| Delaware                                                       |   | 23-3030650                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   | (I.R.S. Employer Identification No.) |

| Large accelerated filer | o | Accelerated filer         | o |
|-------------------------|---|---------------------------|---|
| Non-accelerated filer   | o | Smaller reporting company | x |

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|                                  |                                                                                        | Page   |
|---------------------------------------|---------------------------------------------------------------------------------------------|--------|
|                                  |                                                                                        |
| PART I – FINANCIAL INFORMATION: |                                                                                        |
|                                  |                                                                                        |   |
| Item 1.                               | Financial Statements                                                                        | F-1    |
|                                  |                                                                                        |   |
| Item 2.                               | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16     |
|                                  |                                                                                        |   |
| Item 3.                               | Quantitative and Qualitative Disclosures About Market Risk                                  | 22     |
|                                  |                                                                                        |   |
| Item 4T.                              | Controls and Procedures                                                                     | 22     |
|                                  |                                                                                        |
| PART II – OTHER INFORMATION     |                                                                                        |
|                                  |                                                                                        |   |
| Item 1.                               | Legal Proceedings                                                                           | 22     |
|                                  |                                                                                        |   |
| Item 1A.                              | Risk Factors                                                                                | 22     |
|                                  |                                                                                        |   |
| Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                                 | 22     |
|                                  |                                                                                        |   |
| Item 3.                               | Defaults Upon Senior Securities                                                             | 23     |
|                                  |                                                                                        |   |
| Item 4.                               | [Removed and Reserved]                                                                      | 23     |
|                                  |                                                                                        |   |
| Item 5.                               | Other Information                                                                           | 23     |
|                                  |                                                                                        |   |
| Item 6.                               | Exhibits                                                                                    | 23     |
|                                  |                                                                                        |
| Signatures                            | 24                                                                                          |

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| SPARE BACKUP, INC. AND SUBSIDIARY                                                                                     |
|-----------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED BALANCE SHEETS                                                                                           |
|                                                                                                                  |   |   |   |   |   |   |
|                                                                                                                  |   | June 30, |   |   | December 31, |   |
| ASSETS                                                                                                                |   | 2011 |   |   | 2010 |   |
|                                                                                                                  |   | (Unaudited) |   |   | (1) |   |
| Current Assets:                                                                                                       |   |   |   |   |   |   |   |
| Cash                                                                                                                  |   | $ | 11,287 |   |   | $ | - |   |
| Accounts receivable, net allowance for bad debt of $65,000 and $65,000                                                |   |   | 100,866 |   |   |   | 28,536 |   |
| Prepaid expenses                                                                                                      |   |   | 30,581 |   |   |   | 58,798 |   |
| Total current assets                                                                                                  |   |   | 142,734 |   |   |   | 87,334 |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Property and equipment, net of accumulated depreciation of $685,976 and $758,902                                      |   |   | 204,892 |   |   |   | 305,342 |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Other assets                                                                                                          |   |   | 53,000 |   |   |   | 50,648 |   |
| Total assets                                                                                                          |   | $ | 400,626 |   |   | $ | 443,324 |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                 |   |   |   |   |   |   |   |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Current Liabilities:                                                                                                  |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                                                                 |   | $ | 3,994,343 |   |   | $ | 2,989,495 |   |
| Overdraft liability                                                                                                   |   |   | - |   |   |   | 127,321 |   |
| Accrued payroll taxes                                                                                                 |   |   | 3,567,703 |   |   |   | 3,203,189 |   |
| Convertible promissory notes, net of debt discount $18,073 and $365                                                   |   |   | 1,980,662 |   |   |   | 2,256,870 |   |
| Accrued interest on convertible promissory notes                                                                      |   |   | 34,040 |   |   |   | 31,473 |   |
| Notes payable                                                                                                         |   |   | 399,600 |   |   |   | 892,500 |   |
| Derivative liabilities                                                                                                |   |   | 947,541 |   |   |   | 470,871 |   |
| Deferred revenue                                                                                                      |   |   | 102,500 |   |   |   | 102,500 |   |
| Due to stockholder                                                                                                    |   |   | 15,000 |   |   |   | 15,000 |   |
| Total current liabilities                                                                                             |   |   | 11,041,389 |   |   |   | 10,089,219 |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Stockholders' Deficit:                                                                                                |   |   |   |   |   |   |   |   |
| Preferred stock, $0.001 par value, 5,000,000 shares authorized: 50,000 issued and outstanding                         |   |   | 50 |   |   |   | 50 |   |
| Common stock; $.001 par value; 300,000,000 shares authorized; 259,260,081 and 200,342,955 issued and outstanding |   |   | 259,260 |   |   |   | 200,343 |   |
| Additional paid-in capital                                                                                            |   |   | 102,125,954 |   |   |   | 101,097,359 |   |
| Accumulated deficit                                                                                                   |   |   | (113,026,027 | ) |   |   | (110,943,647 | ) |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Total stockholders’ deficit                                                                                     |   |   | (10,640,763 | ) |   |   | (9,645,895 | ) |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders’ deficit                                                                     |   | $ | 400,626 |   |   | $ | 443,324 |   |
|                                                                                                                  |   |   |   |   |   |   |   |   |
| (1) Derived from audited financial statements                                                                         |   |   |   |   |   |   |   |   |
| See Notes to Unaudited Consolidated Financial Statements.                                                             |

