Securities
and Exchange Commission
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 x
                  Quarterly
      Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of
      1934For
      The Quarterly Period Ended January 31, 2009.o
                  Transition
      Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of
      1934For
      The Transition Period From
    ______________To_________________
 
 Commission
File Number 333-31238
 
 Superclick,
Inc.
 
 (Exact
Name Of Registrant As Specified In Its Charter)
 
 Washington
                  
                  52-2219677(State or Other Jurisdiction of
                  
                  (I.R.S.
      EmployerIncorporation
      or Organization)
                  
                  Identification
      No.)
 
 10222
St-Michel Blvd., Suite 300
 Montreal,
Quebec, H1H 5H1
 (858)
518-1387
 
 (Address,
Including Zip Code, And Telephone Number, Including
 Area
Code, Of Registrant's mailing address in Montreal, Canada)
 
 Check
whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
 
 Yes x  No  ̈
  The
number of outstanding shares of the issuer's common stock, $0.0006 par value, as
of February 24, 2009 was 45,012,251.


TABLE
OF CONTENTS





PagePart
      I – Financial InformationItem
      1.
                          Financial
      StatementsConsolidated
      Balance Sheets as of January 31, 2009 (Unaudited) and October 31, 2008
      (audited)
                          1Consolidated
      Statements of Operations for the three months ended January, 31, 2009 and
      2008 (Unaudited)
                          2Consolidated
      Statements of Stockholders Equity for the year ended October 31, 2008 and
      the three months ended January 31, 2009 (unaudited)
                          3Consolidated
      Statements of Comprehensive Income for the three months ended January 31,
      2009 and 2008 (Unaudited)
                          4Consolidated
      Statements of Cash Flows for the three months ended January 31, 2009 and
      2008 (Unaudited)
                          5Notes
      To Consolidated Financial Statements (Unaudited)
                          6Item
      2.
                          Management's
      Discussion and Analysis
                          22Item
      3.
                          Quantitative
      and Qualitative Disclosures About Market
                          28Item
      4.
                          Controls
      and Procedures
                          34Part
      II – Other InformationItem
      1.
                          Legal
      Proceedings
                          35Item
      2.
                          Unregistered
      Sales of Equity Securities and Use of Proceeds
                          35Item
      3.
                          Defaults
      Upon Senior Securities
                          35Item
      4.
                          Submission
      of Matters to a Vote of Security Holders
                          35Item
      5.
                          Other
      Information
                          35Item
      6.
                          Exhibits
      and Reports on Form 8-K
                          35Signatures
                          
                          36









ITEM
1.  FINANCIAL STATEMENTS





SUPERCLICK,
      INC.Consolidated
      Balance Sheets


January 31,
                              2009
                            
                            
                            October 31,
                              2008(Unaudited)
                            
                            
                            (Audited)ASSETSCURRENT ASSETSCash
                            
                            $
                            519,388
                            
                            
                            $
                            781,520Accounts
      receivable, net (Notes A&B)
                            
                            
                            1,501,569
                            
                            
                            
                            2,142,205Tax
      refund receivable (Note N)
                            
                            
                            3,180
                            
                            
                            
                            48,269Deferred
      tax asset (Note N)
                            
                            
                            115,539
                            
                            
                            
                            78,556Inventory
      (Note C)
                            
                            
                            271,364
                            
                            
                            
                            330,298Prepaid
      expenses
                            
                            
                            33,309
                            
                            
                            
                            20,139TOTAL
      CURRENT ASSETS
                            
                            
                            2,444,349
                            
                            
                            
                            3,400,987Fixed
      assets, net (Note D)
                            
                            
                            139,522
                            
                            
                            
                            153,397TOTAL
      ASSETS
                            
                            $
                            2,583,871
                            
                            
                            $
                            3,554,384LIABILITIES AND STOCKHOLDERS'
      EQUITYCURRENT LIABILITIESAccounts
      payable and accrued expenses (Note E)
                            
                            $
                            494,503
                            
                            
                            $
                            764,646Income
      taxes payable (Note F)
                            
                            
                            200,885
                            
                            
                            
                            84,220Deferred
      revenue (Note G)
                            
                            
                            1,294,374
                            
                            
                            
                            1,643,665Loans
      payable
                            
                            
                            9,191
                            
                            
                            
                            12,626Notes
      payable (Note H)
                            
                            
                            193,400
                            
                            
                            
                            193,400Convertible
      debentures
                            
                            
                            -
                            
                            
                            
                            841,558TOTAL
      CURRENT LIABILITIES
                            
                            
                            2,192,353
                            
                            
                            
                            3,540,115TOTAL
      LIABILITIES
                            
                            
                            2,192,353
                            
                            
                            
                            3,540,115Commitments
      (Note J)
                            
                            
                            -
                            
                            
                            
                            -STOCKHOLDERS' EQUITY (Note
    K)Common
      stock, par value $.0006, 175,000,000 shares authorized; issued and
      outstanding 45,012,251 and 44,937,251 at January 31, 2009 October 31,
      2008, respectively.
                            
                            
                            27,549
                            
                            
                            
                            27,504Common
      stock payable
                            
                            
                            9,000
                            
                            
                            
                            18,000Additional
      paid-in capital
                            
                            
                            6,069,669
                            
                            
                            
                            6,060,714Accumulated
      deficit
                            
                            
                            (5,462,365
                            )
                            
                            
                            (5,863,820
                            )Accumulated
      other comprehensive income (loss)(Cumulative
      translation adjustment)
                            
                            
                            (237,195
                            )
                            
                            
                            (212,989
                            )Treasury
      Stock
                            
                            
                            (15,140
                            )
                            
                            
                            (15,140
                            )TOTAL
      STOCKHOLDERS' EQUITY
                            
                            
                            391,518
                            
                            
                            
                            14,269TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                            
                            $
                            2,583,871
                            
                            
                            $
                            3,554,384





SEE
NOTES TO FINANCIAL STATEMENTS




1




SUPERCLICK,
      INC.Consolidated
      Statements of Operations (Unaudited)For
      the Three Months Ended January 31, 2009 and
2008


Three Months EndedJanuary 31,2009
                                  
                                  
                                  2008RevenueNet
      Sales
                                  
                                  $
                                  1,062,459
                                  
                                  
                                  $
                                  731,617Services
                                  
                                  
                                  809,514
                                  
                                  
                                  
                                  716,238Net
      revenue
                                  
                                  
                                  1,871,973
                                  
                                  
                                  
                                  1,447,855Cost
      of goods sold
                                  
                                  
                                  921,795
                                  
                                  
                                  
                                  801,121Gross
      profit
                                  
                                  
                                  950,178
                                  
                                  
                                  
                                  646,734Costs and ExpensesSelling,
      general & administrative
                                  
                                  
                                  388,523
                                  
                                  
                                  
                                  375,607Research
      & development
                                  
                                  
                                  42,168
                                  
                                  
                                  
                                  45,315Depreciation
                                  
                                  
                                  11,528
                                  
                                  
                                  
                                  17,036Total
      costs and expenses
                                  
                                  
                                  442,219
                                  
                                  
                                  
                                  437,958Income
      from operations
                                  
                                  
                                  507,959
                                  
                                  
                                  
                                  208,776Other Income and (Expense)Interest
      income
                                  
                                  
                                  584
                                  
                                  
                                  
                                  4,752Interest
      expense
                                  
                                  
                                  (24,746
                                  )
                                  
                                  
                                  (47,880
                                  )Gain
      on forgiveness of debt
                                  
                                  
                                  79,970
                                  
                                  
                                  
                                  -Derivative
      gain (loss)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  12,700Total
      other income and (expense)
                                  
                                  
                                  55,808
                                  
                                  
                                  
                                  (30,428
                                  )Net
      income before income taxes
                                  
                                  
                                  563,767
                                  
                                  
                                  
                                  178,348Income
      taxes
                                  
                                  
                                  162,311
                                  
                                  
                                  
                                  -Net
      income
                                  
                                  $
                                  401,456
                                  
                                  
                                  $
                                  178,348Net
      income per common share:Basic
                                  
                                  $
                                  0.01
                                  
                                  
                                  $
                                  0.00Diluted
                                  
                                  $
                                  0.01
                                  
                                  
                                  $
                                  0.00Weighted
      average common shares outstanding:Basic
                                  
                                  
                                  44,941,523
                                  
                                  
                                  
                                  42,255,740Diluted
                                  
                                  
                                  60,039,464
                                  
                                  
                                  
                                  72,732,431





SEE
NOTES TO FINANCIAL STATEMENTS




2




SUPERCLICK,
      INC.Consolidated
      Statement of Stockholder's EquityFor
      the Year Ended October 31, 2008 and the Three Months Ended January 31,
      2009 (Unaudited)


DeficitAccumulated
                          
                          
                          AccumulatedCommon Stock
                          
                          
                          Additional
                          
                          
                          During the
                          
                          
                          Other
                          
                          
                          
                          
                          
                          TotalNumber of
                          
                          
                          
                          
                          
                          
                          
                          
                          Paid-in
                          
                          
                          Developmental
                          
                          
                          Comprehensive
                          
                          
                          Treasury
                          
                          
                          Stockholders'Shares
                          
                          
                          Amount
                          
                          
                          Payable
                          
                          
                          Capital
                          
                          
                          Stage
                          
                          
                          Income (loss)
                          
                          
                          Stock
                          
                          
                          EquityBALANCES
      October 31, 2007
                          
                          
                          41,816,544
                          
                          
                          $
                          25,631
                          
                          
                          $
                          31,332
                          
                          
                          $
                          5,754,632
                          
                          
                          $
                          (7,423,997
                          )
                          
                          $
                          (31,902
                          )
                          
                          $
                          (15,140
                          )
                          
                          $
                          (1,659,444
                          )Shares
      issued during the period:Shares
      issued for services
                          
                          
                          384,122
                          
                          
                          
                          230
                          
                          
                          
                          (1,832
                          )
                          
                          
                          54,247
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          52,645Shares
      issued for interest payable
                          
