UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      DC 20549





**FORM
      10-Q**





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





For
      the
      quarterly period ended March 31, 2008





o
      TRANSITION 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.**(Exact
                Name of Registrant as Specified in Its Charter)Delaware
            
            74-3130469(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer
              Identification
                No.)





11742
                Stonegate Circle
              Omaha,
                Nebraska
            
            68164(Address
                of Principal Executive Offices)
            
            (Zip
                Code)


(402)
                  998-4000(Registrant’s
                  Telephone Number, Including Area
                  Code)
 
 (Former
                  Name, Former Address and Former Fiscal Year, if Changed Since Last
                  Report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):




Large
                accelerated filer o
            Accelerated
                filer oNon-accelerated
                filer o
            Smaller
                reporting company x


(Do
      not
      check if a smaller reporting company)





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





As
      of May
      14, 2008, 8,251,142 shares of the issuer’s common stock, $0.001 par value per
      share, were outstanding.











**KEYON
      COMMUNICATIONS HOLDINGS, INC.**





**Table
      of Contents**




PagePART
                I
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                Statements
            1Condensed
                Consolidated Balance Sheets as of March 31, 2008 (Unaudited)and
                December 31, 2007
            1Condensed
                Consolidated Statements of Operations for the three months ended
                March 31,
                2008 and 2007 (Unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the three months ended
                March 31,
                2008 and 2007 (Unaudited)
            3Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            16Item
                4T.
            Controls
                and Procedures
            22PART
                II
            OTHER
                INFORMATIONItem
                6.
            Exhibits
            22








PART
      I-
      FINANCIAL INFORMATION


**Item
      1.**  **Financial
      Statements.**


**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED
                  ENTITIES****CONDENSED
                  CONSOLIDATED BALANCE SHEETS****AS
                  OF MARCH 31, 2008 (UNAUDITED) AND DECEMBER 31,
                  2007**
  **ASSETS**
              
              **2008**
              
              **2007**CURRENT
                  ASSETS:Cash
              
              $
              117,631
              
              $
              316,999Accounts
                  receivable, net of allowance for doubtful accounts
              
              
              144,803
              
              
              94,098Inventories
              
              
              319,634
              
              
              300,610Prepaid
                  expenses and other current assets
              
              
              91,414
              
              
              75,259Total
                  current assets
              
              
              673,482
              
              
              786,966PROPERTY
                  AND EQUIPMENT - Net
              
              
              4,363,150
              
              
              4,571,220OTHER
                  ASSETSGoodwill
              
              
              1,738,773
              
              
              1,738,773Subscriber
                  base -net
              
              
              864,276
              
              
              964,787Trademarks
              
              
              16,667
              
              
              16,667Refundable
                  deposits
              
              
              65,658
              
              
              65,624Debt
                  issuance costs - net
              
              
              5,196
              
              
              10,065Total
                  other assets
              
              
              2,690,570
              
              
              2,795,916TOTAL
                  ASSETS
              
              $
              7,727,202
              
              $
              8,154,102**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)**CURRENT
                  LIABILITIES:Accounts
                  payable and accrued expenses
              
              $
              2,661,894
              
              $
              2,389,356Cash
                  overdraft
              
              
              26,662
              
              
              298,516Revolving
                  line of credit
              
              
              100,000
              
              
              100,000Term
                  loan payable - related party
              
              
              3,874,937
              
              
              3,000,000Current
                  portion of notes payable
              
              
              150,639
              
              
              149,685Current
                  portion of deferred rent liability
              
              
              57,007
              
              
              57,007Current
                  portion of capital lease obligations
              
              
              833,491
              
              
              742,562Deferred
                  revenue
              
              
              415,352
              
              
              391,193Total
                  current liabilities
              
              
              8,119,982
              
              
              7,128,319LONG-TERM
                  LIABILITIESDeferred
                  rent liability, less current maturities
              
              
              186,069
              
              
              200,320Notes
                  payable, less current maturities
              
              
              60,706
              
              
              68,525Notes
                  payable to shareholders, less current maturities
              
              
              -
              
              
              -Capital
                  lease obligations, less current maturities
              
              
              708,393
              
              
              667,639Total
                  long term liabilities
              
              
              955,168
              
              
              936,484COMMITMENTS
                  AND CONTINGENCIESSTOCKHOLDERS'
                  EQUITY (DEFICIT):Series
                  A preferred stock, $0.001 par value; 5,000,000 shares
                  authorized0
                  shares issued and outstanding at March 31, 2008 and at December
                  31,
                  2007
              
              
              -
              
              
              -Common
                  stock, $0.001 par value; 95,000,000 shares authorized;8,251,142****shares
                  issued and outstanding at March 31, 2008; 8,249,106 shares
              
              
              8,251
              
              
              8,249issued
                  and outstanding as of December 31, 2007Additional
                  paid-in capital
              
              
              14,874,098
              
              
              13,739,714Accumulated
                  deficit
              
              
              (16,230,297
              )
              
              (13,658,664
              )Total
                  stockholders' equity (deficit)
              
              
              (1,347,948
              )
              
              89,299TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
              
              $
              7,727,202
              
              $
              8,154,102


See
        notes
        to condensed consolidated financial statements.




