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**UNITED            STATES            SECURITIES AND EXCHANGE COMMISSION            Washington, D.C. 20549**

**FORM            10-K**

**or**

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

**For transition            period from _______ to _______**

**Commission            file number: 000-27582**
|                                                                                    |                                                                                                                                                               |
|-----------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **SPEEDUS                        CORP.**                                                |
| (Exact name of                        registrant as specified in its charter)           |
|                                                                                    |                                                                                                                                                               |
| **Delaware**                                                                            | **13-3853788**                                                                                                                                                     |
| (State or other                        jurisdiction of                                  | (I.R.S.                        Employer                                                                                                                            |
| incorporation or                        organization)                                   | Identification                        Number)                                                                                                                      |
|                                                                                    |                                                                                                                                                               |
| **9                        Desbrosses Street, Suite 402, New York, NY**                 | **10013**                                                                                                                                                          |
| (Address of Principal                        Executive Offices)                         | (Zip                        code)                                                                                                                                  |
|                                                                                    |                                                                                                                                                               |
| **(888)                        773-3669**                                               |
| (Registrant’s                        telephone number)                            |
|                                                                                    |                                                                                                                                                               |
| **Securities                        registered pursuant to Section 12(b) of the Act:**  |
| **Common Stock, par                        value $.01 per share**                       | **       The                        NASDAQ Stock Market LLC**                                                                   |
| (Title of each                        class)                                            |                 (Name                        of each exchange on which registered) |
|                                                                                    |                                                                                                                                                               |
| **Securities                        registered pursuant to Section 12 (g) of the Act:** |
| **None**                                                                                |

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

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

Indicate by check mark whether            the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of            the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter            period that the registrant was required to file such reports), and (2) has been subject            to such filing requirements for the past 90 days. Yes x            No o

Indicate by check mark if            disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained            herein, and will not be contained, to the best of the registrant’s knowledge, in            definitive proxy or information statements incorporated by reference in Part III of            this Form 10-K or any amendment to this Form 10-K.            o
|                                                                                                                             |                                                |   |                                                    |
|----------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------|--------|---------------------------------------------------------|
|                                                                                                                             | Large accelerated                        filer o    |   | Accelerated                        filer o         |
|                                                                                                                             | Non-accelerated                        filer o |        | Smaller reporting                        company x |
|           (Do                        not check if a smaller reporting company) |

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

The aggregate market value of            the Registrant’s Common Stock held by non-affiliates of the Registrant was            $5,779,000 on June 30, 2007, based on the closing trade price of the Common Stock on            the NASDAQ Capital Market on that date.

The number of shares of Common            Stock outstanding as of March 15, 2008 was 3,992,372.

**DOCUMENTS            INCORPORATED BY REFERENCE**

None

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**SPEEDUS            CORP.            INDEX TO FORM 10-K**

|                               |                                                                                                                                                             |   |     |   |
|------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
|                               |                                                                                                                                                             |        | **Page** |
|                               |                                                                                                                                                             |        |          |
|                               | **PART                        I**                                                                                                                                |        |     |   |
|                               |                                                                                                                                                             |        |     |   |
| Item                        1.     | Business                                                                                                                                                         |        | 3        |   |
| Item                        1A.    | Risk                        Factors                                                                                                                              |        | 6        |   |
| Item                        1B.    | Unresolved                        Staff Comments                                                                                                                 |        | 9        |   |
| Item                        2.     | Properties                                                                                                                                                       |        | 9        |   |
| Item                        3.     | Legal                        Proceedings                                                                                                                         |        | 10       |   |
| Item                        4.     | Submission                        of Matters to a Vote of Security Holders                                                                                       |        | 10       |   |
|                               |                                                                                                                                                             |        |     |   |
|                               | **PART                        II**                                                                                                                               |        |     |   |
|                               |                                                                                                                                                             |        |     |   |
| Item                        5.     | Market                        for Registrant’s Common Equity, Related Stockholder Matters and                        Issuer Purchases of Equity Securities |        | 11       |   |
| Item                        6.     | Selected                        Financial Data                                                                                                                   |        | 13       |   |
| Item                        7.     | Management’s                        Discussion and Analysis of Financial Condition and Results of                        Operations                        |        | 14       |   |
| Item                        7A.    | Quantitative                        and Qualitative Disclosures About Market Risk                                                                                |        | 19       |   |
| Item                        8.     | Financial                        Statements and Supplementary Data                                                                                               |        | 20       |   |
| Item                        9.     | Changes                        in and Disagreements With Accountants on Accounting and Financial                        Disclosure                               |        | 20       |   |
| Item                        9A(T). | Controls                        and Procedures                                                                                                                   |        | 20       |   |
| Item                        9B.    | Other                        Information                                                                                                                         |        | 20       |   |
|                               |                                                                                                                                                             |        |     |   |
|                               | **PART                        III**                                                                                                                              |        |     |   |
|                               |                                                                                                                                                             |        |     |   |
| Item                        10.    | Directors,                        Executive Officers and Corporate Governance                                                                                    |        | 21       |   |
| Item                        11.    | Executive                        Compensation                                                                                                                    |        | 23       |   |
| Item                        12.    | Security                        Ownership of Certain Beneficial Owners and Management and Related                        Stockholder Matters                     |        | 27       |   |
| Item                        13.    | Certain                        Relationships and Related Transactions, and Director                        Independence                                          |        | 28       |   |
| Item                        14.    | Principal                        Accountant Fees and Services                                                                                                    |        | 28       |   |
|                               |                                                                                                                                                             |        |     |   |
|                               | **PART                        IV**                                                                                                                               |        |     |   |
|                               |                                                                                                                                                             |        |     |   |
| Item                        15.    | Exhibits,                        Financial Statement Schedules                                                                                                   |        | 29       |   |

* * * *            *

This Form 10-K contains            “forward-looking statements” within the meaning of Section 27A of the            Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the            “Exchange Act”). These statements appear in a number of places in this Form            10-K and include statements regarding the intent, belief or current expectations of the            Company or its officers with respect to, among other things, the ability of the Company            to make capital expenditures, the ability to incur debt, to service and repay such            debt, as well as other factors that may affect the Company’s financial condition            or results of operations. Forward-looking statements may include, but are not limited            to, projections of revenues, income or losses, capital expenditures, plans for future            operations, financing needs or plans, compliance with covenants in loan agreements,            plans for liquidation or sale of assets or businesses, plans relating to products or            services of the Company, assessments of materiality, predictions of future events, and            the ability to obtain financing, including the Company’s ability to meet            obligations as they become due, and other pending and possible litigation, as well as            assumptions relating to the foregoing. All statements in this Form 10-K regarding            industry prospects and the Company’s financial position are forward-looking            statements. Readers are cautioned not to place undue reliance on these forward-looking            statements, which speak only as of the date hereof. Although the Company believes that            the expectations reflected in such forward-looking statements are reasonable, it can            give no assurance that such expectations will prove to have been correct. The Company            undertakes no obligation to publicly release the result of any revisions to these            forward-looking statements that may be made to reflect events or circumstances after            the date hereof or to reflect the occurrence of unanticipated events.

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**PART            I**

**ITEM 1.            BUSINESS**

**Business            Activities**

          Speedus            Corp. is a holding company that owns significant equity interests in diverse            businesses. We seek business opportunities across all industries for potential            transactions and relationships in which we can apply our current resources and            management strengths. The companies that we target, either public or privately held,            will be seeking growth or restructuring capital to pursue near term business objectives            in demonstrated markets. We will continue to pursue opportunities involving our            expertise in the medical device and wireless markets, as well as those areas involving            our broadband assets as attractive opportunities present themselves.

          We            have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens            Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision support            products and services for primary care physicians, pediatricians, cardiologists and            other healthcare professionals. Zargis Acoustic Cardioscan® (Cardioscan®),            Zargis’ core product, is the first and only FDA-authorized computer-assisted            medical device designed to support physicians in analyzing heart sounds for the            identification of suspected systolic and diastolic murmurs—which are a potential            sign of heart disease. We own 90% of F&B Güdtfood Holding Corp., the creator            and operator of the original Eurocentric “chic and quick” café,            which, as of December 31, 2007, is operating one store in Manhattan. In 2005, we            conceived Wibiki, a new software-based wireless network that leverages existing Wi-Fi            infrastructures to reduce cost, complexity and risk for users when accessing the            Internet wirelessly. Wibiki’s business model will employ a user opt-in            advertising service we call AdChooser to generate revenues that keep Wibiki services            free to users. We own a portfolio of patents that allow for high-speed wireless            communications. We also own fixed wireless spectrum in the New York City metropolitan            area that we may commercialize in the future to support high-speed, or broadband,            Internet access service. For additional information on each of our business segments,            see the discussions below and “Notes to Consolidated Financial Statements —            Note 8, Business Segment Information.”

*          Zargis            Medical Corp.* In January 2001, we co-invested with Siemens Corporate Research,            Inc., a subsidiary of Siemens Corporation, in Zargis Medical Corp. to develop            non-invasive, diagnostic support solutions that automatically analyze acoustical data            from a patient to determine physiologically significant features useful in medical            diagnosis. The development of Zargis’ patented technology is a pioneering effort            in medicine which uses advanced signal processing algorithms deployed on standard            computer platforms. The first Zargis device, Cardioscan, received its initial FDA            authorization in May 2004 and additional authorizations in September 2005 and March            2006. Cardioscan is currently being tested by a small group of physicians during            general medical examinations and physicals to help detect and analyze suspected heart            murmurs which could be a sign of valvular and congenital heart disease. Zargis is            currently researching, and conducting trials on, additional noninvasive diagnostic            support tools that process acoustical data from the body in order to provide an            accurate and intelligible assessment of a patient’s health. These assessments may            be used by physicians and other healthcare providers to assist in the early            identification or monitoring of heart, lung, vascular and other conditions and to            provide better patient treatment.

          Major            next steps remaining for Zargis include continuing market trials and clinical trials            for new applications of the Zargis technology and the formation of strategic            partnerships designed to support product commercialization.

          In            February 2003, we acquired a controlling interest in Zargis Medical. At December 31,            2007, as a result of continued investment, our ownership interest was approximately            81%.

          In            October 2007, Zargis and the 3M Company entered into an exclusive multi-year marketing            alliance involving Zargis’ heart sound analysis software and 3M Littmann’s            next-generation electronic stethoscope. Under the agreement, Zargis will support 3M in            its efforts to develop a next-generation stethoscope that will be compatible with            Zargis’ heart sound analysis software. In addition, the alliance provides Zargis            with a wide-range of marketing and promotional opportunities along with exclusive            rights to sell its heart sound analysis software through the global distribution            network of the Littmann brand. The agreement grants 3M a 10% minority equity position            in Zargis, 5% following the first sale of Zargis’ software through the 3M            distribution channel and 5% in the event the agreement is renewed after an initial two            year term and certain other conditions are met, and a seat on Zargis’ board of            directors.

*          F&B            Güdtfood*. We own 90% of F&B Güdtfood, the creator and operator of the            original Eurocentric “chic and quick” café, which is operating one            store in Manhattan. The acquisition price was $3,500,000 in May 2002. In February 2003,            we reduced our cash investment in F&B Güdtfood and received $1,775,000 while            maintaining our original 51% interest. In December 2003, as a result of renegotiation,            our interest increased to 80% without an additional investment. As a result of certain            milestones not having been met, in 2005 our interest increased to 90%. We have also            entered into a management services contract with F&B Güdtfood that will result            in direct revenues to us although these revenues will be eliminated on our consolidated            financial statements.

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*          Broadband            Patents.*We have accumulated a portfolio of patents that teach and cover the            improvement of high-speed wireless communication systems to allow greater information            content, reliability, clarity, more efficient use of licensed spectrum as compared to            prior systems and other advances. We have 6 domestic patents with expiration dates            ranging from 2007 through 2017, with approximately 46 international counterparts in 28            countries. We also have 4 domestic patents pending and 14 patents pending in an            additional 3 countries. Certain wireless communications systems may employ a number of            different combinations of our patented technology to maximize operational and spectrum            efficiency. While we believe that there is great value in our patented technologies, it            is a lengthy and expensive process to investigate and pursue licensing/patent            infringement cases. We are evaluating a strategy for the utilization of these patents            in the future, which may include pursuit of licensing or development of other strategic            opportunities with users of the underlying technology. We have licensed technology in            the past, both domestically and internationally, but are not currently receiving any            license fees.

          On            May 11, 2006, we filed two separate complaints against Cellco Partnership (d/b/a            Verizon Wireless) in United States District Court in the Southern District of Florida,            in which we assert that Verizon Wireless is infringing two patents. Verizon Wireless is            a joint venture of Verizon Communications Inc. and Vodafone Group PLC. In May 2007, we            reached a mutual agreement with Verizon Wireless leading to the dismissal of the two            separate complaints that we filed against Verizon Wireless. No financial consideration            was paid or received by either party.

          On            June 2, 2006, we filed two separate complaints against Alltel Corp. in United States            District Court in the Southern District of Florida, in which we assert that Alltel is            infringing two patents. In an amended complaint, we asserted claims for infringement            against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to            Alltel Corp. In April 2007, the case was transferred to United States District Court            for the Eastern District of Arkansas. In November 2007, one of the complaints was            dismissed with prejudice. A claim interpretation hearing was held on February 22, 2008,            however, no order has been entered interpreting the claim at issue. The Court has set            the matter for trial during the two-week period commencing on July 18, 2008. A separate            lawsuit was commenced in October 2006 against All Wireless, LLC, a Florida company, in            United States District Court in the Middle District of Florida, alleging infringement.            The All Wireless litigation has been stayed pending the completion of the claim            construction process in the Alltel litigation.

*          Wibiki.*            During 2005, our technology resources and experience in wireless broadband enabled us            to conceive a new software-based Wibiki initiative to leverage existing Wi-Fi            infrastructures to reduce cost and complexity that is now available at www.gobiki.com.            The business premise for Wibiki is an advertising platform we call Adbiki/Adchooser. On            September 21, 2007, Wibiki launched a new beta service to transform web ads into a            usable space by Wibiki members for sharing web content with their friends. We continue            to evolve the Wibiki platform beyond its original wireless focus. Adbiki is versatile,            can scale to a large user base and is the underpinning for the NetfreeUS proposed            service described below.

*          NetfreeUs.*            In March 2007, NetfreeUs, a new wholly-owned subsidiary, asked the FCC for authority to            manage a new nationwide Wireless Public Broadband (WPB) network in the 2155-2175 MHz            frequency band. NetfreeUS’ Wireless Public Broadband (“WPB”) service            will never charge monthly fees. NetfreeUS will coordinate third-party lessees who would            own and operate wireless access points (“WAPs”) with no lessee authorized            to operate more than 50 WAPs. WPB will promote localism and the provision of            advertising and public service messages targeted to local interests and communities, as            well as local business and economic development, through ubiquitous coverage provided            by small-footprint networks. On August 31, 2007, the FCC issued an Order that dismissed            without prejudice the application filed by NetfreeUS and other applicants to provide            wireless service. NetfreeUS has filed a Petition for Partial Reconsideration with the            FCC requesting a grant of its application and petition for forbearance and has also            filed a Notice to Intervene in an action filed by another applicant in the United            States Court of Appeals for the District of Columbia.The later filing was granted and            we are now a party to this proceeding.

*          Local            Multipoint Distribution Service (LMDS) license.* We have an FCC commercial operating            license, awarded to us in recognition of our efforts in developing and deploying LMDS            technology and for spearheading its regulatory approval at the FCC, which covers 150            MHz of spectrum in the New York City area. Under FCC authorization, the license            includes an additional 150 MHz of spectrum until the first Ka band satellite is            launched, an event which is not currently determinable. The license provides that the            spectrum may be used for a wide variety of fixed wireless purposes, including wireless            local loop telephony, high-speed Internet access and two-way            teleconferencing.

          The            license has been renewed through February 1, 2016 conditioned upon demonstrating to the            FCC by March 27, 2007 that we are providing “substantial service.” On March            7, 2007, we filed a notification that we are providing “substantial            service” in accordance with FCC standards. On March 27, 2007, out of an abundance            of caution, we requested a contingent waiver and an extension of time until March 27,            2010 to demonstrate “substantial service,” to the extent our earlier            demonstration is not deemed compliant with FCC standards. On July 31, 2007, we were            informed by the FCC that we had not demonstrated that we were providing            “substantial service” on the required date and were granted a waiver to            extend the construction and substantial service deadline under the Company’s FCC            license renewal to October 6, 2008. In January 2008, we filed a waiver request with the            FCC for a limited extension of the deadline for “substantial service”            consistent with that filed by the LMDS Coalition, a consortium of license holders and            equipment vendors.

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          We            will not commence a full marketing effort using our LMDS technology until new LMDS            equipment becomes commercially available with cost and performance that allow            implementation of an economically viable business model. We cannot determine when this            will occur and this equipment may never be available to us on this basis.

*          Other.*            We have invested a portion of our assets in a portfolio of marketable securities            consisting of publicly traded equity securities. We have also invested a portion of our            assets in equity and debt instruments of non-publicly held companies. We have in the            past and may in the future sell publicly traded equity securities we do not own in            anticipation of declines in the fair market values of these securities.

          We            have generated operating losses and negative operating cash flows since our inception            and expect to continue to do so in the near future.

**One-for-four Reverse Stock            Split in December 2007**

          At            our annual meeting of stockholders held on November 20, 2007, we received stockholder            approval of a proposal authorizing our Board of Directors, in its discretion, to            implement a reverse split of our issued and outstanding shares, as well as treasury            shares, at a ratio not to exceed one-for-six. Thereafter, the Board of Directors            approved the one-for-four ratio. The one-for-four reverse split took effect with the            open of trading on December 3, 2007. The exercise price and the number of shares of            common stock issuable under the Company’s outstanding stock options have been            proportionately adjusted to reflect the reverse stock split.

          We            have retroactively adjusted all share and per share information to reflect the reverse            stock split in the consolidated financial statements and notes thereto, as well as            throughout the rest of this Form 10-K for all periods presented.

**Competition**

          Many            of our present and potential competitors have longer operating histories and            significantly greater financial, technical, marketing and other resources than we do            and therefore may be able to respond more quickly than we can to new or changing            opportunities, technologies, standards and customer requirements.

**Intellectual            Property**

          To            protect our proprietary rights, we rely on a combination of copyright and trademark            laws, trade secrets, confidentiality agreements with employees and third parties and            protective contractual provisions. All of our employees have executed confidentiality            and nonuse agreements that transfer any rights they may have in copyrightable works or            patentable technologies to us.

          We            have applied for registration of our service marks and trademarks in the United States            and in other countries. We may not be successful in obtaining the service marks and            trademarks for which we have applied. To the extent we consider it necessary, we may            file patents to protect our technology. Patents with respect to our technology may not            be granted, and, if granted, patents may be challenged or invalidated. In addition,            issued patents may not provide us with any competitive advantages and may be challenged            by third parties.

          Despite            our efforts to protect our proprietary rights, unauthorized parties may copy aspects of            our products or services or obtain and use information that we regard as proprietary.            The laws of some foreign countries do not protect proprietary rights to as great an            extent as do the laws of the United States. In addition, others could possibly            independently develop substantially equivalent intellectual property. If we do not            effectively protect our intellectual property, our business could suffer. Companies            have frequently resorted to litigation regarding intellectual property rights. We may            have to litigate to enforce our intellectual property rights, to protect our trade            secrets or to determine the validity and scope of other parties’ proprietary            rights.

          We            have filed complaints and are currently litigating certain patent infringement claims.            See Item 3. Legal Proceedings.

**Government            Regulation**

          In            general, we are not currently subject to direct federal, state or local government            regulation, other than regulations that apply to businesses generally. However, the            grant, renewal and administration of spectrum licenses is regulated by the Federal            Communications Commission. See ‘Business Activities, *Local Multipoint            Distribution Service (LMDS) license’* for additional information on our            “substantial service” demonstration and our contingent request for waiver            or extension of the “substantial service” deadline. A failure by the FCC to            conclude that we have demonstrated “substantial service” or to extend the            deadline for demonstrating “substantial service” could have an adverse            effect on the Company.

          In            addition, medical devices such as ours are subject to strict regulation by state and            federal authorities, including the Food and Drug Administration and comparable            authorities in certain states.

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**Employees**

          As            of March 15, 2008, we had approximately 22 full time employees. We also rely on a            number of consultants. None of our employees are represented by a collective bargaining            agreement. We believe that we have a good relationship with our employees.

**Where You Can Find More            Information**

          We            file annual and quarterly reports, proxy statements and other information with the            Securities and Exchange Commission, and we have an Internet website address at            www.speedus.com. We make available free of charge on our internet website address our            annual and quarterly reports and proxy statements filed pursuant to Sections 13(a) or            15(d) of the Exchange Act as soon as reasonably practicable after we electronically            file such material with the SEC. You may also read and copy any document we file at the            Securities and Exchange Commission’s public reference room located at 100 F            Street, N.E., Washington, D.C. 20549. Please call the Securities and Exchange            Commission at 1-800-732-0330 for further information on the operation of such public            reference room. You also can request copies of such documents, upon payment of a            duplicating fee, by writing to the Securities and Exchange Commission at 450 Fifth            Street, N.W., Washington, D.C. 20549 or obtain copies of such documents from the            Securities and Exchange Commission’s website at www.sec.gov.

**ITEM 1A.            RISK FACTORS**

**Risks related            to our business generally**

***Although we have been a            public company since February 1996, we have reoriented our business several times and            our current business has not generated any significant revenues to            date.***

          At            the time of our initial public offering, our business was primarily a subscription            television service. In November 1998, we terminated the subscription television            business and began a limited pilot program for the delivery of high-speed Internet            access. We encountered technical difficulties in this pilot program and reoriented our            business on wireless data and other services. We have not yet generated any significant            revenue from these businesses.

***We have recorded operating            losses in each reporting period since our inception and may never be            profitable.***

          We            have recorded operating losses and negative operating cash flows in all reporting            periods since inception and, at December 31, 2007, had an accumulated deficit of            approximately $73.9 million. We believe that we have sufficient liquidity to finance            our current level of operations through the 2008 fiscal year. However, we do not expect            to have earnings from operations, exclusive of non-cash charges, until such time as we            substantially increase our customer base and/or form a strategic alliance for use of            our capabilities in the future.

***Our existing operations            and infrastructure may not be adequate to manage the growth necessary for successful            implementation of our business plan.***

          Successful            implementation of our business plan will require the management of growth. Our existing            operations and infrastructure may not be adequate to manage such growth, and any steps            taken to improve such systems and controls may not be sufficient. Our future success            will depend in part upon attracting and retaining the services of current management            and technical personnel. We also may not be successful in attracting, assimilating and            retaining new personnel in the future as future growth takes place. We do not maintain            “key person” life insurance policies on any of our key            personnel.

***Shant S. Hovnanian, Vahak            S. Hovnanian and trusts controlled by members of the Hovnanian family, who in the            aggregate own approximately 41% of our Common Stock, may have the power acting together            to control the direction and future operations of our company.***

          Shant            S. Hovnanian, Vahak S. Hovnanian and trusts controlled by members of the Hovnanian            family in the aggregate own approximately 41% of our outstanding Common Stock at            December 31, 2007. As a result, acting together they may have the power to elect all of            the members of our Board of Directors, amend our certificate of incorporation and            by-laws and control the direction and future operations of our Company, in each case            without the approval of any of our other stockholders.

