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Transitional Small Business Disclosure Format (CheckOne):  Yes [  ]    No [ X]

  

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Table of Contents

PART  I.  FINANCIALINFORMATION

 Item 1.  Financial Statements(unaudited)

CondensedConsolidated Statement of Stockholders’ Equity ......................                          Page   5

CondensedConsolidated Statements of Cash Flows.................................                           Page   6

Notes to CondensedConsolidated Financial Statements............................                           Page   7

Item 2.  Management’s Discussion and Analysis orPlan of Operation......................                            Page10

Item 3.  Controls and Procedures........................................................................                            Page14

PART II.  OTHER INFORMATION

Item 6.  Exhibits ...............................................................................................                            Page 15

SIGNATURES.............................................................................................................                              Page17

  

2

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SARS

|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |  December      31, 2007                                                                                                                                                    |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |  September      30, 2007                                                                                                                               |   |
|-------------------------------------------------|------------------------------------------------------------------------|----------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                            |                                                                   |                                                           |                                                                                                                                                                | ASSETS                                                                                                                                                         |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
| Current      Assets                             |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |
|                                            | Cash      and cash equivalents                                         |                                                           | $                                                                                                                                                              |                  206                                                      |                                                                                                                                          |                                                                                                                                          | $                                                                                                                                                                          |                         31                              |                                                                                                                                                            |
|                                            | Receivable      for cash in escrow for common stock sold               |                                                           |                                                                                                                                                                |                    4,233                                        |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                          890                       |                                                                                                                                                            |
|                                            | Accounts      receivable, net                                          |                                                           |                                                                                                                                                                |                        632                  |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                            89            |                                                                                                                                                            |
|                                            | Inventory                                                              |                                                           |                                                                                                                                                                |                                                                                                                                                           |                        224 |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                           142 |                                                                                                                                                      |
|                                            | Prepaid      expenses and other current assets                         |                                                           |                                                                                                                                                                |                          53       |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                            54            |                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      current sssets                                                                                                                                      |                                                                                                                                          |                                                                                                                                          |                    5,347                                                         |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                       1,206                   |   |
| Property,      equipment and software, net      |                                                                   |                                                           |                     6,127                                       |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                       4,179                                       |                                                                                                                                                                            |
| Goodwill                                        |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                        568 |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                          568       |                                                                                                                                                      |
| Identifiable      intangible assets             |                                                                   |                                                           |                      4,113                                 |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                              - |                                                                                                                                                                            |
| Advances      to and receivables from Andronics |                                                                   |                                                           |                            - |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                          854                       |                                                                                                                                                                            |
| Other      assets                               |                                                                   |                                                           |                                                                                                                                                                |                          35       |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                            35            |                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      Assets                                                                                                                                              |                                                                                                                                          | $                                                                                                                                        |                16,190                                                                                |                                                                                                                                                                            |                                                                                                                                                            | $                                                                                                                                                    |                  6,842                                                 |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                | LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                      |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
| Current      Liabilities                        |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |
|                                            | Accounts      payable and other accrued expenses                       |                                                           | $                                                                                                                                                              |                     829                                    |                                                                                                                                          |                                                                                                                                          | $                                                                                                                                                                          |                      467                                               |                                                                                                                                                            |
|                                            | Accounts      payable - related party                                  |                                                           |                                                                                                                                                                |                         835            |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                           420                 |                                                                                                                                                            |
|                                            | Accrued      liabilities                                               |                                                           |                                                                                                                                                                |                     1,368                                  |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                            93            |                                                                                                                                                            |
|                                            | Notes      payable current portion                                     |                                                           |                                                                                                                                                                |                           41 |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                            40            |                                                                                                                                                            |
|                                            | Convertible      debentures                                            |                                                           |                                                                                                                                                                |                        722                  |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                              - |                                                                                                                                                            |
|                                            | Deferred      revenue                                                  |                                                           |                                                                                                                                                                |                           18 |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                             12      |                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      current liabilities                                                                                                                                 |                                                                                                                                          |                                                                                                                                          |                    3,814                                                         |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                         1,032       |   |
| Notes      payable, net of current portion      |                                                                   |                                                           |                           71      |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                            83            |                                                                                                                                                                            |
| Other      non-current liabilities              |                                                                   |                                                           |                         481                 |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                              - |                                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      liabilities                                                                                                                                         |                                                                                                                                          |                                                                                                                                          |                    4,365                                                         |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                          1,115 |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
| Commitments      and Contingencies              |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
| Stockholders'      Equity                       |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |
|                                            | Preferred      Stock - $0.001 par value; 50,000,000 shares authorized; |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |
|                                            |                                                                   | Series      A Convertible Preferred Stock - 1 share issued and |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |
|                                            |                                                                   |                                                           | outstanding;      liquidation value of $950                                                                                                                         |                                                                                                                                                           |                                                                                                                                          |                        950 |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                          950 |                                                                                                                                                        |
|                                            | Common      Stock and additional paid-in capital - $0.001 par value,   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |
|                                            |                                                                   | 500,000,000      shares authorized, 38,572,136 and 31,850,198  |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |
|                                            |                                                                   | shares      issued and issuable, respectively                  |                                                                                                                                                                |                                                                                                                                                           |                  33,576                                  |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                    25,680                                        |                                                                                                                                                      |
|                                            | Accumulated      deficit                                               |                                                           |                                                                                                                                                                |                (22,701)                                                             |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                  (20,903)                                                                  |                                                                                                                                                            |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      Stockholders' Equity                                                                                                                                |                                                                                                                                          |                                                                                                                                          |                   11,825                                                              |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                      5,727                         |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                | Total      Liabilities and Stockholders' Equity                                                                                                                |                                                                                                                                          | $                                                                                                                                        |               16,190                                                                                      |                                                                                                                                                                            |                                                                                                                                                            | $                                                                                                                                                    |                 6,842                                                       |   |
|                                            |                                                                   |                                                           |                                                                                                                                                                |                                                                                                                                                           |                                                                                                                                          |                                                                                                                                          |                                                                                                                                                                            |                                                                                                                                                                            |                                                                                                                                                            |                                                                                                                                                      |                                                                                                                                                        |   |

