**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**


**(Mark
      One)**


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





For
      the
      quarterly period ended October
      31, 2007





**OR**





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





For
      the
      transition period from __________ to __________





Commission
      file number  1-11601





**iDNA,
                INC.**(Exact
                name of registrant as specified in its
                charter)





Delaware
            
            34-1816760(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)








415
                Madison Avenue, 7th Floor, New York, New York
            
            10017(Address
                of principal executive offices)
            
            (Zip
                Code)





(212)
                644-1400(Registrant’s
                telephone number, including area
                code)





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





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





Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer x





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




Indicate
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date:





Class
            
            Outstanding
                at December 12, 2007Common
                Stock, $0.05 par value
            
            9,954,614







**iDNA,
      Inc. and Subsidiaries**





**TABLE
      OF CONTENTS**





PAGEPART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                StatementsReport
                of Independent Registered Public Accounting Firm
            3Condensed
                Consolidated Balance Sheets as of October 31, 2007 and January 31,
                2007
            4Condensed
                Consolidated Statements of Operations for the Three Months and Nine
                Months
                Ended October 31, 2007 and 2006
            5Condensed
                Consolidated Statement of Stockholders’ Equity and Comprehensive Loss for
                the Nine Months Ended October 31, 2007
            6Condensed
                Consolidated Statements of Cash Flows for the Nine Months Ended October
                31, 2007 and 2006
            7Notes
                to Condensed Consolidated Financial Statements
            8Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            22Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            41Item
                4.
            Controls
                and Procedures
            42PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            43Item
                1A.
            Risk
                Factors
            44Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            44Item
                3.
            Defaults
                Upon Senior Securities
            44Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            44Item
                5.
            Other
                Information
            44Item
                6.
            Exhibits
            44Signatures
            
            46Certifications
            
            47




-
          2
          -




**PART
      I. FINANCIAL INFORMATION**





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





REPORT
      OF
      INDEPENDENT


REGISTERED
      PUBLIC ACCOUNTING FIRM





Board
      of
      Directors and Stockholders of


iDNA,
      Inc. and Subsidiaries


New
      York,
      New York





We
      have
      reviewed the accompanying condensed consolidated balance sheet of iDNA, Inc.
      and
      Subsidiaries as of October 31, 2007, the related condensed consolidated
      statements of operations for each of the three-month and nine-month periods
      ended October 31, 2007 and 2006, the related condensed consolidated statement
      of
      stockholders’ equity and comprehensive loss for the nine-month period ended
      October 31, 2007 and the condensed consolidated statements of cash flows for
      each of the nine-month periods ended October 31, 2007 and 2006. These financial
      statements are the responsibility of the Company’s management.





We
      conducted our reviews in accordance with standards of the Public Company
      Accounting Oversight Board (United States) (“PCAOB”). A review of interim
      financial information consists principally of applying analytical procedures
      and
      making inquiries of persons responsible for financial and accounting matters.
      It
      is substantially less in scope than an audit conducted in accordance with
      generally accepted auditing standards, the objective of which is the expression
      of an opinion regarding the financial statements taken as a whole. Accordingly,
      we do not express such an opinion.





Based
      on
      our review, we are not aware of any material modifications that should be made
      to the condensed consolidated financial statements for them to be in conformity
      with accounting principles generally accepted in the United States of
      America.





We
      have
      previously audited, in accordance with standards of the PCAOB, the consolidated
      balance sheet as of January 31, 2007, and the related consolidated statements
      of
      operations, stockholders’ equity and comprehensive loss, and cash flows for the
      year then ended (not presented herein); and in our report dated May 3, 2007,
      we
      expressed an unqualified opinion on those consolidated financial statements.
      In
      our opinion, the information set forth in the accompanying condensed
      consolidated balance sheet as of January 31, 2007, is fairly stated, in all
      material respects, in relation to the consolidated balance sheet from which
      it
      has been derived.





/s/
                Grant Thornton LLPCleveland,
                OhioDecember
                13, 2007


3





**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Balance Sheets**


**(in
      thousands, except share data)**








October
                31,
            
            January
                31,2007
            
            2007(unaudited)**ASSETS**Cash
                and cash equivalents
            
            $
            291
            
            $
            548Restricted
                cash (Note 1)
            
            
            147
            
            
            147Accounts
                receivable, net of allowance of $67 and $82, respectively (Note
                1)
            
            
            2,476
            
            
            1,796Income
                taxes refundable
            
            
            19
            
            
            19Inventory
                (Note 1)
            
            
            113
            
            
            232Prepaid
                expenses
            
            
            309
            
            
            293Other
                current assets
            
            
            171
            
            
            115Total
                current assets
            
            
            3,526
            
            
            3,150Property
                and equipment, net of accumulated depreciation of $3,170 and $2,833,
                respectively (Note 1)
            
            
            2,213
            
            
            2,752Investment
                in AFC (Note 2)
            
            
            6,958
            
            
            7,224Goodwill
                (Note 1)
            
            
            2,728
            
            
            2,728Other
                intangible assets, net of accumulated amortization of $2,790 and
                $2,183,
                respectively (Note 1)
            
            
            5,508
            
            
            6,115Other
                assets
            
            
            108
            
            
            109$
            21,041
            
            $
            22,078**LIABILITIES
                AND STOCKHOLDERS' EQUITY**LIABILITIESCurrent
                maturities of long term obligations (Note 3)
            
            $
            711
            
            $
            805Accounts
                payable
            
            
            1,822
            
            
            1,621Accrued
                income taxes
            
            
            361
            
            
            298Deferred
                revenue (Note 1)
            
            
            1,915
            
            
            1,033Self-insurance
                claims (Note 4)
            
            
            235
            
            
            235Other
                liabilities
            
            
            1,491
            
            
            1,445Total
                current liabilities
            
            
            6,535
            
            
            5,437Long
                term obligations (Note 3)
            
            
            10,986
            
            
            11,071Convertible
                promissory note (Note 3)
            
            
            2,825
            
            
            2,82520,346
            
            
            19,333COMMITMENTS
                AND CONTINGENCIES (Note 4)
            
            
            -
            
            
            -STOCKHOLDERS'
                EQUITYPreferred
                stock
            
            
            -
            
            
            -Common
                stock - $.05 par value, authorized 50,000,000 shares, issued 39,949,589
                and 39,949,589 shares, respectively
            
            
            1,997
            
            
            1,997Additional
                paid-in capital
            
            
            175,176
            
            
            174,837Retained
                deficit
            
            
            (154,326
            )
            
            (151,699
            )Deferred
                compensation
            
            
            (24
            )
            
            (41
            )Treasury
                stock, at cost, 29,994,975 and 30,294,975 shares,
                respectively
            
            
            (22,128
            )
            
            (22,349
            )Total
                stockholders' equity
            
            
            695
            
            
            2,745$
            21,041
            
            $
            22,078




See
      accompanying notes to condensed consolidated financial
      statements.


4





**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Statements of Operations**


**(in
      thousands, except per share data)**


**(unaudited)**





Three
                Months Ended
              October
                31,
            
            Nine
                Months Ended
              October
                31,2007
            
            2006
            
            2007
            
            2006Revenues
                (Note 1)
            
            $
            5,070
            
            $
            4,758
            
            $
            11,494
            
            $
            11,728Cost
                of revenues (Note 1)
            
            
            2,501
            
            
            2,554
            
            
            7,067
            
            
            6,929Gross
                profit
            
            
            2,569
            
            
            2,204
            
            
            4,427
            
            
            4,799Selling,
                general and administrative
            
            
            2,390
            
            
            2,452
            
            
            7,073
            
            
            7,367Impairment
                charge (Note 6)
            
            
            -
            
            
            -
            
            
            -
            
            
            4,482Income
                (loss) from operations
            
            
            179
            
            
            (248
            )
            
            (2,646
            )
            
            (7,050
            )Other
                income (expense):Income
                from AFC investment (Note 2)
            
            
            148
            
            
            191
            
            
            484
            
            
            451Interest
                income
            
            
            1
            
            
            4
            
            
            4
            
            
            10Interest
                expense (Note 3)
            
            
            (59
            )
            
            (216
            )
            
            (172
            )
            
            (579
            )Interest
                expense abatement (Note 3)
            
            
            -
            
            
            -
            
            
            -
            
            
            631Income
                (loss) from continuing operations before income taxes
            
            
            269
            
            
            (269
            )
            
            (2,330
            )
            
            (6,537
            )Benefit
                (provision) for income taxes
            
            
            (14
            )
            
            (11
            )
            
            (18
            )
            
            (34
            )Income
                (loss) from continuing operations
            
            
            255
            
            
            (280
            )
            
            (2,348
            )
            
            (6,571
            )Income
                  from discontinuedoperations,
                  net of tax
            
            
            -
            
            
            1
            
            
            8
            
            
            3Net
                income (loss)
            
            $
            255
            
            $
            (279
            )
            $
            (2,340
            )
            $
            (6,568
            )Basic
                and diluted income (loss) per shareContinuing
                operations
            
            $
            .03
            
            $
            (.03
            )
            $
            (.24
            )
            $
            (.72
            )Discontinued
                operations
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                income (loss) per share
            
            $
            .03
            
            $
            (.03
            )
            $
            (.24
            )
            $
            (.72
            )Weighted
                average number of shares outstandingBasic
                and diluted
            
            
            9,955
            
            
            9,098
            
            
            9,924
            
            
            9,072





See
      accompanying notes to condensed consolidated financial
      statements.


5




**iDNA,
        Inc. and Subsidiaries**
 **Condensed
        Consolidated Statement of Stockholders’ Equity**
 **and
        Comprehensive Loss**
 **Nine
        Months Ended October 31, 2007**
 **(in
        thousands, except share data)**
 **(unaudited)**


Preferred Stock
            
            Common Stock
            
            Additional
            
            
            
            
            
            Deferred
            
            
            
            ComprehensiveShares
            
            Par
              Value
            
            Shares
            
            Par
              Value
            
            Paid-In
              Capital
            
            Retained
              Deficit
            
            Treasury
              Stock
            
            Compensation
              Expense
            
            Total
            
            Income
              (Loss)Balance
                at January 31, 2007
            
            
            -
            
            $
            -
            
            
            39,949,589
            
            $
            1,997
            
            $
            174,837
            
            $
            (151,699
            )
            $
            (22,349
            )
            $
            (41
            )
            $
            2,745Cummulative
                adjustment for the adoption of FIN 48 (Note 1)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (80
            )
            
            
            
            
            
            
            
            (80
            )Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (2,340
            )
            
            
            
            
            
            
            
            (2,340
            )
            $
            (2,340
            )Share-based
                compensation expense
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            339
            
            
            
            
            
            
            
            
            
            
            
            339Treasury
                stock issued
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (207
            )
            
            221
            
            
            
            
            
            14Deferred
                compensation expense
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            17
            
            
            17Comprehensive
                income (loss)
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            (2,340
            )Balance
                at October 31, 2007
            
            
            -
            
            $
            -
            
            
            39,949,589
            
            $
            1,997
            
            $
            175,176
            
            $
            (154,326
            )
            $
            (22,128
            )
            $
            (24
            )
            $
            695





See
      accompanying notes to condensed consolidated financial
      statements.


6


**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Statements of Cash Flows**


**(in
      thousands)**


**(unaudited)**





Nine
                Months Ended
              October
                31,2007
            
            2006Cash
                flows from operating activitiesNet
                loss
            
            $
            (2,340
            )
            $
            (6,568
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Depreciation
                and amortization
            
            
            1,233
            
            
            1,206Impairment
                charge
            
            
            -
            
            
            4,482Income
                from AFC investment
            
            
            (484
            )
            
            (451
            )Share-based
                compensation expense
            
            
            211
            
            
            200Stock
                issued as compensation for services rendered
            
            
            128
            
            
            5Amortization
                of deferred compensation expense
            
            
            17
            
            
            17Loss
                on disposal of assets
            
            
            10
            
            
            -Changes
                in operating assets and liabilities, net of acquisition:Accounts
                receivable
            
            
            (680
            )
            
            145Accrued
                income tax/refundable
            
            
            (17
            )
            
            (55
            )Accounts
                payable
            
            
            201
            
            
            100Deferred
                revenue
            
            
            882
            
            
            236Other
                operating assets and liabilities, net
            
            
            94
            
            
            (38
            )Net
                cash used in operating activities
            
            
            (745
            )
            
            (721
            )Cash
                flows from investing activities:Proceeds
                from AFC distributions
            
            
            750
            
            
            1,207Purchase
                of letter of credit, increase in restricted cash
            
            
            -
            
            
            (147
            )Purchase
                of other property and equipment
            
            
            (97
            )
            
            (533
            )Net
                cash provided by investing activities
            
            
            653
            
            
            527Cash
                flows from financing activities:Proceeds
                from issuance of promissory note
            
            
            -
            
            
            1,000Proceeds
                from borrowings under a capital lease
            
            
            
            
            
            102Proceeds
                from exercise of stock options
            
            
            14
            
            
            -Payments
                to retire due to former OTI Members
            
            
            -
            
            
            (530
            )Payments
                on debt, notes payable and capital lease
            
            
            (179
            )
            
            (341
            )Net
                cash provided by (used in) financing activities
            
            
            (165
            )
            
            231Increase
                (decrease) in cash and cash equivalents
            
            
            (257
            )
            
            37Cash
                and cash equivalents at beginning of period
            
            
            548
            
            
            1,144Cash
                and cash equivalents at end of period
            
            $
            291
            
            $
            1,181Supplemental
                disclosures of cash flow information:Interest
                paid
            
            $
            175
            
            $
            99Income
                taxes paid
            
            $
            17
            
            $
            55





See
      accompanying notes to condensed consolidated financial
      statements


7





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting
      Policies**





*General*


The
      accompanying unaudited condensed consolidated financial statements include
      the accounts
      of iDNA, Inc. and its subsidiaries (“iDNA”). iDNA’s operations are comprised of
      three principal reportable segments: (i) strategic communications services,
      (ii)
      information services and (iii) entertainment. iDNA manages each segment
      separately as a consequence of different marketing, service requirements and
      technology strategies (see Note 5).