----

| SPARE BACKUP, INC. AND SUBSIDIARY                         |
|-----------------------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS                     |
|                                                      |
|                                                      |   | Three-month periods ended |   |   | Six-month periods ended |   |
|                                                      |   | June 30, |   |   | June 30, |   |
|                                                      |   | 2011 |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
|                                                      |   | (Unaudited) |   |   | (Unaudited) |   |   | (Unaudited) |   |   | (Unaudited) |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Revenues                                              |   | $ | 155,909 |   |   | $ | 227,351 |   |   | $ | 193,503 |   |   | $ | 773,593 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                                  |   |   | 400,296 |   |   |   | 989,087 |   |   |   | 658,555 |   |   |   | 1,500,172 |   |
| Selling, general and administrative                       |   |   | 1,877,289 |   |   |   | 2,348,549 |   |   |   | 3,356,492 |   |   |   | 4,554,074 |   |
| Total operating expenses                                  |   |   | 2,277,585 |   |   |   | 3,337,636 |   |   |   | 4,015,047 |   |   |   | 6,054,246 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                            |   |   | (2,121,676 | ) |   |   | (3,110,285 | ) |   |   | (3,821,544 | ) |   |   | (5,280,653 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of derivative liabilities            |   |   | 368,208 |   |   |   | 117,588 |   |   |   | 2,129,934 |   |   |   | (82,619 | ) |
| Gain from debt settlements                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 295,727 |   |
| Interest expense                                          |   |   | (279,950 | ) |   |   | (455,366 | ) |   |   | (390,771 | ) |   |   | (921,694 | ) |
| Total other income (expense)                              |   |   | 88,258 |   |   |   | (337,778 | ) |   |   | 1,739,163 |   |   |   | (708,586 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                  |   | $ | (2,033,418 | ) |   | $ | (3,448,063 | ) |   | $ | (2,082,381 | ) |   | $ | (5,989,239 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per common share                   |   | $ | (0.01 | ) |   | $ | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (0.04 | ) |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted average common                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| shares outstanding                                        |   |   | 243,236,988 |   |   |   | 153,895,574 |   |   |   | 229,801,518 |   |   |   | 146,689,129 |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| See Notes to Unaudited Consolidated Financial Statements. |