|                                                                                         |   |
|----------------------------------------------------------------------------------------------|--------|
|        See      accompanying notes to condensed consolidated financial      statements. |

----

SARS 

|                                                       | Three      months ended December 31, |
|------------------------------------------------------------|--------------------------------------|
|                                                       |                                 | 2007 |   |   | 2006 |   |
|                                                       |                                 |   |   |   |   |   |
| Revenues                                                   |                                 | $ | 119 |   |   | $ | 92 |   |
| Cost      of revenues                                      |                                 |   | 87 |   |   |   | 77 |   |
| Gross      profit                                          |                                 |   | 32 |   |   |   | 15 |   |
| Operating      Expenses                                    |                                 |   |   |   |   |   |   |   |
| Sales      and marketing expense                           |                                 |   | 346 |   |   |   | 606 |   |
| General      and administrative expense                    |                                 |   | 1,484 |   |   |   | 782 |   |
| Total      operating expenses                              |                                 |   | 1,830 |   |   |   | 1,388 |   |
| Loss      from operations                                  |                                 |   | (1,798 | ) |   |   | (1,373 | ) |
| Other      Income (Expense)                                |                                 |   |   |   |   |   |   |   |
| Interest      expense                                      |                                 |   | (4 | ) |   |   | (23 | ) |
| Interest      income                                       |                                 |   | 4 |   |   |   | - |   |
| Total      other income (expense)                          |                                 |   | 0 |   |   |   | (23 | ) |
|                                                       |                                 |   |   |   |   |   |   |   |
| Loss      before income taxes                              |                                 |   | (1,798 | ) |   |   | (1,396 | ) |
| Income      taxes                                          |                                 |   | - |   |   |   | - |   |
|                                                       |                                 |   |   |   |   |   |   |   |
| Net      Loss                                              |                                 |   | (1,798 | ) |   |   | (1,396 | ) |
|                                                       |                                 |   |   |   |   |   |   |   |
| Preferred      stock dividends                             |                                 |   | (19 | ) |   |   | - |   |
|                                                       |                                 |   |   |   |   |   |   |   |
| Net      loss attributable to holders of common stock      |                                 | $ | (1,817 | ) |   | $ | (1,396 | ) |
|                                                       |                                 |   |   |   |   |   |   |   |
| Basic      and diluted net loss attributable to holders    |                                 |   |   |   |   |   |   |   |
| of      common stock per common share                      |                                 | $ | (0.05 | ) |   | $ | (0.07 | ) |
| Weighted      average basic and diluted shares outstanding |                                 |   | 33,931,855 |   |   |   | 20,415,780 |   |

|                                                                                         |   |   |   |   |   |   |   |
|----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|        See      accompanying notes to condensed consolidated financial      statements. |

