 )

831,066$1,940,875

Amortization expense is as follows for each of the years ending September 30:
2008
2009
2010
2011
2012

$827,811
485,893297,250
125,990
125,990

Amortization expense was $1,039,457 for the period ended September 30, 2007.
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3 yearline

Note 4. Long-Term Debt
The Company issued two long-term notes payable to finance the acquisition by the Parent. As described earlier, part of $5,000,000 purchaseprice ($3,500,000) was payable in cash. The remaining $1,500,000 was paid in the form of two notes payable to former stockholders ("theacquisition notes") that will be repaid by the Company. The acquisition notes are being repaid starting in March 2007 in equal monthly
installments of a total of $41,667, plus interest at 7%, until maturity in February 2010. The notes must be repaid immediately in the event ofchange in control or initial public registration of the Company's or Parent's common stock with proceeds that exceed $20,000,000. Additionally,note installments are subject to deferral and adjustment. In any month during the term of the notes for which the Company does not reach acertain earnings amount, as defined, the installments shall not be paid in that month and the payment of principal and interest is deferred to theend of the term. Further, for any month the Company produces excess earnings, as defined, the installment payment will increase. The notes are
secured by Company assets and are guaranteed by the Parent.
Required principal payments for the years ending September 30 are as follows:
2008
2009
2010

$500,000
500,000
249,999$1,249,999

The total interest expense paid on these notes from January 22, 2007, to September 30, 2007, amounted to $49,247. This amount was also totalinterest expense for the period. There was no unpaid interest as of September 30, 2007.
Note 5. Relationship with Hello Metro, Inc.
The Company's former majority shareholder prior to January 22, 2007, was also the sole shareholder of Hello Metro, Inc., a company withsimilar operations. The Company and Hello Metro, Inc. share office facilities under an operating lease for which Hello Metro, Inc. is thecontractual tenant. The operating lease expires in October 2008. The Company reimburses Hello Metro, Inc. monthly for its share of the officespace under a verbal agreement between the two parties. The future minimum payments required by the parties under this lease for the year
ending September 30, 2008, was $51,996 (to be paid by Hello Metro, Inc.) of which the Company is to reimburse $6,000.
Rent expense amounted to $4,240 for the period from January 22, 2007 to September 30, 2007.
There were no other material transactions between these two companies. However, the relationship could result in the future operating results
or financial position of the companies being significantly different from those that would be obtained if the companies were autonomous.
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Note 6. Employment Agreement
In December 2006, the Company entered into an employment agreement with a former shareholder/officer that expires in December 2008. As
part of this agreement, the former shareholder may earn incentive bonuses based on a monthly calculation of earnings. The incentive bonus
earned for the period ended September 30, 2007, was $28,777.
Note 7. Joint Venture Agreement
In June 2007, the Company entered into a Joint Venture Agreement with one of the former stockholders to use his local city guide websites
for the purpose of internet traffic arbitrage. In exchange for the use of his websites, the Company pays a portion (40%) of the internet traffic
arbitrage profits to him as a Domain Leasing Fee. Funds can be advanced to the venture, as well. As of September 30, 2007, the Company had
a payable of $35,047 to the venture. Revenue earned and expenses incurred under this agreement are approximately $630,000 and $370,000 for
the period from January 22, 2007, to September 30, 2007.
Note 8. Management Agreement with the Parent
The Company has a management agreement with the Parent in which the Parent provides administrative services to the Company. The Company
paid a total of $319,000 for these services during the period from January 22, 2007, to September 30, 2007.
Note 9. Subsequent Event
In December 2007, the Joint Venture Agreement discussed in Note 7 was amended. The amendment changed the Domain Leasing Fee currently
paid to the former stockholder to 10%. He will receive the remaining 30% of the profit in the form of an accelerated note payment on theacquisition notes described earlier. The other note holder will also automatically receive accelerated note payments.
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SUPPLEMENTARY INFORMATION
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ACCOUNTANTS' REVIEW REPORT ON SUPPLEMENTARY INFORMATION
To the Board of Directors
Duncan Media Group, Inc.
New York, New YorkOur report on our review of the consolidated financial statements of Superfly Advertising, Inc. and Subsidiary as of September 30, 2007,
and for the period from January 22, 2007, to September 30, 2007, appears on page 1. That review was made for the purpose of expressing
limited assurance that there are no material modifications that should be made to the consolidated financial statements in order for them to be
in conformity with accounting principles generally accepted in the United States. The information included in the accompanying consolidated
statements of operations for the nine-month periods ended September 30, 2007 and 2006, is presented only for supplementary analysis purposes.
Such information has been subject to the inquiries and analytical procedures applied in the basic financial statements, and we are not aware ofany material modifications that should be made thereto.

December 30, 2007
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(See Accountants' Review Report)
For the Nine-Month Period Ended September 30, 2007 and 2006
2007

2006

Revenue$3,625,350$3,381,977

Cost of sales

2,153,850

1,444,946

1,471,500

1,937,031

Operating expenses
Management fees
Selling, general, and administrative
Depreciation of property and equipment
Amortization of intangible assets

319,000
194,439
5,989

111,408
4,389

1,039,457-

Total operating expenses

1,558,885

115,797

Income (loss) from operations(87,385

Gross profit

Other income (expense)
Interest income
Interest expense
Other income

2,110(49,247)

1,821,234

)

20
-

-

40,000Total other income (expense)(47,137)

40,020

Income (loss) before income tax expense(134,522)

1,861,254(362,000)-$(496,522) $1,861,254

Income tax expense
Net income (loss)
See Note to Supplementary Information
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NOTE TO SUPPLEMENTARY INFORMATION(Selected Disclosure - Basis of Presentation)
Note 1. Basis of Presentation
The supplementary information represents the consolidated statements of operations of Superfly Advertising, Inc. and Subsidiary (collectively,"the Company") for the nine-month periods ended September 30, 2007 and 2006. On January 22, 2007, the shareholders of the Company soldall of the Company's common stock to Duncan Media Group, Inc., an unrelated party. In connection with the acquisition, the accounts of theCompany were adjusted using the pushdown accounting method (which means the basis of the Company's assets and liabilities were changed tothe basis used by the Parent). In this supplemental information, the statement of operations for the period ended September 30, 2007, shows theresults of operations as if the acquisition had taken place as of January 1, 2007. The period ended September 30, 2006, represents the Company's
operations before the acquisition took place. Besides income tax (in 2007), the biggest difference resulting from the push-down accounting is
the recognition of amortization of intangibles resulting from the acquisition.
Therefore, the supplementary information is for the entire nine-month period ended September 30, 2007 and 2006. Also, the Company was an"S" Corporation prior to the acquisition by Duncan Media Group, Inc., and the income tax expense is calculated based on the taxable income
generated from the acquisition date to September 30, 2007.
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SUPERFLY ADVERTISING, INC.
AND SUBSIDIARYCONSOLIDATED FINANCIAL REPORTSEPTEMBER 30, 2006

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CONTENTS

Page
CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETCONSOLIDATED STATEMENT OF OPERATIONSCONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITYCONSOLIDATED STATEMENT OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEET
September 30, 2006ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Prepaid expenses$24,897
684,465
885

Total current assets
Property and Equipment, net

710,247

Total assets$733,843

23,596
LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities
Accounts payable
Accrued expenses$56,143
2,358

Total current liabilities
Shareholders' Equity
Common stock (no par or stated value; authorized, issued,and outstanding 100 shares)
Additional paid-in capital
Retained earnings

58,501

200
115,578559,564

Total shareholders' equity

675,342

Total liabilities and shareholders' equity$733,843

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF OPERATIONS
For the Nine-Month Period Ended September 30, 2006
Revenue
Cost of sales$3,381,977

Gross profit
Operating expenses
Selling, general, and administrative
Depreciation

1,937,031

Total operating expenses

115,797

1,444,946

111,408
4,389

Income from operations
Interest and other income

1,821,234
40,020Net income$1,861,254

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Nine-Month Period Ended September 30, 2006

Common Stock
SharesBalances at December 31, 2005
Contribution of shares of subsidiary
Net income
Distributions to shareholder

100

Balances at September 30, 2006

100

Amount$ 200

Additional
Paid-In Capital$115,578

Total
Shareholders'

Retained
Earnings

Equity$ 249,864$ 250,064
115,578
1,861,254

1,861,254(1,551,554$ 200$ 115,578

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENT OF CASH FLOWSFor the Nine-Month period Ended September 30, 2006
Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation
Changes in operating assets and liabilities,
net of effects of acquisition of subsidiary
Accounts receivable
Prepaid expenses
Checks issued in excess of cash in bankAccounts payable
Accrued expenses$1,861,254

4,389(315,500(885(4,61835,302)))(4,564)

Net cash provided by operating activities
Cash Flows From Investing Activities
Purchases of property and equipment
Cash received on acquisition of subsidiary

1,575,378

Net cash provided by investing activities
Cash Flows From Financing Activity
Distributions to shareholder

1,073

Net change in cash and cash equivalents
Cash and Cash Equivalents, beginning of period

24,897

Cash and Cash Equivalents, end of period$24,897(4,088)5,161(1,551,554-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Significant Accounting Policies
The condensed consolidated financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statement prepared inaccordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules andregulations, although the Company’s management believes that the disclosures are adequate to make the information presented not
misleading.
The interim prior information included in the report reflects all adjustments and other normal recurring adjustments, that are, in the opinion of
the Company’s management, necessary for a fair statement of the result of the respective interim periods. Results of operations for interim
periods are not necessarily indicative of results expected for the entire year.
Nature of Operations
Superfly Advertising, Inc. ("Superfly"), along with its wholly-owned subsidiary, Treefrog Commerce, Inc. ("Treefrog") (collectively, "theCompany"), was incorporated in Indiana in November 2004. The Company performs keyword searches, purchasing advertisements on various
internet search engines. Consumers are directed to domain web pages the Company owns containing keyword-based links to higher-priced
cost-per-click ("CPC") syndicated advertisements. The consumer clicks on one of the higher-priced advertisements and the Company earns
fees on the click-through (known as pay-per-click, or "PPC") from the merchant placing the advertisement. The Company nets the difference
between the low price paid for the CPC advertisement on the search results page and the higher price it generates when the consumer clicks onan advertisement on the domain web page.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Superfly and its wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from estimated amounts.
Revenue Recognition
Revenue from advertisements is recognized as customer websites are visited through the Company's websites on a per click basis. Almost all
revenue is from three customers.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments with original maturities of less than three months. Cash balances may occasionally exceed
federal banking insurance limits.

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Accounts Receivable
Accounts receivable are stated at their outstanding balances. Management reviews the collectibility of accounts receivable on a periodic
basis and determines the appropriate amount of any allowance. No allowance was deemed necessary at September 30, 2006. The Company
charges off receivables to an allowance (if any) when management determines that a receivable is not collectible. Accounts receivable are notcollateralized.
Two customers accounted for 91% of accounts receivable at September 30, 2006.
Property and Equipment
Property and equipment are stated at historical cost less accumulated depreciation. Maintenance costs are expensed as incurred. Depreciation iscomputed using the straight-line method over the estimated useful lives of the assets, which range from three to five years.
Income Taxes
The Company has elected to be taxed under Subchapter S of the Internal Revenue Code. As a result, income is taxed at the shareholder level.
Advertising Costs
The Company incurs advertising costs to place customers' websites on the third-party informational websites. These advertising costs are
expensed as incurred. The Company incurred $1,444,946 in advertising costs for the period ended September 30, 2006. One vendor represented
about one-third of advertising costs for the period ended September 30, 2006. Advertising costs are reported as cost of sales in the consolidated
statement of operations because management believes these are direct costs of revenue.

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Note 2. Acquisition
In January 2006, Superfly acquired all of the outstanding stock of Treefrog, which was involved in the same business as Superfly. Prior
to the acquisition, Superfly's two shareholders jointly held a one-third interest in Treefrog. The results of Treefrog's operations have been
included in these consolidated financial statements since the acquisition date. The acquisition enabled Superfly to increase operations, which
was consistent with Superfly's business plan. Superfly did not pay for the acquisition nor did it issue any additional shares of stock for Treefrog.
Instead, Superfly's shareholders transferred a combined 20% of their shares in Superfly to the other two-thirds' shareholders of Treefrog. Since
Superfly received all the shares of Treefrog by way of its shareholders giving up value, this value was deemed to be a contribution of capital.
Moreover, since the transaction effectively involved entities under common control, the contribution of capital was recorded at carrying value.
The following table summarizes the carrying value of Treefrog's assets acquired and liabilities assumed (there were no liabilities assumed) at
date of acquisition:
Cash
Accounts receivable
Net assets acquired$5,161
110,417$115,578

The results of operations of Treefrog prior to the acquisition date have not been included in these consolidated financial statements because
common control did not exist until the acquisition date. As the acquisition of Treefrog occurred in January 2006, and this financial statement isfor the period from January 1, 2006, to September 30, 2006, unaudited proforma information is not presented.

Note 3. Property and Equipment
Property and equipment consists of the following at September 30, 2006:
Office equipment
Less accumulated depreciation$28,896(5,300)$23,596
Depreciation of property and equipment totaled $4,389 for the period ended September 30, 2006.

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Note 4. Relationship with Hello Metro, Inc.
The Company's majority shareholder during the period ended September 30, 2006, was also the sole shareholder of Hello Metro, Inc., acompany with similar operations. The Company and Hello Metro, Inc. share office facilities under an operating lease for which Hello Metro,
Inc. is the contractual tenant. The operating lease expires in October 2008. The Company reimburses Hello Metro, Inc. monthly for its share of
the office space under a verbal agreement between the two parties. The future minimum payments required by the parties under this lease forthe years ending September 30 are as follows:
Total Lease
Obligations
2007
2008

Reimbursement
to Hello Metro$ 51,996$ 6,000

51,9966,000$ 103,992$ 12,000

Rent expense amounted to $400 for the period ended September 30, 2006.
There were no other material transactions between these two companies. However, the existence of common ownership could result in the
future operating results or financial position of the companies being significantly different from those that would be obtained if the companies
were autonomous.
Note 5. Subsequent Events
In December 2006, the Company entered into an employment agreement with an officer that expires in December 2008. As part of thisagreement, the officer may earn incentive bonuses based on a monthly calculation of earnings.
In addition, the officer was advanced a signing bonus in December 2006 amounting to $36,666. The signing bonus is classified as a loan by
the Company. On the last day of each calendar month, starting with December 2006, the Company will forgive $6,111 of the loan provided theofficer remains employed by the Company.

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On January 22, 2007, the shareholders of the Company collectively sold all of the Company's common stock to Duncan Media Group, Inc.
("the Parent"), an unrelated party, for $5,000,000. As a result of the purchase, the Company became a wholly-owned subsidiary of the Parent.
In connection with the acquisition, the accounts of the Company were adjusted using the push-down accounting method (which means the basisof the Company's assets and liabilities were changed to the basis used by the Parent).
Part of the purchase price ($3,500,000) was payable immediately in cash. The remaining $1,500,000 was paid in the form of two notes payable
to former stockholders ("the acquisition notes") that will be repaid by the Company. The notes will be repaid starting in March 2007 in equalmonthly installments, including interest at 7%, until maturity in February 2010. The notes must be repaid immediately in the event of change incontrol or initial public registration of the Company's or the Parent's common stock with proceeds that exceed $20,000,000. Additionally, note
installments are subject to deferral and adjustment. In any month during the term of the notes for which the Company does not reach a certain
earnings amount, as defined, the installments shall not be paid in that month and the payment of principal and interest is deferred to the endof the term. Further, for any month the Company produces excess earnings, as defined, the installment payment will increase. The notes areguaranteed by the Parent.
Because the Company was purchased by Duncan Media Group, Inc., a C corporation for tax purposes, the Company will file a consolidated
federal tax return with the Parent and records its share of the consolidated federal tax expense on a separate return basis.
In June 2007, the Company entered into a Joint Venture Agreement with Clark Scott, one of the former stockholders, to use Scott's local city
guide websites for the purpose of internet traffic arbitrage. In exchange for the use of Scott's websites, the Company will pay a portion (40%)
of the internet traffic arbitrage profits to Scott as a Domain Leasing Fee. In addition, in December 2007, the Joint Venture Agreement wasamended, changing the Domain Leasing Fee currently paid to Scott to 10%. Scott will receive the remaining 30% of the profit in the form ofan accelerated note payment on the acquisition notes described earlier. The other note holder will also automatically receive accelerated notepayments.