----

| SPARE BACKUP, INC. AND SUBSIDIARY                                                                                                                              |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                                          |   |
|                                                                                                                                                           |   |   |   |   |   |   |
|                                                                                                                                                           |   | For the Six Months Ended |   |
|                                                                                                                                                           |   | June 30, |   |
|                                                                                                                                                           |   | 2011 |   |   | 2010 |   |
|                                                                                                                                                           |   | (Unaudited) |   | (Unaudited) |   |
| Cash flows from operating activities:                                                                                                                          |   |   |   |   |   |   |
| Net loss                                                                                                                                                       |   | $ | (2,082,381 | ) |   | $ | (5,989,239 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                                                                                    |   |   |   |   |   |   |   |   |
| Change in fair value of derivative liabilities                                                                                                                 |   |   | (2,129,934 | ) |   |   | 82,619 |   |
| Fair value of options and warrants issued for services                                                                                                         |   |   | 296,175 |   |   |   | 767,913 |   |
| Fair value of option and warrant modifications                                                                                                                 |   |   | 121,621 |   |   |   | 721,464 |   |
| Fair value of warrants issued to convertible promissory note holder                                                                                            |   |   | 200,000 |   |   |   | 12,160 |   |
| Fair value of warrants issued to note holder                                                                                                                   |   |   | - |   |   |   | - |   |
| Fair value of warrants issued for accrued interest                                                                                                             |   |   | 198 |   |   |   | 11,568 |   |
| Fair value of common stock issued in connection with service rendered                                                                                          |   |   | 456,000 |   |   |   | 618,365 |   |
| Fair value of common stock issued in connection with convertible promissory notes modifications                                                                |   |   | - |   |   |   | 79,167 |   |
| Fair value of convertible promissory notes modifications                                                                                                       |   |   | 266 |   |   |   | 125,128 |   |
| Fair value of beneficial conversion features modifications                                                                                                     |   |   | - |   |   |   | - |   |
| Fair value of common stock issued in connection with note payable issuance                                                                                     |   |   | 44,000 |   |   |   | 184,200 |   |
| Fair value of common stock issued in connection with debt settlement                                                                                           |   |   | - |   |   |   | 20,000 |   |
| Fair value of common stock issued in connection with the conversion of convertible promissory notes                                                            |   |   | - |   |   |   | (328 | ) |
| Fair value of common stock issued to satisfy accrued interest                                                                                                  |   |   | 153,561 |   |   |   | - |   |
| Depreciation                                                                                                                                                   |   |   | 110,715 |   |   |   | 151,976 |   |
| Amortization of debt discount                                                                                                                                  |   |   | 29,964 |   |   |   | 247,996 |   |
| Amortization of deferred financing costs                                                                                                                       |   |   | - |   |   |   | 81,964 |   |
| Gain from debt settlement                                                                                                                                      |   |   | - |   |   |   | (295,727 | ) |
| Changes in operating assets and liabilities:                                                                                                                   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                                                                                            |   |   | (72,330 | ) |   |   | 51,371 |   |
| Prepaid expense and other current assets                                                                                                                       |   |   | 28,217 |   |   |   | (9,962 | ) |
| Other assets                                                                                                                                                   |   |   | (2,352 | ) |   |   | - |   |
| Accounts payable, accrued expense and accrued payroll taxes                                                                                                    |   |   | 1,369,084 |   |   |   | 871,902 |   |
| Deferred revenues                                                                                                                                              |   |   | - |   |   |   | (612,974 | ) |
| Accrued interest on convertible promissory notes                                                                                                               |   |   | 2,567 |   |   |   | 157,663 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Net cash used in operating activities                                                                                                                          |   |   | (1,474,629 | ) |   |   | (2,722,774 | ) |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Cash flows used in investing activities:                                                                                                                       |   |   |   |   |   |   |   |   |
| Capital expenditures                                                                                                                                           |   |   | (10,265 | ) |   |   | (47,732 | ) |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Net cash used in investing activities                                                                                                                          |   |   | (10,265 | ) |   |   | (47,732 | ) |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                          |   |   |   |   |   |   |   |   |
| Proceeds from issuance of convertible promissory notes                                                                                                         |   |   | 50,000 |   |   |   | - |   |
| Proceeds from issuance of notes payable                                                                                                                        |   |   | 367,600 |   |   |   | 1,100,000 |   |
| Repayment of notes payable                                                                                                                                     |   |   | (163,000 | ) |   |   | (405,000 | ) |
| Net proceeds from issuance of common stock for cash                                                                                                            |   |   | 1,166,894 |   |   |   | 1,547,475 |   |
| Cash overdraft                                                                                                                                                 |   |   | (127,321 | ) |   |   | (23,695 | ) |
| Proceeds from exercise of warrants                                                                                                                             |   |   | 112,008 |   |   |   | 545,358 |   |
| Proceeds from exercise of stock options                                                                                                                        |   |   | 90,000 |   |   |   | 6,368 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Net cash provided by financing activities                                                                                                                      |   |   | 1,496,181 |   |   |   | 2,770,506 |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Net increase in cash                                                                                                                                           |   |   | 11,287 |   |   |   | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Cash, beginning of period                                                                                                                                      |   |   | - |   |   |   | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Cash, end of period                                                                                                                                            |   | $ | 11,287 |   |   | $ | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                                                                             |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                                                                                                         |   | $ | - |   |   | $ | - |   |
| Cash paid for income taxes                                                                                                                                     |   | $ | - |   |   | $ | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| Non-cash investing and financing activities:                                                                                                                   |   |   |   |   |   |   |   |   |
| Write off of fully depreciated property and equipment                                                                                                          |   | $ | 183,641 |   |   | $ | 1,907,351 |   |
| Fair value of warrants and embedded conversion features issued in connection with the issuance of convertible promissory notes and corresponding debt discount |   | $ | 47,672 |   |   | $ | 153,062 |   |
| Conversion of convertible promissory notes and accrued interest into shares of common stock                                                                    |   | $ | 318,042 |   |   | $ | 383,873 |   |
| Conversion of notes payable into shares of common stock                                                                                                        |   | $ | 759,500 |   |   | $ | - |   |
| Fair value of shares of common stock issued for payment of accrued interest                                                                                    |   | $ | - |   |   | $ | 133,270 |   |
| Fair value of derivative liability                                                                                                                             |   | $ | 2,407,261 |   |   | $ | - |   |
|                                                                                                                                                           |   |   |   |   |   |   |   |   |
| See Notes to Unaudited Consolidated Financial Statements.                                                                                                      |

