**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 July
      31, 2008





**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, 7thFloor, 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, a non-accelerated filer or a smaller reporting company
        (See
        definition of “large accelerated filer”, “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act). (Check one):
  Large accelerated filer o
              Accelerated filer o
              Non-accelerated filer o
              Smaller reporting company x
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act)   Yes
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 September 15,
                2008Common
                Stock, $0.05 par value
            
            13,085,864









**iDNA,
      Inc. and Subsidiaries**





**TABLE
      OF CONTENTS**





PAGEPART
                I.
            FINANCIAL
                INFORMATIONItem
                1.
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as ofJuly
                31, 2008 and January 31, 2008
            
            3Condensed
                Consolidated Statements of Operations for theThree
                Months and Six Months Ended July 31, 2008 and 2007
            
            4Condensed
                Consolidated Statement of Stockholders’ Equity andComprehensive
                Income (Loss) for the Six Months EndedJuly
                31, 2008
            
            5Condensed
                Consolidated Statements of Cash Flows for theSix
                Months Ended July 31, 2008 and 2007
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            7Item
                2.
            Management’s
                Discussion and Analysis ofFinancial
                Condition and Results of Operations
            
            22Item
                3.
            Quantitative
                and Qualitative Disclosures AboutMarket
                Risk
            
            44Item
                4.
            Controls
                and Procedures
            
            44PART
                II.
            OTHER
                INFORMATIONItem
                1.
            Legal
                Proceedings
            
            45Item
                1A.
            Risk
                Factors
            
            46Item 2.
            Unregistered
              Sales of
              Equity Securities and Use of Proceeds
            
            46Item 3.
            Defaults Upon
              Senior
              Securities
            
            46Item 4.
            Submission
              of Matters
              to a Vote of Security Holders
            
            46Item
                5.
            Other
                Information
            
            46Item
                6.
            Exhibits
            
            47Signatures
            
            
            48Certifications
            
            
            49






2





**PART
      I. FINANCIAL INFORMATION**


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


**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Balance Sheets**


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




July
                  31,
              
              January
                  31,2008
              
              2008(unaudited)**ASSETS**Cash
                  and cash equivalents
              
              $
              561
              
              $
              169Restricted
                  cash (Note 1)
              
              
              147
              
              
              147Investment
                  in trading securities (Note 1)
              
              
              225
              
              
              1,421Accounts
                  receivable, net of allowanceof
                  $72 and $75, respectively (Note 1)
              
              
              1,647
              
              
              1,453Income
                  taxes refundable
              
              
              19
              
              
              19Inventory
                  (Note 1)
              
              
              184
              
              
              165Prepaid
                  expenses
              
              
              382
              
              
              444Other
                  current assets
              
              
              73
              
              
              90Total
                  current assets
              
              
              3,238
              
              
              3,908Property
                  and equipment, net of accumulateddepreciation
                  of $3,720 and $3,325, respectively (Note 1)
              
              
              1,834
              
              
              2,102Investment
                  in AFC (Note 2)
              
              
              6,743
              
              
              7,129Other
                  assets
              
              
              149
              
              
              414$
              11,964
              
              $
              13,553**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)**LIABILITIESCurrent
                  maturities of long term obligations (Notes 3 and 4)
              
              $
              1,009
              
              $
              1,123Accounts
                  payable
              
              
              2,190
              
              
              1,220Deferred
                  revenue (Note 1)
              
              
              1,206
              
              
              1,552Self-insurance
                  claims (Note 5)
              
              
              142
              
              
              172Other
                  liabilities
              
              
              861
              
              
              1,324Total
                  current liabilities
              
              
              5,408
              
              
              5,391Long
                  term obligations (Notes 3 and 4)
              
              
              3,831
              
              
              13,373Convertible
                  promissory note (Note 4)
              
              
              -
              
              
              2,825Accrued
                  income taxes, long term
              
              
              622
              
              
              610Redeemable
                  common stock - issued 2,500,000 shares (Note 4)
              
              
              3,121
              
              
              -12,982
              
              
              22,199COMMITMENTS
                  AND CONTINGENCIES (Note 5)
              
              
              -
              
              
              -STOCKHOLDERS'
                  EQUITY (DEFICIT)Preferred
                  stock
              
              
              -
              
              
              -Common
                  stock - $.05 par value,authorized
                  50,000,000 shares, issued37,449,589
                  and 39,949,589 shares, respectively (Note 4)
              
              
              1,872
              
              
              1,997Additional
                  paid-in capital
              
              
              175,743
              
              
              175,537Retained
                  deficit
              
              
              (158,810
              )
              
              (164,076
              )Deferred
                  compensation
              
              
              (6
              )
              
              (18
              )Treasury
                  stock, at cost, 26,863,725 and 29,938,725shares,
                  respectively
              
              
              (19,817
              )
              
              (22,086
              )Total
                  stockholders' equity (deficit)
              
              
              (1,018
              )
              
              (8,646
              )$
              11,964
              
              $
              13,553






See
      accompanying notes to condensed consolidated financial statements.