1


**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED
                  ENTITIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF OPERATIONS****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                  (UNAUDITED)**
  **2008**
              
              **2007**REVENUES:Service
                  and installation revenue
              
              $
              1,980,958
              
              $
              1,466,191Support
                  and other revenue
              
              
              65,073
              
              
              30,184Total
                  revenues
              
              
              2,046,031
              
              
              1,496,375OPERATING
                  COSTS AND EXPENSES:Payroll,
                  bonuses and taxes
              
              
              1,007,688
              
              
              635,878Depreciation
                  and amortization
              
              
              710,380
              
              
              535,355Other
                  general and administrative expense
              
              
              366,183
              
              
              538,822Network
                  operating costs
              
              
              743,398
              
              
              354,504Marketing
                  and advertising
              
              
              164,334
              
              
              60,741Installation
                  expense
              
              
              121,886
              
              
              40,340Professional
                  fees
              
              
              188,837
              
              
              23,549Stock
                  based compensation
              
              
              1,122,386
              
              
              4,585Cost
                  of DISH inventory
              
              
              16,805
              
              
              -Total
                  operating costs and expenses
              
              
              4,441,897
              
              
              2,193,774LOSS
                  FROM OPERATIONS
              
              
              (2,395,866
              )
              
              (697,399
              )OTHER
                  INCOME (EXPENSE):Interest
                  expense - Net of interest income
              
              
              (175,767
              )
              
              (159,838
              )Minority
                  interest in income
              
              
              -
              
              
              -Total
                  other income (expense)
              
              
              (175,767
              )
              
              (159,838
              )PROVISION
                  FOR INCOME TAXES
              
              
              -
              
              
              -NET
                  LOSS
              
              $
              (2,571,633
              )
              $
              (857,237
              )Net
                  loss per common share--basic and diluted
              
              $
              (0.31
              )
              $
              (0.17
              )Weighted
                  average common shares outstanding--basic and diluted
              
              
              8,249,785
              
              
              4,994,053




See
      notes to condensed consolidated financial
      statements.





2


**KEYON
                  COMMUNICATIONS HOLDINGS INC. AND RELATED
                  ENTITIES****CONDENSED
                  CONSOLIDATED STATEMENTS OF CASH FLOWS****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
                  (UNAUDITED)**
  **2008**
              
              **2007****CASH
                  FLOWS FROM OPERATIONS:**Net
                  loss
              
              $
              (2,571,633
              )
              $
              (857,237
              )Adjustments
                  to reconcile net loss to net cash flows from operations:Depreciation
                  expense
              
              
              609,869
              
              
              474,768Amortization
                  expense on subscriber base
              
              
              100,511
              
              
              60,587Stock
                  based compensation expense
              
              
              1,122,386
              
              
              4,585Warrant
                  interest expense
              
              
              -
              
              
              54,139Professional
                  services in exchange for stock
              
              
              -
              
              
              26,105Change
                  in assets and liabilities, net of effect of acquisitions:Accounts
                  receivable
              
              
              (50,705
              )
              
              (955
              )Inventory
              
              
              (19,024
              )
              
              -Prepaid
                  expenses and other current assets
              
              
              (16,155
              )
              
              (1,243
              )Refundable
                  deposits
              
              
              (34
              )
              
              (2,568
              )Other
                  assets
              
              
              4,869
              
              
              36,761Accounts
                  payable and accrued expenses
              
              
              284,538
              
              
              176,851Deferred
                  rent liability
              
              
              (14,251
              )
              
              -Deferred
                  revenue
              
              
              24,159
              
              
              39,835**Net
                  cash flows from operations**
              
              
              (525,470
              )
              
              11,628**CASH
                  FLOWS FROM INVESTING ACTIVITIES:**Capital
                  expenditures for property and equipment
              
              
              (10,635
              )
              
              (20,722
              )Acquisition
                  of SpeedNet and Microlnk
              
              
              -
              
              
              (3,458,255
              )**Net
                  cash flows from investing activities**
              
              
              (10,635
              )
              
              (3,478,977
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from cash overdraft
              
              
              -
              
              
              63,766Payment
                  on cash overdraft
              
              
              (271,854
              )
              
              -Payments
                  on line of credit
              
              
              -
              
              
              (549
              )Payments
                  on loans payable to shareholder
              
              
              -
              
              
              (160,000
              )Proceeds
                  from term note payable
              
              
              874,937
              
              
              3,000,000Payments
                  on notes payable
              
              
              (6,865
              )
              
              (18,000
              )Proceeds
                  from notes payable
              
              
              -
              
              
              -Payments
                  on capital lease obligations
              
              
              (259,481
              )
              
              (138,712
              )Proceeds
                  from stock issuance
              
              
              -
              
              
              1,608,050**Net
                  cash flows from financing activities**
              
              
              336,737
              
              
              4,354,555**NET
                  INCREASE/ (DECREASE) IN CASH**
              
              
              (199,368
              )
              
              887,206**CASH
                  - Beginning of period**
              
              
              316,999
              
              
              4,690**CASH
                  - End of period**
              
              $
              117,631
              
              $
              891,896**SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION:**Acquistion
                  - SpeedNet:Accounts
                  receivable
              
              $
              -
              
              $
              73,197Prepaid
                  assets
              
              
              -
              
              
              109,913Goodwill
              
              
              -
              
              
              1,282,052Subscriber
                  Base
              
              
              -
              
              
              916,301Trademark
              
              
              -
              
              
              16,667Property
                  and equipment
              
              
              -
              
              
              1,618,459Inventory
              
              
              -
              
              
              308,666Accounts
                  payable and accrued expenses
              
              
              -
              
              
              (180,846
              )Deferred
                  Revenue
              
              
              -
              
              
              (431,912
              )Capital
                  lease obligations
              
              
              -
              
              
              (254,242
              )$
              -
              
              $
              3,458,255Stock
                  issued to shareholders for notes payable
              
              $
              -
              
              $
              1,065,999Stock
                  issued to shareholders for notes payable interest
              
              $
              -
              
              $
              100,561Common
                  stock exchange for professional services
              
              $
              12,000
              
              $
              -Warrants
                  for debt issuance costs
              
              $
              -
              
              $
              4,586Warrant
                  interest expense
              
              $
              -
              
              $
              54,139Capital
                  lease obligations for property and equipment
              
              $
              391,165
              
              $
              101,472**Cash
                  payments for:**Interest
              
              $
              264,237
              
              $
              55,094Tax
              
              $
              -
              
              $
              -




See
      notes to condensed consolidated financial
      statements.