----

----

----

|   | Level 1:     | Observable inputs such as quoted market prices in active markets for identical assets or liabilities                                    |
|--------|---------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   | Level 2:     | Observable market-based inputs or unobservable inputs that are corroborated by market data                                              |
|   | Level 3:     | Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. |

----

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|                                                                                                         |   | Three months ended |        |   | Six months ended |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|------------------|--------|
|                                                                                                         |   | June 30,           |        |   | June 30,         |   |   | June 30, |   |   | June 30, |   |
|                                                                                                         |   | 2011               |        |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Numerator:                                                                                                   |   |               |        |   |             |   |   |   |   |   |   |   |
| Net loss                                                                                                     |   | $                  | (2,033,418  | )      |             | $      | (3,448,063 | ) |   | $ | (2,082,381 | ) |   | $ | (5,989,239 | ) |
| (Increase) decrease in fair value of derivative liabilities                                                  |   |               | (368,208    | )      |             |   | (117,588 | ) |   |   | (2,129,934 | ) |   |   | 82,619 |   |
| Numerator for basic earnings per share- loss attributable to common stockholders - as adjusted               |   |               | (2,401,626  | )      |             |   | (3,565,651 | ) |   |   | (4,212,315 | ) |   |   | (5,906,620 | ) |
| Numerator for diluted earnings per share-net income (loss) attributable to common stockholders - as adjusted |   | $                  | (2,401,626  | )      |             | $      | (3,565,651 | ) |   | $ | (4,212,315 | ) |   | $ | (5,906,620 | ) |
|                                                                                                         |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Denominator:                                                                                                 |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Denominator for basic earnings per share--weighted average shares                                            |   |               | 243,236,988 |   |             |   | 153,895,574 |   |   |   | 229,801,518 |   |   |   | 146,689,129 |   |
| Effect of dilutive securities:                                                                               |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Assumed conversion of Series A preferred stock                                                               |   |               | -           |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Assumed conversion of notes payable                                                                          |   |               | -           |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Stock options                                                                                                |   |               | -           |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Warrants                                                                                                     |   |               | -           |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Dilutive potential common shares                                                                             |   |               | -           |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Denominator for diluted earnings per share--adjusted weighted-average shares and assumed conversions         |   |               | 243,236,988 |   |             |   | 153,895,574 |   |   |   | 229,801,518 |   |   |   | 146,689,129 |   |
|                                                                                                         |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Loss per share:                                                                                              |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net loss available to common stockholders                                                                    |   |               |        |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted                                                                                            |   | $                  | (0.01       | )      |             | $      | (0.02 | ) |   | $ | (0.02 | ) |   | $ | (0.04 | ) |

|                           |           |   | June 30, |     |   | December 31, |   |
|--------------------------------|----------------|--------|----------|----------|--------|--------------|--------|
|                           | Estimated life |   | 2011     |     |   | 2010         |   |
| Computer and office equipment  | 3 to 5 years   |   | $        | 688,570  |   |         | $      | 861,946 |   |
| Leasehold improvements         | 5 years        |   |     | 202,298  |   |         |   | 202,298 |   |
|                           |           |   |     | 890,868  |   |         |   | 1,064,244 |   |
| Less: Accumulated depreciation |           |   |     | (685,976 | )      |         |   | (758,902 | ) |
|                           |           |   | $        | 204,892  |   |         | $      | 305,342 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | June 30,2011 |                                                                                  |   | December 31,2010 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------------------------------------------------------------------------------------|--------|------------------|--------|
| Convertible promissory notes, bearing interest between 8% and 10% per annum, maturing between August 2008 and October 2011. Interest is within 30 days after the end of the quarter. Interest may be paid in cash or common stock at the option of the Company. Interest paid in common stock will be calculated at a range of 90% of the average closing price for the common stock for the five trading days preceding the interest payment date to 100% of the volume weighted average price for the common stock for the ten trading days preceding the interest payment date. The promissory notes are convertible at any time at the option of the holder, into shares of common stock at an effective conversion rate ranging from $0.05 to $0.25. |   | $            |                      1,998,735 |   |             | $      |                      2,257,235 |   |
| Less: unamortized discount                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |         | (18,073                                                                               | )      |             |   | (365 | ) |
| Convertible promissory notes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $            | 1,980,662                                                                             |   |             | $      | 2,256,870 |   |

