UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549




**FORM
      10-KSB**




x ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended December 31, 2007




oTRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      transition period from ________ to ___________




Commission
      file number 333-136487




**KEYON
      COMMUNICATIONS HOLDINGS, INC.**


(Name
      of
      Small Business Issuer in Its Charter)





Delaware
            
            74-3130469State
                or Other Jurisdiction of
              Incorporation
                or Organization
            
            (I.R.S.
                Employer
              Identification
                No.)





11742
      Stonegate Circle


Omaha,
      Nebraska 68164


(Address
      of Principal Executive Offices)




(402)
      998-4000


Telephone
      Number, Including Area Code)




Securities
      Registered Pursuant to Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act: None




Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the Registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. YES x NO o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


YES
o  
NO
x




State
      issuer’s revenues for fiscal year ended December 31, 2007:
      $7,185,433




The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates was $14,760,374 computed by reference to the closing price of
      the
      common stock on March 28, 2008.




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date.




**Class**
            
            **Outstanding
                at March 31, 2008**Common
                Stock, $.001 par value
            
            8,249,106





Transitional
      Small Business Disclosure Format YES o NO x










**KEYON
      COMMUNICATIONS HOLDINGS, INC.**




**Table
      of Contents**


PagePART
                  I
              
              1Item
                  1. Description of Business
              
              1Item
                  2. Description of Property
              
              11Item
                  3. Legal Proceedings
              
              12Item
                  4. Submission of Matters to a Vote of Security Holders
              
              12PART
                  II
              
              13Item
                  5. Market for Common Equity, Related Stockholder Matters and Small
                  Business Issuer
              
              13Purchases
                  of Equity SecuritiesItem
                  6. Management’s Discussion and Analysis or Plan of
                  Operation
              
              14Item
                  7. Financial Statements
              
              31Item
                  8. Changes in and Disagreements with Accountants on Accounting
                  and
                  Financial Disclosure
              
              31Item
                  8A(T). Controls and Procedures
              
              31Item
                  8B. Other Information
              
              33PART
                  III
              
              33Item
                  9. Directors, Executive Officers, Promoters, Control Persons and
                  Corporate
                  Governance;Compliance
                  with Section 16(a) of the Exchange Act
              
              33Item
                  10. Executive Compensation
              
              36Item
                  11. Security Ownership of Certain Beneficial Owners and Management
                  and
                  Related Stockholder Matters
              
              38Item
                  12. Certain Relationships and Related Transactions, and Director
                  Independence.
              
              39Item
                  13. Exhibits
              
              40Item
                  14. Principal Accountant Fees and Services
              
              42SIGNATURES
              
              44









**PART
      I**




**Item
      1. Description of Business.**




**Overview**




KeyOn
      Communications Holdings, Inc. (“KeyOn” or the “Company”) is the largest rural
      wireless broadband provider in the United States 1  .
      As of
      December 31, 2007, the Company had over 16,500 subscribers and operates networks
      covering over 50,000 square miles in 11 states across the Midwest and Western
      United States. The Company has grown through the consolidation of similar
      companies throughout its target markets as well as continued organic growth.
      KeyOn primarily focuses on providing fixed wireless broadband to rural and
      other
      areas of the country that it believes are currently underserved by traditional
      phone and cable companies. The Company’s current network footprint covers an
      addressable market of approximately 2.4 million people, as well as small to
      mid-sized businesses.




Since
      launching its wireless broadband service in 2003, the Company has successfully
      increased its subscriber count and, based on both subscribers and revenue,
      KeyOn
      believes that it is the second largest wireless broadband company in the United
      States. To date, the Company has completed and successfully integrated four
      acquisitions and is in active discussions with other candidates located in
      adjacent markets to the Company’s existing network footprint. KeyOn’s
      acquisition strategy allows the Company to rapidly grow its subscriber base
      while expanding its earnings through operating expense reductions and other
      synergies achieved in integration.




KeyOn
      offers residential and business subscribers a simple, reliable and affordable
      broadband service that compares favorably to traditional broadband technologies
      such as cable modem, Digital Subscriber Line (“DSL”) or satellite. The Company
      leverages wireless broadband technology which it believes allows its service
      to
      cover a geographic market for a fraction of the cost of other competing
      broadband technologies. In addition to its broadband services, KeyOn also sells
      video services through its national agreement with DISH Network Corporation,
      formerly EchoStar Satellite, as a national DISH Network retailer in all of
      its
      target markets.




At
      the
      end of December, 2007, KeyOn had over 16,500 total subscribers, up from 996
      at
      the end of 2003, representing a compound annualized growth rate of approximately
      102%.




KeyOn
      is
      able to deliver broadband services at competitive prices to communities that
      are
      ignored or underserved by traditional phone and cable companies. Generally,
      KeyOn’s markets are rural locations with populations of less than 250,000 that
      often lack the communications infrastructure to supply broadband access. There
      are over 6,000 rural and underserved markets with populations of between 3,000
      and 100,000, amounting to 78 million Americans with either little or no access
      to broadband services. 2  In rural
      markets, broadband penetration is only 31% compared to 52% and 49% of households
      in urban and suburban markets, respectively. 3  KeyOn
      believes that the lower broadband penetration rate in rural areas compared
      to
      urban and suburban areas is driven primarily by the technical limitations and
      high cost of providing broadband over traditional networks in less densely
      populated areas. As a result, the Company believes there is a significant
      addressable market which is not currently being targeted by other providers
      of
      broadband services.




KeyOn
      believes that it has a scalable operating platform used in the overall
      management and in all customer functions of the Company’s networks. By
      centralizing operations in its Network Operations Center (“NOC”), utilizing a
      sophisticated Operations Support Software (“OSS”), and by decentralizing
      management around market clusters, the Company believes it is able to achieve
      operating costs that are significantly lower than most of its competitors.
      Further, by expanding into adjacent and new markets or introducing new services,
      the Company is able to leverage its existing network investments to improve
      economic returns. KeyOn believes it can significantly improve its growth
      opportunities while continuing to sequentially grow revenue through:




1 Broadband Wireless Exchange Magazine Website
        (www.bbwexchange.com/wireless_isp/)
  2 Wireless
        Communications Association International Conference, June 12-15,
        2007
  3 Pew
        Internet & American Life Project, Home Broadband Adoption
        2007




-1-


·
            strategic
                acquisitions of wireless broadband companies that complement its
                market
                footprint;




·
            contiguous
                market deployments combined with organic growth within KeyOn’s existing
                footprint;




·
            offering
                its subscribers bundled and additional services such as satellite
                video
                and VoIP to further increase average revenue per user;
                and




·
            the
                strategic introduction of next generation networks, including Worldwide
                Interoperability for Microwave Acess ("WiMAX"), that also provide
                advanced
                services such as nomadic or mobile data and video.




**Subscriber
      Growth Through Acquisitions**




KeyOn
      believes it can take advantage of growing subscriber and operations scale by
      continuing to acquire wireless broadband subscriber bases together with their
      network assets, thus creating a highly profitable and valuable communications
      company. The Company has completed four acquisitions in less than three years.
      The wireless broadband industry is highly fragmented, comprised of thousands
      of
      potential acquisition targets in and around the Company’s market areas. These
      targets represent an opportunity to grow revenues and materially expand the
      Company’s earnings.




Upon
      the
      completion of acquisitions, the Company believes that it can derive higher
      margins than previous ownership through the elimination of duplicative overhead
      costs. KeyOn is able to realize these synergies in the integration of
      acquisition targets through:




·
            Centralizing
                operations and customer support into KeyOn’s NOC in Omaha which enables
                remote monitoring and diagnostics;




·
            Generating
                scale economies in purchasing termination/access loops and capital
                equipment;




·
            Rationalizing
                expenses in areas of management, network and customer support and
                general
                and administrative; and




·
            Leveraging
                KeyOn’s proven marketing initiatives, such as its network of resellers
                and
                targeted direct marketing, to quickly increase the rate of subscriber
                and
                revenue growth.




**Current
      Markets Served and Organic Growth**




KeyOn
      operates primarily in markets with populations of less than 250,000. The Company
      currently offers its broadband services to residential and business subscribers
      in a market footprint covering over 50,000 square miles in the following 11
      Western and Midwestern states: Colorado, Idaho, Illinois, Indiana, Iowa, Kansas,
      Nebraska, Nevada, Ohio, South Dakota and Texas. The Company estimates its
      existing footprint covers approximately 2.4 million people, as well as small
      to
      mid-sized businesses in these areas.





KeyOn
      believes marketing efforts at the local level create a competitive advantage
      by
      creating awareness of its brand while strengthening the connection to its
      communities. The Company’s multi-pronged sales and marketing approach leverages
      its local ties and presence and focuses on establishing strong distribution
      channels in each market. Direct marketing efforts include print and door hangers
      in addition to working with businesses and community groups at the local level
      to promote brand and service awareness. Additionally, the Company works with
      distribution partners, such as satellite television providers, to offer bundled
      services within its markets. KeyOn believes there is strong potential in
      distribution partnerships with satellite television retailers in rural markets
      as direct broadcast satellite penetration is highest in rural areas. 4




4 US
        Government Accountability Office report GAO-05-257 dated April
        2005




-2-




Since
      the
      beginning of 2006, the Company has sequentially increased its total subscriber
      base every month and experienced a compound annualized growth rate of 37.5%,
      which excludes the impact from acquired subscribers. Additionally, the Company
      has achieved a low average monthly churn of approximately 2% during the same
      period, which the Company believes is a combined result of its subscribers’
satisfaction with its service and the lack of other competing services in the
      Company’s markets.




**Broadband
      Internet Access Industry**




Internet
      use has become bifurcated between dial-up access users, who use standard
      telephone lines with service speeds of 56 kbps or less, and broadband Internet
      access users. Broadband Internet access, which the Federal Communications
      Commission defines as service speed greater than 200 kbps in at least one
      direction, has dramatically changed the way people use the Internet. With
      broadband, the functionality of the Internet has been significantly expanded
      to
      include wider entertainment choices, including streaming audio, downloadable
      music and video, greater business applications, including Voice Over Internet
      Protocol (“VoIP”) and video conferencing, and wider accessibility to information
      through Internet search. The United States residential broadband market is
      expected to grow at a compound annualized growth rate of 14% between 2006 and
      2010. 5




As
      of
      December 2007, there were approximately 61.8 million households in the United
      States that had broadband access to the Internet at home, a penetration rate
      of
      approximately 53%. This figure is up from 53.4 million households as of December
      2006, representing a 46% penetration rate, and represents an increase of 16%
      in
      one year. 6  Some of
      the largest increases in penetration were seen in market segments that
      traditionally had low penetration rates, such as those with household incomes
      of
      less than $30,000, those who had not completed high school and rural
      areas. 7  The
      Company believes that these growth statistics indicate that Internet use
      generally, and broadband specifically, is being considered a necessity rather
      than a luxury. Despite this growth in broadband, an estimated 12.3 million
      households, or 10% of all United States households, accessed the Internet using
      a dial-up or other narrowband connection, while an estimated 43.5 million
      households, or 37% of all United States households, 8  had no
      Internet connectivity at all, demonstrating that there still exists a sizeable
      market opportunity to deliver broadband access.




**Wireless
      Broadband Internet Access**




Wireless
      broadband Internet systems consist of a radio transmitter that sends a signal
      on
      a combination of radio channels to receivers located at or in homes and
      businesses. Point-to-multipoint wireless networks can cover wide geographic
      areas efficiently, providing the first available broadband Internet service,
      or
      the first competitive service, in many rural communities. Wireless broadband
      Internet networks can be roughly categorized based upon which wireless
      technology (e.g., standards or proprietary) they utilize and whether they
      utilize licensed or unlicensed spectrum.




The
      wireless broadband sector has begun a new stage of growth, fueled primarily
      by
      technology improvements and increased consumer demand. Demand for broadband
      has
      increased sharply due to new applications, a broader base of equipment vendors
      and software providers manufacturing mass-produced standards-based equipment
      which has led to a resurgence of the wireless broadband sector.




In
      addition to growing broadband demand, there has also been the rapid growth
      of
      mobile products, such as notebook computers and other handheld devices such
      as
      personal digital assistants, or PDAs. As purchases of laptops and other portable
      data devices continue to grow, consumers will increasingly look for more
      efficient and effective ways to access the Internet on those
      devices.





5 IDC's
        2006-2010 U.S. Broadband Services Forecast (September 2006)
  6 Wachovia
        Research report titled *Q4
        2007 State Of Video/Data/Phone Markets* dated
        March 3, 2008
  7Pew Internet & American Life Project, Home Broadband Adoption
        2007
  8 Wachovia
        Research report titled *Q4
        2007 State Of Video/Data/Phone Markets* dated
        March 3, 2008




-3-




**Rural
      Market Opportunity**




Within
      the United States, rural areas have an overall lower Internet penetration rate,
      and substantially less access to broadband, than the more densely populated
      urban and suburban areas. Although broadband adoption has experienced healthy
      growth in the past year, broadband penetration rates in rural markets trail
      the
      rest of the country. While urban and suburban markets have reached broadband
      penetration rates of 52% and 49%, respectively, rural market penetration totals
      only 31%. Importantly, rural market penetration grew 24% year over year, while
      urban and suburban growth rates slowed to 18% and 7%, respectively. 9  Consequently, the significant year over year growth is consistent with greater
      availability of broadband in rural markets, a trend that the Company believes
      is
      supported by many small, wireless broadband companies trying to serve the needs
      of their communities.




One
      of
      the primary reasons for the lagging penetration rate in rural areas is the
      lack
      of infrastructure or access to broadband, rather than less demand for a
      broadband connection. 10  Notably,
      overall Internet use in rural markets, regardless of the mode of connectivity,
      lagged the rest of the country by a much smaller gap, 11 percentage points
      or a
      60% to 71% margin. 11  KeyOn
      believes that this substantially lower penetration rate of broadband Internet,
      or commonly referred to as the "Digital Divide", demonstrates that most rural
      households with Internet access still utilize analog dial-up connections for
      Internet access. Availability is the key to closing this gap as just over
      one-third (38%) of rural adults have access to a broadband connection either
      at
      home or at work, versus more than 55% for urban and suburban
      residents. 12  As a
      result, the Company believes there is a significant market opportunity that
      it
      seeks to address which is not currently being met by traditional phone and
      cable
      providers.




The
      Company believes that the lower broadband penetration rate in rural versus
      urban
      and suburban areas is driven primarily by the technical limitations and high
      cost of providing broadband over terrestrial-based networks in less densely
      populated areas. DSL service suffers from distance limitations in less populated
      areas, and DSL equipment and cable plant upgrades both involve significant
      upfront capital to deploy their service that is rarely justified in less densely
      populated rural markets. As a result, there are still areas that will not be
      served by cable or DSL at any time in the near future. 13  These
      limitations have generally discouraged broadband deployments and have caused
      incumbent phone and cable companies to maintain high broadband Internet service
      prices in the small and rural markets where they do offer these services. Where
      broadband has been deployed, rural areas have experienced rapid growth in home
      broadband uptake, and in the past two years the gap between rural and non-rural
      in-home broadband adoption, though still substantial, has narrowed.




**Service
      Offerings**




*Broadband*




KeyOn
      provides broadband to homes and businesses for a flat monthly rate under service
      agreements for either annual or two-year contracts. These services are generally
      billed monthly, quarterly, semiannually or annually in advance.




*DISH
      Network*




KeyOn
      began offering video services as a reseller of DISH Network Corporation in
      November 2007. By selling and installing DISH Network video packages directly
      (as opposed to through its indirect dealer network) to its subscribers, KeyOn
      receives marketing dollars, installation and activation fees and a nominal
      monthly recurring revenue fee, provided the end-user remains a DISH customer
      for
      over one year. KeyOn does not collect any revenue directly from its end-users
      under the terms of this agreement.




9 Wachovia
        Research report titled *Q4
        2007 State Of Video/Data/Phone Markets* dated
        March 3, 2008
  10 United
        States Government Accountability Office, Telecommunications, May 2006 and
        Pew
        Internet & American Life Project, Home Broadband Adoption 2006
  11 Pew
        Internet & American Life Project, Home Broadband Adoption 2007
  12 Pew
        Internet & American Life Project, Home Broadband Adoption 2007
  13 Frost
        & Sullivan, Satellite and its Place Amongst Competing Broadband Technologies
        2005




-4-




*WiMAX
      Deployments*




KeyOn’s
      wireless broadband service today is provided to subscribers over primarily
      unlicensed spectrum in the 2.4 GHz band. The Company is in the process of
      introducing new network technologies, such as WiMAX, initially in the 3.65
      GHz
      spectrum band. WiMAX is an international network technology standard that
      provides efficient use of spectrum, interoperability of manufacturers'
      equipment, high-bandwidth throughput and self-installation by end users. The
      global WiMAX market opportunity for service revenue is expected to increase
      from
      $322 million in 2006 to approximately $26 billion by 2012, a compound annualized
      growth rate of approximately 108%. 14  Global
      WiMAX subscribers totaled 950,000 as of March 31, 2007 and is projected to
      surpass 54 million in 2012. 15




By
      using
      WiMAX-based equipment as an adjunct to its existing fixed-wireless networks,
      the
      Company expects to create a superior service offering, including nomadic and
      portable data and video services. The advantages of deploying WiMAX technology
      based on a global standard, include higher data speeds, greater spectral
      efficiency, advanced nomadic services with self-installation features, global
      economies of scale and forward compatibility with the mobile WiMAX (802.16
      (e)
      standard). In addition, with the certification of network standards and profiles
      to standards, network equipment costs should continue to decrease. The resulting
      interoperability of hardware will not only accelerate downward pricing, but
      will
      also afford service providers greater vendor selection and potential roaming
      revenues.




**Competitive
      Strengths**




KeyOn
      has
      become a leader in the wireless broadband industry through a demonstrated track
      record of acquiring and integrating acquisitions and the rapid organic growth
      of
      its subscriber base. The Company has achieved its status as the largest rural
      wireless broadband provider due to the following advantages:




·
                  *Proven
                      business model with significant growth potential.*KeyOn has achieved significant growth in the past four years
                      through a
                      strong focus on acquisitions combined with organic growth.
                      The Company has
                      completed four acquisitions in less than three years and is
                      actively
                      seeking additional acquisition candidates. KeyOn’s subscribers have
                      increased from 996 at the beginning of January 2004 to over
                      16,500 as of
                      December 31, 2007, representing a CAGR of 102%.




·
              *Targeting
                  underserved rural markets.*KeyOn operates in 11 states, with networks covering over 50,000
                  square
                  miles and approximately 2.4 million people as well as small to
                  mid-sized
                  business. The Company offers simple, reliable and affordable broadband
                  in
                  rural markets, which have been underserved by traditional communications
                  companies that compares favorably to the broadband access offerings
                  of
                  telephone and cable companies. The Company believes these underserved
                  market segments are among the fastest growing segments within the
                  broadband services market in the United States. In rural markets,
                  only 31%
                  of households had broadband connections as opposed to 52% in urban
                  49% in
                  suburban markets.16




·
              *Disciplined
                  acquisition strategy.*KeyOn pursues acquisition targets with less than 10,000 subscribers
                  that
                  are cash flow neutral to cash flow positive. As a result, these
                  acquisitions are typically accretive on an operating basis shortly
                  after
                  closing as KeyOn can quickly eliminate duplicative overhead costs
                  including management, customer service personnel and facilities
                  and
                  operating lease expenses. KeyOn’s proven operating and marketing
                  strategies, such as the use of third-party resellers and localized
                  direct
                  marketing allow the Company to quickly increase the rate of subscriber
                  and
                  revenue growth for acquired companies.


·
                  *Significant
                      pipeline of acquisition targets.*The
                      Company is currently pursuing several acquisitions in various
                      stages.
                      These targets range in size from approximately one thousand
                      to several
                      thousand subscribers and are based in or adjacent to areas in which
                      KeyOn currently operates.




·
            *Highly
                leveragable business model.*KeyOn’s fixed operating expenses consist primarily of tower rent, circuits
                to transport data and Internet termination bandwidth which KeyOn
                believes
                are generally declining costs over time. In addition, the bulk of
                KeyOn’s
                capital costs are success-based as it incurs capital expenditures
                only
                when the Company adds subscribers and receives the associated revenues.
                The payback on incremental capital expenditures is less than one
                year. As
                a result of KeyOn’s recurring subscription-based business model, a
                relatively small number of subscribers are required to cover its
                fixed
                operating costs. As such, the Company believes that it derives higher
                margins as it adds subscribers and provides additional services while
                keeping operating expenses fixed.


14 Maravedis
        Telecom Market Research and Analysis, June 20, 2007. Annual revenue determined
        by multiplying the reported WiMAX average revenue per user (ARPU) by the
        projected number of subscribers. This monthly revenue figure was then multiplied
        by 12
  15 Senza
        Fili Consulting, June 19, 2007
  16 Pew
        Internet & American Life Project, Home Broadband Adoption 2007
  -5-


·
              *Highly
                  experienced management team.*KeyOn’s management team has been actively involved in the
                  telecommunications industry, with a focus on wireless voice/data,
                  for an
                  aggregate total of over 65 years. The Company’s founders have built,
                  operated or helped finance numerous wireless and fiber optic networks.
                  Current management has a wide range of experience in the
                  telecommunications industry, including overseeing the construction
                  and
                  management of a regional cellular network and a nationwide paging
                  network,
                  participating in the financing and operations of international
                  fiber optic
                  networks, successfully integrating wireless telecommunications
                  acquisitions and financing early stage technologies, equipment
                  and
                  chip-set companies. At KeyOn, the management team has demonstrated
                  the
                  ability to successfully identify and integrate acquisitions, while
                  continuing to grow the business
                  organically.




·
            *Scalable
                technology platform.*The Company’s approach to back-office operations has been instrumental in
                its ability to successfully manage markets across disparate geographies
                and to profitably integrate acquisitions. KeyOn’s OSS handles all network
                management, diagnostic and technical support functions, and subscriber
                service related tasks, such as subscriber pre-qualification, order
                entry,
                scheduling and trouble ticket management. To maintain flexible, customized
                systems and reduce cost, whenever feasible the Company incorporates
                open
                source solutions into the commercially available software it uses.
                The
                visibility that these systems provide into the network and customer
                premise equipment allows the Company to reduce local overhead as
                well as
                centralize technical and support functions.




**Competition**




In
      the
      United States, the broadband access market has evolved as a duoply between
      cable
      and telephone companies. KeyOn believes that rural markets have much less
      competition than urban markets, given the relatively high cost to deploy
      traditional networks in less densely populated areas. However, KeyOn is not
      the
      only provider of broadband services in its markets. KeyOn faces competition
      from
      cable operators that offer broadband over cable networks, incumbent local
      exchange carriers, or ILECs, that offer DSL, satellite operators, wireless
      broadband service providers and mobile cellular operators. KeyOn competes with
      these companies on the basis of availability, price, speed and portability
      of
      the services. Specifically, the Company’s competitors include the
      following:




*Incumbent
      Local Exchange Carrier and Cable Companies*




KeyOn
      faces competition from ILECs in the small markets in the Midwest and West.
      In
      particular, the Company generally faces competition from companies such as
      Qwest
      Communications International Inc., AT&T Inc. and smaller regional or local
      phone companies. If the market has a significant population density (35,000
      -
      50,000+), the larger ILECs have typically deployed DSL in the one central office
      (CO) in the market. DSL deployments by smaller regional and local phone
      companies vary; however, the Company believes that all providers of DSL are
      restricted by DSL's physical distance limitations.




-6-




Cable
      operators typically deploy a hybrid fiber-COAX in order to offer broadband
      through a cable modem service. In markets with a population of 35,000-50,000
      or
      more, cable modem service is often available to most households, with somewhat
      less availability to businesses. In these markets, KeyOn competes against large
      cable providers such as Cox Communications, Inc. and smaller, regional cable
      providers, such as Cable One, Inc. and Bresnan Communications, LLC.




*Wireless
      Broadband Service Providers*




KeyOn
      also faces competition from other wireless broadband providers that use
      unlicensed or licensed spectrum. For example, there may be a locally owned
      "mom
      and pop" wireless broadband operator present in the market offering local
      services. The Company believes these operators lack the operating scale and
      thus
      are burdened with significant costs from or inefficient operations.




Wireless
      broadband competition may also come from local governments, universities, and
      municipalities that provide "WiFi" networks over unlicensed spectrum. These
      services are occasionally characterized as public-private partnerships and
      may
      be partially subsidized. In some cases, they are offered to subscribers at
      no
      cost at all.




In
      addition, Sprint Nextel Corporation, which holds 2.5 GHz licenses throughout
      much of the United States, has announced plans to invest up to $5 billion in
      building out a nationwide WiMAX-based network. Sprint Nextel Corporation has
      initiated WiMAX pre-commercial service in the Chicago, Baltimore and Washington,
      D.C. areas, with commercial service in a number of markets planned in 2008.
      Sprint Nextel Corporation intends to provide services under the "Xohm" brand.
      Clearwire Corporation also offers wireless high speed Internet access utilizing
      pre-WiMAX-based technology in 46 markets in the United States. In terms of
      both
      domestic deployments and subscribers, Clearwire Corporation is the largest
      company providing advanced data services. Both Sprint Nextel Corporation and
      Clearwire Corporation are focused on larger population centers, underscoring
      the
      significant market opportunity available to the Company in serving underserved
      rural markets.




*Satellite*




Satellite
      providers such as WildBlue Communications, Inc. and Hughes Network Systems,
      LLC
      also offer broadband data services in rural and underserved markets. Although
      satellite has the capability to serve a large geographic area, the service
      levels can be impaired by the distance the signal travels to and from the
      satellite. Communication delays, or latency, can significantly inhibit satellite
      providers' ability to offer advanced services, such as VoIP and online gaming.
      According to research conducted by Pike & Fischer, satellite broadband is
      projected to serve only 1.3 million households by 2012, up from 600,000
      subscribers currently being served by satellite broadband. Satellite remains
      a
      broadband access service of last resort, due to its inherent latency and high
      price for equipment and service. KeyOn believes its services can be provided
      to
      its target customers more efficiently and at more competitive prices than
      satellite broadband services and as a result, it does not compete effectively
      with fixed wireless broadband.




*Cellular
      and PCS Services*




Many
      of
      the major mobile wireless carriers offer higher data rate access plans, but
      these plans are either restricted to larger urban and suburban markets or the
      actual data transfer rate can be significantly less than KeyOn’s fixed broadband
      services. However, wireless carriers continue to expand their network coverage,
      allowing advanced data services to be offered to a broader subscriber base.
      Also, wireless carriers have continued to leverage data services by offering
      personal computer data card devices and providing customers with wireless access
      to the Internet. KeyOn believes that these nationwide players will continue
      to
      focus on larger metropolitan markets, and will continue to be limited in
      bandwidth relative to the fixed wireless providers.