3


**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Statements of Operations**


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


**(unaudited)**




Three
                  Months Ended
              
              Six
                  Months EndedJuly
                  31,
              
              July
                  31,2008
              
              2007
              
              2008
              
              2007Revenues
                  (Note 1)
              
              $
              4,146
              
              $
              2,824
              
              $
              7,649
              
              $
              6,424Cost
                  of revenues (Note 1)
              
              
              2,562
              
              
              2,045
              
              
              4,896
              
              
              4,566Gross
                  profit
              
              
              1,584
              
              
              779
              
              
              2,753
              
              
              1,858Selling,
                  general and administrative
              
              
              2,087
              
              
              2,349
              
              
              4,164
              
              
              4,683Loss
                  from operations
              
              
              (503
              )
              
              (1,570
              )
              
              (1,411
              )
              
              (2,825
              )Other
                  income (expense):Income
                  (loss) from AFC investment (Note 2)
              
              
              (22
              )
              
              65
              
              
              214
              
              
              336Interest
                  income
              
              
              2
              
              
              1
              
              
              3
              
              
              3Interest
                  expense (Note 3)
              
              
              (290
              )
              
              (58
              )
              
              (524
              )
              
              (113
              )Interest
                  expense abatement (Note 4)
              
              
              156
              
              
              -
              
              
              156
              
              
              -Gain
                  on restructuring of debt (Note 4)
              
              
              9,026
              
              
              -
              
              
              9,026
              
              
              -Income
                  (loss) from continuing operationsbefore
                  income taxes
              
              
              8,369
              
              
              (1,562
              )
              
              7,464
              
              
              (2,599
              )Benefit
                  (provision) for income taxes
              
              
              (6
              )
              
              2
              
              
              (12
              )
              
              (4
              )Income
                  (loss) from continuing operations
              
              
              8,363
              
              
              (1,560
              )
              
              7,452
              
              
              (2,603
              )Income
                  from discontinued operations, net of tax
              
              
              1
              
              
              3
              
              
              2
              
              
              8Net
                  income (loss)
              
              $
              8,364
              
              $
              (1,557
              )
              $
              7,454
              
              $
              (2,595
              )Basic
                  and diluted income (loss) per shareContinuing
                  operations
              
              $
              .79
              
              $
              (.15
              )
              $
              .72
              
              $
              (.26
              )Discontinued
                  operations
              
              
              -
              
              
              -
              
              
              -
              
              
              -Net
                  income (loss) per share
              
              $
              .79
              
              $
              (.15
              )
              $
              .72
              
              $
              (.26
              )Weighted
                  average numberof
                  shares outstandingBasic
                  and diluted
              
              
              10,586
              
              
              9,955
              
              
              10,320
              
              
              9,908




See
      accompanying notes to condensed consolidated financial statements.




4





iDNA,
      Inc. and Subsidiaries **Condensed
        Consolidated Statements of Stockholder’ Equity
        (Deficit)**
 and
        Comprehensive Income
        (Loss)
 Six
        Months Ended July 31,
        2008
 **(in
        thousands, except per share data)**
 **(unaudited)**


Preferred
                  Stock
              
              Common
                  Stock
              
              Additional
              
              
              
              
              
              Deferred
              
              
              
              ComprehensivePar
              
              
              
              Par
              
              Paid-In
              
              Retained
              
              Treasury
              
              Compensation
              
              
              
              IncomeShares
              
              Value
              
              Shares
              
              Value
              
              Capital
              
              Deficit
              
              Stock
              
              Expense
              
              Total
              
              (Loss)Balance
                  atJanuary
                  31, 2008
              
              
              -
              
              $
              -
              
              
              39,949,589
              
              $
              1,997
              
              $
              175,537
              
              $
              (164,076
              )
              $
              (22,086
              )
              $
              (18
              )
              $
              (8,646
              )Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,454
              
              
              
              
              
              
              
              
              7,454
              
              $
              7,454Share-based
                  compensation expense
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              81
              
              
              
              
              
              
              
              
              
              
              
              81Treasury
                  stock issued
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (344
              )
              
              425
              
              
              
              
              
              81Issuance
                  of common stock fromtreasury
                  for restructuring debt (Note 4)
              
              
              
              
              (2,500,000
              )
              
              (125
              )
              
              125
              
              
              (1,844
              )
              
              1,844
              
              
              
              
              
              -Deferred
                  compensationexpense
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              12
              
              
              12Comprehensive
                  income (loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              7,454Balance
                  atJuly
                  31, 2008
              
              
              -
              
              $
              -
              
              
              37,449,589
              
              $
              1,872
              
              $
              175,743
              
              $
              (158,810
              )
              $
              (19,817
              )
              $
              (6
              )
              $
              (1,018
              )


See
      accompanying notes to condensed consolidated financial statements.




5




**iDNA,
      Inc. and Subsidiaries**


**Condensed
      Consolidated Statements of Cash Flows**


**(in
      thousands)**


**(unaudited)**




Six
                  Months EndedJuly
                  31,2008
              
              2007Cash
                  flows from operating activitiesNet
                  income (loss)
              
              $
              7,454
              
              $
              (2,595
              )Adjustments
                  to reconcile net income (loss) to net cash provided by(used
                  in) operating activities:Gain
                  on restructuring of debt
              
              
              (9,026
              )
              
              -Depreciation
                  and amortization
              
              
              415
              
              
              826Non-cash
                  interest
              
              
              192
              
              
              -Income
                  from AFC investment
              
              
              (214
              )
              
              (336
              )Share-based
                  compensation expense
              
              
              162
              
              
              151Stock
                  issued as compensation for services rendered
              
              
              -
              
              
              79Amortization
                  of deferred compensation expense
              
              
              12
              
              
              11Changes
                  in operating assets and liabilities, net of acquisition:Accounts
                  receivable
              
