---

SECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

Form 10-K /A

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

For the fiscal year ended December 31, 2008

OR

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

For the transition period
from                
to

Commission file no. 0-23687

STOCKHOUSE INC.(Exact
name of registrant as specified in its charter)

|Colorado                                      | 84-1379282                         
|--------------------------------------------- | -----------------------------------
|(State or other jurisdiction of incorporation | (I.R.S. EmployerIdentification No.)
|or organization)                              |                                    

Suite 500-750 West Pender Street Vancouver British
Columbia Canada V6C 2T7(Address of principal executive offices,
including zip code)

(604) 331-0995(Registrants telephone
number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

|Title of Each Class | Name of Each Exchange on Which
      Registered
|------------------- | -----------------------------------------------
|N/A                 | N/A                                            

Securities registered pursuant to Section 12(g) of the
Act:

Title of Each ClassCommon Stock, no par value

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes[ ] No[ x
]

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. Yes[ ] No[ x ]

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

1

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was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes[ x ]    No[
]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K[ ]

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 definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

|Large accelerated filer [ ] |                                               | Non-accelerated filer [ ]      
|--------------------------- | --------------------------------------------- | -------------------------------
|Accelerated filer [ ]       | (Do not check if a smaller reporting company) | Smaller reporting company [ x ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes[ ] No[ x ]

The aggregate market value of common stock held by
non-affiliates of the registrant, based upon the average bid and ask price of
the registrants common stock on June 30, 2008 as reported for such date by the
OTC Bulletin Board was approximately $13,000,000. Common stock held by each
executive officer and director of the registrant and by each person who owns 5%
or more of the outstanding common stock have been excluded from this computation
because such persons may be deemed affiliates of the registrant. This
determination of affiliate status for this purpose does not reflect a
determination that any persons are affiliates for any other purposes.

The number of shares of the registrants common stock
outstanding as of March 30, 2009, the most recent practicable date prior to
filing of this report, was 41,295,922 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None

2

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**EXPLANATORY NOTE**

This Amendment No. 1 (this "Amendment") to  the Annual Report on Form 10-K for the fiscal year ended December 31, 2008 of  Stockhouse Inc. (“Stockhouse”) filed on April 1, 2009 (the “Original Filing”),  is being filed for the purpose of removing $505,000 impairment of intangible  assets expense in Stockhouse’s consolidated statement of operations for the  year ended December 31, 2007, which was inadvertently included during the EDGARization  process.

3

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REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

To the Board of Directors and Shareholders of Stockhouse
Inc.

We have audited the accompanying consolidated balance sheets of
Stockhouse Inc. and subsidiaries (the "Company") as of December 31, 2008 and
2007, and the related consolidated statements of operations, shareholders'
(deficiency) equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the Company at
December 31, 2008 and 2007, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 1 to the consolidated financial
statements, the Company adopted Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109,
effective January 1, 2007.

The accompanying consolidated financial statements for the year
ended December 31, 2008 have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company's recurring losses from operations and net shareholders deficiency
raise substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

/s/ Deloitte & Touche LLPIndependent Registered
Chartered Accountants Vancouver, Canada 
March 31, 2009

4

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|Stockhouse Inc.                                                               
|------------------------------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)                                
|                                                                              
|CONSOLIDATED BALANCE SHEETS                                                   
|                                                                              
|(Expressed in thousands of U.S. Dollars, except number of
      common shares)
|                                                                              
|Continuing operations (note 1)                                                

|                                                              |   | As at December 31, |  
|------------------------------------------------------------- | - | ------------------ | -
|                                                              |   | 2008               |  
|ASSETS                                                        |   |                    |  
|Current Assets:                                               |   |                    |  
|Cash and cash
      equivalents (note 1)                      | $ | 728                |  
|Restricted cash (note 10)                                     |   | 131                |  
|Accounts receivable
      (net of allowance of $347 and $456) |   | 1,327              |  
|Prepaid expenses and other current
      assets               |   | 253                |  
|TOTAL CURRENT ASSETS                                          |   | 2,439              |  
|Property and equipment, net (note 5)                          |   | 555                |  
|Goodwill (note 3)                                             |   | -                  |  
|Intangible assets, net (notes 3 and 4)                        |   | 208                |  
|TOTAL ASSETS                                                  | $ | 3,202              |  
|                                                              |   |                    |  
|LIABILITIES AND SHAREHOLDERS EQUITY                          |   |                    |  
|Current Liabilities:                                          |   |                    |  
|Accounts payable (note
      5)                               | $ | 1,561              |  
|Accrued liabilities (notes 4 and 5)                           |   | 2,085              |  
|Deferred revenues                                             |   | 711                |  
|Debentures (note 6)                                           |   | 545                |  
|Capital lease
      obligations                               |   | 78                 |  
|TOTAL CURRENT LIABILITIES                                     |   | 4,980              |  
|Long-term capital lease obligations                           |   | 4                  |  
|Long term payable (note 4)                                    |   | -                  |  
|Long-term deferred revenues                                   |   | 103                |  
|TOTAL LIABILITIES                                             |   | 5,087              |  
|                                                              |   |                    |  
|SHAREHOLDERS (DEFICIENCY) EQUITY                             |   |                    |  
|                                                              |   |                    |  
|Preferred stock                                               |   |                    |  
|Series A convertible, $1,000 per share                        |   |                    |  
|authorized 5,000,000 shares                                   |   |                    |  
|issued and outstanding 3,000 shares                           |   | 2,969              |  
|Common stock, no par value:                                   |   |                    |  
|authorized 75,000,000
      shares                            |   |                    |  
|issued and outstanding 41,295,922 and
      40,916,921 shares |   | 18,910             |  
|Additional paid-in capital                                    |   | 3,820              |  
|Accumulated deficit                                           |   | (27,584            | )
|TOTAL SHAREHOLDERS (DEFICIENCY) EQUITY                       |   | (1,885             | )
|TOTAL LIABILITIES AND SHAREHOLDERS                           |   |                    |  
|(DEFICIENCY) EQUITY                                           | $ | 3,202              |  

Commitments and contingencies (note 10) Guarantees (note
11)

The accompanying notes are an integral part of these
consolidated financial statements

5

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|Stockhouse Inc.                                                      
|---------------------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)                       
|                                                                     
|CONSOLIDATED STATEMENTS OF OPERATIONS                                
|                                                                     
|(Expressed in thousands of U.S. Dollars, except per share
      data)

|                                                                   |   | For the years ended December 31, |  
|------------------------------------------------------------------ | - | -------------------------------- | -
|                                                                   |   | 2008                             |  
|REVENUES                                                           |   |                                  |  
|Licensing and subscriptions                                        | $ | 9,210                            |  
|Advertising services                                               |   | 2,600                            |  
|TOTAL REVENUES                                                     |   | 11,810                           |  
|OPERATING COSTS AND EXPENSES                                       |   |                                  |  
|Cost of revenues (exclusive of
      amortization)                 |   | 5,236                            |  
|Sales and marketing                                                |   | 4,403                            |  
|Research and development                                           |   | 1,434                            |  
|General and
      administrative                                   |   | 6,372                            |  
|Amortization of intangible assets
      (notes 3 and 4)            |   | 389                              |  
|Impairment of goodwill
      (notes 3 and 4)                       |   | 99                               |  
|Impairment of intangible assets (notes
      3 and 4)              |   | 889                              |  
|TOTAL OPERATING EXPENSES                                           |   | 18,822                           |  
|                                                                   |   |                                  |  
|Loss from operations                                               |   | (7,012                           | )
|Interest and other expense (income), net (notes 4,10 and
      14) |   | (461                             | )
|Loss before income taxes                                           |   | (6,551                           | )
|(Recovery of) provision for income taxes (note 8)                  |   | (5                               | )
|Net loss and comprehensive loss                                    | $ | (6,546                           | )
|                                                                   |   |                                  |  
|Net loss per common share:                                         |   |                                  |  
|Basic and diluted                                                  | $ | (0.16                            | )
|                                                                   |   |                                  |  
|Common shares used in computing basic and diluted net loss         |   |                                  |  
|per share (thousands)                                              |   | 41,301                           |  

The accompanying notes are an integral part of these
consolidated financial statements

6

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|Stockhouse Inc.                                                  
|-----------------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)                   
|                                                                 
|CONSOLIDATED STATEMENT OF SHAREHOLDERS (DEFICIENCY)
      EQUITY
|(Expressed in thousands)                                         