3




**KEYON
      COMMUNICATIONS HOLDINGS, INC.**


**AND
      RELATED ENTITIES**





NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





**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 no 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. 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
      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, satellite video and voice-over-IP (VoIP) services primarily to small
      and rural markets in the Western and Midwestern United States. KeyOn’s markets
      are located in eleven 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.




4




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.





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. 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 $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**





**Basis
      of Presentation**





The
      condensed consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States of America
      for interim financial statements and with Form 10-Q and Article 8 of Regulation
      S-X of the Securities and Exchange Commission. Accordingly, they do not contain
      all the information and footnotes required by accounting principles generally
      accepted in the United States of America for annual financial statements. 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 opinion of the
      Company’s management, the accompanying condensed consolidated financial
      statements contain all the adjustments necessary (consisting only of normal
      recurring accruals) to make the financial position of the Company as of March
      31, 2008 and the results of operations and cash flows for the three months
      ended
      March 31, 2008 and 2007 not misleading. The unaudited condensed consolidated
      financial statements for the three-month period ended March 31, 2008, should
      be
      read in conjunction with the audited financial statements for the years ended
      December 31, 2007 and 2006 as contained in the Form 10-KSB filed on March 31,
      2008.




5




**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. Subscriptions to the services
      are in the form of 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 time of installation. For
      the DISH retailer line of business, the Company recognizes revenues at the
      time
      of installation.





**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.





**Inventories**





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 March 31,
      2008. 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. The
      value of this inventory was $28,366 as of March 31, 2008. The inventory is
      carried at the incurred cost value of the invoiced amount from the suppliers.
      Once the DISH installation is complete, the revenue is recognized and the cost
      of inventory is expensed to operating expense.




**Acquisition
      Costs and Intangible Assets**





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.




6




Intangible
      assets, including goodwill, are accounted for under the provisions of Statement
      of Financial Accounting Standards (“SFAS”) 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 $415,352
      at
      March 31, 2008.





**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 three months ended
      March
      31, 2008.





As
      single-member limited liability companies, KeyOn LLC, 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 three months ended March 31, 2008, there were no
      implications on the Company’s consolidated financial position, results of
      operations or cash flows.




7




**Stock-Based
      Compensation**





Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      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. The Company recorded total stock-based compensation and warrant
      compensation of $1,122,386 and $4,585 for the three months ended March 31,
      2008
      and 2007, respectively.





**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, LLC, KeyOn Pahrump, LLC, KeyOn SIRIS, LLC,
      KeyOn Grand Junction, LLC, KeyOn Idaho Falls, LLC, KeyOn Pocatello, LLC, KeyOn
      SpeedNet LLC and KeyOn Spectrum Holdings, LLC all of which are under common
      ownership. Intercompany balances and transactions have been eliminated in
      consolidation. ****





8





**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
      157,
“Fair Value Measurements” (“SFAS 157”).  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. For
      the
      three month period ended March 31, 2008, there was no impact on the Company’s
      consolidated financial position, results of operations or cash flows due to
      SFAS
      157.




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. We currently do not believe that SAB
      108
      will have a material impact on our financial statements.




In
      February 2007, the FASB issued **** SFAS
      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.  For the three month period ended
      March 31, 2008, there was no impact on the Company’s consolidated financial
      position, results of operations or cash flows due to SFAS 159.





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.





9





**Note
      3 - Equipment**





Equipment
      at March 31, 2008 and December 31, 2007, consisted of the
      following:


**3/31/2008**
              
              **12/31/2007**Subscriber
                  equipment
              
              $
              5,683,943
              
              $
              5,329,361Fixed
                  wireless tower site equipment
              
              
              2,374,255
              
              
              2,353,683Software
                  and consulting costs
              
              
              598,422
              
              
              572,728Computer
                  and office equipment
              
              
              418,030
              
              
              417,077Vehicles
              
              
              277,439
              
              
              277,439Leasehold
                  improvements
              
              
              312,100
              
              
              312,1009,664,189
              
              
              9,262,388Less:
                  accumulated depreciation
              
              
              (5,301,039
              )
              
              (4,691,168
              )Fixed
                  assets - net
              
              $
              4,363,150
              
              $
              4,571,220


Depreciation
      expense for the three months ended March 31, 2008 and 2007 was $609,869 and
      $474,768, respectively.





**Note
      4 - Intangible Assets**





Intangible
      assets at March 31, 2008 and December 31, 2007, consisted of the
      following:


**3/31/2008**
              
              **12/31/2007**Goodwill
              
              $
              1,738,773
              
              $
              1,738,773Subscriber
                  base
              
              
              1,290,887
              
              
              1,290,887Trademark
              
              
              16,667
              
              
              16,6673,046,327
              
              
              3,046,327Less:
                  accumulated amortization
              
              
              (426,611
              )
              
              (326,100
              )Intangible
                  assets - net
              
              $
              2,619,716
              
              $
              2,720,227




Amortization
      expense for the three months ended March 31, 2008 and 2007 was $100,511 and
      $60,587, respectively.