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SUPERFLY ADVERTISING, INC.
AND SUBSIDIARYCONSOLIDATED FINANCIAL REPORTDECEMBER 31, 2006 AND 2005

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CONTENTS
Page
INDEPENDENT AUDITORS' REPORT

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CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED BALANCE SHEETSCONSOLIDATED STATEMENTS OF OPERATIONSCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITYCONSOLIDATED STATEMENTS OF CASH FLOWSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-104
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INDEPENDENT AUDITORS' REPORTTo the Board of Directors
Duncan Media Group, Inc.
New York, New YorkWe have audited the accompanying consolidated balance sheets of Superfly Advertising, Inc. and Subsidiary as of December 31, 2006 and2005, and the related consolidated statements of operations, shareholders' equity, and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we planand perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Superfly
Advertising, Inc. and Subsidiary as of December 31, 2006 and 2005, and the results of their operations and their cash flows for the years thenended, in conformity with accounting principles generally accepted in the United States.

/S/ PETERSON SULLIVAN PLLC

October 29, 2007

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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005ASSETS
Current Assets
Cash and cash equivalents
Accounts receivable
Receivable from officer
Prepaid expenses

2006

2005

$162,258
342,51030,555$258,548

2,000

Total current assets

537,323

258,548

Property and Equipment, net

47,03523,897

Total assets$584,358$282,445

Current Liabilities
Checks issued in excess of cash in bankAccounts payable
Accrued expenses$84,346$4,61820,841

24,981

6,922

Total current liabilities

109,327

32,381

200

200

LIABILITIES AND SHAREHOLDERS' EQUITY

Shareholders' Equity
Common stock (no par or stated value; authorized, issued,and outstanding 100 shares)
Additional paid-in capital
Retained earnings

115,578359,253

249,864

Total shareholders' equity

475,031250,064

Total liabilities and shareholders' equity$584,358$282,445

See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2006 and 2005
2006

2005

Revenue$4,755,989$1,369,902

Cost of sales

2,183,331

601,9092,572,658

767,993

Operating expenses
Selling, general, and administrative
Depreciation

193,190247,986

5,551

913

Total operating expenses

198,741

248,899

Income from operations

2,373,917

519,094

40,026

4,282$2,413,943$523,376

Gross profit

Interest and other income
Net income
See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2006 and 2005
Common Stock

SharesBalances at December 31, 2004

Amount$200$323,009

Net income

523,376

523,376

Distributions to shareholders(596,321
100

200

Contribution of shares of subsidiary

$-

Total
Shareholders'EquityRetained
Earnings$322,809

Balances at December 31, 2005

100

Additional
Paid-In
Capital-)249,864

115,578(596,321)

250,064
115,578

Net income

2,413,943

2,413,943

Distributions to shareholder(2,304,554 )(2,304,554 )$359,253$475,031

Balances at December 31, 2006

100

$200

$115,578

See Notes to Consolidated Financial Statements
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SUPERFLY ADVERTISING, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2006 and 2005

Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation
Amortization of receivable from officer
Changes in operating assets and liabilities,
net of effects of contribution of subsidiary
Accounts receivable
Receivable from officer
Prepaid expenses

2006

2005

$2,413,943$523,376

5,551
6,111

913

26,455(36,666(2,000

Checks issued in excess of cash in bankAccounts payable
Accrued expenses(4,61863,505

Net cash provided by operating activities
Cash Flows From Investing Activities
Purchases of property and equipment
Cash received on contribution of subsidiary(11,523)

4,618(19,362))))

18,0596,263

2,490,340

504,285(28,689)(18,089)(23,528)(18,089)(2,304,554)(596,321)

162,258(110,125)

Cash and Cash Equivalents, beginning of year-

110,125

Cash and Cash Equivalents, end of year

$162,258

$-

5,161

Net cash used in investing activities
Cash Flows From Financing Activity
Distributions to shareholder
Net change in cash and cash equivalents

See Notes to Consolidated Financial Statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
Superfly Advertising, Inc. ("Superfly"), along with its wholly-owned subsidiary, Treefrog Commerce, Inc. ("Treefrog") (collectively, "theCompany"), was incorporated in Indiana in November 2004. The Company performs keyword searches, purchasing advertisements on various
internet search engines. Consumers are directed to domain web pages the Company owns containing keyword-based links to higher-priced costper-click ("CPC") syndicated advertisements. The consumer clicks on one of the higher-priced advertisements and the Company earns fees on
the click-through (known as pay-per-click) to the merchant placing the advertisement. The Company nets the difference between the low pricepaid for the CPC advertisement on the search results page and the higher price it generates when the consumer clicks on a PPC advertisementon the domain web page.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Superfly and its wholly-owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from estimated amounts.
Revenue Recognition
Revenue from advertisements is recognized as customer websites are visited through the Company's websites on a per-click basis. Threecustomers represented 98% of revenue for the year ended December 31, 2006. One customer represented 93% of revenue for the year ended
December 31, 2005.
Cash and Cash Equivalents
Cash equivalents are highly liquid investments with original maturities of less than three months. Cash balances may occasionally exceed
federal banking insurance limits.
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Accounts Receivable
Accounts receivable are stated at their outstanding balances. Management reviews the collectibility of accounts receivable on a periodic basis
and determines the appropriate amount of any allowance. No allowance was deemed necessary at December 31, 2006 and 2005. The Company
charges off receivables to an allowance (if any) when management determines that a receivable is not collectible. Accounts receivable are notcollateralized.
Two customers accounted for 93% of accounts receivable at December 31, 2006. One customer accounted for 100% of accounts receivable at
December 31, 2005.
Property and Equipment
Property and equipment are stated at historical cost less accumulated depreciation. Maintenance costs are expensed as incurred. Depreciation iscomputed using the straight-line method over the estimated useful lives of the assets, which range from five to seven years.
Income Taxes
The Company has elected to be taxed under Subchapter S of the Internal Revenue Code. As a result, income is taxed at the shareholder level.
Advertising Costs
The Company incurs advertising costs to place customers' websites on the third-party informational websites. These advertising costs are
expensed as incurred. The Company incurred $2,183,331 and $601,909 in advertising costs for the years ended December 31, 2006 and2005, respectively. One vendor represented 32% of advertising costs for the year ended December 31, 2006. Two vendors represented 63%
of advertising costs for the year ended December 31, 2005. Advertising costs are reported as cost of sales in the consolidated statement ofoperations since management believes these are direct costs of revenue.
Note 2. Acquisition
In January 2006, Superfly acquired all of the outstanding stock of Treefrog, which was involved in the same business as Superfly. Prior
to the acquisition, Superfly's two shareholders jointly held a one-third interest in Treefrog. The results of Treefrog's operations have been
included in these consolidated financial statements since the acquisition date. The acquisition enabled Superfly to increase operations, which
was consistent with Superfly's business plan. Superfly did not pay for the acquisition nor did it issue any additional shares of stock for Treefrog.
Instead, Superfly's shareholders transferred a combined 20% of their shares in Superfly to the other two-thirds' shareholders of Treefrog. Since
Superfly received all the shares of Treefrog by way of its shareholders giving up value, this value was deemed to be a contribution of capital.
Moreover, since the transaction effectively involved entities under common control, the contribution of capital was recorded at carrying value.
The following table summarizes the carrying value of Treefrog's assets acquired and liabilities assumed (there were no liabilities assumed) at
date of acquisition:
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CashAccounts receivable$5,161
110,417

Net assets acquired$115,578

The results of operations of Treefrog prior to the acquisition date have not been included in these consolidated financial statements sincecommon control did not exist until the acquisition date. The following unaudited proforma information presents the results of operations of theCompany for the year ended December 31, 2005, as if the acquisition had taken place on January 1, 2005. The proforma information is notnecessarily indicative of the results that would have occurred had the acquisition taken place at the beginning of the period presented. Further,
the proforma information is not necessarily indicative of future results.
Revenue$1,640,527

Net income$643,455

Note 3. Property and Equipment
Property and equipment consisted of the following at December 31, 2006 and 2005:
2006
Office equipment
Less accumulated depreciation

2005$53,496(6,461$47,035$24,807)(910)$23,897

Depreciation of property and equipment totaled $5,551 and $913 for the years ended December 31, 2006 and 2005, respectively.
Note 4. Relationship with Hello Metro, Inc.
The Company's majority shareholder during the years ended December 31, 2006 and 2005, was also the sole shareholder of Hello Metro, Inc.,a company with similar operations. The Company and Hello Metro, Inc. share office facilities under an operating lease for which Hello Metro,
Inc. is the contractual tenant. The operating lease expires in October 2008. The Company reimburses Hello Metro, Inc. monthly for its share of
the office space under a verbal agreement between the two parties. The future minimum payments required by the parties under this lease forthe years ending December 31 are as follows:
F-109

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2007
2008

Total Lease

Reimbursement

Obligations

to Hello Metro$51,996$6,00043,3305,000$95,326$11,000

Rent expense amounted to $6,264 and $1,625 for the years ended December 31, 2006 and 2005, respectively.
There were no other material transactions between these two companies. However, the existence of common ownership could result in the
future operating results or financial position of the companies being significantly different from those that would be obtained if the companies
were autonomous.
Note 5. Employment Agreement
In December 2006, the Company entered into an employment agreement with an officer that expires in December 2008. As part of thisagreement, the officer may earn incentive bonuses based on a monthly calculation of earnings. No incentive bonus was earned in 2006.
In addition, the officer was advanced a signing bonus in December 2006 amounting to $36,666. The signing bonus is classified as a loan by
the Company. On the last day of each calendar month, starting with December 2006, the Company will forgive $6,111 of the loan provided theofficer remains employed by the Company. The unamortized balance of this receivable at December 31, 2006, amounted to $30,555.
Note 6. Subsequent Events
On January 22, 2007, the shareholders of the Company collectively sold all of the Company's common stock to Duncan Media Group, Inc., an
unrelated party, at a price of $5,000,000. Part of the purchase price ($3,500,000) was payable immediately in cash. The remaining $1,500,000
was paid in the form of two notes payable to former stockholders that will be repaid by the Company. The notes will be repaid starting in March
2007 in equal monthly installments, including interest at 7%, until maturity in February 2010. The notes must be repaid immediately in the eventof change in control or initial public registration of the Company's or Duncan Media Group, Inc.'s common stock with proceeds that exceed$20,000,000. Additionally, note installments are subject to deferral and adjustment. In any month during the term of the notes for which theCompany does not reach a certain earnings amount, as defined, the installments shall not be paid in that month and the payment of principal andinterest is deferred to the end of the term. Further, for any month the Company produces excess earnings, as defined, the installment payment
will increase. The notes are guaranteed by Duncan Media Group, Inc.
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Pro Forma Financial Statements
Introduction
On February 7, 2008 Morlex entered into: (i) an Agreement and Plan of Merger (the “RHI Merger Agreement”) with RightSide
Holdings, Inc. (“RightSide”) and our wholly owned subsidiary RHI Merger Sub, Inc. (“RHI Merger Sub”), and (ii) an Agreement and Plan ofMerger (the “DMG Merger Agreement”, and together with the RHI Merger Agreement, the “Merger Agreements”) with Duncan Media Group,
Inc. (“Duncan”) and our wholly owned subsidiary DMG Merger Sub, Inc. (“DMG Merger Sub”). Also, on February 14, 2008 (the “Closing
Date”) Morlex entered into a Stock Purchase Agreement (the “AAA Stock Purchase Agreement”) with All Ad Acquisition, Inc., a Delaware
corporation (“AAA”), and all of the shareholders of AAA as listed in the AAA Stock Purchase Agreement, whereby Morlex acquired all of
the outstanding shares of common stock of AAA. AAA is a party to that certain Stock Purchase Agreement, dated November 14, 2007, among
AAA, Iakona, Inc., a California corporation (“Iakona”), and Jason Kulpa (the “Ad Authority Stock Purchase Agreement”) providing for thepurchase and sale of all of the issued and outstanding capital stock of Ad Authority, Inc., a Delaware corporation (“Ad Authority”), to AAA.
Other than the Ad Authority Stock Purchase Agreement, AAA has no assets or liabilities.
On the Closing Date, Morlex acquired RightSide and Duncan by closing the transactions contemplated by the Merger Agreements(collectively, the “Merger Transactions”) and acquired AAA by closing the transactions contemplated by the AAA Stock Purchase Agreement(the “Acquisition Transaction” and, together with the Merger Transactions, the “Transactions”). In connection with the Transactions, theCompany will pay a cash distribution shortly after the Closing Date of $.2929 per share to the holders of record of the common stock of Morlex,
par value $.001 per share (“Company Common Stock”), as of February 11, 2008, for a total distribution of approximately $375,000 (the “CashDistribution”). Shortly after the Closing Date, the Company will also distribute .2929 shares of Company Common Stock per share to theholders of record of Company Common Stock as of February 11, 2008, for a total distribution of approximately 375,000 shares of Company
Common Stock (the “Stock Distribution” and, together with the Cash Distribution, the “Distribution”).
Pursuant to the RHI Merger Agreement, on the Closing Date RHI Merger Sub, our wholly owned subsidiary, merged with andinto RightSide, with RightSide being the surviving corporation (the “RHI Merger”). As a result of the RHI Merger, each share of common
stock of RightSide, par value $.001 per share (the “RightSide Common Stock”), automatically converted into 0.4236 shares of Company
Common Stock, or 8,548,655 shares of Company Common Stock in the aggregate. The outstanding shares of non-convertible preferred stock ofRightSide, par value $.001 per share, were not affected by the RHI Merger and remain outstanding preferred stock of RightSide. Accordingly,
we are not the sole stockholder of RightSide; however, we own all of the outstanding RightSide Common Stock (which is the only voting stockof RightSide).
Pursuant to the DMG Merger Agreement, on the Closing Date DMG Merger Sub, our wholly owned subsidiary, merged with and into
Duncan, with Duncan being the surviving corporation (the “DMG Merger”). As a result of the DMG Merger, each share of common stock of
Duncan, par value $.001 per share (the “Duncan Common Stock”), automatically converted into 0.5433 shares of Company Common Stock, or
5,642,171 shares of Company Common Stock in the aggregate. The outstanding shares of non-convertible preferred stock of Duncan, par value$.001 per share, were not affected by the DMG Merger and remain outstanding preferred stock of Duncan. Accordingly, we are not the sole
stockholder of Duncan; however, we own all of the outstanding Duncan Common Stock (which is the only voting stock of Duncan). Duncan
has no material assets or liabilities other than the stock of its wholly-owned subsidiary Superfly Advertising, Inc. (“Superfly”).
On the Closing Date, we bought all of the outstanding stock of AAA from the stockholders of AAA pursuant to the AAA Stock
Purchase Agreement in exchange for 4,200,000 shares of Company Common Stock. The only asset of AAA is the Ad Authority Stock Purchase
Agreement and certain related agreements.
Following the consummation of the Transactions and the Distribution, a total of 20,045,985 shares of Company Common Stock was
issued and outstanding. The portion of the outstanding Company Common Stock owned by each constituency involved in the Transactions is
as follows:

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Percentage
Constituency

Interest

Former Owners of RightSide
Former Owners of DMG
Stockholders of AAA
Stockholders of Company before Transactions
Total

42.66
28.15
20.95
8.25
100.00F-111

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%
%
%
%
%

The following tables set forth certain historical financial information of Morlex, Duncan and RightSide on an unaudited pro forma basis after
giving effect to the merger of RightSide and the merger of Duncan, each a "reverse acquisition" (i.e., with RightSide as the acquiror of Morlex
and Duncan for accounting purposes).
The accompanying unaudited pro forma combined condensed balance sheet assumes the Transactions took place on September 30, 2007.
The unaudited pro forma combined condensed balance sheet combines the unaudited balance sheets of Morlex, RightSide and Duncan as of
September 30, 2007. Morlex’s fiscal year ended on December 31 and was a development stage company prior to the mergers of RightSide andDuncan.
For purposes of the pro forma information, RightSide’s statement of operations for the year ended December 31, 2006 and nine months ended
September 30, 2007 have been combined with Morlex’s and Duncan’s unaudited statement of operations for the twelve months ended December
31, 2006 and nine months ended September 30, 2007. The unaudited pro forma combined condensed statement of operations gives effect to the
RightSide merger and the Duncan merger as if such mergers had occurred on January 1, 2006.
The unaudited pro forma combined condensed financial information is presented for illustrative purposes only and is not necessarily indicativeof the future financial position or future results of operations of Morlex after the Transactions or of the financial position or results of operationsof Morlex that would have actually occurred had the Transactions been effected as of the date described above.
The pro forma statements of operations do not reflect any effect of the contemplated operating efficiencies, cost savings and other benefits,
anticipated by Morlex’s management as a result of the RightSide and Duncan mergers.
The unaudited pro forma combined condensed financial information should be read in conjunction with the audited financial statements andrelated notes included within this document.
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UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEETAS OF SEPTEMBER 30, 2007
RSH/DMG
Combined
Consolidated
Pro Forma
Balances

Morlex,Inc.