|                          |           |  |           |  |        |   |        |   |            |   |             |   | Total         |  
|------------------------- | --------- |  | --------- |  | ------ | - | ------ | - | ---------- | - | ----------- | - | ------------- | -
|                          | Preferred |  |           |  | Common |   |        |   | Additional |   |             |   | Shareholders |  
|                          | shares    |  | Preferred |  | stock  |   | Common |   | paid-in    |   | Accumulated |   | (Deficiency)  |  
|                          | No. of    |  | shares    |  | No. of |   | stock  |   | capital    |   | deficit     |   | Equity        |  
|                          | shares    |  | $         |  | shares |   | $      |   | $          |   | $           |   | $             |  
|Balance at                |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|December 31, 2006         | -         |  | -         |  | 35,350 |   | 13,793 |   | 3,394      |   | (15,904     | ) | 1,283         |  
|Issuance of common        |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|shares pursuant to        |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|exercise of employee      |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|stock options             | -         |  | -         |  | 734    |   | 236    |   | (54        | ) | -           |   | 182           |  
|Private placement         |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|transaction  common      |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|shares and warrants       | -         |  | -         |  | 3,333  |   | 4,033  |   | 96         |   | -           |   | 4,129         |  
|Issuance of common        |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|shares pursuant to        |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|business acquisition      | -         |  | -         |  | 1,500  |   | 840    |   | -          |   | -           |   | 840           |  
|Stock-based compensation  | -         |  | -         |  | -      |   | -      |   | 216        |   | -           |   | 216           |  
|Net loss and              |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|comprehensive loss        | -         |  | -         |  | -      |   | -      |   | -          |   | (5,134      | ) | (5,134        | )
|Balance at                |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|December 31, 2007         | -         |  | -         |  | 40,917 |   | 18,902 |   | 3,652      |   | (21,038     | ) | 1,516         |  
|Issuance of series A      |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|convertible preferred     |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|shares                    | 3         |  | 2,969     |  | -      |   | -      |   | -          |   | -           |   | 2,969         |  
|Issuance of common stock  |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|pursuant to exercise of   |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|employee stock options    | -         |  | -         |  | 779    |   | 176    |   | (9         | ) | -           |   | 167           |  
|Shares returned to settle |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|acquisition liabilities   |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|(note 3)                  | -         |  | -         |  | (400   | ) | (168   | ) | -          |   | -           |   | (168          | )
|Stock-based compensation  | -         |  | -         |  | -      |   |        |   | 177        |   | -           |   | 177           |  
|Net loss and              |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|comprehensive loss        | -         |  | -         |  | -      |   | -      |   | -          |   | (6,546      | ) | (6,546        | )
|Balance at                |           |  |           |  |        |   |        |   |            |   |             |   |               |  
|December 31, 2008         | 3         |  | 2,969     |  | 41,296 |   | 18,910 |   | 3,820      |   | (27,584     | ) | (1,885        | )

The accompanying notes are an integral part of these
consolidated financial statements

7

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|Stockhouse Inc.                               
|----------------------------------------------
|(formerly Stockgroup Information Systems Inc.)
|                                              
|CONSOLIDATED STATEMENTS OF CASH FLOWS         
|(Expressed in thousands of U.S. Dollars)      

|                                                                      |   | For the years ended December 31, |  
|--------------------------------------------------------------------- | - | -------------------------------- | -
|                                                                      |   | 2008                             |  
|Operating activities:                                                 |   |                                  |  
|Net loss                                                              | $ | (6,546                           | )
|Adjustments to reconcile net loss to net
      cash used in           |   |                                  |  
|operating activities:                                                 |   |                                  |  
|Amortization of property and
      equipment                          |   | 340                              |  
|Amortization of intangible assets                                     |   | 389                              |  
|Impairment of goodwill                                                |   | 99                               |  
|Impairment of intangible
      assets                                 |   | 889                              |  
|Stock-based compensation                                              |   | 177                              |  
|Gain on
      write off of account payable (note 4)                   |   | (44                              | )
|Gain on
      sale of shares in Stockscores (note 14)                 |   | (75                              | )
|Changes in non-cash working capital (note 9)                          |   | (531                             | )
|CASH USED IN OPERATING ACTIVITIES                                     |   | (5,302                           | )
|                                                                      |   |                                  |  
|Investing activities:                                                 |   |                                  |  
|Purchases of property and equipment                                   |   | (192                             | )
|Proceeds on sale of
      shares in Stockscores (note 14)             |   | 75                               |  
|Acquisition of Mobile Finance Division
      (note 3)                 |   | -                                |  
|Acquisition of Semotus assets
      (note 4)                          |   | (50                              | )
|Restricted cash (note 10)                                             |   | (131                             | )
|CASH USED IN INVESTING ACTIVITIES                                     |   | (298                             | )
|                                                                      |   |                                  |  
|Financing activities:                                                 |   |                                  |  
|Proceeds on exercise of stock options                                 |   | 167                              |  
|Proceeds on issuance of
      preferred shares, net of costs (note 7) |   | 2,969                            |  
|Proceeds on debentures, net of costs (note 6)                         |   | 545                              |  
|Proceeds on private
      placements, net of costs (note 7)           |   | -                                |  
|Repayment of capital lease obligations                                |   | (174                             | )
|CASH PROVIDED BY FINANCING ACTIVITIES                                 |   | 3,507                            |  
|                                                                      |   |                                  |  
|Net (decrease) increase in cash and cash
      equivalents            |   | (2,093                           | )
|Cash and cash equivalents, beginning of the year                      |   | 2,821                            |  
|Cash and cash equivalents, end of the year                            | $ | 728                              |  

Supplemental Cash Flow Information (note 9)

The accompanying notes are an integral part of these
consolidated financial statements

8

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          
|                                                           

1.Basis of Presentation and Continuing Operations

Stockhouse Inc. (the Company or
Stockhouse) is a financial media company that provides various financial
Internet solutions, tools, content and services to financial institutions, media
publishers, public companies, and advertisers. The Company also helps the retail
investor create and manage their personal wealth by delivering a consolidated
source of financial data streams, news, portfolio management, analysis tools and
a forum for capturing user-generated content. The Company also operates its
StockHouse.com and StockHouse.ca websites, where it provides its advertising
services.

The Company was incorporated
under the laws of Colorado on December 6, 1994.

Effective July 10, 2008, the
Company changed its name from Stockgroup Information Systems Inc. to Stockhouse
Inc. (Stockhouse or the Company). As a result, effective July 21, 2008,
Stockhouse traded on the Over-the-Counter Bulletin Board quotation service
operated by the Nasdaq Stock Market, Inc. under its new trading symbol STKH.OB
(previously since March 17, 1999 under the symbol SWEB) and on the TSX Venture
Exchange under its new trading symbol SHC.V (previously since December 17,
2002 under the symbol SWB).

Basis of Presentation

These consolidated financial
statements have been prepared in accordance with United States (U.S.)
generally accepted accounting principles (GAAP). The accompanying financial
statements include the accounts of the Company and its subsidiaries. All
intercompany accounts and transactions have been eliminated. All information is
stated in U.S. dollars unless otherwise indicated.

The accompanying consolidated
financial statements have been prepared assuming that the Company will continue
as a going concern which contemplates the realization of assets and discharge of
liabilities in the normal course of operations for the foreseeable future. The
Company has incurred significant recurring operating losses over the past two
years, and has not generated positive cash flow from operations since the first
quarter of 2007. For year ended December 31, 2008 the Company had a net loss of
$6,546,000. At December 31, 2008, the Company held cash and cash equivalents of
$728,000 and had a net working capital deficit of $1,830,000. Net working
capital is defined as current assets minus current liabilities excluding current
deferred revenues. At March 30, 2009, the Company held cash and cash equivalents
of $489,018. These conditions raise doubt about the Companys ability to
continue as a going concern.

The Company has been able, thus
far, to finance the losses, as well as the growth of the business through a
series of equity and debt private placements. As further described in Note 7 to
these consolidated financial statements, in May 2008, the Company closed a
private placement of 3,000 shares of Series A convertible preferred stock at a
price of $1,000 per share for net proceeds of $2,969,000. As further described
in Note 6 to these consolidated financial statement, in November 2008, the
Company entered into debenture purchase agreements with multiple subscribers
under which the Company issued to the subscribers a total of $550,000
(C$672,000) of secured unregistered 18% debentures.

9

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

General economic conditions
deteriorated during 2008 and the Companys revenue, operating results and cash
flows were significantly impacted by the economic slowdown. The duration and
depth of this economic slowdown in markets in which the Company operates will
continue to impact the Companys future advertising and subscription revenue.
Management acted to reduce the Companys operating costs in the second, third,
and fourth quarters of 2008, which included downsizing the number of staff and
executives, renegotiating contracts with significant vendors to reduce costs,
and closing unprofitable locations in Europe. Management believes that as a
result of these cost reductions, the Company has sufficient resources for the
next twelve months to meet its obligations as they fall due in the ordinary
course of business.

The Company will also finance any
further cash requirements, if necessary, through further debt or equity
financings. There is no assurance however, that additional financing can be
obtained, or if obtained, on terms that are acceptable to management. The
accompanying consolidated financial statements do not include any adjustments to
reflect the possible future effects on recoverability and classification of
assets or liabilities should the Company not be able to continue as a going
concern.

2.Summary of Significant Accounting Policies

*Use of estimates*

The preparation of financial
statements in conformity with U.S. GAAP requires the Company to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Estimates are used for, but are not limited to, revenue
recognition, accrued liabilities, contingencies and litigation, allowances for
doubtful accounts, stock-based compensation and income and other taxes. Actual
results could differ from those estimates.

*Foreign Currency*

The reporting and functional
currency of the Company and its subsidiaries is the U.S. dollar. Foreign
currency monetary assets and liabilities are translated into U.S. dollars at the
exchange rate prevailing at the balance sheet date; non monetary assets
denominated in foreign currencies are translated using the rate of exchange at
the transaction date; and foreign exchange gains and losses are included in the
determination of earnings.

*Revenue Recognition*

The Company generates its
revenues from two primary sources: Licensing and Financial Subscription Services
and Advertising Services. The Company records its revenues in accordance with
the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No.
104, Revenue Recognition (SAB 104) and the Financial Accounting
Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables. In all cases, revenue
is recognized only when the price is fixed or determinable, persuasive evidence
of an arrangement exists, the service is performed, and collectability of the
resulting receivable is reasonably assured.

Licensing and Subscription
services consist of managing, licensing, and delivering financial market
information. Examples of financial market information are real time stock
quotes, stock charts, public

10

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

company profiles, investment information and technical stock
analysis. Under these revenue contracts, the Company normally charges customers
for set up fees, periodic maintenance fees, and the contractual monthly
licensing fees for ongoing use of financial tools and content. These revenues
are recognized ratably over the contract term, which is typically 24 months,
beginning when the product is activated. Revenue from activation fees is
recognized ratably over the determinable portion of the customer contract.