-7-




*Other*




Other
      emerging technologies may also seek to enter the broadband services market.
      For
      example, power and distribution companies have attempted to provide broadband
      services over their existing power lines, though without much commercial
      success. It is possible that over time with the further development of
      technology, broadband over power lines may prove to be a means of providing
      competitive broadband services. The 700 MHz auction may also provide existing
      service providers, such as Verizon and AT&T, and potentially new market
      entrants, such as Google Inc., an opportunity to offer additional data services.
      However, the 700 MHz spectrum will not be cleared before February 2009 and
      the
      WiMAX and long-term evolution (“LTE”) technology standards for 700 MHz are not
      likely to be available for deployment for several years.




**Corporate
      History**




The
      Company was organized in the State of Delaware on September 9, 2004 under the
      name Grant Enterprises, Inc., and became a public shell company, as defined
      by
      the Securities and Exchange Commission. On August 9, 2007, a wholly-owned
      subsidiary of the Company merged with and into a private company, KeyOn
      Communications Inc., with KeyOn Communications Inc. being the surviving company.
      Upon closing of the merger, the Company discontinued its former business and
      succeeded to the business of KeyOn Communications Inc. as its sole line of
      business. At the same time, the Company also changed its name from Grant
      Enterprises, Inc. to KeyOn Communications Holdings, Inc.




**Regulatory
      Matters**




Wireless
      broadband services are subject to regulation by the Federal Communications
      Commission. At the federal level, the Federal Communications Commission has
      jurisdiction over wireless transmissions over the electromagnetic spectrum,
      all
      interstate and foreign telecommunications services, and many aspects of
      intrastate telecommunications. State regulatory commissions have jurisdiction
      over many aspects of intrastate telecommunications. Municipalities may regulate
      limited aspects of KeyOn’s business by, for example, imposing zoning
      requirements and requiring installation permits.




*Telecommunications
      Regulation*




KeyOn’s
      wireless broadband systems can be used to provide Internet access service,
      interconnected VoIP service and virtual private networks, or VPNs. The Federal
      Communications Commission has classified Internet access service as an
      interstate information services that is subject to regulation under Title I
      of
      the Communications Act of 1934, as amended, or the Communications Act.
      Accordingly, most regulations that apply to telephone companies and other common
      carriers under Title II of the Communications Act do not apply to KeyOn’s
      wireless broadband Internet access service. For example, KeyOn is not currently
      required to contribute a percentage of gross revenues from its Internet access
      services to universal service funds used to support local telephone service
      and
      advanced telecommunications services for schools, libraries and rural health
      care facilities, or "USF Fees."




The
      Federal Communications Commission has not yet classified interconnected VoIP
      service as an information service regulated under Title I of the Communications
      Act, or as a telecommunications service regulated under Title II of the
      Communications Act. However, the Federal Communications Commission has
      classified interconnected VoIP service as interstate telecommunications for
      purposes of USF fees. As a result, KeyOn must pay USF Fees on the gross revenues
      KeyOn derives from providing interconnected VoIP service to end users. KeyOn
      is
      not required to pay USF fees on the gross revenues it derives from providing
      interstate telecommunications to other carriers, such as interconnected VoIP
      service providers, where KeyOn acts as a carrier's carrier, provided that KeyOn
      verifies that the other carrier is registered to pay and is paying USF fees
      on
      its service to end users. The proposed USF fee rate for the second quarter
      of
      2008 is 11.3% of gross revenues derived from the provision of interstate
      telecommunications to end users. Beginning in late 2007, similar fees used
      to
      support interstate telecommunications relay service providers also apply to
      interconnected VoIP providers as well. At the present time, VoIP is not a
      material contributor to KeyOn’s revenues.




-8-




KeyOn
      is
      not required to file tariffs with the Federal Communications Commission, setting
      forth the rates, terms, and conditions of its Internet access service. The
      Federal Communications Commission, however, is currently considering whether
      to
      impose various consumer protection obligations, similar to Title II obligations,
      on wireless broadband Internet access providers. These requirements may include
      obligations related to truth-in-billing, slamming, service discontinuance,
      customer proprietary network information and federal universal service funds
      mechanisms. Internet access providers are currently subject to generally
      applicable state consumer protection laws enforced by state Attorneys General
      and general Federal Trade Commission consumer protection rules.




The
      Federal Communications Commission has not yet classified interconnected VoIP
      services as information services or telecommunications services under the
      Communications Act. In November 2004, the Federal Communications Commission
      determined that, regardless of their regulatory classification, certain
      interconnected VoIP services qualify as interstate telecommunications subject
      to
      the jurisdiction of the Federal Communications Commission. The Federal
      Communications Commission preempted state regulations that address such issues
      as entry certification, tariffing, and enhanced 911 requirements.




The
      Federal Communications Commission is conducting a comprehensive proceeding
      to
      address all types of Internet protocol-enabled services, including
      interconnected VoIP service, and to consider what regulations, if any, should
      be
      applied to such services, as use of broadband services becomes more widespread.
      In June 2005, the Federal Communications Commission adopted the first set of
      regulations in this comprehensive Internet protocol-enabled proceeding, imposing
      enhanced 911-related requirements on interconnected VoIP service providers
      as a
      condition of offering such service to consumers. The Federal Communications
      Commission defined "interconnected VoIP service" as voice service that:




·
            enables
                real-time, two-way voice communications;




·
            requires
                a broadband connection from the user's location;




·
            requires
                Internet protocol-compatible customer premises equipment; and




·
            permits
                users generally to receive calls that originate on and terminate
                to the
                public switched telephone network.




Effective
      November 28, 2005, all interconnected VoIP providers are required to transmit,
      through the wireline, all 911 calls, as well as a call-back number and the
      caller's registered location for each call, to the appropriate public safety
      answering point that is capable of receiving and processing that information.
      In
      addition, all interconnected VoIP providers must have a process to obtain a
      subscriber's registered location prior to activating service, and must allow
      their subscribers to update their registered location immediately if the
      subscriber moves the service to a different location. Interconnected VoIP
      providers are also required to prominently and in plain English advise
      subscribers of the manner in which dialing 911 using VoIP service is different
      from dialing 911 service using traditional telephone service, and to provide
      warning labels with VoIP equipment.




On
      August
      5, 2005, the Federal Communications Commission adopted an Order finding that
      both facilities-based broadband Internet access providers and interconnected
      VoIP providers are subject to the Communications Assistance for Law Enforcement
      Act, or CALEA, which requires service providers covered by that statute to
      build
      certain law enforcement surveillance assistance capabilities into their
      communications networks. The Federal Communications Commission required
      facilities-based broadband Internet access providers and interconnected VoIP
      providers to comply with CALEA requirements by May 14, 2007.




On
      May 3,
      2006, the Federal Communications Commission adopted an additional Order
      addressing CALEA compliance obligations of these providers. In that order,
      the
      Federal Communications Commission:




·
            affirmed
                the May 14, 2007 compliance deadline;




-9-




·
            indicated
                compliance standards are to be developed by the industry within the
                telecommunications standards-setting bodies working together with
                law
                enforcement;




·
            permitted
                the use of certain third parties to satisfy CALEA compliance obligations;




·
            restricted
                the availability of compliance extensions;




·
            concluded
                that facilities-based broadband Internet access providers and
                interconnected VoIP providers are responsible for any CALEA development
                and implementation costs;




·
            declared
                that the Federal Communications Commission may pursue enforcement
                action,
                in addition to remedies available through the courts, against any
                non-compliant provider; and




·
            adopted
                interim progress report filing requirements.




On
      June
      27, 2006, the Federal Communications Commission released an Order addressing
      USF
      fee obligations of interconnected VoIP service providers. The Federal
      Communications Commission amended the USF rules to require providers of
      interconnected VoIP service to contribute to the USF under the existing
      contribution methodology. Interconnected VoIP providers must report and
      contribute to the USF on all their interstate and international end-user
      telecommunications revenues, using one of three options:




·
            they
                may use the interim safe harbor established in the June, 2006 Order,
                under
                which 64.9% of their traffic is presumed to be interstate or
                international;




·
            they
                may report based on their actual interstate telecommunications revenues;
                or




·
            they
                may rely on traffic studies subject to certain conditions.




All
      interconnected VoIP providers must file a Federal Communications Commission
      Form
      499-A with the Federal Communications Commission for registration purposes
      even
      if they qualify for the de minimis exemption for contribution purposes.
      Interconnected VoIP service also may be subject to state and local taxation.




In
      a
      decision released April 2, 2007, the Federal Communications Commission
      determined that interconnected VoIP providers should be subject to its rules
      implementing Section 222(c) of the Communications Act, which governs
      telecommunications carriers' use of customer proprietary network information,
      or
      CPNI. CPNI is customer-specific information derived from the provision of
      telecommunications service, including call detail and caller location
      information. Federal Communications Commission rules permit carriers and
      interconnected VoIP providers to use CPNI to market the services they already
      provide to customers, and for limited service-related and fraud prevention
      purposes, without prior customer approval. All other uses or third party
      disclosure of CPNI generally require prior customer approval, as follows:
      service providers, either themselves or through agents, may use CPNI to market
      other communications-related services through "opt-out" consent such that the
      service provider may use CPNI unless the customer affirmatively instructs the
      service provider otherwise; all other use or third party disclosure of CPNI,
      including any use of location information, requires "opt-in" approval whereby
      a
      service provider may not use or disclose CPNI without the customer's express
      affirmative permission. The Federal Communications Commission rules also require
      that carriers and interconnected VoIP providers implement personnel, network
      and
      related safeguards to protect CPNI from unauthorized third party disclosure.




In
      a
      decision released on April 21, 2004, the Federal Communications Commission
      determined that interconnected VoIP calls that connect to the public switched
      telephone network, or PSTN, at both ends of the call are subject to the same
      access charges as a circuit switched call. Interconnected VoIP calls that
      connect to the PSTN at one end of the call are subject to either a terminating
      or originating access charge, depending upon which end of the call connects
      to
      the PSTN.




-10-




Broadband
      Internet-related and Internet protocol-services regulatory policies are
      continuing to develop, and it is possible that KeyOn’s broadband Internet access
      and VoIP services could be subject to additional regulations in the future.
      The
      extent of the regulations that will ultimately be applicable to these services
      and the impact of such regulations on the ability of providers to compete are
      currently unknown.




*Spectrum
      Regulation*




The
      Federal Communications Commission routinely reviews its spectrum policies and
      may change its position on spectrum allocations from time to time. On June
      7,
      2007, the Federal Communications Commission issued a Memorandum Opinion and
      Order regarding rules for the 3650-3700 MHz spectrum band. Currently, this
      band
      is allocated for use to an unlimited number of operators pursuant to a link
      registration process. Similarly, the Federal Communications Commission has
      modified regulation in the 2.5 GHz BRS/EBS spectrum band and, from time to
      time,
      can modify or change spectrum allocations pursuant to rulemaking proceedings.
      KeyOn believes that the Federal Communications Commission is committed to
      allocating spectrum to support wireless broadband deployment throughout the
      United States and will continue to modify its regulations to foster such
      deployment, which will help the Company implement it’s existing and future
      business plans.




*Internet
      Taxation*




The
      Internet Tax Non-Discrimination Act, which was passed by Congress in November
      2004 and signed into law in December 2004, renewed and extended until November
      2007, a moratorium on taxes on Internet access and multiple, discriminatory
      taxes on electronic commerce. This moratorium had previously expired in November
      2003, and as with the preceding Internet Tax Freedom Act, “grandfathered” states
      that taxed Internet access prior to October 1998 to allow them to continue
      to do
      so. Certain states have enacted various taxes on Internet access or electronic
      commerce, and selected states’ taxes are being contested on a variety of bases.
      However, state tax laws may not be successfully contested and future state
      and
      federal laws imposing taxes or other regulations on Internet access and
      electronic commerce may arise, any of which could increase the cost of providing
      Internet services, which could, in turn, materially adversely affect KeyOn’s
      business.




**Employees**




As
      of
      March 31, 2008, the Company had 65 full-time employees. Of these employees,
      approximately, 19 serve in customer service and support positions, 26 serve
      as
      network engineers and field technicians, 10 serve in accounting and
      administrative positions and 6 serve in sales and marketing positions. None
      of
      KeyOn’s employees is subject to a collective bargaining agreement. The Company
      considers its relationship with its employees to be good.




**Item
      2. Description of Property**




The
      Company leases approximately 10,000 square feet of office space in Omaha,
      Nebraska for $8,222 per month, plus applicable taxes, subject to adjustments
      in
      accordance with consumer price index fluctuations. The current lease term
      expires on April 1, 2012, at which time KeyOn has the option to extend the
      lease
      for an additional five-year period. This facility serves as the Company’s
      corporate headquarters.




The
      Company leases approximately 3,200 square feet of office space for a field
      office in Las Vegas, Nevada for approximately $3,964 per month. The current
      lease term expires on April 30, 2010.




The
      Company leases approximately 1,350 square feet of office space for a field
      office in Pocatello, Idaho for $900 per month. The current lease term expires
      on
      February 28, 2009.




The
      Company leases approximately 2,000 square feet of office space for a field
      office in Idaho Falls, Idaho for $720 per month. The current lease term expires
      on March 31, 2008, at which time KeyOn will extend the lease for one additional
      one-year period.




-11-




The
      Company leases approximately 1,200 square feet of office space for a field
      office in Grand Junction, Colorado for $710 per month on a month-to-month
      basis.




The
      Company leases approximately 2,400 square feet of office space for a field
      office in Centerville, Iowa for approximately $800 per month. The current lease
      term expires on July 31, 2010.




The
      Company leases approximately 1,200 square feet of office space for a field
      office in Wolfforth, Texas for $525 per month on a month-to-month
      basis.




KeyOn
      believes that its current facilities are adequate for its immediate and
      near-term needs. Additional space may be required as the Company expands its
      activities. The Company does not currently foresee any significant difficulties
      in obtaining any required additional facilities. In the opinion of the
      management, each of its properties is adequately covered by
      insurance.




**Item
      3. Legal Proceedings**




To
      the
      Company’s knowledge, except as described below, no legal proceedings, government
      actions, administrative actions, investigations or claims are currently pending
      against KeyOn or involve KeyOn that, in the opinion of the Company’s management,
      could reasonably be expected to have a material adverse effect on the Company’s
      business and financial condition.




On
      March
      9, 2006, Ajilon Communications, LLC filed a complaint in the District Court
      in
      Clark County, Nevada, against KeyOn Communications, LLC, a wholly owned
      subsidiary of KeyOn Communications, Inc., seeking approximately $104,000 in
      unpaid invoices. On August 23, 2007, KeyOn Communications, LLC filed a counter
      claim against Ajilon Communications, LLC seeking unspecified damages for breach
      of contract and fraud. With respect to this suit, it has been stipulated that
      from March 2005 through August 2005, Ajilon Communications, LLC performed
      installation and technical support services for KeyOn Communications, LLC.
      KeyOn
      Communications, LLC, however, has alleged that it was fraudulently billed for
      these services by Ajilon Communications, LLC and that the work contracted for
      was not properly completed. The parties have commenced discovery and are
      currently in settlement discussions.




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




On
      October 23, 2007, stockholders holding 4,600,210 shares of the Company’s common
      stock, or 56%, approved, by written consent, a 1-for-2 reverse stock split
      of
      the Company’s common stock.




-12-





**PART
      II**




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




From
      August 23, 2007 through November 1, 2007, KeyOn’s common stock was quoted on the
      OTC Bulletin Board under the symbol KYCS.OB, and since November 2, 2007 KeyOn’s
      common stock has been quoted on the OTC Bulletin Board under the symbol KEYO.OB.
      Prior to August 23, 2007, there was no active market for KeyOn’s common stock.
      The following table sets forth the high and low bid prices for the Company’s
      common stock for the periods indicated, as reported by the OTC Bulletin Board.
      The quotations reflect inter-dealer prices, without retail mark-up, mark-down
      or
      commission, and may not represent actual transactions.




**Quarter
                Ended**
            
            **High**
            
            **Low**September
                30, 2007 (from August 23, 2007)
            
            $
            8.50
            
            $
            6.60December
                31, 2007
            
            $
            16.00
            
            $
            4.00




The
      last
      reported sales price of KeyOn’s common stock on the OTC Bulletin Board on March
      28, 2008, was $2.75 per share. As of March 31, 2008, there were approximately
      110 holders of record of the Company’s common stock.




The
      Company has neither paid nor declared dividends on its common stock since its
      inception and does not plan to pay dividends on its common stock in the
      foreseeable future. The Company expects that any earnings which it may realize
      will be retained to finance its growth. There can be no assurance that the
      Company will ever pay dividends on its common stock. The Company’s dividend
      policy with respect to the common stock is within the discretion of the Board
      of
      Directors and its policy with respect to dividends in the future will depend
      on
      numerous factors, including the Company’s earnings, financial requirements and
      general business conditions. Notwithstanding the foregoing, pursuant to that
      certain Business Loan Agreement, dated February 4, 2008, between the
      Company and Sun West Bank, the Company is prohibited from paying any cash
      dividends on the Company’s stock until the Company’s obligations under this
      Business Loan Agreement have been satisfied in full.




**Equity
      Compensation Plan Information**




The
      following table provides information as of December 31, 2007 about compensation
      plans under which shares of the Company’s common stock may be issued to
      employees, consultants or members of the Company’s Board of Directors upon
      exercise of options, warrants or rights under all of the Company’s existing
      equity compensation plans. The Company’s existing equity compensation plans
      consist of the Company’s 2007 Incentive Stock and Awards Plan in which all of
      the Company’s employees and directors are eligible to participate.




**Plan
                Category**
            
            (a)
              Number
                of Securities to be Issued Upon Exercise of Outstanding Options,
                Warrants
                and Rights
            
            (b)
              Weighted-Average
                Exercise Price of Outstanding Options, Warrants and Rights
            
            (c)
              Number
                of Securities Remaining Available for Future Issuance Under Equity
                Compensation Plans (Excluding Securities Reflected in Column
                (a))Equity
                compensation plans approved by stockholders
            
            
            1,086,542
            
            $
            4.11
            
            
            512,133Equity
                compensation plans not approved by stockholders
            
            
            -
            
            
            -
            
            
            -All
                plans
            
            
            1,086,542
            
            $
            4.11
            
            
            512,133




-13-




**Item
      6. Management’s Discussion and Analysis or Plan of
      Operation**




**Recent
      Events**




Prior
      to
      August 9, 2007, the Company was a public shell company, as defined by the
      Securities and Exchange Commission, without material assets or activities.
      On
      August 9, 2007, the Company completed a reverse merger, pursuant to which a
      wholly-owned subsidiary of its merged with and into a private company, KeyOn
      Communications Inc., with such private company being the surviving company.
      In
      connection with this reverse merger, the Company discontinued its former
      business and succeeded to the business of KeyOn Communications Inc. as its
      sole
      line of business. For financial reporting purposes, KeyOn Communications Inc.,
      and not the Company, is considered the accounting acquiror. Accordingly, the
      historical financial statements presented and the discussion of financial
      condition and results of operations herein are those of KeyOn Communications
      Inc. and do not include the Company’s historical financial results. All costs
      associated with the reverse merger, other than financing related costs in
      connection with the simultaneous sale of $2.2 million of units consisting of
      common stock and warrants, were expensed as incurred.




**Overview**




The
      Company provides wireless broadband services primarily to rural and other
      underserved markets under the “KeyOn”, “SpeedNet”, and “SIRIS” brands. The
      Company offers its broadband services along with VoIP services to both
      residential and business subscribers. In October 2007, the Company acquired
      substantially all of the assets of MicroLnk, LLC, a provider of wireless
      broadband services to rural communities in Nebraska and Ohio, headquartered
      in
      Lincoln, Nebraska. The Company currently operates the MicroLnk LLC assets under
      the “SpeedNet” brand. In January 2007, the Company acquired substantially all of
      the assets of SpeedNet Services, Inc., a leading provider of fixed wireless
      broadband services to non-metropolitan communities and rural areas in the
      central United States. Currently, the Company’s markets are located in the
      following 11 Western and Midwestern states: Colorado, Idaho, Illinois, Indiana,
      Iowa, Kansas, Nebraska, Nevada, Ohio, South Dakota, and Texas. On June 1, 2006,
      the Company acquired the assets of an operational market located in Pocatello,
      Idaho for common stock. The Pocatello market was acquired from Freemont
      Broadband, LLC, a subsidiary of Fairpoint Communications, Inc., a leading rural
      local exchange carrier. The Company’s results for the year ended 2007 include an
      entire year of operations of the Pocatello market, eleven months of operations
      of SpeedNet Services, Inc., and two full months of operations from MicroLnk,
      LLC.




**Characteristics
      of the Company's Revenues and Operating Costs and Expenses**




The
      Company offers its services under annual or two-year service agreements.
      These services are generally billed monthly, quarterly, semiannually or annually
      in advance. Payments received in advance for subscriptions are deferred and
      recognized as the services are provided. Service initiation fees are recognized
      at the time of installation.




Operating
      costs and expenses consist of payroll and related expenses, network operating
      costs, marketing and advertising, professional fees, installation expense and
      general and administrative expenses. Payroll expenses consist of personnel
      costs, including salaries, benefits, employer taxes and bonuses across the
      Company’s functional areas: executive, customer support, engineering, accounting
      and billing, marketing, and local market operational staff. Some of the
      Company’s markets utilize third party contractors for installations and this
      expense is classified as installation costs. In contrast, the Company’s other
      markets employ in-house personnel and their wages are captured as payroll
      expenses.




-14-




Network
      operating costs are comprised of costs directly associated with providing the
      Company’s services including tower rent, circuits to transport data to the
      Internet termination point and Internet termination bandwidth.




Marketing
      and advertising expenses primarily consist of direct marketing and advertising
      costs. Professional fees relate to legal, accounting and consulting and
      recruiting resources that the Company utilizes periodically in the normal course
      of doing business. General and administrative expenses primarily consist of
      the
      support costs of the Company’s operations, such as costs related to office
      leases, insurance, travel and entertainment, banking and credit card fees,
      taxes
      and vehicle leases.




**Results
      of Operations**




*Year
      Ended December 31, 2007 Compared to the Year Ended December 31, 2006*




*Revenues* .  During
      the year ended December 31, 2007, the Company recognized revenues of $7,185,433
      compared to revenues of $2,430,829 during the year ended December 31, 2006,
      representing an increase of approximately 196%. This increase was primarily
      the
      result of the Company’s customer growth associated with the Company’s
      acquisition of Pocatello, SpeedNet Services, Inc. and MicroLnk, LLC, as well
      as
      organic customer growth. Organic growth accounted for 4% of this increase,
      and
      the acquisitions accounted for 96%.




*Operating
      Loss* .  Operating
      expenses, which consist of payroll, bonuses and taxes, depreciation and
      amortization, other general and administrative costs, network operating costs,
      marketing and advertising, installation expense, professional fees and stock
      based compensation totaled $14,153,088 for the year ended December 31, 2007,
      compared to $4,330,675 for the year ended December 31, 2006, representing an
      increase of approximately 227%. The Company’s acquisitions of Pocatello,
      SpeedNet Services, Inc. and MicroLnk, LLC, and the increased costs associated
      with running the resulting expanded operations account for 66% of the increase
      in expenses. Non-cash expenses; including stock-based and warrant compensation
      expense and stock granted for professional services accounted for $1,832,998,
      or
      19% of the increase in the operating loss. Of the remaining 15% of the increase,
      $1,480,500 was related to expenses incurred to support the Company’s growth and
      a planned equity offering during the fourth quarter of 2007. These expenses
      include additional salaries for new employees, legal and professional fees,
      and
      travel expenses. Normalized operating expenses without these one time and
      non-cash expenses would have been $10,839,444 for the year ended December 31,
      2007, as compared to $4,330,675 for the year ended December 31, 2006,
      representing an increase of approximately 150%. This adjusted change in
      operating expense is the result of the elimination of duplicative costs and
      efficiencies achieved through economies of scale generated from the acquisitions
      of Pocatello, SpeedNet Services, Inc. and MicroLnk, LLC. The Company’s actual
      operating loss margin decreased by 19 percentage points from a total operating
      loss $6,967,655 of the year ended December 31, 2007, as compared to a loss
      of
      $1,899,846 for the year ended December 31, 2006. By removing the one time and
      non-cash expenses of $3,313,498, the Company’s normalized operating loss margin
      improved by 27 percentage points from a total normalized operating loss
      $3,654,011 for the year ended December 31, 2007, as compared to a loss of
      $1,899,846 for the year ended December 31, 2006.




*Payroll,
      Bonuses and Taxes* .
      Payroll
      bonuses and taxes totaled $3,502,610 for the year ended December 31, 2007,
      compared to $1,329,654 for the year ended December 31, 2006, representing an
      increase of approximately 163%. This increase was primarily due to incremental
      variable staff additions, such as customer service representatives and
      installers needed to service the expanded customer base associated with the
      Company’s acquisition of Pocatello, SpeedNet Services, Inc. and MicroLnk, LLC.
      However, the Company eliminated duplicative overhead positions at the executive
      management level in the acquired businesses.




*Depreciation
      and Amortization* .  Depreciation
      and amortization expenses totaled $2,572,906 for the year ended December 31,
      2007, compared to $1,063,881 for the year ended December 31, 2006, representing
      an increase of approximately 142%. This increase was primarily due to the
      additional network assets and customer premise equipment acquired in connection
      with the Company’s acquisitions of Pocatello, SpeedNet Services, Inc. and
      MicroLnk, LLC. In addition, these were classified as asset purchases which
      resulted in a greater allocation of the purchase price to property, plant and
      equipment, resulting in higher depreciation charges.




-15-




*Other
      General and Administrative Expenses* .  Other
      general and administrative expenses totaled $1,749,643 for the year ended
      December 31, 2007, compared to $767,155 for the year ended December 31, 2006,
      representing an increase of approximately 128%. The majority of this increase,
      93%, is related to the Company’s growth due to the Pocatello, SpeedNet Services,
      Inc. and MicroLnk, LLC acquisitions. Costs relating to the Company’s reverse
      merger and planned equity offering lead to the Company incurring one-time costs
      such as travel, postage, printing and other general and administrative expenses
      which account for the remaining 7% of the increase.




*Network
      Operating Costs* .  Network
      operating costs, which consist of tower rent, local loop costs and Internet
      termination expense, totaled $2,523,601 for the year ended December 31, 2007,
      compared to $665,259 for the year ended December 31, 2006, representing an
      increase of approximately 279%. The additional network footprint and increased
      customer bases associated with the Company’s acquisitions of Pocatello, SpeedNet
      Services, Inc. and MicroLnk, LLC account for 95% of the change. The remaining
      5%
      increase in the Company’s network operating costs resulted from an organic
      increase in the Company’s customer base.