                          
                          150,403
                          
                          
                          
                          90
                          
                          
                          
                          
                          
                          
                          
                          16,252
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          16,342Shares
      issued for retirementof
      convertible debentures
                          
                          
                          1,846,182
                          
                          
                          
                          1,108
                          
                          
                          
                          
                          
                          
                          
                          199,027
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          200,135Stock
      options exercised
                          
                          
                          740,000
                          
                          
                          
                          445
                          
                          
                          
                          (11,500
                          )
                          
                          
                          36,556
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          25,501Stock
      subscriptions receivable
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -Foreign
      Currency Translation Adjustment
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (181,087
                          )
                          
                          
                          
                          
                          
                          
                          (181,087
                          )Net
      income
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,560,177
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,560,177BALANCES
      October 31, 2008
                          
                          
                          44,937,251
                          
                          
                          $
                          27,504
                          
                          
                          $
                          18,000
                          
                          
                          $
                          6,060,714
                          
                          
                          $
                          (5,863,820
                          )
                          
                          $
                          (212,989
                          )
                          
                          $
                          (15,140
                          )
                          
                          $
                          14,269Shares
      issued for services
                          
                          
                          75,000
                          
                          
                          $
                          45
                          
                          
                          $
                          (9,000
                          )
                          
                          $
                          8,955
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          -Foreign
      Currency Translation Adjustment
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (24,206
                          )
                          
                          
                          
                          
                          
                          
                          (24,206
                          )Net
      income
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          401,456
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          401,456BALANCES
      January 31, 2009
                          
                          
                          45,012,251
                          
                          
                          $
                          27,549
                          
                          
                          $
                          9,000
                          
                          
                          $
                          6,069,669
                          
                          
                          $
                          (5,462,365
                          )
                          
                          $
                          (237,195
                          )
                          
                          $
                          (15,140
                          )
                          
                          $
                          391,518





SEE
NOTES TO FINANCIAL STATEMENTS




3




SUPERCLICK,
      INC.Consolidated
      Statements of Comprehensive Income (Unaudited)For
      the Three Months Ended January 31, 2009 and
2008


Three Months EndedJanuary 31,2009
                
                
                2008Net
      earnings
                
                $
                401,456
                
                
                $
                178,348Other
      comprehensive incomeForeign
      currency translation adjustment
                
                
                24,206
                
                
                
                (9,045
                )Net
      comprehensive income
                
                $
                425,662
                
                
                $
                169,303





SEE
NOTES TO FINANCIAL STATEMENTS




4




SUPERCLICK,
      INC.Consolidated
      Statements of Cash Flows (Unaudited)For
      the Three Months Ended January 31, 2009 and 2008


Three Months EndedJanuary 31,2009
                        
                        
                        2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                        
                        $
                        401,456
                        
                        
                        $
                        178,348Adjustments
      to reconcile net incometo
      net cash provided (used) by operating activities:Depreciation
                        
                        
                        11,528
                        
                        
                        
                        17,036Stock
      issued for services
                        
                        
                        -
                        
                        
                        
                        17,979Derivative
      gain on warrants issued with debentures
                        
                        
                        -
                        
                        
                        
                        (12,700
                        )Stock
      issued for accrued interest
                        
                        
                        -
                        
                        
                        
                        6,476Gain
      on forgiveness of debt
                        
                        
                        (79,970
                        )
                        
                        
                        -Deferred
      taxes
                        
                        
                        (117,267
                        )
                        
                        
                        -CHANGES
      IN ASSETS AND LIABILITIES:Accounts
      receivable
                        
                        
                        609,230
                        
                        
                        
                        225,633Other
      receivables
                        
                        
                        1,099
                        
                        
                        
                        (28,106
                        )Prepaid
      expenses
                        
                        
                        (17,133
                        )
                        
                        
                        (3,096
                        )Inventory
                        
                        
                        54,162
                        
                        
                        
                        31,211Accounts
      payable and accrued expenses
                        
                        
                        (237,168
                        )
                        
                        
                        (37,946
                        )Accrued
      payroll
                        
                        
                        (21,685
                        )
                        
                        
                        (18,406
                        )Income
      taxes payable and receivable
                        
                        
                        242,306
                        
                        
                        
                        -Deferred
      revenue
                        
                        
                        (325,883
                        )
                        
                        
                        (226,988
                        )CASH
      PROVIDED BY OPERATING ACTIVITIES
                        
                        
                        520,675
                        
                        
                        
                        149,441CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of furniture and equipment
                        
                        
                        -
                        
                        
                        
                        (10,897
                        )CASH
      (USED) FOR INVESTING ACTIVITIES
                        
                        
                        -
                        
                        
                        
                        (10,897
                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayment
      of loans
                        
                        
                        (3,259
                        )
                        
                        
                        (24,989
                        )Repayment
      of convertible debenture
                        
                        
                        (761,588
                        )
                        
                        
                        (85,297
                        )Stock
      options exercised
                        
                        
                        -
                        
                        
                        
                        31,500CASH
      (USED) FOR FINANCING ACTIVITIES
                        
                        
                        (764,847
                        )
                        
                        
                        (78,786
                        )EFFECT
      OF EXCHANGE RATE CHANGES ON CASH
                        
                        
                        (17,960
                        )
                        
                        
                        (23,053
                        )NET
      INCREASE (DECREASE) IN CASH
                        
                        
                        (262,132
                        )
                        
                        
                        36,705CASH,
      beginning of period
                        
                        
                        781,520
                        
                        
                        
                        789,591CASH,
      end of period
                        
                        $
                        519,388
                        
                        
                        $
                        826,296Interest
      paid
                        
                        $
                        22,503
                        
                        
                        $
                        29,129Taxes
      paid
                        
                        $
                        -
                        
                        
                        $
                        2,888Other
      non-cash investing and financing activities:Shares
      issued for services
                        
                        $
                        -
                        
                        
                        $
                        17,979Shares
      issued for accrued interest
                        
                        $
                        -
                        
                        
                        $
                        6,746Shares
      issued for debt principle
                        
                        $
                        -
                        
                        
                        $
                        100,000





SEE
NOTES TO FINANCIAL STATEMENTS




5




SUPERCLICK,
INC.


NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


FOR THE
THREE MONTHS ENDED JANUARY 31, 2009 AND 2008





NOTE A-ORGANIZATION AND
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Basis of
Presentation





The
unaudited financial statements of Superclick, Inc. as of January 31, 2009 and
for the three period ended January 31, 2009 and 2008 have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial reporting.  Accordingly, they do not include all
of the disclosures required by accounting principles generally accepted in the
United States for complete financial statements and should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Superclick, Inc's Form 10-KSB for the year ended October 31,
2008.   In the opinion of management, all adjustments (consisting
only of normal recurring adjustments) considered necessary for a fair
presentation of the interim financial information have been
included.   The results of operations for any interim period are
not necessarily indicative of the results of operations for the entire
year.




Organization





In
October, 2003, Superclick, Inc. (formerly Grand Prix Sports, Inc.) completed an
acquisition of Superclick Networks, Inc.  The acquisition was
accounted for as a recapitalization effected by a reverse merger, wherein
Superclick Networks, Inc. is considered the acquirer for accounting and
financial reporting purposes (collectively, Superclick Inc. and Superclick
Networks Inc. are referred to hereinafter as the “Company”).  The
pre-merger assets and liabilities of the acquired entity have been brought
forward at their book value and no goodwill has been recognized.  The
accumulated deficit of Superclick Networks, Inc. has been brought forward, and
common stock and additional paid-in-capital of the combined company have been
retroactively restated to give effect to the exchange rates as set forth in the
merger agreement.





Superclick
Networks, Inc. was organized on August 24, 2000, in Montreal, Quebec,
Canada.  For purposes of the financial reporting of our reverse merger
acquisition, the date of inception is considered to be August 24,
2000.





The
Company is in the business of providing and installing broadband high speed
Internet connection equipment and IP (“Internet Protocol”) infrastructure
management systems with 24x7x365 help desk support to hotels, multi dwelling
units (“MDU’s”) and universities on a worldwide basis. Superclick, Inc.
commercialized its initial Internet access management products in
2002.





On
October 6, 2003 Superclick, Inc. amended its articles of incorporation by
changing the name of the Company from Grand Prix Sports, Inc. to Superclick,
Inc. to more accurately reflect the nature of its business after the
recapitalization effected by the reverse merger.




6




Pursuant
to a share purchase agreement dated October 7, 2003, Superclick, Inc. acquired
100% of the issued and outstanding shares of Superclick Networks, Inc. from its
shareholders.  In consideration for acquiring all of Superclick
Network’s shares Superclick, Inc. issued to its previous shareholders 14,025,800
shares of Superclick, Inc.’s common stock.  As a result of the
acquisition, the former shareholders of Superclick Networks, Inc. held
immediately after the acquisition 71.7% of the issued and outstanding shares of
Superclick, Inc.’s common stock.  The remaining 28.3% were held by
Superclick, Inc.’s (formerly Grand Prix Sports, Inc.) shareholders.





Concurrent
with the reverse merger of Superclick, Inc. with Superclick Networks, Inc, the
Company retroactively affected a 6 for 1 common stock split and retroactively
assigned $0.0006 par value to common stock where no value had been previously
stated.  All share and per share amounts shown in these financial
statements reflect the stock split for all periods presented.





Pursuant
to its reverse merger with Superclick Networks Inc., Superclick, Inc. changed
its year-end to October 31 to coincide with the year-end of Superclick Networks,
Inc.  The Company emerged from the development stage during 2005 as
its principal operations had commenced and its national rollout had been
completed. Accordingly, the Company revised the presentation of its Consolidated
Statements of Operations to reflect that of a commercial
enterprise.





Superclick
Inc’s plan of business is committed to the commercialization activities of
Superclick Network, Inc.’s products, with an emphasis on broadening its market
penetration and building product and brand awareness amongst its target customer
base in the hospitality market. Superclick, Inc. intends to grow its revenue
through expanding its sales of Superclick Network Inc.’s products and call
center support services such that it can reasonably support its operating
expenses through cashflow.