              
              (194
              )
              
              11Accrued
                  income tax/refundable
              
              
              12
              
              
              -Accounts
                  payable
              
              
              970
              
              
              396Deferred
                  revenue
              
              
              (346
              )
              
              817Self
                  insurance claims
              
              
              (30
              )
              
              -Other
                  operating assets and liabilities, net
              
              
              (211
              )
              
              (165
              )Net
                  cash used in operating activities
              
              
              (804
              )
              
              (805
              )Cash
                  flows from investing activities:Proceeds
                  from AFC distributions
              
              
              600
              
              
              750Proceeds
                  from sale of marketable securities
              
              
              1,196
              
              
              -Purchase
                  of other property and equipment
              
              
              (147
              )
              
              (58
              )Net
                  cash provided by investing activities
              
              
              1,649
              
              
              692Cash
                  flows from financing activities:Proceeds
                  from exercise of stock options
              
              
              -
              
              
              14Payments
                  of loan origination fees
              
              
              (43
              )
              
              -Payments
                  on debt, notes payable and capital lease
              
              
              (410
              )
              
              (155
              )Net
                  cash used in financing activities
              
              
              (453
              )
              
              (141
              )Increase
                  (decrease) in cash and cash equivalents
              
              
              392
              
              
              (254
              )Cash
                  and cash equivalents at beginning of period
              
              
              169
              
              
              548Cash
                  and cash equivalents at end of period
              
              $
              561
              
              $
              294Supplemental
                  disclosures of cash flow information:Interest
                  paid
              
              $
              197
              
              $
              115Income
                  taxes paid
              
              $
              -
              
              $
              -


See
      accompanying notes to condensed consolidated financial statements




6




**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 6).





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, 2008. The results of operations for the three months and six months
      ended July 31, 2008 are not necessarily indicative of operating results that
      may
      be achieved over the course of the full year.




7





**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 the 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 2009” shall mean iDNA’s fiscal year ending January 31, 2009 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.





*Investments
      in Trading Securities*


iDNA’s
      investment in trading securities is comprised of an investment in a mutual
      fund
      which invests in highly liquid, AAA fixed income securities. iDNA’s investment
      in trading securities is carried at fair market value at July 31, 2008.
      Unrealized gains or losses on trading securities are credited or charged to
      operations. Interest and dividends earned on the investment are recorded as
      interest income.





*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
      $73,000 and $90,000, respectively, are reported as other current assets at
      July
      31, 2008 and January 31, 2008.





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 July 31, 2008 and 2007, electronic
      equipment sales were $347,000 and $508,000, respectively. For the six months
      ended July 31, 2008 and 2007, electronic equipment sales were $823,000 and
      $1.1
      million, respectively.




8





**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 $103,000 and $111,000, respectively, to research and development
      expense for the three months ended July 31, 2008 and 2007. iDNA charged $215,000
      and $208,000, respectively, to research and development expense for the six
      months ended July 31, 2008 and 2007.




*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 July
      31 ,
      2008
      and January 31, 2008.





*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.




9





**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 through January 31, 2008,
      are
      not subject to amortization but are subject to testing for impairment at least
      annually or whenever there is an impairment indicator (see below).





*Valuation
      of Long-Lived Assets*


iDNA reviews
      the carrying value of its long-lived assets (other than goodwill) whenever
      events or changes in circumstances indicate that its carrying amount may not
      be
      recoverable. When indicators of impairment exist, iDNA determines whether the
      estimated undiscounted sum of the future cash flows of 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.





At
      January 31, 2008, the goodwill for each of iDNA’s business segments (information
      services and strategic communications services) was tested for impairment.
      As a
      consequence of the testing, iDNA determined that the carrying value of both
      its
      information services and its strategic communications services business segments
      exceeded their fair value, which was estimated based upon the present value
      of
      each reporting units expected future cash flows. As a consequence, iDNA charged
      to operations an aggregate of $8.0 million for the estimated impairment of
      goodwill and other intangible assets relating to (i) its information services
      segment in the amount of $5.9 million, and (ii) strategic communication services
      segment in the amount of $2.1 million, respectively ,
      resulting in the reduction of the carrying value of all goodwill and other
      intangible assets to zero. Prior to the impairment charge during the fourth
      quarter of Fiscal 2008, iDNA charged to operations $202,000 and $405,000,
      respectively, for the amortization of these intangibles for the three months
      and
      six months ended July 31, 2007.




10




**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 the Financial Accounting Standards
      Board (“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 more 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, upon its adoption as of February
      1,
      2007, iDNA recorded an adjustment to retained deficit of $329,000, inclusive
      of
      interest, to reflect potential liabilities for iDNA’s uncertain tax positions,
      inclusive of interest. iDNA recognizes interest and penalties associated with
      uncertain tax positions as a component of tax expense (benefit). For the three
      months and six months ended July 31, 2008, iDNA charged to operations $6,000
      and
      $12,000, respectively, for income taxes.





As
      of
      January 31, 2008 iDNA has federal net operating loss carryforwards of $91.5
      million of which approximately $24.5 million is estimated to expire due to
      the
      limitations described below. As a consequence, iDNA’s remaining federal net
      operating loss carryforwards of $67.0 million may be used to reduce future
      taxable income. Largely
      as a consequence of these operating loss carryforwards, iDNA reported a net
      deferred tax asset of $29.0 million and an offsetting valuation allowance of
      $29.0 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 $24.5 million of these pre-change losses may expire
      unused.