DuncanMedia
Group, Inc.

Rightside
Holdings,
Inc.

3,536
-

335,908450,380
39,032
157,690
9,787

277,755
37,16854,701
82,387
212,500
17,7503,536

992,797

61,109743,370

61,1091,725,671

Property and equipment, net-

53,448398,158

451,606

Other Assets
Goodwill
Intangible assets, net
Deposits-

1,543,129
1,940,875

4,290,426
1,023,623

5,833,555
2,964,498--

62,89462,894

3,536

3,484,004
4,530,249

5,376,943
6,518,471

8,860,947
11,038,224

5,564
-

272,809
35,047-

290,774
28,583
798,435
200,833

530,115
28,58335,047
798,435
200,833--

1,362,841

1,362,841

5,564

500,000
807,856

635,8873,317,353

1,135,887
4,091,741

Total liabilities

5,564

749,999
1,557,855

544,333
3,861,686

1,294,332
5,386,073

Stockholders' equity
Preferred Stock
Common Stock

1,280

4,150
10,3005,720
20,0129,870
80,670ASSETS
Current Assets
Cash and cash equivalents
Card service reserves
Accounts receivable
Due from affiliates
Income tax receivable
Prepaid interest
Prepaid expenses
Other current assets
Total current assets

Total other assets
Total assets
LIABILITIES & STOCKHOLDERS'EQUITY
Current Liabilities
Accounts Payable and accrued expenses
Interest payable
Due to related party
Deferred revenue
Dividends payable
Short-term notes payable, relatedparties
Current portion of long-term debt
Total current liabilities
Long-term debt, net of current portion

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Pro Forma
Adjustments

Notes

25,0002(39,032) 1(39,032

18,76630,312) 1

3
5642,199
37,168505,081240,077
212,500
27,537

Additional paid-in capital

460,768

3,885,551

Retained deficit(464,076) (927,607

3,634,268

400,000(464,076(18,766(30,312

2
) 4
) 3
) 5

7,867,433) (1,003,215 ) (375,000) 2
4(2,305,822 )

464,076
Total stockholders' equity
Total liabiities and stockholders'equity(2,028) 2,972,394

2,656,785

5,652,151

3,536

4,530,249

6,518,471

11,038,224

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PRO FORMA ADJUSTMENTS RELATED TO THE ACQUISITION
1.

to eliminate intercompany receivables/payables2.

to reflect equity input of $400,000 into the Company and the subsequent cash dividend of $375,000.

3.

to reflect 18,765,825 new shares of common stock issued in the transaction related to the acquisitions of Rightside Holdings,
Inc., Duncan Media Group, Inc. and All Ad Acquisition, Inc. Par value is $ 0.001. No cash consideration received.
18,765,825 shares consist of 8,546,655 shares issued to the shareholders of Rightside Holdings, 5,642,171 shares issued to theshareholders of Duncan Media Group, and 4,200,000 shares issued to the shareholders of All Ad Acquisistion, Inc.

4.

to remove previous equity of Morlex to effect reverse merger of RSH; sum of Additional paid-in capital and retained deficit.

5.

to eliminate common stock of merged subsidiaries.
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UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONSFOR THE NINE-MONTH PERIOD ENDING SEPTEMBER 30, 2007
21st
Superfly,Century

Pro Forma

Inc.

Pub.

Combined

DuncanMedia

Rightside

Preacq.

Preacq.

Morlex,Group,

Holdings,

1/1/

1/1/

Pro Forma

Consolidated

Inc.

Inc.

Inc.

to 1/22/07

to 6/15/07

Adjustments

Pro Forma
Notes

Balances

Revenues
Newsletter revenues--

2,052,931

Pay-per-click-

3,333,748-

Management services fees

617,135

2,670,066

291,6033,625,351(235,000 )-

235,000--

3,568,748

2,052,931

291,603

-

1,999,620-

154,230

General and administrative-

2,167,567

1,210,695

15,820223,471

Other

23,812

14,911

31,181

45

23,321

Total operating expenses

23,812

4,182,098

2,160,044

170,095

456,707-(235,000 )

6,757,756

Income (loss) from operations(23,812 )(613,350 )(107,113 )

121,508

160,428--(462,339 )Interest income

-

2,111

-

2,111

Interest expense-(54,941 )(139,396 )(194,337 )Total other income (expense)-(52,830 )(139,396 )--(203,369 )Income (loss) before taxes(23,812 )(666,180 )(449,878 )

121,508

160,428

Income tax provision-

149,310-

48,60364,171(23,812 )(815,490 )(449,878 )

72,90596,257

Total revenues

617,135-2(235,000 )

6,295,417

Operating expenses
Pay per click direct expenses
Newsletter direct expenses

918,168

2,153,850
209,915

1,128,083(235,000 )23,382,553
93,270

Other income(expense)

-

-

-

-

(192,226 )Non-controlling interest in income of
consolidated subsidiary

Net income (loss)

Income (loss) per common share$ (0.02(203,369 )
-

-

-

-

(857,934 )1)

262,084(1,120,018 )2$ (0.06

Weighted average common shares outstanding,)

Basic and Diluted

1,270,270

-

-

-

-

-

-

20,045,985

Notes to pro forma financial statements:
1.

Income tax provision has been added to the pro forma statements in cases where companies presented were not taxed as S
Corps, using a tax rate of 40%.

2.

Additional shares of 18,765,825 added to existing outstanding shares.
F-115
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UNAUDITED CONDENSED COMBINED PRO FORMA STATEMENT OF OPERATIONSFOR YEAR ENDING DECEMBER 31, 2006
21st
DuncanCentury

Rightside

Superfly,

Pub.

Advisors,Media

Rightside

Pro FormaGroup,

Holdings,

Inc.

Preacq.

Inc.

Combined

Inc.

Inc.

Preacq.

1/1/

Preacq.

Consolidated

Morlex,11/21 to

5/6 to 12/

1/1/

to 12/31/

1/1/

Pro FormaInc.

12/31/06

31/06

to 12/31/06

06

to 6/09/06

Adjustments

1,749,684

1,265,645

Pro Forma
Notes

Balances

Revenues
Newsletter revenues--

1,240,088

Pay-per-click

-

-

-

Management services fees

-

-

-

-

-

1,240,088

Newsletter direct expenses--

649,918

General and administrative-

35,000771,582

Other

24,41977,172

Total operating expenses

24,419

Income (loss) from operations

Total revenues

4,255,417

4,795,989

4,795,989

4,795,989---

9,051,406

1,749,684

1,265,645

513,334

362,584

1,525,836

191,397

1,140,093

709,7842,847,856

23,342

7,342

134,263

28,497

295,035

112,172

1,444,842

2,382,070

1,787,690

1,100,865-

6,852,058(24,419 )(112,172 )(204,754 )

2,413,919(38,006 )164,780-

2,199,348

Interest income

-

108

-

24

-

132

Interest expense-(52(55,032 )--(55,084)

Total other income (expense)-

56(55,032 )24-(54,952

)

-

-

-

Income (loss) before taxes(24,419 )(112,116 )(259,786 )

2,413,943(38,006 )Income tax provision--

92,718965,577(15,202 )Operating expenses
Pay per click

2,183,331

2,183,331

Other income (expense))--

Non-controlling interest in income of
consolidated subsidiary

Net loss
Income (loss) per common share(206,137 )$ (24,419 ) $ (112,116 ) $ (352,504 ) $ 1,448,366$ (0.03(41,357 )(206,137 )-

1,938,259

1$ (22,804 ) $ (41,357 ) $ -1,043,093$ 895,166)$ 0.04Weighted average common shares outstanding,
Basic and Diluted

942,461

-

-

-

-

-

-

2

20,045,985

PRO FORMA ADJUSTMENTS RELATED TO THE ACQUISITION
1.

Income tax provision has been added to the pro forma statements in cases where companies presented were not taxed as S
Corps, using a tax rate of 40%.

2.

Additional shares of 18,765,825 added to existing outstanding shares.

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F-116

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Exhibit 2.3
STOCK PURCHASE AGREEMENT
by and between
MORLEX, INC.,
ALL AD ACQUISITION, INC.,
andthe SHAREHOLDERS OF
ALL AD ACQUISITION, INC.
LISTED ON THE SIGNATURE PAGES HERETO

Dated as of February 14, 2008

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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1. Definitions.
Section 1.2. Other Definitions.
ARTICLE II TRANSFER OF THE SHARES; CLOSING
Section 2.1. Transfer of the Seller Shares.
Section 2.2. Closing.
Section 2.3. Proceedings at Closing.
Section 2.4. Closing Deliveries.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 3.1. Organization and Qualification
Section 3.2. Authorization.
Section 3.3. Absence of Restrictions and Conflicts.
Section 3.4. Title to the Seller Shares.
Section 3.5. Brokers, Finders and Investment Bankers.
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1. Organization and Qualification
Section 4.2. Corporate Authority
Section 4.3. Absence of Restrictions and Conflicts.
Section 4.4. Capitalization.
Section 4.5. Business Activity of Company
Section 4.6. Brokers, Finders and Investment Bankers.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Section 5.1. Organization and Qualification.
Section 5.2. Capitalization
Section 5.3. Issuance of the Shares
Section 5.4. Authority Relative to this Agreement.
Section 5.5. No Conflicts, Required Filings and Consents
Section 5.6. SEC Reports
Section 5.7. Scope of Operations; Compliance with Laws
Section 5.8. Liabilities and Contracts
Section 5.9. Litigation
Section 5.10. Brokers
Section 5.11. Assets
Section 5.12. Restrictions on Business Activity of Purchaser
Section 5.13. Absence of Certain Changes and Events.
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1

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ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Further Assurances.
Section 6.2. Transfer Taxes.
ARTICLE VII MISCELLANEOUS PROVISIONS
Section 7.1. Notices.
Section 7.2. Schedules and Exhibits.
Section 7.3. Assignment; Successors in Interest.
Section 7.4. Number; Gender.
Section 7.5. Captions.
Section 7.6. Controlling Law; Amendment.
Section 7.7. Consent to Jurisdiction, Etc.
Section 7.8. WAIVER OF JURY TRIAL.
Section 7.9. Severability.
Section 7.10. Counterparts.
Section 7.11. Enforcement of Certain Rights.
Section 7.12. Waiver.
Section 7.13. Integration.
Section 7.14. Transaction Costs.
Section 7.15. Interpretation; Constructions.

2

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LIST OF SCHEDULES
Schedule A

Seller Shares

3

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STOCK PURCHASE AGREEMENTTHIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of February 14, 2008, is made and entered into by andbetween Morlex, Inc., a Colorado corporation (the “Purchaser”), All Ad Acquisition, Inc., a Delaware corporation (the “Company”) and eachshareholder of the Company listed on the signature pages hereto (each a “Seller” and collectively the “Sellers”). The Purchaser, the Company
and the Sellers are sometimes individually referred to herein as a “Party” and collectively as the “Parties.”
WHEREAS, the Sellers own all of the issued and outstanding capital stock of the Company, consisting of 100 shares of common
stock, without par value (the “Company Common Stock”).
WHEREAS, Purchaser desires to purchase, and the Sellers desire to sell, all of the issued and outstanding shares of the Company
Common Stock (the “Seller Shares”) in exchange for shares of Purchaser’s common stock, par value $.001 per share (the “Purchaser Common
Stock”), all subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements andconditions hereinafter set forth, and intending to be legally bound hereby, the Parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
(a)Definitions.

The following terms, as used herein, have the following meanings:“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common
control with such other Person. For purposes of this definition, “control,” when used with respect to any specified Person, means the power todirect the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract orotherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Business Day” means any day except Saturday, Sunday or any day on which banks are not required to be open for business in New
York, New York.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Organizational Documents” means the articles of incorporation and by-laws of the Company, each as amended to date.
“Contract” means any written or oral agreement, permit, loan or credit agreement, note, bond, mortgage, indenture, lease, sublease,purchase order or other agreement, instrument, concession, franchise or license.

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“Encumbrances” means and includes security interests, mortgages, liens, pledges, charges, easements, reservations, restrictions,clouds, servitudes, rights of way, options, rights of first refusal, community property interests, equitable interests, restrictions of any kind,conditional sale or other title retention agreements, any agreement to provide any of the foregoing and all other encumbrances, whether or not
relating to the extension of credit or the borrowing of money, whether imposed by Contract, Law, equity or otherwise.
“Equity Interests” means any capital stock, partnership or limited liability company interest or other equity or voting interest or any
security or evidence of indebtedness convertible into or exchangeable for any capital stock, partnership or limited liability company interest orother equity interest, or any right, warrant or option to acquire any of the foregoing.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Agent” means a nationally-recognized institution engaged by Purchaser to act as exchange agent in connection with theTransactions.
“Governmental Authorization” shall mean any approval, franchise, certificate of authority, order, consent, judgment, decree, license,
permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Entity
or pursuant to any Law.
“Governmental Entity” means any federal, state or local or foreign government or any court, administrative or regulatory agency orcommission or other governmental authority or agency, domestic or foreign.
“Law” means any law (both common and statutory law and civil and criminal law), treaty, convention, rule, directive, legislation,
ordinance, regulatory code (including, without limitation, statutory instruments, guidance notes, circulars, directives, decisions, rules andregulations) or similar provision having the force of law or an order of any Governmental Entity or any self regulatory organization.
“Liability” means any liability or obligation (including as related to Taxes), whether known or unknown, asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due, regardless of when asserted.
“Material Adverse Effect” with respect to any Person, means any state of facts, change, event, effect or occurrence (whether or notconstituting a breach of a representation, warranty or covenant set forth in this Agreement) that, individually or in the aggregate, is or may bereasonably likely to be materially adverse to such Person’s near-term or long-term projected business, financial condition, results of operations,prospects, properties, assets or Liabilities (including, without limitation, contingent Liabilities). A Material Adverse Effect shall also include
any state of facts, change, event or occurrence that shall have occurred or been threatened that (when taken together with all other adverse stateof facts, changes, events, effects or occurrences that have occurred or been threatened) is or would be reasonably likely to prevent or materiallydelay the performance by the Seller of any of its obligations under this Agreement or the consummation of the transactions contemplated
hereby.

