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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

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

For the fiscal year endedDecember 31,
2007or

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

For the transition period from: ____ to ____

Commission File Number 000-23687

STOCKGROUP INFORMATION SYSTEMS
INC.(Exact name of registrant as specified in its
charter)

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

Suite 500  750 West Pender St., Vancouver, B.C. V6C 2T7
Canada(Address of principal executive offices)

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

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

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

Common shares, no par valueTitle of Each
Class:

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

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

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained in this form, and no disclosure
  will be contained, to the best of registrant's knowledge, in definitive proxy
  or information statements incorporated by reference in Part III of this Form
  10-KSB or any amendment to this Form 10-KSB. [   ]

1

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

State issuer's revenues for its most recent fiscal year:
$14,338,000

State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2 of the Exchange Act.): The aggregate market value of common equity
  held by non-affiliates of the registrant as of December 31, 2007 was approximately
  $23,323,000. The number of shares outstanding of the registrant’s common
  equity as of March 28, 2008 was 41,395,922.

Documents incorporated by reference:

None

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

2

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STOCKGROUP INFORMATION SYSTEMS INC. TABLE OF CONTENTS

|           |                                                                                                                                                      | Page
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|           |                                                                                                                                                      |     
|PART I     |                                                                                                                                                      | 4   
|           |                                                                                                                                                      |     
|Item 1.    | Description of Business                                                                                                                              | 4   
|           |                                                                                                                                                      |     
|Item 2.    | Description of Property                                                                                                                              | 11  
|           |                                                                                                                                                      |     
|Item 3.    | Legal Proceedings                                                                                                                                    | 11  
|           |                                                                                                                                                      |     
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                                                                  | 12  
|           |                                                                                                                                                      |     
|PART II    |                                                                                                                                                      | 13  
|           |                                                                                                                                                      |     
|Item 5.    | Market for Common Equity and Related Stockholder Matters                                                                                             | 13  
|           |                                                                                                                                                      |     
|Item 6.    | Managements Discussion and Analysis or Plan of Operation                                                                                            | 16  
|           |                                                                                                                                                      |     
|Item 7.    | Financial Statements                                                                                                                                 | 36  
|           |                                                                                                                                                      |     
|Item 8.    | Changes In and Disagreements With Accountants on Accounting
      and Financial Disclosure                                                           | 59  
|           |                                                                                                                                                      |     
|Item 8A.   | Controls and Procedures                                                                                                                              | 59  
|           |                                                                                                                                                      |     
|Item 8B.   | Other Information                                                                                                                                    | 60  
|           |                                                                                                                                                      |     
|PART III   |                                                                                                                                                      | 61  
|           |                                                                                                                                                      |     
|Item 9.    | Directors, Executive Officers, Promoters and Control Persons
      and Corporate Governance; Compliance With Section 16(a) of the Exchange
      Act | 61  
|           |                                                                                                                                                      |     
|Item 10.   | Executive Compensation                                                                                                                               | 65  
|           |                                                                                                                                                      |     
|Item 11.   | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters                                                 | 69  
|           |                                                                                                                                                      |     
|Item 12.   | Certain Relationships and Related Transactions, and Director
      Independence                                                                      | 71  
|           |                                                                                                                                                      |     
|Item 13.   | Exhibits                                                                                                                                             | 72  
|           |                                                                                                                                                      |     
|Item 14.   | Principal Accountant Fees and Services                                                                                                               | 74  
|           |                                                                                                                                                      |     
|SIGNATURES | 75                                                                                                                                                  

3

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References
in this Form 10-KSB to the Company, Stockgroup, we, our, and us refer
to Stockgroup Information Systems Inc. and our consolidated subsidiaries, unless
otherwise indicated. StockHouse, BullBoards and related logos are trademarks or
registered trademarks of the Company in the U.S., Canada or other countries

Foreign Currency and Exchange Rates

All amounts in this annual report are stated in United States
Dollars unless otherwise indicated. For purposes of consistency, Canadian
Dollars have been converted into United States currency at the following rates:

Per 1 US DollarAverage for 2007
    C$1.08Rate at December 31, 2007
    C$0.99


PART I

FORWARD-LOOKING STATEMENTS

Certain
statements contained herein constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These forward-looking statements can be identified
by the use of predictive, future-tense or forward-looking terminology, such as
"believes," "anticipates," "expects," "estimates," "plans," "may," "intends," or
similar terms. These statements appear in a number of places in this report and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
trends affecting the Company's financial condition or results of operations,
(ii) the Company's business and growth strategies, (iii) the Internet and
Internet commerce and (iv) the Company's financing plans. Investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors set forth under "Risk Factors
Affecting Our Business" and elsewhere in this report. The Company disclaims any
obligation to update any such factors or to publicly announce the result of any
revisions to any of the forward-looking statements contained herein to reflect
future events or developments. The managements discussion and analysis of the
Company contained in this Annual Report on Form 10-KSB should be read in
conjunction with the consolidated audited financial statements and notes related
thereto included elsewhere in this report.

Item 1. Description of Business

Our Company

Stockgroup
is a financial information media company. Our technology platform aggregates
real-time and delayed data for stocks, mutual funds, commodities, options and
ETFs, plus financial analytics, content, news and collaborative functions. Our
StockHouse.com website, is an online financial portal focused on community
contributed content such as message boards, blogs, and contributed articles
which provides a targeted venue for advertisers. Our Stockstream suite of PC
desktop and mobile phone financial information products is licensed to
intermediaries such as Global brokerage firms and media publishers to offer to
their customers and for their internal use.

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We
are a United States and Canadian reporting public company. We were incorporated
in 1994 in the state of Colorado. Our shares are quoted on the Nasdaq OTC
Bulletin Board under the symbol SWEB and are listed on the TSX Venture Exchange
under the symbol SWB. Our head office is in Vancouver, Canada, with regional
offices in New York, Toronto and London. Our corporate website is
www.stockgroup.com.

Products and Services

We generate revenue through two main product lines:

- Licencing and subscriptions of the Stockstream suite of desktop and
  mobile portfolio management and realtime financial information tools.
- Advertising on the StockHouse.com website

The majority of our revenues are recurring in nature.

Stockstream Licensing and Subscriptions

Stockgroup
aggregates realtime data for stocks, mutual funds, commodities, options and
ETFs, plus financial analytics, third party and StockHouse content, news and
collaborative functions. This data is presented in a suite of desktop and mobile
tools, sold to clients in the media, banking, stock brokerage, financial
advisor, insurance and other industries. White-labeled versions of Stockstream
tools are provided to investment advisor firms to offer to the investors
customers to track stocks, manage portfolios, read news, blog, and access
subscribed content. The product utilizes Stockgroup's collaboration technology
to enable advisors and clients to simultaneously view an online portfolio and
set alerts.

Potential
clients are identified through telemarketing, tradeshows and speaking events.
Relationships are developed through a direct sales force in North America and
Western Europe and through channel partners. Stockstream services include:

- Stockstream Platinum: streaming real-time portfolio manager
- Real-time or delayed stock quotes on major U.S. and Canadian exchanges;
- Company Snapshot: fundamentals, chart, news and regulatory filings;
- Market Summary: daily major indices, stock market gainers, decliners, most
  actives;
- Mutual Funds Center: daily prices, performance and charts;
- Portfolio Management System: updating values, transaction handling, alert
  capabilities;
- Stockstream Mobile: real-time streaming market data and news for mobile
  devices.

Economies
of scale allow Stockgroup to provide a service that is efficiently delivered and
customized, at substantial cost savings over the client building and managing
these systems internally. From a competitive standpoint, we provide premium data
products, with proprietary filters, analytics and features that are aimed at
providing financial institutions with competitive advantage to improve customer
retention. Our clients gain advantage in a number of ways:

- A reduction of cost and complexity by having Stockgroup use proprietary
  filters and analytics to aggregate and transform raw market data feeds into
  informative and actionable information.
- Private-labled versions of the tools enable our clients to offer a unique
  set of tools consistent with their brand and market differentiation.
- Through unique collaboration technologies that help financial institutions
  enhance advisor-client communications and increase customer retention. By
  encouraging their users to consolidate investment tracking in Stockstream
  tools, financial institutions can gain valuable customer intelligence
  including assets and portfolios under management at other financial
  institutions.

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Advertising Services on the StockHouse.com web portal

The
StockHouse.com web portal and related websites and microsites provide an
advertising outlet for a wide range of advertising clients such as small and
large agencies, media buyers, and smaller publicly traded companies that need a
cost-effective method of creating awareness of their company in the investment
community. Client relationships are developed through inside sales campaigns and
an outside sales force.

StockHouse.com
offers financial content aggregation from hundreds of sources, a comprehensive
equities database, and the message forums Bullboards and StockHouse Blogs.
StockHouse offers advertising agencies and media buyers access to high traffic
website with a focused user demographics. We believe there will be ongoing
growth in the advertising market and an increasing shift in advertisers use of
the internet versus traditional media. Advertising services are categorized as
follows:

- Display Advertisingservices are targeted at media agencies, and
  focus on standard online advertising formats such as leaderboard, big box and
  skyscraper placements on the StockHouse website.
- Investor Relations Advertisingservices are targeted at small public
  companies seeking promotion, and focus on high-impact press release
  dissemination, generating qualified investor leads, and maximizing exposure to
  the market via StockHouse.com and, InvestorMarketPlace.com content, and
  through managed email marketing campaigns.

Competition

Stockgroups
competitors are providers of other online portfolio management and financial
content products, and financial media sites that cater to active investors. Our
key competitive differentiators are the collaborative technologies that we serve
through our platform, our product design strategy that adds functionality to
meet the strategic needs of our clients, and user generated content from the
StockHouse investor community, qualified and ranked by StockHouses patent
pending technology StReET (StockHouse Reputation Engine
Technology).

The
financial portal competitors to StockHouse can be categorized into major
financial portals (such as Yahoo! Finance, MSN Money, CNN Money) and financial
portals with user generated content (such as Motley Fool). Competitors to
Stockstream include players like IDC eSignal, Prophet.Net, and Globe Investor.

We believe the landscape for financial websites is well
established, with very strong barriers to entry for new participants,
particularly the need for a critical mass of users in sites that generate
content from the users of the community which is a key driver of building more
volume of content.

Intellectual Property, Proprietary Rights and Domain
Names

We
own the domain names stockhouse.com, stockhouse.ca, stockhouse.tv,
stockgroup.com smallcapcenter.com, and investormarketplace.com. We believe our
ownership of these domain names gives us adequate protection over them and we
intend to continue to keep them in our possession.

We
issued new identifying logo marks and a tag line for StockHouse in 2007. We own
or are in the process of applying for trademark registrations for StockHouse
and/or its related logos in the United States, Canada, the United Kingdom,
Australia and Hong Kong. We own trademarks for @ The Bell in the United
States, Australia and Hong Kong. Bullboards is trademarked in Canada and
Australia and Investors Click Here is trademarked in the United States. We may
pursue or acquire other trademarks in the future in addition to any other common
law trademark rights that we may have.

6

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We
protect our other intellectual property through a combination of trademark laws,
trade secret laws and confidentiality agreements with our employees, customers,
independent contractors, agents and vendors. We pursue the registration of our
domain names, trademarks and service marks in the United States and
internationally. Effective trademark, service mark, copyright and trade secret
protection may not be available in every country in which our services and
products are made available online. We create some of our own content and obtain
the balance of our content from third parties. It is possible that we could
become subject to infringement or defamation actions based upon the content
obtained from these third parties. In addition, others may use this content and
we may be subject to claims from our licensors.

In
January 2007, we acquired the intellectual property assets of the Mobile Finance
Division (MFD) of TeleCommunications Systems, Inc. (TCS), of Owings Mills,
Maryland, USA. These assets comprise trademarks and technology, relating to the
TCSs Marketstream product line, which distributes financial market data, news,
and analytics, like charting and portfolio functionality, via mobile devices. We
also acquired all assets and liabilities of TCSs European operations by means
of a share purchase transaction.

In
May 2007, we acquired the intellectual property assets of the Financial Data
Business of Semotus Solutions, Inc. of Los Gatos, California, USA (Semotus).
These assets comprise trademarks plus technology that allows mobile data users
to schedule data delivery at selected intervals or based on triggering events,
as a cost-effective alternative to realtime streaming data solutions for markets
where the cost of bandwidth and streaming data is price prohibitive.

We
currently have one patent application pending in the Canadian Intellectual
Property Office.

We
enter into confidentiality agreements with our employees and independent
consultants and have instituted procedures to control access to and distribution
of our technology, documentation and other proprietary information and the
proprietary information of others from whom we license content. The steps we
take to protect our proprietary rights may not be adequate and third parties may
infringe or misappropriate our trademarks, service marks and similar proprietary
rights. In addition, other parties may assert claims of infringement of
intellectual property or alter proprietary rights against us. The legal status
of intellectual property on the Internet is currently subject to various
uncertainties as legal precedents have not been set and are still to be
determined in many areas of Internet law.

Regulatory Issues

We
are subject to government regulation in connection with securities laws and
regulations applicable to all publicly owned companies, as well as laws and
regulations applicable to businesses generally. We are also increasingly subject
to government regulation and legislation specifically targeting Internet
companies, such as privacy regulations adopted at the local, state, national and
international levels and taxes levied at the state level. Due to the increasing
popularity and use of the Internet, enforcement of existing laws, such as
consumer protection regulations, in connection with Web-based activities has
become more aggressive, and it is expected that new laws and regulations will
continue to be enacted at the local, state, national and international levels.
Such new legislation, alone or combined with increasingly aggressive enforcement
of existing laws, could inhibit the growth in use of the Internet and decrease
the acceptance of the Internet as a communications and commercial medium, which
could in turn decrease the demand for our services or otherwise have a material
adverse effect on our future operating performance and business. See Risk
Factors  We Face Government Regulation and Legal Uncertainties.

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Product Development

We
believe that each new product in our pipeline is developed to meet the needs to
our growing corporate and individual investor client base and remains centered
upon helping investors create and manage their wealth.

In
2007, we launched numerous financial applications for our corporate clients and
the beta version of a widely updated StockHouse.com website. The new version of
StockHouse includes a proprietary reputation filtering system to delinate the
quality of individual contributors who contribute information to our StockHouse
community. We believe this is the first reputation system of its kind for user
generated content in the financial markets. The new StockHouse also includes new
portfolio sharing, advanced content ratings, upgraded market data tools and
integrated social networking features for individual investors. In addition, we
re-architected our legacy applications to the .NET platform, we created a
sophisticated data model, and we integrated our wireless product offerings.
During 2007, we released new versions of our Stockstream product for both
StockHouse users and for enterprise customers.

Our
product development group, located in Vancouver, is responsible for the project
management, design, development, quality assurance and release of product
enhancements, upgrades and new products. Research and development expenses were
$2,040,000 in 2007 and $684,000 in 2006.

Equipment

We
have made additional investments in servers and computer equipment required for
our websites, streaming of data and hosting services. Part of this additional
capacity was to satisfy growing demand for our products and services, part to
power the new StockHouse.com website, and part to consolidate our worldwide
wireless operations. We also provisioned a remote data center to provide
redundant failover, and we have assigned additional staff towards maintenance
and support of these services.

Employees

In
2007, we added and filled key positions within our management and development
teams to support the Companys strategic growth initiatives. As of December 31,
2007, we employed 79 people on a full-time basis. None of our employees,
worldwide, are subject to collective bargaining agreements. We have executive
employment agreements with our executive officers as further described in
Item 10. Executive Compensation, under the heading Employment
Contracts and Termination of Employment and Change-in-Control Arrangements.

Corporate Background of Stockgroup

From
1995 to 1999 we operated a financial market information publishing business and
website, aimed at public company clients. We used the funds from a public
offering in the spring of 1999 to provide the foundation for the development and
mass marketing of our services. In October 1999 we launched the website
SmallCapCenter.com. At that time we believed that a subscription/advertising
model centering around small cap content was viable. While parts of this
business model did not prove to be profitable, the exercise of building
SmallCapCenter and its related investment tools gave us certain experience and
skills, and a suite of service products to sell commercially. SmallCapCenter.com
exists to this day.

We
entered the financial software and content market late in 2000 by licensing our
proprietary content and applications to clients who needed to improve their
offering their financial customers and users. Our licensed content model is
attractive to clients because it is a comprehensive and cost effective
alternative to in-house development.

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From
2001 to 2002 we expanded our product suite to include market sector supplements
and automated webpage tools such as the IntegrateIR. We already had a public
company customer base, so the transition into this area was a natural extension.
We acquired the website and certain related assets to run the StockHouse brand
in 2004. For 2005 and 2006, we continued to grow our financial media business
and in January 2007 made a significant purchase of a provider of wireless
solutions provider as described below.

Business Acquisition  Mobile Finance Division of
TeleCommunication Systems, Inc.

On
January 31, 2007, we closed a transaction for the purchase of the Mobile Finance
Division of TeleCommunication Systems, Inc. Following is a description of the
acquired business, known as MFD. We believe that having a platform for mobile
delivery of our content and the StockStream product, is an important part of our
strategy for growing enterprise and retail customers. We further believe that
adding this capability will provide us with an additional channel of
distribution to existing customers, and scalability in distributing our content.

Operations, Products and Services

MFD
acquires financial data and news from global information companies, packages it,
and delivers it to selected Blackberry® phones and pagers. Non-pager services
are marketed under the MarketStream brand. Pager subscriptions are declining as
newer mobile devices become available; however, in many cases MFD pager
customers convert to the newer MarketStream product. The customer base is in
North America and Europe and is serviced primarily out of the companys offices
in Vancouver, Canada and London, UK.

The
product primarily serves wealth management, capital markets and advisory
companies. These institutions or their employees purchase subscriptions,
typically one year in length. Sales efforts target financial institutions with
large numbers of traders and investment professionals. Increasing numbers of
users use the Internet as a source of stock market information. As a result,
financial content is becoming an expected standard offering for media and
financial services companies. Our clients, including brokerages, banks, large
news websites and traditional media outlets, are encountering competitive
pressures to improve their financial content offerings. We believe that this
market expansion continues to drive demand for the services provided by our
mobile finance business.

® BlackBerry is the exclusive property and trademark of
Research In Motion Limited. BlackBerry is registered with the U.S. Patent and
Trademark Office and may be pending or registered in other countries.

***MarketStream***

The
MarketStream service provides global real-time streaming access to prices and
volumes for stocks, foreign exchange rates, futures, commodities, fixed income
products, options and ETFs, as well as news and charts. MarketStream offers a
high degree of flexibility in both detail and display. MarketStream
subscriptions can be purchased on an individual or multi-seat basis, and users
then purchase different data feeds depending on their individual needs. We
believe that the MarketStream product has a competitive advantage in that it is
a true streaming or real time product versus polling applications which
update every one to three seconds, making it a true institutional grade product.

Customers of Mobile Finance Division

The
clients of MFD are Tier I financial institutions with personnel who require
real-time mobile access to financial market data. Prospects are contacted
directly by the sales force from internally generated leads. In some cases new
prospects are given a two week free trial, after which they decide what data
they wish to receive and sign up for a subscription which can be on a monthly or
annual basis.

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Customers are located primarily in North America and Europe and
include leading global investment banking, securities and investment management
firms.

Sales and Marketing Strategy

The
strategy for MFD is to deliver the MarketStream product to institutional and
professional customers. We intend to expand our customer base by adding the
acquired mobile functionality to our platform, and then extending the platform
to existing customers. Our strategy will be to provide our platform to financial
services, media, and channel partners on a bulk or private labeled basis. In
addition, our intention is to offer a consumer product by the middle of 2008. We
further expect that wireless delivery of new products we develop including the
user-generated content generated in our StockHouse community should increase
demand from both the institutional and retail investment communities.