***Our stock price has            historically been volatile, which may make it more difficult for you to resell shares            when you want at prices you find attractive.***

          The            trading price of our Common Stock has been and may continue to be subject to wide            fluctuations. During 2007, 2006 and 2005, the high and low sale prices of our Common            Stock on the Nasdaq Stock Market ranged from $5.96 to $1.40, $8.20 to $4.10 and $11.70            to $4.24, respectively. The closing sale price of our Common Stock was $1.26 on March            15, 2008. Our stock price may fluctuate in response to a number of events and factors,            such as quarterly variations in operating results, announcements of technological            innovations or new products and media properties by us or our competitors, the            operating and stock price performance of other companies that investors may deem            comparable, and

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news reports relating to trends            in our markets.

          On            several occasions prior to 2007, we were not in compliance with Marketplace Rules,            which require listed companies to maintain a closing bid price equal to or greater than            $1.00. In all such cases, we subsequently received notice from the Nasdaq Stock Market            that we had regained compliance with Marketplace Rules and the matter was            closed.

          On            June 19, 2007, we received a letter from the Nasdaq Stock Market informing us that we            had 180 days, or until December 17, 2007, to regain compliance with Marketplace Rule            4310(c)(4), which requires us to maintain a minimum closing bid price of $1.00 per            share. For the 30 consecutive business days prior to June 19, 2007, the bid price of            the Company’s common stock closed below $1.00 per share. If at any time before            December 17, 2007 the closing bid price of our common stock was $1.00 or more per share            for a minimum of 10 consecutive business days, we will have complied with the minimum            bid requirement. At our annual meeting of stockholders held on November 20, 2007, we            received stockholder approval of a proposal authorizing our Board of Directors, in its            discretion, to implement a reverse split of our issued and outstanding shares, as well            as treasury shares, at a ratio not to exceed one-for-six. Thereafter, the Board of            Directors approved the one-for-four ratio. The one-for-four reverse split took effect            with the open of trading on December 3, 2007. On December 17, 2007, we received notice            from the Nasdaq Stock Market that we had regained compliance with Marketplace Rule            4310(c)(4) and the matter was closed.

          If            our Common Stock were delisted from Nasdaq, trading in our Common Stock would have to            be conducted on the OTC Bulletin Board or in the non-Nasdaq over-the-counter market,            also referred to as the “pink sheets”. If that were to occur, liquidity for            our Common Stock could be significantly decreased which could reduce the trading price            and increase the transaction costs of trading shares of our Common Stock.

***Sales of shares of Common            Stock by Shant S. Hovnanian and Vahak S. Hovnanian could adversely affect the market            price of the Common Stock.***

          Future            sales of shares of Common Stock, or the availability of shares of Common Stock for            future sale, may adversely impact the market price of the Common Stock prevailing from            time to time. Sales of substantial amounts of our Common Stock, or the perception that            such sales could occur, could adversely affect the prevailing market price of the            Common Stock.

          Shares            of Common Stock held by Shant S. Hovnanian and Vahak S. Hovnanian have been held by            each of them for the requisite holding periods under Rule 144 under the Securities Act            and may be sold in accordance with volume restrictions.

**Risks related            to certain short-term investments**

***Securities that we invest            in are subject to market price risks.***

          As            part of our overall investment strategy, we invest in publicly traded equity            securities. We purchase these securities in anticipation of increases in the fair            market values of the securities.

          We            have also invested in equity and debt instruments of non-publicly held companies and            account for them under the cost method since we do not have the ability to exercise            significant influence over operations. We monitor these investments for other than            temporary impairment by considering current factors including economic environment,            market conditions, operational performance and other specific factors relating to the            business underlying the investment, and record reductions in carrying values when            necessary.

          We            have in the past and may in the future sell publicly traded equity securities that we            do not own in anticipation of declines in the fair market values of the securities.            When we sell securities that we do not own, we must borrow the securities we sold in            order to deliver them and settle the trades. Thereafter, we must buy the securities and            deliver them to the lender of the securities. Our potential for loss on these            transactions is unlimited since the value of the underlying security can keep            increasing which could have a material adverse effect on the Company’s            consolidated financial statements.

***The Company is seeking to            eliminate the risk that it could be deemed to be an investment            company.***

          The            Company has substantial liquidity. Although a portion of the Company’s cash is            invested in securities, the Company is pursuing an acquisition strategy that will, if            successfully executed, eliminate any risk of it being deemed to be an investment            company.

          Generally,            a company must register under the Investment Company Act of 1940 and comply with            significant restrictions on operations and transactions with affiliates if its            investment securities exceed 40% of the company’s total assets, or if it holds            itself out as being primarily engaged in the business of investing, owning or holding            securities. If it is deemed to be an investment company, it might need to dispose of or            acquire investments in order to avoid investment company status.

7

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**Risks related            to investments in other companies**

***Ability to successfully            identify investment opportunities***

          We            will face substantial competition in identifying and closing appropriate investment            opportunities from, among others, venture capital firms, large corporate investors and            other publicly traded companies. These competitors may limit our opportunity to acquire            interests in new partner companies. In addition, we may be unable to acquire interests            in appropriate companies for other reasons, including the inability to agree on terms,            such as price and ownership percentages, incompatibility between us and management and            access to sufficient funding. Our growth will be materially adversely affected if we            cannot successfully identify investments in a sufficient number of            companies.

***The value of our business            may fluctuate because of companies that we may invest in.***

          The            value of our business may fluctuate because of companies that we may invest in. These            companies may be development stage or privately held companies for which no public            market exists for their stock. The valuations of our investments in privately held            companies that we may invest in are indeterminate prior to their public offerings, and            there can be no assurance that these offerings will occur since they will be dependent            upon the development of these businesses, market conditions and other conditions over            which we may have no control.

***Capital and management            resources***

          There            will be a number of special issues that we will have to address for investment in            start-up companies, including: the diversion of management attention in connection with            both negotiating and overseeing these transactions; the potential issuance of            additional shares of our Common Stock in connection with these transactions, which            could dilute the rights of existing shareholders, and the need to incur additional debt            in connection with these transactions. In addition, many, if not all, of these start-up            companies will face the same, or similar, risks as we face in our own            business.

***Managing            growth***

          Successful            implementation of our business plan will require the management of growth. We cannot            assure you that our existing operations and infrastructure will be adequate to manage            such growth, or that any steps taken to improve such systems and controls will be            sufficient. Our future success will depend in part upon attracting and retaining the            services of current management and technical personnel. We cannot assure you that we            will be successful in attracting, assimilating and retaining new personnel in the            future as future growth takes place.

**Risks related            to medical device companies**

***Risks related to            government regulation and future regulatory requirements***

          Medical            devices such as ours are subject to strict regulation by state and federal authorities,            including the Food and Drug Administration and comparable authorities in certain            states.

          Manufacturers            of medical devices are required to comply with very specific rules and regulations            concerning the testing, manufacturing, packaging, labeling and marketing of medical            devices. Failure to comply with applicable regulatory requirements could result in,            among other things, civil and criminal fines, product recalls, detentions, seizures,            injunctions and criminal prosecutions.

          In            addition, these regulations are subject to future change. We cannot predict what            material impact, if any, these changes might have on our business. Future changes in            regulations or enforcement policies could impose more stringent requirements on us,            compliance with which could adversely affect our business.

***Potential product            recalls***

          In            the event that any of our products prove to be defective, we could voluntarily recall,            or the FDA could require us to redesign or implement a recall of, any defective            product. There is a possibility that we may recall products in the future and that            future recalls could result in significant costs to us and in significant negative            publicity which could harm our ability to market our products in the future.

***We could be exposed to            significant liability claims.***

          We            could be exposed to significant liability claims if we are unable to obtain insurance            at acceptable costs and adequate levels or otherwise protect ourselves against            potential product liability claims.

          The            testing, manufacture, marketing and sale of medical devices involve the inherent risk            of liability claims. A successful product liability claim could affect or prevent            commercialization of our medical devices, or cause a significant

8

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financial burden on us, or both,            and could have a material adverse effect on our business, financial condition, and            ability to market our medical devices.

***Health care providers may            not be able to obtain adequate levels of third-party reimbursement.***

          The            success of our product may depend on the ability of health care providers to obtain            adequate levels of third-party reimbursement. The amount of reimbursement available may            vary. The cost of medical care is funded, in substantial part, by government insurance            programs, such as Medicare and Medicaid, and private and corporate health insurance            plans. Third-party payers may deny reimbursement at adequate levels if they determine            that a prescribed device or diagnostic procedure is not used in accordance with            cost-effective treatment methods as determined by the payer, or is experimental,            unnecessary or inappropriate. The inadequacy of the reimbursement may have a            material adverse effect on our business.

***The medical device            industry is characterized by rapid technological changes and            advances.***

          Although            the Company believes that its products are technologically current, the development of            new technologies or refinements of existing ones by the Company’s competitors            could at any time make the Company’s existing products technologically or            economically obsolete. Although the Company is not aware of any pending technological            developments that would be likely to materially and adversely affect its business or            financial position, there can be no assurance that such developments will not occur at            any time.

***We may rely on third            parties to support the manufacture or commercialization of our            products.***

          We            may rely on third parties, and possibly single third parties, to manufacture or            commercialize our products. Third parties may not perform their obligations as            expected. The amount and timing of resources that third parties devote to manufacturing            or commercializing our product may not be within our control. The third party on which            we rely to commercialize our products may not be able to recruit and retain skilled            sales representatives.

          Furthermore,            our interests may differ from those of the third party that manufacture or            commercializes our products. Disagreements that may arise with the third party could            limit the manufacture or commercialization of our products, or result in litigation or            arbitration, which would be time-consuming, distracting and expensive. If the third            party that supports the manufacture or commercialization of our products breaches or            terminates its agreement with us, or fails to conduct its activities in a timely            manner, such breach, termination or failure could result in the disruption of our            business and could have a material adverse effect on our results of            operations.

**Risks related            to our high-speed Internet access service**

***We may be unable to solve            ongoing technical difficulties in our deployment and equipment for our high-speed            Internet access service is not, and may never be, available at a cost and with            performance levels that allow for commercial implementation on an economically            attractive basis.***

          Our            super high-speed Internet service utilizes a new technology that has a limited            operating history and that remains subject to further development and            refinement.

          The            equipment necessary to provide our high-speed Internet access service is not currently            manufactured on a scale and at a cost suitable for the commercialization of our            service. Such equipment may never become available at a cost and with performance            levels that allow for commercial implementation on an economically attractive            basis.

***Many financially stronger            competitors with broader market coverage are offering high-speed Internet            access*.**

          The            market for Internet access and related services is highly competitive. We expect local,            regional and national Internet service providers to be competitors for our super            high-speed Internet access service. Telephone companies with digital subscriber line            technology, which increases the effective capacity of existing copper telephone cables,            are among other competitors. Also, cable operators with high-speed cable modems are            among the other communications companies also providing high-speed Internet access.            Many of the competing Internet service providers have, or can be expected to have,            greater financial, marketing and other resources than us. We may not be able to compete            successfully with these entities.

**ITEM 1B.            UNRESOLVED STAFF COMMENTS**

          None.

**ITEM 2.            PROPERTIES**

9

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          All            of our properties are leased space. Information on our major locations at December 31,            2007 is presented below:

|   |                                 |   |                                                |   |        |   |           |   |        |   |   |   |   |   |
|--------|--------------------------------------|--------|-----------------------------------------------------|--------|-------------|--------|----------------|--------|-------------|--------|--------|--------|--------|--------|
|   |                                 |   |                                                |   | **Square**  |   | **Lease**      |   | **Renewal** |   |   |
|   | **Location**                         |   | **Use**                                             |   | **footage** |   | **expiration** |   | **options** |   |   |
|   |                                      |   |                                                     |   |             |   |                |   |             |   |   |
|   | New York,                        NY  |   | Executive and                        administrative |   | 2,500       |   |           | 2007   |        |   | None   |   |   |   |
|   | New York,                        NY  |   | F&B                        restaurant           |   | 1,300       |   |           | 2009   |        |   | None   |   |   |   |
|   | New York,                        NY  |   | F&B                        restaurant           |   | 1,500       |   |           | 2014   |        |   | None   |   |   |   |
|   | New York,                        NY  |   | Other                                               |   | 3,000       |   |           | 2008   |        |   | None   |   |   |   |
|   | Princeton,                        NJ |   | Administrative and                        research  |   | 2,500       |   |           | 2009   |        |   | None   |   |   |   |
|   | Stamford,                        CT  |   | Administrative                                      |   | 850         |   |           | 2009   |        |   | None   |   |   |   |

**ITEM 3.            LEGAL PROCEEDINGS**

               On            May 11, 2006, we filed two separate complaints against Cellco Partnership (d/b/a            Verizon Wireless) in United States District Court in the Southern District of Florida,            in which we assert that Verizon Wireless is infringing two patents. Verizon Wireless is            a joint venture of Verizon Communications Inc. and Vodafone Group PLC. In May 2007, we            reached a mutual agreement with Verizon Wireless leading to the dismissal of the two            separate complaints that we filed against Verizon Wireless. No financial consideration            was paid or received by either party.

               On            June 2, 2006, we filed two separate complaints against Alltel Corp. in United States            District Court in the Southern District of Florida, in which we assert that Alltel is            infringing two patents. In an amended complaint, we asserted claims for infringement            against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to            Alltel Corp. In April  2007, the case was transferred to United States District            Court for the Eastern District of Arkansas. In November 2007, one of the complaints was            dismissed with prejudice. A claim interpretation hearing was held on February 22, 2008,            however, no order has been entered interpreting the claim at issue. The Court has set            the matter for trial during the two-week period commencing on July 18, 2008. A separate            lawsuit was commenced in October 2006 against All Wireless, LLC, a Florida company, in            United States District Court in the Middle District of Florida, alleging infringement.            The All Wireless litigation has been stayed pending the completion of the claim            construction process in the Alltel litigation.

**ITEM 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

               At            its Annual Meeting of shareholders held on December 20, 2007, the Company submitted the            following matters to a vote of its shareholders, all of which were approved:

               1.            Election of Directors:

|   |                                         |   |                                 |      |                                      |    |   |   |   |
|--------|----------------------------------------------|--------|--------------------------------------|-----------|-------------------------------------------|---------|--------|--------|--------|
|   | **Name of                        Director**  |   | **Votes                        For** |      | **Votes                        Withheld** |    |   |
|   |                                              |   |                                      |      |                                           |    |   |
|   | Shant S.                        Hovnanian    |   |                                 | 3,224,742 |                                      | 96,474  |   |   |   |
|   | Vahak S.                        Hovnanian    |   |                                 | 3,168,625 |                                      | 152,591 |   |   |   |
|   | William F.                        Leimkuhler |   |                                 | 3,235,537 |                                      | 85,679  |   |   |   |
|   | Jeffrey                        Najarian      |   |                                 | 3,235,417 |                                      | 85,799  |   |   |   |
|   | Christopher                        Vizas     |   |                                 | 3,235,417 |                                      | 85,799  |   |   |   |

               2.            Appointment of PricewaterhouseCoopers LLP as the independent registered public            accounting firm of the Company:

|   |                                 |   |                                     |   |            |   |   |   |
|--------|--------------------------------------|--------|------------------------------------------|--------|-----------------|--------|--------|--------|
|   | **Votes                        For** |   | **Votes                        Against** |   | **Abstentions** |   |
|   |                                      |   |                                          |   |                 |   |
|   | 3,294,197                            |   | 13,882                                   |   |            | 13,137 |   |   |

               3.            Amendment to the Certificate of Incorporation, as amended, of the Company to enable the            Company to implement a reverse stock split of all the issued and outstanding shares, as            well as treasury shares, of the Company’s Common Stock at a ratio not to exceed            one-for-six:

|   |                                 |   |                                     |   |            |   |   |   |
|--------|--------------------------------------|--------|------------------------------------------|--------|-----------------|--------|--------|--------|
|   | **Votes                        For** |   | **Votes                        Against** |   | **Abstentions** |   |
|   |                                      |   |                                          |   |                 |   |
|   | 2,931,211                            |   | 386,575                                  |   |            | 3,430  |   |   |

10

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**PART            II**

|                               |                                                                                                                                                                 |
|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ITEM                        5.** | **MARKET FOR                        REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER                        PURCHASES OF EQUITY SECURITIES** |

               Our            Common Stock is listed for quotation on the Nasdaq Capital Market and trades under the            symbol “SPDE.” The following table sets forth high and low trade prices for            the Common Stock for the fiscal quarters indicated.

|   |                                  |   |                                 |   |                                |   |   |   |   |   |   |   |   |
|--------|---------------------------------------|--------|--------------------------------------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |                                  |   | **High                        Sale** |   | **Low                        Sale** |   |   |
|   |                                  |   |                                      |   |                                     |   |   |
|   | **2007**                              |   |                                 |   |                                |   |   |   |   |
|   | First                        quarter  |   |                                 | $      | 5.960                               |   |   |   | $      | 4.600  |   |   |   |
|   | Second                        quarter |   |                                 |   | 5.040                               |   |   |   |   | 2.400  |   |   |   |
|   | Third                        quarter  |   |                                 |   | 3.520                               |   |   |   |   | 1.920  |   |   |   |
|   | Fourth                        quarter |   |                                 |   | 3.920                               |   |   |   |   | 1.400  |   |   |   |
|   |                                  |   |                                 |   |                                |   |   |   |   |   |   |   |   |
|   | **2006**                              |   |                                 |   |                                |   |   |   |   |   |   |   |   |
|   | First                        quarter  |   |                                 | $      | 6.720                               |   |   |   | $      | 4.600  |   |   |   |
|   | Second                        quarter |   |                                 |   | 7.040                               |   |   |   |   | 4.400  |   |   |   |
|   | Third                        quarter  |   |                                 |   | 5.480                               |   |   |   |   | 4.080  |   |   |   |
|   | Fourth                        quarter |   |                                 |   | 8.200                               |   |   |   |   | 4.280  |   |   |   |

          At            our annual meeting of stockholders held on November 20, 2007, we received stockholder            approval of a proposal authorizing our Board of Directors, in its discretion, to            implement a reverse split of our issued and outstanding shares, as well as treasury            shares, at a ratio not to exceed one-for-six. Thereafter, the Board of Directors            approved the one-for-four ratio. The one-for-four reverse split took effect with the            open of trading on December 3, 2007. The exercise price and the number of shares of            common stock issuable under the Company’s outstanding stock options have been            proportionately adjusted to reflect the reverse stock split.

          On            March 15, 2008, the closing trade price of our Common Stock was $1.26 per share. As of            December 31, 2007, there were approximately 200 registered shareholders and, to the            best of our belief, approximately 3,000 beneficial owners of our Common Stock. During            the year ended December 31, 2007, we did not make any sales of securities that were not            registered under the Securities Act of 1933, as amended.

          We            have never declared or paid any cash dividends on our Common Stock and do not intend to            declare or pay cash dividends on the Common Stock at any time in the foreseeable            future. Future earnings, if any, will be used for the expansion of our            business.

**Issuer Purchases of Equity            Securities**

          There            were no repurchases by the Company of its own equity securities during the fourth            quarter of 2007.

11

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**Equity Compensation            Plans**

          The            following table sets forth certain information as of December 31, 2007 for all            compensation plans, including individual compensation arrangements, under which equity            securities of the Company are authorized for issuance:

|   |                                                                              |   |                                        |   |                                        |   |                                        |    |   |
|--------|-----------------------------------------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|---------|--------|
|   |                                                                              |   | **Number                        of**        |   |                                        |   |                                        |    |   |
|   |                                                                              |   | **securities to                        be** |   | **Weighted**                                |   |                                        |    |
|   |                                                                              |   | **issued                        upon**      |   | **average                        exercise** |   |                                        |    |
|   |                                                                              |   | **exercise                        of**      |   | **price                        of**         |   | **Number                        of**        |    |
|   |                                                                              |   | **outstanding**                             |   | **outstanding**                             |   | **securities**                              |    |
|   |                                                                              |   | **options,**                                |   | **options,**                                |   | **remaining**                               |    |
|   |                                                                              |   | **warrants                        and**     |   | **warrants                        and**     |   | **available                        for**    |    |
|   | **Plan                        category**                                          |   | **rights**                                  |   | **rights**                                  |   | **further                        issuance** |    |
|   |                                                                                   |        |                                             |        |                                             |        |                                             |    |
|   | Equity compensation                        plans approved by security holders     |   | 550,938                                     |   | $                                           | 7.84   |                                        | 173,019 |   |
|   | Equity compensation                        plans not approved by security holders |   |                                        |   |                                        |   |                                        |    |   |
|   |                                                                                   |        |                                             |        |                                             |        |                                             |    |
|   | Total                                                                             |   | 550,938                                     |   | $                                           | 7.84   |                                        | 173,019 |   |
|   |                                                                                   |        |                                             |        |                                             |        |                                             |    |

**Performance            graph**

          The            following graph compares the cumulative return on the Company’s Common Stock for            the last five years with the Total Return Index for both The Nasdaq Stock Market US            (“Nasdaq US”) and Nasdaq Non-Financial Stocks (the “Peer            Group”), as prepared for Nasdaq by the Center for Research in Security Prices at            the University of Chicago.

          The            performance graph assumes (i) $100 was invested on December 31, 2002 and (ii)            reinvestment of dividends. Each measurement point on the graph below represents the            cumulative stockholder return as measured by the last sale price at the end of each            annual period from 2003 through 2007.