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“Ordinary Course of Business” means the ordinary and usual course of business in a manner consistent with past practice.
“OTCBB” means the Over-the-Counter Bulletin Board.
“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality thereof.
“Purchaser Organizational Documents” means the articles of incorporation and by-laws of the Purchaser, each as amended to date.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, or any successor federal Law, and the rules and regulations
promulgated thereunder, all as the same may from time to time be in effect.
“Seller Organizational Documents” means the applicable formation and governing documents of such Seller, including certificates offormation or incorporation, by-laws, limited liability company operating agreements, partnership agreements or similar documents, as amended
to date.
“Taxes” means all taxes, assessments, charges, duties, fees, levies or other governmental charges (including interest, penalties oradditions associated therewith), including income, franchise, capital stock, real property, personal property, tangible, withholding, employment,
payroll, social security, social contribution, unemployment compensation, disability, transfer, sales, use, excise, gross receipts, value-added andall other taxes of any kind imposed by any Governmental Entity, whether disputed or not, and any charges, interest or penalties imposed by any
Governmental Entity.
“Transactions” shall mean the transactions contemplated pursuant to this Agreement.
Section 1.2.

Other Definitions.

Each of the following terms is defined in the Section set forth opposite such term:
Terms

SectionAgreement
Closing
Closing Date
Company
Company Common Stock
Exchange Ratio
Parties
Party
Purchaser
Purchaser Common Stock
Purchase Price
Purchaser SEC Reports
SellerSeller Shares
Transfer Taxes

Preamble and 8.15(a)2.2
2.2Preamble
Recitals
2.1(b)
Preamble
Preamble
Preamble
4.2
2.1(b)
4.6
Preamble
Recitals
5.4
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ARTICLE II
TRANSFER OF THE SHARES; CLOSING
Section 2.1.

Transfer of the Seller Shares.

(a)Transfer of Seller Shares. In accordance with, and subject to the terms and conditions of this Agreement, at the
Closing, each Seller shall contribute, transfer and deliver to the Purchaser, and Purchaser shall purchase and accept from each Seller, all of theSeller Shares held by such Seller, as set forth in Schedule A hereto, free and clear of all Encumbrances, in exchange for the payment of thePurchase Price for all Seller Shares held by such Seller.
(b)Transfer Consideration. Each Seller Share shall be exchanged for the right to receive 100,000 (the “Exchange
Ratio”) fully paid and nonassessable shares of Purchaser Common Stock which, in addition to any cash in lieu of any fractional interests
pursuant to Section 2.1(c), shall constitute the purchase price with respect to each Seller Share (the “Purchase Price”). As of the Closing Date,the Seller Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each stockholder
of any such Seller Shares shall cease to have any rights with respect thereto, except the right to receive the Purchase Price. In no event shallinterest be paid or accrued on the Purchase Price.
(c)
Fractional Shares. No certificates representing fractional shares of Purchaser Common Stock shall be issued inconnection with the Closing, and such fractional shares shall not entitle the owner thereof to any rights of a stockholder of the Purchaser. In
lieu of any such fractional shares, each holder of Seller Shares exchanged pursuant to Section 2.1(b) who would otherwise have been entitled
to receive a fraction of a share of Purchaser Common Stock (after taking into account all Seller Shares then held by such holder) shall receive
cash (without interest) in an amount equal to the product of such fractional part of a share of Purchaser Common Stock multiplied by theaverage of the closing prices of the Purchaser Common Stock on the OTCBB as reported on the OTCBB for the 10 consecutive trading days
ending on the second trading day prior to the Closing Date, or, in the event that there has been no trading of the Purchaser Common Stockduring such 10-day period, the last available closing price of the Purchaser Common Stock on the OTCBB.
Section 2.2.

Closing.

The closing of the transactions contemplated by this Agreement (the “Closing”), unless another date or place is agreed to by the parties,
shall take place at the offices of Nixon Peabody LLP, 437 Madison Avenue, New York, New York 10022 on the date hereof (the “Closing
Date”).

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Section 2.3.

Proceedings at Closing.

(a)
All proceedings to be taken and all documents to be executed and delivered by all Parties at the Closing shall bedeemed to have been taken and executed simultaneously, and no proceedings shall be deemed taken nor any documents executed or delivered
until all have been taken, executed and delivered.
(b)
Exchange Agent. At or promptly following the Closing, the Purchaser shall deposit with the Exchange Agent, in
trust for the benefit of the holders of shares of the Company Common Stock immediately prior to the Closing, certificates representing theshares of Purchaser Common Stock issuable pursuant to Section 2.1(b). In addition, the Purchaser shall make available by depositing with the
Exchange Agent, as necessary from time to time after the Closing, cash in an amount sufficient to make the payments in lieu of fractional
shares pursuant to Section 2.1(c) and any distributions to which holders of shares of the Company Common Stock may be entitled pursuant to
Section 2.3(d). All cash and Purchaser Common Stock deposited with the Exchange Agent shall hereinafter be referred to as the “Exchange
Fund.”(c)At or after the Closing, each holder of a certificate representing the Company Common Stock (the “Certificates”)
shall surrender and deliver such Certificate to the Exchange Agent together with a duly completed and executed transmittal letter. Upon such
surrender and delivery, the holder shall receive the Purchase Price. Until so surrendered and exchanged, each Certificate formerly representing
an outstanding share of Company Common Stock shall, after the Closing, be deemed for all purposes to evidence only the right to receive thePurchase Price.
(d)
At the Closing, the stock transfer books of the Company shall be closed and no transfer of shares of Company
Common Stock shall be recorded thereafter, other than transfers of shares of Company Common Stock that have occurred prior to the Closing
Date. In the event that, after the Closing, Certificates are presented for transfer to the Company or the Purchaser, they shall be delivered to the
Exchange Agent and exchanged for the Purchase Price as provided for in this Section 2.3.
(e)
Any Purchase Price that remains undistributed to the stockholders of the Company as of the Closing Date after fourmonths have elapsed following the Closing Date shall be delivered to the Purchaser by the Exchange Agent, upon demand, and any former
stockholders of the Company who have not previously complied with this Section 2.3 shall thereafter look only to the Purchaser for paymentof their claim for the Purchase Price or distributions with respect to the Purchaser Common Stock.
(f)
Neither the Exchange Agent, nor any of the Company or the Purchaser shall be liable to any holder of shares ofCompany Common Stock with respect to any Purchase Price (or distributions with respect to the Purchaser Common Stock) delivered to a
public official pursuant to any applicable abandoned property, escheat or similar Law.
(g)
In the event any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall deliver the
Purchase Price and any distributions with respect to the Purchaser Common Stock to which such holder is entitled in exchange for such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact by the record holder thereof and the delivery of such bond as the
Exchange Agent may reasonably require.

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Section 2.4.

Closing Deliveries.

(a)
At the Closing, the Seller shall deliver the following items to the Purchaser, each in form and substance reasonably
satisfactory to the Purchaser:(i)a certificate of the Seller, dated as of the Closing Date, certifying that the Seller is not aforeign person within the meaning of Section 1445 of the Code; provided, that the failure to deliver such certificate shall entitle
the Purchaser to reduce the Purchase Price payable to the Seller by any required withholding Taxes as a consequence of the
failure to deliver such certificate;(ii)
those consents and approvals, in form and substance satisfactory to the Purchaser and its
counsel, that are required for consummation of the transactions contemplated by this Agreement; and(iii)
copies of all filings made by the Seller with Governmental Entities in connection with theconsummation of the transactions contemplated by this Agreement.
(b)

At the Closing, the Purchaser shall deliver the following items to the Seller:(i)a certificate of an officer of the Purchaser, dated as of the Closing Date, certifying (A) the
Purchaser Organizational Documents; (B) the incumbency of each officer executing this Agreement and any other agreement,
document or instrument contemplated hereby; and (C) the resolutions of Purchaser’s board of directors approving thisAgreement and all other agreements and documents contemplated hereby; and(ii)
certificate of the Secretary of State of the State of Colorado, dated as of a date not more than
five (5) days prior to the Closing Date, certifying as to the good standing of the Purchaser.
(c)

At the Closing, the Company shall deliver the following items to the Purchaser:(i)a certificate of an officer of the Company, dated as of the Closing Date, certifying (A) the
Company Organizational Documents; (B) the incumbency of each officer executing this Agreement and any other agreement,
document or instrument contemplated hereby; and (C) the resolutions of Company’s board of directors approving thisAgreement and all other agreements and documents contemplated hereby; and6

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(ii)certificate of the Secretary of State of the State of Delaware, dated as of a date not more than
five (5) days prior to the Closing Date, certifying as to the good standing of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller, severally as to itself or him or herself, and not jointly, hereby represents and warrants to the Purchaser as follows:
Section 3.1.

Organization and Qualification(a)Such Seller that is not an individual is an entity duly organized, validly existing and in good standing under thelaws of its jurisdiction of organization, with full power and authority to conduct its business as it is now being conducted, to own or use theproperties or assets that it purports to own or use, and to perform all of its obligations under all Contracts. Subject to Schedule 3.1(a), such
Seller that is not an individual is duly qualified or licensed to do business as a foreign entity and is in good standing as a foreign entity in eachjurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires
such licensing, qualification or good standing, except for any failure to so license, qualify or be in such good standing, which, when taken
together with all other such failures, has not had, does not have and could not reasonably be expected to have a Material Adverse Effect onsuch Seller.
(b)Such Seller that is not an individual, as applicable, has made available or delivered to the Purchaser a true andcomplete copy of the Seller Organizational Documents. The Seller Organizational Documents so delivered are in full force and effect.
Section 3.2.

Authorization.

Such Seller has full power and authority to execute and deliver this Agreement, to perform its, his or her obligations under thisAgreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by such Seller, theperformance by such Seller of its, his or her obligations under this Agreement and the consummation of the transactions provided for in thisAgreement have been duly and validly authorized by all necessary action on the part of such Seller that is not an individual. This Agreement
has been duly executed and delivered by such Seller and constitutes the valid and binding agreement of such Seller, enforceable against such
Seller in accordance with its terms, subject to applicable bankruptcy, insolvency and other similar laws affecting the enforceability of creditors’rights generally, general equitable principles and the discretion of courts in granting equitable remedies.
Section 3.3.

Absence of Restrictions and Conflicts.

The execution, delivery and performance of this Agreement, the consummation of the transactions contemplated by this Agreement
and the fulfillment of and compliance with the terms and conditions of this Agreement do not with the passing of time or the giving of noticeor both, violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, or permit the acceleration of
any obligation under, or otherwise require any action, approval, order, authorization, registration, declaration or filing with respect to (a) any of
the Seller Organizational Documents or any resolution of such Seller adopted by the Board of Directors or shareholders of such Seller, whereapplicable, (b) any Contract to which such Seller is a party, (c) any judgment, decree or order of any Governmental Entity to which such Seller
is a party or by which the Seller or any of its properties is bound or (d) any permit or Law of any Governmental Entity or public or regulatory
unit, agency or authority applicable to such Seller, that in any case would be reasonably likely to prevent or materially delay the performanceby such Seller of any of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby.

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Section 3.4.

Title to the Seller Shares.

Such Seller is the lawful owner, both of record and beneficially, of the Seller Shares set forth opposite such Seller’s name on Schedule
A hereto, and has good, valid and marketable title to such Seller Shares, free and clear of any Encumbrances and with no restriction on the voting
rights and other incidents of record and beneficial ownership pertaining thereto. Such Seller is not the subject of any bankruptcy, reorganizationor similar proceeding. Except for this Agreement, there are no outstanding Contracts or understandings between such Seller and any other
Person with respect to the acquisition, disposition, transfer, registration or voting of or any other matters in any way pertaining or relating to, or
any other restrictions on any of the Seller Shares held by such Seller. The Seller acquired the Seller Shares in one or more transactions exempt
from registration under the Securities Act and state securities and “blue sky” laws.
Section 3.5.

Brokers, Finders and Investment Bankers.

Such Seller has not employed any broker, finder or investment banker or incurred any Liability for any investment banking fees,
financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1.

Organization and Qualification(a)
The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties or assetsthat it purports to own or use, and to perform all of its obligations under all Contracts. The Company is duly qualified or licensed to dobusiness as a foreign corporation and is in good standing as a foreign corporation in each jurisdiction in which either the ownership or use of
the properties owned or used by it, or the nature of the activities conducted by it, requires such licensing, qualification or good standing,
except for any failure to so license, qualify or be in such good standing, which, when taken together with all other such failures, has not had,
does not have and could not reasonably be expected to have a Material Adverse Effect on the Company.

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(b)The Company has made available or delivered to the Purchaser a true and complete copy of the Company
Organizational Documents. The Company Organizational Documents so delivered are in full force and effect.
(c)
Section 4.2.

The Company has no Subsidiaries and does not own any Equity Interests in any Person.
Corporate Authority.

The Company has the full legal right, requisite corporate power and authority and has taken all corporate action necessary in order to
execute, deliver and perform fully, its obligations under this Agreement and to allow it to consummate the transactions contemplated hereby.
The execution and delivery by the Company of this Agreement and the consummation by the Company of the transactions contemplated
hereby have been duly authorized and approved by the Board of Directors of the Company, and no other corporate proceeding with respect to
the Company is necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly executed anddelivered by the Company and constitutes valid and binding agreements of the Company, enforceable against the Company in accordance with
its terms.
Section 4.3.

Absence of Restrictions and Conflicts.

The execution, delivery and performance of this Agreement, the consummation of the transactions contemplated by this Agreement
and the fulfillment of and compliance with the terms and conditions of this Agreement do not with the passing of time or the giving of noticeor both, violate or conflict with, constitute a breach of or default under, result in the loss of any benefit under, or permit the acceleration of any
obligation under, or otherwise require any action, approval, order, authorization, registration, declaration or filing with respect to (a) any of theCompany Organizational Documents or any resolution of the Company adopted by the Board of Directors or shareholders of the Company, (b)any Contract to which the Company is a party, (c) any judgment, decree or order of any Governmental Entity to which the Company is a party
or by which the Company or any of its properties is bound or (d) any permit or Law of any Governmental Entity or public or regulatory unit,
agency or authority applicable to the Company, that in any case would be reasonably likely to prevent or materially delay the performance by
the Company of any of its obligations under this Agreement or the consummation of any of the transactions contemplated hereby.
Section 4.4.

Capitalization.

(a)
The authorized capital stock of the Company consists of 100 shares of common stock, no par value per share, 42 ofwhich are issued and outstanding and owned by the Sellers as set forth on Schedule A. There are no securities outstanding which areconvertible into, exchangeable for, or carrying the right to acquire, Equity Interests of the Company or subscriptions, warrants, options, calls,
puts, convertible securities, registration or other rights, arrangements or commitments obligating the Company to issue, sell, register, purchaseor redeem any of its Equity Interests or any ownership interest or rights therein. There are no voting trusts or other agreements orunderstandings to which the Company is bound with respect to the voting of any Equity Interests of the Company. There are no stock
appreciation rights, phantom stock rights or similar rights or arrangements outstanding with respect to the Company, and no derivative
instruments issued by the Company, the underlying security of which is an Equity Interest of the Company.

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(b)Except as specifically contemplated by this Agreement, there are no Contracts, commitments, arrangements,
understandings or restrictions to which the Company is bound relating in any way to any Equity Interest of the Company, including any rights
of first refusal and any rights of first offer or any voting arrangements.
(c)
All Equity Interests issued by the Company have been issued in transactions exempt from registration under the
Securities Act and the rules and regulations promulgated thereunder and all applicable state securities or “blue sky” laws, and the Company
has not violated the Securities Act or any applicable state securities or “blue sky” laws in connection with the issuance of any such Equity
Interests.
Section 4.5.

Business Activity of Company

The Company was formed for the purpose of acquiring Ad Authority, Inc. The Company has no operations, assets or Liabilities, and is
not a party to any Contracts other than in each case the Stock Purchase Agreement, dated as of November 14, 2007, among Iakona, Inc., Jason
Kulpa, the Company and Duncan Capital Partners LLC and the Employment Agreement between Jason Kulpa and the Company.
Section 4.6.

Brokers, Finders and Investment Bankers.