----

|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |
|------------------------------------------------------------------------------------------|--------|-------------------------------|--------|--------|--------------------------------------------------|--------|--------|-------------|--------|--------|---------------|--------|--------|---------|--------|--------|--------|--------|
|                                                                                     |   | Series      A Preferred Stock |   |   | Common      Stock and additional paid-in capital |   |   | Accumulated |   |   |          |   |
|                                                                                     |   | Shares                        |   |   | Amount                                           |   |   | Shares      |   |   | Amount        |   |   | Deficit |   |   | Total  |   |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |
| Balance      at September 30, 2007                                                       |   |                          | 1      |   |                                             | $      | 950    |        |   |   | 31,850,198    |   |   | $       | 25,680 |   |   | $      | (20,903 | ) |   | $ | 5,727 |   |
|   Shares      issuable for cash                                                |   |                          |   |   |                                             |   |   |        |   |   | 6,363,750     |   |   |    | 6,364  |   |   |   |   |   |   |   | 6,364 |   |
|   Stock      issue costs paid or payable in cash                               |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    | (1,403 | )      |   |   |   |   |   |   | (1,403 | ) |
|        Shares issuable for services provided and recorded as stock issue      costs |   |                          |   |   |                                             |   |   |        |   |   | 308,188  |   |   |    | -      |   |   |   | - |   |   |   | - |   |
|   Preferred      stock dividends                                               |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    | (19    | )      |   |   |   |   |   |   | (19 | ) |
|   Common      stock and warrants issuable for Andronics purchase               |   |                          |   |   |                                             |   |   |        |   |   | 50,000        |   |   |    | 2,174  |   |   |   |   |   |   |   | 2,174 |   |
|   Increase      in paid-in capital relating to premium on                      |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |
|     covertible      debentures                                       |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    | 780    |   |   |   |   |   |   |   | 780 |   |
|   Net      loss for the three months ended December 31, 2007                   |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   | (1,798 | ) |   |   | (1,798 | ) |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                        |   |                          | 1      |   |                                             | $      | 950    |        |   |   | 38,572,136    |   |   | $       | 33,576 |   |   | $      | (701 | ) |   | $ | 11,825 |   |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |
| See      accompanying notes to condensed consolidated financial      statements.         |
|                                                                                     |   |                          |   |   |                                             |   |   |        |   |   |          |   |   |    |   |   |   |   |   |   |   |   |   |   |