The
      strategic communications services segment provides content development via
      the
      design, development and production of media, collateral material, logistics,
      support and/or broadcast services for presentations at corporate and
      institutional events, meetings, training seminars and symposiums. The
      presentations may be live at single or multi-site venues and can include video
      conferencing, satellite broadcasting and webcasting or the presentations may
      be
      provided via on-demand access via internet websites, DVD or video
      tape.





The
      information services segment utilizes custom wireless communication technology
      and proprietary software to facilitate client audience interaction,
      participation and polling to collect, exchange and/or analyze data and
      information in real-time during a meeting or event. The wireless communication
      services are available as a turn-key service provided by iDNA during a scheduled
      meeting or event or alternatively, a client can purchase from iDNA the required
      electronic components and related proprietary software to administer its needs
      independently.





As
      a
      consequence of iDNA’s investment in the Angelika Film Centers, LLC (“AFC”), iDNA
      operates in the movie exhibition and entertainment industry (see Note
      2).





The
      financial statements are unaudited but in the opinion of management, reflect
      all
      adjustments (consisting only of normal recurring accruals) necessary for a
      fair
      presentation of iDNA’s consolidated financial position, results of operations,
      stockholders’ equity and comprehensive loss, and cash flows for the periods
      presented.





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with generally accepted accounting principles for interim
      financial statements and with the rules of the Securities and Exchange
      Commission applicable to interim financial statements and therefore do not
      include all disclosures that might normally be required for financial statements
      prepared in accordance with generally accepted accounting principles. The
      accompanying unaudited condensed consolidated financial statements should be
      read in conjunction with iDNA’s consolidated financial statements, including the
      notes thereto, appearing in iDNA’s Annual Report on Form 10-K for the year ended
      January 31, 2007. The results of operations for the three months and nine months
      ended October 31, 2007 are not necessarily indicative of operating results
      that
      may be achieved over the course of the full year.


8





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





The
      preparation of financial statements and the accompanying notes thereto, in
      conformity with generally accepted accounting principles, requires management
      to
      make estimates and assumptions that affect reported amounts of assets and
      liabilities and disclosure of contingent assets and
      liabilities at the
      date of the financial statements and reported amounts of revenues and expenses
      during the respective reporting periods. Examples include provision for bad
      debt, useful lives of property and equipment and intangible assets, impairment
      of property and equipment and intangible assets, deferred income taxes, self
      insurance claims and assumptions related to equity-based compensation. Actual
      results could differ from those estimates.





iDNA
      uses
      a January 31 year-end for financial reporting purposes. References herein to
      the
      term “Fiscal 2008” shall mean iDNA’s fiscal year ending January 31, 2008 and
      references to other “Fiscal” years shall mean the year that ended (or ends, as
      the case may be) on January 31 of the year indicated. The term the “Company” or
“iDNA” as used herein refers to iDNA, Inc. together with its consolidated
      subsidiaries unless the context otherwise requires.





*Revenues*


iDNA’s
      revenues are earned within short time periods, generally less than one week.
      iDNA recognizes revenue from its strategic communications segment, including
      the
      video production, video editing, meeting services and broadcast satellite or
      webcast services, and its information services segment when the services are
      complete and delivered or all technical services have been rendered. Deposits
      and other prepayments are recorded as deferred revenue until revenue is
      recognized. iDNA does not have licensing or other arrangements that result
      in
      additional revenues following the delivery of the video or a broadcast. Costs
      accumulated in the production of the video, meeting services or broadcasts
      are
      deferred until the sale and delivery are complete. Deferred production costs
      of
      $171,000 and $115,000, respectively, are reported as other current assets at
      October 31, 2007 and January 31, 2007.





iDNA
      recognizes revenue from the sale of electronic equipment, proprietary software
      and related components at the time of shipment. Deposits and other prepayments
      received prior to shipment are recorded as deferred revenue until the electronic
      equipment and related software are shipped. iDNA has licensing and technical
      support arrangements for future software enhancements and upgrades for technical
      support for previously delivered electronic equipment. Revenues derived from
      licensing and technical support are recognized over the term of the licensing
      and technical support period, which generally are sold in increments of one
      year
      of coverage. For the three months ended October 31, 2007 and 2006, electronic
      equipment sales were $560,000 and $708,000, respectively. For the nine months
      ended October 31, 2007 and 2006, electronic equipment sales were $1.6 million
      and $2.0 million, respectively.


9





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





*Cost
      of Revenues*


Cost
      of
      revenues consists of direct expenses specifically associated with client service
      revenues. The cost of revenues includes direct salaries and benefits, purchased
      products or services for clients, web hosting, support services, shipping and
      delivery costs.





*Research
      and Development Costs*


Research
      and development costs are comprised principally of personnel costs incurred
      for
      enhancements, modifications, updates, service and support expenditures for
      iDNA’s proprietary software. Research and development costs are charged to
      operations as incurred and are included as a component of costs of revenues.
      iDNA charged $96,000 and $101,000, respectively, to research and development
      expense for the three months ended October 31, 2007 and 2006. iDNA charged
      $305,000 and $299,000, respectively, to research and development expense for
      the
      nine months ended October 31, 2007 and 2006.





*Restricted
      Cash*




In
      June
      2006, iDNA obtained a letter of credit in an amount of $147,000 that was issued
      in favor of the landlord of iDNA’s new New York headquarters. The letter of
      credit is collateralized by an interest bearing money market account in the
      same
      amount. Therefore, $147,000 is classified as restricted cash as of October 31,
      2007
      and January 31, 2007.





*Accounts
      Receivable*


Accounts
      receivable are recorded at the invoiced amount and do not bear interest. The
      allowance for doubtful accounts is iDNA's best estimate of the amount of
      probable credit losses in iDNA's existing accounts receivable. iDNA determines
      the allowance based on analysis of historical bad debts, client concentrations,
      client credit-worthiness and current economic trends. iDNA reviews its allowance
      for doubtful accounts quarterly. Past-due balances over 90 days and specified
      other balances are reviewed individually for collectibility. All other balances
      are reviewed on an aggregate basis. Account balances are written off against
      the
      allowance after all means of collection have been exhausted and the potential
      for recovery is considered remote. iDNA does not have any off-balance sheet
      credit exposure related to its clients.





*Inventory*


Inventory
      is comprised principally of electronic equipment and related components held
      for
      sale to clients. Inventory is valued at the lower of cost or market using the
      first-in - first-out inventory cost method.





*Property
      and Equipment*


Property
      and equipment are stated at cost. Depreciation is computed using the
      straight-line method over the estimated useful lives of the assets, which range
      from eighteen months to ten years. Leasehold improvements are amortized over
      the
      shorter of the lease term or the estimated useful lives of the related
      improvements.


10




**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





*Goodwill
      and Other Intangible Assets*


Intangible
      assets with indefinite lives, including goodwill, are not subject to
      amortization but are subject to testing for impairment at least annually or
      whenever there is an impairment indicator (see Note 6).





In
      its
      acquisition of Option Technologies Interactive, LLC (“OTI”), iDNA acquired
      certain intangible assets including client relationships and lists and a
      non-competition agreement with an aggregate fair value of $703,000. The useful
      lives of these intangibles are estimated to be 5 to 7 years. The intangible
      assets with definite useful lives are amortized using the straight-line method
      over those lives. For the three months ended October
      31, 2007 and 2006,
      iDNA charged to operations $26,000 and $12,000, respectively, for the
      amortization of these intangible assets. For the nine months ended October
      31, 2007 and 2006,
      iDNA charged to operations $78,000 and $88,000, respectively, for the
      amortization of these intangible assets.





In
      its
      acquisition of Audience Response Systems, Inc. and the Campus Group Companies,
      Inc. (collectively, the “Campus Group”), iDNA acquired certain intangible assets
      including client relationships and lists and a non-competition agreement with
      an
      initial aggregate fair value of $9.5 million. The useful lives of these
      intangibles were initially estimated to be 17 years and 9 years, respectively.
      In connection with iDNA’s impairment analysis, effective July 31, 2006, among
      other adjustments, the estimated useful life of the client relationships was
      revised to 10 years. The intangible assets with definite useful lives are
      amortized using the straight-line method over those lives. For the three months
      ended October 31,
      2007
      and 2006, iDNA charged to operations $176,000 and $153,000, respectively for
      the
      amortization of these intangible assets. For the nine months ended October 31,
      2007
      and 2006, iDNA charged to operations $529,000 and $437,000, respectively, for
      the amortization of these intangible assets.





*Valuation
      of Long-Lived Assets and Goodwill*


iDNA
      reviews the carrying value of its long-lived assets (other than goodwill)
      whenever events or changes in circumstances indicate that their carrying amount
      may not be recoverable. When indicators of impairment exist, iDNA determines
      whether the estimated undiscounted sum of the future cash flows from such assets
      is less than their carrying amounts. If less, an impairment loss is recognized
      in the amount, if any, by which the carrying amount of such assets exceeds
      their
      respective fair values. The determination of fair value is based on quoted
      market prices in active markets, if available, or independent appraisals; sales
      price negotiations; or projected future cash flows discounted at a rate
      determined by management to be commensurate with iDNA’s business risk. The
      estimation of fair value utilizing discounted forecasted cash flows includes
      significant judgments regarding assumptions of revenue, operating and marketing
      costs; selling and administrative expenses; interest rates; property and
      equipment additions and retirements; industry competition; and general economic
      and business conditions, among other factors.


11


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





*Income
      Taxes*


Deferred
      income taxes are provided for all temporary differences between the book and
      tax
      basis of assets and liabilities. Deferred income taxes are adjusted to reflect
      new tax rates when they are enacted into law. The effect on deferred tax assets
      and liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date. A valuation allowance is recognized if it
      is
      anticipated that some or all of a net deferred tax asset may not be
      realized.





In
      February 2007, iDNA adopted the provisions of FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes* (“FIN
      48”), an interpretation of FASB Statement No. 109, *Accounting
      for Income Taxes* .
      FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      recognition and measurement of a tax position taken or expected to be taken
      on a
      tax return. The interpretation requires that iDNA recognize the impact of a
      tax
      position in the financial statements if that position is less likely than not
      of
      being sustained on audit, based on the technical merits of the position. FIN
      48
      also provides guidance on derecognition classification, interest and penalties,
      accounting in interim periods and disclosure. In accordance with the provisions
      of FIN 48, any cumulative effect resulting from the change in accounting
      principle is to be recorded as an adjustment to the opening balance of retained
      earnings (deficit).





As
      a
      consequence of the adoption of the provisions of FIN 48, iDNA recorded an
      adjustment to retained deficit of $80,000 to reflect potential liabilities
      for
      iDNA’s uncertain tax positions, inclusive of interest. In addition, iDNA’s tax
      years open for examination vary by jurisdiction. iDNA was last under examination
      by the IRS for the taxable years through January 31, 1998. iDNA recognizes
      interest and penalties associated with uncertain tax positions as a component
      of
      tax expense (benefit).





As
      of
      January 31, 2007, iDNA had federal net operating loss carryforwards of $88.8
      million that may be used to reduce future taxable income, subject to
      limitations. Largely as a consequence of these operating loss carryforwards,
      iDNA reported a net deferred tax asset of $39.4 million and an offsetting
      valuation allowance of $39.4 million since iDNA is unable to determine, at
      this
      time, that it more likely than not will generate future taxable income against
      which the net operating loss could be applied.





Effective
      November 3, 2000, iDNA repurchased shares of its common stock, $0.05 par value,
      (“Common Stock”) and underwent a “change in ownership” as defined for the
      purposes of Sections 382 and 383 of the Internal Revenue Code. As a consequence
      of this “change in ownership”, the use of net operating loss carryforwards
      totaling $61.0 million incurred prior to November 3, 2000 (“pre-change losses”)
      will be subject to significant annual limitation. Based upon an evaluation
      of
      the tax position regarding the Section 382 limitation on the pre-change losses,
      iDNA has determined that $5.9 million of these pre-change losses may expire
      unused resulting in a tax-effected reduction of $2.1 million to iDNA’s net
      operating loss carryforwards included in its net deferred tax asset. As a
      consequence of this evaluation, as of February 1, 2007 iDNA (i) reduced the
      amount of its net deferred tax asset attributable to its net operating loss
      carryforwards by $2.1 million, thereby reducing its total net deferred tax
      asset
      from $39.4 million to $37.3 million, and (ii) reduced iDNA’s valuation allowance
      by $2.1 million from $39.4 million to $37.3 million. These adjustments offset
      one another, resulting in no net charge to iDNA’s opening retained deficit
      reported for the nine months ended October 31, 2007.