*Marketing
      and Advertising Expenses* .  Marketing
      and advertising expenses totaled $558,922 for the year ended December 31, 2007,
      as compared to $234,324 for the year ended December 31, 2006, representing
      an
      increase of approximately 139%. This increase was primarily due to the emphasis
      on organic growth across all of the Company’s markets. The Company now has the
      ability to market to a greater number of potential customers served by the
      additional network footprint associated with its acquisitions of Pocatello,
      SpeedNet Services, Inc. and MicroLnk, LLC. The Company’s marketing costs were 8%
      and 10% as a percentage of revenues for the year ended December 31, 2007 and
      December 31, 2006, respectively. This two percentage point improvement in
      marketing expenses was due to the Company’s ability to utilize marketing costs
      over a larger customer base.




*Installation
      Expense* .  Installation
      expense, which consists primarily of expenses associated with installation
      supplies, third party installation costs and transportation expenses related
      to
      customer installations, totaled $380,944 for the year ended December 31, 2007,
      as compared to $145,956 for the year ended December 31, 2006, representing
      an
      increase of approximately 161%. Installation volumes also increased by 67%
      year
      over year. The Company’s acquisition of SpeedNet Services, Inc. accounted for
      94% of the installation volume increase while organic growth accounted for
      6%
      during the year ended December 31, 2007. SpeedNet Services, Inc. utilizes
      third-party contractors for installations and this expense is classified as
      installation expenses. In contrast, in the Company’s other markets it utilizes
      employees and their wages are captured as payroll expenses.




*Professional
      Fees* .  Professional
      fees, which consist of legal, accounting, and other related expenses, totaled
      $1,257,569 for the year ended December 31, 2007, as compared to $111,387 for
      the
      year ended December 31, 2006, representing an increase of approximately 1029%.
      Specifically, legal fees and other professional fees related to the Company’s
      reverse merger and planned 2007 equity offering accounted for 80% of the
      increase during the year ended December 31, 2007. Non-cash investor relations
      services directly related to the reverse merger accounted for 17% of the
      increase in professional fees during the year ended December 31, 2007. All
      other
      professional fees increased by 3% year over year relating to the Company’s
      acquisitions of the Pocatello and SpeedNet Services, Inc.




*Stock-Based
      and Warrant Compensation* .  Stock-based
      and warrant compensation of $1,606,893 was expensed for the year ended December
      31, 2007, compared to $13,059 for the year ended December 31, 2006. Warrants
      were granted during the year ended December 31, 2007 as compensation for the
      guaranty of the Company’s $3 million loan with Sun West Bank. The expense
      recorded for these warrants granted was $901,566. Stock-based compensation
      for
      stock options issued under the Company’s option plan totaled $705,327 for the
      year ended December 31, 2007, compared to stock option expenses in the year
      ended December 31, 2006 of $13,059.




-16-




*Other
      Income and Expense* .
      The
      Company incurred other income and expense of $643,098 for the year ended
      December 31, 2007, compared to $306,528 for the year ended December 31, 2006,
      representing an increase of approximately 110%. 85% of the increase resulted
      from interest expenses associated with the Company’s term note and line of
      credit and 15% resulted from expenses related to certain capital leases for
      equipment that the Company entered into during the second half of 2006 and
      2007,
      respectively.




*Net
      Loss* .  The
      Company had a net loss of $7,610,753 for the year ended December 31, 2007,
      compared to a net loss of $2,206,374 for the year ended December 31, 2006,
      representing an increase of approximately 245%. The Company’s acquisition of
      Pocatello, SpeedNet Services, Inc. and MicroLnk, LLC led to increased costs
      associated with running the expanded operations, which accounted for 33% of
      the
      increase. 32% of the net loss increase was attributed to $1,832,998 of non-cash
      expenses, including stock-based and warrant compensation expense and stock
      granted for professional services. Finally, 27% of the increase resulted from
      expenses of $1,480,500 in support of the Company’s planned 2007 equity offering.
      These expenses include additional salaries for new employees, legal and
      professional fees, and travel expenses. The increase in interest expense and
      interest income of $408,334 accounted for 8% of the increase. Normalized net
      loss without these one-time expenses would have been $4,297,109 for the year
      ended December 31, 2007 compared to $2,206,374 for the year ended December
      31,
      2006, representing an increase of approximately 95%. This adjusted change in
      net
      loss was as a result of the elimination of duplicative costs and efficiencies
      achieved through economies of scale generated with the Company’s acquisitions of
      Pocatello, SpeedNet Services, Inc. and MicroLnk,LLC. The Company’s net margin
      decreased by 15 percentage points from a net loss $7,610,753 for the year ended
      December 31, 2007 compared to a net loss of $2,206,374 for the year ended
      December 31, 2006. By removing the one time and non-cash expenses of $3,313,498,
      the Company’s normalized net margin increased by 31 percentage points from
      a total normalized net loss $4,297,109 for the year ended December 31, 2007
      compared to a net loss of $2,206,374 for the year ended December 31,
      2006.




**Liquidity
      and Capital Resources**




*General*




As
      of
      December 31, 2007 and 2006, the Company had cash of $316,999 and $4,690,
      respectively.




*Net
      Cash Used by Operating Activities* .  Net
      cash
      used in operating activities totaled $1,355,852 for the year ended December
      31,
      2007, compared to net cash used in operating activities of $1,144,047 for the
      year ended December 31, 2006. This change is primarily attributable to legal
      and
      professional fees incurred with the reverse merger and planned 2007 equity
      offering.




*Net
      Cash Used in Investing Activities* .  Net
      cash
      used in investing activities totaled $4,937,833 for the year ended December
      31,
      2007, compared to $36,708 for the year ended December 31, 2006. The cash usage
      during 2007 was the result of the Company’s purchase of MicroLnk, LLC and
      SpeedNet Services, Inc., coupled with cash expenditures for customer premise
      equipment, tower equipment and software.




*Net
      Cash Provided By Financing Activities* .  Net
      cash
      provided by financing activities totaled $6,605,995 for the year ended December
      31, 2007, compared to $998,241 for the year ended December 31, 2006. During
      2007, the Company entered into a commercial loan agreement for $3,000,000.
      Proceeds from the sale of stock and the exercise of warrants during 2007 totaled
      $4,193,743.




*Working
      Capital* .  As
      of
      December 31, 2007, the Company had negative working capital of $6,341,353.
      This
      number includes $3,000,000 of term debt, $742,562 for capital leases, and
      $391,193 for deferred revenue.




As
        of
        December 31, 2007, current liabilities included a $3 million term loan due
        in
        January 2008.  The Company has executed a new commercial loan agreement on
        February 8, 2008 totaling $4.5 million (the “Loan”), the proceeds of which were
        used to refinance the aforementioned $3.0 million term loan and for working
        capital to help sustain its current capital needs.  The Loan matures on
        August 4, 2008, however, it is renewable at the Company’s option until February
        4, 2009.  The Company believes that its core business has remained strong
        as evidenced by the overall growth of the Company’s subscriber base and
        revenues.  The Company expects to continue its acquisition and organic
        growth strategies which management believes will attract existing investors
        and
        new investors to the Company.  The Company expects to begin to generate
        operating income and positive cash from operations by implementing business
        strategies which have the effect of spreading the Company’s fixed costs over a
        larger revenue base.




-17-




*Private
      Placement*




In
      connection with the reverse merger in August 2007, the Company completed a
      private placement, pursuant to which the Company issued 551,750 shares of common
      stock and five-year warrants to purchase 275,875 shares of common stock at
      an
      initial exercise price of $6.70 per share for aggregate net proceeds of
      $2,088,500. In connection with this private placement, the Company incurred
      placement agent fees of approximately $56,000, and issued the placement agent
      three-year warrants to purchase an aggregate of 6,000 shares of common stock
      at
      an initial exercise price of $6.70 per share. In addition, the Company incurred
      other professional fees and expenses totaling approximately $75,000 in
      connection with the reverse merger and private placement.




**Critical
      Accounting Policies and Estimates**




The
      Company’s consolidated financial statements are prepared in accordance with
      accounting principles generally accepted in the United States that require
      it to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities at the date of its financial statements and the reported amounts
      of
      revenues and expenses during the reporting periods. The consolidated financial
      statements include the accounts of the Company and its wholly owned
      subsidiaries. All significant intercompany balances and transactions have been
      eliminated in consolidation. In the Company’s opinion, the condensed
      consolidated financial statements contain all the adjustments necessary
      (consisting only of normal recurring accruals) to make the financial position
      of
      the Company and the results of operations and cash flows not misleading.
      Critical accounting policies are those that require the application of
      management's most difficult, subjective, or complex judgments, often because
      of
      the need to make estimates about the effect of matters that are inherently
      uncertain and that may change in subsequent periods. In preparing the financial
      statements, the Company utilized available information, including its past
      history, industry standards and the current economic environment, among other
      factors, in forming the Company’s estimates and judgments, giving due
      consideration to materiality. Actual results may differ from these estimates.
      In
      addition, other companies may utilize different estimates, which may impact
      the
      comparability of the Company’s results of operations to those of companies in
      similar businesses. The Company believes that of its significant accounting
      policies, the following may involve a higher degree of judgment and estimation.




*Equipment.* Equipment is stated at the lower of cost or present value of the capital lease
      obligation. Expenditures for additions, renewals, and betterments are
      capitalized; expenditures for maintenance and repairs are charged to operations
      as incurred. Upon retirement, sale or other disposition of equipment, the cost
      and accumulated depreciation are eliminated from the accounts and any gain
      or
      loss is included in operations. In addition, long-lived assets are reviewed,
      at
      least annually, for impairment of the carrying value of such assets. If
      impairment is deemed to have occurred, an impairment loss is included in the
      Company’s current operations. Depreciation is computed principally using the
      straight line method over estimated useful lives or the length of the capital
      lease, ranging from two to seven years.




*Revenue
      Recognition.* The
      Company prepares the Company’s financial statements on the accrual method of
      accounting. Under this basis, income is recognized when earned, and expenses
      are
      generally recognized when incurred. The Company charges a recurring subscription
      fee for providing its various Internet access services to its subscribers and
      recognizes revenues when they are earned, which generally occurs as the service
      is provided. The services are subscribed to for the periods of either
      month-to-month, or with annual or two year contracts and are generally billed
      monthly, quarterly, semiannually or annually in advance. Payments received
      in
      advance for subscriptions are deferred and recognized as the services are
      provided. Service initiation fees are recognized at the time of installation.




-18-




*Intangible
      Assets.* Intangible assets, including goodwill, are accounted for under the provisions
      of
      Statement of Financial Accounting Standards No. 142, "Goodwill and Other
      Intangible Assets" ("SFAS 142"). Under SFAS 142, intangible assets, other than
      goodwill, are identified and segregated between amortizable and nonamortizable
      assets. Amortizable intangibles are amortized over their estimated, contractual,
      or regulated useful lives. Goodwill and other nonamortizable assets are
      reviewed, at least annually, for impairment in the carrying value of the
      intangible asset. In addition, this review also includes the net carrying value
      of amortizable intangible assets. If impairment is deemed to have occurred,
      a
      loss for such impairment is recorded as part of current operations.




*Stock
      Based Compensation.* On
      December 31, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123 (revised 2004), "Share-Based Payment," requiring the Company
      to recognize expenses related to the fair value of its employee stock option
      awards. The Company recognizes the cost of all share-based awards on a straight
      line vesting basis over the vesting period of the award.




The
      Company has estimated the fair value of its option awards granted after December
      1, 2005, using the Black-Scholes option pricing model. Expected volatilities
      are
      based on the historical volatility of the Company’s valuation during prior
      financings. As of December 31, 2006, the expected life, representing the period
      of time that options granted are expected to remain outstanding, is 3 years.
      The
      risk-free rate for periods within the contractual life of the option is based
      on
      the United States Treasury yield curve in effect at the time of grant.




*Off-Balance
      Sheet Arrangements.* The
      Company has no off-balance sheet arrangements, financings, or other
      relationships with unconsolidated entities known as “Special Purposes
      Entities”.




**Recently
      Issued Accounting Pronouncements**




The
      following pronouncements have been issued by the Financial Accounting Standards
      Board (the “FASB”):




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      157,
“Fair Value Measurements” (“SFAS 157”). This statement defines fair value,
      establishes a framework for measuring fair value in generally accepted
      accounting principles, and expands disclosures about fair value measurements.
      SFAS 157 applies to other accounting pronouncements that require or permit
      fair
      value measurements, the FASB having previously concluded in those accounting
      pronouncements that fair value is the relevant measurement attribute.
      Accordingly, this statement does not require any new fair value measurements.
      However, for some entities, the application of SFAS 157 will change current
      practice. The provisions of SFAS 157 are effective as of the beginning of the
      Company’s 2009 fiscal year. The Company is currently evaluating the impact of
      SFAS 157, but does not expect the adoption of SFAS 157 to have a material impact
      on its consolidated financial position, results of operations or cash flows.




In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in the Current Year Financial Statements” (“SAB 108”).
      SAB 108 addresses how the effects of prior-year uncorrected misstatements should
      be considered when quantifying misstatements in current-year financial
      statements. SAB 108 requires an entity to quantify misstatements using a balance
      sheet and income-statement approach and to evaluate whether either approach
      results in quantifying an error that is material in light of relevant
      quantitative and qualitative factors. The guidance is applicable for fiscal
      years ending after November 15, 2006. The Company currently does not believe
      that SAB 108 will have a material impact on its financial statements.




In
      February 2007, the FASB issued Statement of Financial Accounting Standards
      159,
“The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS
      159”), which expands opportunities to use fair value measurements in financial
      reporting and permits entities to choose to measure many financial instruments
      and certain other items at fair value. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating SFAS
      159
      to determine its impact on its consolidated financial position, results of
      operations or cash flows.




-19-




In
      June
      2001, the FASB issued FAS 141, Business Combinations, which was established
      to
      (1) better reflect investments made in acquired companies, and (2) to provide
      additional information regarding acquired intangible assets. FAS 141 mandates
      that all assets acquired and liabilities assumed are valued at their fair value.
      FAS 141 was revised in December 2007, and is effective for business combinations
      for which the acquisition date is on or after the beginning of the first annual
      reporting period beginning on or after December 15, 2008. This revision
      represents a major departure from the historical cost accounting that many
      companies use currently. The Company is currently evaluating FAS 141 to
      determine its impact on its future consolidated financial position, results
      of
      operations or cash flows.




**Certain
      Risks and Uncertainties**




Certain
      statements in this Annual Report on Form 10-KSB, including certain statements
      contained in “Description of Business” and “Management’s Discussion and
      Analysis,” constitute “forward-looking statements” within the meaning of Section
      27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended. The words or phrases “can be,” “may,” “could,”
“would,” “expects,” “believes,” “seeks,” “estimates,” “projects” and similar
      words and phrases are intended to identify such forward-looking statements.
      Such
      forward-looking statements are subject to various known and unknown risks and
      uncertainties, including those described on the following pages, and the Company
      cautions you that any forward-looking information provided by or on behalf
      of
      the Company is not a guarantee of future performance. The Company’s actual
      results could differ materially from those anticipated by such forward-looking
      statements due to a number of factors, some of which are beyond the Company’s
      control. All such forward-looking statements are current only as of the date
      on
      which such statements were made. The Company does not undertake any obligation
      to publicly update any forward-looking statement to reflect events or
      circumstances after the date on which any such statement is made or to reflect
      the occurrence of unanticipated events.




**Risks
      Relating to the Company**




***The
      Company may be unable to successfully execute on either its acquisition strategy
      or organic growth strategy, both of which it depends upon to drive the growth
      of
      its subscriber base.***




The
      Company currently has a limited corporate infrastructure. In order to
      successfully execute on both its acquisition strategy and organic growth
      strategy, KeyOn will need to continue to build its infrastructure and
      operational capabilities. The Company’s ability to do any of these successfully
      could be affected by any one or more of the following factors:




·
            the
                Company’s ability to successfully negotiate with potential acquisition
                targets, including the targets' willingness to accept consideration
                such
                as cash, debt, the Company’s common stock or a combination
                thereof;




·
            the
                Company’s ability to acquire companies or their assets at purchase prices
                that are consistent with KeyOn’s targeted
                returns;




·
            the
                Company’s ability to successfully integrate companies it acquires, which
                could result in increased costs, additional churn or damage to an
                existing
                or acquired brand;




·
            the
                ability of the Company’s equipment, equipment suppliers or third-party
                service providers to perform as it
                expects;




-20-




·
            the
                Company’s ability to further penetrate its existing markets and contribute
                to the organic growth of its subscriber
                base;




·
            the
                Company’s ability to differentiate its services from those offered by its
                competitors in the markets it
                serves;




·
            the
                Company’s ability to obtain both network and customer premise equipment,
                which it currently receives from third
                parties;




·
            the
                Company’s ability to attract and retain qualified
                personnel;




·
            equipment
                failure or interruption of service, which could adversely affect
                the
                Company’s reputation and its relations with
                customers;




·
            the
                Company’s ability to accurately predict and respond to the rapid
                technological changes in its industry and the evolving demands of
                the
                markets it serves; and




·
            the
                Company’s ability to raise additional capital to fund its
                growth.




The
      Company’s failure to adequately address any one or more of the above factors
      could have a significant adverse impact on the Company’s ability to implement
      its business plan with respect to its acquisition strategy and organic growth
      plans, as well as its ability to pursue other opportunities that
      arise.




***Any
      acquisitions the Company makes could result in integration difficulties that
      could lead to substantial costs, delays or other operational or financial
      difficulties.***




KeyOn
      seeks to expand by acquiring businesses, including those in its current or
      new
      geographic markets. The Company cannot accurately predict the timing, size
      and
      success of its acquisition efforts and the associated capital commitments that
      might be required. The Company expects to face competition for acquisitions,
      which may limit the number of acquisition opportunities available and may lead
      to higher acquisition prices. KeyOn may not be able to identify, acquire or
      profitably manage additional businesses or successfully integrate acquired
      businesses, if any, without substantial costs, delays or other operational
      or
      financial difficulties. In addition, such acquisitions involve a number of
      other
      risks, including:




·
            failure
                of the acquired businesses to achieve expected
                results;




·
            diversion
                of management's attention and resources to
                acquisitions;




·
            inability
                to timely and cost-effectively integrate acquired
                operations;




·
            failure
                to retain key customers or personnel of the acquired
                businesses;




·
            disappointing
                quality or functionality of acquired equipment, networks and personnel;
                and




·
            risks
                associated with unanticipated events, liabilities or
                contingencies.




Subscriber
      dissatisfaction with, or performance problems of, a single acquired business
      could negatively affect KeyOn’s reputation. The inability to acquire businesses
      on reasonable terms or successfully integrate and manage acquired companies,
      or
      the occurrence of performance problems at acquired companies, could result
      in
      dilution, unfavorable accounting treatment or one-time charges and difficulties
      in successfully managing the business.




***The
      Company has a history of operating losses and expects to continue suffering
      losses for the foreseeable future.***




The
      Company has incurred losses since it was launched in 2002. Moreover, in each
      of
      2007 and 2006, KeyOn recorded net losses of $7,610,753 and $3,727,257. The
      Company cannot anticipate when, if ever, its operations will become net
      cash-flow positive. The Company may incur net losses as it integrates
      acquisitions, introduces new network equipment, increases its marketing for
      organic subscriber growth and acquires spectrum in pursuit of its business
      strategy.




-21-




***The
      Company’s business will require additional capital for continued
      growth.***




KeyOn’s
        independent auditors have expressed substantial doubt about the Company’s
        ability to continue as a going concern, which may hinder the Company’s ability
        to obtain future financing.
 
 In
        their
        report dated March 26, 2008, KeyOn’s independent auditors stated that the
        Company’s financial statements for the year ended December 31, 2007 were
        prepared assuming that it would continue as a going concern, and that they
        have
        substantial doubt about the Company’s ability to continue as a going concern.
        KeyOn’s auditors’ doubts are based on the Company’s incurring net losses and
        deficits in cash flows from continuing operations. The Company continues
        to
        experience net operating losses. The Company’s ability to continue as a going
        concern is subject to its ability to generate a profit and/or obtain necessary
        funding from outside sources, including by the sale of its securities, or
        obtaining loans from financial institutions, where possible. The Company’s
        continued net operating losses and its auditors’ doubts increase the difficulty
        of meeting such goals, and its efforts to continue as a going concern may
        not
        prove successful.




The
      continued growth of the Company’s business will require additional funding for
      future acquisitions, the introduction of new network technologies such as WiMAX,
      debt service, the potential upgrade of its networks, the expansion of its
      network coverage area and working capital. In addition, KeyOn may raise
      additional capital through the issuance of debt to finance acquisitions of
      companies and spectrum that may require the Company to use a portion of its
      cash
      flows from operations and other available cash to make payments of principal
      and
      interest on debt, thereby reducing funds that could be available for other
      business purposes. KeyOn may be unable to secure such funding when needed in
      adequate amounts or on acceptable terms, if at all. To execute its business
      strategy, KeyOn may issue additional equity securities in public or private
      offerings, potentially at a price lower than the market price at the time of
      such issuance. Similarly, by securing debt financing, the Company may be forced
      to incur significant interest expense. If KeyOn cannot secure sufficient funding
      it may be forced to forego strategic opportunities or delay, scale back or
      eliminate network deployments, operations, acquisitions, spectrum bids and
      other
      growth opportunities.




***The
      Company may experience difficulties in maintaining its existing network, as
      well
      as in constructing, upgrading and introducing new technologies, such as WiMAX,
      into networks, which could adversely affect customer satisfaction, increase
      subscriber churn and reduce the Company’s revenues.***




KeyOn’s
      success depends on providing affordable and reliable broadband access, as well
      as related services. If the number of subscribers using its network and the
      complexity of its services increase, the Company will require more
      infrastructure, network and customer service resources to maintain the quality
      of its services. Consequently, the Company may be required to make substantial
      investments to construct and improve its facilities and equipment and to upgrade
      its technology and network infrastructure. This is particularly true in
      connection with the WiMAX networks the Company intends to pursue. If KeyOn
      does
      not implement these developments and network upgrades successfully, or if it
      experiences inefficiencies, operational failures, or unforeseen costs during
      implementation, the quality of the Company’s services could
      decline.




The
      Company may experience quality deficiencies, cost overruns and delays in
      implementing its network improvements and expansion, in maintenance and upgrade
      projects, including slower than anticipated technology migrations. In addition,
      KeyOn typically is required to obtain rights from land, building or tower owners
      to install its antennae and other equipment to provide service to its
      subscribers. The Company may not be able to obtain, on terms acceptable to
      itself, or at all, the rights necessary to construct its network and expand
      its
      services.




KeyOn
      also faces challenges in managing and operating its networks. These challenges
      include operating, maintaining and upgrading network and customer premises
      equipment to accommodate increased traffic or technological advances, and
      managing the sales, advertising, customer support, billing and collection
      functions of its business, while providing reliable network service at expected
      speeds and quality. The Company’s failure in any of these areas could adversely
      affect customer satisfaction, increase subscriber churn, increase its costs
      and
      decrease its revenues.




***The
      Company does not obtain and maintain rights to use licensed spectrum in its
      targeted markets which could negatively impact its ability to execute its
      business strategy. To the extent KeyOn secures licensed spectrum, it faces
      increased operational costs and greater regulatory
      scrutiny.***




In
      certain markets, the Company intends to provide mobile or nomadic service by
      using technologies such as WiMAX and licensed spectrum. If other unlicensed
      spectrum bands, such as 3.65 GHz are insufficient to use for the deployment
      of
      such services, the Company may need to secure and maintain sufficient rights
      to
      use licensed spectrum by obtaining licenses or long-term leases in those
      markets. Obtaining licensed spectrum can be a long and difficult process that
      can be costly and require a disproportionate amount of management resources,
      and
      may require the Company to incur significant indebtedness or secure additional
      capital. KeyOn may not be successful in its efforts to secure spectrum
      acquisition financing or be able to acquire, lease or maintain, either from
      third parties or through a licensed spectrum auction, the spectrum necessary
      to
      execute its strategy.




-22-




Licensed
      spectrum, whether owned or leased, poses additional risks,
      including:




·
            adverse
                changes to regulations governing spectrum
                rights;




·
            the
                risk that spectrum acquired or leased will not be commercially usable
                or
                free of damaging interference from licensed or unlicensed operators
                in the
                Company’s or adjacent bands;




·
            failure
                of the Federal Communications Commission or other regulators to renew
                spectrum licenses as they expire;




·
            inability
                to satisfy build-out or service deployment requirements upon which
                spectrum licenses or leases are, or may be,
                conditioned;




·
            increases
                in spectrum acquisition costs;




·
            uncertainty
                in obtaining the equipment required to use the licensed
                spectrum;




·
            increases
                in capital expenses associated with new equipment required to utilize
                the
                licensed spectrum;




·
            contractual
                disputes with, or the bankruptcy or other reorganization of the license
                holders, which could adversely affect control over the spectrum subject
                to
                such licenses.




***Depending
      upon the geographic market, some of the Company’s competitors are better
      established and have engineering, sales and marketing resources that are
      significantly greater than the Company has, which may make it difficult to
      attract and retain subscribers.***




As
      a
      general matter, the market for broadband and related services is highly
      competitive, and KeyOn may compete with other companies in its markets. Some
      of
      these competitors are well established with larger and better-developed networks
      and support systems, longer-standing relationships with customers, greater
      name
      recognition and greater financial, technical and marketing resources than the
      Company has. As a result, KeyOn’s competitors may reduce the prices of their
      services significantly or may offer broadband connectivity packaged with other
      services. The Company may not be able to reduce its prices or otherwise combine
      its services with other services, which may make it more difficult to attract
      and retain subscribers.




The
      Company’s competitors include:




·
            cable
                operators offering broadband Internet connectivity services and voice
                communications;




·
            incumbent
                and competitive local exchange carriers providing DSL
                services;




·
            wireless
                Internet service providers using licensed or unlicensed
                spectrum;




·
            third
                generation, or 3G, cellular, personal communications service, or
                PCS, and
                other wireless providers offering wireless broadband services and
                capabilities, including developments in existing cellular and PCS
                technology that may increase network speeds or have other advantages
                over
                the Company’s services;




-23-




·
            Internet
                service providers offering dial-up Internet
                connectivity;




·
            municipalities
                and other entities operating free or subsidized wireless broadband
                networks;




·
            providers
                of VoIP telephone services;




·
            satellite
                providers offering or developing broadband connectivity;
                and




·
            electric
                utilities and other providers offering or planning to offer broadband
                Internet connectivity over power
                lines.