Estimated
      amortization expense for the remainder of 2008 and future fiscal years is as
      follows:




2008
              
              $
              301,5332009
              
              
              402,0442010
              
              
              109,4932011
              
              
              21,1892012
              
              
              21,1892013
              
              
              8,829Thereafter
              
              
              -$
              864,277




10




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





The
      Company executed a new loan agreement with Sun West Bank on February 8, 2008,
      totaling $4.5 million (the “Loan”). The Company used $3.0 million of the
      proceeds to refinance its existing debt loan of $3.0 million with Sun West
      Bank.
      The remaining $1.5 million is available to be drawn upon as needed. The loan
      balance was $3,874,937 as of March 31, 2008. 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
      Sun
      West Bank’s index rate plus 2.5 percentage points over the index. A shareholder
      in the Company is also a minority shareholder and Board member of the lending
      institution. As a member of the bank’s Board and Loan Committee, the shareholder
      abstained from voting on this transaction as required under the appropriate
      banking regulations. The Loan is guaranteed by three shareholders of the
      Company, one being an officer of the Company. The interest is payable monthly.





The
      Company holds a line of credit loan for $100,000 with Sun West Bank. 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 Sun West Bank and varies weekly.
      The
      variable interest rate as of March 31, 2008 was 9.25%. The interest on the
      line
      of credit is paid monthly. The line of credit is guaranteed by a shareholder
      and
      officer of the Company.


**Notes
                  payable**
              
              **3/31/2008**
              
              **12/31/2007**Note
                  and loan payable for professional services non-interest
                  bearing
              
              $
              121,737
              
              $
              121,7377.8%
                  note payable to American National Bank, payable monthly for 48
                  months for
                  the purchase of vans
              
              
              65,319
              
              
              69,9599.1%
                  note payable to GMAC, payable monthly for 60 months for the purchase
                  of
                  two trucks
              
              
              24,289
              
              
              26,514211,345
              
              
              218,210Less
                  current portion
              
              
              (150,639
              )
              
              (149,685
              )Long
                  term portion
              
              $
              60,706
              
              $
              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 March 31, 2008:


2008
              
              $
              142,8192009
              
              
              31,2732010
              
              
              29,5782011
              
              
              7,675$
              211,345




11




**Note** **6
      - Operating and Capital Leases**





The
      Company and its related entities lease equipment from certain parties under
      various capital leases expiring in 2008 through 2011. Pursuant to those capital
      lease financing arrangements, the Company has drawn down an additional $391,165
      in the three months ended March 31, 2008.





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 also 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
      $2,981,413 as of March 31, 2008.




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 March 31, 2008:


2008
              
              $
              844,7222009
              
              
              793,4112010
              
              
              213,6552011
              
              
              26,4962012
              
              
              -Total
                  mimimum lease payments
              
              
              1,878,284Less
                  amounts representing interest
              
              
              (336,400
              )1,541,884Less
                  current portion
              
              
              (833,491
              )Long
                  term capital lease obligations
              
              $
              708,393




Future
      minimum lease payments under the operating leases with initial or remaining
      terms of one year or more consist of the following at March 31, 2008:


2008
              
              $
              783,7502009
              
              
              609,5862010
              
              
              426,3812011
              
              
              303,6942012
              
              
              201,4452013
              
              
              57,372Thereafter
              
              
              14,645Total
              
              $
              2,396,873





The
      total
      rental expense included in operating expenses for operating leases included
      above is $298,729 and $250,040 for the three months ended March 31, 2008 and
      2007, respectively.




12




**Note
      7** **- Related Party Transactions**





Related
      parties that entered into transactions with the Company include officers and
      stockholders. Transactions with related parties as of March 31, 2008 and
      December 31, 2007:


**3/31/2008**
              
              **12/31/2007**Term
                  loan payable (see also Note 5)
              
              $
              3,874,937
              
              $
              3,000,000


**Note
      8 - Business Combinations**





On
      January 31, 2007, through a wholly owned subsidiary, KeyOn SpeedNet LLC
      (SpeedNet LLC) purchased the assets of SpeedNet Services, Inc. (“SpeedNet”),
      including subscriber contracts, accounts, and fixed assets, and assumed certain
      operating liabilities 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. Also, 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. As consideration for these acquired assets, the
      Company paid MicroLnk $659,981 in cash.




The
      financial results for the three month period ended March 31, 2007 for KeyOn
      Communications Holdings, Inc. include two months of operations from KeyOn
      SpeedNet, LLC, and no operations for the MicroLnk acquisition. These financial
      results reflected on a pro forma basis (unaudited) by adding in the January
      2007
      SpeedNet Services, Inc. and January, February and March, 2007 of MicroLnk,
      LLC
      financial results is reported as follows:


**KEYON
                  COMMUNICATIONS HOLDINGS, INC. AND RELATED
                  ENTITIES****PRO
                  FORMA CONDENSED CONSOLIDATED STATEMENT OF
                  OPERATIONS****FOR
                  THE THREE MONTHS ENDED MARCH 31, 2007
                  (UNAUDITED)**
  **Q1
                  2007 as reported**
              
              **Jan
                  2007 SpeedNet Services**
              
              **Q1
                  2007 MicroLnk**
              
              
              
              **Adjustments**
              
              **Q1
                  2007 pro forma**TOTAL
                  REVENUES
              
              $
              1,496,375
              
              $
              482,435
              
              $
              184,416
              
              
              
              
              $
              -
              
              $
              2,163,225OPERATING
                  COSTS AND EXPENSES:Depreciation
                  and amortization
              
              
              535,355
              
              
              170,567
              
              
              25,729
              
              
              b
              
              
              (50,228
              )
              
              681,423TOTAL
                  OPERATING COSTS AND EXPENSE
              
              
              2,193,774
              
              
              710,670
              
              
              217,540
              
              
              a,b,c
              
              
              274,395
              
              
              2,847,588LOSS
                  FROM OPERATIONS
              
              
              (697,399
              )
              
              (228,235
              )
              
              (33,124
              )
              
              
              
              
              274,395
              
              
              (684,363
              )TOTAL
                  OTHER INCOME (EXPENSE):
              
              
              (159,838
              )
              
              (18,869
              )
              