Summary of Significant
Accounting Principles





Principles of
consolidation





The
consolidated financial statements include the accounts of Superclick Networks,
Inc. and its majority-owned subsidiaries, Superclick, Inc. and Hotel Net LLC,
which are 100% consolidated in the financial statements.  All material
inter-company accounts and transactions have been eliminated.





Accounting
estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.





Cash and cash
equivalents





For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with an original maturity of three months or less to
be cash equivalents.




7




Accounts
receivable





Accounts
receivable are reported at the customers' outstanding balances less any
allowance for doubtful accounts. Interest is not accrued on overdue accounts
receivable.  The Company evaluates receivables on a regular basis for
potential reserve.





Inventories





Inventories
are valued at the lower of cost or market. Cost is determined on a first-in,
first-out method.  Management performs periodic assessments to
determine the existence of obsolete, slow moving and non-salable inventories,
and records necessary provisions to reduce such inventories to net realizable
value.





Property and
equipment





Property
and equipment are stated at cost.  Major renewals and improvements are
charged to the asset accounts while replacements, maintenance and repairs, which
do not improve or extend the lives of the respective assets, are
expensed.  At the time property and equipment are retired or otherwise
disposed of, the asset and related accumulated depreciation accounts are
relieved of the applicable amounts.  Gains or losses from retirements
or sales are credited or charged to income.





The
Company depreciates its property and equipment on a declining balance method at
the following rates as applied to net depreciable value:





Furniture
      and fixtures:
                      
                      
                      20
                      %Computer
      equipment and software:
                      
                      
                      30
                      %Leasehold
      improvements
                      
                      
                      20
                      %Fabrication
      equipment
                      
                      
                      20
                      %




Long-lived
assets





Statement
of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," requires that long-lived assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
historical cost-carrying value of an asset may not be recovered.  The
Company assesses recoverability of the carrying value of an asset by estimating
the fair value of the asset.  If the fair value is less than the
carrying value of the asset, an impairment loss is recorded equal to the
difference between the asset's carrying value and fair value.




Revenue recognition
policy





Revenue
from the sale of Internet high speed connection equipment and installation is
recognized when the earning process is complete and the risk and rewards of
ownership have transferred to the customer, which is considered to have occurred
after the delivery and installation of the equipment to the
customer.




8





Maintenance
and support revenue is recognized ratably over the maintenance
term.  First-year maintenance typically is sold with the related
software license and renewed on an annual basis thereafter. Estimated fair
values of ongoing maintenance and support obligations are based on separate
sales of renewals to other customers or upon renewal rates quoted in the
contracts.  For such arrangements with multiple obligations, we
allocate revenue to each component of the arrangement based on the estimated
fair value of the undelivered elements.  Fair value of services, such
as consulting or training, is based upon separate sales of these
services.  At times, we may enter into multiple-customer contracts in
which we allocate revenue based on the number of specified users at each
customer, and recognize revenue upon customer acceptance and satisfying the
other applicable conditions of the above described accounting
policy.





Shipping and handling
costs





The
Company's policy is to classify shipping and handling costs as part of cost of
goods sold in the statement of operations.





Advertising





The
Company expenses all advertising as incurred.  For the three months
ended January 31, 2009 and 2008, the Company incurred approximately $0 and
$2,102, respectively in marketing and advertising expense.





Earnings (Loss) per common
share





The
Company follows Statement of Financial Accounting Standards No. 128 which
requires the reporting of both basic and diluted earnings (loss) per
share.  Basic loss per share is calculated using the weighted average
number of common shares outstanding in the period.  Diluted loss per
share includes potentially dilutive securities such as outstanding options and
warrants, using the “treasury stock” method and convertible securities using the
"if-converted" method.





Issuance of common
stock





The
issuance of common stock for other than cash is recorded by the Company at
management’s estimate of the fair value of the assets acquired or services
rendered.





Income
taxes





Provisions
for income taxes are based on taxes payable or refundable for the current year.
Deferred taxes are based on temporary differences between the amount of taxable
income and pretax financial income and between the tax bases of assets and
liabilities and their reported amounts in the financial
statements.  Deferred tax assets and liabilities are included in the
financial statements at currently enacted income tax rates applicable to the
period in which the deferred tax assets and liabilities are expected to be
realized or settled as prescribed in FASB Statement No. 109, Accounting for
Income Taxes.    In June 2006, the FASB issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109” (“FIN 48”).  FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with SFAS No. 109,
“Accounting for Income Taxes” (SFAS 109”).  FIN 48 prescribes a
two-step process to determine the amount of tax benefit to be
recognized.  First, the tax position must be evaluated to determine
the likelihood that it will be sustained upon external
examination.  If the tax position is deemed “more-likely-than-not” to
be sustained, the tax position is then assessed to determine the amount of
benefit to recognize in the financial statements.  The amount of the
benefit that may be recognized is the largest amount that has a greater than
50 percent likelihood of being realized upon ultimate
settlement.  As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income
taxes.  Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.  The
Company underwent a change of control for income tax purposes on October 8, 2003
according to Section 381 of the Internal Revenue Code.  The Company's
utilization of U.S. Federal net operating losses will be limited in accordance
to Section 381 rules.




9




Impact of accounting
standards





In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 expands the use of fair value
accounting but does not affect existing standards which require assets or
liabilities to be carried at fair value. Under SFAS 159, a company may elect to
use fair value to measure accounts and loans receivable, available-for-sale and
held-to-maturity securities, equity method investments, accounts payable,
guarantees and issued debt. Other eligible items include firm commitments for
financial instruments that otherwise would not be recognized at inception and
non-cash warranty obligations where a warrantor is permitted to pay a third
party to provide the warranty goods or services. If the use of fair value is
elected, any upfront costs and fees related to the item must be recognized in
earnings and cannot be deferred, e.g., debt issue costs. The fair value election
is irrevocable and generally made on an instrument-by-instrument basis, even if
a company has similar instruments that it elects not to measure based on fair
value. At the adoption date, unrealized gains and losses on existing items for
which fair value has been elected are reported as a cumulative adjustment to
beginning retained earnings. Subsequent to the adoption of SFAS 159, changes in
fair value are recognized in earnings. SFAS 159 is effective for fiscal years
beginning after November 15, 2007 and is required to be adopted by the Company
in the first quarter of fiscal 2009. The Company is currently is determining
whether fair value accounting is appropriate for any of its eligible items and
cannot estimate the impact, if any, which SFAS 159 will have on its consolidated
results of operations and financial condition.





In
December 2007, the FASB issued SFAS 141(revised 2007), Business
Combinations (“SFAS 141R”). SFAS 141R will significantly change the
accounting for business combinations in a number of areas including the
treatment of contingent consideration, contingencies, acquisition costs,
IPR&D and restructuring costs. In addition, under SFAS 141R, changes in
deferred tax asset valuation allowances and acquired income tax uncertainties in
a business combination after the measurement period will impact income tax
expense. SFAS 141R is effective for fiscal years beginning after
December 15, 2008 and, as such, the Company will adopt this standard in
fiscal 2010. The Company has not yet determined the impact, if any, of
SFAS 141R on its consolidated financial statements.




In
December 2007, the FASB issued SFAS 160, Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51
(“SFAS 160”). SFAS 160 will change the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
(NCI) and classified as a component of equity. This new consolidation method
will significantly change the account with minority interest holders.
SFAS 160 is effective for fiscal years beginning after December 15,
2008 and, as such, the Company will adopt this standard in fiscal 2010. The
Company has not yet determined the impact, if any, of SFAS 160 on its
consolidated financial statements.




10




In
February 2008, the FASB issued FASB Staff Position 157-2, Effective Date of FASB
Statement No. 157, which delays the effective date of SFAS No. 157. We
believe the delayed adoption of SFAS No. 157 will not have a material
impact on our financial statements.





In March
2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133. SFAS 161 amends SFAS
133 and changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. The Statement is effective for financial statements issued for
fiscal years and interim periods beginning after November 15, 2008, with early
application encouraged. We are currently assessing the financial impact of SFAS
161 on our consolidated statements.





In
May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)” (FSP APB 14-1).  FSP APB 14-1 requires recognition of
both the liability and equity components of convertible debt instruments with
cash settlement features.  The debt component is required to be
recognized at the fair value of a similar instrument that does not have an
associated equity component.  The equity component is recognized as
the difference between the proceeds from the issuance of the note and the fair
value of the liability.  FSP APB 14-1 also requires an accretion of
the resulting debt discount over the expected life of the debt.  This
FSP shall be effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. Early adoption is not permitted.  We are currently evaluating
the impact of FSP APB 14-1.




In May
2008, the FASB issued Statement of Financial Accounting Standards ("SFAS") No.
162, The Hierarchy of Generally Accepted Accounting Principles. This standard is
intended to improve financial reporting by identifying a consistent framework,
or hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with generally accepted
accounting principles in the United States for non-governmental entities. SFAS
No. 162 is effective 60 days following approval by the U.S. Securities and
Exchange Commission ("SEC") of the Public Company Accounting Oversight Board's
amendments to AU Section 411, The Meaning of Present Fairly in Conformity with
Generally Accepted Accounting Principles. We do not expect SFAS No. 162 to have
a material impact on the preparation of our financial statements.




On June
16, 2008, the FASB issued final Staff Position (FSP) No. EITF 03-6-1,
"Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities," to address the question of whether instruments
granted in share-based payment transactions are participating securities prior
to vesting. The FSP determines that unvested share-based payment awards that
contain rights to dividend payments should be included in earnings per share
calculations. The guidance will be effective for fiscal years beginning after
December 15, 2008. We are currently evaluating the requirements of (FSP) No.
EITF 03-6-1 as well as the impact of the adoption on our financial
statements.




11





Concentrations of credit
risk





The
Company performs ongoing credit evaluations of its customers.  At
January 31, 2009, two customers accounted for 35% (23% and 12%) of accounts
receivable.





At
January 31, 2008, two customers accounted for 34% (19% and 15%) of accounts
receivable.