12


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





*Stock-Based
      Compensation*


Effective
      February 1, 2006, iDNA adopted the provisions of Statement of Financial
      Accounting Standards (“SFAS”) No. 123R (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123(R)”), which replaces SFAS No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”), and superseded APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* .
      SFAS
      No. 123(R) requires all share-based payments to employees, including grants
      of
      employee stock options, to be recognized in the financial statements based
      on
      their fair values beginning with the first interim or annual period after
      December 15, 2005. iDNA elected the prospective method of adopting SFAS No.
      123(R) which requires that compensation expense be recorded over the remaining
      periods for what would have been the remaining fair value under SFAS No. 123
      of
      all unvested stock options and restricted stock at the beginning of the first
      quarter of adoption. The compensation costs for that portion of awards is based
      on the grant-date fair value of the awards as calculated for pro forma
      disclosures under SFAS No. 123. iDNA charged to operations $60,000 and $60,000,
      respectively, for share-based compensation for the three months ended October
      31, 2007 and 2006. iDNA charged to operations $211,000 and $200,000,
      respectively, for share-based compensation for the nine months ended October
      31,
      2007 and 2006.





*Earnings
      Per Share*


Basic
      earnings (loss) per share is computed by dividing net income (loss) by the
      weighted-average number of shares of iDNA, $0.05 par value common stock (“Common
      Stock”) outstanding for the period. Dilutive earnings per share for all periods
      presented is the same as basic earnings per share because the inclusion of
      common stock ,
      in the
      form of stock options and warrants, would have an anti-dilutive effect on income
      (loss) per share for the three months and nine months ended October 31, 2007
      and
      2006. For the nine months ended October 31, 2007 and 2006, iDNA excluded 39,711
      and 0, respectively, from the earnings (loss) per share computation due to
      their
      dilutive effect. For three months ended October 31, 2007 and 2006, there were
      no
      common stock equivalents excluded for the earnings per share computation due
      to
      their dilutive effect.


13


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      1 – Basis of Presentation and Significant Accounting Policies** **-
      continued**





*New
      Accounting Pronouncements*


In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, *Fair
      Value Measurement* (“SFAS
      No. 157”). SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value in accordance with Generally Accepted Accounting Principles
      (“GAAP”), and expands disclosures about fair value measurements. The provisions
      of SFAS No. 157 are effective for fiscal years beginning after November 15,
      2007. iDNA does not anticipate the application of this pronouncement will have
      a
      material impact on iDNA’s reported consolidated financial position or results of
      operations.





In
      February 2007, the FASB issued Statement No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      No. 159”). SFAS No. 159 allows entities the option to measure eligible financial
      instruments at fair value as of specified dates. Such election, which may be
      applied on an instrument by instrument basis, is typically irrevocable once
      elected. SFAS No. 159 is effective for fiscal years beginning after November
      15,
      2007, and early application is allowed under certain circumstances. iDNA is
      currently evaluating the impact SFAS No. 159 will have on its consolidated
      financial position.





*Reclassifications*


Certain
      Fiscal 2007 amounts have been reclassified to conform with Fiscal 2008
      presentations.





**Note
      2 – Investment in AFC**





On
      April
      5, 2000, iDNA, through its wholly owned subsidiary National Cinemas, Inc.,
      acquired a 50% membership interest in AFC. AFC is the owner and operator of
      the
      Angelika Film Center, which is a multiplex cinema and café complex in the Soho
      District of Manhattan in New York City.





AFC
      is
      currently owned 50% by iDNA and 50% by Reading International, Inc. (“Reading”).
      The articles and bylaws of AFC provide that for all matters subject to a vote
      of
      the members, a majority is required, except that in the event of a tie vote,
      the
      Chairman of Reading shall cast the deciding vote.





iDNA
      uses
      the equity method to account for its investment in AFC. iDNA’s initial
      investment exceeded its share of AFC’s net assets and that portion of the
      investment balance is accounted for in a manner similar to goodwill. AFC uses
      a
      December 31 year-end for financial reporting purposes. iDNA reports on a January
      31 year-end, and for its fiscal quarters ending April 30, July 31, October
      31
      and January 31 records its pro-rata share of AFC’s earnings on the basis of
      AFC’s fiscal quarters ending March 31, June 30, September 30 and December 31,
      respectively. For the three months ended October 31, 2007 and 2006, iDNA
      recorded income of $148,000 and $191,000, respectively, representing its share
      of AFC’s net income. For the nine months ended October 31, 2007 and 2006, iDNA
      recorded income of $484,000 and $451,000, respectively, representing its share
      of AFC’s net income.


14





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      2 – Investment in AFC – continued**





Summarized
      income statement data for AFC for the three months and nine months ended
      September 30, 2007 and 2006, respectively, is as follows (in
      thousands):





Three Months Ended
            
            Nine Months EndedSeptember 30,
            
            September 30,2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            1,408
            
            $
            1,646
            
            $
            4,696
            
            $
            4,575Film
                rental
            
            
            287
            
            
            406
            
            
            1,144
            
            
            1,219Operating
                costs
            
            
            608
            
            
            635
            
            
            1,909
            
            
            1,809Depreciation
                and amortization
            
            
            195
            
            
            195
            
            
            585
            
            
            532General
                and administrative expenses
            
            
            22
            
            
            28
            
            
            90
            
            
            1131,112
            
            
            1,264
            
            
            3,728
            
            
            3,673Net
                income
            
            $
            296
            
            $
            382
            
            $
            968
            
            $
            902iDNA's
                proportionate share of net income
            
            $
            148
            
            $
            191
            
            $
            484
            
            $
            451





**Note
      3** **–
      Current and Long Term Obligations**





As
      a
      consequence of iDNA’s acquisition of OTI effective November 18, 2005, iDNA
      issued to Flexner Wheatley & Associates (“FWA”) and MeetingNet Interactive,
      Inc. (“MeetingNet”) promissory notes in an aggregate principal amount of $1.5
      million (the “OTI Promissory Notes”). The OTI Promissory Notes bear interest at
      5% per annum and are repayable in quarterly installments according to a formula
      based upon the future cash flows realized from OTI’s operations. iDNA’s
      obligations under the OTI Promissory Notes are secured by the membership
      interests of OTI. At October 31, 2007, iDNA had outstanding principal
      obligations under the terms of the OTI Promissory Notes of $1.0 million and
      accrued interest of $13,000.





As
      a
      consequence of iDNA’s acquisition of the Campus Group effective July 31, 2003,
      iDNA issued to Mr. Steve Campus and certain family trusts promissory notes
      in an
      aggregate principal amount of $9.9 million and a convertible promissory note
      in
      the principal amount of $2.8 million (collectively, the “Campus Notes”). Of the
      $9.9 million in promissory notes issued by iDNA, $6.6 million of the promissory
      notes (“Base Notes”) bear interest at 5% per annum and are repayable in
      quarterly installments according to a formula based upon the future cash flows
      realized from the Campus Group over a period not to exceed seven years. The
      remaining $3.3 million in promissory notes (“Trailing Notes”) issued by iDNA
      bear interest at 5% per annum and are repayable in quarterly installments,
      commencing upon the retirement of the Base Notes, according to a formula based
      upon the future cash flows realized from the Campus Group over a period not
      to
      exceed three years subsequent to the retirement of the Base Notes. The $2.8
      million convertible promissory note (“Convertible Note”) (i) bears interest at
      5% per annum, payable quarterly in cash or accumulating as principal at the
      election of iDNA, (ii) requires principal payments to commence upon the
      retirement of the Base Notes and Trailing Notes and is then repayable in
      quarterly installments according to a formula based upon the future cash flows
      realized from the Campus Group over a period not to exceed three years and
      (iii)
      is convertible at the option of the holder into shares of iDNA’s Common Stock at
      a base conversion price of $1.50 per share. The holder may not convert the
      Convertible Note into shares of iDNA’s Common Stock prior to repayment of the
      Base Notes and Trailing Notes. iDNA’s obligations under the Campus Notes are
      secured by the capital stock of the companies comprising the Campus Group.
      At
      October 31, 2007, iDNA had outstanding principal obligations under the terms
      of
      the Base Notes, Trailing Notes and the Convertible Note of $6.0 million, $3.3
      million and $2.8 million, respectively, and accrued interest of
      $156,000.


15


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      3 – Current and Long Term Obligations –
continued**





For
      the
      trailing twelve month period ended October 31, 2006, The Campus Group’s
      financial performance had fallen below certain minimum operating cash flow
      thresholds established pursuant to the terms of the Campus Notes. As a
      consequence, the interest expense incurred by iDNA during the twelve month
      period ended July 31, 2006 was abated. As a consequence of the interest
      abatement, iDNA realized a gain from the abatement of interest on the Campus
      Notes of $631,000 during the second quarter of Fiscal 2007. For the trailing
      twelve month period ended October 31, 2007, the Campus Group’s financial
      performance remained below the minimum operating cash flow thresholds. As a
      consequence no interest was incurred on the Campus Notes during the period
      February 1, 2007 through October 31, 2007. Prospectively, interest may accrue
      pursuant to the terms of the Campus Notes.




As
      a
      consequence of iDNA’s acquisition of OMI Business Communications, Inc. (“OMI”)
      effective April 1, 2003, iDNA assumed a $402,000 loan guaranteed by the U.S.
      Small Business Administration (the “SBA Loan”). At October 31, 2007, the
      remaining balance of the SBA Loan of $307,000 is repayable in monthly
      installments of $3,309 with the last payment due in April 2017. The SBA Loan
      bears interest at the rate of 4% per annum. OMI’s obligations under the SBA Loan
      is collateralized by substantially all of OMI's assets and the personal
      guarantee of Mr. Dean Thompson, President of OMI.





In
      September 2006, OMI consummated equipment financing in the form of a capital
      lease with a financing institution to acquire $102,000 in various digital media
      production and editing equipment. The capital lease is payable in monthly
      installments with the last payment due in July 2009 and bears an implied
      interest rate of 10%. OMI’s obligations under the capital lease are
      collateralized by the digital media production and editing equipment acquired
      by
      OMI. At October 31, 2007, the remaining balance due under the capital lease
      was
      $61,000. The accumulated depreciation for the underlying equipment pursuant
      to
      the capital lease was $40,000 and $14,000, respectively, at October 31, 2007
      and
      January 31, 2007.


16


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      3 – Current and Long Term Obligations –
continued**





On
      July
      20, 2006, iDNA consummated a Loan and Security Agreement with a lender and
      issued a Promissory Note (the “Note”) in a principal amount of $1.0 million. The
      lender, Seasons Go Round, is an unaffiliated third party lender. Pursuant to
      the
      terms of the Note, (i) the outstanding principal of the Note is due February
      15,
      2008, (ii) iDNA is required to pay interest only, monthly and in arrears, during
      the term of the Note and (iii) the Note bears interest at fourteen percent
      (14%)
      per annum. iDNA may prepay the Note at any time and without a prepayment
      penalty. iDNA’s obligations under the Note is secured by a perfected first
      priority security interest in and to, and a lien on and pledge of iDNA’s right,
      title and interest in and to virtually all of iDNA’s assets not previously
      pledged pursuant to other long term obligations. At October 31,
      2007, the balance due under the Note was $1.0 million. The Note was repaid
      and
      retired on November 21, 2007 as a consequence of iDNA’s then consummated Master
      Loan and Security Agreement with a lender in the principal amount of $4.25
      million (see Note 7). As a further consequence of the consummation of Master
      Loan and Security Agreement, iDNA has classified the Note as a long term
      obligation at October 31, 2007.





The
      components of long term obligations at October 31, 2007 are as follows (in
      thousands):





AmountsCapital
                leases
            
            $
            61SBA
                loan
            
            
            307Promissory
                note
            
            
            1,000OTI
                promissory notes
            
            
            1,008Base
                promissory notes
            
            
            6,046Trailing
                promissory notes
            
            
            3,275Convertible
                debt
            
            
            2,82514,522Less
                current maturities
            
            
            (711
            )Long-term
                obligations and convertible debt
            
            $
            13,811





17





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      3 – Current and Long Term Obligations –
continued**





iDNA’s
      current maturities and long term obligations at October 31, 2007 are as follows
      (in thousands):





Amounts2008
            
            $
            7152009
            
            
            1,0332010
            
            
            1,5772011
            
            
            5152012
            
            
            4,430Thereafter
            
            
            6,25714,527Less:
                capital lease interest
            
            
            (5
            )$
            14,522





**Note
      4 – Commitments and Contingencies**





*Self-Insurance
      Reserves for Property Damage and Personal Injury Claims*


iDNA,
      under the names Agency Rent-A-Car, Inc. (“ARAC”), Altra Auto Rental and Automate
      Auto Rental, previously engaged in the rental of automobiles on a short-term
      basis, principally to the insurance replacement market. In Fiscal 1996, iDNA
      disposed of its rental fleet business through the sale of certain assets and
      through certain leases to a national car rental company. All liabilities related
      to the discontinued rental business, principally self-insurance claims, were
      retained by ARAC.





iDNA
      is
      subject to certain self-insurance claims and litigation expenses relating to
      its
      discontinued automobile rental operations. iDNA’s management estimates the
      required self-insurance liability based upon specific identification of the
      known matters subject to future claims, the nature of the claim and the
      estimated costs to be incurred. These estimates include, but are not limited
      to,
      ARAC’s historical loss experience and projected loss factors. The required
      self-insurance liability is subject to adjustment in the future based upon
      changes in the nature of the remaining claims or the ultimate cost. As a
      consequence of iDNA’s sale of its automobile rental operations in 1995, iDNA
      believes that all incurred claims have been reported to ARAC and that there
      are
      no longer any incurred but not yet reported claims to be received by ARAC.
      iDNA’s self-insurance liability at both October 31, 2007 and January 31, 2007
      was $235,000.