              (254
              )
              
              d
              
              
              14,651
              
              
              (164,310
              )NET
                  LOSS
              
              $
              (857,237
              )
              $
              (247,104
              )
              $
              (33,378
              )
              
              
              
              $
              289,046
              
              $
              (848,672
              )
 a.
                $192k,
                    Elimination of retention bonuses (plus payroll taxes) paid to
                    top
                    employees to stay during sale of business plus elimination of
                    executive's
                    salary for January
 b.
                $50k,
                    Depreciation adjustment for January for new fair market valuation
                    of
                    assets
 c.
                $32k,
                    Adjustment for one quarter rent due to relocation into a smaller
                    facility
                    in Q2 2007
 d.
                $15k,
                    Adjustment of interest charged on SpeedNet Services other debt
                    that is not
                    a liablity under KeyOn
                    SpeedNet


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





On
      December 31, 2006, we adopted Statement of Financial Accounting Standards (SFAS)
      No. 123 (revised 2004), “Share-Based Payment,” requiring us to recognize
      expenses related to the fair value of our employee stock option awards. We
      recognize the cost of all share-based awards on a straight line vesting basis
      over the vesting period of the award.




13




***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 no 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 and the equity financing, 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. During the three month period ended March 31,
      2008,
      2,036 shares were issued for services rendered for investor relations. As of
      March 31, 2008, 8,251,142 shares were issued and outstanding.





***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 March 31, 2008, no shares of preferred stock were issued and outstanding.





***Warrants***





The
      Company has 1,723,679 common stock warrants outstanding and exercisable as
      of
      March 31, 2008 with a warrant strike price ranging from $3.31 to $8.00 and
      an
      average price of $5.27 for each share of common stock. These warrants have
      expiration dates of three to seven years from their date of issue. As of
      December 31, 2007, a total of 473,345 warrants to purchase shares of our common
      stock were outstanding and exercisable. A total of 1,250,004 warrants were
      issued during the three months ended March 31, 2008. The cost of $606,233 for
      these warrants granted was expensed as compensation expense during the three
      months ended March 31, 2008. No shares were forfeited or exercised during the
      three months ended March 31, 2008. The amount expensed in the three months
      ended
      March 31, 2008 to interest expense for the amortization of the debt issuance
      costs was $4,869.




14




***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 our common stock under our 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, our 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 KeyOn’s development and financial success.
      Under the 2007 Plan, we 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.





As
      of
      March 31, 2008, 831,491 options are outstanding. As of December 31, 2007,
      612,867 options were outstanding. For the three months ended March 31, 2008,
      218,624 options were granted and none were forfeited. Compensation expense
      recorded on stock options for the three months ended March 31, 2008 totaled
      $516,153. The range of strike price per outstanding option is $2.10 to $8.16
      and
      the weighted average strike price is $3.36 per share.





**Note
      10 - Commitments and Contingencies**





The
      Company currently is a party to a litigation 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 is also in litigation involving a former site-contractor seeking payment
      for alleged unpaid invoices and a dispute between a former wholesale partner
      and
      a current wholesale partner in which KeyOn is a third-party defendant. The
      Company is awaiting settlement documents for the first two matters. In the
      third
      action, although the Company has an affirmative counter-claim and believes
      it
      will prevail, reasonably anticipated damages are less than $20,000.




15




**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**





**Recent
      Events**





Prior
      to
      August 9, 2007, we were a public shell company, as defined by the Securities
      and
      Exchange Commission, without material assets or activities. On August 9, 2007,
      we completed a reverse merger, pursuant to which a wholly-owned subsidiary
      of
      ours merged with and into a private company, KeyOn Communications Inc., with
      such private company being the surviving company. In connection with this
      reverse merger, we discontinued our former business and succeeded to the
      business of KeyOn Communications Inc. as our sole line of business. For
      financial reporting purposes, KeyOn Communications Inc., and not us, 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
      our
      historical financial results.





**Overview**





We
      provide wireless broadband services primarily to rural and other underserved
      markets under the "KeyOn," "SpeedNet," and "SIRIS" brands. We offer our
      broadband services along with satellite video and VoIP services to both
      residential and business subscribers. In October 2007, we acquired substantially
      all of the assets of MicroLnk, LLC, a provider of wireless broadband services
      to
      rural communities in Nebraska, headquartered in Lincoln. We currently operate
      the MicroLnk assets under the “SpeedNet” brand. In January 2007, we 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. Including the operations of SpeedNet
      Services, Inc., our markets are located in the following 11 Western and
      Midwestern states: Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Nebraska,
      Nevada, Ohio, South Dakota, and Texas. Our results for the quarter ended March
      31, 2007 include only two months of operations of SpeedNet versus three months
      of operations for the quarter ended March 31, 2008.





**Characteristics
      of Our Revenues and Operating Costs and Expenses**





We
      offer
      our 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. In January 2008, we began receiving revenues for DISH
      installations and DISH equipment sales. These revenues are recognized upon
      installation. DISH network is a provider of direct broadcast satellite
      television products and services.





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 and DISH inventory costs. Payroll expenses
      consist of personnel costs, including salaries, benefits, employer taxes and
      bonuses across our functional areas: executive, customer support, engineering,
      accounting and billing, marketing, and local market operational
      staff.





Network
      operating costs are comprised of costs directly associated with providing our
      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 we utilize periodically in the normal course of doing business.
      General and administrative expenses primarily consist of the support costs
      of
      our operations, such as costs related to office real estate leases, company
      insurance, travel and entertainment, banking and credit card fees, taxes and
      vehicle leases. DISH inventory costs consist of the cost of the equipment
      purchased from DISH network in support of our DISH offering.