11


**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 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 $40,000 and $74,000,
      respectively, for share-based compensation for the three months ended July
      31,
      2008 and 2007. iDNA charged to operations $162,000 and $151,000, respectively,
      for share-based compensation for the six months ended July 31, 2008 and
      2007.





*Earnings
      Per Share*


Basic
      earnings (loss) per share is computed by dividing net income (loss) by the
      weighted-average number of shares of Common Stock, exclusive of Common Stock
      subject to redemption (see Note 4), outstanding for the period. Dilutive
      earnings per share for all periods presented is the same as basic earnings
      per
      share due to (i) the inclusion of common stock ,
      in the
      form of stock options and warrants (“Common Stock Equivalents”), would have an
      anti-dilutive effect on income (loss) per share for the three months and six
      months ended July 31, 2008 and 2007 or (ii) there were no Common Stock
      Equivalents for the respective period. For the three months ended July 31,
      2008
      and 2007, there were 0 and 12,736 Common Stock Equivalents, respectively,
      excluded from the earnings per share computation due to their dilutive effect.
      For the six months ended July 31, 2008 and 2007, there were 0 and 100,549 Common
      Stock Equivalents, respectively, excluded from the earnings per share
      computation due to their dilutive effect.





*Non-cash
      Financing Activities*


In
      July
      2008, iDNA issued 2.5 million shares of Common Stock in exchange for the
      repayment of $375,000 of aggregate principal amount of the Amended Promissory
      Notes (defined below, see Note 4).




12


**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 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. The FASB agreed to a one-year deferral of the effective date for
      non-financial assets and liabilities that are recognized or disclosed at fair
      value on a non-recurring basis. The application of this pronouncement did not
      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. The adoption of this pronouncement did not have a material impact on
      iDNA’s reported consolidated financial position or results of
      operations.





In
      December 2007, the FASB issued SFAS No. 141-R, *Business
      Combinations* .
      SFAS
      No. 141-R applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. The objective of SFAS No. 141-R
      is to improve the relevance, representational faithfulness and comparability
      of
      the information that a reporting entity provides in its financial reports about
      a business combination. SFAS No, 141-R changes the requirements for an
      acquirer’s recognition and measurement of the assets acquired and the
      liabilities assumed in a business combination. 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
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interest in Consolidated Financial Statements - an amendment to ARB
      No.51* .
      SFAS
      No. 160 requires that (i) noncontrolling (minority) interests be reported as
      a
      component of shareholders’ equity, (ii) net income attributable to the parent
      and to the noncontrolling interest be separately identified in the consolidated
      statement of operations, (iii) changes in a parent’s ownership interest while
      the parent retains its controlling interest be accounted for as equity
      transactions, (iv) any retained noncontrolling equity investment upon the
      deconsolidation of a subsidiary be initially measured at fair value, and (v)
      sufficient disclosures are provided that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS No.160 is effective for annual periods beginning after December
      15,
      2008. 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.


13




**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


(unaudited)





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





In
      March
      2008, the FASB issued SFAS No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities”* (“SFAS
      161”). SFAS 161 enhances disclosure requirements for derivative instruments in
      order to provide users of financial statements with an enhanced understanding
      of
      (i) how and why an entity uses derivative instruments, (ii) how derivative
      instruments and related hedged items are accounted for under SFAS No. 133, *“Accounting
      for Derivative Instruments and Hedging Activities”* and its
      related interpretations, and (iii) how derivative instruments and related hedged
      items affect an entity’s financial position, financial performance and cash
      flows. SFAS 161 is to be applied prospectively for the first annual reporting
      period beginning on or after November 15, 2008. 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.





*Reclassifications*


Certain
      Fiscal 2008 amounts have been reclassified to conform with Fiscal 2009
      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 s,
      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. 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 July 31, 2008 and 2007, iDNA recorded
      a
      loss of $22,000 and income of $65,000, respectively, representing its share
      of
      AFC’s net income (loss). For the six months ended July 31, 2008 and 2007, iDNA
      recorded income of $214,000 and $336,000, 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 six months ended June
      30,
      2008 and 2007, respectively, is as follows (in thousands):




Three
                  Months Ended
              
              Six
                  Months EndedJune
                  30,
              
              June
                  30,2008
              
              2007
              
              2008
              
              2007Revenues
              
              $
              1,043
              
              $
              1,288
              
              $
              2,890
              
              $
              3,288Operating
                  costs
              
              
              859
              
              
              941
              
              
              2,015
              
              
              2,157Depreciation
                  and amortization
              
              
              206
              
              
              195
              
              
              403
              
              
              390General
                  and administrative expenses
              
              
              22
              
              
              21
              
              
              44
              
              
              681,087
              
              
              1,157
              
              
              2,462
              
              
              2,615Net
                  income (loss)
              
              $
              (44
              )
              $
              131
              
              $
              428
              
              $
              673iDNA's
                  proportionate share of net income (loss)
              
              $
              (22
              )
              $
              65
              
              $
              214
              
              $
              336


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





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 provided a term loan
      in an
      aggregate principal amount of $4.25 million (the “Term Loan”) to Holdings (the
“Term Loan Financing”). Interest accrues 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. At July 31, 2008, the “prime rate” was
      5.0%. 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. At July 31, 2008, Holdings and
      iDNA were in compliance with the financial covenants under the Loan Agreement.
      At July 31, 2008, the principal balance of the Term Loan was $3.9 million.