12

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**ITEM 6.            SELECTED CONSOLIDATED FINANCIAL DATA**            The selected consolidated financial data below should be read in conjunction            with”Management’s Discussion and Analysis of Financial Condition and            Results of Operations” and the Consolidated Financial Statements of the Company            and Notes thereto included elsewhere in this Form 10-K.

|                                                        |   |                                               |                                                             |     |                                          |      |   |     |      |     |   |      |   |   |      |   |
|-------------------------------------------------------------|--------|----------------------------------------------------|------------------------------------------------------------------|----------|-----------------------------------------------|-----------|--------|----------|-----------|----------|--------|-----------|--------|--------|-----------|--------|
|                                                        |   | **Year ended December                        31,** |                                                             |
|                                                        |   |                                                    |                                                             |
|                                                        |   | **2007**                                           |                                                             | **2006** |                                          | **2005**  |   | **2004** |      | **2003** |   |
|                                                        |   |                                                    |                                                             |          |                                          |           |   |          |      |          |   |
|                                                        |   |                                               | **(in thousands,                        except per share data)** |     |                                          |
| **Statement of                        Operations Data**     |   |                                               |                                                             |     |                                          |      |   |     |      |     |   |      |   |   |      |   |
| Revenues                                                    |   | $                                                  | 733                                                              |     | $                                             | 846       |   | $        | 1,038     |     | $      | 917       |   | $      | 711       |   |
| Total operating                        expenses             |   |                                               | 6,004                                                            |     |                                          | 7,062     |   |     | 6,934     |     |   | 10,778    |   |   | 7,581     |   |
|                                                        |   |                                                    |                                                                  |     |                                               |           |   |          |           |     |        |           |   |        |           |   |
| Operating                        loss                       |   |                                               | (5,271                                                           | )        |                                          | (6,216    | )      |     | (5,896    | )        |   | (9,861    | )      |   | (6,870    | )      |
| Investment                        income/(loss)             |   |                                               | 853                                                              |     |                                          | 601       |   |     | (52       | )        |   | 419       |   |   | (4,520    | )      |
| Minority                        interest                    |   |                                               | —                                                          |     |                                          | —   |   |     | 159       |     |   | 508       |   |   | 779       |   |
| Equity in loss of                        associated company |   |                                               | —                                                          |     |                                          | —   |   |     | —   |     |   | —   |   |   | (93       | )      |
| Settlement of                        litigation             |   |                                               | —                                                          |     |                                          | —   |   |     | —   |     |   | 15,000    |   |   | —   |   |
| Benefit from/(provision                        for) taxes   |   |                                               | —                                                          |     |                                          | —   |   |     | 322       |     |   | (62       | )      |   | —   |   |
|                                                        |   |                                                    |                                                                  |     |                                               |           |   |          |           |     |        |           |   |        |           |   |
| Net                        earnings/(loss)                  |   | $                                                  | (4,418                                                           | )        | $                                             | (5,615    | )      | $        | (5,467    | )        | $      | 6,004     |   | $      | (10,704   | )      |
|                                                        |   |                                                    |                                                                  |     |                                               |           |   |          |           |     |        |           |   |        |           |   |
| **Per Common                        Share**                 |   |                                               |                                                             |     |                                          |      |   |     |      |     |   |      |   |   |      |   |
| Basic                        earnings/(loss)                |   | $                                                  | (1.11                                                            | )        | $                                             | (1.40     | )      | $        | (1.35     | )        | $      | 1.48      |   | $      | (2.60     | )      |
| Weighted average                        outstanding         |   |                                               | 3,992,044                                                        |     |                                          | 4,012,927 |   |     | 4,045,552 |     |   | 4,061,320 |   |   | 4,124,567 |   |
|                                                        |   |                                               |                                                             |     |                                          |      |   |     |      |     |   |      |   |   |      |   |
| Diluted                        earnings/(loss)              |   | $                                                  | (1.11                                                            | )        | $                                             | (1.40     | )      | $        | (1.35     | )        | $      | 1.43      |   | $      | (2.60     | )      |
| Weighted average                        outstanding         |   |                                               | 3,992,044                                                        |     |                                          | 4,012,927 |   |     | 4,045,552 |     |   | 4,199,825 |   |   | 4,124,567 |   |
|                                                        |
|                                                        |   | **December                        31,**            |                                                             |
|                                                        |   |                                                    |                                                             |
|                                                        |   | **2007**                                           |                                                             | **2006** |                                          | **2005**  |   | **2004** |      | **2003** |   |
|                                                        |   |                                                    |                                                             |          |                                          |           |   |          |      |          |   |
|                                                        |   |                                               |                                                             |     | **(in                        thousands****)** |      |   |     |      |
| **Balance Sheet                        Data**               |   |                                               |                                                             |     |                                          |      |   |     |      |     |   |      |   |   |      |   |
| Cash and cash                        equivalents            |   | $                                                  | 8,845                                                            |     | $                                             | 10,204    |   | $        | 18,563    |     | $      | 17,741    |   | $      | 19,419    |   |
| United States                        Treasury bills         |   |                                               | 2,997                                                            |     |                                          | 4,990     |   |     | —   |     |   | 5,977     |   |   | —   |   |
| Working                        capital                      |   |                                               | 10,919                                                           |     |                                          | 14,658    |   |     | 18,635    |     |   | 23,329    |   |   | 17,774    |   |
| Net property and                        equipment           |   |                                               | 51                                                               |     |                                          | 528       |   |     | 426       |     |   | 610       |   |   | 420       |   |
| Net other intangible                        assets          |   |                                               | —                                                          |     |                                          | 34        |   |     | 623       |     |   | 1,418     |   |   | 2,042     |   |
| Net                        goodwill                         |   |                                               | —                                                          |     |                                          | —   |   |     | —   |     |   | —   |   |   | 621       |   |
| Total                        assets                         |   |                                               | 13,290                                                           |     |                                          | 17,136    |   |     | 22,460    |     |   | 28,682    |   |   | 28,510    |   |
| Minority                        interest                    |   |                                               | —                                                          |     |                                          | —   |   |     | —   |     |   | 159       |   |   | 531       |   |
| Total                        liabilities                    |   |                                               | 1,437                                                            |     |                                          | 1,034     |   |     | 1,285     |     |   | 1,673     |   |   | 6,990     |   |
| Total                        equity                         |   |                                               | 11,852                                                           |     |                                          | 16,102    |   |     | 21,176    |     |   | 26,850    |   |   | 20,989    |   |

13

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**ITEM 7.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF            OPERATIONS**

**Operations**

          Speedus            Corp. is a holding company that owns significant equity interests in diverse            businesses. We seek business opportunities across all industries for potential            transactions and relationships in which we can apply our current resources and            management strengths. The companies that we target, either public or privately held,            will be seeking growth or restructuring capital to pursue near term business objectives            in demonstrated markets. We will continue to pursue opportunities involving our            expertise in the medical device and wireless markets, as well as those areas involving            our broadband assets as attractive opportunities present themselves.

          We            have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens            Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision support            products and services for primary care physicians, pediatricians, cardiologists and            other healthcare professionals. Zargis Acoustic Cardioscan® (Cardioscan®),            Zargis’ core product, is the first and only FDA-authorized computer-assisted            medical device designed to support physicians in analyzing heart sounds for the            identification of suspected systolic and diastolic murmurs—which are a potential            sign of heart disease. We own 90% of F&B Güdtfood Holding Corp., the creator            and operator of the original Eurocentric “chic and quick” café,            which is operating two stores in Manhattan. In 2005, we conceived Wibiki, a new            software-based wireless network that leverages existing Wi-Fi infrastructures to reduce            cost, complexity and risk for users when accessing the Internet wirelessly.            Wibiki’s business model will employ a user opt-in advertising service we call            AdChooser to generate revenues that keep Wibiki services free to users. We own a            portfolio of patents that allow for high-speed wireless communications. We also own            fixed wireless spectrum in the New York City metropolitan area that we may            commercialize in the future to support high-speed, or broadband, Internet access            service. For additional information on each of our business segments, see the            discussions below and “Notes to Consolidated Financial Statements — Note 8,            Business Segment Information.”

                      *Zargis Medical Corp.* In January 2001, we co-invested with Siemens Corporate            Research, Inc., a subsidiary of Siemens Corporation, in Zargis Medical Corp. to develop            non-invasive, diagnostic support solutions that automatically analyze acoustical data            from a patient to determine physiologically significant features useful in medical            diagnosis. The development of Zargis’ patented technology is a pioneering effort            in medicine which uses advanced signal processing algorithms deployed on standard            computer platforms. The first Zargis device, Cardioscan, received its initial FDA            authorization in May 2004 and additional authorizations in September 2005 and March            2006. Cardioscan is currently being tested by a small group of physicians during            general medical examinations and physicals to help detect and analyze suspected heart            murmurs which could be a sign of valvular and congenital heart disease. Zargis is            currently researching, and conducting trials on, additional noninvasive diagnostic            support tools that process acoustical data from the body in order to provide an            accurate and intelligible assessment of a patient’s health. These assessments may            be used by physicians and other healthcare providers to assist in the early            identification or monitoring of heart, lung, vascular and other conditions and to            provide better patient treatment.

          Major            next steps remaining for Zargis include continuing market trials and clinical trials            for new applications of the Zargis technology and the formation of strategic            partnerships designed to support product commercialization.

          In            February 2003, we acquired a controlling interest in Zargis Medical. At December 31,            2007, as a result of continued investment, our ownership interest was approximately            81%.

          In            October 2007, Zargis and the 3M Company entered into an exclusive multi-year            marketing alliance involving Zargis’ heart sound analysis software and 3M            Littmann’s next-generation electronic stethoscope. Under the agreement, Zargis            will support 3M in its efforts to develop a next-generation stethoscope that will be            compatible with Zargis’ heart sound analysis software. In addition, the alliance            provides Zargis with a wide-range of marketing and promotional opportunities along with            exclusive rights to sell its heart sound analysis software through the global            distribution network of the Littmann brand. The agreement grants 3M a 10% minority            equity position in Zargis, 5% following the first sale of Zargis’ software            through the 3M distribution channel and 5% in the event the agreement is renewed after            an initial two year term and certain other conditions are met, and a seat on            Zargis’ board of directors.

                      *F&B Güdtfood*. We own 90% of F&B Güdtfood, the creator and            operator of the original Eurocentric “chic and quick” café, which is            operating one store in Manhattan. The acquisition price was $3,500,000 in May 2002. In            February 2003, we reduced our cash investment in F&B Güdtfood and received            $1,775,000 while maintaining our original 51% interest. In December 2003, as a result            of renegotiation, our interest increased to 80% without an additional investment. As a            result of certain milestones not having been met, in 2005 our interest increased to            90%. We have also entered into a management services contract with F&B            Güdtfood that will result in direct revenues to us although these revenues will be            eliminated on our consolidated financial statements.

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*          Broadband            Patents.* We have accumulated a portfolio of patents that teach and cover the            improvement of high-speed wireless communication systems to allow greater information            content, reliability, clarity, more efficient use of licensed spectrum as compared to            prior systems and other advances. We have 6 domestic patents with expiration dates            ranging from 2007 through 2017, with approximately 46 international counterparts in 28            countries. We also have 4 domestic patents pending and 14 patents pending in an            additional 3 countries. Certain wireless communications systems may employ a number of            different combinations of our patented technology to maximize operational and spectrum            efficiency. While we believe that there is great value in our patented technologies, it            is a lengthy and expensive process to investigate and pursue licensing/patent            infringement cases. We are evaluating a strategy for the utilization of these patents            in the future, which may include pursuit of licensing or development of other strategic            opportunities with users of the underlying technology. We have licensed technology in            the past, both domestically and internationally, but are not currently receiving any            license fees.

          On            May 11, 2006, we filed two separate complaints against Cellco Partnership (d/b/a            Verizon Wireless) in United States District Court in the Southern District of Florida,            in which we assert that Verizon Wireless is infringing two patents. Verizon Wireless is            a joint venture of Verizon Communications Inc. and Vodafone Group PLC. In May 2007, we            reached a mutual agreement with Verizon Wireless leading to the dismissal of the two            separate complaints that we filed against Verizon Wireless. No financial consideration            was paid or received by either party.

          On            June 2, 2006, we filed two separate complaints against Alltel Corp. in United States            District Court in the Southern District of Florida, in which we assert that Alltel is            infringing two patents. In an amended complaint, we asserted claims for infringement            against Alltel Communications, Inc. and Alltel Wireless Holdings, Inc., in addition to            Alltel Corp. In  April  2007, the case was transferred to United States            District Court for the Eastern District of Arkansas. In November  2007, one            of the complaints was dismissed with prejudice. A claim interpretation hearing was held            on February 22, 2008, however, no order has been entered interpreting the claim at            issue. The Court has set the matter for trial during the two-week period commencing on            July 18, 2008. A separate lawsuit was commenced in October 2006 against All Wireless,            LLC, a Florida company, in United States District Court in the Middle District of            Florida, alleging infringement. The All Wireless litigation has been stayed pending the            completion of the claim construction process in the Alltel litigation.

*          Wibiki.*            During 2005, our technology resources and experience in wireless broadband enabled us            to conceive a new software-based Wibiki initiative to leverage existing Wi-Fi            infrastructures to reduce cost and complexity that is now available at www.gobiki.com.            The business premise for Wibiki is an advertising platform we call Adbiki/Adchooser. On            September 21, 2007, Wibiki launched a new beta service to transform web ads into a            usable space by Wibiki members for sharing web content with their friends. We continue            to evolve the Wibiki platform beyond its original wireless focus. Adbiki is versatile,            can scale to a large user base and is the underpinning for the NetfreeUS proposed            service described below.

                      *NetfreeUs.* In March 2007, NetfreeUs, a new wholly-owned subsidiary, asked the            FCC for authority to manage a new nationwide Wireless Public Broadband (WPB) network in            the 2155-2175 MHz frequency band. NetfreeUS’ Wireless Public Broadband            (“WPB”) service will never charge monthly fees. NetfreeUS will coordinate            third-party lessees who would own and operate wireless access points            (“WAPs”) with no lessee authorized to operate more than 50 WAPs. WPB will            promote localism and the provision of advertising and public service messages targeted            to local interests and communities, as well as local business and economic development,            through ubiquitous coverage provided by small-footprint networks. On August 31, 2007,            the FCC issued an Order that dismissed without prejudice the application filed by            NetfreeUS and other applicants to provide wireless service. NetfreeUS has filed a            Petition for Partial Reconsideration with the FCC requesting a grant of its application            and petition for forbearance and has also filed a Notice to Intervene in an action            filed by another applicant in the United States Court of Appeals for the District of            Columbia. The latter filing was granted and we are now a party to this            proceeding.

*          Local            Multipoint Distribution Service (LMDS) license.* We have an FCC commercial operating            license, awarded to us in recognition of our efforts in developing and deploying LMDS            technology and for spearheading its regulatory approval at the FCC, which covers 150            MHz of spectrum in the New York City area. Under FCC authorization, the license            includes an additional 150 MHz of spectrum until the first Ka band satellite is            launched, an event which is not currently determinable. The license provides that the            spectrum may be used for a wide variety of fixed wireless purposes, including wireless            local loop telephony, high-speed Internet access and two-way            teleconferencing.

          The            license has been renewed through February 1, 2016 conditioned upon demonstrating to the            FCC by March 27, 2007 that we are providing “substantial service.” On March            7, 2007, we filed a notification that we are providing “substantial            service” in accordance with FCC standards. On March 27, 2007, out of an abundance            of caution, we requested a contingent waiver and an extension of time until March 27,            2010 to demonstrate “substantial service,” to the extent our earlier            demonstration is not deemed compliant with FCC standards. On July 31, 2007, we were            informed by the FCC that we had not demonstrated that we were providing            “substantial service” on the required date and were granted a waiver to            extend the construction and substantial service deadline under the Company’s FCC            license renewal to October 6, 2008. In January 2008, we filed a waiver request with the            FCC for a limited extension of the deadline for “substantial service”            consistent with that filed by the LMDS Coalition, a consortium of license holders and            equipment vendors.

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          We            will not commence a full marketing effort using our LMDS technology until new LMDS            equipment becomes commercially available with cost and performance that allow            implementation of an economically viable business model. We cannot determine when this            will occur and this equipment may never be available to us on this basis.

*          Other.*            We have invested a portion of our assets in a portfolio of marketable securities            consisting of publicly traded equity securities. We have also invested a portion of our            assets in equity and debt instruments of non-publicly held companies. We have in the            past and may in the future sell publicly traded equity securities we do not own in            anticipation of declines in the fair market values of these securities.

          We            have generated operating losses and negative operating cash flows since our inception            and expect to continue to do so in the near future.

**Critical Accounting            Policies**

          Our            discussion and analysis of our financial condition and results of operations are based            upon our consolidated financial statements. The preparation of those financial            statements in conformity with generally accepted accounting principles 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 dates of the            financial statements and the reported amounts of operating revenues and expenses during            the reporting periods. Actual results could differ from those estimates. For a            description of all of our accounting policies, see Note 2 to our consolidated financial            statements included in this Form 10-K. However, we believe the following critical            accounting policies affect the more significant judgments and estimates used in the            preparation of our consolidated financial statements.

*          Financial            instruments*. Our financial instruments consist primarily of cash equivalents,            United States treasury bills and marketable securities and may include securities sold            and not purchased. The carrying value of cash equivalents approximates market value            since these highly liquid, interest earning investments are invested in money market            funds. Marketable securities consist of publicly traded equity securities classified as            trading securities and are recorded at fair market value, i.e., closing prices quoted            on established securities markets. Securities sold and not repurchased are also carried            at the fair market value of the securities. Significant changes in the market value of            securities that we invest in could have a material impact on our financial position and            results of operations.

          We            have also invested in equity and debt instruments of non-publicly held companies and            account for them under the cost method since we do not have the ability to exercise            significant influence over operations. We monitor these investments for other than            temporary impairment by considering current factors including economic environment,            market conditions, operational performance and other specific factors relating to the            business underlying the investment, and record reductions in carrying values when            necessary.

                      *Long-lived assets.* Long-lived assets, including fixed assets and other            intangibles, are reviewed for impairment whenever events or changes in circumstances            indicate that the carrying amount of any such asset may not be recoverable through            estimated future cash flows from that asset. The estimate of cash flow is based upon,            among other things, certain assumptions about expected future operating            performance.

                      *Share-Based Payments*. Prior to January 1, 2006, we accounted for our employee            stock options in accordance with Statement of Financial Accounting Standards No. 123,            “Accounting for Stock-Based Compensation”, as amended, which defines a            “fair value method” of measuring and accounting for compensation expense            from employee stock options. FASB 123 also allowed accounting for such options under            the “intrinsic value method” in accordance with Accounting Principles Board            No. 25, “Accounting for Stock Issued to Employees.” We elected to use the            intrinsic value method and adopted the disclosure only provisions of FASB 123.            Generally, no compensation cost was recognized since stock options were issued with            exercise prices equal to the market value of the underlying shares on the grant            date.

          Effective            January 1, 2006, we adopted FASB 123R, “Share-Based Payment”, using the            modified prospective application method. Under this method, for all unvested awards as            of January 1, 2006, we record compensation cost based upon the fair value of those            awards on the grant date over the remaining service period of each award on a straight            line basis. For awards granted after January 1, 2006, we record compensation cost based            upon the fair value of those awards on the grant date over the service period of each            award on a straight line basis.

          We            estimate the value of these awards on the date of grant using a Black-Scholes option            pricing model. The determination of the fair value of these awards on the date of grant            is affected by our stock price as well as assumptions regarding a number of complex and            subjective variables. These variables include our expected stock price volatility over            the term of the awards, expected term, risk-free interest rate, expected dividends and            expected forfeiture rates.

          If            factors change and we employ different assumptions in the application of FASB 123R in            future periods, the compensation expense that we record under FASB 123R may differ            significantly from what we have recorded in the current period. There is a high degree            of subjectivity involved when using option pricing models to estimate share-based            compensation under FASB 123R. Consequently, there is a risk that our estimates of the            fair values of these awards on the grant dates may bear little resemblance to the            actual values realized upon the exercise, expiration, early termination or

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forfeiture of those share-based            payments in the future. Employee stock options may expire worthless or otherwise result            in zero intrinsic value as compared to the fair values originally estimated on the            grant date and reported in our consolidated financial statements. Alternatively, value            may be realized from these instruments that are significantly in excess of the fair            values originally estimated on the grant date and reported in our consolidated            financial statements. During the year ended December 31, 2007, we do not believe that            reasonable changes in the projections would have had a material effect on share-based            compensation expense.

                      *Contingencies*. We account for contingencies in accordance with Statement of            Financial Accounting Standards No. 5, “Accounting for Contingencies”. SFAS            No. 5 requires that we record an estimated loss when information available prior to            issuance of our financial statements indicates that it is probable that an asset has            been impaired or a liability has been incurred at the date of the financial statements            and the amount of the loss can be reasonably estimated. Accounting for contingencies            such as environmental, legal and income tax matters requires us to use our judgment.            While we believe that our accruals for these matters are adequate, if the actual loss            is significantly different than the estimated loss, our results of operations will be            affected in the period that the difference is known.

**Twelve Months Ended December            31, 2007 Compared to Twelve Months Ended December 31, 2006**

          Revenues            decreased $113,000 from $846,000 for the twelve months ended December 31, 2006 to            $733,000 for the twelve months ended December 31, 2007. This decrease is primarily a            result of a reduction in menu prices at the Company’s first store and the lack of            customer acceptance of the F&B format at the second store. We closed the second            store, with revenues of $262,000 and $325,000 during the years ended December 31, 2007            and 2006, respectively, in December 2007.

          Selling,            general and administrative expenses decreased $492,000 from $4,320,000 for the twelve            months ended December 31, 2006 to $3,828,000 for the twelve months ended December 31,            2007. This decrease is primarily a result of decreases in stock based compensation in            the amount of $503,000, as well as decreases as a result of personnel            reductions.

          Research            and development expenses decreased $65,000 from $1,678,000 for the twelve months ended            December 31, 2006 to $1,613,000 for the twelve months ended December 31, 2007. This            decrease is primarily a result of a $231,000 decrease during 2007 in connection with            new wireless initiatives by the Company, net of a $165,000 increase as a result of            continuing development of Zargis’ medical device technology.

          Depreciation            and amortization decreased $492,000 from $758,000 for the twelve months ended December            31, 2006 to $266,000 for the twelve months ended December 31, 2007. This decrease is            primarily a result of a decrease in amortization of medical technology in the amount of            $142,000 from the completion of amortization of medical technology resulting from the            Zargis acquisition and a decrease in amortization of a patent in the amount of $413,000            from the completion of amortization.

          Investment            income/(loss) increased $252,000 from a net gain in the amount of $601,000 for the            twelve months ended December 31, 2006 to a net gain in the amount of $853,000 for the            twelve months ended December 31, 2007. Realized gains decreased $35,000 from net gains            of $100,000 for the twelve months ended December 31, 2006 to net gains of $65,000 for            the twelve months ended December 31, 2007. Unrealized gains increased $426,000 from net            losses of $289,000 for the twelve months ended December 31, 2006 to net gains of            $137,000 for the twelve months ended December 31, 2007. Interest income decreased            $139,000 from $790,000 for the twelve months ended December 31, 2006 to $651,000 for            the twelve months ended December 31, 2007. The decrease in interest income is a result            of a lesser amount of funds available for short-term investment. These investment            income amounts will fluctuate based upon changes in the market value of the underlying            investments, overall market conditions and the amount of funds available for short-term            investment and are not necessarily indicative of the results that may be expected for            any future periods.

**Twelve Months Ended December            31, 2006 Compared to Twelve Months Ended December 31, 2005**

          Revenues            decreased $192,000 from $1,038,000 for the twelve months ended December 31, 2005 to            $846,000 for the twelve months ended December 31, 2006. This decrease is primarily a            result of a reduction in menu prices at the Company’s first store and the            temporary closing of the second store for renovations, as well as a lack of customer            acceptance of the F&B format at the second store. We are testing new menu concepts            as a solution to customer acceptance.

          Selling,            general and administrative expenses increased $469,000 from $3,851,000 for the twelve            months ended December 31, 2005 to $4,320,000 for the twelve months ended December 31,            2006. This increase is primarily a result of increases in legal expenses in connection            with litigating patent infringement claims in the amount of $400,000 and stock based            compensation in the amount of $600,000, net of decreases in other legal expenses in the            amount of $200,000 and taxes in the amount of $300,000 as a result of the receipt of a            withholding tax refund, as well as decreases as a result of personnel            reductions.

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          Research            and development expenses decreased $119,000 from $1,797,000 for the twelve months ended            December 31, 2005 to $1,678,000 for the twelve months ended December 31, 2006. This            decrease is primarily a result of a lower level of expenses incurred during 2006 in            connection with new wireless initiatives by the Company.

          Depreciation            and amortization decreased $183,000 from $941,000 for the twelve months ended December            31, 2005 to $758,000 for the twelve months ended December 31, 2006. This decrease is            primarily a result of a decrease in amortization of medical technology from the            completion of amortization of early tranches of medical technology resulting from the            Zargis acquisition, net of an increase as a result of renovation to one of the F&B            Restaurant stores.

          Cost            of sales decreased $38,000 from $345,000 for the twelve months ended December 31, 2005            to $307,000 for the twelve months ended December 31, 2006. This decrease is primarily a            result of the decrease in revenues.

          Investment            income/(loss) increased $653,000 from a net loss in the amount of $52,000 for the            twelve months ended December 31, 2005 to a net gain in the amount of $601,000 for the            twelve months ended December 31, 2006. Realized gains increased $275,000 from net            losses of $175,000 for the twelve months ended December 31, 2005 to net gains of            $100,000 for the twelve months ended December 31, 2006. Unrealized losses decreased            $178,000 from net losses of $467,000 for the twelve months ended December 31, 2005 to            net losses of $289,000 for the twelve months ended December 31, 2006. Interest income            increased $200,000 from $590,000 for the twelve months ended December 31, 2005 to            $790,000 for the twelve months ended December 31, 2006. The increase in interest            income, net of a decrease as a result of a lesser amount of funds available for            short-term investment, is a result of increased interest rates. These investment income            amounts will fluctuate based upon changes in the market value of the underlying            investments, overall market conditions and the amount of funds available for short-term            investment and are not necessarily indicative of the results that may be expected for            any future periods.