16




**Results
      of Operations**





*Three-Month
      Period Ended March 31, 2008 as Compared to the Three-Month Period Ended March
      31, 2007*





*Revenues.* During
      the three-month period ended March 31, 2008, we recognized revenues of
      $2,046,031, as compared to revenues of $1,496,375 during the three-month period
      ended March 31, 2007, representing an increase of approximately 36.7%. This
      increase was the result of the additional revenue from our 2007 acquisitions
      and
      organic subscriber growth. The revenues in the first quarter of 2008 include
      one
      additional month of revenue from SpeedNet and three months of revenue from
      MicroLnk as compared to the first quarter of 2007. As the Company's GAAP
      financials display revenues and marketing and advertising both net of promotions
      and/or service credits, adjusting for these items, revenues for the quarter
      ended March 31, 2008 were $2.1 million.





*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 $4,441,897 for the three-month period ended March
      31,
      2008, as compared to $2,193,774 for the three-month period ended March 31,
      2007,
      representing an increase of approximately 102.5%. A majority of this increase,
      49.7%, was due to the incurrence of $1,122,386 for non-cash expenses including
      stock-based and warrant compensation expense. Another contributing factor,
      accounting for 36.7% of the increase in the operating loss, is the cost
      increases associated with the larger customer base, including the acquisitions
      of SpeedNet Services, Inc. and MicroLnk, LLC, and the resulting increased costs
      associated with running the expanded operations. Increased professional fees
      to
      support public company requirements account for 7.4% of the increase. Additional
      marketing initiatives for the continued organic expansion of the customer base
      and the initiation of activities as a DISH retailer and related DISH inventory
      costs account for 6.2% of the increase. Finally, the operating expenses for
      the
      first quarter of 2008 include certain one-time expenses and over accrued network
      operating costs totaling approximately $300,000. Without the non-cash expenses,
      normalized operating expenses would have been $3,319,511 for the three-month
      period ended March 31, 2008 as compared to $2,193,774 for the three-month period
      ended March 31, 2007, representing an increase of only 51.3%. Our actual
      operating loss margin increased by 71 percentage points from a total
      operating loss $2,395,866 of the three-month period ended March 31, 2008 as
      compared to a loss of $697,399 for the three-month period ended March 31, 2007.
      By removing non-cash expenses of $1,122,386, our normalized operating loss
      margin increased by less than 16 percentage points from a total normalized
      operating loss $1,273,480 for the three-month period ended March 31, 2008 as
      compared to a loss of $697,399 for the three-month period ended March 31, 2007.
      We were not a public company in the first quarter of 2007 and therefore did
      not
      incur costs related thereto. In addition, we hired additional personnel during
      the fourth quarter of 2007, including senior executives in furtherance of its
      acquisition strategy, public status and the associated growth of the
      business.





*Payroll,
      Bonuses and Taxes.* Payroll
      bonuses and taxes totaled $1,007,688 for the three-month period ended March
      31,
      2008, as compared to $635,878 for the three-month period ended March 31, 2007,
      representing an increase of approximately 58.5%. This increase was primarily
      due
      to the incremental variable staff additions, such as customer service
      representatives and installers that are needed to service the expanded customer
      base as a result of our acquisitions of SpeedNet Services, Inc. and MicroLnk,
      LLC in 2007.





*Depreciation
      and Amortization.* Depreciation
      and amortization expenses totaled $710,380 for the three-month period ended
      March 31, 2008, as compared to $535,355 for the three-month period ended March
      31, 2007, representing an increase of approximately 32.7%. This increase was
      primarily due to the additional network footprint and customer premise equipment
      acquired in connection with the acquisitions SpeedNet Services, Inc. and
      MicroLnk, LLC in 2007.





*Other
      General and Administrative Expenses* . Other
      general and administrative expenses totaled $366,183 for the three-month period
      ended March 31, 2008, as compared to $538,822 for the three-month period ended
      March 31, 2007, representing a decrease of approximately 32.0%. Expenses
      incurred in connection with our acquisitions account for 29.9% of the decrease
      in the three-month period ended March 31, 2008 as compared to the three-month
      period ended March 31, 2007. The balance of the decrease, or 70.1%, is due
      to
      our efforts to reduce and manage costs relating to office rent, bank service
      charges, shipping, and travel.





*Network
      Operating Costs* . Network
      operating costs, which consist of tower rent, Internet transport costs and
      Internet termination expense, totaled $743,398 for the three-month period ended
      March 31, 2008, as compared to $354,504 for the three-month period ended March
      31, 2007, representing an increase of approximately 109.7%. The additional
      network footprint and increased customer bases associated with our acquisitions
      of SpeedNet Services, Inc. and MicroLnk, LLC account for 96.3% of the change.
      The balance of the increase, or 3.7%, is related to the organic increase in
      the
      customer base.




17




*Marketing
      and Advertising Expenses* . Marketing
      and advertising expenses totaled $164,334 for the three-month period ended
      March
      31, 2008, as compared to $60,741 for the three-month period ended March 31,
      2007, representing an increase of approximately 170.5%. This increase was
      primarily due to our emphasis on organic growth across all of our markets as
      we
      have the ability to market to a greater number of potential customers served
      by
      the additional network footprint associated with our 2007 acquisitions of
      SpeedNet Services, Inc. and MicroLnk, LLC. Our marketing costs were 8% of
      revenue for the three-month period ended March 31, 2008 and 4% for the
      three-month ended March 31, 2007. This 4 percentage point difference in
      marketing expenses as a percentage of revenue was due to our expanded marketing
      efforts in the SpeedNet Services Inc. territories as well as the initiation
      of
      activities as a DISH retailer.