Holdings’
      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).




15




**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


(unaudited)





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





In
      connection with the consummation of the Term Loan, as required by the Loan
      Agreement, iDNA issued warrants to Silar and a consultant (the “Warrants”) to
      purchase 1.5 million and 60,000 shares, respectively, of iDNA’s Common Stock at
      an exercise price of $0.27 per share. The number of shares issuable upon
      exercise of the Warrants 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 Warrants. Additionally, pursuant to the
      Warrants, 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. The fair value of the
      Warrants at the date of grant was $339,000. At July 31, 2008, the unamortized
      fair value of the Warrants issued in the amount of $231,000 was recorded as
      a
      reduction of the principal on the Term Loan. iDNA charges to interest expense
      the fair value of the Warrants over the expected three year term of the Term
      Loan. For the three months and six months ended July 31, 2008, iDNA charged
      to
      interest expense $46,000 and $74,000, respectively, for the fair value of the
      Warrants.




On
      January 31, 2008, ARS consummated an auto loan with a financing institution
      for
      the purchase of a delivery van in the principal amount of $24,000. The auto
      loan
      is repayable in monthly installments of $755 with the last payment due February
      2011. The auto loan bears interest at the rate of 9.0% and is collateralized
      by
      the van purchased with the proceeds from the loan. At July 31, 2008, the
      principal balance of the auto loan was $21,000.





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 July 31, 2008, iDNA had outstanding principal obligations
      under the terms of the OTI Promissory Notes of $855,000 and accrued interest
      obligations of $12,000.





As
      of
      January 31, 2008, OTI did not meet certain minimum financial performance
      criterion and, as a consequence, (i) iDNA retained an option to reduce the
      purchase price in an amount estimated between $206,000 and $412,000 and (ii)
      for
      the three months and six months ended July 31, 2008 no interest was incurred
      under the OTI Promissory Notes. iDNA has not exercised its option to reduce
      the
      purchase price for its acquisition of OTI as of September 12, 2008 and no
      adjustment to the OTI Promissory Notes was recorded at July 31, 2008.
      Prospectively, interest may accrue pursuant to the terms of the OTI Promissory
      Notes once the minimum operating cash flow thresholds are achieved.




16




**iDNA,
        Inc. and Subsidiaries**
 **Notes
        to Condensed Consolidated Financial Statements**
 (unaudited)




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




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 July 31, 2008, the remaining
      balance of the SBA Loan of $286,000 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 are
      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 bears an implied interest
      rate of 10% and is payable in monthly installments with the last payment due
      in
      July 2009. At July 31, 2008, the remaining balance due under the capital lease
      was $35,000. The accumulated depreciation for the underlying equipment pursuant
      to the capital lease was $65,000 and $48,000, respectively, at July 31, 2008
      and
      January 31, 2008.





The
      components of long term obligations at July 31, 2008 are as follows (in
      thousands):




AmountsAuto
                  loan
              
              $
              21Capital
                  leases
              
              
              35SBA
                  loan
              
              
              286Term
                  Loan
              
              
              3,643OTI
                  promissory notes
              
              
              8554,840Less
                  current maturities
              
              
              (1,009
              )Long-term
                  obligations andconvertible
                  debt
              
              $
              3,831




iDNA’s
      current maturities and long term obligations at July 31, 2008 are as follows
      (in
      thousands):




Amounts2009
              
              $
              1,0122010
              
              
              1,3862011
              
              
              2,4802012
              
              
              322013
              
              
              32Thereafter
              
              
              1325,074Less
                  - unamortized debt discount
              
              
              (231
              )Less
                  - capital lease interest
              
              
              (3
              )$
              4,840
  17
 
  **iDNA,
            Inc. and Subsidiaries**
 **Notes
            to Condensed Consolidated Financial Statements**
 (unaudited)





**Note
      4 – Gain on Restructuring of Debt and Issuance of Shares of Common Stock
      Subject to Redemption**




Effective
      as of July 3, 2008, iDNA entered into a Reduction of Purchase Price Agreement
      (the “Reduction Agreement”) with Steven Campus, president of the Campus Group
      (defined below), the Campus Family 2000 Trust ( the
      “Family Trust” ) and
      the
      Trust Established Under the Will of Nancy Campus (the “Shelter Trust” and,
      collectively with the Family Trust, the “Trusts” and each a “Trust”). (The
      Trusts and Steven Campus are herein referred to collectively as the
“Stockholders” and each as a “Stockholder”).




Pursuant
      to and as provided in that certain Stock Purchase Agreement dated July 31,
      2003
      between iDNA and the Stockholders, iDNA acquired from the Stockholders all
      of
      the issued and outstanding shares of capital stock of each of (i) Campus
      Group Companies, Inc. (“CGCI”),
      (ii) Multi - Video  Services , Inc. (“ Multi-Video ”) ,
      (iii)
      Interactive Conferencing Network, Inc. (“ Interactive ”) and
      (iv)
      Audience Response Systems, Inc. (“ARSI”  and,
      collectively with CGCI, Multi-Video, Interactive and ARSI, the “Campus
      Group” ). In
      consideration for the shares of the Campus Group so acquired, iDNA (i) made
      a
      cash payment to the Stockholders and (ii) issued to the Stockholders certain
      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 “Promissory Notes”) (the cash amount and Promissory Notes
      collectively, the “Purchase Price”). At July 2, 2008, iDNA had outstanding
      principal obligations under the terms of the Promissory Notes of $12.1 million
      and accrued interest of $156,000.