          Minority            interest represents the interest of minority stockholders in the losses of F&B            Güdtfood and Zargis Medical since the dates of acquisition of a majority interest.            Through the year ended December 31, 2006, F&B Güdtfood and Zargis Medical            continued to generate losses which, during 2005, reduced the minority interest balance            to zero. As result, the Company is consolidating 100% of the losses for these entities            and continues to fund their operations with intercompany loans or additional            investment, which are eliminated in consolidation.

          During            the twelve months ended December 31, 2005, the Company recorded a benefit from taxes in            the amount of $322,000 as a result of a tax refund from the filing of amended tax            returns. No such gain was recorded in 2006.

**Liquidity and Capital            Resources**

          The            Company has recorded operating losses and negative operating cash flows in each year of            its operations since inception.

          Net            cash used in operating activities was $3,310,000 for the year ended December 31, 2007            compared to net cash used in operating activities of $2,900,000 for the year ended            December 31, 2006. This net increase in cash used in operating activities is primarily            the result of a tax refund received in 2006.

          Net            cash provided by investing activities was $1,953,000 for the year ended December 31,            2007 compared to net cash used in investing activities of $5,261,000 for the year ended            December 31, 2006. This net increase in cash provided by investing activities is            primarily the result of an $11,000,000 increase in maturities, net of a $4,000,000            increase in purchases, of United States Treasury bills.

          Net            cash used in financing activities was $2,000 for the year ended December 31, 2007            compared to net cash used in financing activities of $198,000 for the year ended            December 31, 2006. This net decrease in cash used in financing activities is a result            of a decrease in repurchases of treasury stock.

          At            December 31, 2007, the Company’s future minimum lease payments due under            noncancelable leases aggregated $1,128,000,  $307,000, $259,000, $138,000,            $109,000 and $112,000 is due during the years ending December 31, 2008, 2009, 2010,            2011 and 2012, respectively, and $203,000 is payable thereafter. In addition, in            connection with a license agreement to which the Company is a party, a termination            payment will be payable by the Company in the amount of $300,000 or $200,000 if the            license agreement is terminated by the Company before September 2009 or September 2011,            respectively.

          The            Company believes that it has sufficient liquidity to finance its current level of            operations and expected capital requirements through the 2008 fiscal year. However, the            Company does not expect to have earnings from operations until such time as it            successfully commercializes business opportunities under development, substantially            increases its customer base and/or forms a strategic alliance for use of its            capabilities in the future. We cannot predict when this will occur. We have no material            non-cancelable commitments and the amount of future capital funding requirements will            depend on a number of factors that we cannot quantify, including the success of our            business and the types of services we offer, as well as other factors that are not            within our control, including competitive conditions, government regulatory            developments and capital costs. The lack of additional capital in the future could have            a material

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adverse effect on the            Company’s financial condition, operating results and prospects for            growth.

          We            have invested a portion of our assets in a portfolio of marketable securities            consisting of publicly traded equity securities. We purchase these securities in            anticipation of increases in the fair market values of the securities. We have in the            past and may in the future sell publicly traded equity securities we do not own in            anticipation of declines in the fair market values of these securities. When we sell            securities that we do not own, we must borrow the securities we sold in order to            deliver them and settle the trades. Thereafter, we must buy the securities and deliver            them to the lender of the securities. Our potential for loss on these transactions is            unlimited since the value of the underlying security can keep increasing.

**Off-Balance Sheet            Arrangements**

          The            Company does not have any off-balance sheet arrangements.

**Recent Accounting            Pronouncements**

          There            have been no recent accounting pronouncements which upon future adoption would have an            effect on the Company’s results of operations or financial position, except as            disclosed below.

          In            September 2006, the Financial Accounting Standards Board issued FASB 157, “Fair            Value Measurements”. FASB 157 defines fair value, establishes a framework for            measuring fair value in generally accepted accounting principles and expands            disclosures about fair value measurements. FASB 157 is effective for fiscal years            beginning after November 15, 2007 and interim periods within those fiscal years. In            November 2007, the FASB issued proposed FASB Staff Position SFAS 157-a,            “Application of FASB Statement No. 157 to FASB Statement No. 13 And Its Related            Interpretive Accounting Pronouncements That Address Leasing Transactions.” In            December 2007, the FASB issued proposed FASB Staff Position FAS 157-b, “Effective            Date of FASB Statement No. 157,” to allow a one-year deferral of adoption of SFAS            157 for nonfinancial assets and nonfinancial liabilities that are recognized at fair            value on a nonrecurring basis. The comment deadline for proposed FSP FAS 157-a was            January 4, 2008. The comment deadline for FSP FAS 157-b was January 16, 2008. The            ultimate outcome of these recent developments is currently unknown. The Company does            not expect adoption of FASB No. 157 to have a material effect on its results of            operations or financial position.

          In            February 2007, the Financial Accounting Standards Board issued FASB No. 159, “The            Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment            of FASB Statement No. 115,” which permits companies to measure many financial            instruments and certain other assets and liabilities at fair value on an            instrument-by-instrument basis (the fair value option). Adoption of FASB 159 is            optional and it may be adopted beginning in the first quarter of 2007. The Company is            currently evaluating the possible impact of adopting FASB No. 159 on our consolidated            financial statements.

          In            December 2007, the Financial Accounting Standards Board issued FASB No. 141R,            “Business Combinations”. FASB 141R establishes principles and requirements            for how the acquirer of a business recognizes and measures in its financial statements            the identifiable assets acquired, the liabilities assumed, and any noncontrolling            interest in the acquiree. FASB 141R also provides guidance for recognizing and            measuring the goodwill acquired in the business combination and determines what            information to disclose to enable users of the financial statements to evaluate the            nature and financial effects of the business combination. FASB 141R will become            effective as of the beginning of the Company’s fiscal year beginning after            December 15, 2008. The impact that adoption of FASB No. 141R will have on the            Company’s consolidated financial statements will depend on the nature, terms and            size of business combinations that occur after the effective date.

          In            December 2007, the Financial Accounting Standards Board issued FASB No. 160,            “Noncontrolling Interests in Consolidated Financial Statements-an amendment of            ARB No. 51”. FASB 160 establishes accounting and reporting standards for the            noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.            FASB 160 will become effective as of the beginning of the Company’s fiscal year            beginning after December 15, 2008. The Company is currently evaluating the impact that            the adoption of FASB No. 160 will have on its consolidated financial condition or            results of operations.

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| **ITEM                        7A.** | **QUANTITATIVE AND                        QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |

          The            Company’s financial instruments at December 31, 2007 consist primarily of cash            equivalents and United States Treasury bills, which are subject to interest rate risk,            and marketable securities, which are subject to equity price risk.

          As            part of our overall investment strategy, we invest in publicly traded equity            securities. We purchase these securities in anticipation of increases in the fair            market values of the securities. We have in the past and may in the future sell            publicly traded equity securities that we do not own in anticipation of declines in the            fair market values of the securities. When we sell securities that we do not own, we            must borrow the securities we sold in order to deliver them

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and settle the trades.            Thereafter, we must buy the securities and deliver them to the lender of the            securities. Our potential for loss on these transactions is unlimited since the value            of the underlying security can keep increasing which could have a material adverse            effect on the Company’s consolidated financial statements.

          The            carrying value of cash equivalents approximates market value since these highly liquid,            interest earning investments are invested in money market funds. The Company’s            investment in marketable securities consists of publicly traded equity securities            classified as trading securities and are recorded at fair market value. Securities sold            and not repurchased are carried at the fair market value of the securities.

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|------------------------------------|------------------------------------------------------------------------|
| **ITEM                        8.** | **FINANCIAL                        STATEMENTS AND SUPPLEMENTARY DATA** |

          The            Consolidated Financial Statements of the Company and related Notes thereto and the            financial information required to be filed herewith are included under Item 15 of this            Form 10-K.

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|------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------|
| **ITEM                        9.** | **CHANGES IN AND                        DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL                        DISCLOSURE** |

          None.

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| **ITEM                        9A(T).** | **CONTROLS AND                        PROCEDURES** |

**Evaluation of Disclosure            Controls and Procedures.**

          Management            of the Company, including the Chief Executive Officer and the Chief Financial Officer,            evaluated the effectiveness of the design and operation of the Company’s            disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and            15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period            covered by this report. Based upon that evaluation, the Company’s Chief Executive            Officer and the Chief Financial Officer concluded that the Company’s disclosure            controls and procedures were effective as of the end of the period covered by this            report for the information required to be disclosed by the Company in the reports it            files or submits under the Securities Exchange Act of 1934, as amended, to be recorded,            processed, summarized and reported within the time periods specified in the Securities            and Exchange Commission’s rules and forms.

**Management’s Report On            Internal Control Over Financial Reporting**

          Management            is responsible for establishing and maintaining adequate internal control over            financial reporting, as defined in Rule 13a-15(f) of the Exchange Act, for the Company.            In fulfilling this responsibility, estimates and judgments by management are required            to assess the expected benefits and related costs of control procedures. The objectives            of internal control include providing management with reasonable, but not absolute,            assurance that assets are safeguarded against loss from unauthorized use or            disposition, and that transactions are executed in accordance with management’s            authorization and recorded properly to permit the preparation of consolidated financial            statements in conformity with accounting principles generally accepted in the United            States of America.

          Our            management, including our Chief Executive Officer and Chief Financial Officer,            conducted an evaluation of the effectiveness of our internal control over financial            reporting based on the framework in “Internal Control — Integrated            Framework”issued by the Committee of Sponsoring Organizations of the Treadway            Commission. Based on its evaluation, our management concluded that our internal control            over financial reporting was effective as of December 31, 2007. Our management reviewed            the results of their assessment with the Audit Committee.

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

**Changes in Internal Control            over Financial Reporting.**

          There            have not been any changes in the Company’s internal control over financial            reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange            Act) during the fiscal quarter ended December 31, 2007 that have materially affected,            or are reasonably likely to materially affect, the Company’s internal control            over financial reporting.

|                                |                                         |
|-------------------------------------|----------------------------------------------|
| **ITEM                        9B.** | **OTHER                        INFORMATION** |

          None.

20

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**PART            III**

|                                |                                                                              |
|-------------------------------------|-----------------------------------------------------------------------------------|
| **ITEM                        10.** | **DIRECTORS,                        EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** |

**Directors and Executive            Officers**

          The            table below sets forth the names, ages and titles of the persons who were Directors            and/or executive officers of the Company as of March 15, 2008.

|                                         |    |                                                                    |
|----------------------------------------------|---------|-------------------------------------------------------------------------|
| **Name**                                     | **Age** | **Position**                                                            |
|                                              |         |                                                                         |
| Shant S.                        Hovnanian    | 48      | Chairman of the                        Board of Directors,              |
|                                         |    | President and Chief                        Executive Officer            |
| Vahak S.                        Hovnanian    | 76      | Director                                                                |
| William F.                        Leimkuhler | 56      | Director                                                                |
| Jeffrey                        Najarian      | 49      | Director                                                                |
| Christopher                        Vizas     | 58      | Director                                                                |
| Thomas M.                        Finn        | 60      | Secretary, Treasurer                        and Chief Financial Officer |
| John A.                        Kallassy      | 43      | Executive Vice                        President, Chief Executive        |
|                                         |    | Officer –                        Zargis Medical Corp.             |

          Shant            S. Hovnanian has served as our Chairman of the Board of Directors, President and Chief            Executive Officer since October 1995. From June 1980 until January 1991, Mr. Hovnanian            served as Executive Vice President of the V. S. Hovnanian Group (the “Hovnanian            Group”), consisting of home building operations, real estate development and            utility companies. In 1995, Mr. Hovnanian served as a U.S. Delegate to the World Radio            Conference of the International Telecommunications Union in Geneva, Switzerland. Mr.            Hovnanian is the son of Mr. Vahak S. Hovnanian.

          Vahak            S. Hovnanian has served as a Director since October 1995. Mr. Hovnanian has been            Chairman of the Board and President of the Hovnanian Group since 1968. Mr. Hovnanian is            the father of Mr. Shant S. Hovnanian.

          William            F. Leimkuhler has served as a Director since September 2000. Mr. Leimkuhler is the            General Counsel and Director of Business Development of Paice Corporation, a privately            held developer of advanced vehicle powertrains. Mr. Leimkuhler is also a director of            Integral Systems, Inc. and U.S. Neurosurgical, Inc. From 1994 through 1999, he held            various positions with Allen & Company, a New York investment banking firm,            initially serving as the firm’s General Counsel. Prior to that, Mr. Leimkuhler            was a corporate partner with the New York law firm of Werbel & Carnelutti (now            Heller Ehrman White & McAuliffe).

          Jeffrey            Najarian has served as a Director since October 2000. Mr. Najarian has been Chief            Executive Officer of Starpoint Solutions, Inc., formerly TIS Worldwide, Inc., since its            inception in 1992. A creator and founder of Starpoint, he has been instrumental in            building one of the country’s fastest growing, privately-held companies, as cited            by *Inc.* magazine. From 1984-1992, Mr. Najarian worked at Setford-Shaw-Najarian,            a recruiting/placement firm for technology specialists, becoming a partner after only            three years. He led the staff in billing, propelling SSN to become a leading search            firm for Wall Street banks.

          Christopher            Vizas has served as a Director since July 2001. Mr. Vizas is a principal in the            strategic advisory firm of East Wind Partners. He serves as a member of the Boards of            several privately held companies. Mr. Vizas’ positions during the 1990s included            Chairman of eGlobe, Inc, a turn around company reorganized under Chapter 11 of the            Bankruptcy Act, CEO of Quo Vadis International, Managing Director of Kouri Capital            Group and its Telecommunications & Technology affiliate, and founder and Vice            Chairman of Orion Network Systems. Earlier in his career, he was a founder and part of            the management in Trinity Cellular and Asia Pacific Space & Communications. Mr.            Vizas served in the White House Office of Telecommunications Policy in the Ford            Administration, as Special Counsel to the U.S. Privacy Commission, and on congressional            staff.

          Thomas            M. Finn has served as Secretary, Treasurer and Chief Financial Officer since March            2003. Mr. Finn has been a consultant since 1994. Prior to that time, Mr. Finn was a            Senior Vice President of Integrated Resources, Inc., a diversified financial services            firm, and was the Chief Financial Officer of Integrated’s publicly-traded            investment programs, including American Real Estate Partners, L.P., a New York Stock            Exchange master limited partnership. Previously, Mr. Finn was an Audit Manager for            Deloitte & Touche LLP. Mr. Finn is a graduate of Long Island University.

          John            A. Kallassy has served as Executive Vice President since September 2000 and Chief            Executive Officer of Zargis Medical Corp. since November 2004. In addition to            developing and executing Zargis’ business strategy, Mr. Kallassy is also            responsible for evaluating new business investment opportunities at Speedus within            several business sectors. Prior to his leadership roles at Speedus and Zargis, Mr.            Kallassy was a founder and Chief Executive Officer of American Data Consultants, Inc.            (ADC), a firm specializing in information services, direct marketing and            marketing

21

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research. Mr. Kallassy sold ADC            to R.L. Polk in 1997 and continued his employment for three years at R.L. Polk as the            ADC division president and later as a corporate vice president where he led the product            management and analytical consulting groups for a $100 million business unit that was            ultimately sold to Equifax Inc. Mr. Kallassy holds a Bachelor of Science Degree in            Biochemistry from the State University of New York which was completed at            Leeds University in Leeds, England and earned his MBA from the Johnson School of            Management at Cornell University.

**Audit            Committee**

          The            Audit Committee of the Board currently consists of William F. Leimkuhler (Chairman),            Jeffrey Najarian and Christopher Vizas, all independent non-employee directors. The            Audit Committee has the duties and responsibilities set out in the Audit Committee            Charter. Those include: selection and appointment of the independent auditor, review of            its independence and of other services provided by it, and of the fees and other            arrangements regarding its services; review with the independent auditor and management            of the scope of the audit, and of significant financial reporting issues and judgments;            review with the independent auditor and management of the annual audited financial            statements and of the quarterly financial statements; and review with the independent            auditor and management of the quality and adequacy of internal controls. The Board has            determined that Mr. Leimkuhler is an “audit committee financial expert”            within the meaning of the rules of the Securities and Exchange Commission.

          The            Audit Committee has adopted a charter which is available in the Investor Relations            section of the Company’s website at www.speedus.com.

**Audit Committee            Report**

          Management            is responsible for the Company’s internal control, consolidated financial            statements and the financial reporting process. PricewaterhouseCoopers LLP served as            the Company’s independent public accountants in 2007 and is responsible for            expressing an opinion on those consolidated financial statements based upon an audit in            accordance with auditing standards generally accepted in the United States of America.            The Committee’s responsibilities include the monitoring and oversight of these            processes.

          The            Committee has met and held discussions with management and PricewaterhouseCoopers. The            Committee has also reviewed and discussed the 2007 quarterly and annual consolidated            financial statements with management and PricewaterhouseCoopers. The Committee has also            discussed with PricewaterhouseCoopers matters required to be discussed by Statement on            Auditing Standards No. 61, “Communication with Audit Committees”, issued by            the Auditing Standards Board of the American Institute of Certified Public            Accountants.

          PricewaterhouseCoopers            has also provided to the Committee the written disclosures required by Independence            Standards Board Standard No. 1, “Independence Discussions with Audit            Committees” and the Committee discussed with PricewaterhouseCoopers that            firm’s independence.

          Based            upon the Committee’s review and discussion of the 2007 annual consolidated            financial statements with management and PricewaterhouseCoopers, the Committee            recommended to the Board of Directors that the Company’s audited 2007            consolidated financial statements be included in the Company’s Annual Report on            Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange            Commission.

|   |                                                    |
|--------|---------------------------------------------------------|
|   | **By the Audit                        Committee**       |
|   | **of the Board of                        Directors:**   |
|   | William F.                        Leimkuhler (Chairman) |
|   | Jeffrey                        Najarian                 |
|   | Christopher                        Vizas                |

**Code of Ethics**

          The            Company is committed to conducting its business in accordance with applicable laws,            rules and regulations and to full and accurate financial disclosure in compliance with            applicable law. In order to promote honest and ethical conduct, the Board of Directors            has adopted a Code of Business Conduct and Ethics applicable to all Directors,            officers, employees and agents of the Company and a Code of Ethics for the Chief            Executive Officer and Senior Financial Officers.

          The            Code of Business Conduct and Ethics and the Code of Ethics for the Chief Executive            Officer and Senior Financial Officers are available in the Investor Relations section            of the Company’s website at www.speedus.com. A copy of either Code may also be            obtained without charge by any person upon written request to Speedus Corp., 9            Desbrosses Street, Suite 402, New York, New York 10013, Attention: Chief Financial            Officer.

22

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**Section 16(a) Beneficial            Ownership Reporting Compliance**

          The            Company’s Directors, executive officers and holders of more than 10% of the            outstanding Common Stock are required to report their initial ownership of Common Stock            and any subsequent changes in that ownership to the Securities and Exchange Commission.            Specific due dates for these reports have been established by the Commission and the            Company is required to disclose any failure by such persons to file these reports in a            timely manner for the 2007 fiscal year. Based solely upon the Company’s review of            copies of such reports furnished to it, the Company believes that for the 2007 fiscal            year its Directors, executive officers and holders of more than 10% of the outstanding            Common Stock complied with all reporting requirements of Section 16(a) under the            Exchange Act.

|                                |                                              |
|-------------------------------------|---------------------------------------------------|
| **ITEM                        11.** | **EXECUTIVE                        COMPENSATION** |

**Summary Compensation            Table**

          The            following table sets forth the salary and bonus, as well as certain other compensation,            paid or accrued to each of the three most highly compensated executive officers of the            Company (the “Named Executive Officers”) for the years ended December 31,            2007, 2006 and 2005 in all capacities in which they served. See Employment            Agreements.

|                                            |   |     |   |       |    |      |    |       |      |    |       |       |        |         |       |           |        |          |        |                                 |   |    |    |   |    |    |   |
|-------------------------------------------------|--------|----------|--------|------------|---------|-----------|---------|------------|-----------|---------|------------|------------|-------------|--------------|------------|----------------|-------------|---------------|-------------|--------------------------------------|--------|---------|---------|--------|---------|---------|--------|
|                                            |   |     |   |       |    |      |    |       |      |    |       |       |        |         |       |           |        |          | **Non-**    |                                 |   |    |    |   |    |    |
|                                            |   |     |   |       |    |      |    |       |      |    |       |       |        |         |       | **Non-Equity** |        | **qualified** |        |                                 |   |    |    |   |    |
|                                            |   |     |   |       |    |      |    |       |      |    |       |       |        |         |       | **Incentive**  |        | **Deferred**  |        | **All                        Other** |   |    |    |   |
|                                            |   |     |   |       |    |      |    |       |      |    |       |       | **Option**  |         | **Plan**   |           | **Compen-** |          | **Compen-** |                                 |   |    |    |
| **Name                        and**             |   |     |   |       |    |      |    |       | **Stock** |    | **Awards** |       | **Compen-** |         | **sation** |           | **sation**  |          |        |                                 |   |
| **Principal                        Position**   |   | **Year** |   | **Salary** |    | **Bonus** |    | **Awards** |      | **(1)** |       | **sation** |        | **Earnings** |       | **(2)**        |        | **Total**     |        |
|                                                 |        |          |        |            |         |           |         |            |           |         |            |            |             |              |            |                |             |               |        |
| Shant S.                        Hovnanian       |   | 2007     |   | $          | 275,000 |      | $       | —    |      | $       | —    |       | $           | —      |       | $              | —     |          | $           | —                              |   | $       | 171,526 |   | $       | 446,526 |   |
| Chief Executive                        Officer  |   | 2006     |   |       | 268,750 |      |    | —    |      |    | —    |       |        | 484,000      |       |           | —     |          |        | —                              |   |    | 164,780 |   |    | 917,530 |   |
|                                            | 2005   |     |   | 250,000    |    |      | — |       |      | — |       |       | —     |         |       | —        |        |          | —     |                                 |   | 158,411 |    |   | 408,411 |    |
| Thomas M.                        Finn           |   | 2007     |   | $          | 230,625 |      | $       | —    |      | $       | —    |       | $           | —      |       | $              | —     |          | $           | —                              |   | $       | — |   | $       | 230,625 |   |
| Chief Financial                        Officer  |   | 2006     |   |       | 220,325 |      |    | —    |      |    | —    |       |        | —      |       |           | —     |          |        | —                              |   |    | — |   |    | 220,325 |   |
|                                            | 2005   |     |   | 191,000    |    |      | — |       |      | — |       |       | —     |         |       | —        |        |          | —     |                                 |   | — |    |   | 191,000 |    |
| John A.                        Kallassy         |   | 2007     |   | $          | 225,000 |      | $       | 53,000     |      | $       | —    |       | $           | —      |       | $              | —     |          | $           | —                              |   | $       | — |   | $       | 278,000 |   |
| Executive Vice                        President |   | 2006     |   |       | 225,000 |      |    | 24,000     |      |    | —    |       |        | —      |       |           | —     |          |        | —                              |   |    | — |   |    | 249,000 |   |
|                                            |   | 2005     |   |       | 216,666 |      |    | 12,500     |      |    | —    |       |        | 69,000       |       |           | —     |          |        | —                              |   |    | — |   |    | 298,166 |   |

          (1)            In determining the aggregate grant date fair value, the stock options were valued using            the Black- Scholes option pricing model. For information on the key assumptions used in            valuing the options, see “Notes to Consolidated Financial Statements - Note 2,            Summary of Significant Accounting Policies - Stock options.”

          (2)            Under the terms of his employment contract, Mr. Hovnanian is entitled to certain            benefits. See ‘Employment Agreements’. The amount shown in the table above            represents the total cost of these items to the Company without adjustment for the            portion of these costs allocable to business use by the Company.