During
the three months ended January 31, 2009, the Company’s the Company’s two largest
customers accounted for 24% (14% and 10%) of sales.





During
the three months ended January 31, 2008, the Company’s three largest customers
accounted for 36% (15%, 11% and 10%) of sales.





For the
three months ended January 31, 2009 and 2008, approximately 38% and 20% of the
Company's net sales were made to customers outside the United
States.





The
Company has maintained balances in excess of federally insured limits from time
to time during the fiscal year.  Management periodically reviews the
adequacy and strength of the financial institutions and deems this to be an
acceptable risk.





Disclosure about Fair Value
of Financial Instruments





The
Company estimates that the fair value of all financial instruments at October
31, 2008, as defined in FASB 107, does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheet.  The estimated fair value amounts have been determined
by the Company using available market information and appropriate valuation
methodologies.  Considerable judgment is required in interpreting
market data to develop the estimates of fair value, and accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.





Accounting
for Share-Based Compensation





The
Company adopted the provisions of SFAS 123 (revised 2004), Share-Based
Payment (SFAS 123(R), which requires the Company to recognize expense
related to the fair value of share-based compensation awards as of the beginning
of the second quarter in fiscal 2006.  Management elected to use the
modified prospective transition method as permitted by SFAS 123(R) and
therefore has not restated the Company’s financial results for prior
periods.   See Note L for further information.




12




Foreign Currency
Translation





The
financial statements of the Canadian Subsidiary are measured using the Canadian
dollar as the functional currency.  Assets, liabilities and equity
accounts of the company are translated at exchange rates as of the balance sheet
date or historical acquisition date, depending on the nature of the
account.  Revenues and expenses are translated at average rates of
exchange in effect during the year.  The resulting cumulative
translation adjustments have been recorded as a separate component of
stockholders' equity.  The financial statements are presented in
United States of America dollars.





Research and
development





Expenses
related to present and future products are expensed as incurred.





NOTE B – ACCOUNTS
RECEIVABLE





The
accounts receivable balance at January 31, 2009 and October 31, 2008 consisted
of $1,501,569 and $2,142,205, respectively, and is reported net of an allowance
for doubtful accounts of $51,625 and $55,974, respectively.





NOTE C -
INVENTORY





Inventory
is comprised of computer equipment and stated at the lower of cost or market, as
determined using the first in, first out method.   The following
table represents the major components of inventory at January 31, 2009 and
October 31, 2008:





2009
                              
                              
                              2008Computer
      equipment
                              
                              $
                              291,646
                              
                              
                              $
                              350,912Allowance
      for obsolete inventory
                              
                              
                              (20,282
                              )
                              
                              
                              (20,614
                              )Inventory,
      net
                              
                              $
                              271,364
                              
                              
                              $
                              330,298





NOTE D - PROPERTY AND
EQUIPMENT





Property
and equipment consisted of the following at January 31, 2009 and October 31,
2008:





2009
                  
                  
                  2008Computer
      hardware
                  
                  $
                  179,364
                  
                  
                  $
                  182,298Furniture
      & fixtures
                  
                  
                  126,398
                  
                  
                  
                  128,466Computer
      software
                  
                  
                  85,155
                  
                  
                  
                  86,548Leasehold
      improvements
                  
                  
                  28,407
                  
                  
                  
                  28,871Fabrication
      mold and dye
                  
                  
                  18,400
                  
                  
                  
                  18,701437,724
                  
                  
                  
                  444,884Accumulated
      depreciation
                  
                  
                  (298,202
                  )
                  
                  
                  (291,487
                  )Fixed
      assets, net
                  
                  $
                  139,522
                  
                  
                  $
                  153,397





Depreciation
expense for the three months ended January 31, 2009 and 2008 was $11,528 and
$17,036, respectively.





13





NOTE E – ACCOUNTS PAYABLE
AND ACCRUED EXPENSES





Accounts
payable of $494,503 at January 31, 2009 consisted of $278,149 in trade payables,
$31,432 related to professional fees, $16,722 of accrued interest and $168,200
of accrued payroll.  Accounts payable and accrued expenses at October
31, 2008 consisted of $507,559 in trade payables, $48,840 related to
professional fees, $15,039 of accrued interest and $193,208 of accrued payroll
of which $42,614 and $45,517 are due to the CEO and CFO,
respectively.





NOTE F – INCOME TAXES
PAYABLE





As of
January 31, 2009, $200,885 was accrued for income taxes payable to the Canadian
and Provincial income tax authorities.  The Company recorded a
provision for income taxes of $162,311 for the three months ended January 31,
2009 based on a combined Federal and Provincial tax rate of 31%.





As of
October 31, 2008, $84,220 was accrued for income taxes payable to the Canadian
and Provincial income tax authorities.  The Company recorded a
provision for income taxes of $157,175 for the year ended October 31, 2008 based
on a combined Federal and Provincial tax rate of 32%.





The
Company updates the estimate of its annual effective tax rate at the end of each
quarterly period.  The Company’s estimate takes into account
estimations of annual pre-tax income, the geographic mix of pre-tax income and
its interpretations of tax laws and the possible outcomes of current and future
audits.





NOTE G – DEFERRED
REVENUE





Deferred
revenue consists of funds received in advance of services being
performed.  As of January 31, 2009, the deferred revenue balance of
$1,294,374 consisted of 1) $830,903 related to support and maintenance for
multiple customers; 2) $349,990 related to the sale of a master license
agreement which commenced August 2007 and is being amortized over its term of
thirty six (36) months; and 3) $113,481 related to customer deposits for future
hardware installations.





As of
October 31, 2008, the deferred revenue balance of $1,643,665 consisted of 1)
$904,365 related to support and maintenance for multiple customers; 2) $408,325
related to the sale of a master license agreement which commenced August 2007
and is being amortized over its term of thirty six (36) months; and 3) $330,975
related to customer deposits for future hardware installations.





Deferred
revenue related to support and maintenance is recorded in a manner consistent
with the Company’s revenue recognition policy.  The Company typically
enters into one-year upgrade and maintenance contracts with its
customers.  The upgrade and maintenance contracts are generally paid
in advance.  The Company defers such payment and recognizes revenue
ratably over the contract period.




14




NOTE H – NOTES PAYABLE TO
FORMER SHAREHOLDERS OF HOTEL NET, LLC





The
Company currently has five notes outstanding to the former shareholders of Hotel
Net LLC.  Four of the notes have a face amount of $70,000 payable
quarterly through December 31, 2009 and do not accrue interest.  The
interest, if imputed, would not be immaterial to these financial statements
taken as a whole.





The
remaining note originally dated August 31, 2005 has a face amount of $70,000,
accrues interest at the rate of nine percent (9%) per annum, is convertible into
shares of common stock at a conversion price of $.50, matured on January 1, 2006
and is currently in default.





During
the three months ended January 31, 2009 and 2008, the Company recognized $1,683
and $1,683, respectively of interest expense on the single interest bearing
note.  Accrued interest payable on the remaining interest bearing note
was $16,722 which was also convertible into 181,845 shares of common stock as of
January 31, 2009.  The principle balance on all of the notes as of
January 31, 2009 was $193,400.





During
the year ended October 31, 2008, the Company recognized $6,696 of interest
expense on the single interest bearing note.  Accrued interest payable
on the remaining interest bearing note was $15,039 which was also convertible
into 178,478 shares of common stock as of October 31, 2008.  The
principle balance on all of the notes as of October 31, 2008 was
$193,400.





NOTE I – CONVERTIBLE
DEBENTURE





On
January 23, 2009, the Company made a $726,079 settlement payment in full
satisfaction of our outstanding debentures.  This payment was in
addition to other principle payments of $41,588 made during the
quarter.  The holder of our debentures accepted 90% of the outstanding
principle and interest in full satisfaction resulting in a gain to the Company
of $79,970.  The Company has been released from all claims,
liabilities or obligations of any type or nature with respect to the
debentures.





Three
      Months Ended
                            January
      31, 2009Total
      principle payments
                          
                          $
                          720,000Total
      interest payments
                          
                          
                          6,079Total
      payments
                          
                          
                          726,079Debenture
      balance as of January 23, 2009 (Pay-off date) including interest and
      principle
                          
                          
                          806,049Gain
      on settlement of debentures
                          
                          $
                          79,970





The
965,997 common stock warrants related to these debentures, as described below,
will remain outstanding and unchanged as a result of the debenture
settlement.





During
the three months ended January 31, 2009, the Company incurred $22,503 and
$44,067, respectively, in interest expense.





15





NOTE J -
COMMITMENTS





The
Company financed computer equipment with a loan term which extends through
September 28, 2009 at a rate of $1,230 per month. The remaining equipment loan
obligation is $9,191.





On
October 1, 2004 the Company began a lease for office space.  The lease
extends through September 30, 2009 at a rate of $4,867 per month.  The
remaining lease obligation is $38,936.





During
the three months ended January 31, 2009, the Company incurred $15,738 and
$17,875, respectively, in rent expense.





We do not
maintain any long-term or exclusive commitments or arrangements to purchase
merchandise from any single supplier.





NOTE K - PREFERRED AND
COMMON STOCK





Preferred
Stock





The
Company has authorized 20,000,000 shares of $.0001 par value preferred stock
available for issuance.  No shares of preferred stock have been issued
as of January 31, 2009.





Private Placement and
Warrant Activity





During
the year ended October 31, 2008, the Company issued 1,996,585 shares of common
stock, including 1,846,182 shares in exchange for $200,135 of debenture
principle and 150,403 shares of in exchange for $16,342 of accrued interest
related to our debentures.





Stock issued for
Services





During
the year ended October 31, 2008, the Company issued 384,122 shares of common
stock in exchange for director services.  Of the 384,122 shares, 1)
141,656 shares were issued for services performed in fiscal year 2007 which
expense of $19,832 was recognized in our fiscal year ending October 31, 2007,
and; 2) 242,466 shares were issued for services valued at
$34,645.  The Company has accrued $18,000 to common stock payable for
director services performed.  We anticipate the issuance of common
stock for these services during our first fiscal quarter of 2009.