Supply Strategy

We
currently outsource the management of the MFD platform to Imperial Software
Technologies of London, UK (IST). We also license the ISTs Delta Stream®
software engine as the wireless content manager provides the user interface
functionality for MarketStream. We pay a royalty to IST® for each unit of
MarketStream and we have a non-compete agreement for the financial services
marketplace. Delta Stream® and MarketStream reside on servers in our Vancouver
network operations center. We pay IST® a fee maintaining our servers and systems
and for application support, and additional fees for any customization. A copy
of the source code is in escrow, and in the event of business failure by IST,
the source code will be transferred to us.

® Delta Stream is the exclusive property and a registered
trademark of IST.

Acquisition of Semotus Solutions Inc.

On
May 8, 2007, we entered into a purchase agreement with Semotus Solutions Inc.
(Semotus), whereby we agreed to acquire the financial information services
assets of Semotus, a Los Gatos, California based provider of mobile enterprise
software solutions. We agreed to pay Semotus up to $350,000.00. The purchase
price of $150,000 was paid on closing of the transaction. The remainder is
payable at a rate of 30% of monthly gross revenues earned from customer
contracts purchased from Semotus until an additional $200,000 is paid or within
two years whichever occurs first. If the gross revenues fall below 25% of prior
revenue within the first nine months post close, the amount payable monthly will
decrease to 15% of monthly gross revenues. Furthermore, should monthly gross
revenues fall below $15,000 per month at any time; the purchase price will be
deemed paid in full. As of December 31, 2007 the outstanding payable was
$137,000 which we expect will be fully paid within the two year period.

The
Semotus software targets the individual investor, by employing a polling
technology that allows users to schedule data delivery at selected intervals or
based on triggering events. We believe the polling technology is a
cost-effective alternative to streaming market data solutions in markets where
the cost of bandwidth and streaming data is price prohibitive.

In
connection with the asset purchase, Semotus will provide Stockgroup with certain
transition services subject to the conditions of a signed Transition Services
Agreement. Some of these services include, human resources, information
technology, accounting and legal services.

Available Information

Our
corporate website is Stockgroup.com. We are subject to the information and
periodic reporting requirements of the Securities Act of 1934, as amended (the
Exchange Act) and, as such, we file

10

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reports, proxy statements and other information with the U.S.
Securities and Exchange Commission (SEC). We are an electronic filer. We make
available, free of charge, on our investor relations website under Regulatory
Filings our Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB,
Current Reports on Form 8-K and any amendments to those reports as soon as
reasonably practicable after we electronically file or furnish such materials to
the SEC. Alternatively, contact our Investor Relations department in writing for
a hardcopy of our Form 10-KSB.

The
public may read and copy any materials filed by us with the SEC at the SECs
Public Reference Room at 100 F Street N.E., Washington DC 20459. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-732-0330. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The internet address of the site is
http://www.sec.gov.

In
addition, being listed on the TSX Venture Exchange (TSX-V), we are subject to
periodic reporting requirements set forth by the Ontario Securities Commission,
which are substantially similar to those of the SEC. Such filings are available
on our website and are also available on the Canadian Securities Administrators
website, www.sedar.com.

We
are not required to deliver an annual report to our stockholders but will upon
request will provide one.

Item 2. Description of Property

We
do not own any real property or any rights to acquire any real property. Our
head office is located at Suite 500  750 West Pender St., Vancouver, B.C. V6C
2T7 Canada. Our corporate offices are composed of one floor of leased space
located in the center of Vancouvers business community. We also lease premises
in Toronto and New York. In addition, as the result of our January 2007
acquisition of MFD, we assumed office space leases in Owings Mills, Maryland and
London, United Kingdom.

The following is a summary of our lease commitments:

Location
    Term
    Square Feet
    Monthly Commitment(in thousands of Dollars)Vancouver, B.C.
    5 years
    9,475
    $ 30,000Toronto, Ont.
    4
    2,050
    $   5,000New York, NY
    1
    3,000
    $   5,000Owings Mills, MD
    1
    750
    $   2,000London, UK
    1
    5,000
    $ 25,000


Item 3. Legal Proceedings

We
were the plaintiff in a lawsuit filed in the Ontario Supreme Court of Justice
against Hollinger Inc. and Hollinger Canadian Publishing Holdings Co. in which
we sought to recover approximately C$471,000 from the defendant. The defendant
was our vendor and the amount we seek consists of unused advertising credits
which we prepaid in 1999. Subsequent to December 31, 2007, the case has been
resolved by a negotiated settlement in which the defendant has paid C$340,000 to
the Company.

We
are 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,
is seeking damages, interest and costs in the order of C$225,000 for alleged
wrongful dismissal from her employment with the Company. The matter was heard by
the Supreme Court of British Columbia in a trial beginning on December 3, 2007
and ending on December 7, 2007. We are currently awaiting the judgment of the
Court. We have recorded a reserve of C$31,000 as the Company's reasonable
estimate of its liability relating to this matter.

11

---

However, the final settlement or adjudication of this matter
could possibly be less than or could materially exceed the reserve accrued by
the Company.

We
  are 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, in which we seek to recover approximately $346,000 from the
  defendant. The defendant was a reseller of our MarketStream service in Australia
  and the amount we seek 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 if we win
  the lawsuit. No provision has been made for recovery of these credits in the
  financial statements in any year.

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

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

There
were no matters submitted to a vote of security holders during the fourth
quarter of 2007.

12

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PART II

Item 5. Market for Common Equity and Related Shareholders
Matters

Market Information

Our
common stock has been quoted for trading on the Over-the-Counter Bulletin Board
quotation service operated by Nasdaq Stock Market, Inc. (Nasdaq OTCBB) since
March 17, 1999 under the symbol SWEB, and on the TSX Venture Exchange
(TSX-V) since December 17, 2002 under the symbol SWB.

The
following table sets forth the range of high and low sales prices in U.S.
dollars for our common shares on the Nasdaq OTCBB and in Canadian dollars for
our common shares on the TSX-V for each quarter within the last two fiscal
years. Prices on the Nasdaq OTCBB represent quotations between dealers without
adjustment for retail markup, markdown or commission and may not represent
actual transactions.

Price per Common Share
      Price per Common Shareon
        Nasdaq OTCBB
      on
        TSX-VHigh
      Low
      High
      Low2007:Fourth Quarter
      $ 1.10
      $ 0.51
      C$ 1.05
      C$ 0.47Third Quarter
      $ 1.29
      $ 0.80
      C$ 1.35
      C$ 0.89Second Quarter
      $ 1.45
      $ 0.90
      C$ 1.68
      C$ 0.99First Quarter
      $ 1.18
      $ 0.38
      C$ 1.32
      C$ 0.412006:Fourth Quarter
      $ 0.47
      $ 0.31
      C$ 0.58
      C$ 0.35Third Quarter
      $ 0.45
      $ 0.30
      C$ 0.50
      C$ 0.34Second Quarter
      $ 0.49
      $ 0.34
      C$ 0.56
      C$ 0.39First Quarter
      $ 0.37
      $ 0.27
      C$ 0.42
      C$ 0.31


Holders

As
of December 31, 2007, there were 40,916,921 common shares of no par value
issued. As of December 31, 2007, there were 96 holders of record, which does not
include beneficial owners of our common stock whose shares are held in the names
of various dealers, clearing agencies, banks, brokers and other fiduciaries.

Dividends

We
have not declared nor distributed any cash dividends on our common shares. We do
not anticipate paying any cash dividends on our commons shares in the
foreseeable future.

Issuer Purchases of Equity Securities

Our
  stock repurchase program expired in May 2006. Before this time, during 2006,
  we repurchased 100,000 common shares of our stock, at prices ranging from $0.26
  to $0.27 per share, for an aggregate cost of $27,000.

13

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Recent Sales of Unregistered Securities

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 shares of common stock at C$1.50 ($1.36) per
share for total gross proceeds of C$5,000,000 million ($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. Each warrant entitles the agents to acquire one common share pursuant
to the warrant at a price of C$1.50 per share at any time before May 16,
2008.

The proceeds of the offering are being used for acquisitions
and general working capital. 333,334 of the shares were issued to subscribers
pursuant to Regulation S of the Securities Act of 1933 on the basis that they
represented to the Company that they were not US Persons as such term is
defined in Regulation S. 3,000,000 of the shares were issued to accredited
investors resident in the US pursuant to Regulation D of the Securities Act of
1933. The certificates issued in connection with the offering include legends
required under applicable securities laws and exchange requirements and are
restricted from resale without an effective prospectus or exemption. The
proceeds of the private placement were used for acquisitions and general working
capital. In connection with the offering, we agreed to file a registration
statement with respect to the resale of shares of our common stock sold to the
investors and shares of our common stock issuable upon exercise of the warrants
with the SEC within 40 days after the final closing date. We filed a
registration statement on Form SB-2 with the SEC registering the resale of all
the securities issued in the offering on June 18, 2007. The registration
statement was declared effective on June 29, 2007 (SEC File No. 333-143780).

On
  January 26, 2007, we issued 1,500,000 of our common shares to TeleCommunication
  Systems, Inc.. These common shares are restricted from resale. The issuance
  of the shares was exempt from registration requirements under Section 4(2) of
  the Securities Act, or Regulation D of the Securities Act, as a transaction
  by an issuer not involving a public offering. The shares are offered with piggyback
  registration rights. If at any time, we decide to file a registration statement
  under the Securities Act, other than a registration on Form S-8, we will provide
  the opportunity for the holder of these shares to register them for resale.

Securities Authorized for Issuance under Equity
Compensation Plans

The Company grants stock options pursuant to shareholder
approved stock option plans. 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 Stock Option Plan.

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 June 2007 we adopted the 2007 Stock
Option Plan, which authorizes the issuance of a maximum of 3,300,000 shares of
our common stock granted to directors, officers, employees, consultants or
advisors of our Company or any of our parents, subsidiaries or any other entity
in which we, our parent or subsidiary hold a substantial ownership interest. All
of the shares issuable under the 2007 Stock Option Plan have been registered
under a registration statement on Form S-8 filed with the SEC on June 14, 2007
(SEC File No. 333-143763). A total of 3,300,000 shares of common stock of
Stockgroup were registered in connection with our 2003 Stock Option Plan by a
registration statement on Form S-8 filed on April 15, 2004 (SEC File No.
333-114481). In April 2004, our Board of Directors approved the amendment of the

14

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2003 Stock Option Plan to decrease the minimum vesting period
from two years to one year and to increase the maximum percentage of options
that may vest in any given financial quarter from 12.5% to 25%.

In 2007, 732,175 options were exercised for proceeds of $182,000.
  In 2006, 761,400 options were exercised for proceeds of $190,000. Subsequent
  to December 31, 2007, an additional 650,000 options have been granted under
  the 2007 Option Plan at an average exercise price of $0.58.

The
following table provides information as of December 31, 2007 with respect to our
common shares that may be issued under our existing Stock Option Plans upon the
exercise of stock options by our employees, consultants and members of our Board
of Directors under all of our existing equity compensation plans, all of which
have been approved by our shareholders.

|                             |  |                            |  |   | Weighted-average     |  |  |                           | 
|---------------------------- |  | -------------------------- |  | - | -------------------- |  |  | ------------------------- | 
|                             |  | Number of securities to be |  |   | exercise price of    |  |  |                           | 
|                             |  | issued upon exercise of    |  |   | outstanding options, |  |  | Number of securities      | 
|                             |  | outstanding options,       |  |   | warrants and rights  |  |  | remaining available       | 
|                             |  | warrants and rights        |  |   | (USD)                |  |  | for
      future issuance | 
|Equity compensation plans    |  |                            |  |   |                      |  |  |                           | 
|approved by security holders |  | 3,861,375                  |  | $ | 0.64                 |  |  | 2,931,775                 | 

15

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

The
following discussion and analysis should be read together with our Consolidated
Financial Statements and the Notes to those statements included elsewhere in
this Annual Report on Form 10-KSB. This discussion contains forward-looking
statements based on our current expectations, assumptions, estimates and
projections about Stockgroup and our industry. These forward-looking statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, should,
expects, plans, anticipates, believes, estimates, predicts,
potential or continue or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled Risk Factors Affecting Our Business that may cause our or our
industrys actual results, levels of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. We
undertake no obligation to update publicly any forward-looking statements for
any reason, even if new information becomes available or other events
occur.

Our
consolidated financial statements are stated in United States dollars and are
prepared in accordance with United States generally accepted accounting
principles. In this discussion, unless otherwise specified, all references to
common shares refer to the common shares in our capital stock and the terms
we, us and our mean Stockgroup Information Systems Inc., a Colorado
corporation.

Overview

***Our
Business***

Our
services can be separated into two categories: (i) Licensing and Subscription ;
and (ii). Advertising Services. The basic commonalities between the two
categories are that all of our services relate to the financial markets and all
are currently delivered over the Internet or mobile devices.

Much
of our sales are driven by popular interest in the stock markets. Advertising
services are in greater demand when there is greater overall demand for online
advertising across all industries. Our licensing and subscription services are
driven by our clients customers demand for market information. Our audience
levels on our StockHouse websites are closely correlated with the popularity of
the stock market. We believe that greater audience levels on our StockHouse
websites will translate into larger revenues over the long term.

The
Internet is the delivery vehicle for all of our products. The Internet has not
yet reached maturity and continues to reach new levels of sophistication.
Increasing numbers of people are using the Internet as a source of stock market
information. As a result, financial content is becoming an expected standard
offering for media and financial services companies. Financial software and
content systems clients, including large news websites, brokerages, banks, and
other media are encountering competitive pressures to improve their financial
content offerings. This market expansion has driven demand for our services and
has resulted in continued sales growth.

We
also receive financial information from suppliers over the Internet and deliver
it to mobile devices. Adoption of mobile and smart phones continue to grow at a
significant pace as investors and investment professionals use mobile devices to
stay connected to the market when they are away from their desktops. We believe
that this market expansion continues to drive demand for the services provided
by this mobile finance business.

16

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On
January 31, 2007, we closed a transaction to purchase of a division of
TeleCommunication Systems, Inc., known as the Mobile Finance Division. The
acquired business specializes in the sale of a wireless service delivering
financial market data, news, and limited analytics like charting and portfolio
functionality. The acquired business is described above in Item 1.
Business, under the heading Business Acquisition  Mobile Finance
Division of TeleCommunication Systems, Inc.The following discussion
includes financial results of the acquired business.

Results of Operations as a Percentage of Revenue

|                                                   |  | Years Ended  |  
|-------------------------------------------------- |  | ------------ | -
|                                                   |  | December 31, |  
|                                                   |  | 2007         |  
|REVENUES                                           |  |              |  
|Licencing and Subscriptions                        |  | 72%          |  
|Advertising Services                               |  | 28%          |  
|Revenues                                           |  | 100%         |  
|                                                   |  |              |  
|OPERATING COSTS AND EXPENSES (1)                   |  |              |  
|Cost of revenues (exclusive of
      amortization) |  | 42%          |  
|Sales and marketing                                |  | 34%          |  
|Research and development                           |  | 14%          |  
|General and administrative                         |  | 43%          |  
|Amortization of intangible assets                  |  | 4%           |  
|                                                   |  |              |  
|Total operating costs and expenses                 |  | 137%         |  
|                                                   |  |              |  
|Loss from operations                               |  | (37%         | )
|                                                   |  |              |  
|Interest income (expense)                          |  | 1%           |  
|Other income (expense)                             |  | (36%         | )
|                                                   |  |              |  
|Loss before income taxes                           |  | (36%         | )
|Provision for income taxes                         |  |  %          |  
|                                                   |  |              |  
|Net loss and comprehensive loss                    |  | (36%         | )

|(1) | Total operating costs and expenses for the year ended
      December 31, 2007 includes stock-based compensation calculated in
      accordance with FAS 123R, of $216,000 or 2% of total revenues. We recorded
      $121,000 of stock- based compensation for the year ended December 31,
      2006.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Results of Operations

|(in thousands of Dollars)   |   | Years Ended December |  |   |       |  |   |          | 
|--------------------------- | - | -------------------- |  | - | ----- |  | - | -------- | 
|                            |   | 2007                 |  |   | 2006  |  |   | Change $ | 
|Licensing and Subscriptions |   | 10,170               |  |   | 4,001 |  |   | 6,169    | 
|Advertising Services        | $ | 3,978                |  | $ | 3,765 |  | $ | 213      | 
|Total revenues              | $ | 14,148               |  | $ | 7,766 |  | $ | 6,382    | 

Our
revenues are derived from customers located in North America and Europe.

17

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Licensing and Subscription

Licensing
  and subscriptions revenues increased by 154% in 2007 from 2006, and represented
  72% of total revenues in 2007 compared to 45% in 2006. This increase is primarily
  attributable to our acquisition of MFD and of Semotus’ assets. We have
  continued to sign new agreements to sell our Stockstream products to our institutional
  customers, renew existing agreements and to continue to add services for our
  new and existing clients.

Advertising Services

Advertising
Services revenues include advertising on our StockHouse websites and related
properties. The StockHouse brand name and the functionality of StockHouse.com
and StockHouse.ca websites, including our StockHouse Blogs, provide us with a
link to the investment community. The StockHouse website allows us to provide a
range of advertising services for our clients where they gain exposure to an
affluent group of consumers. We believe that there continues to be an increased
market size for online advertising in general and that there is a greater demand
among companies for highly targeted advertising to the investment community,
which has enabled us to extract greater returns for our advertising inventory
over time.

Advertising
revenues decreased by 6% in 2007 from 2006, and represented 28% of total
revenues in 2007 compared to 55% in 2006. We provide online advertising services
to a wide range of companies. Revenues are dependent on the stock market and can
fluctuate from period to period depending on the nature of services sold,
including the mix of customers purchasing advertising and the amount of
advertising purchased by customers. This revenue category was not impacted by
our acquisition of MFD and Semotus.

Seasonality

We
traditionally see a slowdown in the first and third quarter of each year in
advertising revenues due to weaker advertising spend after the year-end holiday
period and lower activity in the financial markets during the summer.

Operating Costs and Expenses

|(in thousands of Dollars)               |   | Years Ended December 31, |  |   |       |  |   |          | 
|--------------------------------------- | - | ------------------------ |  | - | ----- |  | - | -------- | 
|                                        |   |                          |  |   |       |  |   |          | 
|                                        |   | 2007                     |  |   | 2006  |  |   | Change $ | 
|Cost of revenues                        |   |                          |  |   |       |  |   |          | 
|(exclusive of amortization)             | $ | 5,986                    |  | $ | 2,259 |  | $ | 3,727    | 
|Sales and marketing                     |   | 4,869                    |  |   | 3,041 |  |   | 1,828    | 
|Research and development                |   | 1,925                    |  |   | 684   |  |   | 1,241    | 
|General and administrative              |   | 6,100                    |  |   | 2,621 |  |   | 3,479    | 
|Amortization of intangible
      assets |   | 505                      |  |   |      |  |   | 505      | 
|Total operating costs and expenses      | $ | 19,385                   |  | $ | 8,605 |  | $ | 10,780   | 

Total
  operating costs and expenses increased by 125% in 2007 from 2006, and increased
  to 137% of total revenues in 2007 from 111% in 2006. The majority of the increase
  is attributable to the operational costs associated with our mobile finance
  operations and investment in new product development. Although we expect that
  total operating expenses will continue to increase as we expand our business,
  continue to integrate the mobile finance operations into our historical operations,
  and expand our product line, there was a decrease in research and development
  costs in the fourth quarter of 2007 attributable to the completion of our redesigned
  website, StockHouse.com. We expect Research and Development costs to be lower
  in 2008.