*Other
      Litigation*


In
      the
      normal course of its business, iDNA is periodically named as defendant in legal
      proceedings. It is the policy of iDNA to vigorously defend litigation and/or
      enter into settlements of claims where management deems appropriate. In the
      opinion of management, the amount of ultimate liability with respect to any
      current actions, if any, is unlikely to materially affect iDNA’s financial
      position, results of operations or liquidity.


18





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      5 – Segment Information**





iDNA’s
      operations are comprised of three principal reportable segments: (i) strategic
      communications services, (ii) information services and (iii) entertainment.
      iDNA
      manages each segment separately as a consequence of different marketing, service
      requirements and technology strategies for the respective segments.





iDNA
      evaluates the performance of its segments and allocates resources based on
      revenues and operating income. The table below presents the information about
      reportable segments for continuing operations used by iDNA’s chief operating
      decision-makers for the three months and nine months ended October 31, 2007
      and
      2006. Prior financial periods have been conformed to the current presentation
      (in thousands):


Strategic
            
            
            
            UndistributedInformation
            
            Communications
            
            
            
            Corporate
            
            IntersegmentServices
            
            Services
            
            Entertainment
            
            Expenses
            
            Elimination
            
            Total**Three
                Months Ended** **October 31,
                2007**Revenues
            
            $
            2,432
            
            $
            2,729
            
            $
            -
            
            $
            -
            
            $
            (91
            )
            $
            5,070Operating
                income (loss)
            
            
            47
            
            
            365
            
            
            148
            
            
            (291
            )
            
            -
            
            
            269Depreciation
                and amortization expense
            
            
            219
            
            
            177
            
            
            -
            
            
            11
            
            
            -
            
            
            407Capital
                expenditures
            
            
            9
            
            
            28
            
            
            -
            
            
            2
            
            
            -
            
            
            39**Three
                Months Ended****October
                31, 2006**Revenues
            
            $
            2,457
            
            $
            2,350
            
            $
            -
            
            $
            -
            
            $
            (49
            )
            $
            4,758Operating
                income (loss)
            
            
            22
            
            
            157
            
            
            191
            
            
            (639
            )
            
            -
            
            
            (269
            )Depreciation
                and amortization expense
            
            
            230
            
            
            163
            
            
            -
            
            
            17
            
            
            -
            
            
            410Capital
                expenditures
            
            
            119
            
            
            95
            
            
            -
            
            
            17
            
            
            -
            
            
            231**Nine
                Months Ended****October
                31, 2007**Revenues
            
            $
            7,074
            
            $
            4,568
            
            $
            -
            
            $
            -
            
            $
            (148
            )
            $
            11,494Operating
                income (loss)
            
            
            (469
            )
            
            (1,481
            )
            
            484
            
            
            (864
            )
            
            -
            
            
            (2,330
            )Depreciation
                and amortization expense
            
            
            656
            
            
            539
            
            
            -
            
            
            38
            
            
            -
            
            
            1,233Capital
                expenditures
            
            
            48
            
            
            43
            
            
            -
            
            
            6
            
            
            -
            
            
            97**Nine
                Months Ended****October
                31, 2006**Revenues
            
            $
            7,309
            
            $
            4,512
            
            $
            -
            
            $
            -
            
            $
            (93
            )
            $
            11,728Operating
                income (loss)
            
            
            (107
            )
            
            (6,080
            )
            
            451
            
            
            (801
            )
            
            -
            
            
            (6,537
            )Depreciation
                and amortization expense
            
            
            654
            
            
            503
            
            
            -
            
            
            49
            
            
            -
            
            
            1,206Impairment
                charge
            
            
            -
            
            
            4,482
            
            
            -
            
            
            -
            
            
            -
            
            
            4,482Capital
                expenditures
            
            
            338
            
            
            124
            
            
            -
            
            
            71
            
            
            -
            
            
            533




19





**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      6 – Impairment of Long-Lived Assets and Goodwill**





Pursuant
      to iDNA’s established accounting policies, iDNA conducted its Fiscal 2006 annual
      analysis of goodwill as of January 31, 2006. iDNA estimated the fair value
      of
      its reporting units and compared those values to the carrying values of those
      reporting units. If the estimated fair value of the reporting unit had been
      less
      than the estimated book value, then an impairment would have been deemed to
      have
      occurred. In estimating the fair value of each reporting unit, iDNA used
      primarily the income approach (which utilizes forecasted discounted cash flows
      to estimate the fair value of the reporting unit. iDNA concluded that as of
      January 31, 2006 there was no impairment of its goodwill based upon the then
      estimated fair value of its reporting units.





However,
      during the second quarter of Fiscal 2007, as a consequence of declining revenues
      and the loss of a client, the results of the operations of the Campus Group
      Companies, Inc. (“CGC”) reporting unit raised questions as to whether
      projections used at the last valuation date were still valid. Accordingly,
      management performed additional impairment tests as of July 31, 2006 for CGC
      and
      determined that impairment charges were required at that date. Accordingly,
      second quarter operations for Fiscal 2007 were charged $2.6 million and $1.9
      million for the estimated impairment of CGC’s goodwill and other intangible
      assets, respectively. Additionally, iDNA determined it appropriate to reduce
      the
      useful life of the CGC client relationships intangible asset from 17 years
      to 10
      years. iDNA will continue to monitor CGC’s operations and will recognize further
      impairment charges if and when deemed appropriate.




iDNA
      subsequently conducted its Fiscal 2007 annual analysis of goodwill as of January
      31, 2007. iDNA concluded that as of January 31, 2007 there were no additional
      impairments of its goodwill based upon the then estimated fair value of its
      reporting units.





**Note
      7 – Subsequent Event – iDNA Consummates Loan
      Agreement**





On
      November 21, 2007, iDNA, via its wholly owned subsidiary, iDNA Cinema Holdings,
      Inc. (“Holdings”), consummated a Master Loan and Security Agreement (the “Loan
      Agreement”) with Silar Advisors, L.P. (“Silar”), as Lender and Administrative,
      Payment and Collateral Agent, pursuant to which Silar agreed to provide a term
      loan in an aggregate principal amount of $4,250,000 (the “Term Loan”) to
      Holdings (the “Term Loan Financing”). Interest is to accrue on the Term Loan at
      a per annum rate equal to the variable annual rate of interest designated from
      time to time by Citibank N.A. as its “prime rate,” plus 4%, or, if greater,
      12.25%, and is payable by Holdings on a quarterly basis. The Term Loan matures
      on November 20, 2009 unless extended for one year at the option of Holdings,
      upon written notice provided to Silar between fifteen (15) and forty-five (45)
      days prior to the Maturity Date, provided that no default is then ongoing and
      that Holdings is then in compliance with its financial covenants under the
      Loan
      Agreement.




20


**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


**(unaudited)**





**Note
      7 – Subsequent Event – iDNA Consummates Loan Agreement -
      continued**





iDNA
      has
      utilized the proceeds from the Term Loan Financing in the following manners:
      (i)
      approximately $1.0 million was applied for the repayment and retirement of
      iDNA’s indebtedness to Seasons Go Round Inc.; (ii) approximately $260,000 was
      used for prepayment of interest on the Term Loan; (iii) approximately $167,000
      was paid to Silar or its designee in satisfaction of fees and expenses due
      in
      connection with the Term Loan Financing; (iv) $60,000 was paid to a consultant
      for its role in facilitating the Term Loan Financing; and (v) the remaining
      proceeds of approximately $2.7 million have been and will continue to be
      utilized for working capital purposes.




iDNA’s
      obligations under the Term Loan are secured by a pledge of all of Holdings’
assets, including all of the outstanding shares of National Cinemas, Inc.
      (“NCI”), which owns a 50% membership interest in AFC .
      The
      Term Loan is also guaranteed by (i) iDNA (with such guaranty being secured
      by a
      pledge of substantially all of iDNA’s assets, other than the shares of its
      operating subsidiaries) and (ii) NCI (with such guaranty being secured by a
      pledge of substantially all of NCI’s assets, other than its 50% membership
      interest in AFC).




In
      connection with the Term Loan Financing, as required by the Loan Agreement,
      iDNA
      also issued to Silar a warrant (the “Warrant”) to purchase 1.5 million shares of
      iDNA’s Common Stock at an exercise price of $0.27 per share. The number of
      shares issuable upon exercise of the Warrant is subject to customary adjustment
      in the event of a stock dividend, stock split, reverse stock split or similar
      event and is furthermore subject to a weighted-average antidilution protection
      in the event that iDNA issues additional shares of Common Stock for
      consideration less than the existing exercise price under the Warrant.
      Additionally, pursuant to the Warrant, the holder thereof has been granted
      (subject to certain conditions, including the reimbursement of iDNA’s costs)
      three demand registration rights for the underlying shares of Common Stock,
      as
      well as unlimited piggyback registration rights for such shares of Common
      Stock.


21





**Item
      2.**


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations**





**General**





iDNA,
      Inc. (the “Company” or “iDNA”), began operations in 1969 and was incorporated in
      Delaware in 1971. As a consequence of iDNA’s consummation of a series of
      acquisitions during the past four years, iDNA’s operations are comprised of
      three principal reportable segments: (i) strategic communications services,
      (ii)
      information services and (iii) entertainment. iDNA manages each segment
      separately as a consequence of different marketing, service requirements and
      technology strategies for the respective segments.





The
      strategic communications services segment provides content development via
      the
      design, development and production of media, collateral material, logistics,
      support and/or broadcast services for presentations at corporate and
      institutional events, meetings, training seminars and symposiums. The
      presentations may be live at single or multi-site venues and can include video
      conferencing, satellite broadcasting and webcasting, or the presentations may
      be
      provided via on-demand access via internet websites, DVD or video
      tape.





The
      information services segment utilizes custom wireless communication technology
      and proprietary software to facilitate client audience interaction,
      participation and polling to collect, exchange and/or analyze data and
      information in real-time during a meeting or event. The wireless communication
      services are available as a turn-key service provided by iDNA during a scheduled
      meeting or event or alternatively, a client can purchase from iDNA the required
      electronic components and related proprietary software to administer its needs
      independently.





As
      of
      consequence of iDNA’s investment in the Angelika Film Centers, LLC (“AFC”), iDNA
      operates in the movie exhibition and entertainment industry.





**Critical
      Accounting Policies**





iDNA’s
      consolidated financial statements are prepared in accordance with generally
      accepted accounting principles, which require iDNA to make estimates and
      assumptions. Those estimates and assumptions affect the reported amounts of
      assets and liabilities, the disclosure of contingent assets and liabilities,
      and
      the reported revenues and expenses of iDNA. iDNA’s significant accounting
      policies are described in Note 1 of Notes to Condensed Consolidated Financial
      Statements included under Item 1 of this Part I (hereinafter, the “Notes”).
      However, certain accounting policies are deemed “critical”, as they require
      management’s highest degree of judgment, estimates and assumptions. These
      accounting estimates and disclosures have been discussed with the Audit
      Committee of iDNA’s Board of Directors. A discussion of iDNA’s critical
      accounting policies, the judgments and uncertainties affecting their application
      and the likelihood that materially different amounts would be reported under
      different conditions or using different assumptions are as follows:


22




**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Revenues :
      iDNA’s
      revenues are earned within short time periods, generally less than one week.
      iDNA recognizes revenue from its strategic communications segment, including
      the
      video production, video editing, meeting services and broadcast satellite or
      webcast services, and its information services segment when the services are
      complete and delivered or all technical services have been rendered. Deposits
      and other prepayments are recorded as deferred revenue until revenue is
      recognized. iDNA does not have licensing or other arrangements that result
      in
      additional revenues following the delivery of the video or a broadcast. Costs
      accumulated in the production of the video, meeting services or broadcasts
      are
      deferred until the sale and delivery are complete. Deferred production costs
      of
      $171,000 and $115,000, respectively, are reported as other current assets at
      October 31, 2007 and January 31, 2007.





iDNA
      recognizes revenue from the sale of electronic equipment, proprietary software
      and related components at the time of shipment. Deposits and other prepayments
      received prior to shipment are recorded as deferred revenue until the electronic
      equipment and related software are shipped. iDNA has licensing and technical
      support arrangements for future software enhancements and upgrades for technical
      support for previously delivered electronic equipment. Revenues derived from
      licensing and technical support are recognized over the term of the licensing
      and technical support period, which generally are sold in increments of one
      year
      of coverage. For the three months ended October 31, 2007 and 2006, electronic
      equipment sales were $560,000 and $708,000, respectively. For the nine months
      ended October 31, 2007 and 2006, electronic equipment sales were $1.6 million
      and $2.0 million, respectively.





Cost
      of Revenues :
      Cost of
      revenues consists of direct expenses specifically associated with client service
      revenues. The cost of revenues includes direct salaries and benefits, purchased
      products or services for clients, web hosting, support services, shipping and
      delivery costs.