All Licensing and Subscription
services are delivered via the Internet from the Companys Web servers to the
clients websites on a continuous real time basis. Revenue begins to be earned
on the day the data feed is activated and begins to deliver content to the
client site. Revenue is earned on a fixed monthly fee, with some clients paying
a page-view overage fee over a certain number of page-views. The page-view
overages, if any, are billed to the client and recorded on a monthly basis as
they occur and usually represent a small portion of the overall monthly fee from
each customer. Usage usually refers to website page views and real-time
quotes.

Advertising Services consist of
advertising on the Companys investment-orientated websites; the Companys
client direct advertising solutions portfolio, and e-mail services, Internet
advertising services are sold either individually or bundled together into
comprehensive programs.

A portion of advertising revenues
on the Companys investment-oriented websites consists of continuous or rotating
advertisements on various specialized web pages hosted by StockHouse.com,
StockHouse.ca, SmallCapCenter.com and InvestorMarketPlace.com. Delivery of these
profiles is based either on a certain number of days the advertising appears on
the web pages or a certain quantity of impressions, profile views or
click-throughs, depending on the agreement. An impression is a single instance
of an Internet user viewing the page that contains the clients name and/or
logo. A profile view is a single instance of an Internet user clicking on the
clients profile link. A click-through is a single instance of an Internet user
clicking on the clients profile and being redirected to the clients website.
Revenue is recognized on such advertising programs based on delivery, and
delivery organized and measured to equal the agreed monthly fee in each month
the customer is profiled on the web pages.

E-mail services are mailings to a
targeted list of e-mail addresses, with delivery consisting solely of
transmitting the mailing to the e-mail targets. Each transmittal is called a
flight. E-mail services may be bought on a per-flight basis, for which revenue
is recorded when the flight occurs, or on a fixed-fee monthly basis in which the
client receives access to a fixed number of flights per month. The Company
records the revenue on the fixed fee monthly e-mail services on a pro-rata basis
over the term of the agreement.

Internet advertising on the
Companys websites is delivered, and revenue is earned, on a page-view basis, as
this term is defined above. Advertising insertion orders are obtained from
customers and advertisements are delivered in a set rotation on the Companys
StockHouse websites. At the end of certain specified period, usually monthly,
the customer is given a page-view delivery report and billed according to the
number of page-views delivered.

Subscriptions to StockStream and
MarketStream and its real-time streaming data information are sold online via
our websites. Subscriptions are one month in duration and auto-renew unless
cancelled by the subscriber. Revenue from subscriber services is recognized in
the period earned.

11

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Deferred revenues represent
amounts for which the Company has received deposits which are to be applied to
the end of the contract. The earnings process has not yet been completed for
those payments. Deferred revenues primarily related to our license agreements,
which are amortized ratably over the period of the contract and certain internet
services for which the Company holds deposits.

*Cost of Revenues*

Cost of revenues is recorded if
the cost relates directly to the services the Company sells or to its
revenue-generating websites, namely StockHouse.com, StockHouse.ca,
SmallCapCenter.com, and InvestorMarketPlace.com. Cost of revenues consist of
subscription fees for access to data feeds of financial and business databases,
as well as internet bandwidth costs, and direct advertising purchases. Data
feeds are a key component of many of the Companys licensing and subscription
services, as well as a key input into its revenue-generating websites. Bandwidth
is consumed by the Companys revenue-generating websites, by its licensing and
subscription services, and by its e-mail mailing services. Direct advertising
purchases relate to Internet advertising purchases for the purpose of promoting
a client or clients feature on one of the Companys websites.

*Fair value of Financial
Instruments*

The Companys financial
instruments consist of cash and cash equivalents, restricted cash, accounts
receivable, accounts payable, accrued liabilities, and capital lease
obligations. Unless otherwise stated the fair value of the financial instruments
approximates their carrying value.

*Cash and Cash Equivalents*

Cash and cash equivalents, which
consist of cash and short-term deposits with original maturities of ninety days
or less, are recorded at fair value. The Company places its cash and cash
equivalents with high quality financial institutions. Cash equivalents at
December 31, 2008 and 2007, respectively, were US denominated term deposits of
$nil and $1,465,000.

*Accounts Receivable*

Accounts receivable are stated
net of allowance for doubtful accounts of $347,000 at December 31, 2008 and
$456,000 at December 31, 2007. The Company makes judgments as to its ability to
collect outstanding receivables and provides allowances for a portion of
accounts receivable when collection becomes doubtful. Provisions are generally
made for all accounts over 90 days, with certain exceptions based on the nature
of the customer or where special arrangements are agreed to with the customer.
In some cases an allowance is made before 90 days if the Company has a
reasonable belief that the collection of the account is doubtful. Invoices which
are over 120 days are generally sent to collections.

*Property and
Equipment*

Property and equipment are
carried at cost less accumulated amortization. Office equipment, computer
software and equipment are amortized using the straight-line method over the
assets estimated useful lives which range from 1 to 5 years. Capital leases of
computer hardware are amortized over the term of the lease on a straight-line
basis. Leasehold improvements are amortized over the shorter of the asset life
or the remaining lease term on a straight-line basis.

12

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

*Leases*

Leases are classified as either
capital or operating leases. Leases which transfer substantially all the
benefits and risks of ownership of the property to the Company are accounted for
as capital leases. Capital lease obligations reflect the present value of future
minimum lease payments, discounted at the appropriate interest rate. All other
leases are accounted for as operating leases and rental payments are expensed as
incurred.

*Software development
costs*

The Company applies FAS No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed (FAS 86) to software developed internally, acquired in
business acquisitions or purchased. FAS 86 requires companies to capitalize
eligible software development costs upon achievement of technological
feasibility, subject to net realizable value considerations. Research and
development costs prior to technological feasibility are expensed as incurred.
Because the period between achievement of technological feasibility and the
general release of the Companys products have been a relatively short duration,
costs qualifying for capitalization were insignificant during 2008 and 2007.
There were no capitalized software development costs at December 31, 2008 and
2007.

*Goodwill and Intangible
assets*

In accordance with FAS No. 142,
Goodwill and Other Intangible Assets, goodwill and intangible assets
that have indefinite useful lives are no longer amortized to expense. Goodwill
is required to be tested for impairment on an annual basis, or more frequently
if certain indicators arise, using the guidance specifically provided.
Furthermore, Statement No. 142 requires purchased intangible assets other than
goodwill to be amortized over their useful lives unless these lives are
determined to be indefinite.

Management reviews goodwill and
other intangible assets at least annually, and on an interim basis when
conditions require, evaluates events or changes in circumstances that may
indicate impairment in the carrying amount of such assets. An impairment loss is
recognized in the statement of operations in the period that the related asset
is deemed to be impaired. Other intangible assets, which include intellectual
property and customer relationships, with definite lives are amortized to
expense on a straight-line basis over their respective estimated useful lives
averaging approximately three years.

Impairment testing for goodwill
is performed in accordance with FAS No. 142, Goodwill and Other Intangible
Assets (FAS 142). FAS 142, requires the Company to complete a two-step
process that begins with an estimation of the fair value of the reporting unit.
The first step of the impairment test, used to identify potential impairment,
compares the fair value of a reporting unit with its carrying amount, including
goodwill. If the carrying amount of the reporting unit exceeds its fair value,
the second step of the impairment test is performed to measure the amount of the
impairment loss, if any.

The Company evaluates long-lived tangible assets and
definite-lived intangible assets for potential impairments in accordance with
FAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets (FAS 144). Under FAS 144, an impairment loss is recognized only if
the carrying amount of a definite-lived intangible asset is not recoverable and
exceeds its fair value. Recoverability of these assets is determined based upon
the expected undiscounted future net cash flows from the operations to which

13

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

the assets relate, utilizing managements best estimates,
appropriate assumptions and projections at the time. When analyzing intellectual
property for impairment the Company uses a relief from royalty method which
calculates the cost savings associated with owning rather than licensing the
intellectual property, applying an assumed royalty rate within the Companys
discounted cash flow calculation. If the carrying value is determined not to be
recoverable from future operating cash flows, the asset is deemed impaired and
an impairment loss is recognized to the extent the carrying value exceeds the
estimated fair market value of the asset.

*Income Taxes*

The Company accounts for its
income taxes in accordance with FAS No. 109, Accounting for Income
Taxes (FAS 109) and related interpretations. This Interpretation requires
that the impact of a tax position be recognized if it is more likely than not of
being sustained in an audit, based on the technical merits of the position. Even
though the Company is in a consolidated loss position, determining the provision
for income tax expense, income tax liabilities, and deferred tax assets and
liabilities involves judgment. In addition, tax interpretations, regulations and
legislations are continually changing. Tax exposures can involve complex issues
and may require an extended period to resolve.

The Company records a valuation
allowance to reduce its deferred tax assets to the amount of future tax benefit
that is more likely than not to be realized. The Company believes its tax
positions comply with current applicable tax law and that the Company has
adequately provided for known tax contingencies.

In June 2006, the Financial
Accounting Standards Board (FASB) issued Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109 (FIN
48). The Interpretation clarifies the accounting and disclosure for uncertainty
in tax positions, as defined. The Company adopted the provisions of FIN 48 on
January 1, 2007. The Company did not have any material uncertain tax positions
upon adoption. As a result, there were no adjustments to the opening balance of
accumulated deficit. The Company believes that its income tax filing positions
and deductions will be sustained on audit and does not anticipate any
adjustments that will result in a material adverse effect on the Companys
financial condition, results of operations, or cash flow. Therefore, at December
31, 2008 and 2007, the Company had no material unrecognized tax benefits.