During
the three months ended January 31, 2009, the Company issued 75,000 shares of
common stock in exchange for director services.  The shares were
issued for services performed in fiscal year 2008 which expense of $9,000 was
recognized in our fiscal year ending October 31, 2008.





Common Stock
Options





During
the year ended October 31, 2008, no options were canceled or
granted.  740,000 shares of common stock were issued pursuant to
option exercises, including 1) 230,000 shares issued pursuant to prior year
option exercises, and; 2) 510,000 shares issued pursuant to options exercised
during 2008 which resulted in $25,500 to the company.  No other option
activity occurred.





16





During
the three months ended January 31, 2009, no options were canceled or
granted.





NOTE L -
WARRANTS





At
January 31, 2009 the Company had 965,997 warrants related to convertible
debentures entitling the holder thereof the right to purchase one common share
for each warrant held as follows:





ExerciseWarrant
                                                      
                                                      Number
      of
                                                      
                                                      Price
      Per
                                                      
                                                      ExpirationClass
                                                      
                                                      Warrants
                                                      
                                                      Warrant
                                                      
                                                      DateDebenture
                                                      
                                                      
                                                      735,370
                                                      
                                                      >or=to
      $0.30
                                                      
                                                      7/31/2010Debenture
                                                      
                                                      
                                                      230,627
                                                      
                                                      >or=to
      $0.30
                                                      
                                                      8/17/2010Total
                                                      
                                                      
                                                      965,997





During
the year ended October 31, 2008 and 2007, no warrants were issued or exercised
and 200,000 and 1,899,999 warrants expired, respectively.





During
the three months ended January 31, 2009 and 2008, there was no warrant
activity.





NOTE M – STOCK INCENTIVE
PLANS





The 2004 Incentive Stock
Option Plan





On April
8, 2004, the Board of Directors of the Company adopted the 2004 Incentive Stock
Option Plan. This Plan is a plan for key Employees (including officers and
employee directors) and Consultants of the Company and its Affiliates and is
intended to advance the best interests of the Company, its Affiliates, and its
stockholders by providing those persons who have substantial responsibility for
the management and growth of the Company and its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in the employ of the
Company or any of its Affiliates.





The
Company may issue each of the following under this Plan: Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award The Plan was effective April 9, 2004 (the "Effective
Date"), provided that within one year of the Effective Date, the Plan shall have
been approved by at least a majority vote of stockholders. No Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award shall be granted pursuant to the Plan ten years after
the Effective Date.





During
the year ended October 31, 2008, 740,000 shares of common stock were issued
pursuant to option exercises, including 1) 230,000 shares issued pursuant to
prior year option exercises, and; 2) 510,000 shares issued pursuant to options
exercised during 2008 (See Note K).  No other option activity
occurred.





During
the three months ended January 31, 2009, there was no option
activity.





17





The
following table summarizes the Company's stock option activity for the three
months ended January 31, 2009:





2009Weighted
      AverageShares
                              
                              
                              Exercise
      PriceOutstanding
      at beginning of year
                              
                              
                              13,952,356
                              
                              
                              $
                              0.07Granted
                              
                              
                              -
                              
                              
                              
                              -Forfeited
                              
                              
                              -
                              
                              
                              
                              -Exercised
                              
                              
                              -
                              
                              
                              
                              -Outstanding
      at end of year
                              
                              
                              13,952,356
                              
                              
                              
                              0.07Options
      exerciseable at year end
                              
                              
                              13,952,356





The
following table summarizes information about the Company's stock options
outstanding at January 31, 2009:





Options
      Outstanding
                                      
                                      
                                      Options
      ExercisableNumber
                                      
                                      
                                      Weighted
                                      
                                      
                                      Weighted
                                      
                                      
                                      
                                      
                                      
                                      WeightedRange
      of
                                      
                                      Outstanding
                                      
                                      
                                      Average
                                      
                                      
                                      Average
                                      
                                      
                                      
                                      
                                      
                                      AverageExercise
                                      
                                      At
      January 31,
                                      
                                      
                                      Contractural
                                      
                                      
                                      Exercise
                                      
                                      
                                      Number
                                      
                                      
                                      ExercisePrices
                                      
                                      2009
                                      
                                      
                                      Life
      (years)
                                      
                                      
                                      Price
                                      
                                      
                                      Outstanding
                                      
                                      
                                      Price$
                                      0.50
                                      
                                      
                                      589,856
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      0.50
                                      
                                      
                                      
                                      589,856
                                      
                                      
                                      $
                                      0.500.65
                                      
                                      
                                      137,500
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.65
                                      
                                      
                                      
                                      137,500
                                      
                                      
                                      
                                      0.650.05
                                      
                                      
                                      13,225,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.05
                                      
                                      
                                      
                                      13,225,000
                                      
                                      
                                      
                                      0.05-Total
                                      
                                      
                                      13,952,356
                                      
                                      
                                      
                                      -
                                      
                                      
                                      $
                                      0.07
                                      
                                      
                                      
                                      13,952,356
                                      
                                      
                                      $
                                      0.07





The
Company adopted Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment (“SFAS 123r”) as of the beginning of the first
interim or annual reporting period that begins after December 15,
2005.  Under SFAS 123r, the Company measures the fair market value of
stock options granted using the Black-Scholes Option Pricing Model on the date
of grant and recognizes related compensation expense ratably over the options
vesting period for all future grants.  The Company also estimates the
amount of forfeitures or the amount of options that will be canceled in the
future.  During the three months ended January 31, 2009 and 2008, the
Company recognized no compensation expense.  The Company has recorded
compensation expense of $767,017 through January 31, 2009.





2004 Superclick, Inc.
Non-Employee Director's Stock Incentive Plan





On
December 31, 2003, the Board of Directors of the Company adopted the 2004
Superclick, Inc. Non-Employee Director's Stock Incentive Plan (the "Stock
Incentive Plan").  The Stock Incentive Plan provides for the issuance
of Options, Restricted Stock, and/or Deferred Stock to an
Awardee.  The total number of shares of Common Stock which may be
awarded under the Plan is 1,500,000.  If any awarded shares are
forfeited, they become available for future issuance.  An annual
aggregate limit of 300,000 shares (including Options, Restricted Stock, and
Deferred Stock) is set for any individual Director.




18





The Stock
Incentive Plan has a term of ten years commencing on January 1,
2004.  Awardees are defined as director to whom an award is
made.  An eligible director is any person who on the date of grant is
a member of the Board of Directors of the Company and is not an employee of the
Company or of any Subsidiary.  Stock Options are non-qualified
right-to-buy Options for the purchase of Common Stock of the
Company.  The term of each Option shall be ten years from the Date of
Grant.  The Option Price shall be the Fair Market Value of Superclick,
Inc. Common Stock on the date the Option is granted.  Under no
circumstances shall any Option vest in less than one year from the date of
grant.  Shares purchased upon exercise of an Option must be paid for
in full at the time of exercise either in cash or with currently owned
shares.  Neither the Committee on Directors and Governance nor the
Board of Directors may re-price any Option that is less than the option exercise
price.  Restricted Stock is Common Stock of the Company restricted as
to sale in such fashion as the Committee on Directors and Governance shall
determine.  Prior to the lifting of the restrictions, the Awardee will
be entitled to receive dividends from and to vote the shares of Restricted
Stock.





During
the year ended October 31, 2008, the Company issued 384,122 shares of common
stock in exchange for director services.  Of the 384,122 shares, 1)
141,656 shares were issued for services performed in fiscal year 2007 which
expense of $19,832 was recognized in our fiscal year ending October 31, 2007,
and; 2) 242,466 shares were issued for services valued at
$34,645.  The Company has accrued $18,000 to common stock payable for
director services performed.  We anticipate the issuance of common
stock for these services during our first fiscal quarter of 2009.





During
the three months ended January 31, 2009, the Company issued 75,000 shares of
common stock in exchange for director services.  The shares were
issued for services performed in fiscal year 2008 which expense of $9,000 was
recognized in our fiscal year ending October 31, 2008.





From
inception through January 31, 2009, the Company has issued 2,569,772 shares to
our directors under this stock incentive plan.





NOTE N – NET OPERATING LOSS
CARRY FORWARD





In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred tax assets
will not be realized.  The ultimate realization of deferred tax assets
is dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income
and tax planning strategies in making this assessment.





During
the year ended October 31, 2008, our U.S. based operation had a net loss of
approximately $43,000.  A valuation allowance for the full amount of
the net deferred tax asset was recorded because of uncertainties as to the
amount of taxable income that would be generated in future years.  The
valuation allowance increased by approximately $17,200 for the year ended
October 31, 2008, assuming a tax rate of 40%.


19





United
      States Corporation Income TaxesYear of Loss (Income)
                    
                    Amount
                    
                    Expiration DateOctober
      31, 2008
                    
                    $
                    44,582
                    
                    October
      31, 2028October
      31, 2006
                    
                    
                    781,183
                    
                    October
      31, 2026October
      31, 2005
                    
                    
                    3,969,331
                    
                    October
      31, 2025October
      31, 2004
                    
                    
                    898,697
                    
                    October
      31, 2024October
      31, 2003
                    
                    
                    53,638
                    
                    October
      31, 2023December
      31, 2002
                    
                    
                    45,349
                    
                    December
      31, 2022$
                    5,792,780





The
expiration dates for U.S. net operating losses (NOL) may be extendable under
Section 381 of the U.S. Internal Revenue Code.





During
the year ended October 31, 2008, our wholly owned Canadian subsidiary generated
net income for tax purposes of $1,153,148 CDN.   However, the
subsidiary lowered its tax liability to both the Federal and Provincial
authorities with the application of its carry forward R&D tax credits and
NOL. If the subsidiary did not have the carry forward balances available, based
on a combined tax rate of approximately 32%, the provision would have been
approximately $363,240 CDN.  The NOL available to offset Canadian
Income Taxes was fully utilized during the fiscal year ending October 31,
2008.