18

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Cost of revenues

Our
cost of revenues includes costs associated with bandwidth, data feeds and
exchange fees and other direct product costs. Total cost of revenues increased
by 165% in 2007 from 2006, and increased to 42% of total revenues in 2007 from
29% in 2006. Bandwidth costs increased 133%; and data feeds and exchange fees
increased by 162% in 2007 over 2006.

The
majority of the increase is attributable to the costs for data feeds and airtime
associated with the acquisition of MFD. The costs associated with providing
streaming data to customers are very similar to those of our historical
business. Late in 2007 we achieved some cost savings as the result of
negotiation with suppliers to reduce these costs, although the overall costs for
2007 increased as the result of the acquisition and our inability to reduce
duplicated fees as quickly as we anticipated.

We
anticipate that bandwidth costs will increase in 2008 to support growing demand.
Generally, bandwidth costs are correlated with changes in our traffic levels of
StockHouse and the number of customers to which we license our platform.
Increased traffic, as we experienced in 2007 over 2006, results in expanded
bandwidth requirements and additional costs.

Costs
associated with providing data feeds and exchange fees to our customers have
increased year over year as data feed providers, including vendors and stock
exchanges, have required purchasers of data to remit new user fees and older
data contracts have more expensive fees. The number of clients to which we
provide data has increased in 2007 resulting in additional costs. We expect that
data feed and exchange fees will increase as our customer base and their data
requirements increase.

Sales and Marketing

Sales
and marketing expenses increased by 60% in 2007 from 2006, but decreased to 34%
of total revenues in 2007 from 39% in 2006. The acquisition of MFD resulted in
additional sales personnel in Maryland, New York and Europe, and the costs
associated with those individuals. The year over year decrease of sales and
marketing revenues as a percentage of total revenues is primarily attributable
to a lower cost for sales and marketing of our acquired business and achieving
an increase of revenues with some costs being fixed.

Research and Development

Research and development expenses increased by 181% in 2007 from
  2006, and increased to 14% of total revenues in 2007 from 9% in 2006. In 2007,
  the majority of our development efforts related to preparation for the launch
  of the new StockHouse.com website in the fourth quarter of 2007, the majority
  of the increase results from the addition of external consultants and 12 full
  time employees to the research and development and quality assurance teams in
  the first quarter of the year. In 2006, the majority of our development efforts
  related to the next generation of our portfolio management solution, StockStream,
  which we launched at the end of 2006. In addition, we commenced development
  work related to the configuration of our new primary data feed, which we anticipate
  will improve the quality of our data while reducing costs. For both 2007 and
  2006, our activities also included adding functionality to our suite of products.
  Stock-based compensation attributable to research and development employees
  was $29,000 in 2007 and $9,000 in 2006.

General and Administrative

General and administrative expenses increased by 133% in 2007
  from 2006, and increased to 43% of total revenues in 2007 from 34% in 2006.

19

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The majority of costs are associated with payroll and the payment
  of consultants. Stock-based compensation expense was $146,000 for 2007 and $70,000
  for 2006. In addition, costs associated with travel and promotion of our business,
  and the acquisition of MFD increased during the year.

Amortization of property and equipment, a non-cash item,
increased to $446,000 for the year ended December 31, 2007 from $217,000 for the
year ended December 31, 2006. The majority of the increase in amortization
expense is attributable to the addition of assets associated with the expansion
of operations in our Vancouver offices.

Offsetting these increased expenses were $146,000 of foreign
  exchange gains in 2007, compared with $24,000 of foreign exchange gains in 2006.
  The private placement financing received in May 2007 in Canadian dollars was
  converted into US dollars during the third quarter, with minimal impact.

Amortization of intangible assets

Amortization of intangible assets is associated with our
purchase of MFD and the Semotus assets.

Interest and other income (expense)

|                                                |   | Years Ended  |   |   |      |   |   |          |  
|----------------------------------------------- | - | ------------ | - | - | ---- | - | - | -------- | -
|(in thousands of Dollars)                       |   | December 31, |   |   |      |   |   |          |  
|                                                |   | 2007         |   |   | 2006 |   |   | Change $ |  
|Interest income                                 | $ | 180          |   | $ | 66   |   | $ | 114      |  
|Interest expense                                |   | (83          | ) |   | (22  | ) |   | (61      | )
|Other income                                    |   | 10           |   |   | 8    |   |   | 2        |  
|Total interest and
      other income (expense) | $ | 107          |   | $ | 52   |   | $ | 55       |  

We earn interest income on our cash and cash equivalents, which
are held in major banks in either interest bearing accounts or term deposits.
The funds received in May 2007 from the private placement resulted in a higher
balance in our term deposits than at December 31, 2006. The majority of interest
expense represents interest charged on capital lease obligations. The increase
is indicative of capital lease obligations, most of which were added in the
second quarter of 2007. Other income is non-recurring.

Liquidity and Capital Resources

Cash
and cash equivalents totaled $2,821,000 at December 31, 2007, an increase of
$808,000 from December 31, 2006.

|                                                           |   | Years Ended |  
|---------------------------------------------------------- | - | ----------- | -
|(in thousands of Dollars)                                  |   | December 31 |  
|                                                           |   | 2007        |  
|Cash used in operating activities                          | $ | (2,435      | )
|Cash used in investing activities                          |   | (910        | )
|Cash provided by financing activities                      |   | 4,153       |  
|Net increase
      (decrease) in cash and cash equivalents | $ | 808         |  

Historically,
our principal source of liquidity has been our operating cash flow, revenues
collected in advance, financings and the extension in timing of the payment of
our liabilities. In 2007, we closed a restricted non-brokered private placement
which contributed $4,129,000 to our cash and cash equivalents balance.

Operating Activities.During 2007, we used more
cash than we generated from operations primarily resulting from our increased
net loss in 2007. Decreases in accounts receivable, and prepaid and other

20

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assets generated $174,000 in cash and we conserved $1,392,000
  in cash due to payment timing of accounts payable and increased accrued liabilities.

The
net increase in accounts receivable during 2007 was primarily due to higher
revenue during the fourth quarter of 2007 which had not been collected at year
end. Our advertising services revenues generally take over 60 days to collect as
our channel partners remit payment only after they receive payment. Days sales
outstanding for December 31, 2007 were 49 days, an increase from 41 days at
December 31, 2006.

Investing Activities. Net cash of $910,000 used
  in 2007 was the result of $324,000 of capital asset purchases, primarily related
  to computer equipment, $348,000 of acquisition costs paid related to our acquisition
  of MFD and $238,000 of the purchase price and acquisition costs for the Semotus
  assets.

Net
cash of $156,000 used in 2006, was the result of capital asset purchases in the
period, primarily related to computer software and hardware. In addition, we
entered into four capital lease agreements in 2006 for computer equipment,
primarily network servers for approximately $192,000. The cash impact of the
repayment of these leases is recorded as a financing activity.

Financing Activities.Net cash provided by financing
  activities of $4,153,000 in 2007, was the result of proceeds, net of cash costs,
  of $4,129,000 from a private placement, and cash received on the exercise of
  stock options of $182,000; partially offset by repayment of capital lease obligations
  of $158,000.

Net
cash provided by financing activities of $402,000 in 2006, was the result of net
cash of $343,000 from a restricted non-brokered private placement which closed
on September 26, 2006 and cash received on the exercise of stock options of
$189,000, offset by cash paid to repurchase common stock of $27,000 and cash
paid on the repayment of capital lease obligations of $103,000.

Future Liquidity Requirements

Changes
in the demand for our products and services, and those of our recently acquired
business, could impact our operating cash flow. We believe that our cash and
cash equivalents will be sufficient to meet our consolidated requirements for
the next 12 months, including, but not limited to, working capital, capital
expenditures, contractual cash commitments, and the costs associated with the
integration of MFD into our business. There is a risk that our current cash and
cash equivalents may not be adequate for our long term needs, in which case we
would most likely choose to raise additional financing through the issuance of
equity or debt securities. We can give no assurance that we will be successful
in raising a sufficient amount of additional capital or in internally generating
a sufficient amount of capital to meet our long-term requirements, or even if we
can raise additional capital, that we can do so on terms that are commercially
reasonable. We do not expect to declare or pay any cash dividends in the
foreseeable future.

On
May 8, 2007, we closed an acquisition for the purchase of certain intangible
assets from Semotus Solutions Inc. In consideration for these assets, we paid
$150,000 of the purchase price on May 9, 2007. The remainder is payable at a
rate of 30% of monthly gross revenues earned from customer contracts purchased
from Semotus until an additional $200,000 is paid or within two years whichever
occurs first. If the gross revenues fall below 25% of prior revenue within the
first nine months post close, the amount payable monthly will decrease to 15% of
monthly gross revenues. Furthermore, should monthly gross revenues fall below
$15,000 per month at any time; the purchase price will be deemed paid in full.
As of December 31, 2007 the outstanding payable was $137,000 which we expect
will be fully paid within the two year period.

21

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Contractual Obligations

Our
cash flow from operations is dependent on a number of factors, including
fluctuations in operating results, accounts receivable collections and the
timing of other payments. The impact of contractual obligations on our liquidity
and capital resources should be analyzed in conjunction with such factors. The
following table summarizes our contractual obligations as of December 31,
2007.

(in thousands of Dollars)
      
      
      
      
      Payments
        Due by PeriodMoreWithin 1
      
      
      
      
      
      4  5
      
      
      Than 5Total
      
      
      Year
      
      
      2  3 Years
      
      
      Years
      
      
      YearsOperating leases
      $
      1,948
      
      $
      532
      
      $
      637
      
      $
      690
      
      $
      89Capital leases
      
      256
      
      
      190
      
      
      66
      
      
      -
      
      
      -Data provider commitment
      
      1,387
      
      
      532
      
      
      821
      
      
      34
      
      
      -Total contractual cashobligations
      $
      3,591
      
      $
      1,254
      
      $
      1,524
      
      $
      724
      
      $
      89


Our
contractual obligations have not changed materially from those presented as of
December 31, 2006, except for the addition of approximately $164,000 in
operating lease commitments in 2008 for office space in Maryland and London
which we assumed as part of our acquisition of MFD.

The
  Company has capital lease obligations for servers and computer equipment required
  for our web sites, streaming data and hosting services. The total commitment
  for 2008 is $190,000 and $66,000 for 2009.

In
2006, we entered into an agreement with a data provider for delivery of market
data used for our services. The agreement expires in March 2010, with an option
to renew for an additional 12 months at then applicable rates. In addition, we
entered into a hosting and connectivity agreement for our back-up hosting site
at an approximate cost of $13,000 per month.

Accounting For and Disclosure of Guarantees

From
time-to-time we enter into certain types of contracts that require us to
indemnify the other parties to the contract against claims against them by third
parties. These contracts primarily relate to: (i) service agreements, under
which we may be required to indemnify clients for liabilities relating to data
transmission and dissemination; (ii) certain agreements with our officers,
directors, employees and third parties, under which the we may be required to
indemnify such persons for liabilities arising out of their relationship with us
or the performance of their duties for us.

We
regularly enter into service level agreements with clients, under which we
guarantee consistent streaming of data within certain pre-defined tolerances.
The terms of these obligations vary and are not generally limited in amount, so
it is not possible to express the amount at risk in dollars. Historically, we
have not been required to make significant payments on account of these
obligations and accordingly, we have not recorded any liability for obligations
of this nature on our balance sheet as of December 31, 2007 and December 31,
2006. The Company carries coverage under certain insurance policies to protect
itself in the case of any unexpected liability; however, this coverage may not
be sufficient.

Off-Balance Sheet Arrangements

We
did not have any off-balance sheet arrangements as of December 31, 2007 or
December 31, 2006.

22

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Critical Accounting Policies

Our
discussion and analysis of our financial position is based on our consolidated
financial statements, which are prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make certain estimates, judgments and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. We
base our estimates on historical experience and various other assumptions that
are believed to be reasonable based on the information available to us at the
time, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily identifiable from
other sources. Actual results may vary from these estimates.

An
accounting policy is considered to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimates are made, and if different estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably
likely to occur, could materially impact the financial statements. We believe
the following critical accounting policies reflect the more significant
estimates and assumptions used in the preparation of the consolidated financial
statements.

- Revenue Recognition
- Allowance for Doubtful Accounts
- Contingencies and Litigation
- Stock-based Compensation
- Business Combinations
- Goodwill and other intangible assets
- Foreign Currency
- Accounting for Income Taxes

Revenue Recognition. Our revenues are generated
from our Licensing and Subscription and our Advertising Services . Licensing and
Subscription services consist of managing, licensing, and delivering financial
market information and are generally sold under service agreements, which are
typically for 24-month terms. These services include subscriber fees for the
StockStream and MarketStream products. Advertising Services consists of client
advertising on our investment-oriented websites, e-mail services, sponsorships,
and other internet advertising services. These services are sold either
individually or bundled together into comprehensive programs and the revenues
are recognized pro-rataas the services are delivered over the term of
the contract.

While
the majority of our revenue transactions contain standard business terms and
conditions, there are certain transactions that contain non-standard business
terms and conditions. In addition, we have certain sales transactions that
involve multiple element arrangements (arrangements with more than one
deliverable) that may include set up fees, implementation and content
integration. These non-standard contracts may require additional interpretation
or judgment. In order to determine the appropriate accounting for the
recognition of revenues we interpret: (i) if an arrangement exists; (ii) how the
arrangement consideration should be allocated among potential multiple elements;
(iii) when to recognize revenue on the deliverables based on when delivery has
occurred; (iv) if the fee is fixed or determinable; and (v) whether we believe
collectability is reasonably assured at the time of recognition based on our
evaluation of creditworthiness of our customers.

We
recognize certain of our advertising revenues based on the number of page views
delivered to a customer. We obtain these page view reports from our Ad servers,
and recognize revenue based on delivery of these page views in accordance with
the pricing set forth in each agreement. In the event that our customers
indicate that a different page view count has been delivered, it may impact our
revenues. Revenue from subscriber service fees is recognized in the period
earned.

23

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Many
of our Licensing and Subscription revenue contracts contain service level
agreements which specify minimum service standards and remedies, such as billing
reductions, for deficiency of service. In the case of an interruption of
service, we make estimates as the amount of revenue which will require reversal,
if any, based specifically on requests from our customers to compensate them for
the service level deficiency.

Changes
in judgments on these assumptions and estimates could materially impact the
timing or amount of revenue recognition. Payments received in advance of
services provided, including deposits, are recorded as deferred revenue.

Prior
to 2007 the Company classified all revenue generated by the StockHouse.com
website as advertising revenue. During 2007, management reviewed this practice
and decided that revenue should be classified more accurately by product line.
Revenue of $233,000 resulting from the sale of Stockstream subscriptions through
the StockHouse.com website, previously classified as advertising revenue in
2006, has been reclassified to licensing and subscriptions revenue in the
comparative financial statements.

Allowance for Doubtful Accounts.We make
judgments as to our ability to collect outstanding receivables and provide
allowances for a portion of accounts receivable when we have estimated that
collection is doubtful. We make provisions based upon a specific review of all
outstanding invoices over 90 days. Provisions are generally made for all
accounts over 90 days, with exceptions made based on the nature of the client,
or where special arrangements are agreed to with the customer. In some cases an
allowance is made before 90 days if we have reasonable belief that the
collection of the account is doubtful.

Contingencies and LitigationWe evaluate
contingent liabilities, including threatened or pending litigation; costs
associated the purchase of trade-marked and copy-written data; and other matters
in accordance with FAS No. 5, Accounting for Contingencies. We assess
the likelihood of any adverse judgments or outcomes to these contingencies as
well as potential ranges of probable losses. We record reserves accordingly
based on the information we have available at the time of assessment. We
currently have a reserve for potential costs attributable to data feed costs.
The advancement in technologies and increased sophistication of systems is
resulting in increased scrutiny of data and costs. While we attempt to stay
current with all vendors, a change in this estimate may impact cost of revenues.
The amounts of the estimated reserve, if any, may change in future periods due
to new developments in each matter or changes in approach to a matter such as a
change in settlement strategy.

Stock-Based Compensation.During the first
quarter of 2006, we implemented the following new critical accounting policy
related to our stock-based compensation. We began accounting for stock options
under the provisions of FAS No. 123R Share-Based Payment (FAS 123R),
which requires the recognition of the fair value of stock-based compensation.
Under the fair value recognition provisions for FAS 123R, stock-based
compensation cost is estimated at the grant date based on the fair value of the
awards expected to vest and recognized as expense ratably over the requisite
service period of the award. We have used the Black-Scholes valuation model to
estimate fair value of our stock-based awards which requires various judgmental
assumptions including estimating share price volatility and expected life. In
addition, we consider many factors when estimating expected life, including
types of awards and historical experience. If any of the assumptions used in the
Black-Scholes valuation model change significantly, stock-based compensation
expense may differ materially in the future from that recorded in the current
period. We adopted FAS 123R using the modified-prospective method.

Business Combinations.Business
combinations are accounted for in accordance with FAS No. 141, Business
Combinations (FAS 141), which requires the purchase method of accounting
for business combinations be followed. In accordance with FAS 141, we allocate
the purchase price of our business combination to the tangible assets,
liabilities and intangible assets acquired, including in-process research

24

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and development, based on their estimated fair values. FAS 141
requires that we determine the recognition of intangible assets based on
specified criteria. The excess purchase price over those fair values, if any, is
recorded as goodwill.

We
must make valuations that require significant estimates and assumptions,
especially related to intangible assets. Our estimates of fair value are based
upon assumptions we believe to be reasonable, but which are inherently uncertain
and unpredictable, and as a result, actual results may differ from
estimates.

Goodwill and other intangible assetsIn
accordance with Statement 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.

Foreign CurrencyThe 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.

Accounting for Income Taxes.We account
for our income taxes in accordance with FAS No. 109, Accounting for Income
Taxes and related interpretations. Even though we are in a consolidated
loss position, determining the provision of income tax expense, income tax
liabilities, and deferred tax assets, including the valuation allowance related
to deferred tax assets, 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.

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. We 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
our opening balance of accumulated deficit. We believe that our income tax
filing positions and deductions will be sustained on audit and we do 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, 2007, the Company had no material unrecognized tax benefits.

Our
policy is to recognize interest and penalties accrued on any unrecognized tax
benefits as a component of income tax expense. For the year ended December 31,
2007, we have not recorded or realized any material interest or penalties with
respect to income taxes.

We
are subject to federal and state taxation in the United States as well as other
foreign jurisdictions. Our major tax jurisdictions, as defined, are reflected
below. As at December 31, 2007, income tax returns, whether filed or not,
pertaining to taxation years that remain open to examination by major
jurisdictions are as follows:

25

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United States
    2004  2007Canada
    2003  2007United Kingdom
    2005  2007Spain
    2003  2007Netherlands
    2002  2007


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

Recent pronouncements

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. FAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years, and is
applicable to us beginning in the first quarter of 2008. We are currently
evaluating the impact of FAS 157 on our consolidated financial statements.

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
many financial instruments and certain other items at fair value at specified
election dates. 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. This statement is expected to expand the use of
fair value measurement. FAS 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years, and is applicable to us beginning in the first quarter of 2008. We
are currently evaluating the impact of FAS 159 on our consolidated financial
statements.