----

|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |        Three      months ended December 31,                                                                                                                                                     |                                                                                                                                                                                        |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  | 2007                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   | 2006 |   |
| Cash      Flows From Operating Activities             |  $                                                                                   |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          | $                                                                                                                                                                     |                                                                                                                                                                                                 |                                                                                                                                                                                        |
|                                                  | Net      loss                                                                             |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                      (1,798)                                                                         |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |  $                 (1,396) |   |
|                                                  | Adjustments      to reconcile net loss to net cash used in                                |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |
|                                                  | operating      activities                                                                 |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |
|                                                  |                                                                                      | Depreciation      and amortization                                                                                                                                                                             |                                                                                                                                                                                                                |                               362                       |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |                           273 |   |
|                                                  |                                                                                      | Share-based      payments included in general and administrative expense                                                                                                                                       |                                                                                                                                                                                                                |                                   - |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |                            157 |   |
|                                                  | Changes      in operating assets and liabilities, exclusive of Andronics      acquisition |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |
|                                                  | Account      receivable                                                                   |                                                                                                                                                                                                           |                                (27)                      |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                9 |   |
|                                                  | Inventories                                                                               |                                                                                                                                                                                                           |                                   (1)     |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                            (111)                     |   |
|                                                  | Prepaid      expenses and other current assets                                            |                                                                                                                                                                                                           |                                    3 |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                8 |   |
|                                                  | Accounts      payable                                                                     |                                                                                                                                                                                                           |                                173                       |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                            102                       |   |
|                                                  | Accrued      liabilities                                                                  |                                                                                                                                                                                                           |                             (336)                                       |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                            104                       |   |
|                                                  | Other                                                                                     |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                (37)                |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |                         (370) |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                | Net      cash used in operating activities                                                                                                                                                                    |                                                                                                                                                                  |                            (1,661)                            |                                                                                                                                                                                        |   |   |                      (1,224) |   |
| Cash      Flows From Investing Activities             |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |
|                                                  | Purchases      of property, equipment, and software                                       |                                                                                                                                                                                                           |                                 (81)                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                          (183)                                 |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                | Net      cash used in investing activities                                                                                                                                                                    |                                                                                                                                                                  |                                 (81) |                                                                                                                                                                                        |   |   |                          (183) |   |
| Cash      Flows From Financing Activities             |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |
|                                                  | Borrowings      on notes payable                                                          |                                                                                                                                                                                                           |                                   -       |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                              61            |   |
|                                                  | Payments      on notes payable                                                            |                                                                                                                                                                                                           |                                  (9)           |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                               -       |   |
|                                                  | Proceeds      from sale of common stock and warrants, net of cash fees                    |                                                                                                                                                                                                           |                            2,442                                             |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                        1,509                                             |   |
|                                                  | Stock      issue costs                                                                    |                                                                                                                                                                                                           |                              (516)                                 |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                               -       |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                | Net      cash provided by financing activities                                                                                                                                                                |                                                                                                                                                                  |                              1,917                  |                                                                                                                                                                                        |   |   |                        1,570 |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |   |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                | Net      increase in cash and cash equivalents                                                                                                                                                                |                                                                                                                                                                  |                                175        |                                                                                                                                                                                        |   |   |                            163 |   |
| Cash      and cash equivalents, beginning of period   |                                                                                      |                                   31 |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                             66                           |                                                                                                                                                                                        |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |   |   |
| Cash      and cash equivalents, end of period         |        $                                                                             |                           206                                                |                                                                                                                                                                                                                |                                                                                                                                                                                                          | $                                                                                                                                                                |                      229                                                                    |                                                                                                                                                                                        |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |   |   |
| Supplemental      disclosure of cash flow information |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |
|                                                  | Cash      paid for interest                                                               | $                                                                                                                                                                                                              |                            4                                                 |                                                                                                                                                                                                          |                                                                                                                                                                  | $                                                                                                                                                                                               |                        23                                                |   |
|                                                  | Cash      paid for income taxes                                                           |                                                                                                                                                                                                           |                             -                                           |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                          -                                     |   |
|                                                  | Non-Cash      Investing and Financing Activities                                          |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |
|                                                  |                                                                                      | Common      shares issuable for stock issue costs                                                                                                                                                         | $                                                                                                                                                                                                              |        636                                                                                                                                                                                               |                                                                                                                                                                  |                                                                                                                                                                                                 | $                                                                                                                                                                                      |        - |   |
|                                                  |                                                                                      | Warrants      issued for stock issue costs                                                                                                                                                                     | $                                                                                                                                                                                                              |                            2,201                                       |                                                                                                                                                                  |                                                                                                                                                                                                 | $                                                                                                                                                                                      |                           - |   |
|                                                  |                                                                                      | Amounts      payable to related party for stock issue cost                                                                                                                                                     | $                                                                                                                                                                                                              |  308                                                                                                                                                                                                     |                                                                                                                                                                  |                                                                                                                                                                                                 | $                                                                                                                                                                                      | - |   |
|                                                  |                                                                                      | Increase      in receivable  for cash in escrow for common stock sold                                                                                                                                     | $                                                                                                                                                                                                              |  3,343                                                                                                                                                                                              |                                                                                                                                                                  |                                                                                                                                                                                                 | $                                                                                                                                                                                      |  - |   |
|                                                  |                                                                                      | Securities      issued for purchase of Andronics:                                                                                                                                                              |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           | Convertible      debentures, net premium of $780                                                                                                                                                                    |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                | recorded      as an increase in paid-in capital                                                                                                                                                               | $                                                                                                                                                                |                         722                                                  |                                                                                                                                                                                        |   | $  |                           - |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           | Common      stock                                                                                                                                                                                                   | $                                                                                                                                                                                                             |                            104 |                                                                                                                                                                                                 |                                                                                                                                                                                        | $  |                           - |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           | Warrants                                                                                                                                                                                                            | $                                                                                                                                                                                                             |                       2,070                             |                                                                                                                                                                                                 |                                                                                                                                                                                        | $  |                           - |   |
|                                                  |                                                                                      |                                                                                                                                                                                                           |                                                                                                                                                                                                                |                                                                                                                                                                                                          |                                                                                                                                                                  |                                                                                                                                                                                                 |                                                                                                                                                                                        |   |   |   |   |