----

|                                                                                                                                     |   | Six-month period ended June 30, 2011                                                                              | Six-month period ended June 30, 2010                                                                                  |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
| Repricing of certain convertible promissory notes from $0.16 to $0.12 per share-interest expense                                         |   | $                   266 | $                   125,128 |
| Issuance of 416,666 shares of common stock in connection with aforementioned repricing                                                   |   | -                                                                                                                 | 79,167                                                                                                                |
| Issuance of 6,149,966 and 2,203,457 shares of common stock pursuant to conversion of convertible notes payable and related interest |   | 318,042                                                                                                           | 383,873                                                                                                               |
|                                                                                                                                     |   |                                                                                                              |                                                                                                                  |
| Proceeds from issuance of convertible note payable                                                                                       |   | 50,000                                                                                                            | -                                                                                                                     |
| Fair value of warrants issued to certain promissory note holders recorded as interest expense                                            |   | 200,000                                                                                                           | 12,160                                                                                                                |
| Fair value of 955,029 shares of common stock to satisfy accrued interest obligations                                                     |   | 81,687                                                                                                            | -                                                                                                                     |
| Fair value of warrants and embedded conversion features recorded as corresponding debt discount                                          |   | 47,672                                                                                                            | 153,062                                                                                                               |
| Fair value of warrants issued to satisfy accrued interest obligations                                                                    |   | 198                                                                                                               | 11,568                                                                                                                |
| Amortization of debt discount                                                                                                            |   | 29,964                                                                                                            | 247,996                                                                                                               |
| Amortization of deferred financing costs                                                                                                 |   | -                                                                                                                 | 81,964                                                                                                                |
|                                                                                                                                     |   |                                                                                                              |                                                                                                                  |
|                                                                                                                                     |   |                                                                                                              |                                                                                                                  |
|                                                                                                                                     |   |                                                                                                              |                                                                                                                  |

|                                                                                             |   | Six-month period ended June 30, 2011                                                                                  | Six-month period ended June 30, 2010                                                                                  |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------|
| Principal repayments                                                                             |   | $                   163,000 | $                   405,000 |
| Proceeds from issuance of note payable                                                           |   | 367,600                                                                                                               | 1,100,000                                                                                                             |
| Fair value of 955,029 and 980,000 shares of common stock to satisfy accrued interest obligations |   | 115,874                                                                                                               | 184,200                                                                                                               |
| Issuance of 12,946,000 shares to satisfy obligations under certain notes payable            |   | 759,500                                                                                                               | -                                                                                                                     |
|                                                                                             |   |                                                                                                                  |                                                                                                                  |
|                                                                                             |   |                                                                                                                  |                                                                                                                  |

----

|                          |   |          |   |   | Liability contracts recognized during the six-month period ended |   |      |             |   |
|-------------------------------|--------|---------------|--------|--------|------------------------------------------------------------------|--------|-----------|------------------|--------|
|                          |   | June 30, 2011 |   |   | June 30,  2011                                              |   |      | December31, 2010 |   |
| Embedded Conversion Features: |   |          |   |   |                                                             |   |      |             |   |
| Effective Exercise price      |   | $             | 0.08   |   |                                                             | $      | 0.05      |             |   | $ | 0.10-0.16 |   |
| Effective Market price        |   | $             | 0.08   |   |                                                             | $      | 0.09      |             |   | $ | 0.095 |   |
| Volatility                    |   |          | 69     | %      |                                                             |   | 69        | %                |   |   | 75 | % |
| Risk-free interest            |   |          | 1.76   | %      |                                                             |   | 0.28      | %                |   |   | 0.30 | % |
| Terms days                    |   |          | 90     |   |                                                             |   | 120       |             |   |   | 182 |   |
| Expected dividend rate        |   |          | 0      | %      |                                                             |   | 0         | %                |   |   | 0 | % |
|                          |   |          |   |   |                                                             |   |      |             |   |   |   |   |
|                          |   |          |   |   |                                                             |   |      |             |   |   |   |   |
| Warrants:                     |   |          |   |   |                                                             |   |      |             |   |   |   |   |
| Effective Exercise price      |   | $             | 0.22   |   |                                                             | $      | 0.09-0.34 |             |   | $ | 0.05-0.20 |   |
| Effective Market price        |   | $             | 0.08   |   |                                                             | $      | 0.08      |             |   | $ | 0.095 |   |
| Volatility                    |   |          | 69     | %      |                                                             |   | 69        | %                |   |   | 75 | % |
| Risk-free interest            |   |          | 1.76   | %      |                                                             |   | 1.76      | %                |   |   | 75.00 | % |
| Terms                         |   |          | 525    |   |                                                             |   | 76-1825   |             |   |   | 829 |   |
| Expected dividend rate        |   |          | 0      | %      |                                                             |   | 0         | %                |   |   | 0 | % |
|                          |   |          |   |   |                                                             |   |      |             |   |   |   |   |