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 and is applicable to us beginning in the first quarter of
2009. We are currently evaluating the potential impact, if any, of the adoption
of FAS 141(R) on our consolidated financial statements

In
March 2008, the FASB issued FAS No. 161, "Disclosures About Derivative
Instruments and Hedging Activities  an amendment of FASB Statement No. 133"
(FAS 161). FAS 161 changes the disclosure requirements for derivative
instruments and hedging activities. Entities will now be required to provide
enhanced disclosures about how and why an entity uses derivative instruments,
how the instruments are accounted for under FAS 133, and how the instruments and
related hedged items affect an entity's financial position, financial
performance, and cash flows. FAS 161 is effective for fiscal years beginning
after November 15, 2008 and is applicable to us beginning in the first quarter
of 2009. We are currently evaluating the potential impact, if any, of the
adoption of FAS 161 on our consolidated financial statements

26

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Risk Factors Affecting Our Business

We
operate in a rapidly changing environment that involves numerous uncertainties
and risks. The following section describes some, but not all, of these risks and
uncertainties that may adversely affect our business, financial condition or
results of options. This section should be read in conjunction with the audited
consolidated financial statements and the accompanying notes thereto, and other
parts of Managements Discussion and Analysis included in this Annual Report.
Additional factors and uncertainties not currently known to us or that we
currently consider immaterial could also harm our business, operating results
and financial condition.

Risks Related to Our Business

We have a history of operating losses and we cannot
predict if or when we will be profitable.

We
have a history of operating losses in the past years. We currently cannot
estimate if we will be profitable in fiscal 2008 or future fiscal periods. Our
acquisition of the Mobile Finance Division of TeleCommunication Systems, Inc.
has increased losses in the short and medium term as integration costs and
possible loss of revenue may occur. In addition, we have limited operating
history upon which an evaluation of our current business and prospects can be
based.

Computer equipment problems and failures could adversely
affect business.

Problems
or failures in Internet-related equipment, including file servers, computers and
software, could result in interruptions or slower response times for our
web-based services, which could reduce the attractiveness of our website and
financial tools to our customers and users. In addition, our customers rely on
us for time-sensitive, up-to-date data that is reliably delivered. Our business
is dependent on our ability to rapidly and efficiently process substantial
quantities of data on our computer-based networks and systems. Should
interruptions continue for an extended period we could lose significant business
and our reputation could be damaged. Equipment problems and failures could
result from a number of causes, including an increase in the number of users of
our website, computer viruses, outside programmers penetrating and disrupting
software systems, human error, fires, floods, power and telecommunications
failures and internal breakdowns. In addition, any disruption in Internet access
and data feeds provided by third parties could have a material and adverse
effect on our business. If we experience a major disaster such as a fire, theft,
or intentional destruction of our computer equipment, we cannot be certain of
the extent of the disruption to our business.

We may have difficulty scaling and adapting our existing
architecture to accommodate increased traffic and technology advances or
changing business requirements, which could lead to the loss of customers and
advertisers, and cause us to incur expenses to make architectural changes.

To
be successful, our network infrastructure has to perform well and be reliable.
The greater the user traffic and the greater the complexity of our products and
services, the more computing power we will need. We have spent and expect to
incur costs related to the purchase of computer equipment, the upgrade of our
technology and network infrastructure to handle increased traffic on our web
sites and our servers, and to roll out new products and services. This expansion
is expensive and complex and could result in inefficiencies or operational
failures. If we do not expand successfully, or if we experience inefficiencies
and operational failures, the quality of our products and services and our
users and customers experience could decline. This could damage our reputation
and lead us to lose current and potential users, customers and advertisers. Cost
increases, loss of traffic or failure to accommodate new technologies or
changing business requirements could materially harm our operating results and
financial condition.

27

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We may not be able to compete successfully against
current and future competitors.

We
currently compete with several other companies offering similar services. Many
of these companies have significantly greater financial resources, name
recognition, and technical and marketing resources, and virtually all of them
are seeking to improve their technology, products and services. We cannot assure
that we will have the financial resources or the technological expertise to meet
this competition successfully.

We are dependent on activity levels in the securities
market.

Our
business is dependent upon the health of the financial markets as well as the
financial health of the participants in those markets. Some of the financial
data and information market demand is dependent on activity levels in the
securities markets while other demand is static and is not dependent on activity
levels. In the event that the U.S. or international financial markets suffer a
prolonged downturn that results in a significant decline in investor activity,
our revenue levels could be materially adversely affected.

We face government regulation and legal
uncertainties

The
growth and development of the market for Internet commerce and communications
has prompted both federal and state laws and regulations concerning the
collection and use of personally identifiable information (including consumer
credit and financial information under the Gramm-Leach-Bliley Act), consumer
protection, the content of online publications, the taxation of online
transactions and the transmission of unsolicited commercial email, popularly
known as spam. More laws and regulations are under consideration by various
governments, agencies and industry self-regulatory groups. Although our
compliance with applicable federal and state laws, regulations and industry
guidelines has not had amaterial adverse effect on us, new laws and
regulations may be introduced and modifications to existing laws may be enacted
that require us to make changes to our business practices. Although we believe
that our practices are in compliance with applicable laws, regulations and
policies, if we were required to defend our practices against investigations of
state or federal agencies or if our practices were deemed to be violating
applicable laws, regulations or policies, we could be penalized and our
activities enjoined. Any of the foregoing could increase the cost of conducting
online activities, decrease demand for our services, lessen our ability to
effectively market our services, or otherwise materially adversely affect our
business, financial condition and results of operations.

Our
ability to comply with all applicable securities laws and rules is largely
dependent on our establishment and maintenance of appropriate compliance systems
(including proper supervisory procedures and books and records requirements), as
well as our ability to attract and retain qualified compliance personnel.

Because we
operate in an industry subject to extensive regulation, new regulation, changes
in existing regulation, or changes in the interpretation or enforcement of
existing laws and rules could have a material adverse effect on our business,
results of operations and financial condition.

We depend on the ability for wireless devices to access
the Internet.

Historically,
wireless carriers have been relatively slow to implement complex new services
such as Internet-based services. Our future success depends upon a continued
increase in the use of wireless devices to access the Internet and upon the
continued development of wireless devices as a medium for the delivery of
network-based content and services. We have no control over the pace at which
wireless carriers implement these new services. The failure of wireless carriers
to introduce and support services

28

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utilizing our products in a timely and effective manner could
reduce sales of our products and services and seriously harm our business. In
addition, mobile handsets change very frequently requiring continued product
design changes and development which may financially impact our business
negatively.

We may be unable to protect the intellectual property
rights upon which our business relies.

We
have or may pursue certain trademarks, and we have brand names, Internet domain
names, website designs, programs and certain subscriber lists which make up the
intellectual property we view as important to our business. It may be possible
for a third party to copy or otherwise obtain or use our intellectual property
without authorization or to develop similar technology independently. There can
also be no assurance that our business activities will not infringe upon the
proprietary rights of others, or that other parties will not assert infringement
claims against us, including claims that by, directly or indirectly, providing
hyperlink text links to websites operated by third parties, we have infringed
upon the proprietary rights of other third parties. Due to the global nature of
the Internet, there can be no assurance that obtaining trademark protection in
the United States will prevent infringements on our trademarks by parties in
other countries. We have not sought or obtained any patents on our proprietary
software and data processing applications.

Litigation
may be necessary in the future to enforce our intellectual property rights, to
protect trade secrets or patents that we may obtain, or to determine the
validity and scope of the proprietary rights of others. Such litigation could
result in substantial costs and diversion of resources and could have a material
adverse effect on our future operating results.

An interruption in the supply of products and services
that we obtain from third parties could cause a decline in sales of the services
from our company, and products we purchase to avoid shortages may become
obsolete before we can use them.

In
designing, developing and supporting the data services of our company, we have
relied on wireless carriers, wireless handheld device manufacturers, content
providers, software providers and companies that manage some of our other
services such as our internal IT operations and customer care services. These
suppliers may experience difficulty in supplying us products or services
sufficient to meet our needs or they may terminate or fail to renew contracts
for supplying us these products or services on terms we find acceptable. Any
significant interruption in the supply of any of these products or services
could cause a decline in sales of our services unless and until we are able to
replace the functionality provided by these products and services. We also
depend on third parties to deliver and support reliable products, enhance our
current products, develop new products on a timely and cost-effective basis and
respond to emerging industry standards and other technological changes. In
addition, we rely on the ability of our content providers to continue to provide
us with uninterrupted access to the news and financial information we provide to
our customers. The failure of third parties to meet these criteria, or their
refusal or failure to deliver the information for whatever reason could
materially harm our business and would also affect our ability to sell our
products.

Our industry is a rapidly evolving market therefore our
product and service offerings could become obsolete unless we respond
effectively and on a timely basis to rapid technological changes.

The
successful execution of our business strategy is contingent upon wireless
network operators launching and maintaining mobile location services, our
ability to create new software and adapt our existing software products and
website to rapidly changing technologies, industry standards and customer needs.
As a result of the complexities inherent in our product offerings, new
technologies may require long development and testing periods. Additionally, new
products may not achieve market acceptance or our competitors could develop
alternative technologies that gain broader market acceptance than our products.
If we are unable to develop and introduce technologically advanced products that
respond to evolving industry standards and customer needs, or if we are unable
to complete the development and

29

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introduction of these products on a timely and cost effective
basis, we will have incurred substantial resources without realizing the
anticipated revenues, which would have an adverse effect on our results of
operations and financial condition.

The
applicability to the Internet of existing laws governing issues such as
intellectual property ownership and infringement, copyright, trademark, trade
secret, taxation, obscenity, libel, employment and personal privacy is uncertain
and developing. Any new legislation or regulation, or the application or
interpretation of existing laws, may have a material adverse effect on our
business, results of operations and financial condition. Additionally,
modifications to our business plans or operations to comply with changing
regulations or certain actions taken by regulatory authorities may increase our
costs of providing our product and service offerings and materially adversely
affect our financial condition.

If mobile equipment manufacturers do not overcome
capacity, technology and equipment limitations, we may not be able to sell our
products and services.

The
wireless technology currently in use by most wireless carriers has limited
bandwidth, which restricts network capacity to deliver bandwidth-intensive
applications like data services to a large number of users. Because of capacity
limitations, wireless users may not be able to connect to their network when
they wish to, and the connection is likely to be slow, especially when receiving
data transmissions. Data services also may be more expensive than users are
willing to pay. To overcome these obstacles, wireless equipment manufacturers
will need to develop new technology, standards, equipment and devices that are
capable of providing higher bandwidth services at lower cost. We cannot be sure
that manufacturers will be able to develop technology and equipment that
reliably delivers large quantities of data at a reasonable price. If more
capacity is not added, a sufficient market for our products and services is not
likely to develop or be sustained and sales of our products and services would
decline and our business would suffer.

Some mobile operators charge fees for data usage.

Our
wireless service is a live streaming service which uses continued bandwidth and
wireless usage charges. In the event that some wireless providers do not provide
unlimited data at a flat rate, this may limit our market acceptance of our
product due to the cost of data service when used on a sustained basis. Some
wireless providers who do offer flat rates do not allow the continuous data
stream functionality on Blackberry® devices to be activated which may limit our
sales.

We depend on key personnel and expect to hire additional
personnel.

We
depend on the continued contributions of our executive officers, sales,
technical and other critical personnel to execute our business plan. Our future
success will also depend in a large part upon our ability to attract and retain
highly skilled management, technical engineers, sales and marketing personnel,
and finance personnel. Competition for such personnel is intense and there can
be no assurance that we will be able to attract and retain such personnel. The
loss of the services of any key personnel, the inability to attract or retain
qualified personnel in the future, or any delays in hiring required personnel,
particularly technical engineers and sales personnel, could have a material
adverse affect on our business, results of operations and financial condition.

We
are also dependent upon the personnel acquired through our acquisition of Mobile
Finance especially in the short term to transfer business knowledge. In the
event that we lose any or all of these employees there may be a significant
impact on our business in sales, cost, and customer service.

30

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We may fail to support our anticipated growth in
operations which could reduce demand for our services and materially adversely
affect our revenue.

Our
business strategy is based on the assumption that the number of customers, the
amount of information they want to receive and the number of services we offer
will all increase. We must continue to develop and expand our systems and
operations to accommodate this growth. In addition, information technology has
dropped dramatically in price over the past years and is expected to continue to
drop, such that more customers will be required to maintain the same levels of
revenue. The expansion and adaptation of our systems operations requires
substantial financial, operational and management resources. Due to the limited
deployment of our services to date, the ability of our systems and operations to
connect and manage a substantially larger number of customers while maintaining
superior performance is unknown. Any failure on our part to develop and maintain
our wireless data services as we experience rapid growth could significantly
reduce demand for our services and materially adversely affect our revenue.

We may be held liable for online information or services
provided by third parties or us.

Because
materials may be downloaded by the public on Internet services offered by us or
the Internet access providers with whom we have relationships, and because third
party information may be posted by third parties on our website through
discussion forums and otherwise, there is the potential that claims will be made
against us for defamation, negligence, copyright or trademark infringement or
other theories. Such claims have been brought against providers of online
services in the past. To date we have been named in at lease one lawsuit in
which defamation is alleged to have occurred on our Internet discussion forum
called Bull Boards. The imposition of liability based on such claims could
materially and adversely affect us.

Even
to the extent such claims do not result in liability, we could incur significant
costs in investigating and defending against such claims. The imposition on us
of potential liability for information or services carried on or disseminated
through our website could require implementation of measures to reduce exposure
to such liability, which may require the expenditure of substantial resources
and limit the attractiveness of services to members and users.

We
post news clippings from other news websites on the StockHouse and
SmallCapCenter websites with links to the source site. Most publishers currently
encourage this practice, although certain publishers have requested that we
cease posting their stories. We have complied with their request in each case.
To the extent that a large majority of news publishers prohibit posting of their
stories on our websites or begin charging royalty fees for such stories, our
website traffic could decrease or our costs could increase, thereby adversely
impacting our profitability.

We
generally purchase data including trademarked and copy-written data that may or
may not be under contract. The advancement in technologies and increased
sophistication of systems is resulting in increased scrutiny of data and costs.
We attempt to stay current with all vendors however the timing of identifying
the vendors and costs of data may cause significant increase in cost of rates.

Our
general liability insurance will not cover all potential claims to which we are
exposed or may not be adequate to indemnify us for all liability that may be
imposed. Any imposition of liability that is not covered by insurance or is in
excess of insurance coverage could have a material adverse effect on our
business, results of operations and financial condition.

31

---

We may pursue strategic acquisitions and investments that
could have an adverse effect on our business if they are unsuccessful.

As
part of our business strategy, we have acquired companies and may continue to
acquire companies, technologies and product lines to complement our internally
developed products. In January 2007, we acquired the Mobile Finance Division of
TeleCommunication Systems Inc. It is possible that the contemplated benefits of
this acquisition or any future acquisitions may not materialize within the time
periods or to the extent anticipated. Critical to the success of this strategy
in the future and, ultimately our business as a whole, is the orderly, effective
integration of acquired businesses, technologies, product lines and employees
into our organization. If this integration is unsuccessful, our business will
suffer. There is also the risk that our valuation assumptions and models for the
acquired product or business may be overly optimistic or inaccurate if customers
do not demand the acquired companys products to the extent we expect, the
technology does not function as we expect or the technology we acquire is the
subject of infringement or trade secret claims by third parties.

Because our product and service offerings are sold
internationally, we are subject to risks of conducting business in foreign
countries.

In
2007, customers, primarily in North America, Europe and Australia purchased our
products and in 2008 customers in North America, Europe and Australia will
purchase our products. In addition, a portion of the revenue historically
generated by our company has typically been generated outside the United States.
We believe our revenue will be increasingly dependent on business in foreign
countries, and we will be subject to the social, political and economic risks of
conducting business in foreign countries, including:

- inability to adapt our products and services to local business practices,
  language, customs and mobile user preferences;
- costs of adapting our product and service offerings for foreign markets;
- inability to locate qualified local employees, partners and suppliers;
- reduced protection of intellectual property rights;
- the potential burdens of complying with a variety of U.S. and foreign
  laws, trade standards and regulatory requirements, including the regulation of
  wireless communications and the Internet and uncertainty regarding liability
  for information retrieved and replicated in foreign countries;
- general geopolitical risks, such as political and economic instability and
  changes in diplomatic and trade relations; and
- unpredictable fluctuations in currency exchange rates.

Any
of the foregoing risks could have a material adverse effect on our business by
diverting resources toward addressing them or by reducing or eliminating sales
in such foreign countries.

Our legacy pager business is deteriorating rapidly.

Through
the purchase of MFD, as described in Item 1. Business, we acquired their
legacy business of providing financial information to pager devices. Pagers
represent the majority of the revenue of the company at acquisition. Most
customers have been with the company for years but are changing to other types
of wireless devices. The company has seen a rapid loss of subscribers for its
pager service and there can be no assurance that the Company can convert the
subscribers to its Marketstream wireless offering. In addition,
telecommunication companies are shutting down their pager networks and rendering
the service inoperable. If this occurs in countries we operate in, we would be
unable to service our pager customers.

32

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Involvement in Certain Legal Proceedings.

We
are involved in various legal matters which arise from time-to-time in the
ordinary course of business, none of which we believe is material to our results
of operations, liquidity or financial condition at this time. We cannot
reasonably estimate at this time whether a monetary settlement will be reached
or predict the ultimate resolution of these legal matters.

Our Business and Stock Price May Be Adversely Affected If
Our Internal Controls Are Not Effective.

Section
404 of the Sarbanes-Oxley Act of 2002 requires companies to conduct a
comprehensive evaluation of their internal control over financial reporting. To
comply with this statute, we are required to document and test our internal
control over financial reporting and our management is required to assess and
issue a report concerning our internal control over financial reporting. Our
independent registered public accounting firm is not required to report on the
effectiveness of our internal control over financial reporting.

As
described in Part 8  Item 8A. Controls and Procedures of this report, our
Chief Executive Officer and Chief Financial Officer concluded as discussed
below, that a material weakness existed in our control over financial reporting
as of December 31, 2007, and as a result, that our disclosure controls and
procedures were not effective.

Management
has evaluated its key financial processes to assess risk of material weaknesses.
The Company has identified several significant deficiencies in the operation of
internal controls over financial reporting within the MFD entities and assets
acquired on January 31, 2007. When considered in the aggregate, management
believes that these constitute a material weakness within its internal control
framework relating to the Companys financial reporting process.

We
have taken and are taking actions to remediate this material weakness. In
addition, management has developed and presented to the Audit Committee a plan
and timetable for the implementation of remediation measures (to the extent not
already implemented), and the Audit Committee intends to monitor such
implementation. We believe that these actions will remediate the significant
control deficiencies we have identified and strengthen our internal control over
financial reporting.

Although
we believe we are taking appropriate actions to remediate the control
deficiencies we have identified and to strengthen our internal control over
financial reporting, we cannot assure you that we will not discover other
material weaknesses in the future. The existence of one or more material
weaknesses could result in errors in our financial statements, and substantial
costs and resources may be required to rectify these or other internal control
deficiencies. If we cannot produce reliable financial reports, investors could
lose confidence in our reported financial information, the market price of our
common stock could decline significantly, we may be unable to obtain additional
financing to operate and expand our business, and our business and financial
condition could be harmed.