*Installation
      Expense* . Installation
      expense, which consists primarily of expenses associated with installation
      supplies, third party installation costs and transportation expenses relating
      to
      the installations, totaled $121,886 for the three-month period ended March
      31,
      2008, as compared to $40,340 for the three-month period ended March 31, 2007,
      representing an increase of approximately 202.1%. Installation volumes increased
      by 62.5% for the three-month period ended March 31, 2008 as compared to the
      three-month period ended March 31, 2007. The SpeedNet and MicroLnk acquisitions
      account for 28.3% while organic growth accounted for 71.7% of the installation
      volume increase for the three-month period ended March 31, 2008 as compared
      to
      the three-month period ended March 31, 2007. The SpeedNet territories primarily
      utilize third party contractors for installations and this expense is classified
      to installation costs. In contrast, our other markets utilize employees and
      their wages are captured as payroll expenses.





*Professional
      Fees* . Professional
      fees, which consist of legal, accounting, and other related expenses, totaled
      $188,837 for the three-month period ended March 31, 2008, as compared to $23,549
      for the three-month period ended March 31, 2007, representing an increase of
      approximately 701.9%. Specifically, accounting fees account for 48.3%, advisory
      fees account for 25.1%, legal fees account for 18.8%, and other professional
      fees account for 7.8% of the increase in professional fee costs for the
      three-month period ended March 31, 2008 as compared to the three-month period
      ended March 31, 2007. These additional expenses were incurred in connection
      with
      being a publicly traded company as of August 9, 2007. Non-recurring professional
      fees incurred during the three-month period ended March 31, 2008, for
      accounting, legal fees and other professional fees totaled $89,981.





*Stock-Based
      and Warrant Compensation* .
       Stock-based and warrant compensation of $1,122,386 was expensed for the
      three-month period ended March 31, 2008, as compared to $4,585 for the
      three-month period ended March 31, 2007. The expense for warrants granted as
      compensation for the guaranty on our term note with Sun West Bank was $606,233
      during the three-month period ended March 31, 2008. Stock-based compensation
      for
      stock options issued under our option plan totaled $516,153 for the three-month
      period ended March 31, 2008 as compared to stock option expense in for the
      three-month period ended March 31, 2007 totaling $4,585.





*Cost
      of DISH Inventory* . 
      Cost of DISH inventory of $16,805 was expensed for the three-month period ended
      March 31, 2008, as compared to no cost for the three-month period ended March
      31, 2007. The expense for DISH inventory is recognized immediately after
      installation. We began our DISH retailer line of business in January
      2007.





*Other
      Income and Expense* . 
      We incurred other income and expense of $175,767 for the three-month period
      ended March 31, 2008, as compared to $159,838 for the three-month period ended
      March 31, 2007, representing an increase of 10%. The primary reason for the
      increase, 69.2%, resulted from interest income of $11,600 earned in the
      three-month period ended March 31, 2007 as compared to $585 earned for the
      three-month period ended March 31, 2008. The remaining reason for the increase,
      or 30.8%, is due to the increased interest expense incurred in connection with
      lease financing in support of our continued organic growth of our customer
      base.




18


*Net
      Loss* . 
      We had a net loss of $2,571,633 for the three-month period ended March 31,
      2008,
      as compared to a net loss of $857,237 for the three-month period ended March
      31,
      2007, representing an increase of approximately 200%. The major contributing
      factor of the increased net loss is the incurrence of $1,122,386 for non-cash
      expenses, including stock-based and warrant compensation expense, which accounts
      for 65.2% of the increase. The increased costs associated with running the
      expanded operations of SpeedNet Services, Inc. and MicroLnk, LLC, contributed
      to
      25.2% of the increase. Finally, 9.6% of increase is the incremental professional
      fees incurred in support of our public company status. Normalized net loss
      without the non-cash expenses would have been $1,449,247 for the three-month
      period ended March 31, 2008 as compared to $857,237 for the three-month period
      ended March 31, 2007, representing an increase of only 69.1%. This is as a
      result of the elimination of duplicative costs and improvements in efficiencies
      due to economies of scale with our acquisitions of SpeedNet Services, Inc.
      and
      MicroLnk, LLC. Our net loss margin increased by 68 percentage points from a
      net
      loss $2,571,633 for the three-month period ended March 31, 2008 as compared
      to a
      net loss of $857,237 for the three-month period ended March 31, 2007. However,
      after removing the non-cash expenses of $1,122,386, our normalized net loss
      margin increased by 13 percentage points from a total normalized net loss
      $1,449,247 for the three-month period ended March 31, 2008 as compared to a
      net
      loss of $857,237 for the three-month period ended March 31, 2007.





**Liquidity
      and Capital Resources**





*General*





As
      of
      March 31, 2008 and as of March 31, 2007, we had cash of $117,631 and $891,986,
      respectively.





*Net
      Cash Used by Operating Activities* .
      Net
      cash used in operating activities totaled $525,470 for the three-month period
      ended March 31, 2008, as compared to net cash proceeds from operating activities
      of $11,628 for the three-month period ended March 31, 2007. The change in cash
      used in operating activities is attributed to the increases in professional
      fees
      in support of our public company requirements, network operating costs relating
      to the SpeedNet territories, marketing costs and an increase in accounts
      receivable which account for 30.7%, 46.6%, 14.9% and 7.8% of the change,
      respectively.





*Net
      Cash Used in Investing Activities* .
      Net
      cash used in investing activities totaled $10,635 for the three-month period
      ended March 31, 2008, as compared to $3,478,977 for the three-month period
      ended
      March 31, 2007. In the three-month period ended March 31, 2007, we completed
      the
      asset purchase of SpeedNet Services, Inc.