**Grants of Plan-Based            Awards**

          There            were no grants of options to purchase Common Stock made to Named Executive Officers            during 2007.

23

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

          The            following table sets forth information regarding the outstanding stock option awards            held by the Named Executive Officers as of December 31, 2007. None of the Named            Executive Officers have ever received any stock awards.

|                                      |   |                                                                                                        |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |   |    |   |   |   |   |   |      |   |
|-------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|-----------|--------|
|                                      |   |                                                                                                        |    | **Equity                        Incentive                        Plan Awards:                        Number of                        Securities                        Underlying                        Unexercised                        Unearned                        Options** |   |                                      |   |   |    |
|                                      |   |                                                                                                        |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |   |
|                                      |   |                                                                                                        |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |   |
|                                      |   |                                                                                                        |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |   |
|                                      |   | **Number of                        Securities****Underlying****Unexercised                        Options** |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |   |
|                                      |   |                                                                                                        |    |                                                                                                                                                                                                                                                                                   |   |                                      |   |
|                                      |   |                                                                                                        |    | **Option****Exercise****Price**                                                                                                                                                                                                                                                        |   | **Option****Expiration****Date**          |   |
|                                      |   |                                                                                                             |    |                                                                                                                                                                                                                                                                                   |   |                                      |
| **Name**                                  |   | **Exercisable**                                                                                             |    | **Unexercisable**                                                                                                                                                                                                                                                                      |   |                                      |   |   |
|                                           |        |                                                                                                             |         |                                                                                                                                                                                                                                                                                        |        |                                           |        |        |         |        |        |        |        |        |           |        |
| Shant S.                        Hovnanian |   |                                                                                                        | 1,350   |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   | $      | 3.560  |   |   | 12/2/2008 |   |
|                                      |   |                                                                                                        | 62,500  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 19.360 |   |   | 6/11/2009 |   |
|                                      |   |                                                                                                        | 31,925  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 4.000  |   |   | 4/3/2011  |   |
|                                      |   |                                                                                                        | 62,500  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 4.400  |   |   | 4/25/2012 |   |
|                                      |   |                                                                                                        | 100,000 |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 5.080  |   |   | 8/10/2016 |   |
| Thomas M.                        Finn     |   |                                                                                                        | 500     |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   | $      | 3.560  |   |   | 12/2/2008 |   |
|                                      |   |                                                                                                        | 5,000   |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 19.360 |   |   | 6/11/2009 |   |
|                                      |   |                                                                                                        | 33      |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 21.360 |   |   | 4/30/2009 |   |
|                                      |   |                                                                                                        | 35      |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 20.800 |   |   | 5/31/2009 |   |
|                                      |   |                                                                                                        | 2,784   |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 4.000  |   |   | 4/3/2011  |   |
|                                      |   |                                                                                                        | 25,000  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 4.700  |   |   | 6/10/2013 |   |
| John                        Kallassy      |   |                                                                                                        | 56,250  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   | $      | 12.000 |   |   | 9/5/2010  |   |
|                                      |   |                                                                                                        | 28,125  |                                                                                                                                                                                                                                                                                   |   | —                                   |   |   | — |   |   | 4.000  |   |   | 4/3/2011  |   |
|                                      |   |                                                                                                        | 16,667  |                                                                                                                                                                                                                                                                                   |   | 8,333       |   |   | — |   |   | 6.000  |   |   | 7/15/2015 |   |

          For            additional information regarding stock options, see “Notes to Consolidated            Financial Statements - Note 4, Stockholders’ Equity.”

**Option Exercises and Stock            Vested**

          None            of the Named Executive Officers exercised any stock options during 2007 and none of the            Named Executive Officers have ever received any stock awards.

**Compensation            Committee**

          The            Compensation Committee of the Board currently consists of Jeffrey Najarian (Chairman),            Christopher Vizas and William F. Leimkuhler, all independent non-employee directors.            The Compensation Committee establishes and administers the Company’s policies            regarding compensation. In addition, the Compensation Committee, as well as the Board            of Directors, administers the Company’s Stock Incentive Plan and determines which            eligible employees and consultants of the Company may participate in the Plan and the            type, extent and terms of the awards to be granted to them.

**Compensation Discussion and            Analysis**

          The            Company’s compensation policy for all of its executive officers is formulated and            administered by the Compensation Committee of the Board. Compensation of the            Company’s executive officers, exclusive of the Chief Executive Officer, is            developed and approved by the Chief Executive Officer, subject to oversight by the            Compensation Committee. Compensation of the Chief Executive Officer is developed and            approved by the Compensation Committee. The Compensation Committee, as well as the            Board of Directors, also administers the Company’s Stock Incentive Plan, under            which grants of various stock-based incentives may be made to employees (including            executive officers), directors and consultants.

          The            primary goals of the Company’s compensation policy are to attract, retain and            motivate skilled executive officers and to provide incentives for them to act in the            best interests of the Company’s stockholders. In determining the level of            executive compensation, certain quantitative and qualitative factors, including, but            not limited to, the Company’s operating and financial performance, the            individual’s level of responsibilities, experience, commitment, leadership and            accomplishments relative to stated objectives, and marketplace conditions are taken            into consideration.

24

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          The            Company’s compensation program for executives consists of four key elements,            discussed in greater detail below: (1) base salary, (2) consideration for a            performance-based bonus, (3) periodic grants of stock-based incentives, and (4) other            benefits and perquisites.

*          Base            Salary.* Base salary amounts for executive officers take into account such factors            as competitive industry salaries, an executive’s scope of responsibilities, and            individual performance and contribution to the organization.

*          Performance-based            Bonus.* Executive officers have an opportunity to receive performance-based bonus            awards based on the overall performance of the Company and on specific individual            performance targets.

*          Stock-based            Incentives.* Executive officers have an opportunity to receive stock-based            incentives, generally grants of options to purchase the Company’s common Stock.            These awards provide employees with the incentive to stay with the Company for longer            periods of time, which in turn, provides the Company with greater stability. Equity            awards also are less costly to the Company than cash compensation.

*          Other            Benefits and Perquisites.* Executive officers receive the same general health and            welfare benefits offered to all employees. Except as provided in employment contracts,            the Company provides no other perquisites to executive officers. See Employment            Contracts.

*          Section            162(m) of the Code.* Section 162(m) of the Internal Revenue Code of 1986, as amended            (the “Code”), generally limits the deductibility by the Company of            compensation paid in any one year to any executive officer named in the Summary            Compensation Table to $1,000,000. Option awards under the Stock Incentive Plan made in            conformity with the “performance-based” exemption from Section 162(m) will            be exempt from the limits of Section 162(m). While the Company’s policy has            always been to pursue a strategy of maximizing deductibility of compensation for all of            its employees, the Compensation Committee believes it is important to maintain the            flexibility to take actions it considers to be in the best interest of the Company and            its stockholders, which may be based on considerations in addition to Section 162(m).            In 2007, none of the executive officers were paid cash compensation in excess of            $1,000,000.

**Compensation Committee            Report**

          The            Compensation Committee has reviewed and discussed the discussion and analysis of the            Company’s compensation which appears above with management and, based on such            review and discussion, the Compensation Committee recommended to the Company’s            Board of Directors that the above disclosure be included in this Annual Report on Form            10-K.

|   |                                                     |
|--------|----------------------------------------------------------|
|   | **By the                        Compensation Committee** |
|   | **of the Board of                        Directors:**    |
|   | Jeffrey Najarian                        (Chairman)       |
|   | Christopher                        Vizas                 |
|   | William F.                        Leimkuhler             |

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**Compensation of            Directors**

          The            following table sets forth information regarding the cash fees, as well as certain            other compensation, paid or accrued to our Directors for the year ended December 31,            2007.

|                                         |   |                                                                                                 |   |                                    |   |                                                                    |   |                                                                                                                                     |   |                                                                                                                                                                                                                                           |   |                                                                       |   |      |    |   |   |    |   |   |   |   |
|----------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------|--------|-----------|---------|--------|--------|---------|--------|--------|--------|--------|
| **Name**                                     |   | **Fees                        Earned or                        Paid in                        Cash** |   | **Stock                        Awards** |   | **Option                        Awards                        (1) (2)** |   | **Non-Equity                        Incentive                        Plan                        Compen-                        sation** |   | **Change in                        Pension                        Value and                        Nonqualified                        Deferred                        Compen-                        sation                        Earnings** |   | **All Other                        Compen-                        sation** |   | **Total** |    |
|                                              |        |                                                                                                      |        |                                         |        |                                                                         |        |                                                                                                                                          |        |                                                                                                                                                                                                                                                |        |                                                                            |        |           |         |        |        |         |        |        |        |        |
| Vahak S.                        Hovnanian    |   | $                                                                                                    | 24,000 |                                    | $      | —                                                                 |   | $                                                                                                                                        | 3,817  |                                                                                                                                                                                                                                           | $      | —                                                                    |   | $         | — |   | $      | — |   | $      | 27,817 |   |
| William F.                        Leimkuhler |   |                                                                                                 | 72,000 |                                    |   | —                                                                 |   |                                                                                                                                     | 3,817  |                                                                                                                                                                                                                                           |   | —                                                                    |   |      | — |   |   | — |   |   | 75,817 |   |
| Jeffrey                        Najarian      |   |                                                                                                 | 24,000 |                                    |   | —                                                                 |   |                                                                                                                                     | 3,817  |                                                                                                                                                                                                                                           |   | —                                                                    |   |      | — |   |   | — |   |   | 27,817 |   |
| Christopher                        Vizas     |   |                                                                                                 | 72,000 |                                    |   | —                                                                 |   |                                                                                                                                     | 3,817  |                                                                                                                                                                                                                                           |   | —                                                                    |   |      | — |   |   | — |   |   | 75,817 |   |

          (1)            In determining the aggregate grant date fair value, the stock options were valued using            the Black- Scholes option pricing model. For information on the key assumptions used in            valuing the options, see “Notes to Consolidated Financial Statements - Note 2,            Summary of Significant Accounting Policies - Stock options.”

          (2)            At December 31, 2007, Messrs. Hovnanian, Leimkuhler, Najarian and Vizas held stock            options in the aggregate amounts of 29,125, 30,063, 25,000 and 22,500,            respectively.

          During            2007, our Directors who are not officers or employees (“Non-Employee            Directors”) received an annual retainer of $24,000. Mr. Leimkuhler received an            additional retainer for services as a Director of two of the Company’s            majority-owned subsidiaries, as lead outside director of the Company and as the            Chairman of the Company’s Audit Committee in the aggregate amount of $48,000. Mr.            Vizas received an additional retainer for services as a Director of two of the            Company’s subsidiaries and as the Chairman of the Company’s Governance and            Nominating Committee in the aggregate amount of $48,000. In addition, upon their            initial election to the Board, new Non-Employee Directors are granted options to            purchase 1,250 shares of Common Stock that are fully vested and immediately            exercisable. Upon the date of each annual meeting, Non-Employee Directors are granted            options at fair market value to purchase an additional 2,500 shares of Common Stock            that are fully vested and immediately exercisable. Our Directors of the Company who are            officers or employees do not receive any additional compensation for serving on the            Board or on any Board committee.

**Employment            Agreements**

          We            entered into an agreement effective April 1, 2006 with Mr. Shant S. Hovnanian, Chairman            and Chief Executive Officer of the Company. The agreement has a three-year term and            provides for an annual salary of $275,000. Under the agreement, Mr. Hovnanian is            entitled to be considered for an annual performance based bonus targeted at 50% or            greater of his base salary, use of a Company apartment and car, a country club            membership (which Mr. Hovnanian has not taken) and a $2,000,000 term life insurance            policy with the beneficiary designated by Mr. Hovnanian. Under the new agreement, Mr.            Hovnanian was also granted 100,000 options in August 2006 to purchase shares of our            Common Stock at the market value as of the effective date of the agreement. The options            are fully vested and immediately exercisable.

          We            entered into an employment agreement effective September 5, 2000 with Mr. John A.            Kallassy. The agreement provides that Mr. Kallassy will act as our Executive Vice            President. The agreement, which has no term, provides for an annual salary of $175,000,            subject to periodic review, and annual bonuses aggregating $50,000 based on the            executive’s attainment of certain performance goals. Under this agreement, Mr.            Kallassy was granted 56,250 options to purchase shares of our Common Stock at the            market value as of the effective date of the agreement. 4,688 of these options were            fully vested and immediately exercisable at the date of grant. Of the balance, 4,688            options become exercisable each three months after September 5, 2000 and all options            are now fully vested and exercisable. In 2005, Mr. Kallassy’s bonus and salary            were combined and the aggregate total paid as salary. Thereafter, Mr. Kallassy became            entitled to bonuses based upon the achievement of certain agreed upon            milestones.

**Compensation Committee            Interlocks and Insider Participation**

          No            interlocking relationship exists between the Board of Directors or the Compensation            Committee and the Board of Directors or compensation committee of any other company,            nor has any such interlocking relationship existed in the past.

26

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**ITEM 12.            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER            MATTERS**

                    The            following table sets forth information as of March 15, 2008 with respect to the            beneficial ownership of our stock by (i) each person known by us to be the beneficial            owner of more than 5% of the Common Stock; (ii) each person serving as a Director or            Director nominee of the Company; (iii) each of our executive officers, and (iv) all of            our Directors and executive officers as a group. Unless otherwise indicated, all shares            are owned directly and the indicated owner has sole voting and dispositive power with            respect thereto.

|                                                                                                                                                           |   |                                                                                  |   |        |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|-------------|--------|--------|--------|
|                                                                                                                                                           |   | **Common Stock                        Beneficially                        Owned (1)** |   |
|                                                                                                                                                           |   |                                                                                       |        |
| **Beneficial                        Owner**                                                                                                                    |   | **Number**                                                                            |   | **Percent** |   |
|                                                                                                                                                                |        |                                                                                       |        |             |        |
|                                                                                                                                                           |
| Shant S. Hovnanian                        (2)(3)                                                                                                               |   | 811,754                                                                               |   |        | 18.0   |   |   |
| Vahak W. Hovnanian                        Asset Trust, the Paris J. Hovnanian Asset Trust and the Charentz J.                        Hovnanian Asset Trust (4) |   | 390,000                                                                               |   |        | 8.7    |   |   |
| Vahak S. Hovnanian                        (5)                                                                                                                  |   | 726,415                                                                               |   |        | 16.1   |   |   |
| William F. Leimkuhler                        (6)                                                                                                               |   | 30,063                                                                                |   |        | *      |   |   |
| Jeffrey Najarian                        (7)                                                                                                                    |   | 25,000                                                                                |   |        | *      |   |   |
| Christpher Vizas                        (8)                                                                                                                    |   | 22,500                                                                                |   |        | *      |   |   |
| Thomas M. Finn                        (9)                                                                                                                      |   | 33,352                                                                                |   |        | *      |   |   |
| John Kallassy                        (10)                                                                                                                      |   | 131,700                                                                               |   |        | 2.9    |   |   |
| XO Holdings, Inc.                        (11)                                                                                                                  |   | 500,000                                                                               |   |        | 11.1   |   |   |
| All Directors and                        Executive Officers as a group (total 7 persons)                                                                       |   | 2,170,783                                                                             |   |        | 48.2   |   |   |
|                                                                                                                                                                |        |                                                                                       |        |             |        |        |        |
| *                        Less than 1% of the outstanding Common Stock                                                                                          |
|                                                                                                                                                                |

          (1)            Pursuant to the regulations of the Securities and Exchange Commission, shares are            deemed to be “beneficially owned” by a person if such person directly or            indirectly has or shares (i) the power to vote or dispose of such shares, whether or            not such person has any pecuniary interest in such shares, or (ii) the right to acquire            the power to vote or dispose of such shares within 60 days, including any right to            acquire through the exercise of any option, warrant or right.

          (2)            Includes options to purchase 258,275 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (3)            Includes 34,375 shares of Common Stock owned by Mr. Shant S. Hovnanian’s minor            children for which Mr. Hovnanian, as custodian, has sole voting power.

          (4)            These shares were donated by Shant S. Hovnanian as gifts to and held in equal portions            by (i) the Vahak W. Hovnanian Asset Trust, (ii) the Paris J. Hovnanian Asset Trust and            (iii) the Charentz J. Hovnanian Asset Trust (collectively, the “Trusts”),            which were established for the benefit of Mr. Hovnanian’s minor children. Mr.            Hovnanian’s wife is the trustee of the Trusts.

          (5)            Includes options to purchase 29,125 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (6)            Includes options to purchase 30,063 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (7)            Includes options to purchase 25,000 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (8)            Includes options to purchase 22,500 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (9)            Includes options to purchase 33,352 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

          (10)            Includes options to purchase 109,375 shares of Common Stock pursuant to the Stock            Incentive Plan, which are fully vested and exercisable.

27

----

          (11)            Pursuant to a Stock Purchase Agreement dated as of June 13, 1999, the Company is            required to use all reasonable efforts, subject to fiduciary duties under applicable            law, to cause an XO Communications, Inc. representative to be elected to the            Company’s Board.

          In            addition, Verizon Communications Inc., formerly Bell Atlantic Corporation, has the            right to appoint one director to the Board, so long as Verizon shall hold at least 1%            of the shares of Common Stock outstanding on a fully diluted basis.

**Equity Compensation            Plans**

          Information            regarding our Common Stock authorized for issuance under equity compensation plans is            included in Item 5 of this Form 10-K.

**ITEM 13.            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR            INDEPENDENCE**

          The            information under ‘Director Compensation’ included in Item 11. of this Form            10-K is incorporated by reference.

**ITEM 14.            PRINCIPAL ACCOUNTANT FEES AND SERVICES**

          Audit            Fees represent fees for services rendered in connection with the annual audit and            quarterly reviews of the Company’s financial statements. For the years ended            December 31, 2007 and 2006, the Company paid or accrued $207,000 and $195,000,            respectively, for audit fees to PricewaterhouseCoopers LLP.

          Audit            - Related Fees represent fees for services rendered in connection with assurance and            related services that are reasonably related to the performance of the audit or review            of the financial statements and are not reported as Audit Fees. For the years ended            December 31, 2007 and 2006, the Company did not pay or accrue any amounts for audit            related fees.

          Tax            Fees represent fees for services rendered in connection with tax compliance, tax advice            and tax planning. For the years ended December 31, 2007 and 2006, the Company paid or            accrued $56,000 and $50,000, respectively, for tax fees to PricewaterhouseCoopers            LLP.

          All            Other Fees represent fees for services rendered other than those described above. For            the years ended December 31, 2007 and 2006, the Company did not pay or accrue any            amounts for these services.

          The            Audit Committee of the Company’s Board of Directors has established a policy            requiring its pre-approval of all audit and non-audit services provided by its            independent registered public accounting firm. The policy requires the general            pre-approval of annual audit services and all other permitted services.

          All            of the audit and non-audit services described above were approved by the Audit            Committee and not pursuant to the waiver of pre-approval provisions set forth in            applicable rules of the SEC.

28

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**PART            IV**

**ITEM 15.            EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

|                                                                                  |                                                                                                                                                                |        |   |
|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|
| (a) **Financial                        Statements and Financial Statement Schedules** |                                                                                                                                                                |        |
|                                                                                  |
| (1)                                                                                   | Consolidated                        Financial Statements                                                                                                            | **Page(s)** |
|                                                                                  |                                                                                                                                                                |             |
|                                                                                  | Report                        of Independent Registered Public Accounting Firm                                                                                      | 31          |   |
|                                                                                  |                                                                                                                                                                |        |   |
|                                                                                  | Consolidated                        Balance Sheets as of December 31, 2007 and 2006                                                                                 | 32          |   |
|                                                                                  |                                                                                                                                                                |        |   |
|                                                                                  | Consolidated                        Statements of Operations for the years ended December 31, 2007, 2006 and                        2005                            | 33          |   |
|                                                                                  |                                                                                                                                                                |        |   |
|                                                                                  | Consolidated                        Statements of Changes in Stockholders’ Equity for the years ended                        December 31, 2007, 2006 and 2005 | 34          |   |
|                                                                                  |                                                                                                                                                                |        |   |
|                                                                                  | Consolidated                        Statements of Cash Flows for the years ended December 31, 2007, 2006 and                        2005                            | 35          |   |
|                                                                                  |                                                                                                                                                                |        |   |
|                                                                                  | Notes                        to Consolidated Financial Statements                                                                                                   | 36-45       |   |

|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)                        **Exhibits** |
|                                    |
|                                    | 3.1a   |   | Certificate of                        Incorporation. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 3.1b   |   | Certificate of                        Amendment to Certificate of Incorporation dated November 28, 2007                        (2)                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 3.2    |   | By-laws.                        (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 4.1    |   | Form of Common Stock                        Certificate. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 4.3    |   | Form of Rights                        Agreement between SPEEDUS.COM, Inc. and Equiserve Trust Company, N.A., as                        Rights Agent. The Rights Agreement includes as Exhibit A the Certificate of                        Designation, Preferences and Rights of Series A Junior Participating                        Preferred Stock of SPEEDUS.COM, Inc., as Exhibit B the form of Rights                        Certificate and as Exhibit C the form of Summary of Rights to Purchase                        Shares of Series A Junior Participating Preferred Stock. (3) |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 10.1   |   | Speedus Corp. 2005                        Stock Incentive Plan. (4)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 10.2   |   | Employment                        Agreement, dated as of April 1, 2006, between Speedus Corp. and Shant S.                        Hovnanian. (5)                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 10.3   |   | Amended and Restated                        Agreement of Limited Partnership of CellularVision of New York, L.P., dated                        as of July 7, 1993, by and between Hye Crest Management, Inc., Bell                        Atlantic Ventures, XXIII, Inc. and the limited partners set forth on the                        signature page thereto. (1)                                                                                                                                                                                                                         |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 10.4   |   | Agreement, dated as                        of January 12, 1996, by and among CellularVision USA, Inc., CellularVision                        of New York, L.P., Hye Crest Management, Inc., Shant S. Hovnanian, Vahak S.                        Hovnanian, Bernard B. Bossard and Bell Atlantic Ventures XXIII, Inc.                        (1)                                                                                                                                                                                                                                               |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 14     |   | Code of Ethics for                        Chief Executive Officer and Senior Finance Officers (6)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 21     |   | Subsidiaries of                        Speedus Corp. (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 23.1   |   | Consent of PricewaterhouseCoopers LLP (7)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 31.1   |   | Certification of Chief Executive Officer Pursuant To Rule 13a-14 of the                        Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 of The                        Sarbanes-Oxley Act Of 2002 (7)                                                                                                                                                                                                                                                                                                                                                               |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 31.2   |   | Certification of Chief Financial Officer Pursuant To Rule 13a-14 of the                        Securities Exchange Act of 1934, As Adopted Pursuant To Section 302 of The                        Sarbanes-Oxley Act Of 2002 (7)                                                                                                                                                                                                                                                                                                                                                               |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 32.1   |   | Certification of Chief Executive Officer Pursuant To 18 U.S.C. Section                        1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002                        (7)                                                                                                                                                                                                                                                                                                                                                                                           |
|                                    |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                    | 32.2   |   | Certification of Chief Financial Officer Pursuant To 18 U.S.C. Section                        1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002                        (7)                                                                                                                                                                                                                                                                                                                                                                                           |

29

----

|                                                         |   |                                                                                                                                                                                                                                             |
|--------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                              |
| (1)                                                          |   | Incorporated by                        reference to the Company’s Registration Statement in Form S-1 (File                        No. 33-98340) which was declared effective by the Commission on February 7,                        1996. |
|                                                         |   |                                                                                                                                                                                                                                             |
| (2)                                                          |   | Incorporated by                        reference to the Company’s Form 8-K filed on December 4,                        2007.                                                                                                               |
|                                                         |   |                                                                                                                                                                                                                                             |
| (3)                                                          |   | Incorporated by                        reference to the Company’s Form 8-K filed on January 16,                        2001.                                                                                                               |
|                                                         |   |                                                                                                                                                                                                                                             |
| (4)                                                          |   | Incorporated by                        reference to the Company’s Definitive Proxy Statement filed on                        October 13, 2005.                                                                                             |
|                                                         |   |                                                                                                                                                                                                                                             |
| (5)                                                          |   | Incorporated by                        reference to the Company’s Form 10-Q filed on August 14,                        2006.                                                                                                               |
|                                                         |   |                                                                                                                                                                                                                                             |
| (6)                                                          |   | Incorporated by                        reference to the Company’s Form 10-K filed on April 2,                        2007.                                                                                                                 |
|                                                         |   |                                                                                                                                                                                                                                             |
| (7)                                                          |   | Filed                        herewith.                                                                                                                                                                                                           |
|                                                         |   |                                                                                                                                                                                                                                             |
| (c) **Financial                        Statement Schedules** |
|                                                         |
| None.                                                        |   |                                                                                                                                                                                                                                             |

30

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**REPORT OF            INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and            Stockholders of            Speedus Corp.:

In our opinion, the consolidated            financial statements listed in the index appearing under Item 15(a)(1) present fairly,            in all material respects, the financial position of Speedus Corp. and its subsidiaries            at December 31, 2007 and 2006, and the results of their operations and their cash flows            for each of the three years in the period ended December 31, 2007 in conformity with            accounting principles generally accepted in the United States of America. These            financial statements are the responsibility of the Company’s management. Our            responsibility is to express an opinion on these financial statements based on our            audits. We conducted our audits of these statements in accordance with the standards of            the Public Company Accounting Oversight Board (United States). Those standards require            that we plan and perform the audit to obtain reasonable assurance about whether the            financial statements are free of material misstatement. An audit includes examining, on            a test basis, evidence supporting the amounts and disclosures in the financial            statements, assessing the accounting principles used and significant estimates made by            management, and evaluating the overall financial statement presentation. We believe            that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the            consolidated financial statements, the Company has changed its method of accounting for            share-based compensation in 2006.