The Wireless Industry is Experiencing Rapid Technological
Change, and We May Lose Customers If We Fail to Keep Up With These
Changes.

The
wireless communications industry is experiencing significant technological
change, as evidenced by the ongoing improvements in the capacity and quality of
digital technology, the development and commercial acceptance of wireless data
services, shorter development cycles for new products and enhancements and
changes in end-user requirements and preferences. The cost of implementing or
competing against future technological innovations may be prohibitive to us, and
we may lose customers if we fail to keep up with these changes.

33

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The Loss of Key Personnel and Difficulty Attracting and
Retaining Qualified Personnel Could Harm Our Business.

We
believe our success depends heavily on the contributions of our employees and on
attracting, motivating and retaining our officers and other management and
technical personnel. We do not, however, generally provide employment contracts
to our employees. If we are unable to attract and retain the qualified employees
that we need, our business may be harmed.

Risks Related to Ownership of Our Common Stock

We are significantly influenced by our officers,
directors and entities affiliated with them.

In
the aggregate, beneficial ownership of our shares by our officers, directors and
management represents approximately 16% of issued and outstanding shares of our
common stock at March 28, 2008. These shareholders, if acting together, will be
able to influence significantly all matters requiring approval by shareholders,
including the election of directors and the approval of mergers or other
business combinations transactions.

Trading of our stock may be restricted by the SECs penny
stock regulations, which may limit a shareholders ability to buy and sell our
stock.

The
Securities and Exchange Commission (the SEC) has adopted regulations which
generally define penny stock to be any equity security that has a market price
(as defined) less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. Our securities are covered by the
penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customers
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customers confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules; the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

Future issuances of shares may adversely impact the value
of our stock.

We
may attempt to raise additional capital through the sale of common stock in the
future. Future issuances of common stock may dilute your position in us.

34

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Our stock price is vulnerable to buying and selling
pressures.

As
there is a limited market for our common stock, there may be considerable
volatility in our stock price due to selling and buying pressures. Future sales
of shares by our existing or future shareholders could cause the market price of
our common stock to decline. At March 28, 2008, there were 41,395,000 issued and
outstanding shares of our common stock; however, a portion of these shares are
subject to trading restrictions in the United States.

Our Board of Directors may authorize and issue preferred
shares.

Our
Board of Directors has the authority to issue preferred shares with rights,
preferences and/or privileges senior to or on parity with the rights of the
holders of common stock. The potential consequences to our investors include a
loss of perceived value of the stock in the market and a loss of future earnings
and dividends, if and when dividends are declared. Because some of our officers
and directors are located in non-U.S. jurisdictions, you may have no effective
recourse against the management for misconduct and may not be able to enforce
judgment and civil liabilities against our officers, directors, experts and
agents.

Some
of our directors and officers are nationals and/or residents of countries other
than the United States, and all or a substantial portion of their assets are
located outside the United States. As a result, it may be difficult for
investors to enforce within the United States any judgments obtained against our
officers or directors, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any U.S. state.

35

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Item 7. Financial Statements



|Report
      of Independent Registered Chartered Accountants                                               | 37
|---------------------------------------------------------------------------------------------------------- | --
|                                                                                                           |   
|Consolidated
      Balance Sheets as of December 31, 2007 and 2006                                         | 38
|                                                                                                           |   
|Consolidated
      Statements of Operations for the Years Ended December 31, 2007 and 2006                 | 39
|                                                                                                           |   
|Consolidated
      Statements of Shareholders Equity for the Years Ended December 31, 2007
      and 2006 | 40
|                                                                                                           |   
|Consolidated
      Statements of Cash Flows for the Years Ended December 31, 2007 and 2006                 | 41
|                                                                                                           |   
|Notes
      to Consolidated Financial Statements                                                           | 42

36

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REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS

To the Board of Directors and Shareholders of Stockgroup
Information Systems Inc.

We
have audited the accompanying consolidated balance sheets of Stockgroup
Information Systems Inc. and subsidiaries (the Company) as of December 31,
2007 and 2006 and the related consolidated statements of operations,
shareholders 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 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 as of December 31, 2007
and 2006 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 Statement of Financial Accounting Standards No. 123(R), Share-Based
Payments, effective January 1, 2006 and Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an Interpretation of FASB Statement No. 109,
effective January 1, 2007.



/s/ Deloitte & Touche LLP

Independent Registered Chartered Accountants Vancouver,
Canada March 31, 2008

37

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Stockgroup Information Systems Inc.

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of U.S. Dollars, except number of
common shares)

|                                                              |   | As at December 31, |  
|------------------------------------------------------------- | - | ------------------ | -
|                                                              |   | 2007               |  
|ASSETS                                                        |   |                    |  
|Current Assets:                                               |   |                    |  
|Cash and cash
      equivalents (note 1)                      | $ | 2,821              |  
|Accounts receivable (net of allowance of
      $456 and $98)  |   | 1,906              |  
|Prepaid and other
      current assets (note 2)               |   | 752                |  
|TOTAL CURRENT ASSETS                                          |   | 5,479              |  
|Property and equipment,
      net (note 4)                    |   | 703                |  
|Goodwill (note 2)                                             |   | 99                 |  
|Intangible assets, net
      (notes 2 and 3)                  |   | 1,530              |  
|TOTAL ASSETS                                                  | $ | 7,811              |  
|                                                              |   |                    |  
|LIABILITIES AND SHAREHOLDERS EQUITY                          |   |                    |  
|Current Liabilities:                                          |   |                    |  
|Accounts payable (note 4)                                     | $ | 1,818              |  
|Accrued liabilities
      (note 4)                            |   | 2,824              |  
|Deferred revenues                                             |   | 1,341              |  
|Capital lease
      obligations                               |   | 190                |  
|TOTAL CURRENT LIABILITIES                                     |   | 6,173              |  
|Long-term capital lease obligations                           |   | 66                 |  
|Long term payable (note 3)                                    |   | 41                 |  
|Long-term deferred revenues                                   |   | 15                 |  
|TOTAL LIABILITIES                                             |   | 6,295              |  
|                                                              |   |                    |  
|Shareholders Equity                                          |   |                    |  
|Common stock, no par value:                                   |   |                    |  
|authorized 75,000,000 shares                                  |   |                    |  
|issued and outstanding
      40,916,921 and 35,350,413 shares |   | 18,902             |  
|Additional paid-in capital                                    |   | 3,652              |  
|Accumulated deficit                                           |   | (21,038            | )
|TOTAL SHAREHOLDERS EQUITY                                    |   | 1,516              |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                    | $ | 7,811              |  
|                                                              |   |                    |  
|                                                              |   |                    |  
|Commitments and contingencies (note 9)                        |   |                    |  
|Guarantees (note 10)                                          |   |                    |  

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

38

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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, |  
|---------------------------------------------------------- | - | -------------------------------- | -
|                                                           |   | 2007                             |  
|REVENUES                                                   |   |                                  |  
|Licensing and subscriptions                                |   | 10,170                           |  
|Advertising services                                       | $ | 3,978                            |  
|TOTAL REVENUES                                             |   | 14,148                           |  
|OPERATING COSTS AND EXPENSES                               |   |                                  |  
|Cost of revenues (exclusive of amortization)               |   | 5,986                            |  
|Sales and marketing                                        |   | 4,869                            |  
|Research and development                                   |   | 1,925                            |  
|General and administrative                                 |   | 6,100                            |  
|Amortization of intangible assets (notes
      2 and 3)    |   | 505                              |  
|TOTAL OPERATING EXPENSES                                   |   | 19,385                           |  
|                                                           |   |                                  |  
|Loss from operations                                       |   | (5,237                           | )
|Interest and other expense (income), net                   |   | (107                             | )
|Loss before income taxes                                   |   | (5,130                           | )
|Provision for income taxes (note 8)                        |   | 4                                |  
|Net loss and comprehensive loss                            | $ | (5,134                           | )
|                                                           |   |                                  |  
|Net loss per common share:                                 |   |                                  |  
|Basic and diluted                                          | $ | (0.13                            | )
|                                                           |   |                                  |  
|Common shares used in computing basic and diluted net loss |   |                                  |  
|per share (thousands)                                      |   | 39,264                           |  

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

39

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Stockgroup Information Systems Inc.

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY(Expressed in thousands)

Additional
    
    
    
    
    
    TotalCommon
    
    
    Common
    
    
    paid-in
    
    
    Accumulated
    
    
    Shareholdersstock
    
    
    stock
    
    
    capital
    
    
    deficit
    
    
    Equity# of
      shares
    
    
    $
    
    
    $
    
    
    $
    
    
    $Balance at December 31,
      2005
    
    33,522
    
    
    13,359
    
    
    3,202
    
    
    (15,113
    )
    
    1,448Issuance of common sharespursuant to exercise of
      employeestock options
    
    761
    
    
    200
    
    
    (10
    )
    
    -
    
    
    190Repurchase of common shares
    
    (100
    )
    
    (40
    )
    
    12
    
    
    -
    
    
    (28
    )Private placement transaction common shares and warrants
    
    1,167
    
    
    274
    
    
    69
    
    
    -
    
    
    343Stock based compensation
    
    -
    
    
    -
    
    
    121
    
    
    -
    
    
    121Net loss and comprehensive loss
    
    -
    
    
    -
    
    
    -
    
    
    (791
    )
    
    (791
    )Balance at December 31, 2006
    
    35,350
    
    
    13,793
    
    
    3,394
    
    
    (15,904
    )
    
    1,283Issuance of common sharespursuant to exercise of employeestock options
    
    734
    
    
    236
    
    
    (54
    )
    
    -
    
    
    182Private placement transaction common shares and warrants
    
    3,333
    
    
    4,033
    
    
    96
    
    
    -
    
    
    4,129Issuance of common sharespursuant to business
      acquisition
    
    1,500
    
    
    840
    
    
    -
    
    
    -
    
    
    840Stock based compensation
    
    -
    
    
    -
    
    
    216
    
    
    -
    
    
    216Net loss and comprehensive loss
    
    -
    
    
    -
    
    
    -
    
    
      (5,134
    )
    
      (5,134
    )Balance at December 31, 2007
    
    40,917
    
    
    18,902
    
    
    3,652
    
    
      (21,038
    )
    
      1,516


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

40

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Stockgroup Information Systems Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed
in thousands of U.S. Dollars)

|                                                                    |   | For the years ended December 31, |  
|------------------------------------------------------------------- | - | -------------------------------- | -
|                                                                    |   | 2007                             |  
|Operating activities:                                               |   |                                  |  
|Net loss                                                            | $ | (5,134                           | )
|Adjustments to reconcile net loss to net
      cash used in         |   |                                  |  
|operating activities:                                               |   |                                  |  
|Amortization of property and equipment                              |   | 446                              |  
|Amortization of intangible assets                                   |   | 505                              |  
|Stock-based compensation                                            |   | 216                              |  
|Changes in operating assets and liabilities:                        |   |                                  |  
|Accounts receivable                                                 |   | 137                              |  
|Prepaid and other current assets                                    |   | 37                               |  
|Accounts payable                                                    |   | 512                              |  
|Accrued liabilities                                                 |   | 880                              |  
|Deferred revenues                                                   |   | (34                              | )
|CASH USED IN OPERATING ACTIVITIES                                   |   | (2,435                           | )
|                                                                    |   |                                  |  
|Investing activities:                                               |   |                                  |  
|Purchases of property
      and equipment                           |   | (324                             | )
|Acquisition of Mobile Finance Division                              |   | (348                             | )
|Acquisition of Semotus assets                                       |   | (238                             | )
|CASH USED IN INVESTING ACTIVITIES                                   |   | (910                             | )
|                                                                    |   |                                  |  
|Financing activities:                                               |   |                                  |  
|Proceeds on exercise of
      stock options                         |   | 182                              |  
|Repurchase of common shares                                         |   | -                                |  
|Proceeds on private
      placements, net of costs                  |   | 4,129                            |  
|Repayment of capital lease obligations                              |   | (158                             | )
|CASH PROVIDED BY FINANCING ACTIVITIES                               |   | 4,153                            |  
|                                                                    |   |                                  |  
|Net increase (decrease) in cash and cash
      equivalents          |   | 808                              |  
|Cash and cash equivalents, beginning of the year                    |   | 2,013                            |  
|Cash and cash equivalents, end of the year                          | $ | 2,821                            |  
|                                                                    |   |                                  |  
|Supplemental Cash Flow Information                                  |   |                                  |  
|Interest paid                                                       |   | 18                               |  
|Taxes paid                                                          |   | 2                                |  
|Assets acquired through capital lease transactions                  |   | 181                              |  
|Value of warrants issued in connection with
      private placement |   | 96                               |  
|Value of shares issued for acquisition of Mobile Finance            |   |                                  |  
|Division                                                            |   | 840                              |  

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

41

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|Stockgroup Information Systems Inc.       
|------------------------------------------
|Notes to Consolidated Financial Statements
|December 31, 2007                         
|                                          

1. Organization and Summary of Significant Accounting
Policies

Organization and Basis of Presentation

Stockgroup
Information Systems Inc. (the Company or Stockgroup) 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
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 noted.

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

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. In 2007 the company recorded a
foreign exchange gain of $203,000 In 2006 the company recorded a foreign
exchange gain of $24,000

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 collectibility 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 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

42

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Stockgroup Information Systems Inc. Notes to Consolidated
Financial Statements December 31, 2007

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.

Prior
to 2007 the Company classified all revenue generated by the StockHouse.com
website as advertising revenue. During 2007, management reviewed this practice
and decided that revenue should be classified more accurately by product line.
Revenue of $233,000 resulting from the sale of Stockstream subscriptions through
the StockHouse.com website, previously classified as advertising revenue in
2006, has been reclassified to licensing and subscriptions revenue in the
comparative financial statements.

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.

43

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Stockgroup Information Systems Inc. 
  Notes to Consolidated Financial Statements 
  December 31, 2007

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, Internet bandwidth, 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, accounts
receivable, accounts payable 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 equivalents with high quality financial institutions.
Cash equivalents at December 31, 2007 and 2006, respectively, are U.S.
denominated term deposits of $1,465,000 and $1,400,000.

Accounts Receivable

Accounts
receivable are stated net of allowance for doubtful accounts of $456,000 at
December 31, 2007 and $98,000 at December 31, 2006. 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 with 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.

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

44

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Stockgroup Information Systems Inc. 
  Notes to Consolidated Financial Statements 
  December 31, 2007

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 2007 and
2006. There were no capitalized software development costs at December 31, 2007
and 2006.

Goodwill and Intangible assets

In
accordance with Statement 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.

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

45

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Stockgroup Information Systems Inc. 
  Notes to Consolidated Financial Statements 
  December 31, 2007

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, 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 year
ended December 31, 2007, the Company has not recorded or realized any material
interest or penalties with respect to income taxes.

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, 2007, income tax returns, whether filed
or not, pertaining to taxation years that remain open to examination by major
jurisdictions are as follows:

United States
    2004  2007Canada
    2003  2007United Kingdom
    2005  2007Spain
    2003  2007Netherlands
    2002  2007


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. Prior to January 1, 2006, the Company measured compensation expense for
all of its share-based compensation using the intrinsic value method prescribed
by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25) and related interpretations. On transition,
the Company elected to use the modifiedprospective approach

46

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Stockgroup Information Systems Inc. 
  Notes to Consolidated Financial Statements 
  December 31, 2007

method. Under that transition method, the calculated expense in
2006 is equivalent to compensation expense for all awards granted prior to, but
not yet vested as of January 1, 2006, based on the grant-date fair values
estimated in accordance with the original provisions of FAS 123. 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.

Recent pronouncements

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. FAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years, and is
applicable to the Company beginning in the first quarter of 2008. The Company is
currently evaluating the impact of FAS 157 on its consolidated financial
statements.

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
many financial instruments and certain other items at fair value at specified
election dates. 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. This statement is expected to expand the use of
fair value measurement. FAS 159 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years, and is applicable to the Company beginning in the first quarter of
2008. The Company is currently evaluating the impact of FAS 159 on its
consolidated financial statements.

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. The Company is currently evaluating the potential impact, if
any, of the adoption of FAS 141(R) on its consolidated financial statements

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.

47

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Stockgroup Information Systems Inc. 
  Notes to Consolidated Financial Statements 
  December 31, 2007

2. 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 some TCS liabilities in exchange for certain assets
of TCS that made up its Mobile Finance Division (MFD). The transaction closed
on January 31, 2007.

MFD
delivers financial market data, news, and limited analytics like charting and
portfolio functionality, distributed through mobile devices such as pagers,
Blackberry® and other mobile devices. The acquisition adds:

- a proven set of wireless financial products for migration onto the
  Companys platform without significant additional development costs and
  go-to-market time; and
- a high profile customer-base, consisting of leading wealth management,
  capital markets and advisory companies located in North America and Europe,
  that can be introduced to the Companys existing product-line.

The
acquisition of MFD has been 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.

The
allocation of the purchase price was finalized in the fourth quarter of 2007. An
independent valuation of the significant assets acquired was completed in the
fourth quarter of 2007 supporting managements allocation of the purchase
consideration. The final allocation of the purchase price at January 31, 2007 is
as follows (in thousands of Dollars):

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

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.

48

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

The following table presents details of the purchased
identifiable intangible assets

|                                 |  | Estimated        |  |   |                   |  |   |              |  |   |                  | 
|-------------------------------- |  | ---------------- |  | - | ----------------- |  | - | ------------ |  | - | ---------------- | 
|                                 |  | Useful Life      |  |   | January 31,       |  |   | Accumulated  |  |   |                  | 
|(in thousands of
      Dollars): |  | (in
      years) |  |   | 2007
      Amount |  |   | Amortization |  |   | Net
      Amount | 
|Intellectual property            |  | 4                |  | $ | 870               |  | $ | 199          |  | $ | 671              | 
|Customer
      relationships     |  | 2 -
      4      |  |   | 790               |  |   | 243          |  |   | 547              | 
|                                 |  |                  |  | $ | 1,660             |  | $ | 442          |  | $ | 1,218            | 

The estimated future amortization expense of purchased
identifiable intangible assets is as follows (in thousands of Dollars):

|2008  |   | 483   | 
|----- | - | ----- | 
|2009  |   | 359   | 
|2010  |   | 348   | 
|2011  |   | 28    | 
|Total | $ | 1,218 | 

Under
the terms of the Purchase Agreement with TCS the Company is indemnified for
certain undisclosed liabilities of MFD as at the date of the transaction. The
indemnity expires on April 30, 2008. The Companys best estimate is that there
are $300,000 of costs for liabilities not disclosed as at the date of acquiring
MFD and therefore the Company has recorded a liability for this amount with a
corresponding receivable for the same amount from TCS (included in prepaid and
other current assets) as of December 31, 2007. The Company believes that the
maximum amount of potential undisclosed liabilities not recorded by the Company
as of December 31, 2007, is $650,000.

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, 2006. 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.

49

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

MFD
also incurred expenses in 2006 relating to sales and marketing and general and
administrative which are not expected to be incurred in the future. These costs
have not been excluded from the pro forma results as they are not fully
determinable.

| |                                                    |   | Year Ended   |  
| | -------------------------------------------------- | - | ------------ | -
| | (In thousands of Dollars, except per share data)   |   | December 31, |  
| |                                                    |   | 2007         |  
| | REVENUES                                           |   |              |  
| | Licensing and subscriptions                        | $ | 10,870       |  
| | Advertising services                               |   | 3,978        |  
| |                                                    | $ | 14,848       |  
| | Total Operating Expenses net of Other
      Income |   |              |  
| | (Expense)                                          |   | 19,828       |  
| |                                                    |   |              |  
| | Net 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       |  

3. Asset Acquisition

On
May 8, 2007 the Company entered into a 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 follows:

| | 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. If the gross
        revenues fall below 25% of prior revenue within the first nine months
        post close, the amount payable monthly would decrease to 15% of monthly
        gross revenues.