The Company has not employed any broker, finder or investment banker or incurred any Liability for any investment banking fees,
financial advisory fees, brokerage fees or finders’ fees in connection with the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Sellers as follows:
Section 5.1.

Organization and Qualification.

(a)
The Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State ofColorado. The Purchaser has the requisite corporate power and authority to carry on its business as it is now being conducted and is duly
qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of its properties owned or held underlease or the nature of its activities makes such qualification necessary, except for any failure to so license, qualify or be in such good standing,which, when taken together with all other such failures, has not had, does not have and could not reasonably be expected to have a Material
Adverse Effect on the Purchaser.

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(b)The Purchaser has made available or delivered to the Company a true and complete copy of the Purchaser
Organizational Documents. The Purchaser Organizational Documents so delivered are in full force and effect.
Section 5.2.

Capitalization.

The authorized capital stock of the Purchaser consists of 1,000,000,000 shares of common stock, par value $.001 per share (“Purchaser
Common Stock”). As of the date of this Agreement, the Purchaser has 1,501,765 shares of Purchaser Common Stock issued and 1,280,160
shares of Purchaser Common Stock outstanding, all of which have been duly authorized, validly issued, fully paid and non-assessable. As of
the Closing Date, there will be no more than 1,280,160 shares of Purchaser Common Stock issued and outstanding, all of which have been
duly authorized, validly issued, fully paid and non-assessable. Purchaser Common Stock is presently eligible for quotation and trading on the
OTCBB in all 50 states of the United States and is not subject to any notice of suspension or delisting. Purchaser Common Stock is eligible
for registration under the Exchange Act. All of the issued and outstanding shares of Purchaser Common Stock were issued in compliancewith all applicable Laws including, without limitation, the Securities Act, the Exchange Act and applicable “blue sky” laws. There are no
preemptive or other outstanding rights, options, warrants, conversion rights (including pursuant to convertible securities), stock appreciationrights, redemption rights, repurchase rights, registration rights, agreements, arrangements, calls, commitments or rights of any kind relating to
the issued or unissued capital stock of the Purchaser or obligating the Purchaser to issue or sell any shares of capital stock of, or other equity
interests in, the Purchaser. As of the date of this Agreement, there are no outstanding contractual obligations of the Purchaser to repurchase,
redeem or otherwise acquire any shares of capital stock of the Purchaser or to provide material funds to, or make any material investment (inthe form of a loan, capital contribution or otherwise) in, any Person.
Section 5.3.

Issuance of the Shares.

The shares of Purchaser Common Stock are duly authorized and, when issued and paid for in accordance with the transactions
contemplated hereby, will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances. Upon the delivery by
the Purchaser of such shares to the Exchange Agent, such shares will be duly and validly issued and the persons in whose names such sharesare registered will be entitled to the rights of the registered holders specified hereunder and under the documents contemplated hereby.
Section 5.4.

Authority Relative to this Agreement.

The Purchaser has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions to which it is a party. The execution and delivery of this Agreement by the Purchaser, and the consummation by
the Purchaser of the Transactions have been duly and validly authorized by all necessary corporate action and no other corporate proceedingson the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions
contemplated pursuant to this Agreement. This Agreement has been duly and validly executed and delivered by the Purchaser and, assuming
the due authorization, execution and delivery hereof by the Seller, constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms.

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Section 5.5.

No Conflicts, Required Filings and Consents.

(a)
The execution and delivery of this Agreement by the Purchaser does not and will not, and the performance of thisAgreement and the consummation of the Transactions by Purchaser will not: (i) conflict with or violate the articles of incorporation or by-lawsof the Purchaser (ii) assuming the consents, approvals, authorizations and waivers specified in Section 5.5(b) have been received, conflict withor violate any Laws applicable to the Purchaser or by which any property or asset of the Purchaser is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any
right of termination, amendment, acceleration, or cancellation of, or result in the creation of a lien or other encumbrance on any property orasset of the Purchaser pursuant to, any Contract to which the Purchaser is a party or by which the Purchaser or any property or asset of thePurchaser is bound or affected.
(b)
The execution and delivery of this Agreement by the Purchaser does not and will not, and the performance of thisAgreement and the consummation of the Transactions by the Purchaser will not, require any consent, approval, authorization, waiver or permitof, or filing with or notification to, any Governmental Entity, except for applicable requirements of the Exchange Act, the Securities Act, and“blue sky” laws.
Section 5.6.

SEC Reports.

The Purchaser has filed with the SEC all forms, reports, schedules, registration statements and preliminary or definitive proxy or
information statements required to be filed by it with the SEC since December 31, 2005 (such reports, the “Purchaser SEC Reports”). As of
their respective dates, the Purchaser SEC Reports complied as to form in all material respects with the requirements of the Exchange Act or the
Securities Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Purchaser SEC Reports. As of theirrespective dates of filing, all SEC Reports filed by the Purchaser at any time did not contain any untrue statement of a material fact or omit tostate a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Purchaser has filed all material contracts and agreements and other documents or instruments required to be
filed as exhibits to the Purchaser SEC Reports.
Section 5.7.

Scope of Operations; Compliance with Laws.

.
(a)
The Purchaser SEC Reports describe fairly and accurately all operations and material transactions engaged in or
conducted by the Purchaser since its inception. Except as described in the Purchaser SEC Reports, Purchaser does not own, lease or have theright to use, and has never owned, leased or had the right to use, any real property or interest therein. The Purchaser does not have and has
never had any ownership, equity or other interest in any other Person. The Purchaser has not guaranteed any obligation of any other Person.
The Purchaser has no employees.
(b)

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(i)The Purchaser is in compliance in all material respects with each Law that is or wasapplicable to it or to the conduct or operation of its business or the ownership or use of any of its assets;(ii)
no event has occurred or circumstance exists that could reasonably be expected to (with orwithout the giving of notice or the lapse of time or both) constitute or result, directly or indirectly, in a violation by the Purchaserof, or a failure on the part of the Purchaser to comply in all material respects with, any Law; and(iii)
the Purchaser has not received, at any time, any notice or other communication (whether
oral or written) from any Governmental Entity or any other Person regarding any actual, alleged, possible, or potential violationof or failure on the part of the Purchaser to comply in all material respects with, any Law.
(c)
The Purchaser holds and maintains in full force and effect all material Governmental Authorizations required to
conduct its business in the manner and in all such jurisdictions as it is currently conducted and to permit it to own and use its properties andassets in the manner in which it currently owns and uses such assets.
Section 5.8.

Liabilities and Contracts.

The Purchaser does not have outstanding any liability or obligation of any nature whatsoever (whether absolute, accrued, contingent
or otherwise and whether due or to become due) except as set forth in the Purchaser SEC Reports. The Purchaser is not and has not been a party
to, nor are or were the Purchaser’s assets bound or affected by, any Contract except for Contracts under which the Purchaser has no further
rights or obligations because the Contract has been fully performed or validly and irrevocably terminated.
Section 5.9.

Litigation.

There is no suit, action or proceeding pending, threatened against or affecting the Purchaser, nor is there any judgment, decree,
injunction or order of any Governmental Entity or arbitrator outstanding against the Purchaser.
Section 5.10.

Brokers.

No agent, broker, finder, investment banker or other firm or Person is or will be entitled to any broker’s or finder’s fee or other similarcommission or fee in connection with the Transactions based upon arrangements made by or on behalf of the Purchaser.
Section 5.11.

Assets.

As of the date hereof no asset of the Purchaser (tangible or intangible) is subject to any Encumbrance.

13

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Section 5.12.

Restrictions on Business Activity of Purchaser.

As of the date hereof, there are no restrictions on the Purchaser’s business activities.
Section 5.13.

Absence of Certain Changes and Events.

Except as set forth in the Purchaser SEC Filings, since December 31, 2006 through and including the date of this Agreement, thePurchaser has conducted its business only in, and has not engaged in any transaction other than according to, the Ordinary Course of Business,and there has not been any:(a)change in the business, operations, properties, prospects, assets, or condition of the Purchaser that has had, does
have or could reasonably be expected to have a Material Adverse Effect on the Company;(b)(i) change in the authorized or issued capital stock of the Purchaser; (ii) grant of any new or amendment of any
existing stock option, warrant, or other right to purchase shares of capital stock of the Purchaser; (iii) issuance of any security convertible into
the capital stock of the Purchaser; (iv) grant of any registration rights in respect of the capital stock of the Purchaser; (v) reclassification,
combination, split, subdivision, purchase, redemption, retirement, issuance, sale, or any other acquisition or disposition, directly or indirectly,
by the Purchaser of any shares of the capital stock of the Company; (vi) any amendment of any material term of any outstanding security of
the Company; or (vii) declaration, setting aside or payment of any dividend (whether in cash, securities or other property) or other distribution
or payment in respect of the shares of the capital stock of the Company;(c)amendment or other change in the Purchaser Organizational Documents; or(d)other events or transactions material to the Purchaser.
ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS

Section 6.1.

Further Assurances.

Subject to the terms and conditions herein provided, at any time from and after the Closing, at the request of a Party and without
further consideration, each other Party shall promptly execute and deliver such further agreements, certificates, instruments and documents andperform such other actions as the requesting Party may reasonably request in order to fully consummate the transactions contemplated hereby
and carry out the purposes and intent of this Agreement; provided that the requesting Party shall pay all reasonable and documented expenses
associated therewith.
Section 6.2.

Transfer Taxes.

All excise, sales, use, value added, registration stamp, recording, documentary, conveyancing, franchise, property, transfer, gains
and similar Taxes, levies, charges and fees (collectively, “Transfer Taxes”) incurred in connection with the transactions contemplated by thisAgreement shall be borne one-half by the applicable Seller and one-half by the Purchaser. The Purchaser and each Seller shall cooperate
in providing each other with any appropriate resale exemption certifications and other similar documentation. The Party that is required byapplicable law to make the filings, reports, or returns with respect to any applicable Transfer Taxes shall do so, and the other Party shallcooperate with respect thereto as necessary.

14
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ARTICLE VIIMISCELLANEOUS PROVISIONS
Section 7.1.

Notices.

All notices, communications and deliveries under this Agreement will be made in writing signed by or on behalf of the Party making
the same, will specify the Section under this Agreement pursuant to which it is given or being made, and will be delivered personally or byfacsimile or other electronic transmission or sent by registered or certified mail (return receipt requested) or by next day courier (with evidence
of delivery and postage and other fees prepaid) as follows:
To the Purchaser:

Morlex, Inc.
c/o Duncan Capital LLC
420 Lexington Avenue, Suite 450
New York, New York 10170
Attention: President
Telephone: (212) 581-5150
Facsimile: (212) 581-5198

with a copy to:

Nixon Peabody LLP
437 Madison Avenue
New York, NY 10022
Attn: Jane Greyf, Esq.
Facsimile: 866-516-0358
E-Mail: jgreyf@nixonpeabody.com

To the Seller, at the address of such Seller set forth on Schedule A hereto.
To the Company:

All Ad Acquisition, Inc.
c/o Duncan Capital LLC
420 Lexington Avenue, Suite 450
New York, New York 10170
Attention: President
Telephone: (212) 581-5150
Facsimile: (212) 581-5198

or to such other representative or at such other address of a Party as such Party may furnish to the other Parties in writing. Any notice which isdelivered personally or by facsimile or other electronic transmission in the manner provided herein shall be deemed to have been duly given to
the Party to whom it is directed upon actual receipt by such Party or its agent. Any notice which is addressed and mailed in the manner herein
provided shall be conclusively presumed to have been duly given to the Party to which it is addressed at the close of business, local time of therecipient, on the fourth Business Day after the day it is so placed in the mail (or on the first Business Day after placed in the mail if sent byovernight courier) or, if earlier, the time of actual receipt.

15

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Section 7.2.

Schedules and Exhibits.

The Schedules and Exhibits to this Agreement are hereby incorporated into this Agreement and are hereby made a part of thisAgreement as if set out in full in this Agreement.
Section 7.3.

Assignment; Successors in Interest.

No assignment or transfer by any Party of such Party’s rights and obligations under this Agreement will be made except with the priorwritten consent of the other Parties to this Agreement; provided, however, that the Purchaser may assign any or all of its rights, obligations andinterests hereunder without any such written consent to any Affiliate of the Purchaser or to any of the Purchaser’s lenders as security for any
obligations arising in connection with the financing of the transactions contemplated hereby. This Agreement will be binding upon and will
inure to the benefit of the Parties and their successors and permitted assigns, and any reference to a Party will also be a reference to a successor
or permitted assign.
Section 7.4.

Number; Gender.

Whenever the context so requires, the singular number will include the plural and the plural will include the singular, and the genderof any pronoun will include the other genders.
Section 7.5.

Captions.

The titles, captions and table of contents contained in this Agreement are inserted in this Agreement only as a matter of convenienceand for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision of this Agreement.
Unless otherwise specified to the contrary, all references to Articles and Sections are references to Articles and Sections of this Agreement andall references to Schedules are references to Schedules, respectively, to this Agreement.
Section 7.6.

Controlling Law; Amendment.

This Agreement will be governed by and construed and enforced in accordance with the internal laws of the State of New Yorkapplicable to Contracts executed within such state. This Agreement may not be amended, modified or supplemented except by writtenagreement of the Parties.
Section 7.7.

Consent to Jurisdiction, Etc.

Except as otherwise expressly provided in this Agreement, the Parties hereto agree that any suit, action or proceeding seeking toenforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought to the non-exclusive jurisdiction of the courts of the State of New York or the federal courts located in the State of
New York, and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any
such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which isbrought in any such court has been brought in an inconvenient forum. The Parties agree that, after a legal dispute is before a court as specified
in this Section 7.7, and during the pendency of such dispute before such court, all actions, suits, or proceedings with respect to such disputeor any other dispute, including without limitation, any counterclaim, cross-claim or interpleader, shall be subject to the exclusive jurisdictionof such court. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without
the jurisdiction of any such court. Each Party hereto agrees that a final judgment in any action, suit or proceeding described in this Section 7.7
after the expiration of any period permitted for appeal and subject to any stay during appeal shall be conclusive and may be enforced in otherjurisdictions by suit on the judgment or in any other manner provided by applicable laws.
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16

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Section 7.8.

WAIVER OF JURY TRIAL.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATEDHEREBY.
Section 7.9.

Severability.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective tothe extent of such pro-hibition or unenforceability without invalidating the remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted
by law, the Parties waive any provision of law which renders any such provision prohibited or unenforceable in any respect.
Section 7.10.

Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument and all of which
together shall constitute a single instrument. Execution and delivery of this Agreement by electronic exchange bearing the copies of a party’s
signature shall constitute a valid and binding execution and delivery of this Agreement by such party. Such electronic copies shall constituteenforceable original documents.
Section 7.11.

Enforcement of Certain Rights.

Nothing expressed or implied in this Agreement is intended, or will be construed, to confer upon or give any Person other than theParties, and their successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, or resultin such Person being deemed a third party beneficiary of this Agreement.

17

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Section 7.12.

Waiver.

Any agreement on the part of a Party to any extension or waiver of any provision of this Agreement will be valid only if set forth in an
instrument in writing signed on behalf of such Party. A waiver by a Party of the performance of any covenant, agreement, obligation, condition,
representation or warranty will not be construed as a waiver of any other covenant, agreement, obligation, condition, representation or warranty.
A waiver by a Party of a condition to Closing will not be considered as a waiver of any rights to indemnification that may be claimed by such
Party with respect to the matters relating to such waived condition. A waiver by any Party of the performance of any act will not constitute a
waiver of the performance of any other act or an identical act required to be performed at a later time.
Section 7.13.

Integration.

This Agreement and the documents executed pursuant to this Agreement supersede all negotiations, agreements and understandings(both written and oral) among the Parties with respect to the subject matter of this Agreement. The Parties hereby agree that for purposes ofthis Agreement (including, but not limited to, indemnification obligations) neither Party has made to the other any representations, warranties
or covenants or other disclosures other than those contained in this Agreement.
Section 7.14.

Transaction Costs.