| See      accompanying notes to condensed consolidated financial      statements. |
|----------------------------------------------------------------------------------|

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|            | 2007 | 2006 |
|-----------------|------|------|
| Customer      A | 18%  | *    |
| Customer      B | 17%  | 18%  |
| Customer      C | 17%  | *    |
| Customer      D | *    | 16%  |
| Customer      E | *    | 22%  |

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| Current      assets                   |   | $      | 622   |   |
|---------------------------------------|--------|--------|-------|--------|
| Property,      equipment and software |   |   | 2,186 |   |
| Identifiable      intangible assets   |   |   | 4,180 |   |
| Total                                 |   | $      | 6,988 |   |

|                    |   | 2007   |   |   | 2006    |
|-------------------------|--------|--------|--------|--------|---------|
| Revenues                |   | $      | 622    |   | $       | 1,461 |
| Net      loss           |   |   | (2,267 | )      |    |  (3,928) |
| Net      loss per share |   | $      | (0.07  | )      |  $ | (0.19) |

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|                                                             |                                                |                                                |                                           |                                |   |            |     |        weighted      average                                                   |
|------------------------------------------------------------------|-----------------------------------------------------|-----------------------------------------------------|------------------------------------------------|-------------------------------------|--------|-----------------|----------|-------------------------------------------------------------------------------------|
|                                                             |                                                |  number      of                                |                                           | exercise                            | term   |            | exercise |                                                                                | remaining      term |
|                                                             |                                                |  warrants                                      |                                           | price                               |   | (in      years) |     | price                                                                               |   | (in      years) |
|                                                             |                                                |                                                |                                           |                                |   |            |     |                                                                                |   |   |
| Outstanding      at October 1, 2007                              |                                                |        8,977,601 |                                           |                                |   |            |     |  $            1.03 |   | 3.9 |
|   Issued      to placement agents                      |                                                |        1,364,947 |                                           |  $    1.00 |   | 5.0             |     |                                                                                |   |   |
|   Issued      in connection with Andronics acquisition |        1,000,000 |                                                |        0.01 |                                | 1.3    |            |     |                                                                                |   |
| Outstanding      at December 31, 2007                            |                                                |      11,342,548            |                                           |                                |   |            |     |  $            0.94 |   | 3.6 |

|                        |   |   |   |   |   | 2007              |   | 2006 |
|-----------------------------|--------|--------|--------|--------|--------|-------------------|--------|------|
| Expected      life in years |   |   |   |   |   | 1.3      to 5.0   |   | 5.0  |
| Volatility                  |   |   |   |   |   | 79%               |   | 145% |
| Interest      rate          |   |   |   |   |   | 3.2%      to 3.5% | 4.5%   |
| Dividend      yield rate    |   |   |   |   |   | 0%                |   | 0%   |

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| ·   | Obtaining      representations in writing from directors and officers regarding full      disclosure of agreements, and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------|

| ·   | Initiated      process of forming a financial reporting disclosure committee and      processes. |
|--------------------|--------------------------------------------------------------------------------------------------|

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PART II. OTHER INFORMATION

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Item 4. Submission of Matters to a Vote ofSecurities Holders

Item 5. Other Information

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SIGNATURES 

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