Should
monthly gross revenues fall below $15,000 per month at any time, the purchase
price will be deemed paid in full.

This
acquisition closed on May 8, 2007 and has been accounted for as an asset
purchase transaction for a total cost of $375,000 including $25,000 for
acquisition costs.

For
the purposes of these consolidated financial statements, the purchase
consideration has been allocated to the identifiable intangible assets acquired
as intellectual property ($140,000) and customer relationships ($235,000), based
on managements best estimates.

For
  the period from May 8, 2007 to December 31, 2007, $63,000 of consideration relating
  to monthly gross revenues was paid to the vendor. As of December 31, 2007, of
  the balance of $137,000 is expected to be payable, $96,000 is included in accounts
  payable (note 4) and $41,000 has been recorded on the consolidated balance sheet
  as a long term payable which is expected to be paid in 2009. For the year ended
  December 31, 2007 amortization of the Semotus intangible assets was $63,000.

50

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

4. Balance Sheet Components

| |                                              |   | December 31, |  
| | -------------------------------------------- | - | ------------ | -
| | (In thousands of Dollars)                    |   | 2007         |  
| |                                              |   |              |  
| | Accounts payable                             |   |              |  
| | Trade accounts payable                       | $ | 1,517        |  
| | Current portion of
      amount due to asset |   |              |  
| | acquisition vendor (note 3)                  |   | 95           |  
| | Sales taxes payable                          |   | 206          |  
| | Total Accounts payable                       | $ | 1,818        |  
| |                                              |   |              |  
| | Accrued liabilities                          |   |              |  
| | Accrued liabilities                          | $ | 1,810        |  
| | Accrued data costs(note 2)                   |   | 740          |  
| | Customer deposits                            |   | 274          |  
| | Total accrued
      liabilities              | $ | 2,824        |  
| |                                              |   |              |  
| | Property and equipment                       |   |              |  
| | Computer equipment                           | $ | 1,143        |  
| | Computer equipment under capital lease       |   | 686          |  
| | Computer software                            |   | 336          |  
| | Website software                             |   | 638          |  
| | Office furniture and
      equipment         |   | 237          |  
| | Leasehold improvements                       |   | 110          |  
| | Total cost                                   |   | 3,150        |  
| | Less: accumulated
      amortization         |   | (2,447       | )
| | Property and equipment                       | $ | 703          |  

In 2007, amortization expense related to property and
  equipment totalled $446,000 including $167,000 amortization for capital assets
  under lease. In 2006, amortization expense was $217,000, including $93,000 of
  amortization for capital assets under lease.

5. Shareholders Equity

The
Company is authorized to issue up to 75,000,000 shares of common stock and
5,000,000 shares of preferred stock. No preferred stock is issued and
outstanding. During 2007, the Company issued shares on the exercise of stock
options and also in a private placement transaction. The Company also
repurchased and retired shares of its common stock during 2006.

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

51

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

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, 2007, and activity since December
31, 2005:

Options
        OutstandingWeighted-Weighted
      AverageNumber of
      
      
      Average
      Remaining
      AggregateOptions
      
      
      Exercise
      Contractual
      IntrinsicAvailable For
      Number of
      Price Per Share
      Price
      Term
      ValueGrant
      Options
      $
      $
      (in
        years)
      $000Balance at December 31, 2005
      955,075
      4,129,400
      $0.12 - $0.59
      $0.26Options granted
      (1,201,250)
      1,201,250
      $0.29 - $0.44
      $0.38Options exercised
      
      (761,400)
      $0.15 - $0.36
      $0.25Options expired and forfeited
      637,500
      (685,000)
      $0.15 - $0.38
      $0.30Balance at December 31, 2006
      391,325
      3,884,250
      $0.12 - $0.59
      $0.29
      2.56
      448Additional options authorized
      3,300,000Options granted
      (1,107,000)
      1,107,000
      $0.41 - $1.25
      $0.85Options exercised
      
      (732,175)
      $0.12 - $0.43
      $0.23Options expired and forfeited
      347,450
      (397,450)
      $0.31 - $1.08
      $0.57Balance at December 31, 2007
      2,931,775
      3,861,625
      $0.12 - $1.25
      $0.64
      2.34
      865Vested and exercisable atDecember 31, 2007
      
      2,747,719
      
      0.54
      1.14
      $777


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
2007, 732,175 options were exercised for proceeds of $182,000. Subsequent to
December 31, 2007, an additional 650,000 options have been granted under the
2007 Option Plan at an average exercise price of $0.58.

The
aggregate intrinsic value is equal to the difference between the quoted closing
market price of the Companys common shares at December 31, 2007 and the
exercise price of the underlying awards, where the stock options are
in-the-money. At December 31, 2007, there were 3,104,625 in-the-money options
outstanding and 2,692,093 in-the-money options vested and exercisable.

The
following table summarizes the Companys unvested equity award activity for the
year ended December 31, 2007:

52

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

|                              |  |                  |   |  | Weighted-Average | 
|----------------------------- |  | ---------------- | - |  | ---------------- | 
|                              |  |                  |   |  | Grant Date Fair  | 
|Unvested Shares               |  | Number of Awards |   |  | Value  U.S. $   | 
|Unvested at December 31, 2006 |  | 918,819          |   |  | $0.20            | 
|Granted                       |  | 1,107,000        |   |  | $0.58            | 
|Vested                        |  | (579,463         | ) |  | $0.16            | 
|Forfeited                     |  | (347,450         | ) |  | $0.35            | 
|Unvested at December 31, 2007 |  | 1,098,906        |   |  | $0.50            | 

As
  of December 31, 2007, total unrecognized compensation expense related to unvested
  awards granted under the Plans was $320,000, which is expected to be recognized
  over a weighted-average period of 2.36 years. Forfeiture rates used to determine
  unrecognized compensation expense were based on forfeiture rates experienced
  for the year ended December 31, 2006.

Stock-Based Compensation Expense

During
2007, the net loss of $4,887,000 includes $216,000 of stock-based compensation
expense calculated in accordance with FAS 123R, of which $41,000 was
attributable to sales and marketing employees, $146,000 was attributable to
general and administrative employees and non-employee directors and $29,000 was
attributable to research and development employees.

During
2006, the net loss of $791,000 includes $121,000 of stock-based compensation
expense calculated in accordance with FAS 123R, of which $42,000 was
attributable to sales and marketing employees, $70,000 was attributable to
general and administrative employees and non-employee directors and $9,000 was
attributable to research and development employees.

Valuation Assumptions Used in Fair-Value Based
Calculation Method

The
fair-value of the Companys stock-based awards granted to employees,
non-employee directors and consultants for years ended December 31, 2007 and
2006 was estimated using the Black-Scholes option-pricing model using the
following weighted average assumptions:

|                            | Year Ended  
|--------------------------- | ------------
|                            | December 31,
|                            | 2007        
|Expected life (in years)    | 5 years     
|Risk-free interest rate     | 4%          
|Expected volatility         | 86%         
|Dividend yield              | 0%          
|Fair value per stock option | $0.58       

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

53

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

trading restrictions. Employee stock options have
characteristics significantly different from those of traded options.

Financings

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. Each
warrant entitles the agents to acquire one common share pursuant to the warrant
at a price of C$1.50 per share at any time before May 16, 2008. These warrants
have been 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. The proceeds of the offering are being used for
acquisitions and general working capital.

On
September 26, 2006, the Company completed a restricted non-brokered private
placement for 1,166,667 purchased securities (Unit) at a price of $0.30 per
Unit with ten of its directors and senior management. Each Unit consisted of one
common share and one share purchase warrant (Warrant) for the purchase of one
common stock. Each Warrant entitles the holder to purchase one common share at a
price of $0.40 per share at any time until the close of business on the day
which is twenty-four months from the date of issue of the Unit. All shares
issued in connection with the private placement and any shares issued on
exercise of warrants comprised in those Units are subject to a one year hold
period. At December 31, 2007, all 1,166,667 warrants were outstanding and
exercisable. Legal fees and other costs were $7,000, resulting in net proceeds
of $342,000. Of the net proceeds, $274,000 were allocated to common stock and
$68,000 were allocated to additional paid in capital (associated with warrants)
based on the fair value of each security at the time of issuance. The
Black-Scholes value of each warrant of $0.08 was determined based on the
following assumptions: expected life of 2 years; market price on date of issue
of $0.32; exercise price of $0.40 per warrant; risk-free interest rate of 4% and
volatility of 54%.

Repurchase of Common Shares

During
2006, the Company repurchased 100,000 common shares of its stock, at prices
ranging from $0.26 to $0.27 per share, for an aggregate cost of $28,000. The
Companys stock repurchase program expired in May 2006.

6. 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.

54

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

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

(in thousands of Dollars)North
    
    
    United2007
    
    America
    
    
    Kingdom
    
    
    Spain
    
    
    Australia
    
    
    Benelux
    
    
    TotalREVENUESLicensing and
      subscription
    $
    7,206
    
    $
      1,572
    
    $
      493
    
    $
    462
    
    $
      437
    
    $
      10,170Advertising services
    
    3,978
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    3,978TOTAL REVENUES
    $
    11,184
    
    $
      1,572
    
    $
      493
    
    $
    462
    
    $
      437
    
    $
      14,148


(in thousands of Dollars)North2006
    
    AmericaREVENUESLicensing and subscription
    $
    4,001Advertising
    
    3,765TOTAL REVENUES
    $
    7,766


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

As
of December 31, 2007 one customer accounted for 10% of outstanding trade
receivables, and during as of December 31, 2006 a different customer accounted
for 10% of outstanding trade receivables. During 2007 and 2006, the Company had
no customers whose revenue represented greater than 10% of total revenues.

7. Related Party Transaction

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. A member of the third partys senior
managements team is a director of the Company.

In
December 2006, in the normal course of business, the Company sold advertising to
a Company who is affiliated with our 50% owned subsidiary, Stockscores Analytics
Corp. The one-time sale represented approximately $85,000 in revenues, which was
the fair value for the services provided. The full amount was paid subsequent to
year end.

55

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

8. Income Taxes

The
Company is subject to United States federal and state income taxes at an
approximate rate of 42% (2006  approximate rate of 38%). 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 Ended |  
|------------------------------------------------------- | - | ------------------- | -
|                                                        |   | December 31,        |  
|(In thousands of Dollars)                               |   | 2007                |  
|                                                        |   |                     |  
|Tax recovery at U.S. statutory rates                    | $ | (2,167              | )
|Lower statutory rates on the losses (income) of foreign |   |                     |  
|subsidiaries                                            |   | 366                 |  
|Change in statutory tax rates in the USA and Canada     |   | 173                 |  
|Change in and adjustment to valuation allowance         |   | 1,249               |  
|Non-deductible expenses                                 |   | 379                 |  
|Other                                                   |   | 4                   |  
|Provision for income
      taxes                        | $ | 4                   |  

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)  |   | 2007               |  
|                                 |   |                    |  
|Net operating loss carryforwards | $ | 6,759              |  
|Net capital loss carryforwards   |   | 87                 |  
|Property and equipment           |   | 743                |  
|Deferred revenue                 |   | 317                |  
|Financing fees                   |   | 137                |  
|Other                            |   | 46                 |  
|Total deferred tax assets        |   | 8,089              |  
|Less: valuation
      allowance  |   | (8,089             | )
|Net deferred tax assets          | $ |                   |  

56

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

The
Company has also net capital losses of $323,000 available to offset future
taxable capital gains in Canada. At December 31, 2007, the Company had operating
losses available to be carried forward in several tax jurisdictions that will
expire as follows:

(in thousands of Dollars)
    USA
    Canada
    United Kingdom
    Other
    Total2008
    $               
      -
    $         240
    $           -
    $          
      -
    $           2402022
    -
    -
    -
    158
    1582023
    955
    -
    -
    -
    9552024
    161
    -
    -
    -
    1612026
    102
    -
    -
    -
    1022027
    394
    1,092
    -
    -
    1,486Indefinite
    -
    -
      21,972
    452
      22,534Total
    $         1,612
    $      1,332
      $ 21,972
    $        610
      $      25,636


9. Commitments and Contingencies

Commitments(In thousands of dollars)
      
      
      
      
      Payments
        Due by PeriodMoreWithin 1
      
      
      
      
      
      4  5
      
      
      Than 5Total
      
      
      Year
      
      
      2  3 Years
      
      
      Years
      
      
      YearsOperating leases
      $
      1,948
      
      $
      532
      
      $
      637
      
      $
      690
      
      $
      89Capital leases
      
      256
      
      
      190
      
      
      66
      
      
      -
      
      
      -Data provider commitment
      
      1,387
      
      
      532
      
      
      821
      
      
      34
      
      
      -Total contractual cashobligations
      $
      3,591
      
      $
      1,254
      
      $
      1,524
      
      $
      724
      
      $
      89


The
  Company leases its facilities under operating leases that expire at various
  times to March 2013. Total rent expense was $621,000 in 2007 and $282,000 in
  2006. The Company leases certain computer equipment, mainly servers, under capital
  leases. Of the total amount of capital lease payments above, approximately $4,000
  relates to interest payments due in future years. Interest expense related to
  capital lease obligations was $20,000 for 2007 and $22,000 for 2006.

The
Company entered into an agreement with a data provider for the delivery of
market data used in the Companys products. The agreement expires in March 2010,
with an option to renew for an additional 12 months at the then applicable
current rates. In addition, the Company has entered into a hosting and
connectivity agreement for the back-up hosting site at an approximate cost of
$13,000 per month, with an end date that coincides with the data provider
agreement.

Contingencies

The
Company was the plaintiff in a lawsuit filed in Ontario Supreme Court of Justice
against Hollinger Inc. and Hollinger Canadian Publishing Holdings Co. in which
the Company sought to recover approximately C$471,000 from the defendant. The
defendant was a vendor to the Company and the amount sought by the Company
consists of unused advertising credits which were prepaid by the Company in
1999. Subsequent to December 31, 2007, the case has been resolved by a
negotiated settlement in which the defendant has paid C$340,000 to the Company.

The
Company is 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, is seeking damages, interest

57

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Stockgroup Information Systems
Inc. Notes to Consolidated Financial Statements December 31, 2007

and costs in the order of C$225,000 for alleged wrongful
dismissal from her employment with the Company. The matter was heard by the
Supreme Court of British Columbia in a trial beginning on December 3rd, 2007 and
ending on December 7th, 2007. The Company is currently awaiting the judgment of
the Court. The Company has recorded a reserve of C$31,000 as the Company's
reasonable estimate of its liability relating to this matter. However, the final
settlement or adjudication of this matter could possibly be less than or could
materially exceed the reserve accrued by the Company.

We
are 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, in which we seek to recover approximately AU$395,000 from the
defendant. The defendant was a reseller of our MarketStream service in Australia
and the amount we seek 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 if
we win the lawsuit. No provision has been made for recovery of these credits in
the financial statements in any year.

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.

10. 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.

58

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

None.

Item 8A. Controls and Procedures

Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
furnished under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports is accumulated and communicated to management,
including our Chief Executive Officer as appropriate, to allow timely decisions
regarding required disclosure.

As
required by Rule 13a-15 under the Exchange Act, as of the end of the period
covered by this report, being December 31, 2007, we have carried out an
evaluation of the effectiveness of the design and operation of our Company's
disclosure controls and procedures. This evaluation was carried out under the
supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded, as discussed
below, that a material weakness existed in our internal control over financial
reporting as of December 31, 2007, and as a result our disclosure controls and
procedures were not effective.

Managements Report on Internal Control over Financial
Reporting

Management
is responsible for establishing and maintaining adequate internal control over
our financial reporting. In order to evaluate the effectiveness of internal
control over financial reporting, as required by Section 404 of the
Sarbanes-Oxley Act, management has conducted an assessment, including testing,
using the criteria in Internal Control  Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our
system of internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements.

Based
on our evaluation under the framework in Internal Control-Integrated Framework,
our Chief Executive Officer and Chief Financial Officer concluded that our
internal control over financial reporting was not effective as of December 31,
2007. A material weakness (described in the following paragraph) existed in our
internal control over financial reporting, and therefore our internal control
over financial reporting was not operating effectively as of such date, for the
reasons discussed below.

As
  allowed under guidance issued by the SEC for entities acquired during the year,
  management did not test internal controls within the European operations of
  the Mobile Finance Division (“MFD”) acquired in 2007 from TeleCommunication
  Systems. The European operations of MFD constitute 23% and 18% of net and total
  assets, 20% of revenues and 28% of the net loss in the consolidated financial
  statements as and for the year ended December 31, 2007. However, as a result
  of finalizing the Company’s annual consolidated financial statements,
  management has identified several significant deficiencies in the effectiveness
  of internal controls over financial reporting at MFD. Management believes that,
  when considered in the aggregate, these significant deficiencies constitute
  a material weakness. A material weakness as defined in Rule 1-02 of Regulation
  S-X and adopted by PCAOB Auditing Standard 5 is a deficiency, or combination
  of deficiencies, in internal control over financial reporting such that there
  is a reasonable possibility that material misstatement of the Company’s
  annual or interim financial statements will not be prevented or detected on
  a timely basis. Management attributes this material weakness to legacy systems,
  and limited and not appropriately skilled personnel resources.

59

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Management is taking steps to enhance and improve its internal
  controls by implementing additional levels of supervisory review. Although the
  Company has implemented additional levels of supervisory review, there can be
  no assurance that these measures can definitively prevent errors from occurring
  in the future.

This
annual report does not include an attestation report of our independent
registered chartered accountants regarding internal control over financial
reporting. The effectiveness of our internal control over financial reporting
was not subject to an audit pursuant to Securities and Exchange Commission rules
that permit the Company to provide only managements report in this annual
report.

Inherent Limitations of Internal Controls

Our internal control over
financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles. Our internal control over financial reporting includes those
policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of our assets;
- provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with generally
  accepted accounting principles, and that our receipts and expenditures are
  being made only in accordance with authorizations of our management and
  directors; and
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use, or disposition of our assets that could have a
  material effect on the financial statements.

Management
does not expect that our internal controls will prevent or detect all errors and
all fraud. A control system, no matter how well designed and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of internal controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been
detected. Also, any evaluation of the effectiveness of controls in future
periods are subject to the risk that those internal controls may become
inadequate because of changes in business conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

(b) Changes in internal controls. Except as discussed in
the preceding paragraphs, there was no change in the Companys internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Securities and Exchange Act of 1934, as amended) during the year ended December
31, 2007 that has materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.