Accounts
      Receivable :
      iDNA
      extends credit to clients in the normal course of business. iDNA continuously
      monitors collections and payments from clients and maintains an allowance for
      doubtful accounts based upon historical experience and any specific client
      collection issues that have been identified. Since accounts receivable are
      concentrated in a relatively few number of clients, a significant change in
      the
      liquidity or financial position of any of these clients could have a material
      adverse impact on the collectibility of the accounts receivable and future
      operating results. i DNA
      does
      not have any off-balance sheet credit exposure related to its
      customers.


23





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Valuation
      of Long-lived Assets and Goodwill :
      iDNA
      reviews the carrying value of its long-lived assets (other than goodwill)
      whenever events or changes in circumstances indicate that their carrying amount
      may not be recoverable. When indicators of impairment exist, iDNA determines
      whether the estimated undiscounted sum of the future cash flows from such assets
      is less than their carrying amounts. If less, an impairment loss is recognized
      in the amount, if any, by which the carrying amount of such assets exceeds
      their
      respective fair values. The determination of fair value is based on quoted
      market prices in active markets, if available, or independent appraisals; sales
      price negotiations; or projected future cash flows discounted at a rate
      determined by management to be commensurate with iDNA’s business risk. The
      estimation of fair value utilizing discounted forecasted cash flows includes
      significant judgments regarding assumptions of revenue, operating and marketing
      costs; selling and administrative expenses; interest rates; property and
      equipment additions and retirements; industry competition; and general economic
      and business conditions, among other factors.





Pursuant
      to iDNA’s established accounting policies, iDNA conducted its Fiscal 2006 annual
      analysis of goodwill as of January 31, 2006. iDNA estimated the fair value
      of
      its reporting units and compared those values to the carrying values of those
      reporting units. If the estimated fair value of the reporting unit had been
      less
      than the estimated book value, then an impairment would have been deemed to
      have
      occurred. In estimating the fair value of each reporting unit, iDNA used
      primarily the income approach (which utilizes forecasted discounted cash flows
      to estimate the fair value of the reporting unit. iDNA concluded that as of
      January 31, 2006 there was no impairment of its goodwill based upon the then
      estimated fair value of its reporting units.





However,
      during the second quarter of Fiscal 2007, as a consequence of declining revenues
      and the loss of a client, the results of the operations of the Campus Group
      Companies, Inc. (“CGC”) reporting unit raised questions as to whether
      projections used at the last valuation date were still valid. Accordingly,
      management performed additional impairment tests as of July 31, 2006 for CGC
      and
      determined that impairment charges were required at that date. Accordingly,
      second quarter operations for Fiscal 2007 were charged $2.6 million and $1.9
      million for the estimated impairment of CGC’s goodwill and other intangible
      assets, respectively. Additionally, iDNA determined it appropriate to reduce
      the
      useful life of the CGC client relationships intangible asset from 17 years
      to 10
      years. iDNA will continue to monitor CGC’s operations and will recognize further
      impairment charges if and when deemed appropriate.




iDNA
      conducted its Fiscal 2007 annual analysis of goodwill as of January 31, 2007.
      iDNA concluded that as of January 31, 2007 there were no additional impairments
      of its goodwill based upon the then estimated fair value of its reporting units.


24





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Self-Insurance
      Claims :
      iDNA’s
      wholly-owned subsidiary ARAC, Inc. (“ARAC”) maintained and continues to maintain
      self-insurance for claims and associated litigation expenses relating to bodily
      injury or property damage from accidents involving the vehicles rented to
      customers by its discontinued automobile rental operations occurring in Fiscal
      1996 and prior. ARAC was, when required by either governing state law or the
      terms of its rental agreement, self-insured for the first $1.0 million per
      occurrence, and for losses in excess of $5.0 million per occurrence, for bodily
      injury and property damage resulting from accidents involving its rental
      vehicles. ARAC was also self-insured, up to certain retained limits, for bodily
      injury and property damage resulting from accidents involving ARAC vehicles
      operated by employees within the scope of their employment.





ARAC
      is
      the subject to certain self-insurance claims and associated litigation expenses
      relating to its discontinued automobile rental operations. iDNA’s management
      estimates the required self-insurance liability based upon specific
      identification of the known matters subject to future claims, the nature of
      the
      claim and the estimated costs to be incurred. These estimates include, but
      are
      not limited to, ARAC’s historical loss experience and projected loss factors.
      The required self-insurance liability is subject to adjustment in the future
      based upon changes in the nature of the remaining claims or the ultimate cost.
      As a consequence of iDNA’s sale of its automobile rental operations in 1995,
      iDNA believes that all incurred claims have been reported to ARAC and that
      there
      are no longer any incurred but not yet reported claims to be received by ARAC.
      iDNA’s self-insurance liability at October 31, 2007 and January 31, 2007 was
      $235,000 and $235,000, respectively.





Because
      of the uncertainties related to several residual small claims and legal
      proceedings involving iDNA’s former rental operations and self-insurance claims,
      it is difficult to project with precision the ultimate effect that the
      adjudication or settlement of these matters will have on iDNA. As additional
      information regarding iDNA’s potential liabilities becomes available, iDNA will
      revise its estimates as appropriate.


25





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Stock-Based
      Compensation :
      Effective February 1, 2006, iDNA adopted the provisions of Statement of
      Financial Accounting Standards (“SFAS”) No. 123R (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123(R)”), which replaced SFAS No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”), and superseded APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* .
      SFAS
      No. 123(R) requires all share-based payments to employees, including grants
      of
      employee stock options, to be recognized in the financial statements based
      on
      their fair values beginning with the first interim or annual period after
      December 15, 2005. iDNA elected the prospective method of adopting SFAS No.
      123(R) which requires that compensation expense be recorded over the remaining
      periods for what would have been the remaining fair value under SFAS No. 123
      of
      all unvested stock options and restricted stock at the beginning of the first
      quarter of adoption. The compensation costs for that portion of awards is based
      on the grant-date fair value of the awards as calculated for pro forma
      disclosures under SFAS No. 123. iDNA charged to operations $60,000 and $60,000,
      respectively, for share-based compensation for the three months ended October
      31, 2007 and 2006. iDNA charged to operations $211,000 and $200,000,
      respectively, for share-based compensation for the nine months ended October
      31,
      2007 and 2006.





Income
      Taxes :
      iDNA
      recognizes deferred tax assets and liabilities based on differences between
      the
      financial statement carrying amounts and the tax basis of assets and
      liabilities. Loss carrybacks, reversal of deferred tax liabilities, tax planning
      and estimates of future taxable income are considered in assessing the need
      for
      a valuation allowance. At the time it is determined that iDNA will more likely
      than not be able to realize deferred tax assets in excess of the recorded
      amount, net of its valuation allowance, an adjustment to reduce the valuation
      allowance would be recorded that would increase income in the period such
      determination was made. Likewise, should management determine that iDNA would
      not be able to realize all or part of net deferred tax assets generated in
      the
      future, an increase to the valuation allowance would be charged to and reduce
      income in the period such determination was made.


26





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





**Financial
      Condition and Results of Operations**


**Results
      from Operations for the Three Months Ended October 31,
      2007**


**as
      Compared to the Three Months Ended October 31, 2006**





The
      following table sets forth for the three months ended October 31, 2007 and
      2006
      certain statements of operations data by segment obtained from iDNA’s
      consolidated statement of operations (in thousands). All figures described
      in
      the ensuing discussion (as derived from the table) are stated in approximate
      amounts, based upon rounding of figures presented in the table.





Information Services
              Three Months Ended
              October 31,
            
            Strategic
              Communications Services
              Three Months Ended
              October 31,
            
            Intersegment Elimination
              Three Months Ended
              October 31,2007
            
            2006
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            2,432
            
            $
            2,457
            
            $
            2,729
            
            $
            2,350
            
            $
            (91
            )
            $
            (49
            )Cost
                of revenues
            
            
            1,325
            
            
            1,523
            
            
            1,267
            
            
            1,080
            
            
            (91
            )
            
            (49
            )Selling,
                general and administrative expenses
            
            
            1,060
            
            
            912
            
            
            1,097
            
            
            1,112
            
            
            -
            
            
            -Operating
                income (loss)
            
            
            47
            
            
            22
            
            
            365
            
            
            157
            
            
            -
            
            
            -Depreciation
                and amortization expense
            
            
            219
            
            
            230
            
            
            177
            
            
            163
            
            
            -
            
            
            -





Entertainment
              Three Months Ended
              October 31,
            
            Undistributed
              Corporate Expenses
              Three Months Ended
              October 31,
            
            Consolidated
              Three Months Ended
              October 31,2007
            
            2006
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            5,070
            
            $
            4,758Cost
                of revenues
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            2,501
            
            
            2,554Selling,
                general and administrative expenses
            
            
            -
            
            
            -
            
            
            233
            
            
            428
            
            
            2,390
            
            
            2,452Operating
                income (loss)
            
            
            148
            
            
            191
            
            
            (291
            )
            
            (639
            )
            
            269
            
            
            (269
            )Depreciation
                and amortization expense
            
            
            -
            
            
            -
            
            
            11
            
            
            17
            
            
            407
            
            
            410





Revenues: Revenues
      increased 6.6% to $5.1 million for the three months ended October 31, 2007
      as
      compared to $4.8 million for the three months ended October 31, 2006.





Revenues
      attributed to the information services segment decreased $25,000 to $2.4 million
      for the three months ended October 31, 2007 as compared to $2.5 million for
      the
      three months ended October 31, 2006. The decrease in revenues was principally
      due to the net effect of (i) a decline in electronic equipment sales of
      $148,000, offset by, (ii) an increase of $123,000 as a consequence of changes
      in
      the timing and/or scope of the projects completed during the three months ended
      October 31, 2007 as compared to the three months ended October 31, 2006.


27





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Revenues
      attributed to the strategic communications services segment increased $379,000
      to $2.7 million for the three months ended October 31, 2007 as compared to
      $2.3
      million for the three months ended October 31, 2006. The increase in revenues
      was principally due to an increase in the scope and size of and a change of
      timing for projects completed during the three months ended October 31, 2007
      as
      compared to the three months ended October 31, 2006. Although
      the scope of projects completed during the three months ended October 31, 2007
      increased, deferred revenue increased by $882,000 from January 31, 2007 as
      a
      consequence of an increase of the revenue value of projects scheduled for
      completion during the fourth quarter of Fiscal 2008 and the first quarter of
      Fiscal 2009.





The
      nature of iDNA’s business is such that the nature and timing of assignments
      completed for clients, and the resulting revenue, will vary from period to
      period in terms of scope, size of projects and the ultimate revenues derived.
      The timing and fluctuations between periods for assignments is particularly
      apparent for our strategic communications segment where assignments tend to
      be
      fewer in number but larger in scope than the information services segment.
      As a
      consequence, revenues tend to fluctuate from quarter-to-quarter based upon
      the
      client determined timing for completion of an assignment.





iDNA
      recently consolidated its previously decentralized marketing for strategic
      communications services in an effort to improve the coordination and program
      value for current and prospective clients. Each of iDNA’s senior marketing
      strategists develops new marketing initiatives, creates new project
      opportunities, seeks new clients for its services and expands existing client
      relationships to generate new revenues to reduce period to period fluctuations.
      Although no assurances can be made, iDNA continues to seek revenue expansion
      through its new marketing strategists’ initiatives as a means to reduce
      year-to-year and quarter-to-quarter fluctuations in its revenues as well as
      to
      ultimately increase revenues. Generally, there is a six to twelve month
      investment period in new client initiatives and relationships before iDNA
      expects to realize revenues in the form of new projects and/or clients.


28





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





Cost
      of Service Revenues :
      Cost of
      revenues for the three months ended October 31, 2007 and 2006 was $2.5 million
      and $2.6 million, respectively.





Cost
      of
      revenues attributed to the information services segment was $1.3 million for
      the
      three months ended October 31, 2007 as compared to $1.5 million for the three
      months ended October 31, 2006.





The
      gross
      profit realized by the information services segment for the three months ended
      October 31, 2007 and 2006 was $1.1 million and $934,000, respectively. The
      gross
      profit increase of $173,000 for the three months ended October 31, 2007 as
      compared to the three months ended October 31, 2006 is due principally to (i)
      an
      increase in project margins for the period and (ii) a decrease of $33,000 in
      project overhead costs. The gross margin for the three months ended October
      31,
      2007 increased 7.5% to 45.5% as compared to 38.0% for the three months ended
      October 31, 2006, principally due to (i) a decrease in direct project costs
      of
      4.5% that resulted in higher project margins and (ii) a decrease of 3.0% in
      indirect production overhead expenses as a percentage of revenues.





Cost
      of
      revenues attributable to the strategic communications segment increased $187,000
      to $1.3 million for the three months ended October 31, 2007 as compared to
      $1.1
      million for the three months ended October 31, 2006. The increase in the costs
      of revenues was principally due to a increase in direct project costs as a
      consequence of the $379,000 increase in revenues for the three months ended
      October 31, 2007 as compared to the three months ended October 31, 2006. The
      gross profit realized by the strategic communications segment for the three
      months ended October 31, 2007 and 2006 was $1.5 million and $1.3 million,
      respectively. The gross profit increase of $192,000 for the three months ended
      October 31, 2007 as compared the three months ended October 31, 2006 was
      principally due to the increase of revenues. The nature of the strategic
      communications segment’s cost of revenues includes various fixed production,
      operating and personnel costs as well as variable direct project costs. As
      a
      consequence, the absorption of the fixed production operating and personnel
      costs can cause quarter-to-quarter fluctuations in gross profit realized as
      iDNA
      experiences quarter-to-quarter fluctuations in revenues.