Pursuant
      to the Reduction Agreement, iDNA and the Stockholders agreed, among other
      matters, that the Purchase Price was reduced to a remaining balance of three
      hundred seventy-five thousand dollars ($375,000) (the “Purchase Price Balance”).
      The parties further agreed that, inasmuch as the Promissory Notes were intended
      to represent iDNA’s obligation to pay the unpaid portion of the Purchase Price,
      the aggregate outstanding amount of the Promissory Notes was reduced from an
      aggregate of $12.1 million to an amount equal to the Purchase Price Balance.
      The
      Promissory Notes were modified and amended so that the outstanding principal
      amounts due thereunder were reduced to an aggregate of $375,000. (The Promissory
      Notes, as modified and amended pursuant to the Reduction Agreement, are
      hereinafter referred to as the “Amended Promissory Notes.”)




Furthermore,
      pursuant to the Reduction Agreement, in July 2008 the Stockholders surrendered
      and delivered to iDNA each and all of the Amended Promissory Notes, marked
      cancelled, and iDNA, in full payment, discharge and satisfaction of the Amended
      Promissory Notes, issued to the Stockholders an aggregate of two million five
      hundred thousand (2,500,000) shares of iDNA’s common stock, $0.05 par value per
      share (the “Issued Shares”), such Issued Shares to be allocated proportionally
      among the Stockholders. iDNA and the Stockholders agreed that upon the issuance
      of the Issued Shares to the Stockholders, the Purchase Price Balance shall
      be
      paid, discharged and satisfied in full, and no additional amount (whether
      pursuant to the Promissory Notes or otherwise) shall be payable by iDNA on
      account of or with respect to the Purchase Price.




18




**iDNA,
        Inc. and Subsidiaries**
 **Notes
        to Condensed Consolidated Financial Statements**
 (unaudited)


**Note
      4 – Gain on Restructuring of Debt and Issuance of Shares of Common Stock
      Subject to Redemption - continued**




In
      addition, subject to the terms and conditions set forth in the Reduction
      Agreement, iDNA (i) assumed certain obligations to redeem or repurchase from
      the
      Stockholders their Issued Shares and (ii) granted to the Stockholders certain
      rights to sell (or “put”) the Issued Shares to iDNA. iDNA is required to
      semi-annually offer to redeem certain Issued Shares from the Stockholders at
      the
      rate of $2.00 per share for a maximum total redemption payment equal
      to
      the ***excess*** (if any)
      of certain minimum operating cash flow thresholds of the Campus Group for the
      period from August 1, 2008 through July 31, 2013. At any time, the Stockholders
      are free to (i) accept or decline iDNA’s offer to redeem or repurchase the
      Issued Shares and (ii) sell,
      redeem, transfer or otherwise dispose of the Issued Shares to third parties.
      (All shares redeemed by iDNA, or sold, transferred or otherwise disposed of
      to
      third parties are hereinafter referred to as “Excluded Shares”.)




Pursuant
      to the Reduction Agreement, iDNA also granted to the Stockholders the right,
      subject to certain criteria, to sell (or “put”) to iDNA, and require iDNA to
      purchase from the Stockholders, any or all of the Issued Shares (exclusive of all Excluded Shares) at the rate of $2.00 per share during
      the period October 31, 2013 through November 15, 2013 (the “Put
      Right”) .
      However, t he
      Put
      Right shall not be exercisable if one or more of the Stockholders shall have
      received (or be deemed to have received) aggregate consideration of at least
      five million dollars ($5,000,000) on account of or with respect to the sale,
      transfer, redemption or other disposition of some or all of the Issued Shares.
      At July 31, 2008, iDNA recorded a $3.1 million obligation representing the
      fair
      value of the future redemption obligation for the Issued Shares (exclusive
      of all Excluded Shares) as follows (in thousands):


Shares
              
              AmountIssuance
                  of redeemable Common Stockfor
                  restructuring of debt
              
              
              2,500,000
              
              $
              3,121




In
      order
      to secure its obligations to the Stockholders under the Reduction Agreement,
      iDNA has (i) pledged to the Stockholders all of iDNA’s right, title and interest
      in and to all of the capital stock of the Campus Group held by iDNA and (ii)
      caused the Campus Group to guaranty such obligations, with such guaranty to
      be
      secured by the assets of the Campus Group.




In
      addition, pursuant to the Reduction Agreement, Mr. Campus, the Campus Group
      and
      iDNA are entering into an employment agreement (the “Employment Agreement”)
      under which Mr. Campus shall serve as President of the Campus Group until the
      earliest to occur of (i) the redemption of all Issued Shares (exclusive of
      any
      Excluded Shares) or (ii) the lapse of the Put Right. Mr. Campus is entitled
      to
      base compensation of $100,000 per year and standard employment benefits pursuant
      to the Campus Group’s employment benefits program offered to all personnel from
      time-to-time.