The
subsidiary recently underwent an audit by the Canadian Federal Government, the
outcome of which resulted in a potential reduction to the NOL carry
forward.  The Company plans to contest the potential adjustment and
has not reduced the potential NOL available by that amount for purposes of
calculating our provision for income tax.





The
subsidiary receives tax credits for research and development activities from
Revenue Canada. As of January 31, 2009, the Company reflected approximately
$115,539 USD in tax credits available for future use.





The
subsidiary receives reimbursement of research and development activities from
the Province of Quebec beyond the tax credits described above.  As of
January 31, 2009, the receivable was $3,180.





The
subsidiary receives reimbursement of sales tax charged on the resale of goods
and services transacted in Canada from both Federal and from the Provincial
governments beyond the tax credits described above.  As of January 31,
2009, the Company recognized $7,062 as a receivable for those sales
taxes.





NOTE O – RELATED PARTY
TRANSACTION





Mr.
Pitcher, Chairman of the Company’s Board of Directors, provides consulting
services to the Company in exchange for monthly compensation of $5,000 and
related expenses.  During the three months ended January 31, 2009 and
2008, Mr. Pitcher received $15,300 and $17,386, respectively.


20





Mrs.
Papapicco, formerly the Director of Operations, is the spouse of Mr. Natale,
Chief Executive Officer of the Company.  Mrs. Papapicco became
separated from the Company on May 31, 2008, but has provided services on a
limited basis.  During the three months ended January 31, 2009, she
received approximately $2,133 in United States dollars.





NOTE P - SUBSEQUENT
EVENTS





February
13, 2009, the Board of Directors accepted the resignation of Wendy Borow-Johnson
from the Company's board of directors. The resignation of Ms. Johnson was not
due to any disagreement with the Company's operations, policies or
practices.  Concurrent with Ms. Johnson’s resignation from
Superclick’s board of directors, the remaining four members of the board
unanimously appointed Ronald Fon to the board, effective February 13,
2009.


21


ITEM
2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS





We derive
the majority of our revenue from the installation of our Superclick Internet
Access Management System (SIMS) and from revenue generated from our call center.
Support fees are tied to the number of rooms serviced in a client’s property.
Due to our reliance on installations, variations in revenue levels may cause
fluctuations in quarterly results.   Factors such as a client's
commitment to providing internet access to their guests, general economic and
industry conditions and other issues could affect our revenue and
earnings.





In
addition to our North American operations, we have installations and contracts
in Europe and the Caribbean.  With the exception of Canadian
operations, the majority of transactions in other regions are denominated using
the United States dollar.   However, some of our transactions are
in Canadian dollars; therefore, we are exposed to currency fluctuation
risks.





We
continue to develop our product offering and IP management solutions, listening
carefully to our customers to determine development paths that most directly
meet their needs. Superclick emerged from the development stage during the
fiscal year ended October 31, 2005.





Critical
Accounting Policies





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, revenues and
expenses reported in the accompanying financial statements and related
footnotes.  We base our estimates and assumptions on historical
experience, observance of industry trends and various other sources of
information and factors.  Actual results may differ from these
estimates.  Critical accounting policies are defined as those that are
reflective of significant judgments and uncertainties, and potentially could
result in materially different results under different assumptions and
conditions.  In consultation with our Board of Directors, we have
identified six accounting principles that we believe are key to an
understanding of our financial statements.  These important accounting
policies require management's most difficult, subjective judgments.





Revenue
Recognition





Revenue
from the sale of Internet high speed connection equipment and installation is
recognized when the earning process is complete and the risk and rewards of
ownership have transferred to the customer, which is considered to have occurred
after the delivery and installation of the equipment to the
customer.





Maintenance
and support revenue is recognized ratably over the maintenance
term.  First-year maintenance typically is sold with the related
software license and renewed on an annual basis thereafter. Estimated fair
values of ongoing maintenance and support obligations are based on separate
sales of renewals to other customers or upon renewal rates quoted in the
contracts.  For such arrangements with multiple obligations, we
allocate revenue to each component of the arrangement based on the estimated
fair value of the undelivered elements.  Fair value of services, such
as consulting or training, is based upon separate sales of these
services.  At times, we may enter into multiple-customer contracts in
which we allocate revenue based on the number of specified users at each
customer, and recognizes revenue upon customer acceptance and satisfying the
other applicable conditions of the above described accounting
policy.


22





Accounts
receivable





Accounts
receivable are reported at the customers' outstanding balances less any
allowance for doubtful accounts.  Interest is not accrued on overdue
accounts receivable.  We evaluate receivables outstanding greater than
ninety days on a regular basis for potential reserve.





Inventories





Inventories
are valued at the lower of cost or market.  Cost is determined on a
first-in, first-out method or market.  Management performs periodic
assessments to determine the existence of obsolete, slow moving and non-salable
inventories, such as discontinued products, and records necessary provisions to
reduce such inventories to net realizable value.





Income
taxes





Provisions
for income taxes are based on taxes payable or refundable for the current period
and deferred taxes on temporary differences between the amount of taxable income
and pretax financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements.  Deferred tax
assets and liabilities are included in the financial statements at currently
enacted income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as prescribed in
FASB Statement No. 109, Accounting for Income Taxes.  In
June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109”
(“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’s financial statements in accordance with SFAS
No. 109, “Accounting for Income Taxes” (SFAS 109”).  FIN 48
prescribes a two-step process to determine the amount of tax benefit to be
recognized.  First, the tax position must be evaluated to determine
the likelihood that it will be sustained upon external
examination.  If the tax position is deemed “more-likely-than-not” to
be sustained, the tax position is then assessed to determine the amount of
benefit to recognize in the financial statements.  The amount of the
benefit that may be recognized is the largest amount that has a greater than
50 percent likelihood of being realized upon ultimate
settlement.  As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income
taxes.  Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized.  The
Company underwent a change of control for income tax purposes on October 8, 2003
according to Section 381 of the Internal Revenue Code.  The Company's
utilization of U.S. Federal net operating losses will be limited in accordance
to Section 381 rules.  As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.  Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be
realized.


23





Foreign
Currency Translation





The
financial statements of our Canadian subsidiary are measured using the Canadian
dollar as the functional currency.   Assets, liabilities and
equity accounts of the company are translated at exchange rates as of the
balance sheet date or historical acquisition date, depending on the nature of
the account.   Revenues and expenses are translated at average
rates of exchange in effect during the period.   The resulting
cumulative translation adjustments have been recorded as a separate component of
stockholders' equity.   The financial statements are presented in
United States of America dollars.





Overview





Results of
Operations





THREE
MONTHS ENDED JANUARY 31, 2009 AND 2008





Revenue





During
the three months ended January 31, 2009, revenue was $1,871,973 compared to
$1,447,855 for the three months ended January 31, 2008.  The 29.3%
favorable sales variance was mainly due to a 45.2% improvement in net sales
(new business) compared
to the same period last year. Services revenue grew 13%, to $809,514 from
$716,238.





Gross
Profit





Gross profit for thethree monthsendedJanuary 31, 2009increased by $303,444or46.9% to $950,178compared to $646,734for the three months ended
January 31,
2008.  Gross
margin for thefirst
quarterwas50.8% compared to44.7% the previous year.The improvement in gross profit
outperformed the sales growth by 17.6%.  Compared to the same period
last year, net revenue increased 29.3% whereas the gross profit increased
46.9%.  The Company continues to deploy and service new and existing
installations in a manner that is both effective and efficient resulting in
continued strength in margins.


Selling,
General and Administrative





For the
three months ended January 31, 2009 and 2008, selling, general and
administrative expenses (SG&A) were $388,523 or 20.8% of net revenue and
$375,607 or 25.9% of net revenue, respectively.  As a percentage of
revenue SG&A decreased by 5.2% representing a 20% improvement in SG&A
during the first quarter of 2009 compared to the prior year.





Research
and Development





For the
three months ended January 31, 2009 and 2008, research and development expense
was $42,168 and $45,315, respectively.  The $3,147 or 6.9%
year-over-year decrease was mainly due to foreign exchange variances as a result
of a stronger U.S. dollar compared to the same period last
year.


24





Income
from operations





Income
from operations for the three months ended January 31, 2009 was $507,959 or
27.1% of net revenue compared to $208,776 or 14.4% of net revenue for the three
months ended January 31, 2008; a $299,183 or 143.3% improvement.





Other
Income and Expense





Interest
income for the three months ended January 31, 2009 and 2008 was $584 and $4,752,
respectively.





Interest
expense for the three months ended January 31, 2009 and 2008 was $24,746 and
$47,880, respectively.  Interest expense represents interest incurred
on the debentures and on a note payable. The decrease in interest expense is due
to the lower debenture principle compared to the same period last
year.  The debentures were settled in full on January 23, 2009 (Settlement Date) resulting in
a gain on forgiveness of debt in the amount of $79,970 or approximately 10% of
the outstanding principle and interest on the Settlement Date.





During
the three months ended January 31, 2008, a derivative gain of $12,700 was
realized which related to the decrease in our liability.  The
derivative gain represents the decrease in the value of the 965,997 common stock
warrants related to our debentures.  No such gain or loss was recorded
as of January 31, 2009 as the value of the warrants was nil.





The total
other income and expense for the three months ended January 31, 2009 was income
of $55,808 compared to expense of $30,428 the previous year.





Net
Income before Income Taxes





Net
income before income taxes for the three months ended January 31, 2009 was
$563,767 or 30.1% of net revenue compared to $178,348 or 12.3% of net revenue
during the three months ended January 31, 2008.





Income
Taxes





The
Company recorded a provision for income taxes recorded $162,311 in income tax
expense during the three months ended January 31, 2009 compared to nil in
2008.  Despite the increase in income taxes, first quarter 2009 net
income was $401,456 or 21.4% of net revenue compared to $178,348 or 9.5% of net
revenue during 2008 representing an improvement of $223,108 or 125.1% in the
bottom line.