PricewaterhouseCoopers LLP            New York, New York            March 27, 2008

31

----

**SPEEDUS            CORP.CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                   |   |                                    |        |     |   |        |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|-------------|----------|--------|-------------|--------|
|                                                                                                                                                   |   | **December                        31,** |        |
|                                                                                                                                                   |   |                                         |        |
|                                                                                                                                                   |   | **2007**                                |        | **2006** |   |
|                                                                                                                                                   |   |                                         |        |          |   |
|                                                                                                                                                   |   |                                    |        |     |   |        |   |
| **ASSETS**                                                                                                                                             |   |                                    |        |     |   |        |   |
| Current                        assets:                                                                                                                 |   |                                    |        |     |   |        |   |
| Cash and cash                        equivalents                                                                                                       |   | $                                       | 8,845,358   |     | $      | 10,204,167  |   |
| United States Treasury                        bills                                                                                                    |   |                                    | 2,996,700   |     |   | 4,990,250   |   |
| Assets held for                        sale                                                                                                            |   |                                    | 342,000     |     |   | —     |   |
| Marketable                        securities                                                                                                           |   |                                    | 92,190      |     |   | 354,011     |   |
| Prepaid expenses and                        other                                                                                                      |   |                                    | 79,623      |     |   | 143,654     |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
| Total current                        assets                                                                                                            |   |                                    | 12,355,871  |     |   | 15,692,082  |   |
| Property and equipment,                        net of accumulated depreciation of $112,353 and $444,972                                                |   |                                    | 50,569      |     |   | 527,828     |   |
| Other intangible                        assets, net of accumulated amortization of $1,125,928 in 2006                                                  |   |                                    | —     |     |   | 34,116      |   |
| Other                        investments                                                                                                               |   |                                    | 800,000     |     |   | 800,000     |   |
| Other assets                                                                                                                                           |   |                                    | 83,127      |     |   | 81,737      |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
| Total assets                                                                                                                                           |   | $                                       | 13,289,567  |     | $      | 17,135,763  |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
|                                                                                                                                                   |   |                                    |        |     |   |        |   |
| **LIABILITIES AND                        STOCKHOLDERS’ EQUITY**                                                                                  |   |                                    |        |     |   |        |   |
| Current                        liabilities:                                                                                                            |   |                                    |        |     |   |        |   |
| Accounts                        payable                                                                                                                |   | $                                       | 46,413      |     | $      | 62,805      |   |
| Accrued                        liabilities                                                                                                             |   |                                    | 1,390,803   |     |   | 971,055     |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
| Total current                        liabilities                                                                                                       |   |                                    | 1,437,216   |     |   | 1,033,860   |   |
|                                                                                                                                                   |   |                                    |        |     |   |        |   |
| Commitments and                        Contingencies                                                                                                   |   |                                    |        |     |   |        |   |
|                                                                                                                                                   |   |                                    |        |     |   |        |   |
| Stockholders’                        equity:                                                                                                     |   |                                    |        |     |   |        |   |
| Common stock ($.01 par                        value; 50,000,000 shares authorized; 5,438,006 shares issued)                                            |   |                                    | 54,380      |     |   | 54,380      |   |
| Preferred stock ($.01                        par value; 20,000,000 shares authorized):                                                                 |   |                                    |        |     |   |        |   |
| Series A Junior                        Participating ($.01 par value;4,000 shares authorized; no shares issued and                        outstanding) |   |                                    | —     |     |   | —     |   |
| Additional                        paid-in-capital                                                                                                      |   |                                    | 91,797,457  |     |   | 91,627,241  |   |
| Treasury stock (at                        cost; 1,445,634 and 1,445,221 shares)                                                                        |   |                                    | (6,085,078  | )        |   | (6,083,360  | )      |
| Accumulated                        deficit                                                                                                             |   |                                    | (73,914,408 | )        |   | (69,496,358 | )      |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
| Stockholders’                        equity                                                                                                      |   |                                    | 11,852,351  |     |   | 16,101,903  |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |
| Total liabilities and                        stockholders’ equity                                                                                |   | $                                       | 13,289,567  |     | $      | 17,135,763  |   |
|                                                                                                                                                   |   |                                         |             |     |        |             |   |

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

32

----

**SPEEDUS            CORP.CONSOLIDATED STATEMENTS OF OPERATIONS**

|                                                                                  |   |                                                        |       |     |   |       |   |   |       |   |
|---------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|------------|----------|--------|------------|--------|--------|------------|--------|
|                                                                                  |   | **For the years ended                        December 31,** |       |
|                                                                                  |   |                                                             |       |
|                                                                                  |   | **2007**                                                    |       | **2006** |   | **2005**   |   |
|                                                                                  |   |                                                             |       |          |   |            |   |
|                                                                                  |   |                                                        |       |     |   |       |   |   |       |   |
| Revenues                                                                              |   | $                                                           | 733,213    |     | $      | 846,342    |   | $      | 1,038,343  |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
| Expenses:                                                                             |   |                                                        |       |     |   |       |   |   |       |   |
| Selling, general and                        administrative                            |   |                                                        | 3,828,009  |     |   | 4,319,554  |   |   | 3,851,332  |   |
| Research and                        development                                       |   |                                                        | 1,612,872  |     |   | 1,678,139  |   |   | 1,797,315  |   |
| Depreciation and                        amortization                                  |   |                                                        | 265,634    |     |   | 757,553    |   |   | 940,683    |   |
| Cost of                        sales                                                  |   |                                                        | 297,439    |     |   | 306,932    |   |   | 345,354    |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
| Total operating                        expenses                                       |   |                                                        | 6,003,954  |     |   | 7,062,178  |   |   | 6,934,684  |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
|                                                                                  |
| Operating                        loss                                                 |   |                                                        | (5,270,741 | )        |   | (6,215,836 | )      |   | (5,896,341 | )      |
|                                                                                  |
| Investment                        income/(loss)                                       |   |                                                        | 852,691    |     |   | 600,641    |   |   | (52,397    | )      |
| Minority                        interest                                              |   |                                                        | —    |     |   | —    |   |   | 159,294    |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
|                                                                                  |
| Loss before benefit                        from income taxes                          |   |                                                        | (4,418,050 | )        |   | (5,615,195 | )      |   | (5,789,444 | )      |
|                                                                                  |
| Benefit from income                        taxes                                      |   |                                                        | —    |     |   | —    |   |   | 321,539    |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
|                                                                                  |
| Net loss                                                                              |   | $                                                           | (4,418,050 | )        | $      | (5,615,195 | )      | $      | (5,467,905 | )      |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
|                                                                                  |   |                                                        |       |     |   |       |   |   |       |   |
| Per share:                                                                            |   |                                                        |       |     |   |       |   |   |       |   |
| Loss per common share -                        basic and diluted                      |   | $                                                           | (1.11      | )        | $      | (1.40      | )      | $      | (1.35      | )      |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |
| Weighted average common                        shares outstanding - basic and diluted |   |                                                        | 3,992,044  |     |   | 4,012,927  |   |   | 4,045,552  |   |
|                                                                                  |   |                                                             |            |     |        |            |   |        |            |   |

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

33

----

**CONSOLIDATED            STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

**For the years            ended December 31, 2005, 2006 and 2007**

|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   |       |   |   |      |   |   |        |   |   |       |   |
|---------------------------------------------------|--------|-----------------------------------------|--------|-------------------------------------------------------|--------|-------------------------------------------|------------|------------------------------------------------|------------|------------------------------------------------------------------------------------|--------|------------|--------|--------|-----------|--------|--------|-------------|--------|--------|------------|--------|
|                                              |   | **Common                        Stock** |   |                                                  |   | **Treasury                        Stock** |       |                                           |       | **Total                        Stockholders’                        Equity** |   |
|                                              |   |                                         |   | **Additional                        Paid-in-capital** |   |                                           |       | **Accumulated                        Deficit** |       |                                                                               |
|                                              |   | **Amount**                              |   | **Shares**                                            |   |                                      | **Amount** |                                           | **Shares** |                                                                               |   |       |
|                                              |   |                                         |   |                                                       |   |                                           |       |                                                |       |                                                                                    |   |            |   |        |      |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   |       |   |   |      |   |   |        |   |   |       |   |
| Balance, January 1,                        2005   |   | $                                       | 53,974 |                                                  |   | 5,397,381                                 |       | $                                              | 90,708,486 |                                                                               | $      | (5,499,684 | )      |   | 1,342,237 |   | $      | (58,413,258 | )      | $      | 26,849,518 |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Exercise of                        options        |   |                                    | 406    |                                                  |   | 40,625                                    |       |                                           | 162,094    |                                                                               |   |       |   |   |      |   |   |        |   |   | 162,500    |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Stock based                        compensation   |   |                                    |   |                                                  |   |                                      |       |                                           | 16,992     |                                                                               |   |       |   |   |      |   |   |        |   |   | 16,992     |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Repurchase of common                        stock |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   | (385,179   | )      |   | 65,832    |   |   |        |   |   | (385,179   | )      |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Net loss                                          |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   |       |   |   |      |   |   | (5,467,905  | )      |   | (5,467,905 | )      |
|                                              |   |                                         |        |                                                  |        |                                           |       |                                                |            |                                                                               |        |            |   |        |           |   |        |             |   |        |            |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Balance, December 31,                        2005 |   |                                    | 54,380 |                                                  |   | 5,438,006                                 |       |                                           | 90,887,572 |                                                                               |   | (5,884,863 | )      |   | 1,408,069 |   |   | (63,881,163 | )      |   | 21,175,926 |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Stock based                        compensation   |   |                                    |   |                                                  |   |                                      |       |                                           | 739,669    |                                                                               |   |       |   |   |      |   |   |        |   |   | 739,669    |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Repurchase of common                        stock |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   | (198,497   | )      |   | 37,152    |   |   |        |   |   | (198,497   | )      |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Net loss                                          |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   |       |   |   |      |   |   | (5,615,195  | )      |   | (5,615,195 | )      |
|                                              |   |                                         |        |                                                  |        |                                           |       |                                                |            |                                                                               |        |            |   |        |           |   |        |             |   |        |            |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Balance, December 31,                        2006 |   |                                    | 54,380 |                                                  |   | 5,438,006                                 |       |                                           | 91,627,241 |                                                                               |   | (6,083,360 | )      |   | 1,445,221 |   |   | (69,496,358 | )      |   | 16,101,903 |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Stock based                        compensation   |   |                                    |   |                                                  |   |                                      |       |                                           | 170,216    |                                                                               |   |       |   |   |      |   |   |        |   |   | 170,216    |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Repurchase of common                        stock |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   | (1,718     | )      |   | 413       |   |   |        |   |   | (1,718     | )      |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Net loss                                          |   |                                    |   |                                                  |   |                                      |       |                                           |       |                                                                               |   |       |   |   |      |   |   | (4,418,050  | )      |   | (4,418,050 | )      |
|                                              |   |                                         |        |                                                  |        |                                           |       |                                                |            |                                                                               |        |            |   |        |           |   |        |             |   |        |            |   |
|                                              |   |                                    |   |                                                  |   |                                      |       |                                           |
| Balance, December 31,                        2007 |   | $                                       | 54,380 |                                                  |   | 5,438,006                                 |       | $                                              | 91,797,457 |                                                                               | $      | (6,085,078 | )      |   | 1,445,634 |   | $      | (73,914,408 | )      | $      | 11,852,351 |   |
|                                              |   |                                         |        |                                                  |        |                                           |       |                                                |            |                                                                               |        |            |   |        |           |   |        |             |   |        |            |   |

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

34

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**SPEEDUS            CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS**

|                                                                               |   |                                        |        |     |   |        |   |   |        |   |
|------------------------------------------------------------------------------------|--------|---------------------------------------------|-------------|----------|--------|-------------|--------|--------|-------------|--------|
|                                                                               |   | **For        the years ended December 31,** |        |
|                                                                               |   |                                             |        |
|                                                                               |   | **2007**                                    |        | **2006** |   | **2005**    |   |
|                                                                               |   |                                             |        |          |   |             |   |
| Cash flows from operating        activities:                                       |   |                                        |        |     |   |        |   |   |        |   |
| Net loss                                                                           |   | $                                           | (4,418,050  | )        | $      | (5,615,195  | )      | $      | (5,467,905  | )      |
| Adjustments to reconcile        net loss to net cash used in operating activities: |   |                                        |        |     |   |        |   |   |        |   |
| Depreciation and amortization                                                      |   |                                        | 265,634     |     |   | 757,553     |   |   | 940,683     |   |
| Unrealized investment        (gains)/losses                                        |   |                                        | (136,963    | )        |   | 289,394     |   |   | 402,617     |   |
| Minority interest                                                                  |   |                                        | —     |     |   | —     |   |   | (159,294    | )      |
| Stock based compensation                                                           |   |                                        | 170,216     |     |   | 673,158     |   |   | 16,992      |   |
| Changes in operating        assets and liabilities:                                |   |                                        |        |     |   |        |   |   |        |   |
| Marketable securities                                                              |   |                                        | 398,784     |     |   | 531,420     |   |   | (516,850    | )      |
| Prepaid expenses and        other                                                  |   |                                        | 64,031      |     |   | 38,354      |   |   | 41,105      |   |
| Other assets                                                                       |   |                                        | (57,388     | )        |   | 609,707     |   |   | 61,425      |   |
| Accounts payable                                                                   |   |                                        | (16,392     | )        |   | (5,887      | )      |   | (247,050    | )      |
| Accrued liabilities                                                                |   |                                        | 419,748     |     |   | (178,293    | )      |   | (141,861    | )      |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Net cash used in operating        activities                                       |   |                                        | (3,310,380  | )        |   | (2,899,789  | )      |   | (5,070,138  | )      |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Cash flows from investing        activities:                                       |   |                                        |        |     |   |        |   |   |        |   |
| Property and equipment:                                                            |   |                                        |        |     |   |        |   |   |        |   |
| Additions                                                                          |   |                                        | (40,261     | )        |   | (270,385    | )      |   | (26,432     | )      |
| Dispositions                                                                       |   |                                        | —     |     |   | —     |   |   | 64,272      |   |
| United States Treasury        bills:                                               |   |                                        |        |     |   |        |   |   |        |   |
| Purchases                                                                          |   |                                        | (19,006,450 | )        |   | (15,000,000 | )      |   | (14,022,800 | )      |
| Maturities                                                                         |   |                                        | 21,000,000  |     |   | 10,009,750  |   |   | 20,000,000  |   |
| Other investments:                                                                 |   |                                        |        |     |   |        |   |   |        |   |
| Purchases                                                                          |   |                                        | —     |     |   | —     |   |   | (500,000    | )      |
| Transfer to marketable        securities                                           |   |                                        | —     |     |   | —     |   |   | 600,000     |   |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Net cash provided        by/(used in) investing activities                         |   |                                        | 1,953,289   |     |   | (5,260,635  | )      |   | 6,115,040   |   |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Cash flows from financing        activities:                                       |   |                                        |        |     |   |        |   |   |        |   |
| Repurchase of stock                                                                |   |                                        | (1,718      | )        |   | (198,497    | )      |   | (385,179    | )      |
| Proceeds from exercise        of options or warrants                               |   |                                        | —     |     |   | —     |   |   | 162,500     |   |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Net cash used in financing        activities                                       |   |                                        | (1,718      | )        |   | (198,497    | )      |   | (222,679    | )      |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Net increase/(decrease)        in cash and cash equivalent                         |   |                                        | (1,358,809  | )        |   | (8,358,921  | )      |   | 822,223     |   |
|                                                                               |   |
| Cash and cash equivalents,        beginning of period                              |   |                                        | 10,204,167  |     |   | 18,563,088  |   |   | 17,740,865  |   |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |
| Cash and cash equivalents,        end of period                                    |   | $                                           | 8,845,358   |     | $      | 10,204,167  |   | $      | 18,563,088  |   |
|                                                                               |   |                                             |             |     |        |             |   |        |             |   |

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

35

----

**SPEEDUS            CORP.**

**NOTES TO            CONSOLIDATED FINANCIAL STATEMENTS**

**1. Organization and            Business**

*Organization*

          Speedus            Corp. (“Speedus” or the “Company”), a Delaware corporation, was            formed in October 1995 as CellularVision USA, Inc. (“CVUS”) to combine the            ownership of predecessor companies that were under common control. In January 1999,            through a ‘short form merger’ as allowed under Delaware law, CVUS changed            its name to SPEEDUS.COM, Inc. In June 2002, in the same manner, SPEEDUS.COM, Inc.            changed its name to Speedus Corp. Unless the context requires otherwise, the term            Company includes Speedus and its wholly- and majority-owned subsidiaries.

*Business            activities*

          Speedus            Corp. is a holding company that owns significant equity interests in diverse            businesses. We seek business opportunities across all industries for potential            transactions and relationships in which we can apply our current resources and            management strengths. The companies that we target, either public or privately held,            will be seeking growth or restructuring capital to pursue near term business objectives            in demonstrated markets. We will continue to pursue opportunities involving our            expertise in the medical device and wireless markets as well as those areas involving            our broadband assets as attractive opportunities present themselves.

          We            have co-invested with Siemens Corporate Research, Inc., a subsidiary of Siemens            Corporation, in Zargis Medical Corp. to develop advanced diagnostic decision support            products and services for primary care physicians, pediatricians, cardiologists and            other healthcare professionals. Zargis Acoustic Cardioscan (ZAC), Zargis’ core            product, is the first and only FDA-authorized computer-assisted medical device designed            to support physicians in analyzing heart sounds for the identification of suspected            murmurs—which are a potential sign of heart disease. We own 90% of F&B            Güdtfood Holding Corp., the creator and operator of the original Eurocentric            “chic and quick” café, which, as of December 31, 2007, is operating            one store in Manhattan. In 2005, we conceived Wibiki, a new software-based initiative            that leverages existing Wi-Fi infrastructures to reduce cost and  complexity for            users. Wibiki’s business model will employ a user opt-in advertising service we            call AdChooser to generate revenues that keep Wibiki services free to users. We own a            portfolio of patents that allow for high-speed wireless communications. We also own            fixed wireless spectrum in the New York City metropolitan area that we may            commercialize in the future to support high-speed, or broadband, Internet access            service.

**2. Summary of Significant            Accounting Policies**

*Financial statements and            principles of consolidation*

          The            consolidated financial statements include the accounts of Speedus and its wholly-owned            subsidiaries. All significant intercompany accounts and transactions have been            eliminated in consolidation.

          Companies            in which Speedus directly or indirectly owns more than 50% of the outstanding voting            securities or that Speedus has effective control over are accounted for under the            consolidation method of accounting. Under this method, those companies’ balance            sheets and results of operations, from the date Speedus acquired control, are included            in Speedus’ consolidated financial statements. The interest in the net assets and            operations of these companies’ other stockholders is reflected in the caption            ‘Minority interest’ in Speedus’ consolidated balance sheet and            statements of operations. Through the year ended December 31, 2007, F&B            Güdtfood and Zargis Medical continued to generate losses which, during 2005,            reduced the minority interest balance to zero. As result, the Company is consolidating            100% of the losses for these entities and continues to fund their operations with            intercompany loans or additional investment, which are eliminated in            consolidation.

          Companies            in which Speedus owns less than 20% of the outstanding voting securities and does not            have the ability to exercise significant influence are accounted for under the cost            method of accounting.

*Estimates*

          The            preparation of financial statements in conformity with generally accepted accounting            principles 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 dates of the financial statements and the reported amounts of            operating revenues and expenses during the reporting periods. Significant estimates and            assumptions include the adeqacy of the calculations related to stock based            compensation, other than temporary impairmant of investments and the realizable value            of assets held for sale. Actual results could differ from those estimates.

*Cash and Cash            Equivalents*

          The            Company considers all highly liquid interest earning investments with original            maturities of three months or less to be cash equivalents. At December 31, 2007 and            2006, cash equivalents consisted of money market funds.

36

----

*Marketable            Securities*

          All            marketable securities are defined as trading securities under the provisions of            Statement of Financial Accounting Standards No. 115, “Accounting for Certain            Investments in Debt and Equity Securities.” At December 31, 2007 and 2006,            marketable securities consisted of publicly traded equity securities which were            recorded at fair market value. Their original cost was $489,000 and $887,000,            unrealized losses since acquisition were $397,000 and $533,000 and the carrying value            was $92,000 and $354,000, respectively. At December 31, 2007, based upon the fair            market value of these securities, 100% was invested in technology companies.

*Other            investments*

          The            Company has invested in equity and debt instruments of non-publicly held companies and            accounts for them under the cost method since the Company does not have the ability to            exercise significant influence over operations. The Company monitors these investments            for other than temporary impairment by considering current factors including economic            environment, market conditions, operational performance and other specific factors            relating to the business underlying the investment, and records reductions in carrying            values when necessary. The Company does not believe there has been any impairment of            other investments at December 31, 2007.