The Companys policy is to
recognize interest and penalties accrued on any unrecognized tax benefits as a
component of income tax expense. For the years ended December 31, 2008 and 2007,
the Company has not recorded or realized any material interest or penalties with
respect to income taxes.

14

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

The Company is subject to federal
and state taxation in the United States as well as other foreign jurisdictions.
The Companys major tax jurisdictions, as defined, are reflected below. As at
December 31, 2008, income tax returns, whether filed or not, pertaining to
taxation years that remain open to examination by major jurisdictions are as
follows:

United States
    2005 – 2008Canada
    2004 – 2008United Kingdom
    2007 – 2008Spain
    2004 – 2008Netherlands
    2003 – 2008


The Company does not anticipate
any material change in the total amount of unrecognized tax benefits to occur
within the next twelve months.

*Net Loss per Share*

In accordance with FAS No. 128,
Earnings per Share, basic net income (loss) per share is computed based
on the weighted average number of common shares outstanding during the period.
Diluted net income (loss) per share is computed using the weighted average
number of common shares and dilutive equivalent common shares outstanding during
the using the treasury stock method. In a year of income, dilutive equivalent
common shares consist of stock options and warrants where the calculated market
price is in excess of the exercise price of these stock awards In a loss year,
basic and fully diluted net income (loss) per share is equal.

*Contingencies and
Litigation*

The Company evaluates contingent
liabilities including threatened or pending litigation in accordance with FAS
No. 5 Accounting for Contingencies. The Company assesses the likelihood
of an adverse outcome or judgment to a potential claim or legal proceeding, as
well as potential ranges of probable losses, when the outcome of the claims or
proceedings are probable and reasonably estimable. A determination of the amount
of accrued liabilities required, if any, for these contingencies is made after
analysis of each matter. Because of uncertainties related to these matters, the
Company bases its estimates on the information available at the time. As
additional information becomes available, the Company reassesses the potential
liability and may revise its estimates. Any revision to these estimates could
have a material impact on the Companys results of operations and financial
position.

*Accounting for Stock-based Compensation*

On January 1, 2006, the Company adopted the provisions of FAS
No. 123R Share-Based Payment (FAS 123R) which requires recognition of
stock-based compensation expense for all share-based payments based on fair
value. On transition, the Company elected to use the modifiedprospective
approach method. Stock-based compensation expense for all awards granted after
January 1, 2006 is based on the grant-date fair values estimated in accordance
with the provisions of FAS 123R. The Company recognizes these compensation
costs, net of an estimated forfeiture rate, on a pro rata basis over the
requisite service period of each vesting tranche of each award. The Company
considers voluntary termination behavior as well as trends of actual option
forfeitures when estimating the forfeiture rate.

15

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Changes in accounting policies

Fair value measurements

In September 2006, the FASB
issued FAS No. 157 Fair Value Measurements, (FAS 157) which defines
fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements. This statement does not require any
new fair value measurements but provides guidance in determining fair value
measurements under other accounting pronouncements that require or permit fair
value measurements. FAS 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. In February 2008, the FASB issued FASB Staff Positions FAS No.
157-1 and FAS No. 157-2 which exclude FAS No. 13 Accounting for Leases
from the scope of FAS 157 and defers the effective date of FAS 157 to fiscal
years beginning after November 15, 2008 for nonfinancial assets and nonfinancial
liabilities, except for items that are recognized or disclosed at fair value in
an entitys financial statements on a recurring basis. The adoption of FAS 157
on January 1, 2008 did not impact the Companys consolidated financial
statements. In October 2008, the FASB issued FASB Staff Position No. 157-3 (FSP
157-3). FSP 157-3 clarifies the application of FAS 157 in a market that is not
active. The Company has considered the guidance provided by FSP 157-3 in its
determination of estimated fair values as of December 31, 2008, and assessed
there was no impact. (note 12  Fair value of financial instruments)

Fair Value Option for Financial Assets and Financial
Liabilities

In February 2007, the FASB issued
FAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities  Including an amendment of FASB Statement No. 115, (FAS 159)
which permits entities to choose to measure at fair value, at specified election
dates, many financial instruments and certain other items that are not currently
required to be measured at fair value. This statement is expected to expand the
use of fair value measurement. The objective of FAS 159 is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. A business entity
is required to report unrealized gains and losses on items for which the fair
value option has been elected in earnings at each subsequent reporting date. The
statement does not affect any existing accounting literature that requires
certain assets and liabilities to be carried at fair value. FAS 159 is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. The Company adopted the
provisions of FAS 159 commencing January 1, 2008 and currently the Company has
not elected to report any additional assets or liabilities at fair value that
were not already being reported at fair value. The adoption of FAS 159 did not
impact the Companys consolidated financial statements.

In May 2008, the FASB issued FAS
No. 162 The Hierarchy of Generally Accepted Accounting Principles(FAS
162). FAS 162 identifies the sources of accounting principles and the framework
for selecting the principles to be used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with
generally accepted accounting principles in the United States. FAS 162 is
effective November 16, 2008.

16

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Recent accounting pronouncements

In December 2007, the FASB issued
FAS No. 141 (revised 2007), Business Combinations(FAS 141(R))
establishes principles and requirements for how an acquirer recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any non-controlling interest in the acquiree and the
goodwill acquired. FAS 141(R) also establishes disclosure requirements to enable
the evaluation of the nature and financial effects of the business combination.
FAS 141(R) is effective for fiscal years beginning after December 15, 2008.

In March 2008, the FASB issued FAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities, (FAS 161) which is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial
performance, and cash flows. FAS 161 is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008
and is applicable to the Company beginning in the first quarter of 2009. The
Company is currently evaluating the impact of FAS 161 on its consolidated
financial statements.

**3. Business Acquisition**

On January 25, 2007 the Company
announced that it had entered into a formal Purchase Agreement with
TeleCommunication Systems, Inc. (TCS) pursuant to which the Company agreed to
issue to TCS 1,500,000 common shares in the capital of the Company and to assume
certain TCS liabilities in exchange for certain assets of TCS that made up its
Mobile Finance Division (MFD). The transaction closed on January 31, 2007. The
acquisition of MFD was accounted for as a purchase of a business, with the
Company being identified as the acquirer and MFD as the acquiree. These
consolidated financial statements include 100% of the operating results of MFD
from February 1, 2007.

17

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

The allocation of the purchase price at January 31, 2007 is as
follows (in thousands of Dollars):

Purchase Price:1,500,000 common shares of Stockhouse
    $
    840Acquisition costs
    
    348$
    1,188Net Assets Acquired:Accounts receivable
    $
    1,230Prepaid and other current assets
    
    448Property and equipment
    
    146Other assets
    
    157Intellectual property
    
    870Customer relationships
    
    790Goodwill
    
    99Accounts payable
    
    (476
    )Accrued liabilities
    
    (1,269
    )Customer deposits
    
    (291
    )Deferred revenues
    
    (516
    )$
    1,188


An independent valuation of the
significant assets acquired supported managements allocation of the purchase
consideration.

The fair value of the 1,500,000
common shares issued was determined based on the Companys common share price of
$0.56 per share, representing the average closing price of the Companys shares
for the two days before, the day of, and the two days after the date of
announcement of the acquisition. The purchase price may be increased by up to
$500,000, payable in cash, if certain performance requirements are achieved.

The Company tests the carrying
amount of identifiable intangible assets and goodwill annually as of December
31, or whenever events or circumstances indicate that impairment may have
occurred. Due to the combination of the continued decline in revenues from the
acquired MFD business, and the departure of certain key MFD European employees,
management concluded that there were sufficient indicators of impairment to test
the carrying value of intangible assets and goodwill as at June 30, 2008,
September 30, 2008 and December 31, 2008. The impairment test indicated that the
implied fair value of the Companys goodwill was not in excess of its carrying
value at June 30, 2008, and as a result the Company recorded an impairment loss
to write-off the goodwill balance of $99,000 as a non-cash charge to operating
expenses. As a result of the evaluation at June 30, 2008, the Company recorded
an impairment loss totaling $524,000 to reduce the carrying value of the MFD
definite-lived intangible assets to their estimated fair market values of
$347,000 for intellectual property and $106,000 for customer relationships. An
impairment test was also completed at September 30, 2008, and management
concluded that no further impairment existed at that date. As a result of the
evaluation conducted at December 31, 2008, the Company recorded a further
impairment loss totaling $154,000 to reduce the carrying value of the MFD
definite-lived intangible assets to their estimated fair market values of
$208,000 for intellectual property and $Nil for customer relationships.

18

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

The following table presents details of the acquired MFD
intangible assets:

Estimated Useful Life
    
    
    As at December 31,(In thousands of
      Dollars)
    
    (in years)
    
    
    2008
    
    
    2007Intellectual property
    
    4
    
    $
    208
    
    $
    671Customer
      relationships
    
    2 -
      4
    
    
    -
    
    
    547$
    208
    
    $
    1,218


The estimated future amortization expense of the MFD intangible
assets is as follows:

(In thousands of
      Dollars)2009
    $
    1002010
    
    1002011
    
    8Total
    $
    208


For 2008 and 2007, amortization of MFD intangible assets was
$332,000 and $442,000 respectively.