Net
Income Per Common Share





For the
three months ended January 31, 2009, the net income per common share basic was
$0.01 and $0.01 fully diluted, compared to $0.00 Basic and $0.00 diluted for the
three months ended January 31, 2008.  The basic and fully diluted
weighted average shares for the first quarter of 2009 were 44,937,251 and
60,035,192, respectively.  The basic and fully diluted weighted
average shares for the first quarter of 2008 were 42,255,740 and 72,732,431,
respectively.


25





Financial
Condition





From
inception to January 31, 2009, we have incurred an accumulated deficit of
$5,462,365.  This loss has been incurred through a combination of
professional fees and expenses supporting our plans to acquire synergistic
businesses as well as continued operating losses.  However, in the
current quarter we have experienced notable organic growth resulting in a larger
customer base.  Net revenue has grown 29.3% producing a net profit
margin of 21.4%.





Since
inception, we have financed our operations primarily through debt and equity
financing.   During the three months ended January 31, 2009 we
had a net decrease in cash of $262,132.  Total cash resources as of
January 31, 2009 was $519,388 compared to $781,520 at October 31,
2008.





Our
available working capital and capital requirements will depend upon numerous
factors, including the deployment and sale of Internet access management
solutions, the timing and cost of expanding into new markets, the cost of
developing competitive technologies, changes in our existing collaborative and
licensing relationships, the resources that we devote to developing new products
and commercializing capabilities, the status of our competitors, our ability to
establish collaborative arrangements with other organizations, and our ability
to attract and retain key employees.





The
Company's Liquidity Plan





Recent
operating results have alleviated concerns about our ability to generate cash
flow from operations.  Net income for the three months ended January
31, 2009 was $401,456 compared to $178,348 for the three months ended January
31, 2008 and the operations provided $520,675 of cash compared to $149,441 for
the three months ended January 31, 2008.  As a result of the
convertible debenture settlement, the net effect of cash was a decrease of
$262,132 compared to a net increase of $36,705 for the three months ended
January 31, 2008.





The
Company has financed operations solely with cash generated through sales and the
collection of its accounts receivable. The current ratio, defined as current
assets divided by current liabilities was 1.11:1 compared to .96:1 last
year.  The Company has no long-term debt.





Four of
the five notes included in the Note Payables were canceled and replaced with new
notes that do not accrue interest and mature December 31, 2009.  The
remaining note is anticipated to be renegotiated in the near
future.





Our need
to raise additional equity or debt financing and our ability to generate cash
flow from operations will depend on its future performance and our ability to
successfully implement business and growth strategies.  Our
performance will also be affected by prevailing economic
conditions.  Many of these factors are beyond our
control.  If future cash flows and capital resources are insufficient
to meet our commitments, we may be forced to reduce or delay activities and
capital expenditures or obtain additional equity capital.  In the
event that we are unable to do so, we may be left without sufficient
liquidity.


26





Off-Balance
Sheet Arrangements





At
January 31, 2009 we had no obligations that would qualify to be disclosed as
off-balance sheet arrangements.





Contractual
Obligations





Equipment loan
obligation:  Loan obligation relates to computer equipment used
in our Montreal office.  The loan term extends through September 28,
2009 at a rate of $1,230 per month.  The remaining equipment loan
obligation is $9,191.





Operating lease
obligations:  Operating lease obligations consist of office
rental commitment for our offices in Montréal, Québec,
Canada.   On October 1, 2004 we began a lease for office space in
Montréal.  The lease extends through September 30, 2009 at a rate of
$4,867 per month.   The remaining lease obligation is
$38,936.





Inflation





Although
our operations are influenced by general economic conditions, we do not believe
inflation had a material effect on the results of operations during the three
and nine months ended January 31, 2009.   However, there can be
no assurance our business will not be affected by inflation in the
future.


27





ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 RISK
FACTORS
 
 Interested
persons should carefully consider the risks described below in evaluating the
Company. Additional risks and uncertainties not presently known to us, or that
we currently consider immaterial, may also impair our business operations. If
any of the following risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In that case, the
trading price of our common stock would likely decline.
 
 We
may be subject to patent infringement suits brought by separate vendors in our
industry against some of our competitors.
  We
have been made aware that several companies providing public Internet access
have been named in a lawsuit brought by a party claiming patent infringement. We
have not been named in the action, although some companies that have been named
are our customers. We have provided indemnification in our service contracts to
several of these customers. We believe that it is too early at this stage to
determine whether we have any exposure, but we have retained and consulted legal
counsel to maintain a vigilant and proactive posture. We are actively discussing
with our counsel ways that we can limit our potential liability. We are not
defendants to the suit, nor have we retained litigation counsel on the matter.
We will continue to monitor the situation. If we are named in the suit, it will
require us to incur legal expenses, which will have a negative impact on our
profitability. This in turn, may have a negative impact on our stock
price.
  In
a separate matter, we have been made aware that a company providing public
Internet access similar to those provided by us has been named in a legal suit
by a party claiming patent infringement. In this matter, the plaintiff won a
default judgment on the patent infringement claim. We have not been named in
this action nor have we been threatened with any similar claims. However, we
have retained legal counsel to review this matter and also to maintain a
vigilant and proactive posture. We will continue to discuss with our counsel its
assessment of our exposure to a similar claim, as
well as ways to limit our potential liability. We are not defendants to
any related suit, but we are closely monitoring the situation. If we are named
in a patent infringement suit, at a minimum, it will require us to incur legal
expenses, which will have a negative impact on our profitability. This in turn,
may have a negative impact on our stock price.


Our continued operations will depend
on whether we are able to raise additional funds through various potential
sources, such as equity and debt financing, other collaborative agreements,
strategic alliances, and our ability to realize the full potential of our
technology.





Such
additional funds may not become available on acceptable terms and there can be
no assurance that any additional funding that we obtain will be sufficient to
meet our needs in the long term.   Through October 31, 2007, a
significant portion of our financing has been through private placements of
common stock warrants and convertible debt.   Unless our
operations continue to generate significant revenues, we will continue to fund
operations from cash on hand and through similar sources of capital previously
described.   We can give no assurances that any additional
capital that we are able to obtain will be sufficient to meet our
needs.   Although the Company was profitable in fiscal 2007 and
2008, the need for additional equity, debt financing or the entering into a
strategic alliance may be required in order to sustain operations or grow our
business through strategic alliances or acquisitions.


28




We have very limited assets upon
which to rely for adjusting to business variations and for growing new
businesses.





If we are
to grow and expand our operations, we will need to raise significant amounts of
additional capital.   There can be no assurance that we will be
successful in raising a sufficient amount of additional capital, or if we are
successful, that we will be able to raise capital on reasonable
terms.   If we do raise additional capital, our existing
shareholders may incur substantial and immediate dilution.





Risks
Related To Our Business:





Our
revenue and operating results may fluctuate significantly from quarter to
quarter, and fluctuations in operating results could cause its stock price to
decline.





Our
revenue and operating results may vary significantly from quarter-to-quarter due
to a number of factors.   In future quarters, operating results
may be below the expectations of public market analysis or investors, and the
price of its common stock may decline.   Factors that could cause
quarterly fluctuations include:





§
            the
      beginning and ending of significant contracts during a
      quarter;


§
            the
      number, size and scope of the installation
  contracts;


§
            maintenance
      contracts can create variations in revenue levels and may cause
      fluctuations in quarterly results;


§
            fluctuations
      in demand for services resulting from budget cuts, project delays,
      cyclical downturns or similar events, including the recent economic
      downturn;


§
            the
      possibility and subsequent duration of conflicts involving the United
      States military could cause delays in program operations related to our
      hospitality clients by reducing
travel;


§
            clients'
      decisions to divert resources to other projects, which may limit clients'
      resources that would otherwise be allocated to solutions that we
      provide;


§
            recessionary
      pressures in the United States may reduce the level of travel for business
      and leisure, which may, in turn limit our clients’ resources that would
      otherwise be allocated to solutions that we
  provide;


§
            reductions
      in the prices of services offered by competitors;
  and


§
            because
      a significant portion of expenses are relatively fixed, a variation in the
      number of installations or the timing of the initiation or the completion
      of client contracts may cause significant variations in operating results
      from quarter-to-quarter and could result in
  losses.





29





Any
inability to adequately retain or protect our employees, customer relationships
and proprietary technology could harm our ability to compete.





Our
future success and ability to compete depends in part upon our employees,
customer relationships, proprietary technology and trademarks, which we attempt
to protect with a combination of patent, copyright, trademark and trade secret
claims, as well as with our confidentiality procedures and contractual
provisions. These legal protections afford only limited protection and are
time-consuming and expensive to obtain and/or maintain. Further, despite our
efforts, we may be unable to prevent third parties from soliciting our employees
or customers or infringing upon or misappropriating our intellectual
property.





Our
employees, customer relationships and intellectual property may not be adequate
to provide us with a competitive advantage or to prevent competitors from
entering the markets for our products and services. Additionally, our
competitors could independently develop non-infringing technologies that are
competitive with, and equivalent or superior to, our technology. Monitoring
infringement and/or misappropriation of intellectual property can be difficult,
and there is no guarantee that we would detect any infringement or
misappropriation of our proprietary rights.


Even if
we do detect infringement or misappropriation of our proprietary rights,
litigation to enforce these rights could cause us to divert financial and other
resources away from our business operations. The departure of certain key
personnel could harm the financial condition of the Company.





Sandro
Natale, one of our founders and our current CEO, is intimately involved in our
business and has day-to-day relationships with critical customers. Mr Natale is
also critical to our product development.





We may
not be able to afford additional staff to supplement these key personnel.
Competition for highly skilled business, product development, technical and
other personnel is intense, and there can be no assurance that we will be
successful in recruiting new personnel or in retaining our existing personnel. A
failure on our part to retain the services of key personnel could have a
material adverse effect on our operating results and financial condition. We do
not maintain key man life insurance on any of our employees.





The
market in which we compete is intensely competitive and actions by competitors
could render our services less competitive, causing revenue and income to
decline.