*Net
      Cash Provided By Financing Activities* .
      Net
      cash provided by financing activities totaled $336,737 for the three-month
      period ended March 31, 2008, as compared to $4,354,555 for the three-month
      period ended March 31, 2007. During the three-month period ended March 31,
      2008,
      we entered into a commercial loan agreement for $4,500,000 of which $3,000,000
      was used to pay the prior term loan that was entered into during the three-month
      period ending March 31, 2007. We drew down $874,937 of the remaining $1,500,000
      remaining on the loan balance for use in operations. Proceeds from the sale
      of
      stock and exercised warrants for the three-month period ended March 31, 2007
      totaled $1,608,050.





*Working
      Capital* .
      As of
      March 31, 2008, we had negative working capital of $7,446,500. This amount
      includes $3,874,937 of term debt, $833,491 for capital leases, and $415,352
      for
      deferred revenue.





In
      order
      to continue our acquisition and organic growth strategies, as well as to sustain
      our current capital needs, management projects that we will require funds from
      sources outside of our normal operations. As a result, we executed a new
      commercial loan agreement on February 8, 2008 totaling $4.5 million (the
“Loan”). We will use the proceeds of the Loan to refinance our existing term
      loan of $3.0 million due January 30, 2008 and for working capital as required
      by
      the business. The Loan matures on August 4, 2008, but is renewable at our option
      for an additional six months or until February 4, 2009. If in the short-term
      we
      are unable to raise capital on favorable terms, or at all, we intend to generate
      internal cash from further cost reductions already commenced in the first
      quarter of 2008 and/or raise additional outside capital from current
      shareholders or other related parties. However, there can be no assurance that
      we will be successful in doing so, and such cost reductions would significantly
      curtail our current acquisition and organic growth strategy.





*Private
      Placement*





In
      connection with the reverse merger in August 2007, we completed a private
      placement, pursuant to which we 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, we 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, we incurred other professional fees
      and
      expenses totaling approximately $75,000 in connection with the reverse merger
      and private placement.




19




**Critical
      Accounting Policies and Estimates**





Our
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States that require us 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 our company and our wholly owned
      subsidiaries. All significant intercompany balances and transactions have been
      eliminated in consolidation. In our opinion, the condensed consolidated
      financial statements contain all the adjustments necessary (consisting only
      of
      normal recurring accruals) to make our financial position 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, we utilized available
      information, including our past history, industry standards and the current
      economic environment, among other factors, in forming our 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 our results of operations
      to
      those of companies in similar businesses. We believe that of our 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 our
      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.* We
      prepare our financial statements on the accrual method of accounting. Under
      this
      basis, income is recognized when earned, and expenses are generally recognized
      when incurred. We charge a recurring subscription fee for providing our various
      Internet access services to our subscribers and recognize 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.





*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, we adopted Statement of Financial Accounting Standards No.
      123 (revised 2004), "Share-Based Payment," requiring us to recognize expenses
      related to the fair value of our employee stock option awards. We recognize
      the
      cost of all share-based awards on a straight line vesting basis over the vesting
      period of the award.





We
      have
      has estimated the fair value of our option awards granted after December 1,
      2005, using the Black-Scholes option pricing model. Expected volatilities are
      based on the historical volatility of our 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.




20




*Off-Balance
      Sheet Arrangements.* We have
      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 our
      2009 fiscal year. For the three month period ended March 31, 2008, there was
      no
      impact on the Company’s consolidated
      financial position, results of operations or cash flows due to SFAS 157.





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. We currently do not believe that SAB
      108
      will have a material impact on our 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. For the three month period ended March 31,
      2008, there was no impact on the Company’s consolidated
      financial position, results of operations or cash flows due to SFAS 159.





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. We are currently evaluating FAS 141 to determine its
      impact on our future consolidated financial position, results of operations
      or
      cash flows.





**Certain
      Risks and Uncertainties**





Certain
      statements in this Quarterly Report on Form 10-Q, including certain statements
      contained in “Management’s Discussion and Analysis,” constitute forward-looking
      statements. 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 risks and uncertainties. Any forward-looking
      information provided by us or on our behalf is not a guarantee of future
      performance. Our actual results could differ materially from those anticipated
      by such forward-looking statements due to a number of factors, some of which
      are
      beyond our control. All such forward-looking statements are current only as
      of
      the date on which such statements were made. We do 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.




21




**Item
      4T.**  **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. We were unable to conclude that our disclosure controls and
      procedures are effective, as of the end of the period covered by this report
      (March 31, 2008), in ensuring that material information that we are required
      to
      disclose in reports that we file or submit 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. We believe that we will have effective internal controls to meet this
      requirement prior to the filing of our annual report for the year ended December
      31, 2008.





**Changes
      in Internal Control Over Financial Reporting**





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





**PART II
      - OTHER INFORMATION**


**Item
      6.**  **Exhibits.**


**Exhibit
                  No.**
              **Description**31.1*
              Section
                  302 Certification by the Principal Executive Officer31.2*
              Section
                  302 Certification by the Principal Financial Officer32.1*
              Section
                  906 Certification by the Principal Executive Officer32.2*
              Section
                  906 Certification by the Principal Financial
                  Officer




________________________


*
      Filed
      herewith


22





**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.


KEYON
                  COMMUNICATIONS HOLDINGS, INC.Date:
                  May 15, 2008
              By:
              /s/
                    Jonathan SnyderJonathan
                  SnyderPresident
                  and Chief Executive Officer(Principal
                  Executive Officer)Date:
                  May 15, 2008
              By:
              /s/
                    Annette EggertAnnette
                  EggertChief
                  Financial Officer(Principal
                  Financial Officer)




23




**EXHIBIT
      INDEX**


**Exhibit
                    No.**
                **Description**31.1*
                Section
                    302 Certification by the Principal Executive Officer31.2*
                Section
                    302 Certification by the Principal Financial Officer32.1*
                Section
                    906 Certification by the Principal Executive Officer32.2*
                Section
                    906 Certification by the Principal Financial
                    Officer
  ________________________


*
      Filed
      herewith





24