          Other            investments consist of:

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    |    |     |   |    |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|----------|--------|---------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | **December                        31,** |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | **2007**                                |    | **2006** |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |    |          |   |
| (a) 791,667 shares                        of preferred stock of a non-publicly held cardiovascular technology                        company, recorded at cost in the amount of $300,000. In connection with                        this investment, the Company also received warrants to purchase 375,000                        shares of common stock at $.40 per share. This investment was acquired in                        2004.                                                                                                                 |   | $                                       | 300,000 |     | $      | 300,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    |    |     |   |    |   |
| (b) an investment in                        an entity specifically formed to invest in convertible preferred stock in a                        non-publicly held online and directory assistance company, recorded at cost                        in the amount of $250,000. The preferred stock is convertible into shares                        of common stock at a conversion price equal to 50% of the price of the                        common stock in an initial public offering. This investment was acquired in                        2005. |   |                                    | 250,000 |     |   | 250,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                    |    |     |   |    |   |
| (c) an investment in                        an entity specifically formed to invest in a senior third-party note of a                        non-publicly held online and directory assistance company, recorded at cost                        in the amount of $250,000. The note is convertible into shares of common                        stock at a conversion price equal to the price of the common stock in an                        initial public offering. This investment was acquired in 2005.                                            |   |                                    | 250,000 |     |   | 250,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |         |     |        |         |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                       | 800,000 |     | $      | 800,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                         |         |     |        |         |   |

*Securities sold and not            purchased*

          The            Company has in the past and may in the future sell publicly traded equity securities it            does not own in anticipation of declines in the fair market values of the securities.            When the Company effects such transactions, it must borrow the securities it sold in            order to deliver them and settle the trades. The amounts shown on the balance sheet as            ‘Securities sold and not purchased’ represent the value of these securities            at fair market value. At December 31, 2007 and 2006, there were no securities sold and            not purchased.

*Concentrations of Credit            Risk*

          Financial            instruments that potentially could subject the Company to concentrations of credit risk            consist largely of cash equivalents and marketable securities. These instruments are            potentially subject to concentrations of credit risk but the Company believes that this            risk is limited due to diversification and investments being made in investment grade            securities.

          The            Company has in the past and may in the future sell publicly traded equity securities            that it does not own in anticipation of declines in the fair market values of the            securities. When the Company sells securities that it does not own, it must borrow the            securities it sold in order to deliver them and settle the trades. Thereafter, the            Company must buy the

37

----

securities and deliver them to            the lender of the securities. The Company’s potential for loss on these            transactions is unlimited since the value of the underlying security can keep            increasing which could have a material adverse effect on the Company’s            consolidated financial statements.

*Property and            Equipment*

          Office            equipment and leasehold improvements are recorded at cost and depreciated on a            straight-line basis over the estimated useful lives of the assets, ranging from three            to seven years, but not longer than initial lease terms in the case of leasehold            improvements.

          When            assets are fully depreciated, it is the Company’s policy to remove the costs and            related accumulated depreciation from its books and records.

*Long-lived            assets*

          The            Company periodically evaluates the net realizable value of long-lived assets, including            fixed and intangible assets, in accordance with Statement of Financial Accounting            Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived            Assets”, relying on anticipated future cash flows. The Company’s evaluation            of anticipated future cash flows considers operating results, business plans and            economic projections, as well as, non-financial data such as market trends, product and            development cycles, and changes in management’s market emphasis. An impairment in            the carrying value of an asset is recognized when the expected future operating cash            flows derived from the asset are less than its carrying value.

          During            December 2007, the Company closed one of its F&B Restaurant stores as a result of            continued losses. At December 31, 2007, based upon an offer to purchase the leasehold            estate, the Company recorded a loss in the amount of $71,000 representing the            difference between the carrying value of the leasehold estate and the estimated net            proceeds to be received by the Company in the amount of $342,000 which has been            recorded as assets held for sale.

*Revenue            Recognition*

          Revenues            from F&B Güdtfood’s operations are recorded on a cash basis.

*Income Taxes*

          As            required by Statement of Financial Accounting Standards No. 109, “Accounting for            Income Taxes,” the Company is required to provide for deferred tax assets or            liabilities arising due to temporary differences between the book and tax basis of the            Company’s assets and liabilities.

          As            of December 31, 2007, the Company has a deferred tax asset of approximately $46.7            million, relating primarily to operating losses. An offsetting valuation allowance of            $46.7 million has been established as the Company had no ability to carryback its            losses and a limited earnings history. During 2005, the Company recorded a benefit from            income taxes in the amount of $322,000 as a result of a tax refund from the filing of            amended tax returns.

          A            reconciliation of the Company’s effective income tax rate and the federal tax            rate is as follows:

|                                                                        |   |                                               |    |     |   |     |   |   |    |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------------------|---------|----------|--------|----------|--------|--------|---------|--------|
|                                                                        |   | **Year ended December                        31,** |    |
|                                                                        |   |                                                    |    |
|                                                                        |   | **2007**                                           |    | **2006** |   | **2005** |   |
|                                                                        |   |                                                    |    |          |   |          |   |
| Statutory                        rate                                       |   |                                               | (34     | )%       |   | (34      | )%     |   | (34     | )%     |
| Benefit from tax                        refund                              |   |                                               | — | %        |   | —  | %      |   | (6      | )%     |
| Permanent                        difference: goodwill impairment            |   |                                               | — | %        |   | —  | %      |   | — | %      |
| State and local                        income taxes, net of federal benefit |   |                                               | (11     | )%       |   | (10      | )%     |   | (10     | )%     |
| Change in valuation                        allowance                        |   |                                               | 45      | %        |   | 44       | %      |   | 44      | %      |
|                                                                        |   |                                                    |         |     |        |          |   |        |         |   |
| Effective                        rate                                       |   |                                               | 0       | %        |   | 0        | %      |   | (6      | )%     |
|                                                                        |   |                                                    |         |     |        |          |   |        |         |   |

          At            December 31, 2007, the Company had net operating loss carryforwards of approximately            $98.6 million which expire between 2015 and 2027. Under the provisions of the Internal            Revenue Code, certain substantial changes in the Company’s stock ownership may            result in a limitation on the amounts of net operating loss carryforwards which can be            utilized in future years.

Effective January 1, 2007, the Company            adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting            for Uncertainty in Income Taxes—an Interpretation of FASB Statement 109”.            FIN 48 prescribes a comprehensive model for the manner in which a company should            recognize, measure, present and disclose in its financial statements all material            uncertain tax positions that the Company has taken or expects to take on a tax return.            As of the date of adoption, there were no tax positions for which it is reasonably            possible that the total amounts of unrecognized tax benefits will significantly            increase or decrease within twelve months from the date of adoption of FIN 48 or from            December 31, 2007. As of December 31, 2007, the only tax jurisdictions to which the            Company is subject are the United States and several states where the Company operates.            Open tax years relate to years in which unused net operating losses were generated.            Thus, upon adoption of FIN 48, the Company’s open tax years extend back to 1996.            In the event that the Company concludes that it is subject to interest and/or penalties            arising from uncertain tax positions, the Company will present interest and penalties            as a component of income taxes. No amounts of interest or penalties were recognized in            the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations            as of and for the year ended December 31, 2007 upon adoption of FIN            48.

*Earnings Per            Share*

          Basic            and diluted earnings/(loss) per common share are determined in accordance with            Statement of Financial Accounting Standards No. 128, “Earnings Per            Share”.

          For            the years ended December 31, 2007, 2006 and 2005, outstanding stock options and            warrants in the weighted average amounts of 544,000, 471,000 and 459,000, respectively,            have been excluded from the diluted loss per share since their effect would be            antidilutive.

*Stock Options*

          Prior            to January 1, 2006, the Company accounted for its employee stock options in accordance            with Statement of Financial Accounting Standards No. 123, “Accounting for            Stock-Based Compensation”, as amended, which defines a

38

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“fair value method”            of measuring and accounting for compensation expense from employee stock options. FASB            123 also allowed accounting for such options under the “intrinsic value            method” in accordance with Accounting Principles Board No. 25, “Accounting            for Stock Issued to Employees.” The Company elected to use the intrinsic value            method and adopted the disclosure only provisions of FASB 123. Under APB 25, generally            no compensation cost was recognized in the consolidated statement of operations since            stock options were issued with exercise prices equal to the market value of the            underlying shares on the grant date. The following table presents pro forma earnings            and earnings per share as if the fair value method of accounting was applied during the            year ended December 31, 2005:

|                                                              |   |   |       |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|
| Net loss as                        reported                       |   | $      | (5,467,905 | )      |
| After tax effect of                        pro forma compensation |   |   | (74,000    | )      |
|                                                              |   |        |            |   |
| Pro forma net                        loss                         |   | $      | (5,541,905 | )      |
|                                                              |   |        |            |   |
| Loss per common                        share:                     |   |   |       |   |
| Basic and diluted -                        as reported            |   | $      | (1.35      | )      |
|                                                              |   |        |            |   |
| Basic and diluted -                        pro forma              |   | $      | (1.37      | )      |
|                                                              |   |        |            |   |

          The            fair value of these awards on the grant date was estimated using a Black-Scholes option            pricing model. Key assumptions used in valuing these options included risk-free            interest rates between 2-4%, expected lives of three years and volatility factors            between 51-65%.

          Effective            January 1, 2006, the Company adopted FASB 123R, “Share-Based Payment”,            using the modified prospective application method. Under this method, for all unvested            awards as of January 1, 2006, the Company records compensation cost based upon the fair            value of those awards on the grant date over the remaining service period of each award            on a straight line basis. For awards granted after January 1, 2006, the Company records            compensation cost based upon the fair value of those awards on the grant date over the            service period of each award on a straight line basis. Stock based compensation expense            recognized during the years ended December 31, 2007 and 2006 was $170,000 and $673,000,            respectively. For the years ended December 31, 2007 and 2006, as a result of adopting            FASB 123R, the net loss increased by these amounts and both basic and diluted loss per            share increased $0.04 and $0.17, respectively.

          The            fair value of the awards on the grant date was estimated using a Black-Scholes option            pricing model. Assumptions utilized in the model for both Speedus and Zargis are            evaluated and revised, as necessary, to reflect market conditions and experience.            Expected volatility between 60% to 145% has been calculated based on the historical            volatility of the Company’s stock prior to the grant date. The expected term            represents the period of time that options granted are expected to be outstanding and            is estimated based on historical option exercise experience ranging between six and            seven years. The risk-free interest rates between 4% to 5% is equivalent to the U.S.            Treasury yield in effect at the time of grant for the estimated life of the option            grant. Estimated forfeiture rates are based on historical experience.

*Recent Accounting            Pronouncements*

          There            have been no recent accounting pronouncements which upon future adoption would have an            effect on the Company’s results of operations or financial position, except as            disclosed below.

          In            September 2006, the Financial Accounting Standards Board issued FASB 157, “Fair            Value Measurements”. FASB 157 defines fair value, establishes a framework for            measuring fair value in generally accepted accounting principles and expands            disclosures about fair value measurements. FASB 157 is effective for fiscal years            beginning after November 15, 2007 and interim periods within those fiscal years. In            November 2007, the FASB issued proposed FASB Staff Position SFAS 157-a,            “Application of FASB Statement No. 157 to FASB Statement No. 13 And Its Related            Interpretive Accounting Pronouncements That Address Leasing Transactions.” In            December 2007, the FASB issued proposed FASB Staff Position FAS 157-b, “Effective            Date of FASB Statement No. 157,” to allow a one-year deferral of adoption of SFAS            157 for nonfinancial assets and nonfinancial liabilities that are recognized at fair            value on a nonrecurring basis. The comment deadline for proposed FSP FAS 157-a was            January 4, 2008. The comment deadline for FSP FAS 157-b was January 16, 2008. The            ultimate outcome of these recent developments is currently unknown. The Company does            not expect adoption of FASB No. 157 to have a material effect on its results of            operations or financial position.

          In            February 2007, the Financial Accounting Standards Board issued FASB No. 159, “The            Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment            of FASB Statement No. 115,” which permits companies to measure many financial            instruments and certain other assets and liabilities at fair value on an            instrument-by-instrument basis (the fair value option). Adoption of FASB 159 is            optional and it may be adopted beginning in the first quarter of 2007. The Company is            currently evaluating the possible impact of adopting FASB No. 159 on our consolidated            financial statements.

          In            December 2007, the Financial Accounting Standards Board issued FASB No. 141R,            “Business Combinations”. FASB 141R establishes principles and requirements            for how the acquirer of a business recognizes and measures in its financial statements            the identifiable assets acquired, the liabilities assumed, and any noncontrolling            interest in the acquiree. FASB 141R also provides guidance for recognizing and            measuring the goodwill acquired in the

39

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business combination and            determines what information to disclose to enable users of the financial statements to            evaluate the nature and financial effects of the business combination. FASB 141R will            become effective as of the beginning of the Company’s fiscal year beginning after            December 15, 2008. The impact that adoption of FASB No. 141R will have on the            Company’s consolidated financial statements will depend on the nature, terms and            size of business combinations that occur after the effective date.

          In            December 2007, the Financial Accounting Standards Board issued FASB No. 160,            “Noncontrolling Interests in Consolidated Financial Statements-an amendment of            ARB No. 51”. FASB 160 establishes accounting and reporting standards for the            noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary.            FASB 160 will become effective as of the beginning of the Company’s fiscal year            beginning after December 15, 2008. The Company is currently evaluating the impact that            the adoption of FASB No. 160 will have on its consolidated financial condition or            results of operations.

**3. Property and            Equipment**

          Property            and equipment consists of the following:

|                                                 |   |                                    |     |     |   |     |   |
|------------------------------------------------------|--------|-----------------------------------------|----------|----------|--------|----------|--------|
|                                                 |   | **December                        31,** |     |
|                                                 |   |                                         |     |
|                                                 |   | **2007**                                |     | **2006** |   |
|                                                 |   |                                         |     |          |   |
| Leasehold                        improvements        |   | $                                       | 88,831   |     | $      | 617,125  |   |
| Office                        equipment              |   |                                    | 74,091   |     |   | 355,675  |   |
|                                                 |   |                                         |          |     |        |          |   |
|                                                 |   |                                    | 162,922  |     |   | 972,800  |   |
| Less accumulated                        depreciation |   |                                    | (112,353 | )        |   | (444,972 | )      |
|                                                 |   |                                         |          |     |        |          |   |
| Property and                        equipment        |   | $                                       | 50,569   |     | $      | 527,828  |   |
|                                                 |   |                                         |          |     |        |          |   |

          Depreciation            expense was $232,000, $169,000 and $146,000 for the years ended December 31, 2007, 2006            and 2005, respectively. Depreciation expense is included in ‘Depreciation and            amortization’ on the accompanying Consolidated Statement of Operations and not            allocated to ‘Selling, General and Administrative’, ‘Research and            Development’ or ‘Cost of Sales’.

**4. Stockholders’            Equity**

*Stock Options*

          (a)            In November 2005, stockholders approved the Company’s 2005 Stock Incentive Plan            to replace the 1995 Stock Incentive Plan which expired in October 2005. While no new            grants can be made under the 1995 Plan, options outstanding at the expiration of the            1995 Plan will remain outstanding until exercise, cancellation or expiration. Options            available for grant at the expiration of the 1995 Plan have been made available for            grant under the 2005 Plan. To the extent that options granted under the 1995 Plan are            cancelled or expire, those options would be available for issuance under the 2005 plan.            Similar to the 1995 Plan, the 2005 Plan provides for the grant of various            stock–based incentives, including non-qualified and incentive stock options, to            employees, directors and consultants. The Company has issued new shares for the            exercise of stock options and expects to continue to do so in the future.

          See            Note 1 for information on the Company’s accounting policy for stock            options.

          Aggregate            stock option activity and weighted average prices under both Plans for the three years            ended December 31, 2007 is summarized as follows:

|                                                                               |   |        |    |      |   |        |   |      |    |        |   |      |   |   |    |   |   |    |   |
|------------------------------------------------------------------------------------|--------|-------------|---------|-----------|--------|-------------|--------|-----------|---------|-------------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|
|                                                                               |   | **2007**    |    | **2006**  |   | **2005**    |   |
|                                                                               |   |             |    |           |   |             |   |
|                                                                               |   | **Options** |    | **Price** |   | **Options** |   | **Price** |    | **Options** |   | **Price** |   |
|                                                                               |   |             |    |           |   |             |   |           |    |             |   |           |   |
| Outstanding at                        January 1                                    |   |        | 540,365 |      | $      | 8.28        |   |      | 431,615 |        | $      | 9.28      |   |   | 444,740 |   | $      | 9.48    |   |
| Granted                                                                            |   |        | 19,550  |      |   | 3.63        |   |      | 112,250 |        |   | 5.08      |   |   | 52,500  |   |   | 5.80    |   |
| Exercised                                                                          |   |        | — |      |   | —     |   |      | — |        |   | —   |   |   | (40,625 | )      |   | 4.00    |   |
| Expired                                                                            |   |        | (7,750  | )         |   | 28.13       |   |      | (1,250  | )           |   | 60.00     |   |   | — |   |   | — |   |
| Forfeited                                                                          |   |        | (1,227  | )         |   | 14.33       |   |      | (2,250  | )           |   | 5.40      |   |   | (25,000 | )      |   | 14.36   |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Outstanding at                        December 31                                  |   |        | 550,938 |      | $      | 7.84        |   |      | 540,365 |        | $      | 8.28      |   |   | 431,615 |   | $      | 9.28    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Exercisable at                        December 31                                  |   |        | 536,028 |      | $      | 7.91        |   |      | 510,809 |        | $      | 8.44      |   |   | 383,850 |   | $      | 9.72    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Available for grant at                        December 31                          |   |        | 173,019 |      |   |        |   |      | 183,592 |        |   |      |   |   | 292,342 |   |   |    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Weighted average fair                        value per share of grants during year |   |        |    |      | $      | 2.71        |   |      |    |        | $      | 4.60      |   |   |    |   | $      | 2.72    |   |
|                                                                               |   |        |    |      |        |             |   |      |    |        |        |           |   |   |    |   |        |         |   |

          Stock            options generally have ten year term; however, 2,050 options granted in 2007 have five            year terms. 12,050 options granted in 2007, are immediately exercisable. 7,500            options granted in 2007 vest over a two year term.

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                      At December 31, 2007, there was $64,000 of unrecognized compensation cost related to            outstanding stock options that is expected to be recognized over a weighted average            period of 0.8 years.

          The            following table aggregates certain information concerning currently outstanding and            exercisable stock options under both Plans at December 31, 2007:

|                                                |                                 |        |                                                 |                                                                                                             |                                                 |                                                                                                     |   |                                                                        |   |        |   |                                                                                                     |    |                                                                        |   |    |   |   |   |   |   |    |   |
|-----------------------------------------------------|--------------------------------------|-------------|------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|-------------|--------|----------------------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------|--------|---------|--------|--------|--------|--------|--------|---------|--------|
|                                                |                                 |        | **Stock options                        outstanding** |                                                                                                             | **Stock options                        exercisable** |                                                                                                     |
|                                                |                                 |        |                                                      |                                                                                                             |                                                      |                                                                                                     |
| **Range of                        exercise prices** |                                 | **Options** |                                                 | **Weighted                        average                        remaining                        life (years)** |                                                 | **Weighted                        average                        exercise                        price** |   | **Aggregate                        intrinsic                        value** |   | **Options** |   | **Weighted                        average                        exercise                        price** |    | **Aggregate                        intrinsic                        value** |   |
|                                                     |                                 |             |                                                 |                                                                                                                  |                                                 |                                                                                                          |   |                                                                             |   |             |   |                                                                                                          |    |                                                                             |   |
| $                                                   | 3.30                        - 4.00   |        |                                                 | 107,896                                                                                                          |                                                 |                                                                                                     | 3.9    |                                                                        | $      | 3.76        |   | $                                                                                                        | — |                                                                        |   | 107,896 |   | $      | 3.76   |   | $      | — |   |
|                                                | 4.28                        - 8.32   |        |                                                 | 299,550                                                                                                          |                                                 |                                                                                                     | 6.8    |                                                                        |   | 5.24        |   |                                                                                                     | — |                                                                        |   | 284,640 |   |   | 5.22   |   |   | — |   |
|                                                | 9.08                        - 19.36  |        |                                                 | 140,875                                                                                                          |                                                 |                                                                                                     | 1.8    |                                                                        |   | 15.65       |   |                                                                                                     | — |                                                                        |   | 140,875 |   |   | 15.65  |   |   | — |   |
|                                                | 20.80                        - 21.36 |        |                                                 | 117                                                                                                              |                                                 |                                                                                                     | 1.4    |                                                                        |   | 21.07       |   |                                                                                                     | — |                                                                        |   | 117     |   |   | 21.07  |   |   | — |   |
|                                                | 55.00                                |        |                                                 | 2,500                                                                                                            |                                                 |                                                                                                     | 2.2    |                                                                        |   | 55.00       |   |                                                                                                     | — |                                                                        |   | 2,500   |   |   | 55.00  |   |   | — |   |
|                                                |                                 |        |                                                      |                                                                                                                  |                                                 |                                                                                                          |        |                                                                        |        |             |   |                                                                                                          |         |                                                                        |        |         |   |        |        |   |        |         |   |
|                                                |                                 |        |                                                 | 550,938                                                                                                          |                                                 |                                                                                                     | 5.0    |                                                                        | $      | 7.84        |   | $                                                                                                        | — |                                                                        |   | 536,028 |   | $      | 7.91   |   | $      | — |   |
|                                                |                                 |        |                                                      |                                                                                                                  |                                                 |                                                                                                          |        |                                                                        |        |             |   |                                                                                                          |         |                                                                        |        |         |   |        |        |   |        |         |   |

          Intrinsic            value represents the excess of market value at December 31, 2007 over the exercise            price of stock options. The aggregate intrinsic value for stock options outstanding and            exercisable at December 31, 2006 and 2005 was $128,000 and $104,000,            respectively.

          (b)            In February 2002, the Board of Directors of Zargis Medical Corp. approved the Zargis            2002 Stock Option Plan and reserved 280,000 shares of Zargis common stock for issuance            under the plan. In May 2007, the Board of Directors reserved an additional 120,000            shares for issuance under the plan. The Zargis 2002 Plan provides for the grant of            various stock–based incentives, including non-qualified and incentive stock            options, to employees, directors, advisors and consultants. To date, there have been no            options exercised under the Zargis 2002 Plan.

          Zargis’            accounting policy for stock options is the same as the Company’s. See Note            1.

          Aggregate            stock option activity and weighted average prices under the Zargis 2002 Plan for the            three years ended December 31, 2007 is summarized as follows:

|                                                                               |   |        |    |      |   |        |   |      |    |        |   |      |   |   |    |   |   |    |   |
|------------------------------------------------------------------------------------|--------|-------------|---------|-----------|--------|-------------|--------|-----------|---------|-------------|--------|-----------|--------|--------|---------|--------|--------|---------|--------|
|                                                                               |   | **2007**    |    | **2006**  |   | **2005**    |   |
|                                                                               |   |             |    |           |   |             |   |
|                                                                               |   | **Options** |    | **Price** |   | **Options** |   | **Price** |    | **Options** |   | **Price** |   |
|                                                                               |   |             |    |           |   |             |   |           |    |             |   |           |   |
| Outstanding at January                        1                                    |   |        | 185,134 |      | $      | 2.54        |   |      | 180,134 |        | $      | 2.51      |   |   | 126,134 |   | $      | 1.75    |   |
| Granted                                                                            |   |        | 142,024 |      |   | 3.50        |   |      | 50,000  |        |   | 3.50      |   |   | 100,000 |   |   | 3.50    |   |
| Exercised                                                                          |   |        | — |      |   | —     |   |      | — |        |   | —   |   |   | — |   |   | — |   |
| Expired                                                                            |   |        | — |      |   | —     |   |      | — |        |   | —   |   |   | — |   |   | — |   |
| Forfeited                                                                          |   |        | (17,000 | )         |   | 2.71        |   |      | (45,000 | )           |   | 3.50      |   |   | (46,000 | )      |   | 2.57    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Outstanding at December                        31                                  |   |        | 310,158 |      | $      | 2.97        |   |      | 185,134 |        | $      | 2.54      |   |   | 180,134 |   | $      | 2.51    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Exercisable at December                        31                                  |   |        | 148,134 |      | $      | 2.39        |   |      | 121,220 |        | $      | 2.15      |   |   | 78,355  |   | $      | 1.66    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Available for grant at                        December 31                          |   |        | 89,842  |      |   |        |   |      | 94,886  |        |   |      |   |   | 99,866  |   |   |    |   |
|                                                                               |   |             |         |      |   |        |   |           |         |        |   |      |   |        |         |   |   |    |   |
| Weighted average fair                        value per share of grants during year |   |        |    |      | $      | 2.12        |   |      |    |        | $      | 1.61      |   |   |    |   | $      | 1.61    |   |
|                                                                               |   |        |    |      |        |             |   |      |    |        |        |           |   |   |    |   |        |         |   |

          Stock            options have ten year terms. 16,000 and 126,024 options granted in 2007 vest over two            and three year terms, respectively.