Indemnity

Under the terms of the Purchase
Agreement with TCS the Company was indemnified for certain undisclosed
liabilities of MFD as at the date of the transaction. On June 13, 2008, TCS and
the Company agreed to settlement terms under the Purchase Agreement that in
compensation for these previously indemnified liabilities, TCS would return
400,000 of the 1,500,000 Stockhouse common shares issued as part of the purchase
consideration. These 400,000 shares were valued at the date of the settlement at
$0.42 per share. The total value of the shares of $168,000 is considered full
payment for initially undisclosed liabilities of $148,000 plus costs of $20,000
associated with additional professional fees incurred to determine the
undisclosed liabilities as at the date of acquisition. The settlement agreement
also provided for an extension of the indemnity period for certain claims of
undisclosed liability for two years from June 13, 2008.

19

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

*Pro forma Information
(Unaudited)*

The following interim condensed
pro forma consolidated financial summary is presented as if the acquisition of
MFD was completed as of January 1, 2007. The pro forma combined results have
been prepared for informational purposes only and do not purport to be
indicative of the results which would have actually been attained had the
business combination been consummated on the date indicated or of the results
which may be expected to occur in the future.

Year Ended(In thousands of Dollars, except per share data)
    
    December 31,2007REVENUESLicensing and subscriptions
    $
    10,870Advertising services
    
    3,978$
    14,848Total Operating Expenses net of Other
      Income (Expense)
    
    19,828Net loss and comprehensive loss
    $
    (4,980
    )Net loss per common share: Basic and
      diluted
    $
    (0.13
    )Common shares used in computing basic and
      diluted net loss per share(in thousands)
    
    39,431


**4. Asset Acquisition**

On May 8, 2007 the Company
entered into an Asset Purchase Agreement with Semotus Solutions Inc. (Semotus)
pursuant to which the Company agreed to acquire certain intangible assets
related to Semotus Mobile Finance business for total cash consideration of up
to $350,000 payable as: (a) $150,000 cash payable at the Closing Date; and (b)
30% of monthly gross revenues earned from customer contracts purchased from
Semotus until the remaining $200,000 of the purchase price is fully paid or
within two years whichever occurs first. Should monthly gross revenues fall
below $15,000 per month the purchase price will be deemed to be paid in
full.

This acquisition closed on May 8,
2007 and was accounted for as an asset purchase transaction for a total cost of
$375,000 including $25,000 for acquisition costs. The purchase consideration was
allocated, based on managements best estimates, to the identifiable intangible
assets acquired in the amounts of $140,000 for intellectual property and
$235,000 for customer relationships.

As revenues continued to decline
from the acquired Semotus products, management concluded that there were
sufficient indicators of impairment to test the carrying value of acquired
intangible assets as at June 30, September 30, and December 31, 2008. As a
result of this evaluation, the Company recorded an impairment loss totaling
$212,000 at June 30, 2008 to reduce the carrying value of the Semotus
definite-lived intangible assets to their estimated fair market value. The
estimated fair market value of intellectual property was assessed at $53,000.
Customer relationships were determined to have no

20

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

estimated fair market value. An impairment test was also
completed at September 30, 2008, and management concluded that no further
impairment existed at that date

The following table presents details of the acquired Semotus
identifiable intangible assets:

Estimated Useful Life
    
    
    As at December 31,(In thousands of
      Dollars)
    
    (in years)
    
    
    2008
    
    
    2007Intellectual property
    
    4
    
    $
    -
    
    $
    116Customer
      relationships
    
    4
    
    
    -
    
    
    196$
    -
    
    $
    312


For 2008 and 2007, amortization
of Semotus intangible assets was $57,000 and $63,000, respectively.

At December 31, 2007, of the
$137,000 balance expected to be payable $96,000 was recorded in accounts payable
and $41,000 was recorded as a long-term payable.

During the year ended December
31, 2008, purchase consideration of $50,000 related to monthly gross revenues
was paid to the vendor under the terms of the Asset Purchase Agreement (2007
$63,000). In the fourth quarter of 2008, gross revenues attributable to the
acquired customer contracts fell below $15,000 per month for three consecutive
months and accordingly, the Company has deemed the Semotus purchase price paid
in full. The Company derecognized the remaining $88,000 amount payable due to
the Semotus vendor, reduced the remaining  $44,000 carrying value of the intangible assets
to zero, and recorded a gain of $44,000 in other income.

21

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|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

**5. Balance Sheet
Components**

As at December 31,(In thousands of Dollars)
    
    2008
    
    
    2007Property and equipmentComputer equipment
    $
    1,783
    
    $
    1,580Computer equipment
      under capital lease
    
    412
    
    
    530Computer software
    
    168
    
    
    115Office furniture and
      equipment
    
    107
    
    
    94Leasehold improvements
    
    151
    
    
    110Total cost
    
    2,621
    
    
    2,429Less: accumulated
      amortization
    
    (2,066
    )
    
    (1,726
    )Property and equipment
    $
    555
    
    $
    703Accounts payableTrade accounts payable
    $
    1,419
    
    $
    1,517Current portion of
      amount due to assetacquisition vendor (note 4)
    
    -
    
    
    95Sales taxes payable
    
    142
    
    
    206Total Accounts
      payable
    $
    1,561
    
    $
    1,818Accrued liabilitiesAccrued liabilities
    $
    779
    
    $
    1,178Accrued data costs
    
    1,108
    
    
    1,372Customer deposits
    
    198
    
    
    274Total Accrued
      liabilities
    $
    2,085
    
    $
    2,824


In 2008, amortization expense
related to property and equipment totalled $340,000 including $144,000
amortization for capital assets under lease. In 2007, amortization expense was
$446,000, including $167,000 of amortization for capital assets under lease.

Substantially all of the
Companys property and equipment is located in located in Canada.

**6. Debenture
financing**

In November 2008, the Company
entered into debenture purchase agreements with six subscribers pursuant to
which the Company issued to the subscribers a total of $550,000 (C$672,000) of
secured unregistered 18% debentures which mature on November 14, 2009 (the
debentures). Of this amount, $450,000 is denominated in Canadian dollars and
$163,000 (C$200,000) was subscribed for by the Companys Chief Executive
Officer. Interest accrues on the debentures at a rate of 18% per annum,
calculated monthly, and is payable at the end of each of the 4th
calendar day of January, April, July and October. Subscribers may choose to
receive all accrued interest on the maturity date in lieu of the quarterly
payments of interest. The obligations of the Company under these debentures are
secured by the assets of the Companys wholly-owned subsidiary Stockgroup Media
Inc., pursuant to a general

22

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

security agreement. The Company may redeem all or any portion
of the debentures and any accrued interest thereon, at any time from April 30,
2009 until maturity.

**7. Shareholders
Equity**

Preferred Shares

On May 13, 2008, the Company
closed a private placement according to the terms of a stock purchase agreement
entered on April 30, 2008 with PEAK6 Capital Management LLC (PEAK6). Under the
terms of the agreement the Company issued 3,000 shares of Series A convertible
preferred stock at a price of $1,000 per share to PEAK6 for net proceeds to the
Company of $2,969,000. Issue costs of $31,000 were allocated to preferred
shares. In the event of any liquidation, dissolution or winding up of the
affairs of the Company, the preferred shareholders are entitled to be paid first
out of the assets of the Company up to $1,000 per share, subject to certain
adjustments. Holders of preferred shares are entitled to receive dividends when,
as, and if declared by the Company at a rate of 7%. Each preferred share is
convertible to 2,200 common shares of the Company. The preferred shares are
non-voting until conversion, are convertible 180 days after issuance, and
automatically convert into common shares at the end of twenty four months from
date of issuance at a price of $0.4545 per common share. The Company may redeem
the preferred shares at any time after 90 days by paying 110% of their
value.

Common Stock

On May 15, 2007, the Company
completed a private financing led by Jennings Capital Inc. and including Cormark
Securities Inc. (the Underwriters), and issued, on a bought deal basis,
3,333,334 common shares at C$1.50 ($1.36) per share for total gross proceeds of
C$5,000,000 ($4,534,000). The Company paid underwriter fees of 6% of the gross
proceeds of the financing and issued 200,000 warrants to the agents equal to 6%
of the common shares issued in the financing. The warrants expired unexercised
in 2008. These warrants were assigned a value of $105,000 based on a
Black-Scholes valuation model leaving gross proceeds of $4,428,000 attributable
to the common shares. The following assumptions were used in the Black-Scholes
model:

Expected life (in years)
    1 yearRisk-free interest rate
    4%Expected volatility
    97%Fair value per warrant
    $0.58


Share issue costs of $395,000 and
$9,000 were allocated to common shares and to warrants, respectively.

Warrants

The Company issued warrants in
prior periods pursuant to equity financing and private placement transactions.
All warrants expired unexercised in 2008.

23

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Stock Based Compensation Plans

The Company grants stock options
pursuant to shareholder approved stock option plans. On June 4, 2007, the
shareholders of the Company approved the 2007 Stock Option Plan that authorized
the issuance of a maximum of 3,300,000 shares of the Companys common stock
granted to directors, officers, employees, consultants or advisors of the
Company. The Companys 1999, 2000, 2001, 2002, 2003 and 2007 Stock Option Plans
(collectively the Plans) authorize a total of 8,520,600 common shares for
issuance. The Plans entitle employees, non-employee directors, and consultants
to purchase common shares of the Company on the exercise of stock options.
Options immediately become exercisable once vested. Any options that do not vest
as the result of a grantee leaving the Company are forfeited and the common
shares underlying them are returned to the reserve if they were granted under
the 2003 or 2007 Stock Option Plans.

The Company generally grants
stock options for a fixed number of shares to employees with an exercise price
equal to at least the fair market value of the underlying common shares on the
date of grant. The standard vesting schedule used for stock option grants to
most employees is a two year vesting calendar, with equal vesting occurring at
the end of each quarterly period. Stock option grants to management generally
follow a four year vesting calendar, with vesting occurring at the end of each
quarterly period. All stock options are denominated in U.S. dollars and expire
either five or six years after the date of grant.