Item 8B Other Information

None

60

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PART III

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

The
following are our directors and executive officers and certain information about
them as of December 31, 2007:

|Name                  | Age | Principal Occupation and
      Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--------------------- | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Marcus New            | 37  | Founder, President and CEO. Mr. New founded
      Stockgroup in May 1995 and continues to provide the corporate vision and
      direction for the Company. A finalist as Entrepreneur of the Year by Ernst
      & Young Pacific Region in 2005. Mr. New is a recognized leader and
      sought-after speaker in the industry. Prior to founding Stockgroup, Mr.
      New served as VP of Investor Relations for AmCan Public Relations Group
      Inc., a company specializing in investor campaigns for public companies.
      Mr. New received a Bachelor of Arts degree with a Business major from
      Trinity Western University.                                                                                                                                                                                                                                                       
|                      |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|David Caddey          | 58  | Retired President of the Space Missions Unit of MDA
      Corporation, responsible for $300 million in revenues and
      approximately 900 employees. Mr. Caddey has extensive experience in all
      facets of business management including mergers and acquisitions, business
      development, program management and engineering. Mr. Caddey has severed on
      numerous Boards of profit and not-for-profit organizations including past
      Chair and now a Director of the Aerospace Industries Association of
      Canada. Mr. Caddey joined our Board of Directors in June 1999, and in
      addition to being the Chair of the Companys Board of Directors he is also
      a member of our Audit Committee and Compensation Committee.                                                                                                                                        
|                      |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Louis (Lee) deBoer II | 55  | Former Chairman, Life Balance Media LLC; Managing
      Partner, Propeller Partners LLC. Mr. deBoer has over 20 years
      experience in the strategic development of national media programming,
      advertising sales and content development. Mr. DeBoer spent 17 years at
      HBO culminating in the positions of Executive Vice President of HBO Inc.
      and President of its International division. Mr. deBoer joined our Board
      of Directors in October 1999, and he is also a member of our Compensation
      Committee and Nominating and Corporate Governance Committee.                                                                                                                                                                                                                                                                                                   
|                      |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Patrick Spain         | 55  | Chairman and CEO of Highbeam Research, Inc., which
      operates three online research and news services for individuals at
      www.highbeam.com, www.encyclopedia.com and www.newser.com. He is also the
      co-founder and former Chairman and CEO of Hoover's, Inc. a leading online
      provider of company information headquartered in Austin, Texas. Hoover's
      was bought by Dun & Bradstreet in March 2003. Prior to Hoovers, Mr.
      Spain worked in the telecommunications, real estate and consulting
      industries. Mr. Spain holds a Bachelor of Arts from the University of
      Chicago in Ancient History and a Juris Doctorate from Boston University.
      Mr. Spain joined our Board of Directors in August 2004, and he is also a
      member of our Compensation Committee and Chair of the Companys Nominating
      and Corporate Governance Committee.
|                      |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Stephen Zacharias     | 58  | Founder and managing director of Transact Capital
      Partners LLC, a Richmond Virginia based financial advisory firm
      specializing in business sales, acquisitions and other strategic
      consulting for privately-held companies . Mr Zacharias has over 30 years
      of financial related experience, including numerous acquisition and
      divestiture transactions, debt financings and capital reorganizations.
      Before founding Transact, he served as corporate treasurer for Media
      General Inc (NYSE: MEG), a Fortune 1000 TV and newspaper media company,
      and as a board director                                                                                                                                                                                                                                                                         

61

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|Name         | Age | Principal Occupation and Business
      Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------------ | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             |     | and audit committee chairman for Hoovers Inc., an online
      business information company acquired by Dun & Bradstreet. Mr.
      Zacharias is also on the board of directors of creditcards.com. Mr.
      Zacharias joined our Board of Directors in July 2006, and he is also the
      Chair of our Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|             |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Thomas       | 53  | Consultant. Mr. Baker has more than 25 years of
      experience in print and online                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Baker        |     | media. He was the founder and general manager of The
      Wall Street Journal Online (wsj.com), a publication of Dow Jones &
      Company, where he led the start-up effort and grew the Online Journalinto a $60 million business unit and the largest paid news and
      information site on the web. He oversaw The Wall Street Journals
      national radio news network and Dow Jones news syndication and licensing
      business. Mr. Baker has consulted for leading publishers and media
      companies. He holds a degree from Princeton University and an MBA from
      Columbia Business School. Mr. Baker joined our Board of Directors in July
      2006, and he is also a member of our Compensation Committee and Audit
      Committees.                                                                                                              
|             |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|             |     | Executive Officers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Susan Lovell | 40  | Chief Financial Officer. Ms. Lovell provides
      direction on financial strategy for Stockgroup. She was recruited in April
      2006 and brings senior management experience in finance, accounting,
      financial planning and analysis with successful high-tech companies.
      Formerly with Crystal Decisions, which was acquired by Business Objects in
      2003. Ms. Lovell contributed to 15 successive quarters of revenue growth
      and a 60 point increase in operating margins. Crystal Decisions had
      revenues over US$300 million prior to being acquired. Ms. Lovell was also
      the Controller of GaleForce Solutions, an award-winning provider of CRM
      software for the financial services industry, and was responsible for
      developing and leading the information systems audit practice for Ernst
      & Young in Vancouver.
|             |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Bruce Nunn   | 44  | Vice President, Marketing. Mr. Nunn is responsible
      for strategic marketing and product management. Prior to joining
      Stockgroup in September 2005, Mr. Nunn spent 7 years as Director of
      Marketing for Fincentric Corporation, a software provider to the financial
      services sector. Under Mr. Nunns marketing leadership, Fincentric grew
      from $7 million to $62 million in annual revenue over a 3-year period. Mr.
      Nunn has also held senior positions at Computer Associates, including
      product manager for financial products. Mr. Nunn has over 19 years of
      experience bringing software solutions to market and has been recognized
      with awards from the International Association of Business Communicators
      and Advertising Age Magazine.                                                                    

Subsequent
to December 31, 2007, the Company added the following new executive officers,
with certain information about them as follows:

|Name               | Age | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------------ | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Karl Buhr          | 47  | Chief Operating Officer. Mr. Buhr is a digital
      content veteran, and came to Stockgroup in January 2008 to lead the
      execution of the companys product and market vision. Previously he was
      COO of Telemedia Development, a California mobile entertainment content
      provider, acquired in 2007 by Conectium Ltd. Prior to that he was
      Operations Director at Eckoh Plc (formerly 365 Plc), a publicly traded UK
      new-media content and solutions provider. He also spent five years at
      Kaltek Inc., an Atlanta management consulting company.
|                   |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Audrey Brownmiller | 49  | Vice President, Operations, Ms. Brownmiller leads
      Stockgroups IT, software production and client services efforts. She
      joined the company in 2007 from Chancery Software (acquired by Pearson
      School Systems), where she was                                                                                                                                                                                                                                                                                                                                      

62

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|Name         | Age | Principal Occupation and Business Experience                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------ | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             |     | Director of Project Management, ultimately leading
      deployment of information system programs to 160 Canadian DOD schools in
      North America, the UK and Germany.                                                                                                                                                                                                                                                                                                        
|             |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Dana Stetson | 48  | Vice President, Licensing and Subscription Sales.Mr. Stetson came to Stockgroup in 2008 to lead sales of the companys
      desktop and mobile financial tools. He was previously Director of
      Broker-Dealer Sales for Lava Trading, a software services company, where
      he led a 600% revenue increase over two years (Lava Trading is now a
      subsidiary of Citigroup). Previously he was VP of Sales for dynamicsoft,
      which was acquired by Cisco Systems.

Each
director who is elected will serve until the earlier of our next annual meeting,
the date his or her successor has been elected and qualified, or the date of the
director's death, resignation or removal. All terms of office on our Board of
Directors will expire at the close of our 2007Annual Shareholders meeting.

Indemnification of Directors and Officers

Our
by-laws provide for the indemnification of our, directors, officers, employees,
and agents, under certain circumstances, against attorney's fees and other
expenses incurred by them in any litigation to which they become a party arising
from their association with or activities on behalf of the Company. We will also
bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such persons promise to repay us if it is ultimately
determined that any such person should have not been entitled to
indemnification. This indemnification policy could result in substantial
expenditures by us, which we may be unable to recover.

Section 16(a) Beneficial Ownership Reporting
Compliance

Section
16(a) of the Exchange Act requires our executive officers, directors and persons
who own more than 10% of our registered common stock to file reports of
ownership and changes in ownership with the SEC. Such executive officers,
directors and persons who own more than 10% of our stock are also required by
SEC rules to furnish us with copies of all forms that they file pursuant to
Section 16(a) of the Exchange Act.

Based
solely on our review of copies of Forms 3 and 4 and amendments thereto furnished
to us pursuant to Rule 16a-3 and Forms 5 and amendments thereto furnished to us
with respect to 2007, and any written representations referred to in Item
405(b)(1) of Regulation S-B of the Securities Act stating that no Forms 5 were
required, we believe that, during 2007, all Section 16(a) filing requirements
applicable to our officers, directors and more than 10% shareholders, were
compiled with except for the late filings disclosed following. Corrective
filings were made for these incidences of non-compliance.

During
2007, there were no late filings on Forms 3 and 4.

Code of Ethics

We
have adopted a code of ethics that applies to each of our Chief Executive
Officer, Chief Financial Officer and other Senior Officers of our Company. The
text of our Code of Ethics may be viewed on our website at www.stockgroup.com under Investors/Corporate
Governance. . If we make any amendments to our Code of Ethics other than
technical, administrative, or other non-substantive amendments, or grant any
waivers, including implicit waivers, from a provision of our Code of Ethics to
our chief executive officer, chief financial officer, or certain other finance
executives, we will disclose the nature of the amendment or waiver, its
effective date and to whom it applies in a Current Report on Form 8-K filed with
the SEC.

63

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Committees

Audit
Committee.Our Audit Committee currently consists of David Caddey,
Thomas Baker and Stephen Zacharias. The Audit Committee is governed by a written
charter, which can be viewed at www.stockgroup.com under Investors/Corporate
Governance. Each of the members of our Audit Committee is independent, as that
term is defined by Rule 4200(a) (15) of the National Association of Securities
Dealers' listing standards. Mr. Zacharias is our audit committee financial
expert as defined by the rules of the SEC.

Compensation
  Committee.Our Compensation Committee currently consists of Lee deBoer,
  David Caddey, Patrick Spain and Thomas Baker.

Nominating
and Corporate Governance Committee.Our Nominating and Corporate
Governance Committee currently consists of Patrick Spain, David Caddey and Lee
deBoer, and is governed by a written charter which can be viewed at www.stockgroup.com under Investors/Corporate
Governance. The Committee has formed in 2004. During 2007, the nominating
committee did not receive a recommended nominee for director from a security
holder that beneficially owned more than 5% of our common share under rule
(407)(c)(ix) of Regulation S-B.

Procedure for Submitting Shareholder Proposals

We
encourage shareholders to submit proposals, questions or concerns to us by
writing to Mr. Patrick Spain, the Chairman of our Corporate Governance Committee
or any member of our Board of Directors. All written communications with Board
members are treated as confidential. Instructions and contact information for
Mr. Spain and the Board of Directors can be found by visiting our website at
www.stockgroup.com under Investors/Corporate
Governance. Once a proposal, question or concern is received by Mr. Spain or a
Board member, the communication is reviewed and addressed accordingly.

The
Board of Directors established a Corporate Governance Committee to monitor our
practice against generally accepted governance guidelines, and to determine
which guidelines are both practical and beneficial for us. The Corporate
Governance Committee has reviewed our own corporate governance practices, with
input and guidance from the Board of Directors.

Procedure for Submitting Shareholder Proposals Related to
Nominee as Director

See
Procedures for Submitting Shareholder Proposals above.

64

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Item 10. Executive Compensation

Summary
Compensation Table.The following table shows certain information
concerning the compensation of (i) our Chief Executive Officer, (ii) our Chief
Financial Officer; and (iii) our other executive officers as of December 31,
2007 (collectively, the Named Executive Officers) for 2007.

Name
    Year
    Salary ($)
    Bonus ($)
    Option Grants ($)(7)
    All Other Compensation ($)
    Total ($)(1)Marcus New (2)Chief Executive
      Officer
    2007
    224,372
    110,360
    
    25,928
    360,6602006
    142,746
    28,312
    
    23,826
    194,884Susan Lovell (3)Chief
      Financial Officer
    2007
    124,985
    9,300
    37,900
    2,149
    174,3342006
    76,610
    8,267
    24,750
    6,422
    116,049Bruce Nunn (4)Vice
      President, Marketing
    2007
    105,090
    
    37,900
    2,149
    145,1392006
    94,834
    5,511
    
    
    100,345Michael Donnelly (5)Vice
      President, Sales
    2007
    104,256
    43,952
    
    
    148,2082006
    94,074
    46,285
    41,400
    
    181,759Joe McWilliams (6)Vice
      President, Advertising Sales
    2007
    73,994
    10,577
    91,530
    
    176,1012006
    
    
    
    
      


|(1) | All amounts are stated in U.S. dollars. For payment in
      other currencies other than the U.S. dollar, translation of compensation
      into U.S. dollars is made using the average exchange rate for 2007 of
      US$0.93 = C$1.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | All other compensation for Mr. New includes $15,364 of
      costs associated with the lease of a car and $1,768 of costs associated
      with insuring such car.                                                                    
|(3) | Ms. Lovell joined the Company as Chief Financial Officer
      on April 3, 2006. All other compensation comprises parking.                                                                                                            
|(4) | All other compensation for Mr. Nunn comprises
    parking.                                                                                                                                                                            
|(5) | Mr. Donnelly joined the Company as Vice President, Sales
      on May 31, 2006 and his employment with the Company ended effective July
      13, 2007.                                                                               
|(6) | Mr. McWilliams joined the Company as Vice President,
      Advertising Sales on July 16, 2007 and his employment with the Company
      ended effective February 15, 2008. Mr. McWilliams options expired at this
      time.        
|(7) | The fair value of option grants is determined as
      described in Item 7. Financial Statements, Note 3 to the
      Consolidated Financial Statements.                                                                              

65

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Outstanding Equity Awards at Fiscal Year-End

|                     |  | Number of Securities Underlying |     |  |               |  |   |           | 
|-------------------- |  | ------------------------------- | --- |  | ------------- |  | - | --------- | 
|                     |  | Unexercised
      Options       |     |  |               |  |   |           | 
|                     |  |                                 |     |  |               |  |   | Option    | 
|                     |  |                                 |     |  |               |  |   | Exercise  | 
|Name                 |  | Exercisable                     |     |  | Unexercisable |  |   | Price ($) | 
|Marcus New           |  | 400,000                         | (1) |  |              |  | $ | 0.220     | 
|                     |  | 300,000                         |     |  |              |  | $ | 0.170     | 
|                     |  | 652,500                         |     |  |              |  | $ | 0.270     | 
|                     |  |                                 |     |  |               |  |   |           | 
|Susan Lovell (2)     |  | 65,625                          |     |  | 84,375        |  | $ | 0.340     | 
|                     |  | 6,250                           |     |  | 43,750        |  | $ | 1.115     | 
|                     |  |                                 |     |  |               |  |   |           | 
|Bruce Nunn (3)       |  | 75,000                          |     |  |              |  | $ | 0.315     | 
|                     |  | 6,250                           |     |  | 43,750        |  | $ | 0.900     | 
|                     |  |                                 |     |  | 10,000        |  | $ | 0.920     | 
|                     |  |                                 |     |  |               |  |   |           | 
|Michael Donnelly (4) |  |                                |     |  |              |  |   |          | 
|                     |  |                                 |     |  |               |  |   |           | 
|Joe McWilliams (5)   |  |                                 |     |  | 135,000       |  | $ | 0.950     | 

|(1) | Mr. New exercised these options on March 4, 2008,
      immediately before their expiry date. The Companys Insider Trading Policy
      permits insiders to exercise options during a blackout period if the
      options are about to expire, but not purchase or sell shares.                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Options expiring 03-Apr-2011 and 17-May 2012 vest over 4
      years at the rate of 6.25% per quarter in arrears, , beginning three
      months after the grant date.                                                                                                                                                                                 
|(3) | Options expiring 07-Sept-2010 vest at the rate of 12.5%
      per quarter in arrears, starting on December 7, 2005; options expiring
      20-Aug-2012 vesting over 4 years at 6.25% per quarter beginning three
      months after grant date; and vesting at one third per year over a three
      year period on the anniversary of his grant date .
|(4) | Mr. Donnelly exercised his vested options in
  2007.                                                                                                                                                                                                                                                                                                   
|(5) | Options vest at one third per year over a three year
      period on the anniversary of the grant date. Mr. McWilliams options
      expired effective February 15, 2008.                                                                                                                                                                             

Compensation of Directors

The following table shows the
amount of compensation earned by our independent directors in 2007. We
compensate our independent directors with directors fees and stock options.
Option Awards represent the fair value of option awards granted in 2007 as
determined as described in Item 7. Financial Statements, Note 3.

|                      |   | Fees Earned    |  |   |            |  |   | All Other    |  |   |           | 
|--------------------- | - | -------------- |  | - | ---------- |  | - | ------------ |  | - | --------- | 
|                      |   | or Paid in     |  |   | Option     |  |   | Compensation |  |   |           | 
|Name                  |   | Cash
      ($) |  |   | Awards ($) |  |   | ($)          |  |   | Total ($) | 
|Leslie Landes (1)     | $ | 9,831          |  | $ | 6,310      |  | $ |             |  | $ | 16,141    | 
|David Caddey          |   | 11,600         |  |   | 15,745     |  |   |             |  |   | 27,345    | 
|Louis deBoer II       |   | 8,600          |  |   | 15,745     |  |   |             |  |   | 24,345    | 
|Patrick Spain         |   | 8,600          |  |   | 15,745     |  |   |             |  |   | 24,345    | 
|Elizabeth DeMarse (2) |   | 4,833          |  |   |            |  |   |             |  |   | 4,833     | 
|Stephen Zacharias     |   | 11,600         |  |   | 15,745     |  |   |             |  |   | 27,345    | 
|Thomas Baker          |   | 8,600          |  |   | 15,745     |  |   |             |  |   | 24,345    | 
|                      | $ | 63,664         |  | $ | 85,035     |  | $ |             |  | $ | 148,699   | 

|(1) | Mr. Landes resigned from the Companys Board of Directors
      effective November 8, 2007.                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Ms. DeMarse did not stand for re-election to the
      Companys Board of Directors at the Companys annual general meeting on
      June 4, 2007.

66

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Commencing
for the compensation year beginning June 1, 2006, each director receives an
annual fee of $8,600 related to service on the Board of Directors, with an
additional $3,000 per annum paid to members of our Audit Committee. Each
director is eligible to receive up to 25,000 stock options to acquire shares of
common stock, with the exercise price being equal to the market price of our
common stock on the date of grant. Directors who are re-elected and continue to
serve for more than one year may receive up to an additional 25,000 stock
options after each annual general meeting in compensation for future
service.

Employment Contracts and Termination of Employment and
Change-in-Control Arrangements

Employment Agreements

We
have an employment agreement with our CEO, Marcus New, which became effective on
February 9, 2004. Under the Agreement, for 2007, Mr. New received an annual base
salary of C$240,000 (or US$223,000). He is entitled to a minimum 5% annual
compensation increase. All increases are approved by our Compensation Committee.
In addition, he receives an incentive compensation bonus based on achieving
certain goals in the calendar year. For 2007, Mr New received a bonus of
C$119,000 (or US$110,000). Mr. New will be entitled to 12 months of severance
which will include pay in lieu of notice plus an additional one month severance
for each year of employment up to a maximum of 24 months, should we elect to
terminate his employment without cause. The employment agreement contains a
confidentiality clause and a 24-month non-competition clause. There is no
specified termination date in the Agreement.