The
ability to compete depends on a number of factors outside of our control,
including:





§
            the
      prices at which others offer competitive systems, including aggressive
      price competition and discounting on individual contracts, which may
      become increasingly prevalent due to worsening economic
      conditions;


§
            the
      ability of competitors to undertake more extensive marketing
      campaigns;


§
            the
      extent, if any, to which competitors develop proprietary offerings that
      improve their ability to compete;


§
            the
      ability of our  customers to supply the solutions themselves;
      and


§
            the
      extent of competitors' responsiveness to customer
  needs.





30




We may
not be able to compete effectively on these or other
factors.   If we are unable to compete effectively, market
position, and therefore revenue and profitability, would decline.





The
uncertain environment in the lodging industry and the economy will continue to
impact our financial results and growth.





The
present economic slowdown and the uncertainty over its breadth, depth and
duration have left it unclear whether the lodging industry’s growth environment
during the past few years will continue. Many economists have reported that the
U.S. economy is in a recession. Recent substantial increases in transportation
fuel costs, increases in air and ground travel costs and decreases in airline
capacity that could stem from higher fuel costs, could also reduce demand for
our customers’ hotel rooms which could result in lower demand for our solutions.
Accordingly, our financial results and growth could be harmed if the economic
slowdown continues for a significant period or becomes worse or it
transportation costs remain at current high levels for an extended period or
increase further.





International
business exposes our company to various foreign requirements, which could
interfere with business or operations and could result in increased expenses and
declining profitability.





International
operations create special risks, including:





§
            statutory
      requirements, which may impair our ability to expatriate foreign profits
      to help fund domestic operations;


§
            greater
      difficulties in managing and supplying turnkey installation at foreign
      locations;


§
            cultural
      differences that adversely affect
utilization;


§
            unexpected
      changes in trading policies, legal and regulatory requirements, tariffs
      and other foreign taxes;


§
            greater
      difficulties in enforcing agreements with clients and collecting accounts
      receivable;


§
            the
      tax system of foreign countries, which may tax our foreign income at
      higher rates than in the United States and may subject foreign earnings to
      withholding requirements or tariffs, exchange controls or other
      restrictions;


§
            legal
      requirements and regulations of various foreign countries, which may make
      compliance by us with such laws and regulations difficult and may make
      enforcement of our intellectual property rights more difficult;
      and


§
            fluctuations
      in currency exchange rates, which may affect demand for our products and
      services and may adversely affect the profitability in United States
      dollars of services provided by us in foreign markets where payment for
      its products and services is made in the local currency; and general
      economic conditions in the foreign countries into which we sell, which
      could have an adverse impact on its earnings from operations in those
      countries.





If
we and/or our product offerings fail to perform effectively, our reputation, and
therefore our competitive position and financial performance, could be
harmed.





Many of
our new installation opportunities come from existing clients or from referrals
by existing clients.   Therefore, growth is dependent on our
reputation and on client satisfaction.   The failure to provide
solutions or perform services that meet a client's expectations may damage our
reputation and harm its ability to attract new business.   Damage
to our reputation arising from client dissatisfaction could therefore harm
financial performance.




31





The
inability to protect intellectual property could harm our competitive position
and financial performance.





Despite
efforts to protect proprietary rights from unauthorized use or disclosure,
parties, including former employees or consultants, may attempt to disclose,
obtain or use our solutions or technologies.   The steps we have
taken may not prevent misappropriation of solutions or technologies,
particularly in foreign countries where laws or law enforcement practices may
not protect proprietary rights as fully as in the United
States.   Unauthorized disclosure of proprietary information
could make our solutions and technologies available to others and harm our
competitive position.





There
are risks associated with our planned growth.





We have
very limited assets upon which to rely for adjusting to business variations and
for growing new businesses. Should we look for new funding to assist in the
acquisition of other profitable businesses, it is uncertain whether such funds
will be available. If we are to grow and expand our operations, we will need to
raise significant amounts of additional capital. There can be no assurance that
we will be successful in raising a sufficient amount of additional capital, or
if we are successful, that we will be able to raise capital on reasonable terms.
If we do raise additional capital, our existing shareholders may incur
substantial and immediate dilution.





The
sales cycle for our products is lengthy and unpredictable.





The sales
cycle between an initial customer contact and execution of a contract or license
agreement with a customer, or purchase of our products, can vary widely.
Initially, we must educate our customers about the potential applications and
benefits association with our products. In addition, changes in our customers’
budgets, or the priority they assign to control network administration and
development could also affect the sales cycle.





We
may be unable to promote and expand acceptance to our Media Distribution System
(MDS) application.





We have
invested significant resources, time and manpower into the development and
commercialization of our MDS application. We do not believe that there are any
directly competitive offerings in the market and as such, we are faced with a
challenge to educate our clients’ to the benefits of MDS. Additionally, we are
faced with the challenge of developing an attractive advertising and marketing
model that for marketing firms and advertisers that will support our sales
efforts into the hospitality market. Our MDS application may not be successful
or we may not be able to establish a viable commercial sales model that can
scale, which would have a material adverse affect on our revenues, results of
operations and financial condition as we increase our investment in its
development and commitment to is commercialization.





32





Due
to our foreign client installations in Canada, the Caribbean and Europe, we are
exposed to transaction adjustments with respect to foreign
currency.





Our
functional currency is the United States dollar. However, our operating
functional currency is the Canadian Dollar. Under United States dollar
functional currency, the financial statements of foreign subsidiaries are
re-measured from the recording currency to the United States
dollar.   The resulting re-measurement adjustment has been
recorded as separate component of stockholder’s equity. We believe that
operating under United States dollar functional currency, combined with
transacting business in countries with traditionally stable currencies mitigates
the effect of any near-term foreign currency transaction adjustments on our
financial position, results of operations and cash flows.





We have
not engaged in foreign currency hedging transactions nor do we have any
derivative financial instruments.  However, going forward, we will
assess the need to enter into hedging transactions to limit its risk due to
fluctuations in exchange rates.





Risks
Relating To Our Common Stock:





There
is a limited market for our common stock.





Our
common stock is traded in the Over-the-Counter Bulletin Board
market.  This may cause delays in the timing of transactions,
reductions in the number and quality of securities analysts' reporting on us,
and the extent of our coverage in the media.  Trading in our common
stock has been sporadic, and at present, there is a limited market for
it.  There can be no assurance that a stronger market will
develop.  Even if such a market does develop, it may not be
sustained.





Shareholders
may suffer dilution upon the exercise of outstanding options and warrants and
the conversion of convertible notes.





As of
January 31, 2009, we had exercisable stock options outstanding to purchase
13,952,356 shares of common stock, warrants to purchase 965,997 shares of common
stock, and a convertible note convertible into 181,845 shares of common
stock.  To the extent such options or warrants are exercised and
convertible notes are converted, there will be further dilution. In addition, in
the event that any future financing should be in the form of securities
convertible into, or exchangeable for, equity securities, investors may
experience additional dilution upon the conversion or exchange of such
securities.





Future
sales of our common stock by existing shareholders under Rule 144 could decrease
the trading price of our common stock.





As of
January 31, 2009, a total of 10,699,334 shares of our outstanding common stock
were "restricted securities" and could be sold in the public markets only in
compliance with Rule 144 adopted under the Securities Act of 1933 or other
applicable exemptions from registration. As of February 15, 2008, Rule 144 was
amended to provide that a person who is not affiliated with the issuer, holding
restricted securities for a period of six months may thereafter sell those
securities, if the issuer is current with its reporting requirements. Persons
who are not affiliated with the issuer and who have held their restricted
securities for at least one year are not subject to any limitations. Possible or
actual sales of our common stock by present shareholders under Rule 144 could
have a depressive effect on the price of our common stock.




33





Our
common stock is subject to "penny stock" rules.





Our
common stock is classified as a penny stock by the Securities and Exchange
Commission. This classification severely and adversely affects the market
liquidity for our common stock. The Commission has adopted Rule 15g-9, which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience objectives of the person; and
(ii) make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, sets forth (i) the basis on
which the broker or dealer made the suitability determination and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. Disclosure also has to be made about the risks of investing in
penny stocks in public offerings and secondary trading and about the commissions
payable to the broker-dealer and registered representative, current quotations
for the securities and the rights and remedies available to an investor in cases
of fraud in penny stock transactions. Finally, monthly statements have to be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks.





ITEM
4. CONTROLS AND PROCEDURES





(a)        Evaluation
of disclosure controls and procedures





As
required by Rule 13a-15(b) under the Exchange Act, we conducted an evaluation,
under the supervision and participation of our management, including the
Company’s President and Chief Financial Officer (who is the principal accounting
officer).  No weaknesses were noted and both the President and Chief
Financial Officer concluded that the disclosure controls and procedures were
effective as of the most recent fiscal quarter covered by this Form
10-Q.





(b)        Changes
in internal controls





In
accordance with Item 308 (c) of Regulation S-B, there were no changes in the
Company’s internal control reporting in connection with the Company’s evaluation
of its internal controls that occurred during the most recent fiscal quarter
covered by this Form 10-Q.





34





PART
II. OTHER INFORMATION





Item 1.
Legal Proceedings. None.





Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds. None





Item 3.
Defaults Upon Senior Securities. None





Item 4.
Submission of Matters to a Vote of Security Holders. None





Item 5.
Other Information. None.





Item 6.
Exhibits and Reports On Form 8-K.





(a)  Exhibits





31.1  Certificate
of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act of 1934*





31.2  Certificate
of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule
15d-14(a) of the Securities Exchange Act of 1934*





32.1  Certificate
of Chief Executive Officer pursuant to 18 U.S.C. Section1350*





32.2  Certificate
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350*





(b)
Reports on Form 8-K


On
January 20, 2009, the company filed form 8-K with the SEC reporting our results
of operations for the year ended October 31, 2008.





On
January 23, 2009, the company filed form 8-K with the SEC disclosing a quarterly
conference call hosted by it to discuss financial results.





* Filed
herewith.




35


SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Dated:  Date: March 5,
    2009
                          Superclick,
      Inc./s/ Sandro NataleName:
      Sandro NataleTitle:
      President &
CEO


36