Selling,
      General and Administrative (“SG&A”) :
      SG&A for the three months ended October 31, 2007 and the three months ended
      October 31, 2006 was $2.4 million and $2.5 million, respectively.





SG&A
      attributed to the information services segment was $1.1 million and $912,000,
      respectively, for three months ended October 31, 2007 and the three months
      ended
      October 31, 2006. The net increase in information services SG&A was $148,000
      for the three months ended October 31, 2007 as compared to the three months
      ended October 31, 2006. The net increase in SG&A was due principally to an
      increase in personnel and selling expenses.


29





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations – continued**





SG&A
      attributable to the strategic communications services segment decreased $15,000
      to $1.1 million for the three months ended October 31, 2007 as compared to
      $1.1
      million for the three months ended October 31, 2006.





SG&A
      for undistributed corporate expenses for the three months ended October 31,
      2007
      and October 31, 2006 was $233,000 and $428,000, respectively. The corporate
      expenses incurred by iDNA relate principally to expenses incurred at its
      executive offices for executive and corporate finance personnel, certain
      employee benefits, professional services such as consulting, legal and
      accounting fees, corporate insurance, corporate marketing initiatives and the
      costs associated with maintaining its New York facility. iDNA allocates to
      its
      various business segments or units the proportionate share of corporate expenses
      that directly relate to and/or benefit such business segment or unit. The
      undistributed corporate expenses reflect the remaining expenses incurred but
      not
      directly attributable to a business segment or unit. The decrease in corporate
      SG&A of $195,000 for the three months ended October 31, 2007 as compared to
      the three months ended October 31, 2006 was due principally to (i) a net
      decrease in personnel and related benefit expenses, (ii) lower professional
      fees
      from company advisors and (iii) the reduction in facility rent and related
      occupancy costs as iDNA consolidated its New York City-based strategic
      communications operations into one facility.





Income
      from AFC Investment :
      iDNA
      accounts for its investment in AFC using the equity method. For the three months
      ended October 31, 2007 and October 31, 2006, iDNA recorded income of $148,000
      and $191,000, respectively, representing iDNA’s share of AFC’s net income.





Summarized
      income statement data for AFC for the three months ended September 30, 2007
      and
      2006, respectively, is as follows (in thousands):





Three Months Ended
              September 30,2007
            
            2006Revenues
            
            $
            1,408
            
            $
            1,646Film
                rental
            
            
            287
            
            
            406Operating
                costs
            
            
            608
            
            
            635Depreciation
                and amortization
            
            
            195
            
            
            195General
                and administrative expenses
            
            
            22
            
            
            281,112
            
            
            1,264Net
                income
            
            $
            296
            
            $
            382iDNA's
                proportionate share of net income
            
            $
            148
            
            $
            191


30







**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





AFC’s
      revenues decreased $238,000 for the three months ended September 30, 2007 as
      compared to the three months ended September 30, 2006, principally as a result
      of the net effects of (i) a decrease of 18.4% in attendance period-to-period,
      (ii) a decrease of $16,000 in other, concession and café revenues, offset by,
      (iii) a 1.7% increase in average ticket prices. The attendance, and at times
      the
      ticket prices, at AFC will vary depending on audience interest in, and the
      popularity of the films it exhibits and other factors. Film rental expense,
      as a
      percentage of revenue, decreased 4.3% to 20.4% from 24.7% for the three months
      ended September 30, 2007 and 2006, respectively. Film rental expense generally
      is a factor of a fixed percentage rental rate per film multiplied by the number
      of tickets sold. AFC experiences fluctuations in film rental expense, as a
      percentage of revenue, depending upon the rental rate per film and the
      popularity of the film. Operating costs, as a percentage of revenue, increased
      4.6% to 43.2% for the three months ended September 30, 2007, as compared to
      38.6% for the three months ended September 30, 2006 due principally to decreased
      revenues for the three months ended September 30, 2007 as compared to the three
      months ended September 30, 2006. The nature of AFC’s operating costs tend
      generally to be more fixed overhead-related costs and advertising expenses.





Interest
      Expense :
      For the
      three months ended October 31, 2007 and 2006, iDNA incurred interest expense
      of
      $59,000 and $216,000, respectively. The decrease of $157,000 in interest expense
      for the three month period ended October 31, 2007 as compared to the three
      month
      period ended October 31, 2006 is due principally to the suspension of interest
      attributable to the Base Notes, Trailing Notes and Convertible Note (each
      defined below) (collectively, the “Campus Notes”) for the period February 1,
      2007 through October 31, 2007.





The
      aggregate carrying value of the Campus Notes outstanding during the interest
      suspension period was $12.1 million and the value of the foregone interest
      for
      the three months ended October 31, 2007 was $155,000. The Campus Notes issued
      by
      iDNA to acquire Audience Response Systems, Inc. and the Campus Group Companies,
      Inc. (collectively, the “Campus Group”) bear interest at 5% per annum and are
      repayable in quarterly installments according to a formula based upon the future
      cash flows realized from the Campus Group. For the trailing twelve month period
      ended October 31, 2007, the Campus Group’s financial performance fell below
      certain minimum operating cash flow thresholds established pursuant to the
      terms
      of the Campus Notes. As a consequence no interest was incurred on the Campus
      Notes during the period February 1, 2007 through October 31, 2007.
      Prospectively, interest may accrue pursuant to the terms of the Campus
      Notes.





Income
      Taxes :
      Due to
      net operating losses and the availability of net operating loss carryforwards,
      iDNA’s effective federal income tax rate was zero for the three month periods
      ended October 31, 2007 and October 31, 2006. iDNA has provided a full valuation
      allowance against its net operating loss carryforward and other net deferred
      tax
      asset items due to the uncertainty of their future realization.


31


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





**Financial
      Condition and Results of Operations**


**Results
      from Operations for the Nine Months Ended** **October** **31,
      2007**


**as
      Compared to the Nine Months Ended October 31, 2006**





The
      following table sets forth for the nine months ended October 31, 2007 and 2006
      certain statements of operations data by segment obtained from iDNA’s
      consolidated statement of operations (in thousands). All figures described
      in
      the ensuing discussion (as derived from the table) are stated in approximate
      amounts, based upon rounding of figures presented in the table.





StrategicInformation
                Services
            
            Communications
                Services
            
            Intersegment
                EliminationNine
                Months Ended
            
            Nine
                Months Ended
            
            Nine
                Months EndedOctober
                31,
            
            October
                31,
            
            October
                31,2007
            
            2006
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            7,074
            
            $
            7,309
            
            $
            4,568
            
            $
            4,512
            
            $
            (148
            )
            $
            (93
            )Cost
                of revenues
            
            
            4,108
            
            
            4,173
            
            
            3,107
            
            
            2,849
            
            
            (148
            )
            
            (93
            )Selling,
                general and administrative expenses
            
            
            3,428
            
            
            3,243
            
            
            2,942
            
            
            3,260
            
            
            -
            
            
            -Operating
                income (loss)
            
            
            (469
            )
            
            (107
            )
            
            (1,481
            )
            
            (6,080
            )
            
            -
            
            
            -Depreciation
                and amortization expense
            
            
            656
            
            
            654
            
            
            539
            
            
            503
            
            
            -
            
            
            -Impairment
                charge
            
            
            -
            
            
            -
            
            
            -
            
            
            4,482
            
            
            -
            
            
            -





UndistributedEntertainment
            
            Corporate
                Expenses
            
            ConsolidatedNine
                Months Ended
            
            Nine
                Months Ended
            
            Nine
                Months EndedOctober
                31,
            
            October
                31,
            
            October
                31,2007
            
            2006
            
            2007
            
            2006
            
            2007
            
            2006Revenues
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            11,494
            
            $
            11,728Cost
                of revenues
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            7,067
            
            
            6,929Selling,
                general and administrative expenses
            
            
            -
            
            
            -
            
            
            703
            
            
            864
            
            
            7,073
            
            
            7,367Operating
                income (loss)
            
            
            484
            
            
            451
            
            
            (864
            )
            
            (801
            )
            
            (2,330
            )
            
            (6,537
            )Depreciation
                and amortization expense
            
            
            -
            
            
            -
            
            
            38
            
            
            49
            
            
            1,233
            
            
            1,206Impairment
                charge
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            4,482





Revenues: Revenues
      decreased 2.0% to $11.5 million for the nine months ended October 31, 2007
      as
      compared to $11.7 million for the nine months ended October 31, 2006.





Revenues
      attributed to the information services segment decreased $235,000 to $7.1
      million for the nine months ended October 31, 2007 as compared to $7.3 million
      for the nine months ended October 31, 2006. The decrease in revenues was
      principally due to changes in the timing and/or scope of the projects completed
      during the nine months ended October 31, 2007 as compared to the nine months
      ended October 31, 2006.


32





**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





Revenues
      attributed to the strategic communications services segment increased $56,000
      to
      $4.6 million for the nine months ended October 31, 2007 as compared to $4.5
      million for the nine months ended October 31, 2006. The increase in revenues
      was
      principally due to an increase in the scope and size of and a change in the
      timing for projects completed during the nine months ended October 31, 2007
      as
      compared to the nine months ended October 31, 2006. In addition to the change
      in
      the scope of projects completed during the nine months ended October 31, 2007,
      deferred revenue increased by $882,000 from January 31, 2007 as a consequence
      of
      an increase of the revenue value of projects scheduled for completion during
      the
      fourth quarter of Fiscal 2008 and the first quarter of Fiscal 2009.





The
      nature of iDNA’s business is such that the nature and timing of assignments
      completed for clients, and the resulting revenue, will vary from period to
      period in terms of scope, size of projects and the ultimate revenues derived.
      The timing and fluctuations between periods for assignments is particularly
      apparent for our strategic communications segment where assignments tend to
      be
      fewer in number but larger in scope than the information services segment.
      As a
      consequence, revenues tend to fluctuate from quarter-to-quarter based upon
      the
      client determined timing for completion of an assignment.





iDNA
      recently consolidated its previously decentralized marketing for strategic
      communications services in an effort to improve the coordination and program
      value for current and prospective clients. Each of iDNA’s senior marketing
      strategists develops new marketing initiatives, creates new project
      opportunities, seeks new clients for its services and expands existing client
      relationships to generate new revenues to reduce period to period fluctuations.
      Although no assurances can be made, iDNA continues to seek revenue expansion
      through its new marketing strategists’ initiatives as a means to reduce
      year-to-year and quarter-to-quarter fluctuations in its revenues as well as
      to
      ultimately increase revenues. Generally, there is a six to twelve month
      investment period in new client initiatives and relationships before iDNA
      expects to realize revenues in the form of new projects and/or clients.





Cost
      of Service Revenues :
      Cost of
      revenues for the nine months ended October 31, 2007 and 2006 was $7.1 million
      and $6.9 million, respectively.





Cost
      of
      revenues attributed to the information services segment was $4.1 million for
      the
      nine months ended October 31, 2007 as compared to $4.2 million for the nine
      months ended October 31, 2006.





The
      gross
      profit realized by the information services segment for the nine months ended
      October 31, 2007 and 2006 was $3.0 million and $3.1 million, respectively.
      The
      gross profit decrease of $170,000 for the nine months ended October 31, 2007
      as
      compared to the nine months ended October 31, 2006 was due principally to (i)
      a
      decline in revenues of $235,000 and (ii) a reduction in project margins for
      the
      period. The gross margin for the nine months ended October 31, 2007 decreased
      1.0% to 41.9% as compared to 42.9% for the nine months ended October 31, 2006,
      principally due to an increase in direct project costs.


33


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





Cost
      of
      revenues attributable to the strategic communications segment increased $258,000
      to $3.1 million for the nine months ended October 31, 2007 as compared to $2.8
      million for the nine months ended October 31, 2006. The gross profit decrease
      of
      $202,000 for the nine months ended October 31, 2007 as compared the nine months
      ended October 31, 2006 was principally due to an increase in direct project
      costs as a consequence of the completion of smaller, lower margin projects
      during the period and in increase in production costs. The nature of the
      strategic communications segment’s cost of revenues includes various fixed
      production, operating and personnel costs as well as variable direct project
      costs. As a consequence, the absorption of the fixed production operating and
      personnel costs can cause quarter-to-quarter fluctuations in gross profit
      realized as iDNA experiences quarter-to-quarter fluctuations in revenues.





Selling,
      General and Administrative (“SG&A”) :
      SG&A for the nine months ended October 31, 2007 and the nine months ended
      October 31, 2006 was $7.1 million and $7.4 million, respectively.





SG&A
      attributed to the information services segment was $3.4 million and $3.2
      million, respectively, for the nine months ended October 31, 2007 and the nine
      months ended October 31, 2006. The net increase in information services SG&A
      was $185,000 for the nine months ended October 31, 2007 as compared to the
      nine
      months ended October 31, 2006. The net increase in SG&A was due principally
      to an increase in personnel and selling expenses.





SG&A
      attributable to the strategic communications services segment decreased $318,000
      to $2.9 million for nine months ended October 31, 2007 as compared to $3.3
      million for the nine months ended October 31, 2006. The decrease in SG&A was
      principally due to (i) a net decrease in personnel and related benefit expenses,
      (ii) a decrease in professional services and consulting expenses and (iii)
      the
      reduction in facility rent and related occupancy costs as iDNA consolidated
      its
      New York City-based strategic communications operations into one
      facility.