The following table provides
information on the Companys outstanding options and options available for grant
at December 31, 2008, and activity since December 31, 2006:

|                                   |                 |   |            |   | Options Outstanding |  |          | 
|---------------------------------- | --------------- | - | ---------- | - | ------------------- |  | -------- | 
|                                   |                 |   |            |   |                     |  |          | 
|                                   |                 |   |            |   |                     |  | Weighted | 
|                                   | Number of       |   |            |   |                     |  | Average  | 
|                                   | Options         |   |            |   |                     |  | Exercise | 
|                                   | Available       |   | Number of  |   | Price Per Share     |  | Price    | 
|                                   | For
      Grant |   | Options    |   | $                   |  | $        | 
|Balance at December 31, 2006       | 391,325         |   | 3,884,250  |   | $0.12 - $0.59       |  | $0.29    | 
|Additional options authorized      | 3,300,000       |   |            |   |                     |  |          | 
|Options granted                    | (1,107,000      | ) | 1,107,000  |   | $0.41 - $1.25       |  | $0.85    | 
|Options exercised                  | -               |   | (732,175   | ) | $0.12 - $0.43       |  | $0.23    | 
|Options expired and forfeited      | 347,450         |   | (397,450   | ) | $0.31 - $1.08       |  | $0.57    | 
|Balance at
      December 31, 2007 | 2,931,775       |   | 3,861,625  |   | $0.12 -
      $1.25 |  | $0.64    | 
|Options granted                    | (2,808,000      | ) | 2,808,000  |   | $0.08  $0.59       |  | $0.31    | 
|Options exercised                  | -               |   | (779,000   | ) | $0.17 - $0.42       |  | $0.22    | 
|Options forfeited                  | 2,139,000       |   | (2,155,000 | ) | $0.15 - $1.25       |  | $0.52    | 
|Available and outstanding at       |                 |   |            |   |                     |  |          | 
|December 31, 2008                  | 2,262,775       |   | 3,735,625  |   | $0.08 - $0.59       |  | $0.33    | 
|                                   |                 |   |            |   |                     |  |          | 
|Vested and exercisable at          |                 |   |            |   |                     |  |          | 
|December 31, 2008                  |                 |   | 1,692,625  |   |                     |  | $0.39    | 

24

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

The Company ceased granting of
stock options under its 1999, 2000, 2001 and 2002 Stock Option Plans in December
2002. Stock options outstanding to purchase common shares under these plans
continue to be exercisable as vested until exercised or forfeited, and if
forfeited, they are no longer available for future grants.

In 2008, 779,000 options were
exercised for proceeds of $167,000. Subsequent to December 31, 2008, an
additional 836,000 options have been granted under the 2007 Option Plan at an
average exercise price of $0.08.

The aggregate intrinsic value is
equal to the difference between the quoted closing market price of the Companys
common shares at December 31, 2008 and the exercise price of the underlying
awards, where the stock options are in-the-money. At December 31, 2008, there
were no in-the-money options outstanding and no in-the-money options vested and
exercisable.

The following table summarizes
the Companys unvested equity award activity for the year ended December 31,
2008:

|                              |  |                  |   |   | Weighted-Average | 
|----------------------------- |  | ---------------- | - | - | ---------------- | 
|                              |  |                  |   |   | Grant Date Fair  | 
|Unvested Shares               |  | Number of Awards |   |   | Value  $        | 
|Unvested at December 31, 2007 |  | 1,098,906        |   | $ | 0.50             | 
|Granted                       |  | 2,808,000        |   | $ | 0.23             | 
|Vested                        |  | 275,094          |   | $ | 0.24             | 
|Forfeited                     |  | (2,139,000       | ) | $ | 0.36             | 
|Unvested at December 31, 2008 |  | 2,043,000        |   | $ | 0.24             | 

As of December 31, 2008, total
unrecognized compensation expense related to unvested awards granted under the
Plans was $183,000, which is expected to be recognized over a weighted-average
period of 3.04 years. Forfeiture rates used to determine unrecognized
compensation expense were based on forfeiture rates experienced for the year
ended December 31, 2007.

Stock-Based Compensation Expense

|(In thousands of Dollars)              |   | For the years ended December 31, | 
|-------------------------------------- | - | -------------------------------- | 
|                                       |   | 2008                             | 
|Sales and marketing                    | $ | 11                               | 
|Research and development               |   | 4                                | 
|General and administrative             |   | 162                              | 
|Total stock-based compensation expense | $ | 177                              | 

25

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Valuation Assumptions Used in Fair-Value Based Calculation
Method

The fair-value of the Companys
stock-based awards was estimated using the Black-Scholes option-pricing model
using the following weighted average assumptions:

|                            |   | For the years ended | 
|--------------------------- | - | ------------------- | 
|                            |   | December 31,        | 
|                            |   | 2008                | 
|Expected life (in years)    |   | 5 years             | 
|Risk-free interest rate     |   | 3%                  | 
|Expected volatility         |   | 111%                | 
|Dividend yield              |   | 0%                  | 
|Fair value per stock option | $ | 0.21                | 

The expected life of employee
stock options is based on the average expected life of all outstanding stock
options taking into consideration past employee exercise behavior. The exercise
price of the stock option is equal to the market value of the Companys common
stock on the grant date. The Company uses the zero coupon interest yield rate
comparable to the expected life of the option. Expected volatility is based on
historical computations of the Companys volatility. The estimated fair value of
the stock-based awards is amortized over the vesting period of the underlying
awards, on a graduated basis.

The Black-Scholes option pricing
valuation model was developed for use in estimating the fair value of traded
options that have no vesting restrictions, are fully transferable and do not
have employment or trading restrictions. Employee stock options have
characteristics significantly different from those of traded options.

**8. Income Taxes**

The Company is subject to United
States federal and state income taxes at an approximate rate of 41% (2007 
approximate rate of 42%). The reconciliation of the provision for income taxes
at the United States federal statutory rate compared to the Companys income tax
expense as reported is as follows:

For the Years EndedDecember 31,(In thousands of
        Dollars)
      
      2008
      
      
      2007Tax recovery at U.S. statutory rates
      $
      (2,716
      )
      $
      (2,167
      )Lower statutory rates on the losses of foreign subsidiaries
      
      542
      
      
      366Change in statutory tax rates in the USA
        and Canada
      
      (47
      )
      
      173Change in and adjustment to valuation allowance
      
      1,971
      
      
      1,249Non-deductible expenses
      
      250
      
      
      379Other
      
      (5
      )
      
      4(Recovery of) provision for income taxes
      $
      (5
      )
      $
      4


26

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Deferred income taxes reflect the
net tax effects of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income
tax purposes. The Company has recognized a valuation allowance for the deferred
tax assets for which it is not more likely than not that realization will occur.
Significant components of the Companys deferred tax assets are as follows:

As at December 31,(In thousands of
        Dollars)
      
      2008
      
      
      2007Net operating loss carry forwards
      $
      7,242
      
      $
      6,759Net capital loss carry forwards
      
      84
      
      
      87Property and equipment
      
      647
      
      
      743Deferred revenue
      
      155
      
      
      317Financing fees
      
      101
      
      
      137Other
      
      188
      
      
      46Total deferred tax assets
      
      8,417
      
      
      8,089Less: valuation
        allowance
      
      (8,417
      )
      
      (8,089
      )Net deferred tax assets
      $
      -
      
      $
      -


The Company has net capital
losses of $323,000 available to offset future taxable capital gains in Canada.
At December 31, 2008, the Company had operating losses available to be carried
forward in several tax jurisdictions that will expire as follows:

United(In thousands of
      Dollars)
    
    USA
    
    
    Canada
    
    
    Kingdom
    
    
    Netherlands
    
    
    Spain
    
    
    Total2011
    $
    -
    
    $
    -
    
    $
    -
    
    $
    368
    
    $
    -
    
    $
    3682012
    
    -
    
    
    -
    
    
    -
    
    
    43
    
    
    -
    
    
    432013
    
    -
    
    
    -
    
    
    -
    
    
    110
    
    
    -
    
    
    1102014
    
    -
    
    
    -
    
    
    -
    
    
    6
    
    
    -
    
    
    62015
    
    -
    
    
    -
    
    
    -
    
    
    177
    
    
    -
    
    
    1772016
    
    -
    
    
    -
    
    
    -
    
    
    170
    
    
    -
    
    
    1702017
    
    -
    
    
    -
    
    
    -
    
    
    426
    
    
    -
    
    
    4262022
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    158
    
    
    1582023
    
    517
    
    
    -
    
    
    -
    
    
    -
    
    
    31
    
    
    5482024
    
    161
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    1612025
    
    267
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    2672026
    
    273
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    2732027
    
    394
    
    
    2,798
    
    
    -
    
    
    -
    
    
    -
    
    
    3,1922028
    
    800
    
    
    2,279
    
    
    -
    
    
    -
    
    
    -
    
    
    3,079Indefinite
    
    -
    
    
    -
    
    
    17,410
    
    
    -
    
    
    -
    
    
    17,410Total
    $
    2,412
    
    $
    5,077
    
    $
    17,410
    
    $
    1,300
    
    $
    189
    
    $
    26,388


27

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

**9. Supplemental Cash Flow
Information**

During the years end December 31, 2008 and 2007, the Company
had the following changes in non-cash working capital accounts:

|                                 |   | For the years ended December 31, |  
|-------------------------------- | - | -------------------------------- | -
|(In thousands of Dollars)        |   | 2008                             |  
|Accounts receivable              | $ | 579                              |  
|Prepaid and other current assets |   | 499                              |  
|Accounts payable                 |   | (160                             | )
|Accrued liabilities              |   | (907                             | )
|Deferred revenues                |   | (542                             | )
|                                 | $ | (531                             | )

|                                                                    |   | For the years ended December 31, | 
|------------------------------------------------------------------- | - | -------------------------------- | 
|(In thousands of Dollars)                                           |   | 2008                             | 
|Cash                                                                | $ | 728                              | 
|Cash equivalents                                                    | $ | -                                | 
|Interest paid                                                       | $ | 17                               | 
|Taxes paid                                                          | $ | -                                | 
|                                                                    |   |                                  | 
|*Non-cash investing and financing activities*                       |   |                                  | 
|Assets acquired through capital lease transactions                  | $ | 63                               | 
|Value of warrants issued in connection with
      private placement | $ | -                                | 
|Value of shares issued for acquisition of Mobile Finance            |   |                                  | 
|Division                                                            | $ | -                                | 
|Value of shares returned to settle Mobile Finance Division          |   |                                  | 
|acquisition liabilities                                             | $ | 168                              | 