Other
      existing and prospective competitors may adopt technologies or business plans
      similar to KeyOn’s, or seek other means to develop services competitive with the
      Company, particularly if the Company’s services prove to be attractive in its
      target markets. This competition may make it difficult for the Company to
      attract and retain subscribers.




***The
      Company utilizes unlicensed spectrum, which is subject to intense competition,
      low barriers of entry and potential interference from multiple competing
      users.***




The
      Company presently utilizes primarily unlicensed spectrum in connection with
      its
      broadband service offerings. While unlicensed spectrum is regulated by the
      Federal Communications Commission, it is available to multiple simultaneous
      users and may be subject to interference, which may reduce the quality of the
      service provided to subscribers. The availability of unlicensed spectrum is
      limited and others do not need to obtain permits or licenses to utilize the
      same
      unlicensed spectrum used by KeyOn currently or may in the future utilize,
      threatening its ability to reliably deliver services.




***The
      Company relies on third party sales representatives to assist in selling its
      services, and the failure of these representatives to perform as expected could
      reduce the Company’s future sales.***




KeyOn
      sells its services to some of its customers through third party sales
      representatives. However, the Company’s relationships with some of these third
      party sales representatives are relatively new and it is unable to predict
      the
      extent to which its third party sales representatives will be successful in
      marketing and selling the Company’s services. Moreover, many of KeyOn’s third
      party sales representatives also market and sell competing products. The
      Company’s third party sales representatives may terminate their relationships
      with the Company at any time, or with short notice and may give greater
      attention to the products sold by KeyOn’s competitors. KeyOn’s future
      performance will also depend, in part, on its ability to attract additional
      third party sales representatives that will be able to market the Company’s
      services effectively, especially in markets in which KeyOn has not previously
      distributed services. If the Company cannot retain its current third party
      sales
      representatives and recruit additional or replacement third party sales
      representatives, its revenues and operating results could be
      harmed.




***The
      Company relies on a limited number of third party suppliers that produce its
      network and customer premise equipment, and occasionally install or service
      its
      network sites. The Company is also currently using one or more third-party
      providers to supply the Company with certain aspects of its video and VoIP
      services. If these companies fail to perform or experience delays, shortages
      or
      increased demand for their services, KeyOn may face a shortage of components,
      increased costs, and may be required to suspend its network deployment and
      its
      product and service introduction.***




In
      addition to the personnel the Company has on staff, KeyOn also depends on a
      limited number of third party suppliers to produce and deliver services required
      for its networks. The Company does not maintain any long-term supply contracts
      with its equipment manufacturers and distributors. In addition, KeyOn relies
      on
      providers of Internet bandwidth in order to transport data traffic on its
      networks onto the public Internet. If a manufacturer or other provider does
      not
      satisfy KeyOn’s requirements, or if KeyOn loses a manufacturer or any other
      significant provider, it may have insufficient network equipment for delivery
      to
      subscribers and for installation or maintenance of its infrastructure, and
      the
      Company may be forced to suspend the deployment of its network and enrollment
      of
      new subscribers, thus impairing future growth. KeyOn also currently contracts
      with third-party providers for certain video and VoIP services and relies on
      those services to be compliant with all relevant regulatory requirements. To
      the
      extent these third-party providers are unable to meet either KeyOn’s or the
      regulatory requirements, KeyOn may be forced to suspend the deployment of these
      services, thus impairing future revenue growth.




-24-




***The
      Company’s inability to use shares of its common stock or to obtain capital to
      finance future acquisitions could impair the growth and expansion of its
      business.***




The
      extent to which KeyOn will be able or willing to use shares of its common stock
      to consummate acquisitions will depend on:




·
            the
                market value of the Company’s securities, which will
                vary;




·
            liquidity,
                which is presently limited; and




·
            the
                willingness of potential sellers to accept shares of the Company’s common
                stock as full or partial payment for their
                business.




Using
      shares of KeyOn’s common stock for this purpose may also result in significant
      dilution to the Company’s then existing stockholders. To the extent that the
      Company is unable to use its common stock to make future acquisitions, KeyOn’s
      ability to grow through acquisitions may be limited to the extent that the
      Company is able to raise capital through debt or additional equity financings.
      The Company may not be able to obtain the necessary capital to finance any
      acquisitions. If KeyOn is unable to obtain additional capital on acceptable
      terms, or at all, KeyOn may be required to reduce the scope of
      acquisition-driven expansion plans or redirect resources previously committed
      to
      other purposes.




***The
      Company depends on the continued availability of leases for the deployment
      of
      its communications equipment.***




KeyOn
      has
      either constructed or acquired networks in each of the markets it serves.
      Networks are typically built by installing antennae on rooftops, cellular towers
      and other elevated structures pursuant to lease agreements that allow the
      Company to collocate its equipment. In the markets where the Company builds
      networks itself, it typically seeks five-year initial terms for its leases
      with
      multiple three to five year renewal options. Such renewal options are generally
      exercisable at KeyOn’s discretion before the expiration of each term. If the
      leases the Company enters into or assume by way of acquisition are terminated
      or
      if the owners of these structures are unwilling to continue to enter into leases
      with KeyOn in the future, KeyOn would be forced to seek alternative arrangements
      with other providers. If KeyOn is unable to continue to obtain or renew such
      leases on satisfactory terms, its business would be harmed.




***The
      Company’s business depends on strong brands, and if it does not maintain and
      enhance its brand, the Company’s ability to attract and retain subscribers may
      be impaired and its business and operating results may be
      harmed.***




KeyOn
      believes that its brands are a critical part of its business. Maintaining and
      enhancing the Company’s brands may require substantial investments with no
      assurance that these investments will be successful. The Company currently
      markets under the “KeyOn,” “SpeedNet” and “SIRIS” brands, and if it incurs
      significant expenses in promoting and maintaining these brands, KeyOn’s
      business, prospects, operating results and financial condition may be harmed.
      KeyOn anticipates that maintaining and enhancing its brands may become
      increasingly competitive, difficult and expensive.




***KeyOn
      might not have sufficient capital or generate enough cash flow to service
      interest obligations or repay its indebtedness.***




As
      of
      February 8, 2008, the Company had an outstanding promissory note payable of
      $4,500,000, which matures on August 4, 2008 and is extendable to February 4,
      2009 at the Company’s option. The note bears interest at a variable rate equal
      to 2.5 percentage points above the lender’s prime rate, with an initial interest
      rate of 8.75%. If KeyOn is unable to secure additional financing at acceptable
      terms or generate sufficient cash flow from operations, the Company might not
      have adequate capital for interest payments or for principal repayment. In
      addition, while it is outstanding, the promissory note contains prohibitions
      on
      the Company’s ability to secure additional debt or grant future security
      interests with respect to the Company’s assets. These limitations may limit
      KeyOn’s ability to obtain additional financing, withstand downturns in its
      business and take advantage of business and strategic
      opportunities.




-25-




***The
      licensing of additional spectrum in the Company’s markets by the Federal
      Communications Commission could introduce additional
      competition.***




The
      Federal Communications Commission regulates the spectrum bands in which KeyOn
      and its competitors operate. The Federal Communications Commission can make
      additional spectrum available for use or change the way existing spectrum is
      used, which may result in additional competitors entering the Company’s markets
      and providing services that may directly compete with the Company’s offerings.
      In particular, the Federal Communications Commission has offered several blocks
      of spectrum in the 700 MHz frequency range during Auction 73 which began on
      January 24, 2008. This frequency range is suitable for offering data, voice
      and
      video services in rural areas. As a result, the licensing and eventual build
      out
      of this spectrum may bring additional competition to KeyOn’s principal
      markets.




***Excessive
      customer churn may adversely affect the Company’s financial performance by
      slowing customer growth, increasing costs and reducing
      revenue.***




The
      successful implementation of KeyOn’s business plan depends upon controlling
      customer churn. Customer churn is a measure of customers who stop using KeyOn’s
      services. Customer churn could increase as a result of:




·
            personal
                economic conditions;




·
            customers
                moving out of the Company’s geographic coverage
                area;




·
            interruptions
                to the delivery of services to customers over the Company’s
                network;




·
            billing
                errors and/or general reduction in the quality of the Company’s customer
                service;




·
            competitors
                offering additional, desired service offerings that the Company does
                not
                offer; and




·
            the
                availability of competing technology, such as cable modems, DSL,
                third-generation cellular, satellite, wireless Internet service and
                other
                emerging technologies, some of which may, from time to time, be less
                expensive or technologically superior to those offered by the
                Company.




An
      increase in customer churn can lead to slower customer growth, increased costs
      and a reduction in revenue.




***Interruption
      or failure of the Company’s networks, which in certain rural markets are often
      subject to severe weather such as storms or tornados, could impair the Company’s
      ability to provide its services, which could damage the Company’s reputation and
      harm operating results.***




KeyOn’s
      services depend on the continuing operation of its networks. The Company has
      experienced service interruptions in the past and may experience service
      interruptions or system failures in the future. Any unscheduled service
      interruption, as a result of severe weather or otherwise, adversely affects
      the
      Company’s ability to operate its business and could result in an immediate loss
      of revenues. If KeyOn experiences frequent or persistent system or network
      failures, regardless of the reason, KeyOn’s reputation could be permanently
      harmed. The Company may need to make significant capital expenditures to
      increase the reliability of its systems, but these capital expenditures may
      not
      achieve the results the Company expects.




-26-




***The
      success of the Company’s business depends on the continuing contributions of its
      key personnel and the Company’s ability to attract, train and retain highly
      qualified personnel.***




KeyOn
      is
      highly dependent on the continued services of its chief executive officer and
      president, Jonathan Snyder, its chief operating officer, A. Robert Handell,
      and
      its executive vice president, Sid Ganju. Loss of the services of any of these
      individuals could adversely impact KeyOn’s operations. While KeyOn maintains a
      "key man" insurance policy for Jonathan Snyder, neither Jonathan Snyder, A.
      Robert Handell nor Sid Ganju are currently bound by employment agreements.
      The
      Company expects that Messrs. Snyder, Handell and Ganju will enter into
      employment agreements in the near future, but KeyOn can provide no assurances.
      As a result, the Company cannot guarantee that either of these persons will
      stay
      with the Company for any definite period.




In
      addition, to successfully introduce its services in new markets and grow its
      business in existing markets, KeyOn must be able to attract, train, motivate
      and
      retain highly skilled and experienced employees. In particular, qualified
      technical employees periodically are in great demand and may be unavailable
      in
      the time frame required to satisfy customer requirements. The Company may not
      be
      able to attract and retain sufficient numbers of highly skilled technical
      employees in the future. The loss of skilled personnel or the KeyOn’s inability
      to hire or retain sufficient skilled personnel at competitive rates of
      compensation could impair KeyOn’s ability to successfully grow its business and
      retain its existing customer base.




***The
      Company may not be able to effectively control and manage its growth, which
      would negatively impact its operations.***




The
      Company may face challenges in managing expanding service offerings and in
      integrating acquired businesses. Such eventualities will increase demands on
      KeyOn’s existing management, workforce and facilities. Failure to satisfy
      increased demands could interrupt or adversely affect the Company’s operations
      and cause administrative inefficiencies.




***If
      unauthorized persons gain access to the Company’s network, subscribers may
      perceive its network and services as not secure, which may adversely affect
      the
      Company’s ability to attract and retain subscribers and expose the Company to
      liability.***




Although
      KeyOn takes certain measures to guard against unauthorized access to its
      network, it may be unable to anticipate or implement adequate preventive
      measures against unauthorized access. Unauthorized parties may overcome the
      Company’s encryption and security systems and obtain access to data on its
      network, including on a device connected to its network. In addition, because
      KeyOn operates and controls its network and its subscribers' Internet
      connectivity, unauthorized access of KeyOn’s network could result in damage to
      its network and to the computers or other devices used by KeyOn’s subscribers.
      An actual or perceived breach of network security, regardless of whether the
      breach is the Company’s fault, could harm public perception of the effectiveness
      of its security measures, adversely affect the ability to attract and retain
      subscribers, expose the Company to significant liability and adversely affect
      the Company’s business prospects.




***In
      providing the Company’s services, the Company could infringe on the intellectual
      property rights of others, which may cause the Company to engage in costly
      litigation and, if the Company does not prevail, could also cause the Company
      to
      pay substantial damages and prohibit the Company from selling its
      services.***




Third
      parties may assert infringement or other intellectual property claims against
      KeyOn. The Company may have to pay substantial damages, including damages for
      past infringement if it is ultimately determined that the Company’s services
      infringe a third party's proprietary rights. Further, KeyOn may be prohibited
      from selling or providing some of its services before it obtains additional
      licenses, which, if available at all, may require KeyOn to pay substantial
      royalties or licensing fees and divert much needed financial resources. Even
      if
      claims are without merit, defending a lawsuit takes significant time, may be
      expensive and may divert management's attention from other business concerns.
      Any public announcements related to litigation or interference proceedings
      initiated or threatened against KeyOn could cause the Company’s business to be
      harmed and the Company's stock price to decline.




-27-




**Risks
      Relating to the Company’s Industry**




***The
      industry in which the Company operates is continually evolving. The Company’s
      services may become obsolete, and it may not be able to develop competitive
      services on a timely basis or at all.***




The
      broadband and wireless services industries are characterized by rapid
      technological change, competitive pricing, frequent new service introductions,
      evolving industry standards and regulatory requirements. The Company believes
      that its success depends on its ability to anticipate and adapt to these
      challenges and to offer competitive services on a timely basis. The Company
      faces a number of difficulties and uncertainties associated with its reliance
      on
      technological development, such as:




·
            competition
                from service providers using more traditional and commercially proven
                means to deliver similar or alternative services to the Company’s targeted
                markets;




·
            competition
                from better capitalized service providers using more efficient, less
                expensive technologies, including services not yet invented or developed
                to the Company’s targeted markets;




·
            the
                Company’s inability to develop a spectrum portfolio and offer advanced
                data services in a timely and cost efficient manner;




·
            responding
                successfully to advances in competing technologies in a timely and
                cost-effective manner; and




·
            uncertainty
                of timing with respect to a migration toward standards-based technology,
                requiring substantial capital expenditures.




As
      the
      services offered by the Company and its competitors develop, residential and
      business customers may not accept the Company’s services as a commercially
      viable alternative to other means of delivering broadband or wireless broadband
      services. As a result, the Company’s services may become obsolete, and the
      Company may be unable to develop competitive services on a timely basis, or
      at
      all.




***The
      Company is subject to extensive regulation that could limit or restrict its
      activities. If the Company fails to comply with these regulations, it may be
      subject to penalties, including fines and suspensions, and past due fees and
      interest, which may adversely affect the Company’s financial condition and
      results of operations.***




The
      Company’s business, including the acquisition, lease, maintenance, and use of
      spectrum licenses, is extensively regulated by federal, state and local
      governmental authorities. A number of federal, state and local privacy, security
      and consumer laws also apply to the Company’s business. These regulations and
      their application are subject to continual change as new legislation,
      regulations or amendments to existing regulations are adopted from time to
      time
      by governmental or regulatory authorities, including as a result of judicial
      interpretations of such laws and regulations. Current regulations directly
      affect the breadth of services the Company is able to offer and may impact
      the
      rates, terms and conditions of the Company’s services. Regulation of companies
      that offer competing services, such as cable and DSL providers and
      telecommunications carriers, also affects the Company’s business.




The
      Company believes that it is not required to register with the Universal Service
      Administrative Company, or the USAC, as a seller of telecommunications, nor
      is
      it required to collect universal service fund, or USF, fees from its customers
      or to pay USF fees directly. It is possible, however, that the Federal
      Communications Commission may assert that the Company is a seller of
      telecommunications and that it is required to register and pay USF fees on
      some
      or all of the Company’s gross revenues. Although the Company would contest any
      such assertion, the Company could become obligated to pay USF fees, interest
      and
      penalties to USAC with respect to its gross revenues, past and/or future, from
      providing telecommunications and the Company may be unable to retroactively
      bill
      its customers for past USF fees.




-28-




In
      addition, the Federal Communications Commission or other regulatory authorities
      may in the future restrict the Company’s ability to manage subscribers' use of
      its network, thereby limiting the Company’s ability to prevent or address
      subscribers' excessive bandwidth demands. To maintain the quality of its network
      and user experience, the Company may manage the bandwidth used by its
      subscribers' applications, in part by restricting the types of applications
      that
      may be used over the Company’s network. If the Federal Communications Commission
      or other regulatory authorities were to adopt regulations that constrain the
      Company’s ability to employ bandwidth management practices, excessive use of
      bandwidth-intensive applications would likely reduce the quality of its services
      for all subscribers. Such decline in the quality of the Company’s services could
      harm its business.




The
      breach of a license or applicable law, even if inadvertent, can result in the
      revocation, suspension, cancellation or reduction in the term of a license
      or
      the imposition of fines. In addition, regulatory authorities may grant new
      licenses to third parties, resulting in greater competition in territories
      where
      the Company already has rights to licensed spectrum. In order to promote
      competition, licenses may also require that third parties be granted access
      to
      the Company’s bandwidth, frequency capacity, facilities or services. The Company
      may not be able to obtain or retain any required license, and it may not be
      able
      to renew a license on favorable terms, or at all.




Wireless
      broadband services may become subject to greater state or federal regulation
      in
      the future. The scope of the regulations that may apply to similar companies
      and
      the impact of such regulations on the Company’s competitive position are
      presently unknown and could be detrimental to its business and prospects.




**Risks
      Relating to the Company’s Common Stock**




***A
      significant number of the Company’s shares will be eligible for sale and their
      sale or potential sale may depress the market price of the Company’s common
      stock.***




Sales
      of
      a significant number of shares of the Company’s common stock in the public
      market could harm the market price of its common stock. In connection with
      the
      Company’s August 9, 2007 private placement and reverse merger, the Company
      issued 7,201,769 shares of its common stock that could become available for
      resale as soon as August 2008 under Rule 144 or earlier if a registration
      statement covering the resale of such shares is filed and declared effective.
      As
      these shares and as additional shares of the Company’s common stock become
      available for resale in the public market, the supply of common stock will
      increase, which could decrease its price.




In
      addition, if the Company’s stockholders sell substantial amounts of its common
      stock in the public market, or upon the expiration of any statutory holding
      period under Rule 144, upon expiration of lock-up periods applicable to
      outstanding shares, or issued upon the exercise of outstanding options or
      warrants, it could create a circumstance commonly referred to as an "overhang"
      and in anticipation of which the market price of the Company’s common stock
      could fall. The existence of an overhang, whether or not sales have occurred
      or
      are occurring, could also make it more difficult for the Company to raise
      additional financing through the sale of equity or equity-related securities
      in
      the future at a time and price that the Company deems reasonable or appropriate.




***The
      Company became public by means of a reverse merger, and as a result the Company
      is subject to the risks associated with the prior activities of the public
      company.***




Additional
      risks may exist because the Company became public through a reverse merger
      with
      a public shell company that did not have significant operations or assets prior
      to the time of the transaction. The public shell corporation was a development
      stage company from the time of its inception until the time of the merger on
      August 9, 2007. For approximately 3 years prior to the merger, the public shell
      corporation had no significant business operations and generated nominal
      revenues. The Company may require the cooperation or assistance of persons
      or
      organizations, such as auditors, previously associated with the public shell
      company in connection with future matters that could be costly or difficult
      to
      secure. Although the Company performed a due diligence review of the public
      shell company, the Company may still be exposed to undisclosed liabilities
      resulting from its prior operations and the Company could incur losses, damages
      or other costs as a result.




-29-




***The
      Company has not paid dividends in the past and do not expect to pay dividends
      in
      the future. Any return on your investment may be limited to the value of the
      Company’s common stock.***




The
      Company has never paid cash dividends on its common stock and does not
      anticipate doing so in the foreseeable future. The payment of dividends on
      its
      common stock will depend on the Company’s earnings, financial condition and
      other business and economic factors as the board of directors may consider
      relevant. If the Company does not pay dividends, its common stock may be less
      valuable because a return on your investment will only occur if the Company’s
      stock price appreciates.




***The
      Company’s common stock may be affected by limited trading volume and price
      fluctuations, each of which could adversely impact the value of its common
      stock.***




There
      has
      been very limited trading in the Company’s common stock and there can be no
      assurance that an active trading market in its common stock will either develop
      or be maintained. The Company’s common stock has experienced, and is likely to
      experience in the future, significant price and volume fluctuations, which
      could
      adversely affect the market price of the common stock without regard to the
      Company’s operating performance. In addition, the Company believes that factors
      such as quarterly fluctuations in its financial results and changes in the
      overall economy or the condition of the financial markets could cause the price
      of its common stock to fluctuate substantially. These fluctuations may also
      cause short sellers to enter the market from time to time in the belief that
      the
      Company will have poor results in the future. The Company cannot predict the
      actions of market participants and, therefore, can offer no assurances that
      the
      market for its stock will be stable or appreciate over time.




**Risks
      Relating to the Company’s Organization**




***The
      Company’s executive officers and directors own a substantial amount of the
      Company’s common stock and, therefore, exercise significant control over its
      corporate governance and affairs, which may result in their taking actions
      with
      which you do not agree.***




The
      Company’s executive officers and directors, and entities affiliated with them,
      control approximately 36% of the Company’s outstanding common stock, including
      exercisable stock options held by them. These stockholders, if they act
      together, may be able to exercise substantial influence over the outcome of
      all
      corporate actions requiring approval of the Company’s stockholders, including
      the election of directors and approval of significant corporate transactions,
      which may result in corporate action with which you do not agree. This
      concentration of ownership may also have the effect of delaying or preventing
      a
      change in control, which might be in your best interest, but which might
      negatively affect the market price of the Company’s common stock.




***The
      Company is subject to financial reporting and other requirements for which
      the
      Company’s accounting, internal audit and other management systems and resources
      may not be adequately prepared.***




On
      August
      9, 2007, the Company became subject to reporting and other obligations under
      the
      Securities Exchange Act of 1934, as amended, including the requirements of
      Section 404 of the Sarbanes-Oxley Act. Under Section 404, the Company will
      be
      required, starting in the fiscal year ending December 31, 2008, to conduct
      an
      annual management assessment of the effectiveness of its internal controls
      over
      financial reporting and to obtain a report by its independent auditors
      addressing these assessments. The requirements of these rules and regulations
      will increase the Company’s legal and financial compliance costs, make some
      activities more difficult, time-consuming or costly and will place significant
      demands on management, administrative, operational, internal audit and
      accounting systems and resources. In connection with these requirements, the
      Company anticipates that it will need to:




·
            upgrade
                its systems;




-30-




·
            implement
                additional financial and management controls, reporting systems and
                procedures;




·
            implement
                an internal audit function; and




·
            hire
                additional accounting, internal audit and finance staff.




If
      the
      Company is unable to accomplish these objectives in a timely and effective
      fashion, the Company’s ability to comply with its financial reporting
      requirements and other rules that apply to reporting companies could be
      impaired. Any failure to maintain effective internal controls could have a
      negative impact on the Company’s ability to manage its business and on its stock
      price.




***If
      securities or industry analysts do not publish research or publish inaccurate
      or
      unfavorable research about The Company’s business, its stock price and trading
      volume could decline.***




The
      trading market for the Company’s common stock will depend in part on the
      research and reports that securities or industry analysts publish about the
      Company or its business. The Company does not currently have research coverage
      by securities and industry analysts. If the Company obtains securities or
      industry analyst coverage and if one or more of the analysts who covers the
      Company downgrades the Company’s stock or publishes inaccurate or unfavorable
      research about the Company’s business, its stock price would likely decline. If
      one or more of these analysts ceases coverage of the Company or fails to publish
      reports on the Company regularly, demand for its stock could decrease, which
      could cause the stock price and trading volume to decline.




**Item
      7. Financial Statements.**




See
      the
      Company’s financial statements beginning on page F-1.




**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**




Not
      applicable.




**Item
      8A(T). Controls and Procedures.**




**Controls
      and Procedures**




Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed by an issuer in
      the
      reports that it files or submits under the Securities Exchange Act of 1934,
      as
      amended, is accumulated and communicated to the issuer’s management, including
      its principal executive and principal financial officers, or persons performing
      similar functions, as appropriate to allow timely decisions regarding required
      disclosure. As noted below, the Company was unable to conclude that its
      disclosure controls and procedures are effective, as of the end of the period
      covered by this report (December 31, 2007), in ensuring that material
      information that the Company is required to disclose in reports that it files
      or
      submits under the Securities Exchange Act of 1934, as amended, is recorded,
      processed, summarized and reported within the time periods specified in the
      Securities and Exchange Commission’s rules and forms. The Company believes that
      it will have effective internal controls to meet this requirement prior to
      the
      filing of its annual report for the year ended December 31, 2008.




-31-





**Changes
      in Internal Control Over Financial Reporting**




There
      were no changes in the Company’s internal control over financial reporting
      during its most recent fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, the Company’s internal control over
      financial reporting.




**Management’s
      Annual Report on Internal Control over Financial Reporting**





The
      Company’s management is responsible for establishing and maintaining adequate
      internal control over financial reporting. Internal control over financial
      reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities
      Exchange Act of 1934, as amended, as a process designed by, or under the
      supervision of, a company’s principal executive and principal financial officers
      and effected by a company’s board of directors, management and other personnel
      to provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. The Company’s internal control
      over financial reporting includes those policies and procedures that: (i)
      pertain to the maintenance of records that, in reasonable detail, accurately
      and
      fairly reflect the transactions and dispositions of the Company’s assets; (ii)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that the Company’s receipts and expenditures are
      being made only in accordance with authorizations of its management and
      directors; and (iii) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use or disposition of its assets that
      could have a material effect on the financial statements.




As
      a
      result of a recent merger, change in management and other factors, the Company
      did not have a reasonable period of time to design, implement and test
      compliance of its internal control over financial reporting. As a result, this
      annual report does include an assessment by its management of the internal
      control over financial reporting as of December 31, 2007, as noted
      above.




The
      Company is committed to maintaining disclosure controls and procedures that
      are
      designed to ensure that information required to be disclosed by the Company
      in
      the reports that it files or submits to the Securities and Exchange Commission
      under the Securities Exchange Act of 1934, as amended, is recorded, processed,
      summarized and reported within the time periods specified by the Securities
      and
      Exchange Commission’s rules and forms, and that information is accumulated and
      communicated to the Company’s management, including its chief executive officer
      and chief financial officer, as appropriate, to allow timely decisions regarding
      required disclosure. The Company is in the process of designing such internal
      controls and procedures over financial reporting.