          At            December 31, 2007, there was $242,000 of unrecognized compensation cost related to            outstanding stock options that is expected to be recognized over a weighted average            period of 1.9 years.

41

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          The            following table aggregates certain information concerning currently outstanding and            exercisable stock options under the Zargis 2002 Plan at December 31, 2007:

|                                                |   |        |                                                 |                                                                                                             |                                                 |                                                                                                     |   |                                                                        |   |        |   |                                                                                                     |   |                                                                        |    |   |   |    |   |   |   |   |   |    |   |
|-----------------------------------------------------|--------|-------------|------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|-------------|--------|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|---------|--------|--------|---------|--------|--------|--------|--------|--------|---------|--------|
|                                                |   |        | **Stock options                        outstanding** |                                                                                                             | **Stock options                        exercisable** |                                                                                                     |
|                                                |   |        |                                                      |                                                                                                             |                                                      |                                                                                                     |
| **Range of                        exercise prices** |   | **Options** |                                                 | **Weighted                        average                        remaining                        life (years)** |                                                 | **Weighted                        average                        exercise                        price** |   | **Aggregate                        intrinsic                        value** |   | **Options** |   | **Weighted                        average                        exercise                        price** |   | **Aggregate                        intrinsic                        value** |    |
|                                                     |   |             |                                                 |                                                                                                                  |                                                 |                                                                                                          |   |                                                                             |   |             |   |                                                                                                          |   |                                                                             |    |
| $                                                   | 0.50   |        |                                                 |                                                                                                             | 30,000                                               |                                                                                                     |   |                                                                        | 5.0    |        | $      | 0.50                                                                                                     |   | $                                                                           | 90,000  |   |   | 30,000  |   | $      | 0.50   |   | $      | 90,000  |   |
|                                                | 1.75   |        |                                                 |                                                                                                             | 8,500                                                |                                                                                                     |   |                                                                        | 4.8    |        |   | 1.75                                                                                                     |   |                                                                        | 15,000  |   |   | 8,500   |   |   | 1.75   |   |   | 15,000  |   |
|                                                | 2.50   |        |                                                 |                                                                                                             | 59,634                                               |                                                                                                     |   |                                                                        | 6.4    |        |   | 2.50                                                                                                     |   |                                                                        | 60,000  |   |   | 59,634  |   |   | 2.50   |   |   | 60,000  |   |
|                                                | 3.50   |        |                                                 |                                                                                                             | 212,024                                              |                                                                                                     |   |                                                                        | 8.6    |        |   | 3.50                                                                                                     |   |                                                                        | — |   |   | 50,000  |   |   | 3.50   |   |   | — |   |
|                                                |   |        |                                                 |                                                                                                                  |                                                      |                                                                                                     |        |                                                                             |        |        |        |                                                                                                          |   |                                                                             |         |   |        |         |   |        |        |   |        |         |   |
|                                                |   |        |                                                 |                                                                                                             | 310,158                                              |                                                                                                     |   |                                                                        | 7.7    |        | $      | 2.97                                                                                                     |   | $                                                                           | 165,000 |   |   | 148,134 |   | $      | 2.39   |   | $      | 165,000 |   |
|                                                |   |        |                                                 |                                                                                                                  |                                                      |                                                                                                     |        |                                                                             |        |        |        |                                                                                                          |   |                                                                             |         |   |        |         |   |        |        |   |        |         |   |

          Intrinsic            value represents the excess of market value at December 31, 2007 over the exercise            price of stock options. The aggregate intrinsic value for stock options outstanding and            exercisable at December 31, 2006 was $178,000 and $164,000, respectively. The aggregate            intrinsic value for stock options outstanding and exercisable at December 31, 2005 was            $178,000 and $144,000, respectively.

*Zargis Medical*

          In            October 2007, Zargis and the 3M Company entered into an exclusive multi-year            marketing alliance involving Zargis’ heart sound analysis software and 3M            Littmann’s next-generation electronic stethoscope. Under the agreement, Zargis            will support 3M in its efforts to develop a next-generation stethoscope that will be            compatible with Zargis’ heart sound analysis software. In addition, the alliance            provides Zargis with a wide-range of marketing and promotional opportunities along with            exclusive rights to sell its heart sound analysis software through the global            distribution network of the Littmann brand. The agreement grants 3M a 10% minority            equity position in Zargis, 5% following the first sale of Zargis’ software            through the 3M distribution channel and 5% in the event the agreement is renewed after            an initial two year term and certain other conditions are met, and a seat on            Zargis’ board of directors.

          Under            the provisions of Emerging Issues Task Force No. 96-18, “Accounting for equity            instruments that are issued to other than employees for acquiring or in conjunction            with selling, goods and services”, the fair value of the equity interests will be            recognized as an expense over a period of time when the requisite conditions are            met.

*Warrants*

          The            Company accounts for warrants granted to non-employees under the provisions of Emerging            Issues Task Force No. 96-18, “Accounting for equity instruments that are issued            to other than employees for acquiring or in conjunction with selling, goods and            services.” The fair value of the warrants at the time of issuance was determined            using the Black-Scholes option-pricing model. Expenses are recognized over the service            terms. No significant expenses were recognized during the years ended December 31,            2007, 2006 or 2005.

          28,314            warrants with a weighted average exercise price of $55.08 per share outstanding at            January 1, 2005 were cancelled during the year ended December 31, 2005. There were no            significant warrants issued during the years ended December 31, 2007 or            2006.

*Treasury Stock*

          During            the years ended December 31, 2007, 2006 and 2005, the Company repurchased 413 shares,            37,152 shares and 65,832 shares, respectively, of its own Common Stock.

*Stockholder Rights            Plan*

          On            January 11, 2001, the Company’s Board of Directors adopted a stockholder rights            plan in which preferred stock purchase rights will be distributed as a dividend at the            rate of four rights for each share of the Company’s Common Stock.

          Each            right generally will entitle stockholders, in certain circumstances, to buy one one-ten            thousandth of a newly issued share of Series A Junior Participating Preferred Stock of            the Company at an exercise price of $50.00. The rights generally will be exercisable            and transferable apart from the Common Stock only if a person or group acquires            beneficial ownership of 17% or more of the Common Stock or commences a tender or            exchange offer upon consummation of which such person or group would beneficially own            17% or more of the Common Stock.

          If            any person becomes the beneficial owner of 17% or more of the Company’s Common            Stock, then each right not owned by a 17% or more stockholder or certain related            parties will entitle its holder to purchase, at the right’s then-current exercise            price, shares of Common Stock (or, in certain circumstances as determined by the Board,            cash,

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other property, or other            securities) having a value of twice the right’s exercise price. In addition, if,            after any person has become a 17% or more stockholder, the Company is involved in a            merger or other business combination transaction with 42 another person in which its            Common Stock is changed or converted, or sells 50% or more of its assets or earning            power to another person, each right will entitle its holder to purchase, at the            right’s then-current exercise price, shares of common stock of such other person            having a value of twice the right’s exercise price.

          The            Company will generally be entitled to redeem the rights at $.01 per right at any time            until the tenth day following public disclosure that a person or group has become the            beneficial owner of 17% or more of the Company’s common stock. The rights will            expire on January 26, 2011.

**5. One-for-four Reverse Stock            Split**

          At            its annual meeting of stockholders held on November 20, 2007, the Company received            stockholder approval of a proposal authorizing the Company’s Board of Directors,            in its discretion, to implement a reverse split of the Company’s issued and            outstanding shares, as well as treasury shares, at a ratio not to exceed one-for-six.            Thereafter, the Board of Directors approved the one-for-four ratio. The one-for-four            reverse split took effect with the open of trading on December 3, 2007. The exercise            price and the number of shares of common stock issuable under the Company’s            outstanding stock options have been proportionately adjusted to reflect the reverse            stock split.

          The            Company has retroactively adjusted all share and per share information to reflect the            reverse stock split in the consolidated financial statements and notes thereto, as well            as throughout the rest of this Form 10-K, for all periods presented.

**6. Commitments and            Contingencies**

*Noncancelable            Leases*

          At            December 31, 2007, future minimum lease payments due under noncancelable leases are as            follows:

|       |   |   |      |   |
|------------|--------|--------|-----------|--------|
| 2008       |   | $      | 307,000   |   |
| 2009       |   |   | 259,000   |   |
| 2010       |   |   | 138,000   |   |
| 2011       |   |   | 109,000   |   |
| 2012       |   |   | 112,000   |   |
| Thereafter |   |   | 203,000   |   |
|       |   |        |           |   |
|       |   | $      | 1,128,000 |   |
|       |   |        |           |   |

          In            addition, in connection with a license agreement to which the Company is a party, a            termination payment will be payable by the Company in the amount of $300,000 or            $200,000 if the license agreement is terminated by the Company before September 2009 or            September 2011, respectively.

          Rent            expense was approximately $513,000, $569,000 and $496,000 for the years ended December            31, 2007, 2006 and 2005, respectively.

*Indemnification*

          As            permitted under Delaware law, the Company’s Certificate of Incorporation and            By-Laws provide circumstances by which the Company shall indemnify each director,            officer, employee or agent of the Company. The maximum potential exposure under these            provisions is unlimited; however, the Company has an Officers and Directors insurance            policy that limits its exposure and enables it to recover a portion of any amounts            paid. The Company has not provided for any potential exposure under these provisions at            December 31, 2007.

**7. Legal            Proceedings**

          On            May 11, 2006, the Company filed two separate complaints against Cellco Partnership            (d/b/a Verizon Wireless) in United States District Court in the Southern District of            Florida, in which the Company asserts that Verizon Wireless is infringing two patents.            Verizon Wireless is a joint venture of Verizon Communications Inc. and Vodafone Group            PLC. In May 2007, the Company reached a mutual agreement with Verizon Wireless leading            to the dismissal of the two separate complaints that the Company filed against Verizon            Wireless. No financial consideration was paid or received by either party.

          On            June 2, 2006, the Company filed two separate complaints against Alltel Corp. in United            States District Court in the Southern District of Florida, in which the Company asserts            that Alltel is infringing two patents. In an amended complaint, the Company asserted            claims for infringement against Alltel Communications, Inc. and Alltel Wireless            Holdings, Inc., in addition to Alltel Corp. In  April  2007, the case was            transferred to United States District Court for the Eastern District of Arkansas. In            November 2007, one of the complaints was dismissed with prejudice. A claim            interpretation hearing was held on February 22, 2008, however, no order has been            entered interpreting the claim at issue. The Court has set the matter for trial during            the two-week period commencing on July 18, 2008. A separate lawsuit was commenced            in

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October 2006 against All            Wireless, LLC, a Florida company, in United States District Court in the Middle            District of Florida, alleging infringement. The All Wireless litigation has been stayed            pending the completion of the claim construction process in the Alltel            litigation.

**8. Business Segment            Information**

          The            following table sets forth the Company’s financial performance by reportable            operating segment for the years ended December 31, 2007, 2006 and 2005.

|                                                    |   |                                                    |     |       |   |       |   |                                           |     |       |   |       |   |   |       |   |
|---------------------------------------------------------|--------|---------------------------------------------------------|----------|------------|--------|------------|--------|------------------------------------------------|----------|------------|--------|------------|--------|--------|------------|--------|
|                                                    |   | **Year ended December                        31, 2007** |     |
|                                                    |   |                                                         |
|                                                    |   | **F&B**                                             |     | **Zargis** |   | **Wibiki** |   | **Corporate                        and other** |     | **Totals** |   |
|                                                    |   |                                                         |     |            |   |            |   |                                                |     |            |   |
| Revenues from external                        customers |   | $                                                       | 722,213  |       | $      | 11,000     |   | $                                              | —  |       | $      | —    |   | $      | 733,213    |   |
| Depreciation and                        amortization    |   |                                                    | 203,107  |       |   | 11,786     |   |                                           | —  |       |   | 50,741     |   |   | 265,634    |   |
| Operating                        loss                   |   |                                                    | (922,957 | )          |   | (1,909,911 | )      |                                           | (471,817 | )          |   | (1,966,056 | )      |   | (5,270,741 | )      |
| Investment                        income/(loss)         |   |                                                    | 1,690    |       |   | —    |   |                                           | —  |       |   | 851,001    |   |   | 852,691    |   |
| Other intangible                        assets          |   |                                                    | —  |       |   | —    |   |                                           | —  |       |   | —    |   |   | —    |   |
| Fixed                        assets                     |   |                                                    | 28,649   |       |   | 21,920     |   |                                           | —  |       |   | —    |   |   | 50,569     |   |
| Total                        assets                     |   |                                                    | 473,078  |       |   | 125,095    |   |                                           | —  |       |   | 12,691,394 |   |   | 13,289,567 |   |

|                                                    |   |                                                    |     |       |   |       |   |                                           |     |       |   |       |   |   |       |   |
|---------------------------------------------------------|--------|---------------------------------------------------------|----------|------------|--------|------------|--------|------------------------------------------------|----------|------------|--------|------------|--------|--------|------------|--------|
|                                                    |   | **Year ended December                        31, 2006** |     |
|                                                    |   |                                                         |
|                                                    |   | **F&B**                                             |     | **Zargis** |   | **Wibiki** |   | **Corporate                        and other** |     | **Totals** |   |
|                                                    |   |                                                         |     |            |   |            |   |                                                |     |            |   |
| Revenues from external                        customers |   | $                                                       | 834,754  |       | $      | 11,250     |   | $                                              | —  |       | $      | 338        |   | $      | 846,342    |   |
| Depreciation and                        amortization    |   |                                                    | 135,538  |       |   | 13,270     |   |                                           | —  |       |   | 608,745    |   |   | 757,553    |   |
| Operating                        loss                   |   |                                                    | (841,216 | )          |   | (1,641,052 | )      |                                           | (709,833 | )          |   | (3,023,735 | )      |   | (6,215,836 | )      |
| Investment                        income/(loss)         |   |                                                    | 1,523    |       |   | 62         |   |                                           | —  |       |   | 599,056    |   |   | 600,641    |   |
| Other intangible                        assets          |   |                                                    | —  |       |   | 34,116     |   |                                           | —  |       |   | —    |   |   | 34,116     |   |
| Fixed                        assets                     |   |                                                    | 490,111  |       |   | 21,092     |   |                                           | —  |       |   | 16,625     |   |   | 527,828    |   |
| Total                        assets                     |   |                                                    | 650,750  |       |   | 231,939    |   |                                           | —  |       |   | 16,253,074 |   |   | 17,135,763 |   |

|                                                    |   |                                                    |      |       |   |       |   |                                           |     |       |   |       |   |   |       |   |
|---------------------------------------------------------|--------|---------------------------------------------------------|-----------|------------|--------|------------|--------|------------------------------------------------|----------|------------|--------|------------|--------|--------|------------|--------|
|                                                    |   | **Year ended December                        31, 2005** |      |
|                                                    |   |                                                         |
|                                                    |   | **F&B**                                             |      | **Zargis** |   | **Wibiki** |   | **Corporate                        and other** |     | **Totals** |   |
|                                                    |   |                                                         |      |            |   |            |   |                                                |     |            |   |
| Revenues from external                        customers |   | $                                                       | 1,037,703 |       | $      | —    |   | $                                              | —  |       | $      | 640        |   | $      | 1,038,343  |   |
| Depreciation and                        amortization    |   |                                                    | 111,863   |       |   | 13,986     |   |                                           | —  |       |   | 814,834    |   |   | 940,683    |   |
| Operating                        loss                   |   |                                                    | (685,062  | )          |   | (1,739,639 | )      |                                           | (835,728 | )          |   | (2,635,912 | )      |   | (5,896,341 | )      |
| Investment                        income/(loss)         |   |                                                    | 1,231     |       |   | 83         |   |                                           | —  |       |   | (53,711    | )      |   | (52,397    | )      |
| Other intangible                        assets          |   |                                                    | —   |       |   | 210,143    |   |                                           | —  |       |   | 412,768    |   |   | 622,911    |   |
| Fixed                        assets                     |   |                                                    | 372,165   |       |   | 17,462     |   |                                           | —  |       |   | 36,574     |   |   | 426,201    |   |
| Total assets                                       |        |                                                         | 549,410   |            |        | 450,007    |        |                                                | —  |            |        | 21,461,060 |        |        | 22,460,477 |        |

          The            Company has no foreign operations. During the years ended December 31, 2007, 2006 and            2005, the Company did not have sales to any individual customer greater than 10% of            total Company revenues. The Company’s accounting policies for segments are the            same as those described in Note 2.

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**9. Selected Quarterly Data            (unaudited)**

          Quarterly            financial information is summarized in the table below (amounts in thousands, except            per share amounts):

|                                                                |   |                                                    |   |                                      |   |                                     |   |                                      |   |   |   |   |   |
|---------------------------------------------------------------------|--------|---------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|-------------------------------------------|--------|--------|--------|--------|--------|
|                                                                |   | **Year ended December                        31, 2007** |   |
|                                                                |   |                                                         |   |
|                                                                |   | **First                        Quarter**                |   | **Second                        Quarter** |   | **Third                        Quarter** |   | **Fourth                        Quarter** |   |
|                                                                |   |                                                         |   |                                           |   |                                          |   |                                           |   |
| Revenues                                                            |   | $                                                       | 173    |                                      | $      | 213                                      |   | $                                         | 191    |   | $      | 156    |   |
| Selling, general and                        administrative expenses |   |                                                    | 1,110  |                                      |   | 810                                      |   |                                      | 885    |   |   | 1,023  |   |
| Research and                        development                     |   |                                                    | 354    |                                      |   | 381                                      |   |                                      | 525    |   |   | 353    |   |
| Cost of                        sales                                |   |                                                    | 64     |                                      |   | 77                                       |   |                                      | 90     |   |   | 66     |   |
| Operating                        loss                               |   |                                                    | (1,407 | )                                         |   | (1,108                                   | )      |                                      | (1,359 | )      |   | (1,397 | )      |
| Investment                        income/(loss)                     |   |                                                    | 197    |                                      |   | 513                                      |   |                                      | 153    |   |   | (10    | )      |
| Net loss                                                            |   | $                                                       | (1,210 | )                                         | $      | (595                                     | )      | $                                         | (1,207 | )      | $      | (1,406 | )      |
| Per share                        (1):                               |   |                                                    |   |                                      |   |                                     |   |                                      |   |   |   |   |   |
| Basic and                        diluted                            |   | $                                                       | (0.30  | )                                         | $      | (0.15                                    | )      | $                                         | (0.30  | )      | $      | (0.35  | )      |

|                                                                |   |                                                    |   |                                      |   |                                     |   |                                      |   |   |   |   |   |
|---------------------------------------------------------------------|--------|---------------------------------------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|-------------------------------------------|--------|--------|--------|--------|--------|
|                                                                |   | **Year ended December                        31, 2006** |   |
|                                                                |   |                                                         |   |
|                                                                |   | **First                        Quarter**                |   | **Second                        Quarter** |   | **Third                        Quarter** |   | **Fourth                        Quarter** |   |
|                                                                |   |                                                         |   |                                           |   |                                          |   |                                           |   |
| Revenues                                                            |   | $                                                       | 219    |                                      | $      | 209                                      |   | $                                         | 210    |   | $      | 208    |   |
| Selling, general and                        administrative expenses |   |                                                    | 863    |                                      |   | 1,599                                    |   |                                      | 699    |   |   | 1,159  |   |
| Research and                        development                     |   |                                                    | 457    |                                      |   | 445                                      |   |                                      | 482    |   |   | 294    |   |
| Cost of                        sales                                |   |                                                    | 66     |                                      |   | 93                                       |   |                                      | 71     |   |   | 77     |   |
| Operating                        loss                               |   |                                                    | (1,407 | )                                         |   | (2,133                                   | )      |                                      | (1,216 | )      |   | (1,460 | )      |
| Investment                        income/(loss)                     |   |                                                    | 114    |                                      |   | (78                                      | )      |                                      | 232    |   |   | 333    |   |
| Net loss                                                            |   | $                                                       | (1,293 | )                                         | $      | (2,211                                   | )      | $                                         | (984   | )      | $      | (1,127 | )      |
| Per share                        (1):                               |   |                                                    |   |                                      |   |                                     |   |                                      |   |   |   |   |   |
| Basic and                        diluted                            |   | $                                                       | (0.32  | )                                         | $      | (0.55                                    | )      | $                                         | (0.25  | )      | $      | (0.28  | )      |

|   |                                                                                                                                                                                                                                   |   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | (1) Earnings                        per share is computed separately for each period. Therefore, the sum of the                        quarterly per share amounts may differ from the total for the                        year. |

**10. Subsequent            Event**

**          **            In March 2008, the Company invested $1,000,000 for a controlling equity interest in a            new company that was formed to acquire the technology, assets and some of the            operations of a developer and marketer of ultra-high speed storage systems for server            networks and other applications.

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**SIGNATURES**

          Pursuant            to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the            Registrant has duly caused this report to be signed on its behalf by the undersigned,            thereunto duly authorized, in New York, New York on March 31, 2008.

|   |                                                          |
|--------|---------------------------------------------------------------|
|   | **SPEEDUS                        CORP*.***                    |
|   |                                                          |
|   | /s/ Shant S.                        Hovnanian                 |
|   |                                                               |
|   | Shant S.                        Hovnanian                     |
|   | President, Chief                        Executive Officer and |
|   | Chairman of the                        Board of Directors     |

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

|                                             |   |                                                         |   |                                  |
|--------------------------------------------------|--------|--------------------------------------------------------------|--------|---------------------------------------|
| **Signature**                                    |   | **Title**                                                    |        | **Date**                              |
|                                                  |   |                                                              |        |                                       |
|                                             |   |                                                         |        |                                  |
| /s/ Shant S.                        Hovnanian    |   | Chairman of the                        Board of Directors,   |        | March 31,                        2008 |
|                                                  |   | President and Chief                        Executive Officer |        |                                  |
| Shant S.                        Hovnanian        |   |                                                         |        |                                  |
|                                             |   |                                                         |        |                                  |
| /s/ Thomas M.                        Finn        |   | Treasurer and Chief                        Financial and     |        | March 31,                        2008 |
|                                                  |   | Accounting                        Officer                    |        |                                  |
| Thomas M.                        Finn            |   |                                                         |        |                                  |
|                                             |   |                                                         |        |                                  |
| /s/ Vahak S.                        Hovnanian    |   | Director                                                     |        | March 31,                        2008 |
|                                                  |   |                                                         |        |                                  |
| Vahak S.                        Hovnanian        |   |                                                         |        |                                  |
|                                             |   |                                                         |        |                                  |
| /s/ William F.                        Leimkuhler |   | Director                                                     |        | March 31,                        2008 |
|                                                  |   |                                                         |        |                                  |
| William F.                        Leimkuhler     |   |                                                         |        |                                  |
|                                             |   |                                                         |        |                                  |
| /s/ Jeffrey                        Najarian      |   | Director                                                     |        | March 31,                        2008 |
|                                                  |   |                                                         |        |                                  |
| Jeffrey                        Najarian          |   |                                                         |        |                                  |
|                                             |   |                                                         |        |                                  |
| /s/ Christopher                        Vizas     |   | Director                                                     |        | March 31,                        2008 |
|                                                  |   |                                                         |        |                                  |
| Christopher                        Vizas         |   |                                                         |        |                                  |

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