Except as provided above or as otherwise expressly provided herein, (a) the Purchaser will pay its own fees, costs and expenses
incurred in connection with this Agreement and the transactions contemplated by this Agreement, including, without limitation, the fees, costs
and expenses of its financial advisors, accountants, counsel or brokers, and (b) each Seller will pay its own fees, costs and expenses incurred inconnection with this Agreement and the transactions contemplated by this Agreement, including, without limitation, the fees, costs and expensesof their financial advisors, accountants, counsel or brokers.
Section 7.15.

Interpretation; Constructions.

(a)
The term “Agreement” means this agreement together with all Schedules hereto, as the same may from time to time
be amended, modified, supplemented or restated in accordance with the terms hereof. Unless the context otherwise requires, words importing
the singular shall include the plural, and vice versa. The use in this Agreement of the term “including” means “including, without limitation.”
The words “herein”, “hereof’, “hereunder”, “hereby”, “hereto”, “hereinafter”, and other words of similar import refer to this Agreement as awhole, including the Schedules, as the same may from time to time be amended, modified, supplemented or restated, and not to any particular
article, section, subsection, paragraph, subparagraph or clause contained in this Agreement. All references to articles, sections, subsections,clauses, paragraphs, schedules and exhibits mean such provisions of this Agreement and the Schedules attached to this Agreement, except
where otherwise stated. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case thecontext may require. The use in this Agreement of the terms “furnished,” “provided,” “delivered,” “made available” and similar terms refers,with respect to the provision of information and documents to the Purchaser, in addition to the physical delivery of such information or
documents to the Purchaser, to such information and/or documents as are made available by the Seller or any of its employees, consultants,
advisors or attorneys.

18

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(b)The language used in this Agreement shall be deemed to be the language chosen by the parties to express theirmutual intent, and no rule of strict construction shall be applied against any party.
(c)
The Seller hereby acknowledges and agrees that it has had the opportunity to consult with his, her or its own
counsel with respect to the subject matter of this Agreement, and has read and understands all of the provisions of this Agreement (including
the Schedules to this Agreement).
[Signature Page to Follow.]19

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IN WITNESS WHEREOF, the Parties have caused this Stock Purchase Agreement to be duly executed, as of the date first above written.
SELLERS
MW CROW FAMILY LP

By: /s/ Michael Crow
Name:
Title:

Michael Crow
General Partner

DRAKE INVESTMENTS LTD.

By: /s/ Dudley R. Cottingham
Name:
Title:

Dudley R. Cottingham
Director

ABERDEEN HOLDINGS LTD.

By: /s/ Michael Crow
Name:

Michael Crow
Title:
Principal

ALEX CLUG TTEE, CROW 2001 CHILDREN’S
TRUST-FBO MICHELLE LEE CROW

By: /s/ Alex Clug
Name:

Alex Clug
Title:
Trustee

ALEX CLUG TTEE, CROW 2001 CHILDREN’S
TRUST-FBO SPENCER MICHAEL CROW

By: /s/ Alex Clug
Name:

Alex Clug
Title:
Trustee

Signature Page to All Ad Acquisition Stock Purchase Agreement

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ALEX CLUG TTEE, CROW 2001 CHILDREN’S
TRUST-FBO OLIVIA TREVOR CROW

By: /s/ Alex Clug
Name:

Alex Clug
Title:
Trustee

ALEX CLUG TTEE, CROW 2001 CHILDREN’S
TRUST-FBO DUNCAN CROW

By: /s/ Alex Clug
Name:

Alex Clug
Title:
Trustee/s/ Richard Berman
Richard Berman/s/ Michael Crow
Michael Crow
PURCHASER

MORLEX, INC.

By: /s/ Michael Miller
Name:

Michael Miller
Title:
President

COMPANY

ALL AD ACQUISITION, INC.

By: /s/ Michael Crow
Name:
Title:

Michael Crow
President

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Signature Page to All Ad Acquisition Stock Purchase Agreement

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SCHEDULE A
Name

Notice Address

Numberof Shares
6.0

Richard Berman

8.5
Aberdeen Holdings Ltd.

2.0
MW Crow Family LP

4.5
Michael Crow

5.0
Drake Investments Ltd.

4.0
Michelle Crow Trust, Trustee Alex Clug

Spencer Crow Trust, Trustee Alex Clug(same as above)

4.0

Olivia Trevor Crow Trust, Trustee Alex Clug(same as above)

4.0

Duncan Crow Trust, Trustee Alex Clug(same as above)

4.0

Total:

42.0

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Exhibit 4.1

REGISTRATION RIGHTS AGREEMENTBY AND AMONG
MORLEX, INC.
andthe HOLDERS set forth on the signature pages hereto
Dated as of February 14, 2008

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TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND OTHER MATTERS

2

Section 1.1 Definitions

2

Section 1.2 Definitions Generally

5

ARTICLE II REGISTRATION RIGHTS

6

Section 2.1 Demand Registration

6

Section 2.2 Priority on Demand Registration

7

Section 2.3 Piggyback Registration

8

Section 2.4 Priority on Piggyback Registrations

9

Section 2.5 Lock-Up Agreements

10

Section 2.6 Registration Procedures

10

Section 2.7 Registration Restrictions

13

Section 2.8 Indemnification by the Company

13

Section 2.9 Indemnification by the Holders

13

Section 2.10 Conduct of Indemnification Proceedings

14

Section 2.11 Contribution

14

Section 2.12 Underwritten Offering

15

Section 2.13 Other Indemnification

15

Section 2.14 Rule 144 Information/Exchange Act Reporting

15

Section 2.15 Parties in Interest

15

Section 2.16 Mergers, Recapitalizations, Exchanges or Other Transactions Affecting
Registrable Securities

16

Section 2.17 Registration Expenses

16

Section 2.18 No Inconsistent Agreements

16-i-

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ARTICLE III MISCELLANEOUS

17

Section 3.1 Term of the Agreement; Termination of Certain Provisions.

17

Section 3.2 Amendments; Waiver

17

Section 3.3 Governing Law

17

Section 3.4 Notices

18

Section 3.5 Severability

18

Section 3.6 Specific Performance

18

Section 3.7 Assignment; Successors

18

Section 3.8 No Third-Party Rights

19

Section 3.9 Section Headings

19

Section 3.10 Execution in Counterparts

19
-ii-

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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of February 14, 2008 (the “Closing
Date”), by and among Morlex, Inc., a Colorado corporation (the “Company”) and the Holders (as defined herein) set forth on the signature
pages hereto.
WITNESSETH:
WHEREAS, the Company entered into: (i) an Agreement and Plan of Merger (the “RHI Merger Agreement”) with Rightside Holdings,
Inc. (“Rightside”) and RHI Merger Sub, Inc., a wholly-owned subsidiary of the Company (“RHI Merger Sub”); (ii) an Agreement and Plan ofMerger (the “DMG Merger Agreement”, and together with the RHI Merger Agreement, the “Merger Agreements”) with Duncan Media Group,
Inc. (“Duncan”) and DMG Merger Sub, Inc., a wholly-owned subsidiary of the Company (“DMG Merger Sub”); and (iii) a Stock Purchase
Agreement (the “Stock Purchase Agreement”) with All Ad Acquisition, Inc., a Delaware corporation (“AAA”) and parent of Ad Authority,
Inc. (“Ad Authority”), and, the shareholders of AAA listed on the signature pages thereto, whereby all of the outstanding and issued shares ofcommon stock of AAA were purchased by the Company.
WHEREAS, in connection with the transactions contemplated pursuant to the Merger Agreements, the Company is issuing Junior
Convertible Unsecured Notes of the Company (the “Junior Convertible Notes”) and may in the future sell shares of Company Common Stockin private placement transactions (together with the issuance of Junior Convertible Notes, the “Equity Financing”).
WHEREAS, in connection with the acquisition of Rightside, Duncan and Ad Authority, (the “Acquisition Transactions”) and theEquity Financing, the Company wishes to grant registration rights, under the terms and provisions set forth herein, to certain of the parties
hereto who received or may receive in the future Company Common Stock in connection with the Acquisition Transactions (the “Acquisition
Holders”) and who may receive shares of Common Stock upon conversion of the Junior Convertible Notes or otherwise purchase shares ofCommon Stock in the Equity Financing (the “Investor Holders”).
WHEREAS, the Company also wishes to grant registration rights, under the terms and provisions set forth herein, to certain of theparties hereto who were holders of Company Common Stock as of the date immediately prior to the Closing Date (the “Original Holders”, and,
together with the Acquisition Holders, the “Other Holders”).
WHEREAS, the Holders are Beneficial Owners of Registrable Securities (as defined herein).
NOW, THEREFORE, in consideration of the premises and of the mutual agreements, covenants and provisions herein contained, theparties hereto agree as follows:

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ARTICLE I
DEFINITIONS AND OTHER MATTERS
Section 1.1 Definitions. Capitalized terms used in this Agreement without other definition shall, unless expressly stated otherwise,
have the meanings specified in this Section 1.1:
(a)“AAA” has the meaning ascribed to such term in the recitals.

(b)“Acquisition Holders” has the meaning ascribed to such term in the recitals.

(c)“Acquisition Transactions” has the meaning ascribed to such term in the recitals.

(d)“Ad Authority” has the meaning ascribed to such term in the recitals.

(e)“Affiliate” shall mean any person who is an “affiliate” as defined in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act (as defined below).
(f)“Agreement” has the meaning ascribed to such term in the preamble.

(g)“Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.

(h)

“Board” means the Board of Directors of the Company.

(i)“Certificate of Incorporation” means the Articles of Incorporation of the Company, as filed with the Colorado Secretary ofState on December 1, 2005, as amended or restated from time to time.
(j)“Common Stock” means the common stock, par value $0.001 per share of the Company.

(k)“Company” has the meaning ascribed to such term in the preamble.

(l)“Demand Notice” has the meaning ascribed to such term in Section 2.1(a).

(m)“Demand Registration” means the registration under the Securities Act of all or any portion of the Registrable Securities
specified in the Demand Notice.
(n)“DMG Merger Agreement” has the meaning ascribed to such term in the recitals.

(o)“DMG Merger Sub” has the meaning ascribed to such term in the recitals.

(p)“Duncan” has the meaning ascribed to such term in the recitals.

(q)“Equity Financing” has the meaning ascribed to such term in the recitals.
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(r)“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
(s)“Governmental Authority” means any national, local or foreign (including U.S. federal, state or local) or supranational(including European Union) governmental, judicial, administrative or regulatory (including self-regulatory) agency, commission, department,
board, bureau, entity or authority of competent jurisdiction.
(t)“Holder” means any persons set forth on the signature pagers hereto so long as such persons are the Beneficial Owners ofRegistrable Securities.
(u)“Indemnified Parties” has the meaning ascribed to such term in Section 2.8.

(v)

“Investor Holders” has the meaning ascribed to such term in the recitals.

(w)“Junior Convertible Notes” has the meaning ascribed to such term in the recitals.

(x)“Maximum Offering Size” has the meaning ascribed to such term in Section 2.1(d).

(y)“Merger Agreements” has the meaning ascribed to such term in the recitals.

(z)“Original Holders” has the meaning ascribed to such term in the recitals.

(aa)“Other Holders” has the meaning ascribed to such term in the recitals.

(bb)“Piggyback Registration” means the registration under the Securities Act of Registrable Securities on a registration
statement initially intended to register any equity securities of the Company (other than a registration on Form S-8, or any successor Forms,
or, with respect to the Holders, a registration that is pursuant to a Demand Registration made by the Holders), whether or not for sale for theCompany’s own account.
(cc)“Private Placement Holders” has the meaning ascribed to such term in the recitals.

(dd)“Registration Expenses” means any and all expenses incident to the performance of or compliance with any registrationor marketing of securities, including all (i) registration and filing fees, and all other fees and expenses payable in connection with the listingof securities on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of compliance with any securitiesor “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” qualifications of the securities
registered), (iii) expenses in connection with the preparation, printing, mailing and delivery of any registration statements, prospectuses
and other documents in connection therewith and any amendments or supplements thereto, (iv) security engraving and printing expenses,(v) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal
or accounting duties), (vi) customary fees and expenses for independent certified public accountants retained by the Company (including theexpenses relating to any comfort letters or costs associated with the delivery by independent certified public accountants of any comfort lettersrequested pursuant to Section 2.9(h)), (vii) reasonable fees and expenses of any special experts retained by the Company in connection withsuch registration, (viii) reasonable fees, out-of-pocket costs and expenses of the Company, including counsel for the Company, (ix) reasonable
fees, out-of-pocket costs and expenses of one counsel to the selling shareholders, (x) fees and expenses in connection with any review by
the Financial Industry Regulatory Authority, Inc. (“FINRA”) of the underwriting arrangements or other terms of the offering, and all feesand expenses of any “qualified independent underwriter,” including the reasonable fees and expenses of any counsel thereto, (xi) costs ofprinting and producing any agreements among underwriters, underwriting agreements, any “blue sky” or legal investment memoranda and any
selling agreements and other documents in connection with the offering, sale or delivery of the Registrable Securities, (xii) transfer agents’ andregistrars’ fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering, (xiii) expenses
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relating to any analyst or investor presentations or any “road shows” undertaken in connection with the registration, marketing or selling of theRegistrable Securities, (xiv) fees and expenses payable in connection with any ratings of the Registrable Securities, including expenses relating
to any presentations to rating agencies and (xv) all out-of-pocket costs and expenses incurred by the Company or its appropriate officers inconnection with their compliance with Section 2.6(l).
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(ee)“Registrable Securities” shall mean shares of Common Stock beneficially owned by the Holders on the Closing Date or
acquired by the Holders as a result of conversion of the Junior Convertible Notes, otherwise in connection with the Equity Financing, orin connection with the Acquisition of Ad Authority. For purposes of this Agreement, (i) Registrable Securities shall cease to be Registrable
Securities when a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC
and such Registrable Securities have been disposed of pursuant to such effective Registration Statement and (ii) the Registrable Securities of a
Holder shall not be deemed to be Registrable Securities at any time when the entire amount of such Registrable Securities proposed to be soldby in a single sale constitutes less than 1% of the then outstanding shares of Common Stock or, in the written opinion of counsel satisfactory to
the Company, in its reasonable judgment, may be sold to the public pursuant to Rule 144(k) (or any successor provision then in effect) under the
Securities Act in any three-month period or any such Registrable Securities have been sold in a sale made pursuant to Rule 144 of the Securities
Act.
(ff)
“Rule 415” shall mean Rule 415 promulgated under the Securities Act, as amended from time to time, or any similar rule
thereto that may be promulgated by the SEC.
(gg)

“RHI Merger Agreement” has the meaning ascribed to such term in the recitals.

(hh)“RHI Merger Sub” has the meaning ascribed to such term in the recitals.

(ii)“Rightside” has the meaning ascribed to such term in the recitals.

(jj)“SEC” means the United States Securities and Exchange Commission.

(kk)
thereunder.

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations promulgated-4-

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(ll)“Stock Purchase Agreement” has the meaning ascribed to such term in the recitals.