19




**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


(unaudited)





**Note
      4 – Gain on Restructuring of Debt and Issuance of Shares of Common Stock
      Subject to Redemption - continued**





As
      a
      consequence of the various terms of the Reduction Agreement, iDNA (i) realized
      a
      gain of $9.0 million for the restructuring of debt, (ii) recorded a $3.1 million
      obligation for the fair value of the redemption obligation for the Issued Shares
      and (iii) realized the abatement of previously accrued interest of $156,000 for
      the three months and six months ended July 31, 2008. Prospectively, the fair
      value of the redemption obligation is subject to adjustment each reporting
      period as a consequence of changes, if any, to (i) the number of Issued Shares (exclusive
      of all Excluded Shares) held by the Stockholders at the end of a period, (ii)
      actual redemption accepted or declined, by the Stockholders and/or (iii) sales
      of Issued Shares to third parties.




**Note
      5 – 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 July 31, 2008 and January 31, 2008 was
      $142,000 and $172,000, respectively.





*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.




20




**iDNA,
      Inc. and Subsidiaries**


**Notes
      to Condensed Consolidated Financial Statements**


(unaudited)





**Note
      6 –
      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 ended and six months ended July 31, 2008
      and 2007. 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****July
                  31, 2008**Revenues
              
              $
              2,189
              
              $
              1,984
              
              $
              -
              
              $
              -
              
              $
              (27
              )
              $
              4,146Operating
                  income (loss)
              
              
              (91
              )
              
              (72
              )
              
              (22
              )
              
              8,554
              
              
              -
              
              
              8,369Depreciation
                  andamortization
                  expense
              
              
              138
              
              
              60
              
              
              -
              
              
              11
              
              
              -
              
              
              209Capital
                  expenditures
              
              
              53
              
              
              2
              
              
              -
              
              
              7
              
              
              -
              
              
              62**Three
                  Months Ended****July
                  31, 2007**Revenues
              
              $
              2,337
              
              $
              514
              
              $
              -
              
              $
              -
              
              $
              (27
              )
              $
              2,824Operating
                  income (loss)
              
              
              (290
              )
              
              (1,035
              )
              
              65
              
              
              (302
              )
              
              -
              
              
              (1,562
              )Depreciation
                  andamortization
                  expense
              
              
              217
              
              
              177
              
              
              -
              
              
              12
              
              
              -
              
              
              406Capital
                  expenditures
              
              
              36
              
              
              -
              
              
              -
              
              
              7
              
              
              -
              
              
              43**Six
                  Months Ended****July
                  31, 2008**Revenues
              
              $
              4,287
              
              $
              3,424
              
              $
              -
              
              $
              -
              
              $
              (62
              )
              $
              7,649Operating
                  income (loss)
              
              
              (581
              )
              
              (310
              )
              
              214
              
              
              8,141
              
              
              -
              
              
              7,464Depreciation
                  andamortization
                  expense
              
              
              271
              
              
              123
              
              
              -
              
              
              21
              
              
              -
              
              
              415Capital
                  expenditures
              
              
              121
              
              
              6
              
              
              -
              
              
              20
              
              
              -
              
              
              147**Six
                  Months Ended****July
                  31, 2007**Revenues
              
              $
              4,642
              
              $
              1,840
              
              $
              -
              
              $
              -
              
              $
              (58
              )
              $
              6,424Operating
                  income (loss)
              
              
              (516
              )
              
              (1,846
              )
              
              336
              
              
              (573
              )
              
              -
              
              
              (2,599
              )Depreciation
                  andamortization
                  expense
              
              
              437
              
              
              362
              
              
              -
              
              
              27
              
              
              -
              
              
              826Capital
                  expenditures
              
              
              39
              
              
              -
              
              
              -
              
              
              19
              
              
              -
              
              
              58


21




**Item
      2.**


**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. 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.





**Recent
      Developments**





Effective
      as of July 3, 2008, iDNA entered into a Reduction of Purchase Price Agreement
      (the “Reduction Agreement”) with Steven Campus, president of the Campus Group
      (defined below), the Campus Family 2000 Trust ( the
      “Family Trust” ) and
      the
      Trust Established Under the Will of Nancy Campus (the “Shelter Trust” and,
      collectively with the Family Trust, the “Trusts” and each a “Trust”). (The
      Trusts and Steven Campus are herein referred to collectively as the
“Stockholders” and each as a “Stockholder”).




22


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





Pursuant
      to and as provided in that certain Stock Purchase Agreement dated July 31,
      2003
      between iDNA and the Stockholders, iDNA acquired from the Stockholders all
      of
      the issued and outstanding shares of capital stock of each of (i) Campus
      Group Companies, Inc. (“CGCI”),
      (ii) Multi - Video  Services , Inc. (“ Multi-Video ”) ,
      (iii)
      Interactive Conferencing Network, Inc. (“ Interactive ”) and
      (iv)
      Audience Response Systems, Inc. (“ARSI”  and,
      collectively with CGCI, Multi-Video, Interactive and ARSI, the “Campus
      Group” ). In
      consideration for the shares of the Campus Group so acquired, iDNA (i) made
      a
      cash payment to the Stockholders and (ii) issued to the Stockholders certain
      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 “Promissory Notes”) (the cash amount and Promissory Notes
      collectively, the “Purchase Price”). At July 2, 2008, iDNA had outstanding
      principal obligations under the terms of the Promissory Notes of $12.1 million
      and accrued interest of $156,000.