----

|                                                                 |   | Number of Shares of Common Stock |       |   | Fair Value at Issuance |   |      | Fair Value at Issuance(per share) |   |
|----------------------------------------------------------------------|--------|----------------------------------|------------|--------|------------------------|--------|-----------|-----------------------------------|--------|
| Accrued Interest Payment for 8% and 10% convertible promissory notes |   |                             | 972,944    |   |                   | $      | 133,270   |                              |   | $ | 0.14 |   |
| Services performed- Investor relations                               |   |                             | 2,450,000  |   |                   |   | 393,500   |                              |   |   | 0.159 - 0.165 |   |
| Services performed- Legal expense                                    |   |                             | 175,398    |   |                   |   | 28,941    |                              |   |   | 0.165 |   |
| Services performed- Project management expense                       |   |                             | 110,677    |   |                   |   | 22,799    |                              |   |   | 0.20 - 0.21 |   |
| Services performed- Business development                             |   |                             | 900,000    |   |                   |   | 169,000   |                              |   |   | 0.145 - 0.20 |   |
| Services performed- Strategy consulting                              |   |                             | 25,000     |   |                   |   | 4,125     |                              |   |   | 0.165 |   |
| Exercised stock options                                              |   |                             | 636,752    |   |                   |   | 6,368     |                              |   |   | 0.01 |   |
| Exercised warrants                                                   |   |                             | 5,453,595  |   |                   |   | 545,358   |                              |   |   | 0.10 |   |
| Conversion of 8% convertible promissory notes                        |   |                             | 1,828,457  |   |                   |   | 258,873   |                              |   |   | 0.14 |   |
| Conversion of 10% convertible promissory notes                       |   |                             | 725,000    |   |                   |   | 125,000   |                              |   |   | 0.17 |   |
| Private placement, net of finder’s fee of $39,000              |   |                             | 13,761,807 |   |                   |   | 1,547,475 |                              |   |   | 0.10 - 0.20 |   |
| Debt settlement agreement                                            |   |                             | 100,000    |   |                   |   | 20,000    |                              |   |   | 0.20 |   |
| Convertible note repricing                                           |   |                             | 416,666    |   |                   |   | 79,167    |                              |   |   | 0.19 |   |
| Interest associated with issuance of notes payable                   |   |                             | 980,000    |   |                   |   | 184,200   |                              |   |   | 0.16 - 0.22 |   |

|                                                                 |   | Number of Shares of Common Stock |       |   | Fair Value at Issuance |   |      | Fair Value at Issuance(per share) |   |
|----------------------------------------------------------------------|--------|----------------------------------|------------|--------|------------------------|--------|-----------|-----------------------------------|--------|
| Accrued Interest Payment for 8% and 10% convertible promissory notes |   |                             | 955,029    |   |                   | $      | 81,687    |                              |   | $ | 0.09 |   |
| Services performed- Investor relations                               |   |                             | 5,395,000  |   |                   |   | 383,000   |                              |   |   | 0.04-0.10 |   |
| Exercised stock options                                              |   |                             | 3,000,000  |   |                   |   | 90,000    |                              |   |   | 0.03 |   |
| Exercised warrants                                                   |   |                             | 2,240,159  |   |                   |   | 112,008   |                              |   |   | 0.05 |   |
| Conversion of convertible promissory notes and notes payable         |   |                             | 19,095,966 |   |                   |   | 1,077,874 |                              |   |   | 0.05-0.10 |   |
| Private placement, net of finder’s fee of $57,330              |   |                             | 27,730,972 |   |                   |   | 1,166,894 |                              |   |   | .03-.06 |   |
| Interest associated with issuance of notes payable                   |   |                             | 500,000    |   |                   |   | 44,000    |                              |   |   | .088 |   |