SG&A
      for undistributed corporate expenses for the nine months ended October 31,
      2007
      and October 31, 2006 was $703,000 and $864,000, respectively. The corporate
      expenses incurred by iDNA relate principally to expenses incurred at its
      executive offices for executive and corporate finance personnel, certain
      employee benefits, professional services such as consulting, legal and
      accounting fees, corporate insurance, corporate marketing initiatives and the
      costs associated with maintaining its New York facility. iDNA allocates to
      its
      various business segments or units the proportionate share of corporate expenses
      that directly relate to and/or benefit such business segment or unit. The
      undistributed corporate expenses reflect the remaining expenses incurred but
      not
      directly attributable to a business segment or unit. The decrease in corporate
      SG&A of $161,000 for the nine months ended October 31, 2007 as compared to
      the nine months ended October 31, 2006 was due principally to (i) a net decrease
      in personnel and related benefit expenses, (ii) lower professional fees from
      company advisors and (iii) the reduction in facility rent and related occupancy
      costs as iDNA consolidated its New York City-based strategic communications
      operations into one facility.


34




**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





Income
      from AFC Investment :
      iDNA
      accounts for its investment in AFC using the equity method. For the nine months
      ended October 31, 2007 and October 31, 2006, iDNA recorded income of $484,000
      and $451,000, respectively, representing iDNA’s share of AFC’s net income.





Summarized
      income statement data for AFC for the nine months ended September 30, 2007
      and
      2006, respectively, is as follows (in thousands):





Nine
                Months EndedSeptember
                30,2007
            
            2006Revenues
            
            $
            4,696
            
            $
            4,575Film
                rental
            
            
            1,144
            
            
            1,219Operating
                costs
            
            
            1,909
            
            
            1,809Depreciation
                and amortization
            
            
            585
            
            
            532General
                and administrative expenses
            
            
            90
            
            
            1133,728
            
            
            3,673Net
                income
            
            $
            968
            
            $
            902iDNA's
                proportionate share of net income
            
            $
            484
            
            $
            451





AFC’s
      revenues increased $121,000 for the nine months ended September 30, 2007
      as compared to the nine months ended September 30, 2006, principally as a result
      of the net effects of (i) an increase of 2.2% in attendance period-to-period,
      (ii) a 1.7% increase in average ticket prices, offset by, (iii) a decrease
      of
      $32,000 in other, concession and café revenues. The attendance, and at times the
      ticket prices, at AFC will vary depending on audience interest in, and the
      popularity of the films it exhibits and other factors. Film rental expense,
      as a
      percentage of revenue, decreased 2.2% to 24.4% from 26.6% for the nine months
      ended September 30, 2007 and 2006, respectively. Film rental expense generally
      is a factor of a fixed percentage rental rate per film multiplied by the number
      of tickets sold. AFC experiences fluctuations in film rental expense, as a
      percentage of revenue, depending upon the rental rate per film and the
      popularity of the film. Operating costs, as a percentage of revenue, increased
      1.1% to 40.6% for the nine months ended September 30, 2007, as compared to
      39.5%
      for the nine months ended September 30, 2006 due principally to the net effect
      of (i) increased revenues, offset by, (ii) an increase in operating costs,
      principally for rent, professional fees and depreciation, for the nine months
      ended September 30, 2007 as compared to the nine months ended September 30,
      2006. The nature of AFC’s operating costs tend generally to be more fixed
      overhead-related costs and advertising expenses.


35


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





Interest
      Expense :
      For the
      nine months ended October 31, 2007 and 2006, iDNA incurred interest expense
      of
      $172,000 and $579,000, respectively. The decrease of $407,000 in interest
      expense for the nine month period ended October 31, 2007 as compared to the
      nine
      month period ended October 31, 2006 was due principally to the net effects
      of
      (i) the suspension of interest attributable to the Campus Notes for the period
      February 1, 2007 through October 31, 2007, offset by, (ii) an increase of
      $77,000 in interest expense relating to a $1.0 million promissory note issued
      in
      July 2006.





The
      aggregate principal amount of the Campus Notes outstanding during the interest
      suspension period was $12.1 million and the value of the foregone interest
      for
      the nine months ended October 31, 2007 was $461,000. The Campus Notes issued
      by
      iDNA to acquire the Campus Group bear interest at 5% per annum and are repayable
      in quarterly installments according to a formula based upon the future cash
      flows realized from the Campus Group. For the trailing twelve month period
      ended
      October 31, 2007, the Campus Group’s financial performance fell below certain
      minimum operating cash flow thresholds established pursuant to the terms of
      the
      Campus Notes. As a consequence no interest was incurred on the Campus Notes
      during the period February 1, 2007 through October 31, 2007. Prospectively,
      interest may accrue pursuant to the terms of the Campus Notes.





Interest
      expense abatement :
      The
      Campus Notes bear interest at 5% per annum and are repayable in quarterly
      installments according to a formula based upon the future cash flows realized
      from The Campus Group. For the trailing twelve month period ended July 31,
      2006,
      The Campus Group’s financial performance had fallen below certain minimum
      operating cash flow thresholds established pursuant to the terms of the Campus
      Notes. As a consequence, the interest expense incurred by iDNA during the twelve
      month period ended July 31, 2006 was abated. As a consequence of the interest
      abatement, iDNA realized a gain from the abatement of interest on the Campus
      Notes of $631,000 for the nine months ended October 31, 2006.





Income
      Taxes :
      Due to
      net operating losses and the availability of net operating loss carryforwards,
      iDNA’s effective federal income tax rate was zero for the nine month periods
      ended October 31, 2007 and October 31, 2006. iDNA has provided a full valuation
      allowance against its net operating loss carryforward and other net deferred
      tax
      asset items due to the uncertainty of their future realization.


36


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





**Liquidity
      and Capital Resources**





As
      a
      consequence of periodic fluctuations in iDNA’s working capital needs based upon
      the timing of collections, distributions from AFC, and periods of increased
      production activity, on July 20, 2006, iDNA consummated a Loan and Security
      Agreement (“Loan Agreement”) with a lender and issued a Promissory Note (the
“Note”) in a principal amount of $1.0 million. The lender, Seasons Go Round, is
      an unaffiliated third party lender. Pursuant to the terms of the Note, (i)
      the
      outstanding principal amount owed under the Note is due February 15, 2008,
      (ii)
      iDNA is required to pay interest only, monthly and in arrears, during the term
      of the Note and (iii) the Note bears interest at fourteen percent (14%) per
      annum. iDNA may prepay the Note at any time and without a prepayment penalty.
      iDNA’s obligations under the Note are secured by a perfected first
      priority security interest in and to, and a lien on and pledge of, iDNA’s right,
      title and interest in and to virtually all of iDNA’s assets. The lien does not
      extend to the common stock or membership interests of certain subsidiaries
      - the
      Campus Group and Option Technologies Interactive, LLC. (“OTI”). The Note was
      repaid and retired on November 21, 2007 as a consequence of iDNA’s then
      consummated Master Loan and Security Agreement with a lender in the principal
      amount of $4.25 million (see further discussion below).





As
      a
      consequence of iDNA’s acquisition of OTI effective November 18, 2005, iDNA
      issued to Flexner Wheatley & Associates (“FWA”) and MeetingNet Interactive,
      Inc. (“MeetingNet”) promissory notes in an aggregate principal amount of $1.5
      million (the “OTI Promissory Notes”). The OTI Promissory Notes bear interest at
      5% per annum and are repayable in quarterly installments according to a formula
      based upon the future cash flows realized from OTI’s operations. iDNA’s
      obligations under the OTI Promissory Notes are secured by the membership
      interests of OTI. At October 31, 2007, iDNA had outstanding principal
      obligations under the terms of the OTI Promissory Notes of $1.0 million and
      accrued interest of $13,000.





As
      a
      consequence of iDNA’s acquisition of The Campus Group effective July 31, 2003,
      iDNA issued to Mr. Steve Campus and certain family trusts promissory notes
      in an
      aggregate principal amount of $9.9 million and a convertible promissory note
      in
      the principal amount of $2.8 million (collectively, the “Campus Notes”). Of the
      $9.9 million in promissory notes issued by iDNA, $6.6 million of the promissory
      notes (“Base Notes”) bear interest at 5% per annum and are repayable in
      quarterly installments according to a formula based upon the future cash flows
      realized from The Campus Group over a period not to exceed seven years. The
      remaining $3.3 million in promissory notes (“Trailing Notes”) issued by iDNA
      bear interest at 5% per annum and are repayable in quarterly installments,
      commencing upon the retirement of the Base Notes, according to a formula based
      upon the future cash flows realized from The Campus Group over a period not
      to
      exceed three years subsequent to the retirement of the Base Notes. The $2.8
      million convertible promissory note (“Convertible Note”) (i) bears interest at
      5% per annum, payable quarterly in cash or accumulating as principal at the
      election of iDNA, (ii) requires principal payments to commence upon the
      retirement of the Base Notes and Trailing Notes and is then repayable in
      quarterly installments according to a formula based upon the future cash flows
      realized from The Campus Group over a period not to exceed three years and
      (iii)
      is convertible at the option of the holder into shares of iDNA’s Common Stock at
      a base conversion price of $1.50 per share. The holder may not convert the
      Convertible Note into iDNA’s Common Stock prior to repayment of the Base Notes
      and Trailing Notes. iDNA’s obligations under the Campus Notes are secured by the
      capital stock of the companies comprising The Campus Group. At October 31,
      2007,
      iDNA had outstanding principal obligations under the terms of the Base Notes,
      Trailing Notes and the Convertible Note of $6.0 million, $3.3 million and $2.8
      million, respectively, and accrued interest of $156,000.


37


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





For
      the
      trailing twelve month period ended July 31, 2006, The Campus Group’s financial
      performance fell below certain minimum operating cash flow thresholds
      established pursuant to the terms of the Campus Notes. As a consequence, the
      interest expense incurred by iDNA during the twelve month period ended July
      31,
      2006 was abated. As a consequence of the interest abatement on the Campus Notes,
      iDNA realized a gain of $631,000 during the second quarter of Fiscal 2007.
      For
      the trailing twelve month period ended October 31, 2007, the Campus Group’s
      financial performance remained below the minimum operating cash flow thresholds.
      As a consequence no interest was incurred on the Campus Notes during the period
      February 1, 2007 through October 31, 2007. Prospectively, interest may accrue
      pursuant to the terms of the Campus Notes.





As
      a
      consequence of iDNA’s acquisition of OMI Business Communications, Inc. (“OMI”)
      effective April 1, 2003, iDNA assumed a $402,000 loan guaranteed by the U.S.
      Small Business Administration (the “SBA Loan”). At October 31, 2007, the
      remaining balance of the SBA Loan of $307,000 is repayable in monthly
      installments of $3,309 with the last payment due in April 2017. The SBA Loan
      bears interest at the rate of 4% per annum. OMI’s obligation under the SBA Loan
      is collateralized by substantially all of OMI’s assets and payment thereunder is
      subject to the personal guarantee of Mr. Dean Thompson, President of OMI.





In
      September 2006, OMI consummated equipment financing in the form of a capital
      lease with a financing institution to acquire $102,000 in various digital media
      production and editing equipment. The capital lease is payable in monthly
      installments with the last payment due in July 2009 and bears an implied
      interest rate of 10%. OMI’s obligation under the capital lease is collateralized
      by the digital media production and editing equipment acquired by OMI. At
      October 31, 2007, the remaining balance due under the capital lease was
      $61,000.





For
      the
      nine months ended October 31, 2007, iDNA’s cash and cash equivalents decreased
      $257,000 due principally to the net effects of (i) proceeds from AFC
      distributions of $750,000, (ii) proceeds from the exercise of stock options
      of
      $14,000, offset by (iii) cash flows used in operations of $745,000, (iv) capital
      expenditures of $97,000, and (v) the repayment of debt of $179,000.


38


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





Prior
      to
      of its entry into the Loan Agreement (defined below), iDNA had no external
      source of financing and had operated on its existing cash balances, cash flows
      from operations and distributions from its investment in AFC. iDNA is currently
      pursuing (i) reductions in its operating expenses, (ii) investments in new
      marketing initiatives and (iii) new debt or equity financing as a means of
      supplementing iDNA’s resources available to pursue new acquisitions, joint
      ventures or other business development opportunities and to secure working
      capital.