**10. Commitments and
Contingencies**

|Commitments                              |   |       |  |   |                        |  |   |             |  |   |             | 
|---------------------------------------- | - | ----- |  | - | ---------------------- |  | - | ----------- |  | - | ----------- | 
|(In thousands of dollars)                |   |       |  |   | Payments Due by Period |  |   |             | 
|                                         |   |       |  |   | Within 1               |  |   |             |  |   |             | 
|                                         |   | Total |  |   | Year                   |  |   | 2  3 Years |  |   | 4  5 Years | 
|Operating leases                         | $ | 2,138 |  | $ | 485                    |  | $ | 956         |  | $ | 697         | 
|Capital leases                           |   | 104   |  |   | 100                    |  |   | 4           |  |   | -           | 
|Data provider commitment                 |   | 411   |  |   | 372                    |  |   | 39          |  |   | -           | 
|Total contractual
      cash obligations | $ | 2,653 |  | $ | 957                    |  | $ | 999         |  | $ | 697         | 

The Company leases its facilities
under operating leases that expire at various times to March 2014. Total rent
expense was $608,000 in 2008 and $621,000 in 2007. In June 2008, on the expiry
of an existing lease the Company secured larger premises in Toronto with a lease
term to October 2013. The Company leases certain computer equipment, mainly
servers, under capital leases. Of the total amount of capital lease payments
above, approximately $1,000 relates to interest payments due in future years.
Interest expense related to capital lease obligations was $3,000 for 2008 and
$20,000 for 2007.

28

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

Contingencies

The Company was the plaintiff in
a lawsuit filed in Ontario Superior Court of Justice against Hollinger Inc. and
Hollinger Canadian Publishing Holdings Co in which the Company sought to recover
approximately $457,000 from the defendant. The defendant was a vendor to the
Company and the amount sought by the Company consisted of unused advertising
credits which were prepaid by the Company in 1999. The case was resolved by a
negotiated settlement during the first quarter of 2008 and the defendant paid
$340,000 to the Company in full settlement, which is included in other
income.

The Company was the defendant in
a lawsuit filed in the Supreme Court of British Columbia by the plaintiff, Tanis
Churchill. The Plaintiff, a former employee of the Company, sought damages,
interest and costs in the order of approximately $218,000 for alleged wrongful
dismissal from her employment with the Company. The matter was heard by the
Supreme Court of British Columbia and on May 8, 2008, the Supreme Court found in
favor of the plaintiff and awarded damages in the amount of $9,000(C$11,000).
The Court awarded costs to the Company.

The Company is the plaintiff in a
lawsuit filed in the Commercial & Equity Division of the County Court of
Victoria in Melbourne, Australia against The Eight Black Partnership Pty and
Simon Chen, in which the Company seeks to recover approximately $435,000 from
the defendant. The defendant was a reseller of the Companys Marketstream
service in Australia and the amount sought by the Company consists of unpaid
Marketstream subscription fees from July 2006 to May 2007, plus interest. The
case is currently pending final resolution and there is uncertainty as to what
value, if any, will be derived from the lawsuit. No provision has been made for
recovery of these credits in the financial statements in any period.

During 2008, an employee of the
Company made an application to the District Court of Amsterdam, the Netherlands
requesting the Court to order the Company to restore his access to Company
systems and continue paying his salary. He further requested that the Court
order the temporary restriction of funds then held in the Companys Dutch
subsidiarys bank accounts until the terms of his employment could be
determined. The Court granted this application and ordered the transfer of
€89,110 ($131,000) from the operating bank accounts to a restricted account.
This amount is classified as restricted cash on the consolidated balance sheet
at December 31, 2008. Subsequent to December 31, 2008 the matter was resolved by
negotiation, and the restriction on the Companys funds lifted by the Court.

In addition to the above, the
Company is involved in various other legal matters which arise from time-to-time
in the ordinary course of the Companys business, none of which is believed to
be material to its results of operations, liquidity or financial condition at
this time. Unless otherwise noted, the Company cannot reasonably estimate at
this time whether a monetary settlement will be reached or predict the ultimate
resolution of these legal matters.

29

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

**11. Accounting for and
Disclosure of Guarantees**

From time-to-time, the Company
enters into certain types of contracts that require it contingently to indemnify
parties against third party claims. These contracts primarily relate to: (i)
service level agreements with clients, under which the Company may be required
to indemnify clients for liabilities related to data transmission and
dissemination; and (ii) certain agreements with the Companys officers,
directors and employees and third parties, under which the Company may be
required to indemnify such persons for liabilities arising out of their duties
to the Company.

The Company regularly enters into
service level agreements with clients, under which the Company guarantees
consistent streaming of data within certain pre-defined tolerances. The terms of
these obligations vary and generally are not limited in amount, so it is not
possible to express the amount at risk in dollars. Historically, the Company has
not been obligated to make significant payments on account of these obligations,
and accordingly, no liabilities were recorded for these obligations of this
nature on its balance sheets as of December 31, 2007 and December 31, 2006. The
Company carries coverage under certain insurance policies to protect itself in
the case of an unexpected liability; however, this coverage may not be
sufficient.

**12. Fair Value of
Financial Instruments**

The Company adopted SFAS 157 on
January 1, 2008. SFAS 157 defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (an exit price). The
standard outlines a valuation framework and creates a fair value hierarchy in
order to increase the consistency and comparability of fair value measurements
and the related disclosures. Under GAAP, certain assets and liabilities must be
measured at fair value, and SFAS 157 details the disclosures that are required
for items measured at fair value.

The Company has various financial
instruments that must be measured under the new fair value standard including:
cash and cash equivalents, restricted cash, and debentures. The Company
currently does not have non-financial assets or non-financial liabilities that
are required to be measured at fair value on a recurring basis, with the
exception of intangible assets. The Companys financial assets and liabilities
are measured using inputs from the three levels of the fair value hierarchy. The
three levels are as follows:

Level 1 - Inputs are unadjusted quoted
prices in active markets for identical assets or liabilities that the Company
has the ability to access at the measurement date. The fair value of the
Companys cash equivalents and restricted cash based on quoted prices and
therefore classified as Level 1.

Level 2 - Inputs include quoted prices
for similar assets and liabilities in active markets, quoted prices for
identical or similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the asset or liability
(e.g., interest rates, yield curves, etc.), and inputs that are derived
principally from or corroborated by observable market data by correlation or
other means (market corroborated inputs).

Level 3 - Unobservable inputs that
reflect our assumptions about the assumptions that market participants would use
in pricing the asset or liability.

30

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

The following table provides a summary of the fair values of
assets and liabilities under SFAS 157:

Fair Value Measurements at December31, 2008CarryingValueDecember 31,2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Cash and cash equivalents
    $
    728
    
    $
    728
    
    $
    -
    
    $
    -Restricted cash
    
    131
    
    
    131
    
    
    -
    
    
    -Total
    $
    859
    
    $
    859
    
    $
    -
    
    $
    -Liabilities:Debentures
    $
    545
    
    $
    -
    
    $
    -
    
    $
    545


As the debentures were issued late in 2008, the Company believes
that the market rate of interest as at December 31, 2008 was not materially
different to the rate of interest at which the debentures were issued.
Accordingly, the Company believes that the fair value of the debentures
approximated their carrying value at December 31, 2008

31

---

|Stockhouse Inc.                                            
|-----------------------------------------------------------
|(formerly Stockgroup Information Systems Inc.)             
|                                                           
|Notes to the consolidated annual financial
      statements
|December 31, 2008                                          

**13. Segmented
Information**

The Company operates in one
reportable segment. The Company defines a reportable operating segment as a
component of the Company for which separate financial information is available
and which is evaluated regularly by the Chief Executive Officer in deciding how
to allocate resources and in assessing performance.

The following information is
presented by the customers geographic area:

(in thousands of Dollars)North
    
    
    United2008
    
    America
    
    
    Kingdom
    
    
    Other
    
    
    TotalREVENUESLicensing and subscription
    $
    7,061
    
    $
    1,136
    
    $
    1,013
    
    $
    9,210Advertising services
    
    2,600
    
    
    -
    
    
    -
    
    
    2,600TOTAL REVENUES
    $
    9,661
    
    $
    1,136
    
    $
    1,013
    
    $
    11,810


North
    
    
    United2007
    
    America
    
    
    Kingdom
    
    
    Other
    
    
    TotalREVENUESLicensing and subscription
    $
    7,206
    
    $
    1,572
    
    $
    1,392
    
    $
    10,170Advertising services
    
    3,978
    
    
    -
    
    
    -
    
    
    3,978TOTAL REVENUES
    $
    11,184
    
    $
    1,572
    
    $
    1,392
    
    $
    14,148


As of December 31, 2008 and 2007,
one customer accounted for 10% of outstanding trade receivables. During 2008 and
2007, the Company had no customers whose revenue represented greater than 10% of
total revenues.