(mm)“Subsidiary” means, with respect to any person, any corporation, limited liability company, company, partnership, trust,association or other legal entity or organization of which such person (either directly or through one or more subsidiaries of such person)(a) owns, directly or indirectly, a majority of the capital stock or other equity interests the holders of which are generally entitled to vote forthe election of the board of directors or other governing body of such corporation, limited liability company, partnership, trust, associationor other legal entity or organization, or (b) is otherwise entitled to exercise (1) a majority of the voting power generally in the election of theboard of directors or other governing body of such corporation, limited liability company, partnership, trust, association or other legal entity ororganization or (2) control of such corporation, limited liability company, partnership, trust, association or other legal entity or organization.
(nn)“Transfer” means, in respect of any shares of Common Stock, property or other asset, any sale, assignment, transfer,
distribution or other disposition thereof, whether voluntarily or by operation of Law.
(oo)
“Underwritten Offering” means a firm commitment underwritten public offering pursuant to an effective registration
statement under the Securities Act, other than pursuant to a registration statement on Forms S-4 or S-8 or any similar or successor form.
Section 1.2 Definitions Generally. Wherever required by the context of this Agreement, the singular shall include the plural and viceversa, and the masculine gender shall include the feminine and neutral genders and vice versa, and references to any agreement, document or
instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time. Whenused herein:(a)the word “or” is not exclusive;(b)

the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;(c)the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not
to any particular section, paragraph or subdivision;(d)the word “person” means any individual, corporation, limited liability company, trust, joint venture, association, company,
partnership or other legal entity or a government or any department or agency thereof or self-regulatory organization; and(e)all section, paragraph or clause references not attributed to a particular document shall be references to such parts of thisAgreement, and all exhibit, annex and schedule references not attributed to a particular document shall be references to such exhibits, annexes
and schedules to this Agreement.
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ARTICLE IIREGISTRATION RIGHTS
Section 2.1 Demand Registration.
(a)Procedures for Demand.

(i)If, at any time after the date hereof, the Company shall receive a written request (a “Demand Notice”) from theInvestor Holders that the Company effect a Demand Registration for all or any portion of the Registrable Securities specified in such Demand
Notice, specifying the intended method of disposition thereof, then the Company shall use its reasonable best efforts to effect within 60 daysof such Demand Notice, subject to the restrictions of Section 2.1(d), the registration under the Securities Act of the Registrable Securities forwhich the Investor Holders have requested registration under this Section 2.1, all to the extent necessary to permit the disposition (in accordancewith the intended methods thereof as aforesaid) of the Registrable Securities so to be registered; provided, that the Company shall have no
obligation to register such shares of Registrable Securities pursuant to this Section 2.1(a)(i) if the number of shares of Registrable Securities
specified in such notice do not constitute a majority of the shares of Common Stock then held by all of the Investor Holders. At any timeprior to the effective date of a registration statement relating to any registration, the Investor Holders who elected to participate in a Demand
Registration pursuant to this Section 2.1, in their individual capacities, may revoke all or part of such Demand Registration request by providing
a notice to the Company revoking such request.
(ii)
If, on or after the date that is one (1) year from the date hereof, the Company shall receive a Demand Noticefrom the Other Holders to effect a Demand Registration for all or any portion of the Registrable Securities specified in such Demand Notice,specifying the intended method of disposition thereof, then the Company shall use its reasonable best efforts to effect within 60 days of such
Demand Notice, subject to the restrictions of Section 2.1(d), the registration under the Securities Act of the Registrable Securities for which the
Other Holders have requested registration under this Section 2.1, all to the extent necessary to permit the disposition (in accordance with theintended methods thereof as aforesaid) of the Registrable Securities so to be registered; provided, that the Company shall have no obligation
to register such shares of Registrable Securities pursuant to this Section 2.1(a)(ii) if the number of shares of Registrable Securities specified insuch notice do not constitute a majority of the shares of Common Stock held by all of the Other Holders. At any time prior to the effective dateof a registration statement relating to any registration, the Other Holders who elected to participate in a Demand Registration pursuant to thisSection 2.1, in their individual capacities, may revoke all or part of such Demand Registration request by providing a notice to the Company
revoking such request.
(b)
Number of Demands. Subject to the applicable provisions of Section 2.1(a), (i) the Investor Holders shall be entitled torequest one (1) Demand Registration; provided, however, that in the event of a cut back in registration pursuant to Section 2.2 hereof thatexceeds twenty-five percent (25%) of the number of shares requested to be registered by Investor Holders, the Investor Holders shall receiveone (1) additional Demand Registration and (ii) the Other Holders shall be entitled to request one (1) Demand Registration.
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(c)Notice of Demand. Within 10 (ten) business days after receipt of a Demand Notice, the Company shall give written notice
thereof to each of the other Holders (a “Registration Notice”) and, shall, subject to the terms set forth in this Section 2.1 and further subject toany underwriter cut backs (or cut backs otherwise required by applicable law, as determined by the Company in its sole discretion), include insuch registration such number of Registrable Securities held by the Holders for which the Company has received written requests for inclusion
within 10 (ten) business days after such Holder’s receipt of the corresponding Registration Notice.
(d)
Notice of Postponement. Upon notice to the Holders, the Company may postpone effecting a registration statement for (orsuspend the effectiveness of) a Demand Registration pursuant to this Section 2.1 on one occasion during any period of six consecutive months
for a reasonable time specified in the notice but not exceeding 90 days after receipt of the Demand Notice, if (i) the Company’s Board of
Directors shall determine in good faith that effecting the registration would materially and adversely affect an offering of securities of theCompany, the preparation of which had then been commenced, or (ii) the Company is in possession of material non-public information, thedisclosure of which during the period specified in such notice the Company believes in good faith would not be in the best interests of theCompany.
Section 2.2 Priority on Demand Registration.
If a Demand Registration made pursuant to Section 2.1 involves an Underwritten Offering in which the Company is selling and theunderwriter advises the Company and the Holders that, in its view, the number of Registrable Securities requested to be included in suchregistration exceeds the largest number of Registrable Securities that can be sold without having an adverse effect on such offering, including
the price at which such shares can be sold, or, if limits on the size of the offering are otherwise required by applicable law, including, without
limitations, Rule 415 (the “Maximum Offering Size”), then the Company shall include in such registration, in the priority listed below, up to
the Maximum Offering Size:(a)upon a Demand Notice made by any of the Investor Holders:(i)first, all Registrable Securities of any Investor Holders requested to be registered in the Demand Registration by any
Investor Holders delivering a Demand Notice and all Registrable Securities proposed to be registered for the account of any Investor Holders
pursuant to the Demand Registration rights set forth in Section 2.1(c) hereof, pro rata among such Investor Holders, based on the respective
amounts of Registrable Securities held by such Investor Holders and available for sale;(ii)
second, all Registrable Securities of any Other Holders proposed to be registered for the account of any Other
Holders pursuant to the Demand Registration rights set forth in Section 2.1(c) hereof, pro rata among such Other Holders, based on therespective amounts of Registrable Securities held by such Other Holders and available for sale;-7-

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(iii)

third, so much of the Company securities proposed to be registered for the account of the Company; and(iv)
fourth, all Registrable Securities proposed to be registered for the account of any other holders, ratably amongsuch holders based on the respective amounts of Registrable Securities held by such holders, pursuant to any Piggyback Registration rights,
other than the Piggyback Registration rights set forth in Section 2.3 hereof.
(b)

upon a Demand Notice made by any of the Other Holders:(i)first, all Registrable Securities of any Other Holders requested to be registered in the Demand Registration by any
Other Holders delivering a Demand Notice and all Registrable Securities proposed to be registered for the account of any Holders pursuant to
the Demand Registration rights set forth in Section 2.1(c) hereof, pro rata among such Holders, based on the respective amounts of Registrable
Securities held by such Holders and available for sale;(ii)