On
      November 21, 2007, iDNA, via its wholly owned subsidiary, iDNA Cinema Holdings,
      Inc. (“Holdings”), consummated a Master Loan and Security Agreement (the “Loan
      Agreement”) with Silar Advisors, L.P. (“Silar”), as Lender and Administrative,
      Payment and Collateral Agent, pursuant to which Silar agreed to provide a term
      loan in an aggregate principal amount of $4,250,000 (the “Term Loan”) to
      Holdings (the “Term Loan Financing”). Interest is to accrue on the Term Loan at
      a per annum rate equal to the variable annual rate of interest designated from
      time to time by Citibank N.A. as its “prime rate,” plus 4%, or, if greater,
      12.25%, and is payable by Holdings on a quarterly basis. The Term Loan matures
      on November 20, 2009 unless extended for one year at the option of Holdings,
      upon written notice provided to Silar between fifteen (15) and forty-five (45)
      days prior to the Maturity Date, provided that no default is then ongoing and
      that Holdings is then in compliance with its financial covenants under the
      Loan
      Agreement.




iDNA
      has
      utilized the proceeds from the Term Loan Financing in the following manners:
      (i)
      approximately $1.0 million was applied for the repayment and retirement of
      iDNA’s existing indebtedness to Seasons Go Round Inc.; (ii) approximately
      $260,000 was used for prepayment of interest on the Term Loan; (iii)
      approximately $167,000 was paid to Silar or its designee in satisfaction of
      fees
      and expenses due in connection with the Term Loan Financing; (iv) $60,000 was
      paid to a consultant for its role in facilitating the Term Loan Financing;
      and
      (v) the remaining proceeds of approximately $2.7 million have been and will
      continue to be utilized for working capital purposes.




iDNA’s
      obligations under the Term Loan is secured by a pledge of all of Holdings’
assets, including all of the outstanding shares of National Cinemas, Inc.
      (“NCI”), which owns a 50% membership interest in AFC .
      The
      Term Loan is also guaranteed by (i) iDNA (with such guaranty being secured
      by a
      pledge of substantially all of iDNA’s assets, other than the shares of its
      operating subsidiaries) and (ii) NCI (with such guaranty being secured by a
      pledge of substantially all of NCI’s assets, other than its 50% membership
      interest in AFC).


39


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations - continued**





In
      connection with the Term Loan Financing, as required by the Loan Agreement,
      iDNA
      also issued to Silar a warrant (the “Warrant”) to purchase 1.5 million shares of
      iDNA’s Common Stock at an exercise price of $0.27 per share. The number of
      shares issuable upon exercise of the Warrant is subject to customary adjustment
      in the event of a stock dividend, stock split, reverse stock split or similar
      event and is furthermore subject to a weighted-average antidilution protection
      in the event that iDNA issues additional shares of Common Stock for
      consideration less than the existing exercise price under the Warrant.
      Additionally, pursuant to the Warrant, the holder thereof has been granted
      (subject to certain conditions, including the reimbursement of iDNA’s costs)
      three demand registration rights for the underlying shares of Common Stock,
      as
      well as unlimited piggyback registration rights for such shares of Common
      Stock.




As
      of October
      31 ,
      2007,
      iDNA had cash and cash equivalents of $291,000. iDNA believes that its current
      cash balances combined with cash distributions from its investment in AFC and
      cash flow from operations and the net proceeds derived from the Term Loan will
      be sufficient to pay operating expenses and existing liabilities, to fund
      existing debt repayments and to fund its activities through the next twelve
      months.





**Other**





*New
      Accounting Pronouncements*


In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS”) No. 157, *Fair
      Value Measurement* (“SFAS
      No. 157”). SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value in accordance with Generally Accepted Accounting Principles
      (“GAAP”), and expands disclosures about fair value measurements. The provisions
      of SFAS No. 157 are effective for fiscal years beginning after November 15,
      2007. iDNA does not anticipate the application of this pronouncement will have
      a
      material impact on iDNA’s reported consolidated financial position or results of
      operations.





In
      February 2007, the FASB issued Statement No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      No. 159”). SFAS No. 159 allows entities the option to measure eligible financial
      instruments at fair value as of specified dates. Such election, which may be
      applied on an instrument by instrument basis, is typically irrevocable once
      elected. SFAS No. 159 is effective for fiscal years beginning after November
      15,
      2007, and early application is allowed under certain circumstances. iDNA is
      currently evaluating the impact SFAS No. 159 will have on its consolidated
      financial position.





*Inflation*


Inflation
      has not had a material adverse impact on iDNA.





*Off-Balance
      Sheet Arrangements*


iDNA
      does
      not have in place any off-balance sheet arrangements (as defined in Item
      303(a)(4) of Regulation S-K).


40





**Forward
      Looking Statements**





Some
      of
      the information in this report contains forward looking statements within the
      meaning of the federal securities laws that relate to future events or our
      future financial performance and involve known and unknown risks, uncertainties
      and other factors that may cause us or our industry’s actual results, levels of
      activity, performance or achievements to be materially different from any future
      results, levels of activity, performance or achievements expressed or implied
      by
      the forward-looking statements. You should not rely on forward-looking
      statements in this report. Forward-looking statements typically are identified
      by use of terms such as “anticipate”, “believe”, “plan”, “expect”, “intend”,
“may”, “will”, “should”, “estimate”, “predict”, “potential”, “continue” and
      similar words, although some forward-looking statements are expressed
      differently. This report may contain forward-looking statements attributed
      to
      third parties relating to their estimates regarding the growth of our markets
      or
      other factors. All forward-looking statements address matters that involve
      risk
      and uncertainties, and there are many important risks, uncertainties and other
      factors that could cause our actual results as well as those of the markets
      we
      serve, levels of activity, performance, achievements and prospects to differ
      materially from the forward-looking statements contained in this report. You
      should also consider carefully the statements under other sections of this
      report that address additional factors that could cause our actual results
      to
      differ from those set forth in any forward-looking statements. We undertake
      no
      obligation to publicly update or review any forward-looking statements, whether
      as a result of new information, future developments or otherwise.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk.**





Like
      virtually all commercial enterprises, iDNA can be exposed to the risk (“market
      risk”) that the cash flows to be received or paid relating to certain financial
      instruments could change as a result of changes in interest rates, exchange
      rates, commodity prices, equity prices and other market changes.





iDNA
      does
      not engage in trading activities and does not utilize interest rate swaps or
      other derivative financial instruments or buy or sell foreign currency,
      commodity or stock indexed futures or options. Accordingly, iDNA is not exposed
      to market risk from these sources.





As
      of
      October 31, 2007, the interest rates under iDNA’s long term and convertible debt
      are fixed. As a result iDNA has limited market risk associated with market
      interest rates.


41


**Item
      4. Controls and Procedures.**




As
      of the
      end of the period covered by this Quarterly Report on Form 10-Q, the Chief
      Executive Officer and the Chief Financial Officer of iDNA (the “Certifying
      Officers”) have conducted evaluations of iDNA’s disclosure controls and
      procedures. As defined under Sections 13a-15(e) and 15d-15(e) of the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure
      controls and procedures” means controls and other procedures of an issuer that
      are designed to ensure that information required to be disclosed by the issuer
      in the reports that it files or submits under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      Commission’s rules and forms. Disclosure controls and procedures include,
      without limitation, controls and procedures designed to ensure that information
      required to be disclosed by an issuer in the reports that it files or submits
      under the Exchange Act is accumulated and communicated to the issuer’s
      management, including its principal executive and principal financial officers,
      or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure.  The Certifying Officers have
      reviewed iDNA’s disclosure controls and procedures and have concluded that those
      disclosure controls and procedures were effective as of the end of our most
      recent fiscal quarter. In compliance with Section 302 of the Sarbanes-Oxley
      Act
      of 2002, (18 U.S.C. 1350), each of the Certifying Officers has executed the
      requisite Officer’s Certification included as Exhibit 31 to this Quarterly
      Report on Form 10-Q.





The
      Certifying Officers have also conducted an evaluation of iDNA’s internal control
      over financial reporting and have concluded that there has been no change in
      our
      internal control over financial reporting during our most recent fiscal quarter
      covered by this Quarterly Report on Form 10-Q that has materially affected,
      or
      is reasonably likely to materially affect, our internal control over financial
      reporting.


42





**PART
      II. -**  **OTHER
      INFORMATION**





**Item
      1.**   **Legal
      Proceedings**





*Self-Insurance
      Reserves for Property Damage and Personal Injury Claims*


iDNA,
      under the names Agency Rent-A-Car, Inc. (“ARAC”), Altra Auto Rental and Automate
      Auto Rental, previously engaged in the rental of automobiles on a short-term
      basis, principally to the insurance replacement market. In Fiscal 1996, iDNA
      discontinued its automobile rental fleet business through the sale of certain
      assets and through certain leases to a national car rental company. All
      liabilities related to the discontinued rental business, principally
      self-insurance claims, were retained by ARAC.





iDNA’s
      wholly-owned subsidiary ARAC maintained and continues to maintain self-insurance
      for claims relating to bodily injury or property damage from accidents involving
      the vehicles rented to customers by its discontinued automobile rental
      operations occurring in Fiscal 1996 and prior. ARAC was, when required by either
      governing state law or the terms of its rental agreement, self-insured for
      the
      first $1.0 million per occurrence, and for losses in excess of $5.0 million
      per
      occurrence, for bodily injury and property damage resulting from accidents
      involving its rental vehicles. ARAC was also self-insured, up to certain
      retained limits, for bodily injury and property damage resulting from accidents
      involving ARAC vehicles operated by employees within the scope of their
      employment.





ARAC
      is
      subject to certain self-insurance claims and litigation expenses relating to
      its
      discontinued automobile rental operations. iDNA’s management estimates the
      required self-insurance liability based upon specific identification of the
      known matters subject to future claims, the nature of the claim and the
      estimated costs to be incurred. These estimates include, but are not limited
      to,
      ARAC’s historical loss experience and projected loss factors. The required
      self-insurance liability is subject to adjustment in the future based upon
      changes in the nature of the remaining claims or the ultimate cost. As a
      consequence of iDNA’s sale of its automobile rental operations in 1995, iDNA
      believes that all incurred claims have been reported to ARAC and that there
      are
      no longer any incurred but not yet reported claims to be received by ARAC.
      iDNA’s self-insurance liability at October 31, 2007 and January 31, 2007 was
      $235,000 and $235,000, respectively.





Because
      of the uncertainties related to several residual small claims and legal
      proceedings involving iDNA’s former rental operations and self-insurance claims,
      it is difficult to project with precision the ultimate effect the adjudication
      or settlement of these matters will have on iDNA. As additional information
      regarding iDNA’s potential liabilities becomes available, iDNA will revise the
      estimates as appropriate.


43





*Other
      Litigation*


In
      the
      normal course of its business, iDNA is periodically named as defendant in legal
      proceedings. It is the policy of iDNA to vigorously defend litigation and/or
      enter into settlements of claims where management deems appropriate. In the
      opinion of management, the amount of ultimate liability with respect to any
      current actions, if any, is unlikely to materially affect our financial
      position, results of operations or liquidity.





**Item
      1A.**   **Risk
      Factors.**




Not
      applicable





**Item
      2.**   **Unregistered
      Sales of Equity Securities and Use of Proceeds** **.**




Not
      applicable





**Item
      3.**   **Defaults
      Upon Senior Securities.**




Not
      applicable





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




Not
      applicable





**Item
      5.**   **Other
      Information.**




Not
      applicable





**Item
      6. Exhibits.**




**Exhibit**
              **Number**
            **Title
                of Exhibit**
            **Page**
              **Number**3.1
            Second
                Amended and Restated Certificate of Incorporation of the Company
                (incorporated by reference to Exhibit 99.1 to the Company’s Current Report
                on Form 8-K filed on November 4, 2005, SEC File No.
                1-11601).
            N/A3.2
            Second
                Amended and Restated By-Laws of the Company dated as of November
                4, 2005
                (incorporated by reference to Exhibit 99.2 to the Company’s Current Report
                on Form 8-K filed on November 4, 2005, SEC File No. 1-11601).
            N/A


44





**Exhibit**
              **Number**
            **Title
                of Exhibit**
            **Page**
              **Number**4.1
            Certificate
                of Designation Preferences and Rights of Series D Junior Participating
                Preferred Stock of the Company (incorporated by reference to Exhibit
                4.1
                to the Company’s Current Report on Form 8-K filed on October 9, 2001, SEC
                File No. 1-11601).
            N/A4.2
            Specimen
                Stock Certificate - of the Company’s Common Stock (incorporated by
                reference to Exhibit 4(c) to the Company’s Annual Report on Form 10-K for
                the fiscal year ended January 31, 1996, filed on April 25, 1996,
                SEC File
                No. 1-11601).
            N/A4.3
            Rights
                Agreement, dated as of September 26, 2001, between the Company and
                American Stock Transfer & Trust Company, which includes the form of
                Certificate of Designation, Preferences and Rights for the Series
                D Junior
                Participating Preferred Stock as Exhibit “A”, the form of Rights
                Certificate as Exhibit “B” and the Summary of Rights to Purchase Preferred
                Stock as Exhibit “C” (incorporated by reference to Exhibit 4.1 to the
                Company’s Current Report on Form 8-K, filed on October 9, 2001, SEC File
                No. 1-11601).
            N/A31.1
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                of the
                Securities Exchange Act of 1934
            4731.2
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)
                of the
                Securities Exchange Act of 1934
            4832.1
            Certification
                of Principal Executive Officer Pursuant to Rule 13a-14(b) of the
                Securities Exchange Act of 1934 and 18 U.S.C. (Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
            4932.2
            Certification
                of Principal Financial Officer Pursuant to Rule 13a-14(b) of the
                Securities Exchange Act of 1934 and 18 U.S.C. (Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
            50


45


SIGNATURES








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





iDNA,
                INC.Date:
                December 14, 2007
            By:
            /s/
                James J. McNamaraJames
                J. McNamaraChairman of the Board and Chief Executive Officer(principal
                executive officer)By:
            /s/
                Robert V. Cuddihy, Jr.Robert
                V. Cuddihy, Jr.Chief Financial Officer, Secretary and Treasurer(principal
                accounting and financial
                officer)


46