**14. Related Party
Transactions**

In the third quarter of 2007, the
Company entered into a one year agreement with a third party. Under the
agreement the Company provides the implementation set up fee and Intraday
Indices at no charge, with the remaining portions of the agreement billed at
market price. In exchange for the no charge services, the third party agreed to
set up a link on the third partys website indicating Markets provided by
StockHouse.com. These services were valued at the market rate for the set up
fee provided. In the third quarter of 2008 the contract was renewed for a
further one year term. A member of the third partys senior managements team is
a director of the Company.

The Canadian subsidiary of
Stockhouse owned 50% of Stockscores Analytics Corp. (Stockscores), a British
Columbia corporation with limited activity and no material impact on the
Company. During 2008, the Company disposed of its 50% share in Stockscores to
the other shareholder for $75,000 which is recorded as Other Income for the year
ended December 31, 2008.

32

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PART IV

|Item 15 | EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES
|------- | ------------------------------------------------

The following consolidated financial statements of Stockhouse
Inc. and subsidiaries are filed as part of this Form 10-K/A:

Statements

Report of Independent Registered Chartered
      AccountantsConsolidated Balance SheetsDecember 31, 2008 and 2007Consolidated Statements of OperationsYears
      ended December 31, 2008 and 2007Consolidated Statements of Stockholders' (Deficiency)
      Equity and Comprehensive LossYearsended December 31, 2008 and 2007Consolidated Statements of Cash FlowsYears ended December
      31, 2008 and 2007Notes to Consolidated Financial Statements


All schedules are omitted because they are not applicable or
the required information is shown in the Financial Statements or notes
thereto.

EXHIBITS

|                                                                                                                                                                                                                                                                                                              | Exhibit |         | Filing    | Filed with 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | --------- | -----------
|Description                                                                                                                                                                                                                                                                                                   | number  | Form    | Date      | this 10-K/A
|Articles of Incorporation and
      Bylaws                                                                                                                                                                                                                                                                    |         |         |           |            
|Articles of Incorporation & Bylaws                                                                                                                                                                                                                                                                            | 3.1     | 10SB12G | 1/29/1998 |            
|Articles of Amendment dated July 10, 2008                                                                                                                                                                                                                                                                     | 3.2     | 8-K     | 7/24/2008 |            
|Articles of Amendment dated September 30, 2001                                                                                                                                                                                                                                                                | 3.3     | 8-K     | 9/30/2001 |            
|                                                                                                                                                                                                                                                                                                              |         |         |           |            
|Instruments defining the rights of security
      holders                                                                                                                                                                                                                                                     |         |         |           |            
|Certificate of Designation for Series A
      Convertible Preferred Stock                                                                                                                                                                                                                                     | 4.1     | 10-Q    | 5/14/2008 |            
|                                                                                                                                                                                                                                                                                                              |         |         |           |            
|                                                                                                                                                                                                                                                                                                              |         |         |           |            
|                                                                                                                                                                                                                                                                                                              |         |         |           |            
|Material Contractsfinancing
      agreements                                                                                                                                                                                                                                                                 |         |         |           |            
|Private Placement Subscription Agreement dated September
      26, 2006 between the Company and various directors and senior management                                                                                                                                                                       | 10.1    | 8-K     | 9/28/2006 |            
|Purchase Agreement between Stockgroup
      Information Systems Inc., Stockgroup Systems Ltd., Stockgroup Media, Inc.,
      TeleCommunication Systems, Inc., and TeleCommunication Systems (Holdings)
      Limited                                                                                          | 10.2    | 8-K     | 2/16/2007 |            
|Audited Combined Financial Statements of Mobile Finance
      Division (A division of TeleCommunication Systems, Inc.) (MFD) for the
      years ended December 31, 2005 and 2006 and Unaudited Pro forma Consolidated Financial Statements of Stockgroup Information Systems as of
      December 31, 2006 | 10.3    | 8-K/A   | 4/16/2007 |            
|Form of Private Placement Subscription
      Agreement dated May 15, 2007                                                                                                                                                                                                                                     | 10.4    | 8-K     | 5/21/2007 |            
|Form of Registration Rights Agreement dated May 15, 2007                                                                                                                                                                                                                                                      | 10.5    | 8-K     | 5/21/2007 |            
|Asset Purchase Agreement dated May 8, 2007
      between the Company and Semotus Solutions Inc.                                                                                                                                                                                                               | 10.6    | 8-K     | 5/10/2007 |            
|Amended Purchase Agreement dated January 24, 2007 between
      the Company and TeleCommunication Systems, Inc.                                                                                                                                                                                               | 10.7    | 8-K     | 2/20/2007 |            

33

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|Purchase Agreement dated January 24, 2007
      between the Company and TeleCommunication Systems, Inc.                                                                                              | 10.8  | 8-K    | 2/20/2007  |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | ------ | ---------- | -
|Series A Convertible Preferred Stock Purchase Agreement
      dated April 30, 2008                                                                                                                   | 10.9  | 8-K    | 5/7/2008   |  
|Form of Secured Debenture Agreement dated
      November 14, 2008  Canadian Version                                                                                                                 | 10.10 | 10-Q   | 11/17/2008 |  
|Form of Secured Debenture Agreement dated November 14,
      2008 US Version                                                                                                                        | 10.11 | 10-Q   | 11/17/2008 |  
|Debenture Purchase Agreement                                                                                                                                                                         | 10.12 | 10-Q   | 11/17/2008 |  
|General Security Agreement                                                                                                                                                                           | 10.13 | 10-Q   | 11/17/2008 |  
|Lease agreement dated September 19, 2006
      between the Company and Pacific Centre Leaseholds Limited                                                                                             | 10.14 | 10-K   | 3/31/2009  |  
|Lease agreement dated May 8, 2008 between the Company and
      University Equities Inc                                                                                                              | 10.15 | 10-K   | 3/31/2009  |  
|Material Contractsmanagement
      contracts and compensatory plans                                                                                                                                 |       |        |            |  
|Stockgroup Information Systems Inc. 2003 Stock Option Plan
       Amended                                                                                                                           | 10.16 | S-8    | 5/19/2006  |  
|Stockgroup Information Systems Inc. Amended
      and Restated Stock Option Plan  2007                                                                                                              | 10.17 | 10-Q   | 8/13/2008  |  
|Employment Agreement dated February 9, 2004between the
      Company and Marcus New                                                                                                                  | 10.18 | 10-KSB | 03/11/2004 |  
|Employment Agreement dated December 28,
      2007 between the Company and Karl Buhr                                                                                                                 | 10.19 | 8-K    | 2/21/2008  |  
|Employment Agreement dated February 20, 2008 between the
      Company and Audrey Brownmiller                                                                                                        | 10.20 | 8-K    | 2/21/2008  |  
|Amended employment agreement dated October
      31, 2008 between the Company and Karl Buhr                                                                                                          | 10.21 |        |            |  
|Employment Agreement dated December 8, 2008 between the
      Company and Joseph Lee                                                                                                                 | 10.22 | 8-K    | 1/8/2009   |  
|                                                                                                                                                                                                     |       |        |            |  
|Additional Exhibits                                                                                                                                                                                  |       |        |            |  
|List of subsidiaries of the Company                                                                                                                                                                  | 21.1  | 10-K   | 3/31/2009  |  
|Consent of Independent Registered Chartered Accountants                                                                                                                                              | 23.1  | 10-K   | 3/31/2009  |  
|Certification of Chief Executive Officer
      pursuant to Rule 13a-14(a) of the Exchange Act                                                                                                        | 31.1  |        |            | X
|Certification of Chief Financial Officer pursuant to Rule
      13a-14(a) of the Exchange Act.                                                                                                       | 31.2  |        |            | X
|Certification of Chief Executive Officer
      furnished pursuant to Rule13a-14(b) of the Exchange Act and Section 1350
      of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).  | 32.1  |        |            | X
|Certification of Chief Financial Officer furnished pursuant
      to Rule 13a-14(b) of the Exchange Act and Section 1350 of Chapter 63 of
      Title 18 of the United States Code (18 U.S.C. 1350). | 32.2  |        |            | X

34

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

STOCKHOUSE INC.

|By: /s/ Marcus New                    | 
|------------------------------------- | 
|Marcus A. New                         | 
|President and Chief Executive Officer | 

Date: April 3, 2009

Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

|Signature                  |  | Capacity in Which Signed                        |  | Date         
|-------------------------- |  | ----------------------------------------------- |  | -------------
|                           |  |                                                 |  |              
|/s/ David Caddey           |  | Chairman of the Board of Directors              |  | April 3, 2009
|David Caddey               |  |                                                 |  |              
|                           |  | President, Chief Executive Officer and Director |  |              
|/s/ Marcus New             |  | (Principal Executive Officer)                   |  | April 3, 2009
|Marcus New                 |  |                                                 |  |              
|                           |  |                                                 |  |              
|                           |  | Chief Financial Officer                         |  |              
|/s/ Joseph Lee             |  | (Principal Financial and Accounting Officer)    |  | April 3, 2009
|Joseph Lee                 |  |                                                 |  |              
|                           |  |                                                 |  |              
|/s/ Thomas Baker           |  | Director                                        |  | April 3, 2009
|Thomas Baker               |  |                                                 |  |              
|                           |  |                                                 |  |              
|/s/ Stephen
      Zacarias |  | Director                                        |  | April 3, 2009
|Stephen Zacarias           |  |                                                 |  |              

35

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