We
have an employment agreement with our Chief Financial Officer, Susan Lovell. In
2007, her annual base salary was adjusted to C$138,000 (or US$128,000), from her
annual base salary in 2006 of C$120,000. In 2007, she also received a one time
bonus of C$10,000 (or US$9,000). Per her employment agreement, Ms. Lovells
annual salary is subject to normal salary increases, and is entitled to a
C$25,000 annual maximum incentive compensation bonus, based on the achievement
of both Company and departmental goals. On her date of employment, April 3,
2006, she received 150,000 stock options for the Companys common shares at an
exercise price of $0.34 per share, which will vest over 4 years at 6.25% per
quarter in arrears (with immediate vesting in the event of a change in control).
Stock options for 50,000 of Company common shares were also issued to Ms. Lovell
on May 17, 2007, vesting over 4 years at 6.25% per quarter beginning three
months after grant date. Ms. Lovell will be entitled to one month of severance,
which will include pay in lieu of notice, for each year of employment up to a
maximum of four months, should the Company elect to terminate her employment
without cause after 395 days.

We
have an employment agreement with our Vice President of Marketing, Bruce Nunn.
In 2007, his annual base salary was C$113,000 (or US$106,000). Per his
employment agreement, Mr. Nunns annual base salary is subject to normal salary
increases. In 2007, Mr. Nunns annual maximum incentive compensation bonus was
C$45,000 (or US$42,000) based on the achievement of both Company and
departmental goals. On his date of employment, September 7, 2005, he received
75,000 stock options at an exercise price of $0.315 per share, which will vest
over a two year period at 12.5% per quarter in arrears (with immediate vesting
in the event of a change in control). Additional stock options for (i) 50,000 of
Company common shares were also issued to Mr. Nunn on August 20, 2007, vesting
over 4 years at 6.25% per quarter beginning three months after grant date, and
(ii) 10,000 of Company common shares were also issued to Mr. Nunn on September
7, 2007, vesting at one third per year over a three year period on the
anniversary of his grant date (with immediate vesting in the event of a change
in control). Mr. Nunn will be entitled to one month of severance which will
include pay in lieu of notice for each year of employment, should we elect to
terminate Mr. Nunns employment without cause.

Until
his employment with the Company ended effective July 13, 2007, we had an
employment agreement with our Vice President of Sales, Michael Donnelly, who was
to receive an annual base salary

67

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of US$160,000, subject to normal salary increases. In addition,
Mr. Donnelly was to receive incentive compensation pay related to recognized
revenue as outlined in a separate compensation agreement. On his date of
employment, May 31, 2006, he received 200,000 stock options at an exercise price
of $0.425 per share, which were to vest over a four year period at 6.25% per
quarter in arrears. Mr. Donnelly was entitled to two months of severance which
included pay in lieu of notice if we elected to terminate his employment after
one year of employment without cause. Mr. Donnellys employment agreement
contained a 12 month non-competition clause. Mr. Donnelly was paid severance pay
of US$27,000.

Until
his employment with the Company ended effective February 15, 2008, we had an
employment agreement, beginning on July 16, 2008, with our Vice President of
Monetization, Joe McWilliams, who was to receive an annual base salary of
US$170,000 subject to normal salary increases, and was entitled to receive
variable pay of 60% of his annual salary. On October 16, 2007, he was granted
stock options for 135,000 of the Companys common shares, vesting at one third
per year over a three year period on the anniversary of his grant date. These
options expired when Mr. McWilliams employment with the Company ended effective
February 15, 2008. Mr. McWilliams was to be entitled to one month of severance
in lieu of notice for each year of employment up to a maximum of 4 months
severance, if the Company elected to terminate Mr. McWilliams employment without
cause.

Subsequent Hiring/Appointment of Officers in Calendar
Year 2008

Effective
January 7, 2008, we have an employment agreement with Karl Buhr to serve as the
Companys Chief Operating Officer. Mr. Buhr is to receive an annual base salary
of C$190,000 (or US$192,470), subject to normal salary increases. In addition,
he is entitled to an annual C$70,000 (or US$70,910) maximum incentive
compensation bonus. On January 7, 2008, Mr. Buhr was granted 500,000 time based
stock options for the Companys common shares, with one third vesting at the end
of each full year for three years on the anniversary of the grant date. An
additional 250,000 performance based stock options for the Companys common
shares may be granted to Mr. Buhr, based upon Mr. Buhrs and the Companys
attainment of mutually acceptable longer term performance goals. Mr. Buhr will
be entitled to 6 months of salary and the prorated portion of bonuses earned
which will include pay in lieu of notice, should we elect to terminate his
employment without cause. Should Mr. Buhrs job responsibilities be
significantly altered, then Mr. Buhr may terminate the agreement for good reason
and be entitled to 6 months of salary and the prorated portion of any bonuses
earned

Effective
January 8, 2008, we have an employment agreement with Dana Stetson to serve as
the Companys Vice President of Licensing and Subscription Sales. Mr. Stetson is
to receive an annual base salary of US$160,000 subject to normal salary
increases, and is entitled to receive variable pay of up to 50% of his annual
salary. On April 8, 2008, Mr. Stetson will be granted stock options for 135,000
of the Companys common shares, vesting at one third per year over a three year
period on the anniversary of the grant date. Beginning April 8, 2008, Mr.
Stetson is entitled to one month of pay for each year of employment up to a
maximum of 4 months, if the Company elects to terminate Mr. Stetsons employment
with the Company without cause.

Effective
February 1, 2008, we have an employment agreement with Audrey Brownmiller,
formerly a Director of Operations for the Company, to serve as the Companys
Vice President of Operations. Ms. Brownmiller is to receive an annual base
salary of C$125,000 subject to normal salary increases, and is entitled to an
annual C$20,000 maximum incentive compensation bonus. On January 15, 2008, Ms.
Brownmillers original grant of stock options for 75,000 common shares of
Company stock (with 6.25% of the original number of options vesting on the third
month anniversary of her start date and an additional 6.25% vesting on each
three-month anniversary thereafter until all the options are vested) were
increased by stock options for an additional 60,000 common shares of Company
stock, with one third of these additional options vesting at the end of each
year for three years on the anniversary of the grant date. For the Companys
termination of Ms. Brownmillers employment with the Company without cause, the
Employment Standards Act of British Columbia would govern.

68

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The foregoing summary of the employment agreements of our
executive officers is qualified by reference to the complete copies of each of
the employment agreements filed as exhibits to this Annual Report or as an
exhibit to our periodic reports which are on file with the SEC and available at
the SEC website at www.sec.gov., as further described on the list of exhibits in
Item 13. Exhibits, below.

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

Security Ownership of Certain Beneficial Owners

The
following table sets forth the beneficial ownership of our common shares as of
December 31, 2007 for each person or entity (including group) that is known by
us to be the beneficial owner of more than 5% of our outstanding shares.
Information related to holders of more than 5% of our outstanding shares was
obtained from filings made with the SEC pursuant to Sections 13(d) or 13(g) of
the Exchange Act. Except as otherwise noted, the address of the beneficial
owners is c/o Stockgroup Information Systems Inc., Suite 500  750 West Pender
Street, Vancouver, B.C., V6C 2T7.

|                                     |                                             | Percentage        
|------------------------------------ | ------------------------------------------- | ------------------
|Name and Address of Beneficial Owner | Amount and Nature of Beneficial
      Owner | Beneficially Owned
|Marcus A. New (1)                    | 5,163,254                                   | 12.1%             
|Oppenheimer Funds                    | 3,000,000                                   | 7.3%              

(1) On March 11, 1999, we entered into a Share Exchange and
Share Purchase Agreement through our wholly owned subsidiary 579818 B.C. Ltd.,
with Stockgroup Media Inc. (formerly Stock Research Group, Inc.) and all of its
shareholders. Under that agreement we acquired all of the issued and outstanding
shares of Stock Research Group and in consideration 579818 B.C. Ltd. issued
3,900,000 Class A Exchangeable Shares to Stock Research Group shareholders. The
exchangeable shares may be converted, at the option of the holder, into an equal
number of common shares of the Company, held by a trustee. Pending any such
conversion, each holder of the exchangeable shares has the right to vote, or to
direct the trustee to vote on their behalf, an equivalent number of shares of
common stock held of record by them. The trustee has no discretion as to the
voting or disposition of such common stock. At December 31, 2007, there were
2,134,000 exchangeable shares outstanding owned as follows:

| | a) | 169,500 exchangeable shares owned directly by Marcus New,
      the Companys President and CEO;                                                                                                    
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | 19,500 exchangeable shares owned by Mr. News his wife,
      Yvonne New; and                                                                                                                       
| | c) | 1,945,000 exchangeable shares owned indirectly owned by
      Mr. New and Mrs. New, through 518464 B.C. Ltd., a British Columbia company
      owned by Mr. New as to 50% and by Mrs. New as to
50%.

In
addition to the exchangeable shares beneficially owned as described above,
including those owned by Mrs. New, Mr. New owns 376,700 shares of common stock
which were purchased in the open market, 416,777 shares of common stock which
were purchased via our September 2006 private placement, the right to purchase
416,777 additional shares of common stock on the exercise of share purchase
warrants and 1,352,500 fully vested stock options to purchase common stock. He
also beneficially owns 466,500 shares of common stock that Mrs. New directly
owns.

Security Ownership of Management

The
following table sets forth the beneficial ownership of our common shares as of
December 31, 2007 for the following: (i) each of our directors and nominees for
director; (ii) our Chief Executive Officer and each of the Named Executive
Officers named in the Summary Compensation Table in Item 10, Part III; and (iii)
all our directors and our executive officers as a group. Information related to
directors and executive officers is as of December 31, 2007 and options and
warrants exercisable within

69

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60 days after December 31, 2007. Except as otherwise noted, the
address of the beneficial owners is c/o Stockgroup Information Systems Inc.,
Suite 500  750 West Pender Street, Vancouver, B.C., V6C 2T7.

|Name and Address of Beneficial            |                                             | Percentage       
|----------------------------------------- | ------------------------------------------- | -----------------
|Owner                                     | Amount and Nature of Beneficial
      Owner | BeneficiallyOwned
|Directors and Nominees for Director       |                                             |                  
|Marcus A. New (1)                         | 5,163,254                                   | 12.1%            
|David Caddey (2)                          | 576,459                                     | 1.4%             
|Louis deBoer II (3)                       | 233,125                                     | *                
|Patrick Spain (4)                         | 353,375                                     | *                
|Stephen Zacharias (5)                     | 468,672                                     | 1.1%             
|Thomas Baker (6)                          | 135,338                                     | *                
|Executive Officers                        |                                             |                  
|Susan Lovell (7)                          | 329,875                                     | *                
|Bruce Nunn (8)                            | 241,800                                     | *                
|                                          |                                             |                  
|All directors and officers as a group (9) | 7,501,898                                   | 16.9%            

* less than 1%

|(1) | See description of holdings in section above on
      beneficial owners who own more than 5% of our outstanding common
      shares.                                                        
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Includes 183,125 shares issuable on the exercise of stock
      options and 166,667 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter.
|(3) | Includes 183,125 shares issuable on the exercise of stock
      options as of December 31, 2007, or 60 days thereafter.                                                                     
|(4) | Includes 176,875 shares issuable on the exercise of stock
      options and 70,000 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter. 
|(5) | Includes 68,672 shares issuable on the exercise of stock
      options and 200,000 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter. 
|(6) | Includes 68,672 shares issuable on the exercise of stock
      options and 33,333 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter.  
|(7) | Includes 84,375 shares issuable on the exercise of stock
      options and 100,000 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter. 
|(8) | Includes 175,000 shares issuable on the exercise of stock
      options and 33,400 shares issuable on the exercise of share warrants, as
      of December 31, 2007, or 60 days thereafter. 
|(9) | See notes 1 through 8.                                                                                                                                                                      

Applicable
percentage ownership in the above table is based on 40,916,921 shares
outstanding as of December 31, 2007. The number and percentage of shares
beneficially owned is determined under rules of the SEC, and the information is
not necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the individual
has sole or shared voting power or investment power and also any shares which
the individual has the right to acquire within sixty days of December 31, 2007,
through the exercise of any stock option or other right. Unless otherwise
indicated in the footnotes above, we believe each person has sole voting and
investment power (or shares such powers with his or her spouse) with respect to
the shares shown as beneficially owned.

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

During
the last two years, there have been no transactions or proposed transactions to
which we were or are to be a party, in which any persons as set out by Item
404(a) of Regulation S-B had or is to have a direct or indirect material
interest.

Transactions with Related Parties

During
2007, the Company entered into a one year agreement with a third party whose
management team is led by a member of the board of directors. 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.

During
fiscal 2006, we sold advertising to a company that is affiliated with our 50%
owned subsidiary, Stockscores Analytics Corp. The one-time sale was
approximately $85,000, which was market value for the services provided. The
full amount was paid in 2007.

Director Independence

Under
NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or
she is also an executive officer or employee of the corporation. All of our
current directors except for Marcus New, our Chief Executive Officer, are
independent as that term is defined by NASDAQ Rule 4200(a) 15.

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Item 13. Exhibits

The
following exhibits are filed as part of this Form 10-KSB.

|Exhibit |                                                                                                                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Exhibit Title                                                                                                                                                                                                   
|10.1    | Employment
      Agreement between Company and Marcus New                                                                                                                                                       
|10.2    | Employment Agreement
      between Company and Susan Lovell                                                                                                                                                     
|21.1    | List
      of Subsidiaries of the Company                                                                                                                                                                       
|23.1    | Consent of Independent
      Registered Chartered Accountants                                                                                                                                                   
|31.1    | Certification
      of Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act                                                                                                                   
|31.2    | Certification of Chief
      Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.                                                                                                                  
|32.1    | Certification
        of Chief Executive 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    | 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).        

The
following exhibits are incorporated by reference.

|Exhibit | Exhibit Title                                                                                                                                                                                                                                                                                                                                                                                                           
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.1     | Articles of Incorporation & Bylaws, is incorporated
      by reference to Form 10SB12G filed January 29, 1998. (File No. 000-23687)                                                                                                                                                                                                                                                                                     
|3.3     | Articles of Amendment dated September 20, 2001 is
      incorporated by reference to Form 8-K filed October 11, 2001                                                                                                                                                                                                                                                                                                    
|4.1     | Form of Warrant for Common Stock is incorporated by
      reference to Form 8-K filed September 28, 2006. (File No. 000-23687)                                                                                                                                                                                                                                                                                          
|10.1    | Stockgroup Information Systems Inc. 2003 Stock Option
      Plan  Amended, is incorporated by reference to Exhibit 10.1 filed on Form
      S-8 POS with the SEC on May 19, 2006. (File No. 333- 114481)                                                                                                                                                                                                               
|10.2    | Private Placement Subscription Agreement is incorporated
      by reference to Form 8-K filed September 28, 2006. (File No. 000-23687)                                                                                                                                                                                                                                                                                  
|10.3    | Purchase Agreement between Stockgroup Information Systems
      Inc., Stockgroup Systems Ltd., Stockgroup Media, Inc., TeleCommunication
      Systems, Inc., and TeleCommunication Systems (Holdings) Limited. Agreement
      was originally filed on Form 8-K on February 16, 2007 as Exhibit 10.1.
      This agreement is incorporated herein by reference. (File No. 000-23687)                                   
|10.4    | Audited Combined Financial Statements of Mobile Finance
      Division (A division of TeleCommunication Systems, Inc.) (MFD) and
      Unaudited Pro Forma Consolidated Financial Statements of Stockgroup
      Information Systems Inc originally filed on Form 8-K/A on April 16, 2007
      as Exhibits 99.1 and 99.2. These financial statements are incorporated
      herein by reference. (File No. 000-23687)
|10.5    | Private Placement Subscription Agreement (incorporated by
      reference to Form 8-K filed May 21, 2007)                                                                                                                                                                                                                                                                                                               
|10.6    | Registration Rights Agreement dated May 18, 2007
      (incorporated by reference to Form 8-K filed May 21, 2007)                                                                                                                                                                                                                                                                                                       
|10.7    | Asset Purchase Agreement dated May 8, 2007 between the
      Company and Semotus Solutions Inc. (incorporated by reference to Form 8-K
      filed May 5, 2007)                                                                                                                                                                                                                                                         
|10.8    | Amended Purchase Agreement dated as of January 24, 2007
      between the Company and TeleCommunication Systems, Inc. (incorporated by
      reference to Form 8-K filed February 20, 2007)                                                                                                                                                                                                                             
|10.9    | Purchase Agreement dated as of January 24, 2007 between
      the Company and TeleCommunication Systems, Inc. (incorporated by reference
      to Form 8-K filed February 20, 2007)                                                                                                                                                                                                                                     
|10.10   | Employment Agreement between Company and Karl Buhr
      (incorporated by reference to Form 8-K filed February 21, 2008)                                                                                                                                                                                                                                                                                                

72

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|10.11 | Employment Agreement between Company and Dana Stetson
      (incorporated by reference to Form 8-K filed February 21, 2008)                      
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------
|10.12 | Employment Agreement between Company and Audrey
      Brownmiller (incorporated by reference to Form 8-K filed February 21,
      2008)          
|10.13 | 2007 Stock Option Plan (incorporated by reference to
      Exhibit 4.1 filed on Form S-8 with the SEC on June 14, 2007 File No.
      333-143763)
|99.1  | Audit Committee Charter of the Company is incorporated by
      reference to Form 8-K filed on February 20, 2007. (File No.
    000-23687)       

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Item 14. Principal Accountant Fees and Services

Services
performed by our principal accountant during 2007 consisted of the examination
of our financial statements, services related to filings with the SEC and the
TSX, consulting and regulatory filing reviews in connection with private
placements, domestic and foreign tax compliance work, tax filings and tax
consulting services.

Audit Fees

Fees
  billed for audit services totaled approximately $204,000 for 2007 and $65,000
  for 2006, including fees associated with the annual audit and the reviews of
  our quarterly reports on Form 10-QSB.

Audit-Related Fees

Fees
billed for audit related services totaled approximately $9,000 for 2007 and
$3,000 for 2006. Audit related fees include services related to other regulatory
filings and other accounting matters.

Tax Fees

Fees
  billed for tax services, including tax compliance and tax advice, totaled approximately
  $75,000 for 2007 and $46,800 for 2006.

All Other Fees

All
  other types of fees totaled $2,000 in 2007. We did not incur other types of
  fees in 2006.

Pre-approval Policies and Procedures

In
accordance with our Audit Committee Charter, our Audit Committee is required to
review and approve in advance all audit, audit-related, tax, and other services
performed by the principal accountant. Unless the specific service has been
previously pre-approved with respect to that year, the Audit Committee must
approve the permitted service before the principal accountant is engaged to
perform it. The Audit Committee has delegated to the Chair of the Audit
Committee authority to approve permitted services provided that the Chair
reports any decisions to the Committee at its next scheduled meeting. For 2007,
the Audit Committee pre-approved 100% of the fees incurred.

The
Audit Committee has considered the nature and amount of the fees billed by our
principal accountant, and believes that the provision of the services for
non-audit services is compatible with maintaining our principal accountants
independence under U.S. Regulations.

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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.

STOCKGROUP INFORMATION SYSTEMS INC.

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

Date: April 1, 2008

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
      Title
      DatePresident, Chief Executive Officer/s/ Marcus New
      (Principal Executive Officer) and Director
      April 1, 2008Marcus A. NewChief Financial Officer/s/ Susan Lovell
      (Principal Financial and Accounting Officer)
      April 1, 2008Susan Lovell/s/ David Caddey
      Director
      April 1, 2008David Caddey/s/ Lee deBoer
      Director
      April 1, 2008Lee deBoer/s/ Stephen Zacharias
      Director
      April 1, 2008Stephen Zacharias/s/ Thomas Baker
      Director
      April 1, 2008Thomas Baker


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