This
      annual report does not include an attestation report of the Company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the Company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the Company to provide only management’s report
      in this annual report.




-32-


**Item
      8B. Other Information.**




Not
      applicable.




**PART
      III**




**Item
      9. Directors, Executive Officers, Promoters, Control Persons and Corporate
      Governance; Compliance with Section 16(a) of the Exchange
      Act.**




The
      following table sets forth information regarding the members of the Company’s
      board of directors and the Company’s executive officers. All directors hold
      office for one-year terms until the election and qualification of their
      successors. Officers are elected annually by the board of directors and serve
      at
      the discretion of the board.




Name
            
            Age
            
            PositionJonathan
                Snyder
            
            36
            
            Chief
                Executive Officer, President and DirectorJerome
                Snyder
            
            67
            
            Chairman
                of the Board of DirectorsAnnette
                Eggert
            
            42
            
            Chief
                Financial OfficerA.
                Robert Handell
            
            61
            
            Executive
                Vice President, Chief Operating Officer, Secretary and
                DirectorJason
                Lazar
            
            34
            
            Vice
                President, Corporate Development and General CounselSidharth
                Ganju
            
            48
            
            Executive
                Vice President, Corporate Development and StrategyRory
                Erchul
            
            36
            
            Vice
                President, MarketingDavid
                Bailey
            
            50
            
            Vice
                President, Western RegionR.C.
                Mark Baker
            
            61
            
            DirectorJeffrey
                Scott Rice
            
            41
            
            DirectorJason
                K. Horowitz
            
            36
            
            DirectorCurtis
                W. Anderson
            
            58
            
            Director





**Jonathan
      Snyder, President, Chief Executive Officer and Director.** Mr.
      Snyder has served as the Company’s president, chief executive officer and as a
      director since August 2007. Mr. Snyder has been the president, chief executive
      officer and a director of KeyOn Communications, Inc. since February 2002. From
      May 2001 through June 2005, Mr. Snyder served as chairman of Transistor 8 LLC,
      a
      Santa Monica, California-based IT services firm. From 1996 through 1999, Mr.
      Snyder was a member of Pacific Capital Group, Inc. From 1994 through 1996,
      Mr.
      Snyder was an investment banker at Bear, Stearns & Co. Inc. While at Pacific
      Capital Group, Inc., Mr. Snyder was a founding shareholder of and former
      management executive at Global Crossing Limited. Mr. Snyder is a graduate of
      the
      Wharton School of Business at the University of Pennsylvania and earned his
      MBA
      from the Anderson School at UCLA.




**Jerome
      Snyder, Chairman of the Board of Directors.** Mr.
      Snyder has served as the Company’s chairman since August 2007. Mr. Snyder has
      served as chairman of KeyOn Communications, Inc. since 2004. Mr. Snyder has
      been
      an attorney since 1964 and is a founder and principal of companies in Nevada
      and
      regionally, including the predecessor to the Palace Station Hotel and Casino
      (now Station Casinos), Sun State Bank, Sun West Bank, Integrated Financial
      Associates, Medivisit, Border Billboard, Triple Crown of Polo, restaurants,
      and
      numerous professional, commercial and residential real estate developments.




**Annette
      Eggert, Chief Financial Officer.** Ms.
      Eggert has served as the Company’s chief financial officer since August 2007.
      Ms. Eggert has been the chief financial officer of KeyOn Communications, Inc.
      since June 2007. From March 2005 through June 2007, Ms. Eggert was the
      controller for the Interpublic Group Shared Services organization in Omaha,
      Nebraska. From December 2002 through March 2005, Ms. Eggert was the controller
      of Connectivity Solutions Manufacturing, Inc., a wholly owned subsidiary of
      CommScope, Inc. and from October 1990 though December 2002, Ms. Eggert held
      various finance and accounting positions at Connectivity Solutions
      Manufacturing, Inc. Ms. Eggert is a licensed CPA and holds an MBA from the
      University of Nebraska.




-33-




**A.
      Robert Handell, Executive Vice President, Chief Operating Officer, Secretary
      and
      Director.** Mr.
      Handell has served as the Company’s executive vice president, chief operating
      officer, secretary and as a director since August 2007. Mr. Handell has served
      as a director of KeyOn Communications, Inc. since December 2004 and as chief
      operating officer since January 2007. From July 2002 through December 2006,
      Mr.
      Handell served as president and as a director of CalNevAr Ventures, Inc., an
      entity formed to provide operational consulting services to KeyOn
      Communications, Inc. From May 2000 through July 2003, Mr. Handell served as
      chief executive officer and president of BroadLink Communications Inc., a
      high-speed wireless data network operator headquartered in Santa Rosa,
      California. From April 1997 through April 2000, Mr. Handell served as president
      of Edison Source, an Edison International company. From January 1996 through
      June 1997, Mr. Handell served as president and chief executive officer of
      AccessLine Technologies Inc., a provider of personal number software and systems
      to telecommunications carriers. From July 1991 through December 1995, Mr.
      Handell served as executive vice president and chief operating officer of
      BellSouth MobileComm and from April 1987 through June 1991, Mr. Handell served
      as vice president of sales, marketing and customer service at Bell Atlantic
      Mobile Systems.




**Jason
      Lazar, Vice President, Corporate Development and General Counsel.** Mr.
      Lazar
      has served as the Company’s vice president, corporate development and general
      counsel since August 2007. Mr. Lazar was the director of corporate development
      of KeyOn Communications, Inc. from March 2002 to June 2006 and has been the
      vice
      president, corporate development and general counsel of KeyOn Communications,
      Inc. since June 2006. From May 2000 through March 2002, Mr. Lazar served as
      a
      director of ITU Ventures, a leading early-stage venture capital firm with more
      than $75,000,000 under management. Mr. Lazar holds a B.A. form Lehigh University
      and a J.D. from the Benjamin N. Cardozo School of Law at Yeshiva University.




**Sidharth
      Ganju, Executive Vice President, Corporate Development and Strategy.** Mr.
      Ganju
      has served as the Company’s executive vice president, corporate development and
      strategy since October 2007. From 1988 through October 2007, Mr. Ganju held
      various management positions at BellSouth Corporation, including executive
      director, corporate development from 1998 through October 2007. From 1993
      through 1997, Mr. Ganju held various positions at the wireless and the
      international divisions of BellSouth Corporation, serving as a director of
      BellSouth Wireless from 1996 through 1997, a director, business development
      at
      BellSouth International from 1994 through 1996, and a director, paging and
      wireless strategy at BellSouth Enterprises from 1993 through 1994. From 1988
      through 1992, Mr. Ganju was a senior manager, business planning and pricing
      at
      MobilComm, a subsidiary of BellSouth Corporation. Mr. Ganju holds a B.S. in
      electrical engineering from University of Delhi, India and earned his MBA from
      the University of Mississippi. Mr. Ganju is a chartered financial analyst (CFA).




**Rory
      Erchul, Vice President, Marketing.** Mr.
      Erchul has served as the Company’s vice president of marketing since August
      2007. Mr. Erchul has been the vice president of marketing of KeyOn
      Communications, Inc. since July 2007. From December 2006 through June 2007,
      Mr.
      Erchul served as vice president of marketing and customer service for Allegiance
      Communications, LLC, a rural cable company based in Shawnee, Oklahoma. From
      February 2004 to December 2006, Mr. Erchul served as regional manager for KeyOn
      Communications, Inc.'s Idaho operations. From April 2001 to February 2004,
      Mr.
      Erchul served as marketing director for Cable ONE, Inc. in Pocatello, Idaho.
      From January 1998 to April 2001, Mr. Erchul served as marketing director for
      Cable ONE, Inc. in Norfolk, Nebraska and from February 1994 to January 1998
      as
      marketing assistant and telemarketing manager for Cable ONE, Inc. in Fargo,
      North Dakota. Mr. Erchul holds a B.S. from Moorhead State University.




**David
      Bailey, Vice President, Western Region.** Mr.
      Bailey has served as the Company’s vice president, western region since August
      2007. Mr. Bailey has been the vice president, western division of KeyOn
      Communications, Inc. since July 2007. From June 2005 to June 2007, Mr. Bailey
      served as general manager for KeyOn Communications, Inc.'s Colorado, Idaho
      and
      Iowa operations. From March 2001 to June 2005, Mr. Bailey served as the director
      of Ridge Communications LLC, a Denver, Colorado-based telecommunications
      services firm. From November 1991 to March 2001, Mr. Bailey served as regional
      director for Ericsson, managing operations and developing new business with
      BellSouth Corp. and Qwest Communications International Inc. From May 1988 to
      November 1991, Mr. Bailey served as a product marketing engineer for
      Hewlett-Packard Company in Colorado Springs, Colorado. Mr. Bailey holds a B.S.
      from Mesa State College.




-34-




**R.C.
      Mark Baker, Director.** Mr.
      Baker has served as a director since August 2007. Mr. Baker has served as a
      director of KeyOn Communications, Inc. since April 2005. Since September 2003,
      Mr. Baker has served as chief executive officer of Touchstone Systems, Inc.,
      a
      supplier of VoIP termination services to Tier 1 and Tier 2 customers around
      the
      world. Since 2003, Mr. Baker has also been a director of Cornerstone-On-Demand
      Inc., a California based provider of human capital management solutions. From
      November 1999 to January 2003, Mr. Baker served as a director of Ionex
      Telecommunications, Inc., a competitive local exchange carrier, and from July
      1999 to July 2002, Mr. Baker served as its president and chief executive
      officer. From June 1998 to March 1999, Mr. Baker served as chief executive
      officer of USA Global Link GmbH. From December 1993 to June 1998, Mr. Baker
      held
      various senior positions with AT&T Inc., including executive vice president
— international and vice president international traffic management, and from
      November 1989 to September 1992, Mr. Baker served as president and chief
      executive officer of British Telecom North America.




**Jeffrey
      Scott Rice, Director.** Mr. Rice
      has served as a director since August 2007. Mr. Rice has served as a director
      of
      KeyOn Communications, Inc. since April 2005. From January 1999 through October
      2004, at which time it was sold, Mr. Rice was chairman and chief executive
      officer of OneWest, Inc., one of the largest privately held regional Internet
      service providers in the Intermountain West. From December 1997 through January
      1999, Mr. Rice served as a principal and founding partner of Diabetic Sense,
      Inc. (a Catalyst Rx Company), a diabetic management company based in Las Vegas,
      Nevada. From March 1995 though October 1997, Mr. Rice served as a director
      of
      sales for APB America, Inc., a national pharmacy benefits management company.




**Jason
      K. Horowitz, Director.** Mr.
      Horowitz has served as a director since October 2007. Since February 2005,
      Mr.
      Horowitz has served as senior vice president of business and legal affairs
      of
      CKX, Inc. (Nasdaq: CKXE), a diversified media company. From August 2000 to
      February 2005, Mr. Horowitz was the vice president of legal affairs of FXM,
      Inc., a private investment firm. From October 1999 to July 2000, Mr. Horowitz
      was associate counsel for SFX Entertainment, Inc., the world's largest presenter
      and promoter of live entertainment. Mr. Horowitz received a B.A. from the
      University of Pennsylvania and a J.D. from Fordham University School of Law.
      Mr.
      Horowitz is a member of the advisory board of Steppingstone Day School, a not
      for profit school for handicapped babies and preschoolers.




**Curtis
      W. Anderson, Director.** Mr.
      Anderson has served as a director since October 2007. Since 1988, Mr. Anderson
      has served as chief executive officer of Fair, Anderson, & Langerman, a
      certified public accounting and business advisory firm. In addition, Mr.
      Anderson is a founder and director of Service 1st Bank of Nevada and is an
      experienced real estate developer and business investor. Mr. Anderson is also
      active in numerous several civic associations and currently serves on the board
      of Opportunity Village, a not-for-profit that serves people with intellectual
      disabilities, and the Las Vegas Art Museum. Mr. Anderson is a licensed CPA
      and
      received a B.S. from the University of Notre Dame.




Except
      for Jerome Snyder and Jonathan Snyder, who are father and son, respectively,
      there are no family relationships among the Company’s directors or executive
      officers.




**Board
      Committees**




Since
      October 2007, the standing committees of the Company’s board of directors
      consist of an audit committee, a compensation committee and a nominating
      committee. Each member of the Company’s committees is "Independent" as such term
      is defined under and required by the federal securities laws and the rules
      of
      The Nasdaq Stock Market.




-35-




*Audit
      Committee*




The
      audit
      committee of the board of directors is currently comprised of Messrs. Anderson,
      Baker and Rice, each of whom is an independent director. Mr. Anderson is a
      qualified financial expert as defined in Item 407(d)(5)(ii) of Regulation S-B
      and serves as chairman of the audit committee. The audit committee's duties
      are
      to recommend to the Company’s board of directors the engagement of independent
      auditors to audit the Company’s financial statements and to review the Company’s
      accounting and auditing principles. The audit committee reviews the scope,
      timing and fees for the annual audit and the results of audit examinations
      performed by the internal auditors and independent public accountants, including
      their recommendations to improve the system of accounting and internal controls.
      The audit committee will at all times be composed exclusively of directors
      who
      are, in the opinion of the Company’s board of directors, free from any
      relationship that would interfere with the exercise of independent judgment
      as a
      committee member and who possess an understanding of financial statements and
      generally accepted accounting principles.




*Compensation
      Committee*




The
      compensation committee of the board of directors is currently comprised of
      Messrs. Rice and Horowitz. The compensation committee reviews and approves
      the
      Company’s salary and benefits policies, including compensation of executive
      officers. The compensation committee also administers the Company’s stock option
      plans and recommends and approves grants of stock options under such
      plans.




*Nominating
      Committee*




We
      established a nominating committee of the board of directors, currently
      comprised of Messrs. Horowitz and Baker. The nominating committee considers
      and
      makes recommendations on matters related to the practices, policies and
      procedures of the board and takes a leadership role in shaping the Company’s
      corporate governance. As part of its duties, the committee assesses the size,
      structure and composition of the board and board committees, coordinates
      evaluation of board performance and reviews board compensation. The committee
      also acts as a screening and nominating committee for candidates considered
      for
      election to the board. In this capacity it concerns itself with the composition
      of the board with respect to depth of experience, balance of professional
      interests, required expertise and other factors. The committee evaluates
      prospective nominees identified on its own initiative or referred to it by
      other
      board members, management, stockholders or external sources and all
      self-nominated candidates. The committee uses the same criteria for evaluating
      candidates nominated by stockholders and self-nominated candidates as it does
      for those proposed by other board members, management and search companies.




**Code
      of Ethics**




We
      have
      adopted a written code of ethics and business conduct that applies to the
      Company’s directors, executive officers and all employees. The Company intends
      to disclose any amendments to, or waivers from, the Company’s code of ethics and
      business conduct that are required to be publicly disclosed pursuant to rules
      of
      the Securities and Exchange Commission by filing such amendment or waiver with
      the Securities and Exchange Commission. This code of ethics and business conduct
      can be found in the corporate governance section of the Company’s website,
      www.keyon.com. The Company shall provide to any person without charge a copy
      of
      its code of ethics, upon written request to the following address: KeyOn
      Communications Holdings, Inc., 11742 Stonegate Circle, Omaha, Nebraska 68164,
      Attention: General Counsel.




**Item
      10. Executive Compensation.**




**Summary
      Compensation Table**




The
      following table summarizes the annual and long-term compensation paid to
      Jonathan Snyder, the Company’s chief executive officer, A. Robert Handell, the
      Company’s executive vice president, chief operating officer and secretary and
      Jason Lazar, the Company's vice president of corporate development and
      general counsel, whom the Company jointly refers to as the "named executive
      officers." Except for Messrs. Handell, Snyder and Lazar, no other executive
      officer received annual remuneration in excess of $100,000 during 2007.




-36-




**Name
                and Principal Position**
            
            **Year**
            
            **Salary**
              **($)**
            
            **Bonus**
              **($)**
            
            **Option
                Awards(1)**
              **($)**
            
            **All
                Other Compensation**
              **($)**
            
            **Total**
              **($)**Jonathan
                Snyder
            
            
            2007
            
            
            112,269
            
            
            —
            
            
            337,402
            
            
            —
            
            
            449,671President
                and Chief Executive Officer(principal
                executive officer)
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —A.
                Robert Handell
            
            
            2007
            
            
            122,686
            
            
            —
            
            
            99,796
            
            
            —
            
            
            222,482Executive
                Vice President and Chief Operating Officer
            
            
            2006
            
            
            —
            
            
            —
            
            
            —
            
            
            125,000
            (2)
            
            125,000Jason
                Lazar
            
            
            2007
            
            
            95,876
            
            
            —
            
            
            99,796
            
            
            —
            
            
            195,852Vice
                President, Corporate Development and General Counsel
            
            
            2006
            
            
            70,000
            
            
            —
            
            
            —
            
            
            —
            
            
            70,000







(1)
            Based
                upon the aggregate grant date fair value calculated in accordance
                with the
                Financial Accounting Standards Board Statement of Financial Accounting
                Standard No. 123R, Share Based Payment. For information regarding
                the
                Company’s valuation of option awards, see “Critical Accounting Policies —
                Stock-Based Expense.”




(2)
            During
                the fiscal year ended December 31, 2006, the Company paid CalNevAr
                Ventures, Inc., an entity formed to provide operational consulting
                services to the Company and with respect to which A. Robert Handell
                and
                his family are the sole stockholders, consulting fees of
                $125,000.




**Outstanding
      Equity Awards at Fiscal Year-End**




The
      following table summarizes the outstanding equity awards to the Company’s named
      executive officers as of December 31, 2007:




**Option
                Awards****Name**
            
            **Number
                of Securities Underlying Unexercised**
              **Options
                Exercisable**
              **(#)**
            
            **Number
                of Securities Underlying Unexercised**
              **Options
                Unexercisable**
              **(#)**
            
            **Option
                Exercise Price**
              **($)**
            
            **Option**
              **Expiration**
              **Date**Jonathan
                Snyder
            
            
            —
            
            
            75,000
            (1)
            
            4.00
            
            
            08/08/2017A.
                Robert Handell
            
            
            —
            
            
            37,500
            (1)
            
            4.00
            
            
            08/08/2017Jason
                Lazar
            
            
            —
            
            
            37,500
            (1)
            
            4.00
            
            
            08/08/2017





(1)
      These
      options shall become exercisable in full on August 9, 2008.





**2007
      Incentive Stock and Awards Plan**




On
      August
      9, 2007, the Company’s board of directors and stockholders adopted the 2007
      Incentive Stock and Awards Plan. The purpose of the 2007 Incentive Stock and
      Awards Plan is to provide an incentive to attract and retain directors,
      officers, consultants, advisors and employees whose services are considered
      valuable, to encourage a sense of proprietorship and to stimulate an active
      interest of such persons in the Company’s development and financial success.
      Under the 2007 Incentive Stock and Awards Plan, the Company is authorized to
      issue incentive stock options intended to qualify under Section 422 of the
      Internal Revenue Code of 1986, as amended, non-qualified stock options, stock
      appreciation rights, performance shares, restricted stock and long term
      incentive awards. The 2007 Incentive Stock and Awards Plan is administered
      by
      the Company’s board of directors. Upon consummation of the Company’s reverse
      merger on August 9, 2007, the Company granted options to purchase common stock
      under the 2007 Incentive Stock and Awards Plan to the following executive
      officers:




**Name**
            
            **Shares
                Subject to Options**
            
            **Exercise
                Price**
            
            **Vesting
                Schedule**
            
            **Expiration**Jonathan
                Snyder
            
            
            75,000
            
            $
            4.00
            
            
            100%
                on the one year anniversary of the grant date
            
            
            10
                years from date of grantA.
                Robert Handell
            
            
            37,500
            
            $
            4.00
            
            
            100%
                on the one year anniversary of the grant date
            
            
            10
                years from date of grantJason
                Lazar
            
            
            37,500
            
            $
            4.00
            
            
            100%
                on the one year anniversary of the grant date
            
            
            10
                years from date of grant





**Director
      Compensation**




The
      following table summarizes the compensation awarded to the Company’s directors
      in 2007:




**Name**
            
            **Fees
                Earned or Paid in Cash**
              **($)**
            
            **Option
                Awards**
              **($)(1)**
            
            **Total**
              **($)**Jeffrey
                Scott Rice
            
            
            —
            
            
            77,218
            
            
            77,218R.C.
                Mark Baker
            
            
            —
            
            
            77,093
            
            
            77,093Curt
                Anderson
            
            
            —
            
            
            12,500
            
            
            12,500Jerome
                Snyder
            
            
            —
            
            
            15,000
            
            
            15,000Jason
                Horowitz
            
            
            —
            
            
            12,250
            
            
            12,250







(1)
            Based
                upon the aggregate grant date fair value calculated in accordance
                with the
                Financial Accounting Standards Board Statement of Financial Accounting
                Standard No. 123R, Share Based Payment. For information regarding
                the
                Company’s valuation of option awards, see “Critical Accounting Policies —
                Stock-Based Expense.”




During
      June 2007, KeyOn Communications, Inc. ratified the grant of 1,000 options to
      each of its directors who were not stockholders of KeyOn Communications, Inc.
      These options were awarded for service commencing in April 2005 and vested
      through April 2009, half of which options have vested. In connection with the
      Company’s reverse merger on August 9, 2007, each of these directors, who are now
      the Company’s directors, exchanged his 1,000 options to purchase common stock of
      KeyOn Communications, Inc., at an exercise price of $75 per share, for 60,443
      options to purchase the Company’s common stock at an exercise price of $2.48 per
      share.




-37-




Each
        director receives an annual retainer fee of $40,000, payable 80% in equity
        and
        20% in cash.  However, each director can elect to take up to all of his
        cash fees in equity.  The equity issued may take any available form,
        including options or restricted stock at the discretion of each director.
 The non-executive chairman receives an additional $20,000 annual fee,
        payable 100% in equity. All additional compensation to be paid to the members
        of
        the committees is paid in equity.  The chairman of the audit committee
        receives a payment of $10,000 per year.  Each other member of the audit
        committee receives a payment of $4,000 per year. The chairman of the
        compensation committee receives a payment of $5,000 per year.  Each other
        member of the compensation committee receives a payment of $2,500 per year.
         The chairman of the nominating and corporate governance
        committee receives a payment of $4,000 per year.  Each other member of
        the nominating and corporate governance committee receives a payment of
        $2,000 per year.




**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**




The
      following table sets forth information with respect to the beneficial ownership
      of the Company’s common stock as of March 31, 2008 by:




·
            each
                person known by the Company to beneficially own more than 5% of the
                Company’s common stock;




·
            each
                of the Company’s directors;




·
            each
                of the named executive officers; and




·
            all
                of the Company’s directors and executive officers as a group.




The
      percentages of common stock beneficially owned are reported on the basis of
      regulations of the Securities and Exchange Commission governing the
      determination of beneficial ownership of securities. Under the rules of the
      Securities and Exchange Commission, a person is deemed to be a beneficial owner
      of a security if that person has or shares voting power, which includes the
      power to vote or to direct the voting of the security, or investment power,
      which includes the power to dispose of or to direct the disposition of the
      security. Except as indicated in the footnotes to this table, each beneficial
      owner named in the table below has sole voting and sole investment power with
      respect to all shares beneficially owned and each person's address is c/o KeyOn
      Communications Holdings, Inc., 11742 Stonegate Circle, Omaha, Nebraska 68164.
      As
      of December 18, 2007, the Company had 8,249,106 shares outstanding.




**Name
                of Beneficial Owner**
            
            **Number
                of Shares Beneficially Owned(1)**
            
            **Percentage
                Beneficially Owned(1)**Jonathan
                Snyder
            
            
            998,461
            
            
            12.10
            %Jerome
                Snyder
            
            
            1,188,769
            (2)
            
            14.41
            %A.
                Robert Handell
            
            
            349,063
            (3)
            
            4.23
            %Jason
                Lazar
            
            
            228,872
            
            
            2.77
            %R.C.
                Mark Baker
            
            
            63,530
            (4)
            
            *Jeffrey
                Scott Rice
            
            
            63,563
            (4)
            
            *Jason
                Horowitz
            
            
            10,845
            (5)
            
            *Curtis
                W. Anderson
            
            
            10,216
            (6)
            
            *All
                directors and executive officers as a group (12 persons)
            
            
            2,933,467
            
            
            35.56
            %





*  Less
      than
      1%.





(1)
            Shares
                of common stock beneficially owned and the respective percentages
                of
                beneficial ownership of common stock assumes the exercise of all
                options,
                warrants and other securities convertible into common stock beneficially
                owned by such person or entity currently exercisable or exercisable
                within
                60 days of December 31, 2007. Shares issuable pursuant to the exercise
                of
                stock options and warrants exercisable within 60 days are deemed
                outstanding and held by the holder of such options or warrants for
                computing the percentage of outstanding common stock beneficially
                owned by
                such person, but are not deemed outstanding for computing the percentage
                of outstanding common stock beneficially owned by any other person.




-38-





(2)
            Includes
                5,440 shares of common stock issuable upon the exercise of warrants
                and
                79,483 shares of common stock held by Aarken Holdings, LLC, with
                respect
                to which Jerome Snyder is the managing member.





(3)
            Includes
                74,345 shares of common stock that are held jointly by A. Robert
                Handell
                and Dani Jo Handell, A. Robert Handell's spouse.





(4)
            Represents
                45,332 shares of common stock issuable upon the exercise of options.





(5)
            Includes
                998 shares of common stock issuable upon the exercise of warrants.





(6)
            These
                shares are held by Fair, Anderson & Langerman, with respect to which
                Mr. Anderson is the chief executive officer and a
                stockholder.





**Item
      12. Certain Relationships and Related Transactions, and Director
      Independence.**




On
      January 30, 2007, KeyOn issued a $3,000,000 promissory note to Sun West Bank,
      pursuant to which Sun West Bank advanced $3,000,000 to us. This note was
      satisfied in full on February 8, 2008. Repayment under this note was guaranteed
      by Jonathan Snyder, the Company’s president, chief executive officer and a
      director, and Barry Becker, a former director who resigned in October 2007.
      Jerome Snyder, the Company’s chairman, and Steven Shearing agreed to indemnify
      Jonathan Snyder and Barry Becker for certain obligations under this guaranty.
      Jerome Snyder is a minority shareholder and director of Sun West Bank.