----

----

|                           |   | June 30, 2010     |             |   | June 30, 2011     |   |
|--------------------------------|--------|-------------------|------------------|--------|-------------------|--------|
| Exercise price:                |   |              | $0.10 - $0.32    |   |              |   | $.09-.16 |   |
| Market price at date of grant: |   |              | $0.145 $0.225    |   |              |   | $0.08-.09 |   |
| Expected volatility:           |   |              | 64.25% - 168.64% |   |              |   | 69-75% |   |
| Term:                          |   | 2 – 9 years |             |   | 3 – 5 years |   |
| Risk-free interest rate:       |   |              | 0.34% - 3.59%    |   |              |   | 0.75% - 2.72% |   |

|                          |   | June 30, 2010 |            |   | June 30, 2011 |   |
|-------------------------------|--------|---------------|-----------------|--------|--------------------|--------|
| Exercise Price                |   |          | $0.01 - $ 0.20  |   |               |   | $0.03-0.08 |   |
| Market price at date of grant |   |          | $0.16 - $ 0.225 |   |               |   | $0.08 |   |
| Expected volatility           |   |          | 78.2% - 100.4%  |   |               |   | 50-69% |   |
| Risk-free interest rate       |   |          | 1.39% - 2.47%   |   |               |   | 0.63-1.76% |   |

|                                                      |   | Six-month period ended June 30, |            |
|-----------------------------------------------------------|--------|---------------------------------|-----------------|
|                                                      |   | 2011                            |            |   | 2010 |   |
|                                                      |   |                            |            |   |   |   |
| Weighted-average grant-date fair value of options granted |   | $                               | 0.04            |   |   | $ | 0.19 |   |
| Fair value of options recognized as expense:              |   | $                               | 296,175         |   |   | $ | 767,913 |   |
| Options granted                                           |   |                            |  4,500,000 |   |   |   |  3,627,680 |   |

----

|          |   | 2011   |   |   | 2010   |   |
|---------------|--------|--------|--------|--------|--------|--------|
| United States |   |   | 11%    |   |   |   | 15% |   |
| Europe        |   |   | 89%    |   |   |   | 85% |   |

----

|   | · | Insurance and warranties (Assurant and Lyfestyle Group); |
|--------|--------|----------------------------------------------------------|

|   | · | Retail-  Car Phone Warehouse and Simplexity; |
|--------|--------|--------------------------------------------------------|

|   | · | Original Equipment Manufacturers; |
|--------|--------|-----------------------------------|