second, so much of the Company securities proposed to be registered for the account of the Company; and(iii)
third, all Registrable Securities proposed to be registered for the account of any other holders, ratably among suchholders based on the respective amounts of Registrable Securities held by such holders, pursuant to any Piggyback Registration rights, otherthan the Piggyback Registration rights set forth in Section 2.3 hereof.
Section 2.3 Piggyback Registration.
(a)
From and after the Closing Date and until one (1) year from the date hereof, whenever the Company proposes to registerany of its equity securities under the Securities Act (other than a registration statement on Form S-8 or on Form S-4 or any similar successor
forms thereto), whether for its own account or for the account of one or more stockholders of the Company, the Company shall each such time
give prompt written notice at least fifteen (15) business days prior to the anticipated filing date of the registration statement relating to suchregistration to all Holders, which notice shall set forth the Holders’ rights under this Section 2.3 and shall offer the Holders the opportunity
to include in such Piggyback Registration the number of Registrable Securities of the same class or series as those proposed to be registeredas the Holders may request, subject to the provisions of Sections 2.3(a) and (b) and Section 2.4. Upon the request of the Holders made withinten (10) business days after the receipt of notice from the Company (which request shall specify the number of Registrable Securities, if any,intended to be registered by the Holders), the Company shall use its reasonable best efforts to effect the registration under the Securities Act
of all Registrable Securities that the Company has been so requested to register by the Holders to the extent necessary to permit the dispositionof the Registrable Securities so to be registered, provided that (i) if such registration involves an Underwritten Offering, the Holders mustsell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company, as
applicable, and (ii) if, at any time after giving notice of its intention to register any securities pursuant to this Section 2.3(a) and prior to theeffective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to registersuch securities, the Company shall give notice to the Holders and, thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. No registration effected under this Section 2.3 shall relieve the Company of its obligations toeffect a Demand Registration to the extent required by Section 2.1. There shall be no limitation on the number of Piggyback Registrations that
the Company shall be required to effect under this Section 2.3.
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(b)Notwithstanding any provision in this Section 2.3 or elsewhere in this Agreement, no provision relating to the registrationof Registrable Securities shall be construed as permitting the Holders to effect a Transfer of securities that is otherwise expressly prohibited by
the terms of any applicable agreement between the Holders and the Company or any of its Subsidiaries. The Company shall not be obligatedto provide notice or afford Piggyback Registration to the Holders pursuant to this Section 2.3 unless some or all of the Holders’ Registrable
Securities are permitted to be Transferred under the terms of applicable agreements between the Holders and the Company or any of its
Subsidiaries.
(c)
At any time prior to the effective date of the registration statement relating to such registration, the Holders may revoke such
Piggyback Registration request by providing a notice to the Company revoking such request.
(d)Notwithstanding any provision in this Section 2.3 or elsewhere in the Agreement, the Company shall be entitled to elect toeffect the registration under the Securities Act of all of the Registrable Securities held by the Holders in any individual Piggyback Registration,subject to the right of the Holders, in their individual capacities, to revoke all or a portion of their respective Piggyback Registration request
pursuant to Section 2.3(c).
Section 2.4 Priority on Piggyback Registrations.
(a)
If a Piggyback Registration (that is not related to a Demand Registration made by the Holders) involves an Underwritten
Offering and the underwriter advises the Company, that, in its view, the number of Registrable Securities that any eligible Holders intend toinclude in such registration exceeds the Maximum Offering Size, or, if the Company otherwise determines that the Maximum Offering Sizeis exceeded as a result of applicable laws, including, without limitation, Rule 415, then the Company shall include in such registration, in thefollowing priority, up to the Maximum Offering Size:(i)first, so much of the Company securities proposed to be registered for the account of the Company;(ii)
second, all Registrable Securities requested to be registered in the Piggyback Registration by the Investor Holders,
pro rata among such Investor Holders, based on the respective amounts of Registrable Securities held by such Investor Holders and available
for sale (after giving effect to any Transfer restrictions relating to such Registrable Securities);(iii)
third, all Registrable Securities requested to be registered in the Piggyback Registration by the Other Holders, prorata among such Other Holders, based on the respective amounts of Registrable Securities held by such Other Holders and available for sale(after giving effect to any Transfer restrictions relating to such Registrable Securities); and-9-Copyright © 2012 www.secdatabase.com. All Rights Reserved.
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(iv)fourth, all Registrable Securities proposed to be registered for the account of any other holders, ratably amongsuch holders based on the respective amounts of Registrable Securities held by such holders, pursuant to any Piggyback Registration rights,
other than the Piggyback Registration rights set forth in Section 2.3 hereof.
Section 2.5 Lock-Up Agreements. If any registration of Registrable Securities shall be effected in connection with a Underwritten
Offering, neither the Company nor any Holder shall effect any public sale or distribution, including any sale pursuant to Rule 144, of any sharesof Common Stock or other security of the Company (except as part of such Underwritten Offering) until the earliest of (i) 90 days following
registrations of Registrable Securities pursuant to this Agreement, (ii) with respect to the Holders generally, such shorter time as may be agreed
to by the underwriters with respect to any one Holder, and (iii) such time as members of management agree to with the underwriters with respect
to the public sale or distribution of securities held by members of management.
Section 2.6 Registration Procedures. Whenever the Company is required to effect a registration hereunder, the Company shall use its
reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of disposition
thereof as promptly as practicable, and, in connection with any such request, as applicable:(a)
The Company shall, as expeditiously as reasonably practicable, prepare and file with the SEC a registration statement on
any form for which the Company then qualifies or that counsel for the Company shall deem appropriate and which form shall be available forthe sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its
reasonable best efforts to: (i) cause such filed registration statement to become and remain effective, and (ii) promptly update such registration
statement so that it does not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein ornecessary to make the statements therein not misleading, until all of the Registrable Securities included in such registration statement shallhave actually been sold thereunder; provided that, at the request of any Holder, the intended method of distribution relating to the sale of
the Registrable Securities to be registered thereunder shall provide for individual Holders to be named as selling stockholders under suchregistration statement.
(b)Prior to filing a registration statement or prospectus or any amendment or supplement thereto, the Company shall, if
requested, furnish to each Holder and each underwriter, if any, of the Registrable Securities covered by such registration statement copies
of such registration statement as proposed to be filed, and thereafter the Company shall furnish to each Holder and underwriter, if any, such
number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto anddocuments incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 or Rule 430A under the Securities Act and such other documents
as a Holder or underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder.
The Holders shall have the right to request that the Company modify any information contained in such registration statement, amendment andsupplement thereto pertaining to the Holders, and the Company shall use its reasonable best efforts to comply with such request, provided,
however, that the Company shall not have any obligation so to modify any information if the Company reasonably expects that so doing would
cause the prospectus to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
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(c)After the filing of the registration statement, the Company shall (i) cause the related prospectus to be supplemented byany required prospectus supplement, and, as so supplemented, to be filed pursuant to Rule 424 under the Securities Act, (ii) comply with theprovisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement during theapplicable period in accordance with the intended methods of disposition by the Holders thereof set forth in such registration statement or
supplement to such prospectus and (iii) promptly notify the Holders of any stop order issued or threatened by the SEC or any state securities
commission and take all reasonable best efforts to prevent the entry of such stop order or to remove it if entered.
(d)
The Company shall use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by suchregistration statement under such other securities or “blue sky” laws of such jurisdictions in the United States as the Holders reasonably (in lightof the Holders’ intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such othergovernmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all otheracts and things that may be reasonably necessary or advisable to enable a Holder to consummate the disposition of the Registrable Securities
owned by such Holder, provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 2.6(d), (B) subject itself to taxation in any such jurisdiction or (C) consent togeneral service of process in any such jurisdiction.
(e)
The Company shall immediately notify the Holders, at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact oromit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly prepare
and make available to the Holders and file with the SEC any such supplement or amendment.
(f)
The Company shall select an underwriter or underwriters in connection with any Underwritten Offering; provided that, inthe event of a Demand Registration requested by the Holders, such underwriter or underwriters shall be selected by the Holders with the consent
of the Company (which consent shall not be unreasonably withheld). In connection with any Underwritten Offering, the Company shall enter
into customary agreements (including an underwriting agreement in customary form) and take all such other actions as are reasonably requiredin order to expedite or facilitate the disposition of such Registrable Securities in any such Underwritten Offering, including, to the extent
necessary, the engagement of a “qualified independent underwriter” in connection with the qualification of the underwriting arrangements with
FINRA.
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(g)Subject to the execution of confidentiality agreements satisfactory in form and substance to the Company in the exercise
of its good faith judgment, the Company will give to the Holders, their counsel and accountants (i) reasonable and customary access to its
books and records, that, in the opinion of the Board are pertinent corporate documents, and (ii) such opportunities to discuss the business of theCompany with its directors, officers, employees, counsel and the independent public accountants who have certified its financial statements, as
shall be appropriate, in the reasonable judgment of counsel, to the Holders, to enable them to exercise its due diligence responsibility.
(h)
The Company shall use its reasonable best efforts to furnish to the Holders and to each such underwriter, if any, a signed
counterpart, addressed to the Holders or such underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or
comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the kind customarily
covered by opinions or comfort letters, as the case may be, as the Holder and the underwriters reasonably request.
(i)Each Holder shall promptly furnish in writing to the Company such information regarding such Holder that is reasonably
necessary for the distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information
regarding such Holder as may be legally required or advisable in connection with such registration.
(j)
Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind describedin Section 2.6(e), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement coveringsuch Holder’s Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by
Section 2.6(e), and, if so directed by the Company, such Holders shall destroy all copies, other than any permanent file copies then in such
Holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. If the Company
shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including
the period referred to in Section 2.6(a)) by the number of days during the period from and including the date of the giving of notice pursuant to
Section 2.6(e) to the date when the Company shall make available to the Holders a prospectus supplemented or amended to conform with therequirements of Section 2.6(e).
(k)
The Company shall use its reasonable best efforts to list all Registrable Securities covered by such registration statement on
any securities exchange or quotation system on which any of the Registrable Securities are then listed or traded.
(l)
The Company shall have appropriate officers of the Company (i) prepare and make presentations at any “road shows” andbefore analysts and rating agencies, as the case may be, (ii) take other actions to obtain ratings for any Registrable Securities and (iii) otherwise
use their reasonable best efforts to cooperate as reasonably requested by the underwriters in the offering, marketing or selling of the Registrable
Securities.
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(m)The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of Registrable
Securities contemplated hereby.
Section 2.7 Registration Restrictions. Nothing in this Agreement shall be construed as to violate the restrictions set forth in any of the
Merger Agreements, the Stock Purchase Agreement or the Junior Convertible Notes, and no registration of Registrable Securities in violationof such agreements shall be effectuated.
Section 2.8 Indemnification by the Company. In the event of any registration of any securities of the Company under the Securities Act
pursuant to this Article II, the Company will, and it hereby does, indemnify and hold harmless, to the extent permitted by law, each Holder, eachAffiliate of such Holder and its members and managing members (including any director, officer, Affiliate, employee, agent and controllingperson of any of the foregoing, if applicable), each other person who participates as an underwriter in the offering or sale of such securities
and each other person, if any, who controls such seller or any such underwriter within the meaning of the Securities Act (collectively, the“Indemnified Parties”), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including reasonable attorney’s
fees and reasonable expenses of investigation) to which such Indemnified Party may become subject under the Securities Act, common law orotherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified
Party is a party thereto) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained inany registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in the case of a prospectus, in light of the circumstances under which they weremade) not misleading, and the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by itin connection with investigating or defending against any such loss, claim, liability, action or proceeding; provided, that the Company shall not
be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made insuch registration statement or amendment or supplement thereto or in any such preliminary, final or summary prospectus in reliance upon andin conformity with written information furnished to the Company with respect to such person through an instrument duly executed by such
person specifically stating that it is for use in the preparation thereof.
Section 2.9 Indemnification by the Holders. Each of the Holders hereby agrees to indemnify and hold harmless, severally and notjointly, the Company and all other prospective sellers of Registrable Securities with respect to any untrue statement or alleged untrue statementin, or omission or alleged omission from, any registration statement that includes any Registrable Securities and that is filed in accordance withthis Article II, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to
the Company with respect to such Holder through an instrument duly executed by such Holder or underwriter specifically stating that it is foruse in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement, or a document
incorporated by reference into any of the foregoing. Such indemnity shall remain in full force and effect, regardless of any investigation madeby or on behalf of the Company or the Holders, or any of their respective Affiliates, directors, officers or controlling persons, and shall survive
the Transfer of such securities by such Holder. In no event shall the liability of the Holders hereunder be greater in amount than the dollar
amount of the proceeds received by the Holders upon the sale of the Registrable Securities giving rise to such indemnification obligation.
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Section 2.10 Conduct of Indemnification Proceedings. Promptly after receipt by an Indemnified Party hereunder of written noticeof the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Article
II, such Indemnified Party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter ofthe commencement of such action; provided, that the failure of the Indemnified Party to give notice as provided herein shall not relieve theindemnifying party of its obligations under this Article II, except to the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an Indemnified Party, unless in such Indemnified Party’s reasonable judgment a
conflict of interest between such Indemnified Party and indemnifying parties may exist in respect of such claim, the indemnifying party will beentitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such Indemnified Party, and after notice from the indemnifying party to such Indemnified Party of
its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party for any legal or other expenses
subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof, the giving by theclaimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
Section 2.11 Contribution. If the indemnification provided for in this Article II from the indemnifying party is unavailable to an
Indemnified Party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of suchlosses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party andIndemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any otherrelevant equitable considerations. The relative fault of such indemnifying party and Indemnified Parties shall be determined by reference to,among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or allegedomission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or Indemnified Parties, andthe parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable bya party under this Section 2.11 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. In no event shall theliability of the Holders hereunder be greater in amount than the dollar amount of the proceeds received by the Holders upon the sale of theRegistrable Securities giving rise to such indemnification obligation.
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The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.11 were determined by pro
rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall beentitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
Section 2.12 Underwritten Offering.
(a)
A Holder may not participate in any Underwritten Offering hereunder unless such Holder (i) agrees to sell its securities on
the basis provided in any underwriting arrangements approved by the Holders with respect to any Underwritten Offering pursuant to Section 2.2,
or by the Company with respect to any Underwritten Offering pursuant to Section 2.3 and (B) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements
and the provisions of this Agreement in respect of registration rights.
(b)
If Registrable Securities are to be sold in an Underwritten Offering, the Company agrees to include in the registration
statement to be used all such information as may be reasonably requested by the underwriters for the marketing and sale of such Registrable
Securities.
Section 2.13 Other Indemnification. Indemnification similar to that specified herein (with appropriate modifications) shall be given by
the Company and a Holder participating therein with respect to any required registration or other qualification of securities under any federal orstate law or regulation or Governmental Authority other than the Securities Act.
Section 2.14 Rule 144 Information/Exchange Act Reporting. With (i) a view to making available the benefits of certain rules andregulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration, and (ii) to keep
any registration statement on Form S-3 filed pursuant hereto effective, the Company agrees to: (a) make and keep public information available,
as those terms are understood and defined in Rule 144 under the Securities Act; (b) file with the SEC in a timely manner all reports and otherdocuments required of the Company under the Securities Act and the Exchange Act; and (c) furnish to each Holder of Registrable Securities
forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and of the
Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder tosell any Registrable Securities without registration.
Section 2.15 Parties in Interest. Each Holder shall be entitled to receive the benefits of this Agreement and shall be bound by the terms
and provisions of this Agreement by reason of its election to participate in a registration under this Article II. Any transferee of the Registrable
Securities shall be entitled to receive the benefits of this Agreement and shall be bound by the terms and provisions of this Agreement upon
becoming bound hereby pursuant to Section 3.7.
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Section 2.16 Mergers, Recapitalizations, Exchanges or Other Transactions Affecting Registrable Securities. The provisions of thisAgreement shall apply to the full extent set forth herein with respect to the Registrable Securities, to any and all securities or capital stock of
the Company or any successor or assign of any such person (whether by merger, amalgamation, consolidation, sale of assets or otherwise) that
may be issued in respect of, in exchange for, or in substitution of such Registrable Securities, by reason of any dividend, split, issuance, reverse
split, combination, recapitalization, reclassification, merger, amalgamation, consolidation or otherwise.
Section 2.17 Registration Expenses. The Company shall pay all Registration Expenses promptly upon request for payment or
reimbursement therefore in connection with any registration, request for registration, or Underwritten Offering of Registrable Securities
hereunder. The obligation to pay the Registration Expenses shall apply irrespective of whether a registration, once properly demanded, becomes
effective, is delayed, withdrawn or suspended, or, in the case of an Underwritten Offering, is consummated.
Section 2.18 No Inconsistent Agreements. The Company has not and shall not enter into any agreement with respect to the Company’s
securities that is inconsistent with the rights granted to the Holders under this Agreement or that otherwise conflicts with the provisions hereof.
The Company represents and warrants that it is not a party to, or otherwise subject to, any other agreement granting registration rights to any
other Person with respect to any Common Stock or Common Stock equivalents. Unless otherwise consented to in writing by holders of amajority of the Registrable Securities held by the Holders, the following terms shall apply to any grant by the Company to any person (an “Other
Demanding Party”) of any right to initiate (an “Other Demand Right”) the registration of any Common Stock or Common Stock equivalents(a “Registration”); provided that the Company may amend this Agreement to make any person who receives shares of Common Stock inconnection with the transactions contemplated pursuant to the Merger Agreements, the Stock Purchase Agreement or the Equity Financing a“Holder” under the terms of this Agreement:(i)no Other Demand Right shall be granted that will permit an Other Demanding Party the right to demand a
Registration at any time prior to the date that is one (1) year from the Closing Date;(ii)
in connection with any Other Demand Right, the Holders will have the right to piggyback on any such Registration,and if a Registration pursuant to an Other Demand Right involves an Underwritten Offering and for whatever reason the number of sharesrequested to be included in such registration exceeds the Maximum Offering Size (or such lesser amount as required by applicable law, as
determined by the Company in its sole discretion), then the Other Demanding Party shall have priority in such registration; and(iii)
if the Company so elects, the Other Demanding Party may be provided with the right to piggyback on any Demand
Registration pursuant to Section 2.2 hereof and if any such Registration involves an Underwritten Offering and for whatever reason the numberof shares requested to be included in such registration exceeds the Maximum Offering Size (or such lesser amount as required by applicablelaw, as determined by the Company in its sole discretion), then the Other Demanding Party shall be given equal priority on a pro rata basis,
based on the number of shares held by such persons and available for sale in such sale with the “other Holders” or “other persons” pursuant to
Section 2.2(a)(iii) or Section 2.9(a)(iii).
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ARTICLE IIIMISCELLANEOUS
Section 3.1 Term of the Agreement; Termination of Certain Provisions.
(a)
The term of this Agreement shall continue until such time as no Registrable Securities are held by any Holder, except that
Sections 2.8, 2.9, 2.10, 2.11 and Section 3.3 shall survive.
(b)
Unless this Agreement is theretofore terminated pursuant to Section 3.1(a) hereof, each Holder shall be bound by theprovisions of this Agreement with respect to any of its Registrable Securities until such time as such Holder ceases to hold any Registrable
Securities. Thereafter, such Holder shall no longer be bound by the provisions of this Agreement.
Section 3.2 Amendments; Waiver(a)
Subject to the limitations set forth in Section 3.2(b), the provisions of this Agreement may be amended only by the mutual
agreement of the Company and the holders of a majority of the Registrable Securities.
(b)
Any amendment of this Agreement that may adversely affect the rights of the Holders shall require the approval of each of
the Holders so adversely affected, respectively.
(c)
No provision of this Agreement may be waived except by an instrument in writing executed by the party against whom thewaiver is to be effective.
(d)Notwithstanding anything herein to the contrary, the Company may amend this Agreement to make any person who receives
shares of Common Stock in connection with the transactions contemplated pursuant to the Merger Agreements, the Stock Purchase Agreement,or the Equity Financing a “Holder” under the terms of this Agreement.
Section 3.3 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCEWITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANYCHOICE OF LAW OR CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE GENERALOBLIGATIONS LAW OF THE STATE OF NEW YORK).
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Section 3.4 Notices.
(a)
Any communication, demand or notice to be given hereunder will be duly given (and shall be deemed to be received) when
delivered in writing by hand or first class mail or by facsimile to a party at its address as indicated below:
If to the Company:
Morlex, Inc.
c/o Duncan Capital LLC
420 Lexington Avenue, Suite 450
New York, New York 10022
Attention: President
Telephone: (212)581-5150
Facsimile: (212) 581-5198
with a copy (which shall not constitute notice to the Company) to:
Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022
Attention: Jane Greyf, Esq. and Roger Byrd, Esq.
Telephone: (212) 940-3155
Facsimile: (866) 516-0358; andIf to a Holder:to the address and facsimile set forth in the records of the Company.
(b)
Unless otherwise provided to the contrary herein, any notice which is required to be given in writing pursuant to the termsof this Agreement may be given by facsimile.
Section 3.5 Severability. If any provision of this Agreement is finally held to be invalid, illegal or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired and (b) the invalid or unenforceable term or provision shall be deemed replaced by a term orprovision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.
Section 3.6 Specific Performance. Each party hereto acknowledges that the remedies at law of the other parties for a breach or
threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any
bond, and in addition to all other remedies that may be available, shall, subject to Section 3.3, be entitled to obtain equitable relief in the formof specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may be thenavailable.
Section 3.7 Assignment; Successors. This Agreement shall be binding upon and inure to the benefit of the respective legatees, legal
representatives, successors and assigns of each Holder; provided, however, that a Holder may not assign this Agreement or any of his rights or
obligations hereunder, except pursuant to Section 2.15, and any purported assignment in breach hereof by a Holder shall be void; and provided
further that no assignment of this Agreement by the Company or to a successor of the Company (by operation of law or otherwise) shall bevalid unless such assignment is made to a person which succeeds to the business of such person substantially as an entirety.
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Section 3.8 No Third-Party Rights. Other than as expressly provided herein, nothing in this Agreement will be construed to give any
person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to thisAgreement and their successors and assigns.
Section 3.9 Section Headings. The headings of sections in this Agreement are provided for convenience only and will not affect its
construction or interpretation.
Section 3.10 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall bedeemed an original, but all such counterparts shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed or caused to be duly executed this Agreement as of the dates
indicated.
MORLEX, INC.

By: /s/ Michael Miller
Name:
Title:

Michael Miller
President

MW CROW FAMILY LP

By: /s/ Michael Crow
Name:
Title:

Michael Crow
General Partner

ALEX CLUG TTEE, CROW 2001 CHILDREN'S TRUST-FBO
MICHELLE LEE CROW

By: /s/ Alex Clug
Name:
Title:

Alex Clug
Trustee

ALEX CLUG TTEE, CROW 2001 CHILDREN'S TRUST-FBO
SPENCER MICHAEL CROW

By: /s/ Alex Clug
Name:
Title:

Alex Clug
Trustee

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ALEX CLUG TTEE, CROW 2001 CHILDREN'S TRUST-FBO
OLIVIA TREVOR CROW

By: /s/ Alex Clug
Name:
Title:

Alex Clug
Trustee

ALEX CLUG TTEE, CROW 2001 CHILDREN'S TRUST-FBO
DUNCAN CROW

By: /s/ Alex Clug
Name:
Title:

Alex Clug
Trustee/s/ Richard Berman
Richard Berman/s/ Michael Miller
Michael Miller/s/ Jeanne Baer
Jeanne Baer/s/ Robert Kaplan
Robert Kaplan/s/ Helaine Kaplan
Helaine Kaplan/s/ Michelle Kaplan
Michelle Kaplan

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Exhibit 17.1
To Morlex, Inc.:
I hereby resign as President, Secretary, Treasurer and Director of Morlex, Inc., a Colorado corporation, effective immediately.
Dated: February 14, 2008/s/ Michael Miller
Michael Miller

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Exhibit 17.2

To Morlex, Inc.:
I hereby resign as a Director of Morlex, Inc., a Colorado corporation, effective immediately.
Dated: February 14, 2008/s/ Jeanne Baer
Jeanne Baer
Title

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Exhibit 17.3
To Morlex, Inc.:
I hereby resign as a Director of Morlex, Inc., a Colorado corporation, effective immediately.
Dated: February 14, 2008/s/ Michelle Kaplan
Michelle Kaplan

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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the inclusion in the Current Report on Form 8-K of Morlex, Inc. of our reports, as listed below, with respect to financial
statements filed therewith:·

RightSide Holdings, Inc., dated April 20, 2007 and January 28, 2008.

·

Duncan Media Group, Inc., dated January 21, 2008.

·

Superfly Advertising, Inc., dated October 29, 2007, December 26, 2007 and December 30, 2007.

·

21st Century Investors Publishing Corporation, dated December 31, 2007.

PETERSON SULLIVAN PLLC/s/ Peterson Sullivan PLLC
Seattle, Washington
February 14, 2008

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