On
      February 8, 2008, the Company entered into a Business Loan Agreement and
      Promissory Note with Sun
      West
      Bank ,
      pursuant to which it obtained a loan in the principal amount of up to
      $4,500,000.00. This loan is evidenced by a promissory note bearing interest
      at a
      variable rate equal to 2.5 percentage points above the prime rate of Sun West
      Bank, with an initial interest rate equal to eight and three quarter percent
      (8.75%) per annum. Unpaid accrued interest under the note is due and payable
      monthly commencing March 4, 2008 and all advances due under the loan are due
      and
      payable on August 4, 2008, and extendable at the Company’s option, until
      February 4, 2009. The Company’s obligations under this loan are guaranteed by
      each of Jerome Snyder, Jonathan Snyder, and Barry Becker. As consideration
      for
      providing these guarantees, the Company issued each of Jerome Snyder, Jonathan
      Snyder and Barry Becker a five year warrant to purchase 208,128 shares of common
      stock at an exercise price of $4.00 per share, a five year warrant to purchase
      69,375 shares of common stock at an exercise price of $6.00 per share and a
      five
      year warrant to purchase 69,375 shares of common stock at an exercise price
      of
      $8.00 per share.




From
      2002
      through 2006, A. Robert Handell served as the Company’s chief operating officer
      pursuant to a consulting agreement the Company entered into with CalNevAr
      Ventures, Inc., a company controlled by Mr. Handell. During each of 2005 and
      2006, the Company paid CalNevAr Ventures, Inc. consulting fees of $125,000
      in
      connection with Mr. Handell serving as the Company’s chief operating officer. In
      addition to consulting fees, in 2005, the Company loaned CalNevAr Ventures,
      Inc.
      approximately $37,500 for additional services, which was forgiven by the Company
      in 2006.




**Director
      Independence**




R.C.
      Mark
      Baker, Jeffrey Scott Rice, Curtis W. Anderson and Jason K. Horowitz are
      independent directors, as provided in Nasdaq Marketplace Rule
      4200(a)(15).




-39-




**Item
      13. Exhibits.**




**Exhibit
                No.******
            
            **Description**2.1
            
            Agreement
                and Plan of Merger and Reorganization, dated as of August 9, 2007,
                by and
                among Grant Enterprises, Inc., KeyOn Acquisition Corp., and KeyOn
                Communications, Inc. (Incorporated by reference to Exhibit 2.1 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).2.2
            
            Asset
                Purchase Agreement, dated as of October 18, 2007, by and between
                KeyOn
                Communications Holdings, Inc. and MicroLink, LLC (Incorporated by
                reference to Exhibit 2.1 to the Current Report on Form 8-K of KeyOn
                Communications Holdings, Inc. filed with the Securities and Exchange
                Commission on October 24, 2007).3.1
            
            Composite
                Certificate of Incorporation of KeyOn Communications Holdings, Inc.
                (Incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the
                Registration Statement on Form SB-2/A of KeyOn Communications Holdings,
                Inc. filed with the Securities and Exchange Commission on November
                16,
                2007).3.2
            
            Amended
                and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).10.1*
            
            KeyOn
                Communications Holdings, Inc.2007
                Stock and Awards Plan(Incorporated
                by reference to Exhibit 10.1 to the Current Report on Form 8-K of
                KeyOn
                Communications Holdings, Inc. filed with the Securities and Exchange
                Commission on August 10, 2007).10.2*
            
            Form
                of Stock Option Award Agreement (Incorporated by reference to Exhibit
                10.2
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.3*
            
            Form
                of Restricted Stock Agreement (Incorporated by reference to Exhibit
                10.3
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.4
            
            Selling
                Agreement, dated August 6, 2007, by and between KeyOn Communications,
                Inc.
                and WFG Investments, Inc. (Incorporated by reference to Exhibit 10.7
                to
                the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.5
            
            Stock
                Purchase Agreement, date as of August 9, 2007, by and among Grant
                Enterprises, Inc. and each of Richard S. Carrigan, Aileen D. Carrigan
                and
                Patrick E. Carrigan (Incorporated by reference to Exhibit 10.8 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).10.6
            
            Agreement
                of Conveyance, Transfer and Assignment of Assets and Assumption of
                Obligations, dated as of August 9, 2007, by and between Grant Enterprises,
                Inc. and Grant Enterprises, LLC (Incorporated by reference to Exhibit
                10.9
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).




-40-




10.7
            
            Master
                Electronic Equipment Lease, dated August 18, 2005, by and between
                Data
                Sales Company, and KeyOn Communications, Inc. (Incorporated by reference
                to Exhibit 10.10 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.8
            
            Master
                Lease Agreement, dated November 9, 2005, by and between Agility Lease
                Fund
                I, LLC and KeyOn Communications, Inc. (Incorporated by reference
                to
                Exhibit 10.11 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.9
            
            Form
                of Directors and Officers Indemnity Agreement (Incorporated by reference
                to Exhibit 10.13 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.10
            
            Bridge
                Note Purchase Agreement, dated as of November 6, 2007, by and between
                KeyOn Communications Holdings, Inc. and the lenders thereunder
                (Incorporated by reference to Exhibit 10.1 to the Current Report
                on Form
                8-K of KeyOn Communications Holdings, Inc. filed with the Securities
                and
                Exchange Commission on November 7, 2007).10.11
            
            Form
                of Private Placement Subscription Agreement (Incorporated by reference
                to
                Exhibit 10.4 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.12
            
            Form
                of Warrant to Purchase Common Stock (Incorporated by reference to
                Exhibit
                10.5 to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc. filed with the Securities and Exchange Commission on August
                10,
                2007).10.13
            
            Form
                of Placement Agent Warrant to Purchase Common Stock (Incorporated
                by
                reference to Exhibit 4.3 to the Registration Statement on Form SB-2
                of
                KeyOn Communications Holdings, Inc. filed with the Securities and
                Exchange
                Commission on October 5, 2007).10.14
            
            Form
                of Private Placement Lock-up Agreement (Incorporated by reference
                to
                Exhibit 10.6 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.15
            
            Business
                Loan Agreement, dated February 8, 2008, by and between KeyOn
                Communications Holdings, Inc. and Sun West Bank (Incorporated by
                reference
                to Exhibit 10.1 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on
                February 14, 2008).10.16
            
            Promissory
                Note, dated February 8, 2008, issued by KeyOn Communications Holdings.
                Inc. to Sun West Bank (Incorporated by reference to Exhibit 10.2
                to the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on February 14,
                2008).




10.17
            
            Commercial
                Security Agreement, dated February 8, 2008, by and between KeyOn
                Communications Holdings, Inc. and Sun West Bank (Incorporated by
                reference
                to Exhibit 10.3 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on
                February 14, 2008).




-41-




10.18
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Jerome Snyder in favor
                of
                Sun West Bank (Incorporated by reference to Exhibit 10.4 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on February 14,
                2008).10.19
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Jonathan Snyder in
                favor of
                Sun West Bank (Incorporated by reference to Exhibit 10.5 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on February 14,
                2008).10.20
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Barry Becker in favor
                of Sun
                West Bank (Incorporated by reference to Exhibit 10.6 to the Current
                Report
                on Form 8-K of KeyOn Communications Holdings, Inc. filed with the
                Securities and Exchange Commission on February 14,
                2008).10.21
            
            Form
                of Warrant issued to Guarantors of Business Loan Agreement with Sun
                West
                Bank (Incorporated by reference to Exhibit 10.7 to the Current Report
                on
                Form 8-K of KeyOn Communications Holdings, Inc. filed with the Securities
                and Exchange Commission on February 14,
                2008).




14.1
            
            Code
                of Ethics21.1
            
            Subsidiaries
                of Registrant (Incorporated by reference to Exhibit 21.1 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on August 10, 2007).31.1
            
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                by the Chief Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





*  Management
      compensatory plan.




**Item
      14. Principal Accountant Fees and Services.**




L.L.
      Bradford & Company, LLC has served as independent registered public
      accounting firm since August 2007 when KeyOn became a publicly held Company.
      L.L. Bradford & Company, LLC was also the Company’s independent registered
      public accounting firm for periods prior to August 2007 when it was privately
      held.




-42-




**(1)
      Audit Fees**




L.L.
      Bradford & Company, LLC  billed
      the Company audit fees in the aggregate amount of $117,000 in the year
      ended December 31, 2007 and did not bill the Company for any such fees in the
      year ended December 31, 2006. These
      fees relate to the audit of the Company’s annual financial statements and the
      review of the Company’s interim quarterly financial statements.




**(2)
      Audit-Related Fees**




L.L.
      Bradford & Company, LLC, billed the Company audit-related fees in the
      aggregate amount of $13,750 in the year ended December 31, 2007 and
      did not bill the Company for any such fees in the year ended December 31, 2006.
      These fees relate primarily to the auditors review of the Company’s registration
      statements and related consents, audit of acquired companies or assets and
      audit
      related consulting.




**(3)
      Tax Fees**




L.L.
      Bradford & Company, LLC, billed the Company tax fees in the aggregate amount
      of $7,000 in the year ended December 31, 2007 and did not bill the Company
      for
      any such fees in the year ended December 31, 2006.




**(4)
      All Other Fees**




No
      fees
      of this sort were billed by L.L. Bradford & Company, LLC during 2007 and
      2006 and since the Company’s inception in 2002.




-43-




**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




**KEYON
                COMMUNICATIONS HOLDINGS, INC.**Date:March
              31, 2008
            By:
            /s/
              Jonathan SnyderJonathan
                Snyder
              President
                and Chief Executive Officer




In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Registrant and in the capacities and the
      dates indicated.




**Signature**
            
            **Title**
            
            **Date**/s/
                Jonathan Snyder
              Jonathan
                Snyder
            
            President,
                Chief Executive Officer and Director
              (Principal
                Executive Officer)
            
            March
                31, 2008/s/
                Annette Eggert
              Annette
                Eggert
            
            Chief
                Financial Officer (Principal Financial
              Officer
                and Principal Accounting Officer)
            
            March
                31, 2008/s/
                Jerome Snyder
                Jerome
                Snyder
            
            Chairman
                of the Board of Directors
            
            March
                31, 2008/s/
                A. Robert Handell
              A.
                Robert Handell
            
            Director
            
            March
                31, 2008/s/
                R.C. Mark Baker
              R.C.
                Mark Baker
            
            Director
            
            March
                31, 2008/s/
                Jeffrey Scott Rice
              Jeffrey
                Scott Rice
            
            Director
            
            March
                31, 2008/s/
                Jason K. Horowitz
              Jason
                K. Horowitz
            
            Director
            
            March
                31, 2008/s/
                Curtis W. Anderson
              Curtis
                W. Anderson
            
            Director
            
            March
                31, 2008




-44-





**KEYON
      COMMUNICATIONS HOLDINGS, INC.**


**AND
      RELATED ENTITIES**


**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**





Report
                of Independent Registered Accounting Firm
            
            
            F-2Consolidated
                Balance Sheets as of December 31, 2007
            
            
            F-3Consolidated
                Statements of Operations for the Years Ended December 31, 2007 and
                2006
            
            
            F-4Consolidated
                Statements of Shareholders’ Equity for the Years Ended December 31, 2007
                and 2006
            
            
            F-5Consolidated
                Statements of Cash Flows for the Years Ended December 31, 2007 and
                2006
            
            
            F-6Notes
                to Consolidated Financial Statements
            
            
            F-7





F-1




**REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
        the
        Board of Directors and Stockholders
 KeyOn
        Communications Holdings Inc. and Related Entities
 Omaha,
        Nebraska
 
 We
        have
        audited the accompanying consolidated balance sheets of KeyOn Communications
        Holdings Inc. and Related Entities as of December 31, 2007, and the related
        consolidated statements of operations, stockholders’ equity, and cash flows for
        the years ended December 31, 2007 and 2006. These consolidated financial
        statements are the responsibility of the Company’s management. Our
        responsibility is to express an opinion on these consolidated financial
        statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). ** Those
        standards require that we plan and perform the audit to obtain reasonable
        assurance about whether the financial statements are free of material
        misstatement. The
        Company is not required to have, nor were we engaged to perform, an audit
        of its
        internal control over financial reporting. Our audit included consideration
        of
        internal control over financial reporting as a basis for designing audit
        procedures that are appropriate in the circumstances, but not for the purpose
        of
        expressing an opinion on the effectiveness of the Company’s internal control
        over financial reporting. Accordingly, we express no such opinion. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the financial statements. An audit also includes assessing
        the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. We believe that
        our
        audit provides a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of KeyOn Communications
        Holdings Inc. and Related Entities as of December 31, 2007, and the results
        of
        its activities and cash flows for the years ended December 31, 2007 and 2006
        in
        conformity with accounting principles generally accepted in the United
        States.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 1 to the
        consolidated financial statements, the Company has suffered recurring losses
        from operations, negative cash flows from operations and current liabilities
        exceed current assets, all of which raise substantial doubt about the Company’s
        ability to continue as a going concern. Management’s plans in regards to these
        matters are also described in Note 1. The consolidated financial statements
        do
        not include any adjustments that might result from the outcome of this
        uncertainty.
 
 /S/
        L.L.
        Bradford & Company, LLC
 March
        26,
        2008
 Las
        Vegas, Nevada


F-2


**KEYON
                COMMUNICATIONS HOLDINGS INC. AND RELATED ENTITIES****CONSOLIDATED
                BALANCE SHEET****AS
                OF DECEMBER 31, 2007**




**ASSETS**
            
            **2007**CURRENT
                ASSETS:Cash
            
            $
            316,999Accounts
                receivable, net of allowance for doubtful accounts
            
            
            94,098Inventories
            
            
            300,610Prepaid
                expenses and other current assets
            
            
            75,259Total
                current assets
            
            
            786,966PROPERTY
                AND EQUIPMENT - Net
            
            
            4,571,220OTHER
                ASSETSGoodwill
            
            
            1,738,773Subscriber
                base - net
            
            
            964,787Trademarks
            
            
            16,667Refundable
                deposits
            
            
            65,624Debt
                issuance costs - net
            
            
            10,065Total
                other assets
            
            
            2,795,916TOTAL
                ASSETS
            
            $
            8,154,102**LIABILITIES
                AND STOCKHOLDERS' EQUITY**CURRENT
                LIABILITIESAccounts
                payable and accrued expenses
            
            $
            2,389,356Cash
                overdraft
            
            
            298,516Revolving
                line of credit
            
            
            100,000Term
                loan payable - related party
            
            
            3,000,000Current
                portion of notes payable
            
            
            149,685Current
                portion of deferred rent liability
            
            
            57,007Current
                portion of capital lease obligations
            
            
            742,562Deferred
                revenue
            
            
            391,193Total
                current liabilities
            
            
            7,128,319LONG-TERM
                LIABILITIESDeferred
                rent liability, less current maturities
            
            
            200,320Notes
                payable, less current maturities
            
            
            68,525Capital
                lease obligations, less current maturities
            
            
            667,639Total
                long term liabilities
            
            
            936,484COMMITMENTS
                AND CONTINGENCIESSTOCKHOLDERS'
                EQUITYSeries
                A preferred stock, $0.001 par value; 5,000,000 sharesauthorized;
                0 shares issued and outstanding at December 31, 2007
            
            
            -Common
                stock, $0.001 par value; 95,000,000 shares authorized;8,249,106****shares
                issued and outstanding at December 31, 2007
            
            
            8,249Additional
                paid-in capital
            
            
            13,739,714Accumulated
                deficit
            
            
            (13,658,664
            )Total
                stockholders' equity
            
            
            89,299TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY
            
            $
            8,154,102See
                notes to consolidated financial statements.




F-3




**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED ENTITIES****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
  **For
                  the Year Ended December 31, 2007,****2007**
              
              **2006**REVENUESService
                  and installation revenue
              
              $
              7,060,343
              
              $
              2,284,396Support
                  and other revenue
              
              
              125,090
              
              
              146,433Total
                  revenues
              
              
              7,185,433
              
              
              2,430,829OPERATING
                  COSTS AND EXPENSESPayroll,
                  bonuses and taxes
              
              
              3,502,610
              
              
              1,329,654Depreciation
                  and amortization
              
              
              2,572,906
              
              
              1,063,881Other
                  general and administrative expense
              
              
              1,749,643
              
              
              767,155Network
                  operating costs
              
              
              2,523,601
              
              
              665,259Marketing
                  and advertising
              
              
              558,922
              
              
              234,324Installation
                  expense
              
              
              380,944
              
              
              145,956Professional
                  fees
              
              
              1,257,569
              
              
              111,387Stock
                  based compensation
              
              
              1,606,893
              
              
              13,059Total
                  operating costs and expenses
              
              
              14,153,088
              
              
              4,330,675LOSS
                  FROM OPERATIONS
              
              
              (6,967,655
              )
              
              (1,899,846
              )OTHER
                  INCOME (EXPENSE)Interest
                  income
              
              
              39,776
              
              
              11,982Interest
                  expense
              
              
              (682,874
              )
              
              (246,736
              )Acquistion
                  expense
              
              
              -
              
              
              (72,487
              )Minority
                  interest in income
              
              
              -
              
              
              713Total
                  other income (expense)
              
              
              (643,098
              )
              
              (306,528
              )PROVISION
                  FOR INCOME TAXES
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (7,610,753
              )
              $
              (2,206,374
              )Net
                  loss per common share--basic and diluted
              
              $
              (1.18
              )
              $
              (0.48
              )Weighted
                  average common shares outstanding--basic anddiluted
              
              
              6,452,646
              
              
              4,551,835See
                  notes to consolidated financial statements




F-4


**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED ENTITIES****CONSOLIDATED
                  STATEMENT OF STOCKHOLDERS' EQUITY**
 **FOR
          THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  Warrants
            Granted for Debt Issuance Costs, March 31,
 **Common
                      Stock**
                
                **Additional
                    Paid-**
                
                **Accumulated**
                
                **Total
                    Stockholders'****Shares**
                
                **Amount**
                
                **In
                    Capital**
                
                **Deficit**
                
                **Equity**BALANCE,
                    January 1, 2006 (see Note 1)
                
                
                4,696,391
                
                $
                4,553
                
                $
                4,934,208
                
                $
                (3,561,980
                )
                $
                1,376,781Acquisition
                    - Pocatello, June, 2006
                
                
                10,000
                
                
                100
                
                
                912,600
                
                
                -
                
                
                912,700Acquisition
                    - Minority Interest Pahrump, November, 2006
                
                
                5,917
                
                
                59
                
                
                547,648
                
                
                (279,557
                )
                
                268,150Warrants
                    Granted for Debt Issuance Costs 2006
                
                
                -
                
                
                -
                
                
                38,521
                
                
                -
                
                
                38,521Stock
                    Based Compensation, December, 2006
                
                
                -
                
                
                -
                
                
                13,059
                
                
                -
                
                
                13,059Net
                    loss for the year ended December 31, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,206,374
                )
                
                (2,206,374
                )BALANCE,
                    January 1, 2007 (see Note 1)
                
                
                4,712,308
                
                $
                4,712
                
                $
                6,446,036
                
                $
                (6,047,911
                )
                $
                402,837Common
                    Stock Issued for Cash, January 5, 2007
                
                
                422,617
                
                
                423
                
                
                1,607,627
                
                
                -
                
                
                1,608,050Common
                    Stock Exchanged for Professional Services, March 31, 2007
                
                
                6,861
                
                
                7
                
                
                26,098
                
                
                -
                
                
                26,105Common
                      Stock Issued for Mandatorily Converted Notes Payable, January
                      31,
                      2007
                
                
                306,566
                
                
                307
                
                
                1,166,253
                
                
                -
                
                
                1,166,560Warrants
                      Granted on Mandatorily Converted Notes Payable
                
                
                -
                
                
                -
                
                
                54,139
                
                
                -
                
                
                54,139Warrants
                      Granted for Debt Issuance Costs, March 31, 2007
                
                
                -
                
                
                -
                
                
                4,586
                
                
                -
                
                
                4,586Stock
                    Based Compensation, March 31, 2007
                
                
                -
                
                
                -
                
                
                4,585
                
                
                -
                
                
                4,585Warrants
                    Granted for Debt Issuance Costs, June 30, 2007
                
                
                -
                
                
                -
                
                
                34,584
                
                
                -
                
                
                34,584Stock
                    Based Compensation, June 30, 2007
                
                
                -
                
                
                -
                
                
                (3,994
                )
                
                -
                
                
                (3,994
                )Exercise
                    of $.05 Warrants, August 1, 2007
                
                
                192,906
                
                
                193
                
                
                9,509
                
                
                -
                
                
                9,702Exercise
                    of $.0007 Warrants, August 1, 2007
                
                
                92,055
                
                
                92
                
                
                (36
                )
                
                -
                
                
                56Grant
                    of Guaranty Warrants, July, 2007
                
                
                
                
                
                
                
                
                901,566
                
                
                -
                
                
                901,566Exercise
                    of Guaranty Warrants, August, 2007
                
                
                225,393
                
                
                225
                
                
                (225
                )
                
                -
                
                
                -Stock
                    Option Exercised, July, 2007
                
                
                816
                
                
                1
                
                
                -
                
                
                -
                
                
                1Grant
                    of $.0007 Stock Options, July, 2007
                
                
                -
                
                
                -
                
                
                181,073
                
                
                -
                
                
                181,073Conversion
                    of $.0007 Employee Options to Restricted Stock, August,
                    2007
                
                
                640,496
                
                
                640
                
                
                (640
                )
                
                -
                
                
                -Common
                      Stock Issued for Professional Services, August 9,
                      2007
                
                
                50,000
                
                
                50
                
                
                199,950
                
                
                -
                
                
                200,000Common
                    Stock Issued for Cash, August 9, 2007
                
                
                551,750
                
                
                552
                
                
                2,087,948
                
                
                -
                
                
                2,088,500Grant
                    Enterprise Merger Shares
                
                
                900,001
                
                
                900
                
                
                (900
                )
                
                -
                
                
                -Stock
                    Based Compensation, September 30, 2007
                
                
                -
                
                
                -
                
                
                256,644
                
                
                -
                
                
                256,644Warrant
                    Granted for Debt Issuance Costs, September 30,2007
                
                
                -
                
                
                -
                
                
                10,606
                
                
                -
                
                
                10,606Series
                    A Warrants Exercised, December, 2007
                
                
                147,336
                
                
                147
                
                
                487,303
                
                
                -
                
                
                487,450Stock
                    Based Compensation, December 31, 2007
                
                
                
                
                
                
                
                
                204,127
                
                
                -
                
                
                204,127Director
                    Stock Based Compensation, December 31, 2007
                
                
                -
                
                
                -
                
                
                62,875
                
                
                -
                
                
                62,875Net
                    loss for the year ended December 31, 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                (7,610,753
                )
                
                (7,610,753
                )BALANCE,
                    December 31, 2007
                
                
                8,249,106
                
                $
                8,249
                
                $
                13,739,714
                
                $
                (13,658,664
                )
                $
                89,299See
                    notes to consolidated financial statements.




F-5


**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED ENTITIES****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS****FOR
                  THE YEARS ENDED DECEMBER 31, 2007 AND 2006**
  **2007**
              
              **2006****CASH
                  FLOWS FROM OPERATIONS**Net
                  loss
              
              $
              (7,610,753
              )
              $
              (2,206,374
              )Adjustments
                  to reconcile net loss to net cash flows from operations:Depreciation
                  expense
              
              
              2,259,166
              
              
              1,041,963Amortization
                  expense on subscriber base
              
              
              313,740
              
              
              21,918Stock
                  based compensation expense
              
              
              1,606,893
              
              
              13,059Warrant
                  interest expense
              
              
              133,847
              
              
              -Professional
                  services in exchange for stock
              
              
              226,105
              
              
              -Change
                  in assets and liabilities, net of effect of acquisitions:Accounts
                  receivable
              
              
              25,210
              
              
              33,247Inventory
              
              
              8,056
              
              
              -Prepaid
                  expenses and other current assets
              
              
              48,699
              
              
              (8,035
              )Refundable
                  deposits
              
              
              (5
              )
              
              (36,806
              )Other
                  assets
              
              
              66,692
              
              
              (28,964
              )Accounts
                  payable and accrued expenses
              
              
              1,672,664
              
              
              (1,320
              )Deferred
                  rent liability
              
              
              (7,673
              )
              
              -Deferred
                  revenue
              
              
              (98,492
              )
              
              27,265**Net
                  cash flows from operations**
              
              
              (1,355,852
              )
              
              (1,144,047
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Capital
                  expenditures for property and equipment
              
              
              (819,597
              )
              
              (36,708
              )Acquisition
                  of SpeedNet and Microlnk
              
              
              (4,118,236
              )
              
              -**Net
                  cash flows from investing activities**
              
              
              (4,937,833
              )
              
              (36,708
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Proceeds
                  from cash overdraft
              
              
              -
              
              
              57,434Payment
                  on cash overdraft
              
              
              234,656
              
              
              -Payments
                  on loans payable to shareholder
              
              
              (160,000
              )
              
              160,000Proceeds
                  from term note payable
              
              
              3,000,000
              
              
              -Payments
                  on notes payable
              
              
              (27,695
              )
              
              (54,514
              )Proceeds
                  from notes payable
              
              
              81,993
              
              
              100,000Payments
                  on capital lease obligations
              
              
              (691,702
              )
              
              (320,678
              )Proceeds
                  from notes payable to shareholders
              
              
              
              
              
              1,065,999Payments
                  on notes payable to shareholders
              
              
              (25,000
              )
              
              (10,000
              )Proceeds
                  from stock issuance
              
              
              4,193,743
              
              
              -**Net
                  cash flows from financing activities**
              
              
              6,605,995
              
              
              998,241**NET
                  INCREASE/ (DECREASE) IN CASH**
              
              
              312,309
              
              
              (182,515
              )**CASH
                  - Beginning of period**
              
              
              4,690
              
              
              187,205**CASH
                  - End of period**
              
              $
              316,999
              
              $
              4,690**SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION**Acquistion
                  - SpeedNetAccounts
                  receivable
              
              
              73,197
              
              
              -Prepaid
                  assets
              
              
              109,913
              
              
              -Goodwill
              
              
              1,282,052
              
              
              -Subscriber
                  Base
              
              
              916,301
              
              
              -Trademark
              
              
              16,667
              
              
              -Property
                  and equipment
              
              
              1,618,459
              
              
              -Inventory
              
              
              308,666
              
              
              -Accounts
                  payable and accrued expenses
              
              
              (180,846
              )
              
              -Deferred
                  Revenue
              
              
              (431,912
              )
              
              -Capital
                  lease obligations
              
              
              (254,242
              )
              
              -$
              3,458,255
              
              $
              -Acquistion
                  - MicrolnkAccounts
                  receivable
              
              
              28,770
              
              
              -Prepaid
                  assets
              
              
              6,010
              
              
              -Goodwill
              
              
              108,164
              
              
              -Subscriber
                  Base
              
              
              226,264
              
              
              -Property
                  and equipment
              
              
              340,573
              
              
              -Accounts
                  payable and accrued expenses
              
              
              (23,222
              )
              
              -Deferred
                  Revenue
              
              
              (26,577
              )
              
              -$
              659,981
              
              $
              -Acquisition
                  - Minority Interest
              
              $
              -
              
              $
              268,150Stock
                  Acquisition - Pocatello
              
              $
              -
              
              $
              912,700Stock
                  issued to shareholders for notes payable
              
              $
              1,065,999
              
              $
              -Stock
                  issued to shareholders for notes payable interest
              
              $
              100,561
              
              $
              -Common
                  stock exchange for professional services
              
              $
              226,105
              
              $
              -Warrants
                  for debt issuance costs
              
              $
              45,782
              
              $
              38,521Warrant
                  interest expense
              
              $
              133,847
              
              $
              -Stock
                  based compensation
              
              $
              1,606,893
              
              $
              13,059Deferred
                  rent liability for tenant improvement
              
              $
              265,000
              
              $
              -Capital
                  lease obligations for property and equipment
              
              $
              859,348
              
              $
              1,017,865**Cash
                  payments for:**Interest
              
              $
              631,824
              
              $
              136,485Tax
              
              $
              -
              
              $
              -


See
        notes
        to consolidated financial statements.