|   | · | Carriers |
|--------|--------|----------|

----

----

| SPARE BACKUP, INC. AND SUBSIDIARY              |
|------------------------------------------------|
| CONSOLIDATED STATEMENTS OF OPERATIONS          |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |   | Three-month periods ended |   |   | Increase/ |   |   | Increase/ |   |   | Six-month periods ended |   |   | Increase/ |   |   | Increase/ |   |
|                                           |   | June 30, |   |   | (Decrease) |   |   | (Decrease) |   |   | June 30, |   |   | (Decrease) |   |   | (Decrease) |   |
|                                           |   | 2011 |   |   | 2010 |   |   | in $ 2011 |   |   | in % 2011 |   |   | 2011 |   |   | 2010 |   |   | in $ 2011 |   |   | in % 2011 |   |
|                                           |   | (Unaudited) |   |   | (Unaudited) |   |   | vs 2010 |   |   | vs 2010 |   |   | (Unaudited) |   |   | (Unaudited) |   |   | vs 2010 |   |   | vs 2010 |   |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Revenues                                   |   | $ | 155,909 |   |   | $ | 227,351 |   |   | $ | (71,442 | ) |   |   | -31.4 | % |   | $ | 193,503 |   |   | $ | 773,593 |   |   | $ | (580,090 | ) |   |   | -75.0 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                       |   |   | 400,296 |   |   |   | 989,087 |   |   |   | (588,791 | ) |   |   | -59.5 | % |   |   | 658,555 |   |   |   | 1,500,172 |   |   |   | (841,617 | ) |   |   | -56.1 | % |
| Selling, general and administrative            |   |   | 1,877,289 |   |   |   | 2,348,549 |   |   |   | (471,260 | ) |   |   | -20.1 | % |   |   | 3,356,492 |   |   |   | 4,554,074 |   |   |   | (1,197,582 | ) |   |   | -26.3 | % |
| Total operating expenses                       |   |   | 2,277,585 |   |   |   | 3,337,636 |   |   |   | (1,060,051 | ) |   |   | -31.8 | % |   |   | 4,015,047 |   |   |   | 6,054,246 |   |   |   | (2,039,199 | ) |   |   | -33.7 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating loss                                 |   |   | (2,121,676 | ) |   |   | (3,110,285 | ) |   |   | 988,609 |   |   |   | -31.8 | % |   |   | (3,821,544 | ) |   |   | (5,280,653 | ) |   |   | 1,459,109 |   |   |   | -27.6 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense):                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Change in fair value of derivative liabilities |   |   | 368,208 |   |   |   | 117,588 |   |   |   | 250,620 |   |   |   | 213.1 | % |   |   | 2,129,934 |   |   |   | (82,619 | ) |   |   | 2,212,553 |   |   | NM |   |
| Gain from debt settlement                      |   |   | - |   |   |   | - |   |   |   | - |   |   | NM |   |   |   | - |   |   |   | 295,727 |   |   |   | (295,727 | ) |   |   | -100.0 | % |
| Interest expense                               |   |   | (279,950 | ) |   |   | (455,366 | ) |   |   | (175,416 | ) |   |   | -38.5 | % |   |   | (390,771 | ) |   |   | (921,694 | ) |   |   | (530,923 | ) |   |   | -57.6 | % |
| Total other income (expense)                   |   |   | 88,258 |   |   |   | (337,778 | ) |   |   | 426,036 |   |   |   | -126.1 | % |   |   | 1,739,163 |   |   |   | (708,586 | ) |   |   | 2,447,749 |   |   |   | -345.4 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                       |   |   | (2,033,418 | ) |   |   | (3,448,063 | ) |   |   | (1,414,645 | ) |   |   | -41.0 | % |   |   | (2,082,381 | ) |   |   | (5,989,239 | ) |   |   | (3,906,858 | ) |   |   | -65.2 | % |
|                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NM: Not Meaningful                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|   | • | a decrease in non-recurring fair value of options and warrants issued to employees and consultants, including the fair value of modification of terms of such options and warrants, amounting to approximately $680,000 which occurred during the first quarter of 2010.  Otherwise, selling, general, and administrative expenses during the three-month period ended June 30, 2011 is at comparable levels to the prior year period. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | · Decrease in fair value of our derivative liabilities of approximately $2.1 million;· Fair value of stock-based payments issued to employees and consultants of approximately $752,000· Fair value of modifications to options and warrants of approximately $122,000;· Fair value of equity transactions related to financing of approximately $398,000. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Increase in accounts payable, accrued expenses and accrued payroll taxes of approximately $1.4 million, resulting from delays in payments to satisfy our obligations due to our liquidity issues. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | · Decrease in fair value of our derivative liabilities of approximately $2.2 million;· Fair value of stock-based payments issued to employees and consultants of approximately $1.4 million· Fair value of modifications to options and warrants of approximately $722,000;· Fair value of equity transactions related to financing of approximately $329,000;· Amortization of debt discount and deferred financing costs of approximately $330,000. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

|   |   |                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | · Increase in accounts payable, accrued expenses and accrued payroll taxes of approximately $872,000, resulting from delays in payments to satisfy our obligations due to our liquidity issues;· Decrease in deferred revenues of approximately of approximately $613,000 for subscription fees received during fiscal 2009 which were recognized during the first half of 2010. |

----

----

----

| 31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer |
|------|--------------------------------------------------------------------|

| 31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of principal financial and accounting officer |
|------|---------------------------------------------------------------------------------------|

| 32.1   | Section 1350 Certification of Chief Executive Officer and principal financial and accounting officer |
|------------------|------------------------------------------------------------------------------------------------------|

----

|                   |            | SPARE BACK UP, INC.                                                                                        |
|------------------------|-----------------|------------------------------------------------------------------------------------------------------------|
|                   |            |                                                                                                       |
|                   |            |                                                                                                       |
| Dated: August 22, 2011 | By:   | /s/ Cery B. Perle                                                                                          |
|                   |            | Cery B. PerlePresident, Chief Executive Officer and Directorand Principal Financial and Accounting Officer |