F-6




**Note
      1 - Organization and Nature of Business**





On
      August
      9, 2007, KeyOn Communications, Inc. became a publicly-traded company by virtue
      of a merger with a publicly-traded company, Grant Enterprises, Inc. (“Grant”), a
      holding company with a nominal operating business (the “Merger”). In connection
      with the Merger, 900,001 shares of Grant remained outstanding and all other
      outstanding shares of Grant were cancelled. Also, in connection with the Merger,
      Grant issued 6,650,069 shares of its common stock for all outstanding common
      stock of KeyOn. Upon closing of the Merger transaction, a wholly owned
      subsidiary of Grant merged with and into KeyOn, and KeyOn, as the surviving
      corporation, became a wholly-owned subsidiary of Grant. All pre-Merger assets
      and liabilities of Grant were split off from Grant leaving KeyOn’s business as
      the surviving operations of Grant. As a result of the transaction, the former
      owners of KeyOn became the controlling stockholders of Grant and Grant changed
      its name to KeyOn Communications Holdings, Inc. (“KeyOn Holdings”). Accordingly,
      the merger of KeyOn and Grant is a reverse merger. Effective on August 9, 2007,
      and for all reporting periods thereafter, the Company’s operating activities,
      including any prior comparative period, will include only those of KeyOn
      Communications Holdings, Inc.





KeyOn
      Holdings’ shares were previously listed on the OTC Bulletin Board under the
      symbol “KYCS”. On October 26, 2007, KeyOn Holdings effected a 1-for-2 reverse
      stock split of the Company’s common stock, par value $0.001 per share and the
      Company’s ticker symbol was changed to “KEYO” (“Reverse Split”) All common
      share, option and warrant amounts have been adjusted to reflect the Reverse
      Split.





KeyOn
      Communications, Inc. (“KeyOn” or “the Company”), was incorporated on December
      16, 2004, under the laws of the State of Nevada. The Company provides wireless
      broadband and voice-over-IP (VoIP) services primarily to small and rural markets
      in the Western and Midwestern United States. the Company’s markets are located
      in eleven (11) Western and Midwestern states: Colorado, Idaho, Illinois,
      Indiana, Iowa, Kansas, Nebraska, Nevada, Ohio, South Dakota, and Texas. The
      Company has eight wholly-owned organizations (in combination referred to as
      the
“related entities”): KeyOn Communications, LLC; KeyOn SIRIS, LLC; KeyOn Grand
      Junction, LLC; KeyOn Idaho Falls, LLC; KeyOn Pahrump, LLC; KeyOn Pocatello,
      LLC
      and KeyOn SpeedNet LLC and KeyOn Spectrum Holdings, LLC.





KeyOn
      Communications, LLC (KeyOn LLC), a wholly-owned limited liability operating
      entity of the Company, was organized on February 26, 2002 under the laws of
      the
      State of Nevada, to serve a market located in Las Vegas, Nevada and its
      surrounding areas with wireless broadband services. It will continue its
      operations until February 26, 2502 or until dissolved, if sooner.





KeyOn
      Pahrump, LLC (Pahrump), a wholly-owned limited liability operating entity of
      the
      Company, was organized on September 26, 2003 under the laws of the State of
      Nevada, to serve a market located in Pahrump, Nevada and its surrounding areas
      with a wireless broadband service as previously described. It will continue
      its
      operations until September 26, 2503 or until dissolved, if sooner.





KeyOn
      SIRIS, LLC (SIRIS), a wholly-owned limited liability operating entity of the
      Company, was organized on June 16, 2005 under the laws of the State of Nevada,
      to serve markets KeyOn acquired in June 2005 located in southern Iowa with
      a
      wireless broadband service as previously described. It will continue its
      operations until June 16, 2505 or until dissolved, if sooner.





KeyOn
      Grand Junction, LLC (Grand Junction), a wholly-owned limited liability operating
      entity of the Company, was organized on May 31, 2005 under the laws of the
      State
      of Nevada, to serve a market located in Grand Junction, Colorado and its
      surrounding areas with a wireless broadband service as previously described.
      It
      will continue its operations until May 31, 2505 or until dissolved, if
      sooner.





KeyOn
      Idaho Falls, LLC (Idaho Falls), a wholly-owned limited liability operating
      entity of the Company, was organized on May 31, 2005 under the laws of the
      State
      of Nevada, to serve a market located in Idaho Falls, Idaho and its surrounding
      areas with a wireless broadband service as previously described. It will
      continue its operations until May 31, 2505 or until dissolved, if
      sooner.





KeyOn
      Pocatello, LLC (Pocatello), a wholly-owned limited liability operating entity
      of
      the Company, was organized on May 31, 2005 under the laws of the State of Nevada
      to serve a market located in Pocatello, Idaho and its surrounding areas with
      a
      wireless broadband service as previously described. It will continue its
      operations until May 31, 2505 or until dissolved, if sooner.




F-7





KeyOn
      SpeedNet, LLC (SpeedNet LLC), a wholly-owned limited liability operating entity
      of the Company, was organized on June 27, 2006 under the laws of the State
      of
      Nevada.  It served as an acquisition subsidiary in the acquisition of
      SpeedNet.  SpeedNet LLC houses the previous operations of SpeedNet,
      including wireless broadband markets operating the states of Idaho, Illinois,
      Indiana, Iowa, Kansas, Nebraska, Ohio, South Dakota, and Texas.  It will
      continue its operations until June 27, 2506 or until dissolved, if
      sooner.





KeyOn
      Spectrum Holdings, LLC (Spectrum Holdings), a wholly-owned limited liability
      operating entity of the Company, was organized on November 26, 2007 under the
      laws of the State of Nevada. It has no current operations and serves as a
      subsidiary to pursue potential spectrum acquisitions. It will continue its
      operations until November 26, 2507 or until dissolved, if sooner.





The
        accompanying consolidated financial statements are prepared assuming that
        the
        Company will continue as a going concern and contemplates the realization
        of
        assets and satisfaction of liabilities in the ordinary course of business. 
Certain factors, including current liabilities exceeding current assets and
        the
        presence of recurring losses and negative cash flow, among others, indicate
        the
        Company may be unable to continue as a going concern for a reasonable period
        of
        time.  At December 31, 2007, current liabilities included a $3 million term
        loan due in January 2008.  The Company has taken steps to mitigate this
        going concern opinion, including executing a new commercial loan agreement
        on
        February 8, 2008 totaling $4.5 million (the “Loan”), the proceeds of which were
        used to refinance the aforementioned $3.0 million term loan and for working
        capital as to help sustain its current capital needs.  The Loan matures on
        August 4, 2008, however is renewable at the Company’s option until February 4,
        2009. Over the year, the Company has been staffed to accelerate growth through
        acquisitions and rapid organic growth of its subscriber base and the Company
        plans to continue its acquisition and organic growth strategies which management
        believes will attract existing investors and new investors to the Company. 
The Company plans to begin to generate operating income and positive cash
        from
        operations by implementing business strategies which have the effect of
        spreading the Company’s fixed costs over a larger revenue base. These financial
        statements have been prepared assuming the Company will continue as a going
        concern and, accordingly, do not include any adjustments that might result
        from
        the outcome of the uncertainties described above.
  **Note
      2 - Summary of Significant Accounting Policies**





**Estimates**





Management
      uses estimates and assumptions in preparing these financial statements in
      accordance with U.S. generally accepted accounting principles. Those estimates
      and assumptions affect the reported amounts of assets and liabilities, the
      disclosure of contingent assets and liabilities, and the reported revenues
      and
      expenses. Actual results could vary from the estimates that were used, and
      such
      variances could be significant.




**Revenue
      Recognition**





The
      Company prepares its financial statements on the accrual method of accounting.
      Under this basis, income is recognized when earned, and expenses are generally
      recognized when incurred. ****** The
      Company charges a recurring subscription fee for providing its various Internet
      access services to its subscribers and recognizes revenues when they are earned,
      which generally occurs as the service is provided. The services are subscribed
      to for the periods of either annual, two year or by month-to-month contracts
      and
      are generally billed monthly, quarterly, semiannually or annually in advance.
      Payments received in advance for subscriptions are deferred and recognized
      as
      the services are provided. Service initiation fees are recognized at time of
      installation.




F-8





**Cash
      and Cash Equivalents**





The
      Company considers all highly liquid investments with a maturity of three months
      or less when purchased to be cash equivalents. For financial statement purposes,
      investments in money market funds are considered a cash equivalent and are
      included in cash and cash equivalents. ****





**Property
      and Equipment**





Property
      and equipment are carried at cost. Depreciation has been calculated using the
      straight-line method over the estimated useful lives of the respective classes
      of assets or the life of the capital lease which range from 2 years to 7 years.
      An asset begins to be depreciated once that asset has been placed into
      service.





The
      Company reviews property and equipment for impairment whenever events or changes
      in business circumstances indicate that the carrying amount of the assets may
      not be fully recoverable. Recoverability of any asset “held-for-use” is
      determined by comparing the carrying amount of the asset to the undiscounted
      net
      cash flows expected to be generated from the use of the asset. If the carrying
      amount is greater than the undiscounted net cash flows expected to be generated
      by the asset, the asset’s carrying amount is reduced to its fair value. An asset
“held-for-sale” is reported at the lower of the carrying value amount or the
      fair value less the cost to sell.





**Accounts
      Receivable**





The
      billing policy of the Company and its related entities is to bill the majority
      of its subscribers through electronic transactions, such as credit or debit
      card, and electronic check. Accounts receivable arise from providing services
      to
      clients whose credit cards are expired or invalid, or who are not billed
      electronically. These accounts receivable are stated at their estimated
      realizable amounts, net of an allowance of doubtful collections, based on a
      review of outstanding receivables, historical collection information, and
      existing economic conditions. The allowance totaled $136,436 as of December
      31,
      2007.





**Inventory**





With
      the
      purchase of SpeedNet Services, Inc., the Company began to maintain a consistent
      stock supply of customer premise equipment, installation supplies, and tower
      replacement parts. The value of this inventory was $291,268 as of December
      31,
      2007. The Company also began to carry inventory in 2007 in support of its launch
      as a reseller of satellite video service from DISH Network Corporation retailer.
      The value of this inventory was $9,342 as of December 31, 2007. The inventory
      is
      carried at the incurred cost value of the invoiced amount from the suppliers.





**Acquisition
      Costs and Intangible Assets**





Intangible
      assets with indefinite lives (e.g., trademarks) are not amortized and are tested
      annually for impairment of value. Impairment occurs when the fair value of
      the
      asset is less than its carrying amount. If impaired, the asset’s carrying amount
      is reduced to its fair value.





Intangible
      assets with definite lives (e.g., customer lists and non-compete agreements)
      are
      amortized over their estimated useful lives and tested for impairment whenever
      events or changes in circumstances indicate the carrying amount of the asset
      may
      be impaired. Amortization has been calculated using the straight-line method
      over the estimated useful lives of the intangible assets which range from 3
      years to 7 years. An asset begins to be amortized once that asset has been
      placed into service. Impairment occurs when the fair value of the asset is
      less
      than its carrying amount. If impaired, the asset is written down to its fair
      value.





Acquisition
      costs, which may include certain intangible assets, are capitalized as incurred
      as part of the related investment. Once a potential acquisition is identified
      as
      no longer attainable, such costs are charged to expense.




F-9





Intangible
      assets, including goodwill, are accounted for under the provisions of Statement
      of Financial Accounting Standards No. 142, “Goodwill and Other Intangible
      Assets” (SFAS 142”). Under SFAS 142, intangible assets, other than goodwill, are
      identified and segregated between amortizable and non-amortizable assets.
      Amortizable intangibles are amortized over their estimated, contractual, or
      regulated useful lives. Goodwill and other non-amortizable assets are reviewed,
      at least annually, for impairment in the carrying value of the intangible asset.
      In addition, this review also includes the net carrying value of amortizable
      intangible assets. If impairment is deemed to have occurred, a loss for such
      impairment is recorded as part of current operations.





**Deferred
      Revenues**





Payments
      received in advance for subscriptions are deferred and recognized as the
      services are provided. The amount of revenue that was deferred was $391,193
      at
      December 31, 2007.





**Fair
      Value of Financial Instruments** ******





The
      carrying amount of the financial instruments including cash and cash
      equivalents, receivables and payables (including accrued expenses and debt
      borrowings) are reasonable estimates of their fair value, as such financial
      instruments are short-term in nature, bear interest at current market rates,
      or
      are subject to frequent re-pricing.





**Advertising
      and Marketing Costs**





Advertising
      and marketing costs of $558,922 and $234,324 for the years ended December 31,
      2007 and 2006, respectively, were expensed as incurred.





**Reclassifications**





Certain
      reclassifications have been made to the 2006 financial statement amounts to
      conform to the 2007 financial presentation.





**Income
      Taxes**





The
      Company has adopted SFAS No. 109, “Accounting for Income Taxes” (“SFAS 109”).
      Under SFAS 109, deferred tax assets and liabilities are recognized for the
      expected future tax consequences attributable to differences between the
      financial statements carrying amounts of existing assets and liabilities and
      their respective tax bases. Deferred tax assets and liabilities are measured
      using enacted tax rates expected to apply to taxable income in the years in
      which those temporary differences are expected to be recovered or settled.
      Under
      SFAS 109 the effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in income in the period that includes the enactment date.
      A
      valuation is established, when necessary, to reduce deferred income tax assets
      to the amount that is more likely than not to be realized. The Company recorded
      a full valuation loss for the net loss incurred for the year ended December
      31,
      2007.





As
      single-member limited liability companies, KeyOn LLC, Pahrump, SIRIS, Grand
      Junction, Idaho Falls, Pocatello, SpeedNet LLC and Spectrum Holdings are not
      taxed as separate entities for federal income tax purposes. Rather, these
      organizations’ taxable items of income, deduction, loss, and credit are included
      with the federal income tax return of the Company. Accordingly, the members
      separately account for their share of the organization’s income, deductions,
      losses and credits. Therefore, no separate provision for income tax expense
      or
      benefit has been recognized in the accompanying consolidated financial
      statements for these related entities, but was considered for KeyOn as part
      of
      its SFAS 109 reporting requirement.





In
      July
      2006, FASB issued Financial Accounting Standards Interpretation No. 48 (“FIN
      48”), “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109.” FIN 48 prescribes a recognition threshold and measurement
      attribute for the financial statement recognition and measurement of a tax
      position taken or expected to be taken in a company’s income tax return, and
      also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure, and transition.  FIN
      48 utilizes a two-step approach for evaluating tax positions.  Step one, *Recognition* ,
      occurs
      when a company concludes that a tax position is more likely than not to be
      sustained upon examination. Step two, *Measurement* ,
      is
      based on the largest amount of benefit, which is more likely than not to be
      realized on ultimate settlement. FIN 48 is effective for fiscal years beginning
      after December 15, 2006, with the cumulative effect of the change in accounting
      principle to be recorded as an adjustment to the beginning balance of retained
      earnings; and, therefore, is effective for the Company in the first quarter
      of
      fiscal 2008.  For the year ended December 31, 2007, there were no
      implications on the Company’s consolidated financial position, results of
      operations or cash flows.




F-10





**Stock-Based
      Compensation**





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      (“SFAS”) No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”), which is
      a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No.
      123”). SFAS No. 123R supersedes APB No. 25, “Accounting for Stock Issued to
      Employees”, and amends SFAS No. 95, “Statement of Cash Flows.” SFAS No. 123R
      requires all share-based payments to employees, including grants of employee
      stock options, to be recognized in the financial statements based upon their
      fair values. Stock based compensation for the twelve months ended December
      31,
      2007 and 2006, was $1,606,893 and $13,059, respectively.




We
      have
      estimated the fair value of the Company’s option awards granted after December
      1, 2005, using the Black-Scholes option pricing model. Expected volatilities
      are
      based on the historical volatility of the Company’s valuation during prior
      financings. The expected term of options granted is 3 to 5 years and represents
      the period of time that options granted are expected to be outstanding. The
      risk-free rate for periods within the contractual life of the option is based
      on
      the U.S. Treasury yield curve in effect at the time of grant.




The
      table
      summarizes the value of outstanding options as of December 31,




**Black-Scholes
                  Option Valuation Assumptions**
              
              **2007**
              
              **2006**Average
                  fair value of options granted during the period
              
              $
              1.46
              
              $
              1.21Average
                  Expected term (in years)
              
              
              5
              
              
              3Average
                  Expected volatility
              
              
              162.32
              %
              
              39.20
              %Average
                  Expected dividend yield
              
              
              -
              
              
              -Average
                  Risk free rate
              
              
              4.88
              %
              
              4.70
              %





**Consolidation
      Policy**





The
      accompanying consolidated balance sheets and consolidated statements of
      operations, stockholders’ equity, and **** cash
      flows, referred to as “KeyOn Communications Holdings, Inc.,” includes the
      accounts of KeyOn Communications, Inc., KeyOn Communications, LLC, KeyOn
      Pahrump, LLC, KeyOn SIRIS, LLC, KeyOn Grand Junction, LLC, KeyOn Idaho Falls,
      LLC, KeyOn Pocatello, LLC, KeyOn SpeedNet LLC (as of February 1, 2007) and
      KeyOn
      Spectrum Holdings, LLC, all of which are under common ownership. Intercompany
      balances and transactions have been eliminated in consolidation.





**Recent
      Accounting Pronouncements**





The
      following pronouncements have been issued by the Financial Accounting Standards
      Board (“FASB”):




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) 157, “Fair Value Measurements.”  SFAS 157 defines fair value,
      establishes a framework for measuring fair value in generally accepted
      accounting principles, and expands disclosures about fair value measurements.
       SFAS 157 applies to other accounting pronouncements that require or permit
      fair value measurements, the FASB having previously concluded in those
      accounting pronouncements that fair value is the relevant measurement attribute.
      Accordingly, this Statement does not require any new fair value measurements.
      However, for some entities, the application of SFAS 157 will change current
      practice.  The provisions of SFAS 157 are effective as of the beginning of
      the Company’s 2009 fiscal year. The Company is currently evaluating the impact
      of SFAS 157, but does not expect the adoption of SFAS 157 to have a material
      impact on its consolidated financial position, results of operations or cash
      flows.




F-11




In
      September 2006, the Securities and Exchange Commission issued Staff Accounting
      Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when
      Quantifying Misstatements in the Current Year Financial Statements" (SAB 108).
      SAB 108 addresses how the effects of prior-year uncorrected misstatements should
      be considered when quantifying misstatements in current-year financial
      statements. SAB 108 requires an entity to quantify misstatements using a balance
      sheet and income-statement approach and to evaluate whether either approach
      results in quantifying an error that is material in light of relevant
      quantitative and qualitative factors. The guidance is applicable for fiscal
      years ending after November 15, 2006. KeyOn currently does not believe that
      SAB
      108 will have a material impact on the Company’s financial
      statements.





In
      February 2007, the FASB issued **** SFAS
      159,
“The Fair Value Option for Financial Assets and Financial Liabilities,” which
      expands opportunities to use fair value measurements in financial reporting
      and
      permits entities to choose to measure many financial instruments and certain
      other items at fair value.  SFAS 159 is effective for fiscal years
      beginning after November 15, 2007.  The Company is currently evaluating
      SFAS 159 to determine its impact on its consolidated financial position, results
      of operations or cash flows.





In
      June
      2001, the FASB issued FAS 141, Business Combinations, which was established
      to
      (1) better reflect investments made in acquired companies, and (2) to provide
      additional information regarding acquired intangible assets. FAS 141 mandates
      that all assets acquired and liabilities assumed are valued at their fair value.
      FAS 141 was revised in December 2007, and is effective for business combinations
      for which the acquisition date is on or after the beginning of the first annual
      reporting period beginning on or after December 15, 2008. This revision
      represents a major departure from the historical cost accounting that many
      companies use currently. The Company is currently evaluating FAS 141 to
      determine its impact on its future consolidated financial position, results
      of
      operations or cash flows.





**Note
      3 - Equipment**





Equipment
      at December 31, 2007, consisted of the following:


**12/31/2007**Subscriber
                  equipment
              
              $
              5,329,361Fixed
                  wireless tower site equipment
              
              
              2,353,683Software
                  and consulting costs
              
              
              572,728Computer
                  and office equipment
              
              
              417,077Vehicles
              
              
              277,439Leasehold
                  improvements
              
              
              312,1009,262,388Less:
                  accumulated depreciation
              
              
              (4,691,168
              )Fixed
                  assets - net
              
              $
              4,571,220


Depreciation
      for the company is recorded on a straight-line basis. Depreciation expense
      for
      the year ended December 31, 2007 and 2006 was $2,259,166 and $1,041,963
      respectively.




F-12





**Note
      4 - Intangible Assets**





Intangible
      assets at December 31, 2007, consisted of the following:


**12/31/2007**Goodwill
              
              $
              1,738,773Subscriber
                  base
              
              
              1,290,887Trademark
              
              
              16,6673,046,327Less:
                  accumulated amortization
              
              
              (326,100
              )Intangible
                  assets - net
              
              $
              2,720,227


Amortization
      expense is recorded for the customer list asset on a straight-line basis.
      Amortization expense for the year ended December 31, 2007 and 2006 was $313,740
      and $21,918, respectively.





Estimated
      amortization expense for future fiscal years is as follows:


2008
              
              
              402,0442009
              
              
              402,0442010
              
              
              109,4932011
              
              
              21,1892012
              
              
              21,189Thereafter
              
              
              8,829$
              964,788




**Note
      5 - Line of Credit and Other Debt**





On
      January 30, 2007, in connection with the acquisition of SpeedNet, the Company
      entered into a $3,000,000 secured commercial loan agreement with a lending
      institution (the “Loan”). A shareholder in the Company is also a minority
      shareholder and Board member of the lending institution. The shareholder did
      abstain from voting on this transaction in the bank board loan committee as
      is
      required under the banking regulations. The Loan is guaranteed by two
      shareholders of the Company, one of whom is an Officer of the Company. The
      Loan
      has an interest rate of prime +1% with an initial interest rate of 9.25% and
      matured on July 30, 2007 with a six (6) month extension option. The interest
      is
      payable upon maturity or every six months if the loan is extended. On or around
      July 30, 2007, KeyOn exercised its extension option on the $3,000,000 secured
      commercial loan agreement, extending the maturity to January 30,
      2008.





The
      Company holds a line of credit loan for $100,000. The line of credit agreement
      was entered into on December 18, 2006. The line is a variable rate revolving
      line of credit loan for $100,000 due upon demand. The interest rate is the
      base
      rate plus an added margin rate of 3%. The base rate for floating commercial
      loans is published by the lender and varies weekly. This line of credit is
      guaranteed by an Officer of the Company. The variable interest rate as of
      December 31, 2007 was 10.5%. The interest on the line of credit is paid
      monthly.




F-13





**Notes
                  payable**
              
              **12/31/2007**Note
                  and loan payable for professional services non-interestbearing
              
              $
              121,7377.8%
                  note payable to American National Bank, payablemonthly
                  for 48 months for the purchase of vans
              
              
              69,9599.1%
                  note payable to GMAC, payable monthly for 60months
                  for the purchase of two trucks
              
              
              26,514218,210Less
                  current portion
              
              
              (149,685
              )Long
                  term portion
              
              $
              68,525


Future
      minimum payments on the notes payable, which are stated at their principal
      amounts with initial or remaining terms of one year or more consist of the
      following as of December 31, 2007:


2008
              
              $
              149,6852009
              
              
              31,2732010
              
              
              29,5782011
              
              
              7,6742012
              
              
              -Thereafter
              
              
              -$
              218,210





On
      or
      about May 22, 2006, the company raised debt financing in the form of Senior
      Unsecured Convertible Promissory Notes (“Convertible Notes”) totaling
      $1,065,999. On February 1, 2007, the Convertible Notes together with $100,561
      of
      accrued interest converted into 306,570 shares of common stock together with
      45,970 warrants to purchase common stock. The expenses recognized for these
      warrants in 2007 was $54,139.





**Note
      6 - Operating and Capital Leases**





The
      Company has existing capital lease financing relationships with certain parties.
      In connection with an existing capital lease relationship with three
      institutions, the Company has drawn down an additional $859,348 in the year
      ended December 31, 2007.





The
      Company and its related entities lease equipment under various capital leases
      expiring in 2008 through 2011. In addition, the related entities lease tower
      and
      roof-top space under operating leases with terms that are typically for 5 years
      and contain automatic renewals for an additional 10 years. Finally, several
      entities have various operating leases for office space, equipment, and vehicles
      that generally are for 3 to 5 year terms. The total amount of fixed assets
      capitalized through leasing is $2,590,248 as of December 31, 2007.




F-14




Future
      minimum lease payments under the capital leases, which are stated at their
      principal amounts with initial or remaining terms of one year or more consist
      of
      the following as of December 31, 2007:


2008
              
              $
              986,6102009
              
              
              577,6802010
              
              
              161,6152011
              
              
              26,496Total
                  mimimum lease payments
              
              
              1,752,401Less
                  amounts representing interest
              
              
              (342,200
              )1,410,201Less
                  current portion
              
              
              (742,562
              )Long
                  term capital lease obligations
              
              $
              667,639


Future
      minimum lease payments under the operating leases with initial or remaining
      terms of one year or more consist of the following at December 31, 2007:


2008
              
              $
              765,9402009
              
              
              578,8922010
              
              
              440,4382011
              
              
              308,7592012
              
              
              194,400Thereafter
              
              
              52,367Total
              
              $
              2,340,796




The
      total
      rental expense included in operating expenses for operating leases included
      above is $1,090,002 and $444,553 for the year ended December 31, 2007 and
      December 31, 2006, respectively.





**Note
      7 - Related Party Transactions**




Related
      parties that entered into transactions with the Company include officers and
      stockholders. Transactions with related parties as of and for the year ended
      December 31, 2007:


**12/31/2007**Term
                  loan payable (see Note 5)
              
              $
              3,000,000
  F-15


**Note
      8 - Business Combinations**





On
      October 31, 2006, the Company entered into a definitive purchase agreement
      to
      acquire substantially all of the assets of SpeedNet Services, Inc. (“SpeedNet”),
      including subscriber contracts, accounts, and fixed assets, and assume certain
      operating liabilities. Headquartered in Omaha, Nebraska, SpeedNet is a leading
      provider of fixed wireless broadband services to non-metropolitan communities
      and rural areas in the central United States. On January 31, 2007, through
      a
      wholly owned subsidiary, KeyOn SpeedNet LLC (SpeedNet LLC) purchased the assets
      for $3,458,255 in cash, with certain adjustments to the purchase price for
      working capital, deferred revenue and the assumption of certain capital lease
      obligations. The purchase allocation is categorized as follows:


Accounts
                  receivable
              
              $
              73,197Prepaid
                  expenses
              
              
              109,913Accounts
                  payable
              
              
              (180,846
              )Capital
                  lease obligations assumed
              
              
              (254,242
              )Deferred
                  subscription revenue
              
              
              (431,912
              )Fixed
                  assets at fair market value
              
              
              1,618,459Inventory
              
              
              308,666Trademark
              
              
              16,667Customer
                  list
              
              
              916,301Goodwill
              
              
              1,282,052**Purchase
                  Price - SpeedNet**
              
              $
              **3,458,255**




KeyOn’s
      purchase price for SpeedNet was in excess of the estimated fair market value
      of
      SpeedNet’s fixed assets and KeyOn’s assessment of value of the customer base at
      the time of purchase.  KeyOn’s purchase price reflects a premium to the
      fair market value of these assets as a result of the potential for customer
      growth using the brand name of SpeedNet throughout the Midwest.  Also,
      KeyOn expects to realize additional margin enhancement on a prospective basis
      as
      certain duplicative expenses, such as personnel, can be eliminated and other
      operating expenses, such as internet bandwidth, can be decreased due to the
      increased scale of combined operations.  KeyOn’s internal valuation and
      forecast for the SpeedNet business under KeyOn’s management took into account
      these additional tangible and intangible factors which resulted in a higher
      purchase price than the fair market value of the assets.




F-16





On
      October 22, 2007, the Company acquired substantially all of the assets and
      assumed certain liabilities of MicroLnk, LLC, a Nebraska limited liability
      company, (“MicroLnk”), pursuant to an Asset Purchase Agreement. MicroLnk
      operates a wireless communications network that provides wireless broadband
      and
      other related services to both residential and commercial subscribers in rural
      Nebraska and Iowa. As consideration for these acquired assets, the Company
      paid
      MicroLnk $659,981 in cash. The purchase allocation is categorized as
      follows:


Accounts
                  Receivable
              
              $
              28,770Prepaid
                  Expenses
              
              
              6,010Customer
                  Deposits
              
              
              (23,222
              )Deferred
                  Revenue
              
              
              (26,577
              )Fixed
                  assets at fair market value
              
              
              340,573Customer
                  list
              
              
              226,264Goodwill
              
              
              108,164**Purchase
                  Price - Microlnk**
              
              **$**
              **659,981**


KeyOn’s
      purchase price for the MicroLnk assets was in excess of the estimated fair
      market value of MicroLnk’s fixed assets and KeyOn’s assessment of value of the
      customer base at the time of purchase.  KeyOn’s purchase price reflects a
      premium to the fair market value of these assets as a result of the potential
      for customer growth on the company’s existing underutilized network serving
      communities in Nebraska and Iowa.  Also, KeyOn expects to realize
      additional margin enhancement on a prospective basis as certain duplicative
      expenses, such as personnel, can be eliminated and other operating expenses,
      such as Internet bandwidth, can be decreased due to the increased scale of
      combined operations.  KeyOn’s internal valuation and forecast for the
      MicroLnk customer base under KeyOn’s management took into account these
      additional tangible and intangible factors which resulted in a higher purchase
      price than the fair market value of the assets.




F-17





The
      financial results for the year
      ended December 31, 2007 for KeyOn Communications Holdings, Inc. include eleven
      months of operations from KeyOn SpeedNet, LLC, and two months for the MicroLnk
      acquisition. The year-to-date 2007 is reflected on a pro forma basis (unaudited)
      by adding in the actual financial results and other adjustments that remove
      duplicative personnel expenses and one-time non-recurring expenses associated
      with the acquisitions. The January 2007 financial results of SpeedNet Services,
      Inc. and ten months of MicroLnk, LLC financial results are reported as
      follows:


**Keyon
                  Communications Holdings, Inc. and Related
                  Entities****Pro
                  forma Condensed Consolidated Statement of Operations
                  (unaudited)****For
                  the Year Ended December 31, 2007**
  **SpeedNet**
                
                
                
                
                
                
                
                **Pro
                    forma annual****KeyOn
                    year**
                
                **Services
                    month**
                
                **MicroLnk
                    period**
                
                
                
                
                
                **total
                    KeyOn year****ended
                    12/31/2007**
                
                **ended****1/31/2007**
                
                **ended
                    10/22/2007**
                
                **Adjustments**
                
                
                
                **ended
                    12/31/2007****Revenue**
                
                $
                7,185,433
                
                $
                482,435
                
                $
                567,911
                
                $
                278,972
                
                
                i
                
                $
                8,514,751**Total
                    Operating Costs and Expense**
                
                
                14,153,088
                
                
                710,670
                
                
                720,281
                
                
                (3,623,792
                )
                
                a,b,c,d,e,f,
                    h
                
                
                11,960,247**Loss
                    from Operations**
                
                
                (6,967,655
                )
                
                (228,235
                )
                
                (152,370
                )
                
                3,902,764
                
                
                
                
                
                (3,445,496
                )**Total
                    Other Income (Expense)**
                
                
                (643,098
                )
                
                (18,869
                )
                
                (662
                )
                
                148,587
                
                
                g,
                    h
                
                
                (514,042
                )**Net
                    Loss**
                
                $
                (7,610,753
                )
                $
                (247,104
                )
                $
                (153,032
                )
                $
                4,051,351
                
                
                
                
                $
                (3,959,538
                )
  a.
                  $.3M
                      represents the elimination of retention bonuses (plus payroll
                      taxes) paid
                      to top employees to stay during sale of business and elimination
                      of
                      duplicative resource salaries
  b.
                  $.05M
                      represents the depreciation adjustment for January for new
                      fair market
                      valuation of assets
  c.
                  $.2M
                      represents an adjustment rent due to relocation into one location
  d.
                  $1.8M
                      represents an adjustment for non-cash related expenses
  e.
                  $1.3M
                      represents deal related expenses incurred primarily in Q4 2007
  f.
                  $.2M
                      represents an adjustment to salaries for additional headcount
                      for deal
                      related activities
  g.
                  $.02M
                      represents an adjustment of interest charged on SpeedNet Services
                      other
                      debt that is not a liability under KeyOn
                      SpeedNet
  h.
                      $.13M
                          represents non-cash interest expense on warrants
  i.
                  To
                      record $.2M of service credits as network expenses and $.1M
                      of promotional
                      credits as customer acquisition
                      expenses


The
      financial results for the year ended December 31, 2006, for KeyOn Communications
      Holdings, Inc. do not include of operations with KeyOn SpeedNet, LLC or
      MicroLnk, LLC. The financials for the year ended December 31, 2006, reflected
      on
      a pro forma basis (unaudited) by adding in the financials and other adjustments
      for the year ended December 31, 2006 SpeedNet Services, Inc. and MicroLnk,
      LLC,
      financial results are reported as follows:


**Keyon
                  Communications Holdings, Inc. and Related
                  Entities****Pro
                  forma Condensed Consolidated Statement of Operations
                  (unaudited)****For
                  the Year Ended December 31, 2006**
  **KeyOn**
              
              **SpeedNet**
              
              **MicroLnk**
              
              **Adjustments**
              
              
              
              **Pro
                  forma****Revenue**
              
              $
              2,430,830
              
              $
              5,203,296
              
              $
              750,242
              
              $
              118,050
              
              
              f
              
              $
              8,502,418**Total
                  Operating Costs and Expense**
              
              
              4,330,676
              
              
              7,154,244
              
              
              991,411
              
              
              (566,593
              )
              
              a,b,c,d,f
              
              
              11,909,738**Loss
                  from Operations**
              
              
              (1,899,846
              )
              
              (1,950,948
              )
              
              (241,169
              )
              
              684,643
              
              
              
              
              
              (3,407,320
              )**Total
                  Other Income(Expense)**
              
              
              (306,528
              )
              
              (658,924
              )
              
              (11,206
              )
              
              331,732
              
              
              e
              
              
              (644,926
              )**Net
                  Loss**
              
              $
              (2,206,374
              )
              $
              (2,609,872
              )
              $
              (252,375
              )
              $
              1,016,375
              
              
              
              
              $
              (4,052,246
              )
  a.
                  $.3M reduction in executive compensation and duplicative
                  functionsb.
                  $2M—20%
                  reduction in data transmission costs due to new contractsc.
                  $.1M reduction in professional fees due to acquisition
                  expensesd.
                  $.1M reduction in rent due to move/consolidatione.
                  $.3M reduction in interest paid for debt in SpeedNet
                  Servicesf. 
                  $.1M service credits moved out of revenue and to network operating
                  expense




F-18




**Note
      9 - Capital Stock, Stock Based Compensation, and Warrants**





On
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      (SFAS) No. 123 (revised 2004), “Share-Based Payment,” requiring the Company to
      recognize expenses related to the fair value of its employee stock option
      awards. KeyOn recognizes the cost of all share-based awards on a straight line
      vesting basis over the vesting period of the award.





***Common
      Shareholders’ Equity***





On
      August
      9, 2007, KeyOn Communications, Inc. became a publicly-traded company by virtue
      of a merger with a publicly-traded company, Grant Enterprises, Inc. (“Grant”), a
      holding company with a nominal operating business (the “Merger”). KeyOn later
      changed the name of Grant to KeyOn Communications Holdings, Inc. (“KeyOn
      Holdings”) and KeyOn and its subsidiaries became wholly owned subsidiaries of
      KeyOn Holdings. KeyOn Holdings’ shares were listed on the OTC Bulletin Board
      under the symbol “KYCS”. On October 26, 2007, KeyOn Holdings effected a 1-for-2
      reverse stock split of the Company’s common stock, par value $0.001 per share
      and the Company’s ticker symbol was changed to “KEYO” (“Reverse Split”) All
      common share, option and warrant amounts have been adjusted to reflect the
      Reverse Split.





Concurrent
      with the Merger, KeyOn Holdings raised $2,088,500 (net of $118,500 in offering
      costs) with the sale of 551,750 shares of common stock in an equity offering.
      Upon closing of the Merger transaction, a wholly owned subsidiary of Grant
      merged with and into KeyOn, and KeyOn, as the surviving corporation, became
      a
      wholly-owned subsidiary of Grant. All pre-merger assets and liabilities of
      Grant
      were split off from Grant leaving KeyOn’s business as the surviving operations
      of Grant. After accounting for the Merger, the equity financing and the Reverse
      Split KeyOn Holdings had 8,101,770 shares outstanding.





The
      Company is authorized to issue up to 95,000,000 shares of common stock with
      a
      par value of $.001 for each share. As of December 31, 2007, 8,249,106 shares
      were issued and outstanding.





In
      connection with the acquisition of Pocatello, on or about June 1, 2006, KeyOn
      issued 302,215 shares of common stock in exchange for the Pocatello assets.




In
      connection with the acquisition of minority interest in Pahrump, on or about
      November 30, 2006, KeyOn issued 178,821 shares of common stock in exchange
      for
      the 35% minority interest.





In
      connection with the acquisition of SpeedNet, the Company raised both equity
      and
      debt capital for the purchase and for general working capital purposes. On
      or
      about January 31, 2007, KeyOn raised an aggregate of $1,608,050 in the sale
      of
      422,617 shares of common stock. On January 31, 2007, 306,566 shares of common
      stock together with, 45,967 warrants to purchase common stock were issued in
      connection with the conversion of the Company’s Senior Unsecured Promissory
      Notes (Note 5).





Common
      stock of 6,861 shares valued at $3.80 per share was issued on March 22, 2007,
      for payment of professional services performed by a third party. Common stock
      of
      50,000 shares valued at $4.00 per share was issued on August 9, 2007, for the
      payment of professional services performed by a third party.





***Preferred
      Shareholders’ Equity***





The
      Company is authorized to issue up to 5,000,000 shares of Series A Convertible
      Preferred Stock (“preferred stock”) with a par value of $0.001 for each share.
      As of December 31, 2007, no shares of preferred stock were issued and
      outstanding.





***Warrants***





The
      Company has issued common stock warrants with a warrant strike price ranging
      from $3.31 to $6.70 for each share of common stock and an average price of
      $5.46
      for each share of common stock. These warrants have expiration dates of three
      to
      seven years from their date of issue. 473,675 warrants were outstanding at
      December 31, 2007.




F-19





As
      of
      December 31, 2007, a total of 473,675 warrants to purchase shares of the
      Company’s common stock remain outstanding and are currently exercisable as
      follows:


**Number
                  of Warrants**
              
              **Exercise
                  Price ($ / share)**
              
              **Expiration
                  Date**7,374
              
              $
              3.31
              
              
              12/1/20083,566
              
              $
              3.31
              
              
              12/19/20082,055
              
              $
              3.31
              
              
              1/19/20091,058
              
              $
              3.31
              
              
              1/30/20091,451
              
              $
              3.31
              
              
              2/2/2009272
              
              $
              3.31
              
              
              2/10/20094,654
              
              $
              3.31
              
              
              3/23/20092,569
              
              $
              3.31
              
              
              4/17/20093,747
              
              $
              3.31
              
              
              5/31/20093,929
              
              $
              3.31
              
              
              6/30/20093,747
              
              $
              3.31
              
              
              7/20/20094,805
              
              $
              3.31
              
              
              8/3/20096,165
              
              $
              3.31
              
              
              8/31/20093,143
              
              $
              3.31
              
              
              10/19/20093,295
              
              $
              3.31
              
              
              1/17/2010109,354
              
              $
              3.81
              
              
              1/31/20103,567
              
              $
              3.31
              
              
              4/16/20102,992
              
              $
              3.31
              
              
              6/5/201013,146
              
              $
              3.81
              
              
              6/7/20106,166
              
              $
              3.31
              
              
              6/22/20102,297
              
              $
              3.31
              
              
              7/19/20102,448
              
              $
              3.31
              
              
              7/19/2010281,875
              
              $
              6.70
              
              
              8/9/2012





As
      of
      December 31, 2006, a total of 492,162 warrants to purchase shares of the
      Company’s common stock were outstanding and exercisable. The cost of $38,521 for
      37,595 warrants issued was capitalized as debt issuance costs in 2006. A total
      of 650,537 warrants were issued during the year ended December 31, 2007. The
      cost of $46,682 for these warrants granted was capitalized as debt issuance
      costs. 11,334 shares were forfeited during the year ended December 31, 2007.
      In
      the year ending December 31, 2007, 657,690 shares were exercised at an average
      exercise price of $.76 per share. The cash amount paid to the Company was
      $497,210 in exercising the warrants. The amount expensed in the year ending
      December 31, 2007 was $901,566 as compensation expense for 225,393 warrants.
      Interest expense of $79,708 was recorded for the as amortization of debt
      issuance costs for the year ended December 31, 2007.




***Stock
      Option Plans***




On
      April
      25, 2006, KeyOn’s Board of Directors and stockholders adopted the 2006 Stock
      Incentive Plan (the “2006 Plan”). Under the 2006 Plan, KeyOn was authorized to
      issue incentive stock options intended to qualify under Section 422 of the
      Code,
      non-qualified stock options and restricted stock. The 2006 Plan was administered
      by KeyOn’s Board of Directors. Prior to the time of the Merger, there were
      20,278 KeyOn stock options outstanding under the 2006 Plan. Immediately
      following the closing of the Merger, these options were exchanged for options
      to
      purchase 612,831 shares of the Company’s common stock under the Company’s 2007
      Incentive Stock and Awards Plan (the “2007 Plan”) with a weighted average
      exercise price of approximately $2.48 per share. Following this exchange, KeyOn
      terminated the 2006 Plan.





On
      August
      9, 2007, the Company’s Board of Directors and stockholders adopted the 2007
      Plan. The purpose of the 2007 Plan is to provide an incentive to attract and
      retain directors, officers, consultants, advisors and employees whose services
      are considered valuable, to encourage a sense of proprietorship and to stimulate
      an active interest of such persons into the Company’s development and financial
      success. Under the 2007 Plan, the Company are authorized to issue incentive
      stock options intended to qualify under Section 422 of the Code, non-qualified
      stock options, stock appreciation rights, performance shares, restricted stock
      and long term incentive awards. The 2007 Plan is administered by the
      Compensation Committee at the direction of the Board of Directors.




F-20





Activity
      for stock options for the fiscal years ended December 31, 2007 and 2006 is
      as
      follows:


**Number
                  of Options**
              
              **Range
                  of Price Per Share**
              
              **Weighted
                  Average Exercise Price**Balance,
                  December 31, 2005
              
              
              599,563
              
              $
              0.00
              
              $
              0.00Granted
              
              
              217,594
              
              $
              2.48
              
              $
              2.48Exercised
              
              
              —
              
              
              —
              
              
              —Forfeited
              
              
              (145,033
              )
              
              —
              
              
              —Balance,
                  December 31, 2006
              
              
              672,138
              
              $
              0.00
                  - 2.48
              
              $
              0.41Granted
              
              
              741,187
              
              $
              0.00
                  - 8.16
              
              $
              2.58Exercised
              
              
              (816
              )
              $
              0.00
              
              $
              0.00Converted
                  to Restricted Stock
              
              
              (640,496
              )
              $
              0.00
              
              $
              0.00Forfeited
              
              
              (159,146
              )
              $
              0.00
                  - 2.48
              
              $
              2.45Balance,
                  December 31, 2007
              
              
              612,867
              
              $
              2.48
                  - 8.16
              
              $
              3.07





As
      of
      December 31, 2007, 612,867 options are outstanding. As of January 1, 2007,
      672,138 options were outstanding. For the year ended December 31, 2007, 741,187
      options were granted, 159,146 were forfeited and 816 were exercised.
      Compensation expense recorded on stock options for the year ended December
      31,
      2007 totaled $1,606,893. During the three months ended September 30, 2007,
      all
      employee options, totaling 640,496 shares, at the $.0007 strike price were
      converted to common stock shares. The range of strike price per outstanding
      option as of December 31, 2007, is $2.48 to $8.16 and the weighted average
      strike price is $3.07 per share.





**Note
      10 - Commitments and Contingencies**




The
      Company currently is a party to a litigation as a result of a claim against
      one
      of the Company’s wholly-owned subsidiaries (KeyOn Communications, LLC “LLC”)),
      in connection with certain services provided to LLC by the claimant in 2005
      which were only partially paid by LLC. The claimant seeks the payment of certain
      unpaid invoices. The Company asserts that such performance of services was
      unsatisfactory and/or fraudulent and has filed a counter claim seeking
      unspecified damages. The Company has reserved the amount demanded by the
      claimant as of 2005 and is currently in settlement discussions.





**Note
      11 - Subsequent Events**





***Financing***





The
      Company executed a new loan agreement with Sun West Bank on February 8, 2008,
      totaling $4.5 million (the “Loan”). The company intends to use the proceeds to
      refinance its existing debt loan of $3.0 million with Sun West Bank and to
      further its growth strategy of rapidly increasing its subscriber base through
      acquisitions and continued organic growth. The Loan matures on August 4, 2008,
      but is renewable at the Company’s option for an additional six months until
      February 4, 2009. The initial interest rate is 8.75% and will vary with the
      index rate plus be 2.5 percentage points.




F-21


**EXHIBIT
      INDEX** ****




**Exhibit
              No.**
            
            **Description**2.1
            
            Agreement
                and Plan of Merger and Reorganization, dated as of August 9, 2007,
                by and
                among Grant Enterprises, Inc., KeyOn Acquisition Corp., and KeyOn
                Communications, Inc. (Incorporated by reference to Exhibit 2.1 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).2.2
            
            Asset
                Purchase Agreement, dated as of October 18, 2007, by and between
                KeyOn
                Communications Holdings, Inc. and MicroLink, LLC (Incorporated by
                reference to Exhibit 2.1 to the Current Report on Form 8-K of KeyOn
                Communications Holdings, Inc. filed with the Securities and Exchange
                Commission on October 24, 2007).3.1
            
            Composite
                Certificate of Incorporation of KeyOn Communications Holdings, Inc.
                (Incorporated by reference to Exhibit 3.1 to Amendment No. 2 to the
                Registration Statement on Form SB-2/A of KeyOn Communications Holdings,
                Inc. filed with the Securities and Exchange Commission on November
                16,
                2007).3.2
            
            Amended
                and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).10.1*
            
            KeyOn
                Communications Holdings, Inc. 2007 Stock and Awards Plan (Incorporated
                by
                reference to Exhibit 10.1 to the Current Report on Form 8-K of KeyOn
                Communications Holdings, Inc. filed with the Securities and Exchange
                Commission on August 10, 2007).10.2*
            
            Form
                of Stock Option Award Agreement (Incorporated by reference to Exhibit
                10.2
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.3*
            
            Form
                of Restricted Stock Agreement (Incorporated by reference to Exhibit
                10.3
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.4
            
            Selling
                Agreement, dated August 6, 2007, by and between KeyOn Communications,
                Inc.
                and WFG Investments, Inc. (Incorporated by reference to Exhibit 10.7
                to
                the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).10.5
            
            Stock
                Purchase Agreement, date as of August 9, 2007, by and among Grant
                Enterprises, Inc. and each of Richard S. Carrigan, Aileen D. Carrigan
                and
                Patrick E. Carrigan (Incorporated by reference to Exhibit 10.8 to
                the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on August 10,
                2007).10.6
            
            Agreement
                of Conveyance, Transfer and Assignment of Assets and Assumption of
                Obligations, dated as of August 9, 2007, by and between Grant Enterprises,
                Inc. and Grant Enterprises, LLC (Incorporated by reference to Exhibit
                10.9
                to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc.
                filed with the Securities and Exchange Commission on August 10,
                2007).




-45-




10.7
            
            Master
                Electronic Equipment Lease, dated August 18, 2005, by and between
                Data
                Sales Company, and KeyOn Communications, Inc. (Incorporated by reference
                to Exhibit 10.10 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.8
            
            Master
                Lease Agreement, dated November 9, 2005, by and between Agility Lease
                Fund
                I, LLC and KeyOn Communications, Inc. (Incorporated by reference
                to
                Exhibit 10.11 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.9
            
            Form
                of Directors and Officers Indemnity Agreement (Incorporated by reference
                to Exhibit 10.13 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.10
            
            Bridge
                Note Purchase Agreement, dated as of November 6, 2007, by and between
                KeyOn Communications Holdings, Inc. and the lenders thereunder
                (Incorporated by reference to Exhibit 10.1 to the Current Report
                on Form
                8-K of KeyOn Communications Holdings, Inc. filed with the Securities
                and
                Exchange Commission on November 7, 2007).10.11
            
            Form
                of Private Placement Subscription Agreement (Incorporated by reference
                to
                Exhibit 10.4 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.12
            
            Form
                of Warrant to Purchase Common Stock (Incorporated by reference to
                Exhibit
                10.5 to the Current Report on Form 8-K of KeyOn Communications Holdings,
                Inc. filed with the Securities and Exchange Commission on August
                10,
                2007).10.13
            
            Form
                of Placement Agent Warrant to Purchase Common Stock (Incorporated
                by
                reference to Exhibit 4.3 to the Registration Statement on Form SB-2
                of
                KeyOn Communications Holdings, Inc. filed with the Securities and
                Exchange
                Commission on October 5, 2007).10.14
            
            Form
                of Private Placement Lock-up Agreement (Incorporated by reference
                to
                Exhibit 10.6 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on August
                10, 2007).10.15
            
            Business
                Loan Agreement, dated February 8, 2008, by and between KeyOn
                Communications Holdings, Inc. and Sun West Bank (Incorporated by
                reference
                to Exhibit 10.1 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on
                February 14, 2008).10.16
            
            Promissory
                Note, dated February 8, 2008, issued by KeyOn Communications Holdings.
                Inc. to Sun West Bank (Incorporated by reference to Exhibit 10.2
                to the
                Current Report on Form 8-K of KeyOn Communications Holdings, Inc.
                filed
                with the Securities and Exchange Commission on February 14,
                2008).10.17
            
            Commercial
                Security Agreement, dated February 8, 2008, by and between KeyOn
                Communications Holdings, Inc. and Sun West Bank (Incorporated by
                reference
                to Exhibit 10.3 to the Current Report on Form 8-K of KeyOn Communications
                Holdings, Inc. filed with the Securities and Exchange Commission
                on
                February 14, 2008).10.18
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Jerome Snyder in favor
                of
                Sun West Bank (Incorporated by reference to Exhibit 10.4 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on February 14,
                2008).




-46-




10.19
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Jonathan Snyder in
                favor of
                Sun West Bank (Incorporated by reference to Exhibit 10.5 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on February 14,
                2008).10.20
            
            Commercial
                Guaranty, dated February 8, 2008, executed by Barry Becker in favor
                of Sun
                West Bank (Incorporated by reference to Exhibit 10.6 to the Current
                Report
                on Form 8-K of KeyOn Communications Holdings, Inc. filed with the
                Securities and Exchange Commission on February 14,
                2008).10.21
            
            Form
                of Warrant issued to Guarantors of Business Loan Agreement with Sun
                West
                Bank (Incorporated by reference to Exhibit 10.7 to the Current Report
                on
                Form 8-K of KeyOn Communications Holdings, Inc. filed with the Securities
                and Exchange Commission on February 14,
                2008).




14.1
            
            Code
                of Ethics21.1
            
            Subsidiaries
                of Registrant (Incorporated by reference to Exhibit 21.1 to the Current
                Report on Form 8-K of KeyOn Communications Holdings, Inc. filed with
                the
                Securities and Exchange Commission on August 10, 2007).31.1
            
            Certification
                by the Chief Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.31.2
            
            Certification
                by the Chief Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002.32.1
            
            Certification
                by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





*  Management
      compensatory plan.


-47-