Pursuant
      to the Reduction Agreement, iDNA and the Stockholders agreed, among other
      matters, that the Purchase Price was reduced to a remaining balance of three
      hundred seventy-five thousand dollars ($375,000) (the “Purchase Price Balance”).
      The parties further agreed that, inasmuch as the Promissory Notes were intended
      to represent iDNA’s obligation to pay the unpaid portion of the Purchase Price,
      the aggregate outstanding amount of the Promissory Notes was reduced from an
      aggregate of $12.1 million to an amount equal to the Purchase Price Balance.
      The
      Promissory Notes were modified and amended so that the outstanding principal
      amounts due thereunder were reduced to an aggregate of $375,000. (The Promissory
      Notes, as modified and amended pursuant to the Reduction Agreement, are
      hereinafter referred to as the “Amended Promissory Notes.”)




Furthermore,
      pursuant to the Reduction Agreement, in July 2008 the Stockholders surrendered
      and delivered to iDNA each and all of the Amended Promissory Notes, marked
      cancelled, and iDNA, in full payment, discharge and satisfaction of the Amended
      Promissory Notes, issued to the Stockholders an aggregate of two million five
      hundred thousand (2,500,000) shares of iDNA’s common stock, $0.05 par value per
      share (the “Issued Shares”), such Issued Shares to be allocated proportionally
      among the Stockholders. iDNA and the Stockholders agreed that upon the issuance
      of the Issued Shares to the Stockholders, the Purchase Price Balance shall
      be
      paid, discharged and satisfied in full, and no additional amount (whether
      pursuant to the Promissory Notes or otherwise) shall be payable by iDNA on
      account of or with respect to the Purchase Price.




23


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





In
      addition, subject to the terms and conditions set forth in the Reduction
      Agreement, iDNA (i) assumed certain obligations to redeem or repurchase from
      the
      Stockholders their Issued Shares and (ii) granted to the Stockholders certain
      rights to sell (or “put”) the Issued Shares to iDNA. iDNA is required to
      semi-annually offer to redeem certain Issued Shares from the Stockholders at
      the
      rate of $2.00 per share for a maximum total redemption payment equal
      to
      the ***excess*** (if any)
      of certain minimum operating cash flow thresholds of the Campus Group for the
      period from August 1, 2008 through July 31, 2013. At any time, the Stockholders
      are free to (i) accept or decline iDNA’s offer to redeem or repurchase the
      Issued Shares and (ii) sell,
      redeem, transfer or otherwise dispose of the Issued Shares to third parties.
      (All shares redeemed by iDNA, or sold, transferred or otherwise disposed of
      to
      third parties are hereinafter referred to as “Excluded Shares”.)




Pursuant
      to the Reduction Agreement, iDNA also granted to the Stockholders the right,
      subject to certain criteria, to sell (or “put”) to iDNA, and require iDNA to
      purchase from the Stockholders, any or all of the Issued Shares (exclusive of all Excluded Shares) at the rate of $2.00 per share during
      the period October 31, 2013 through November 15, 2013 (the “Put
      Right”) .
      However, t he
      Put
      Right shall not be exercisable if one or more of the Stockholders shall have
      received (or be deemed to have received) aggregate consideration of at least
      five million dollars ($5,000,000) on account of or with respect to the sale,
      transfer, redemption or other disposition of some or all of the Issued Shares.
      At July 31, 2008, iDNA recorded a $3.1 million obligation representing the
      fair
      value of the future redemption obligation for the Issued Shares (exclusive
      of
      all Excluded Shares).




In
      order
      to secure its obligations to the Stockholders under the Reduction Agreement,
      iDNA has (i) pledged to the Stockholders all of iDNA’s right, title and interest
      in and to all of the capital stock of the Campus Group held by iDNA and (ii)
      caused the Campus Group to guaranty such obligations, with such guaranty to
      be
      secured by the assets of the Campus Group.




In
      addition, pursuant to the Reduction Agreement, Mr. Campus, the Campus Group
      and
      iDNA are entering into an employment agreement (the “Employment Agreement”)
      under which Mr. Campus shall serve as President of the Campus Group until the
      earliest to occur of (i) the redemption of all Issued Shares (exclusive of
      any
      Excluded Shares) or (ii) the lapse of the Put Right. Mr. Campus is entitled
      to
      base compensation of $100,000 per year and standard employment benefits pursuant
      to the Campus Group’s employment benefits program offered to all personnel from
      time-to-time.




As
      a
      consequence of the various terms of the Reduction Agreement, iDNA (i) realized
      a
      gain of $9.0 million for the restructuring of debt, (ii) recorded a $3.1 million
      obligation for the fair value of the redemption obligation for the Issued Shares
      and (iii) realized the abatement of interest of $156,000 for the three months
      and six months ended July 31, 2008. Prospectively, the fair value of the
      redemption obligation is subject to adjustment each reporting period as a
      consequence of changes, if any, to (i) the number of Issued Shares (exclusive
      of all Excluded Shares) held by the Stockholders at the end of a period, (ii)
      actual redemption accepted or declined, by the Stockholders and/or (iii) sales
      of Issued Shares to third parties.




24




**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





**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:





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
      $73,000 and $90,000, respectively, are reported as other current assets at
      July
      31, 2008 and January 31, 2008.





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 July 31, 2008 and 2007, electronic
      equipment sales were $347,000 and $508,000, respectively. For the six months
      ended July 31, 2008 and 2007, electronic equipment sales were $823,000 and
      $1.1
      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.




25




**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





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.





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 its carrying amount
      may not be recoverable. When indicators of impairment exist, iDNA determines
      whether the estimated undiscounted sum of the future cash flows of 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.





At
      January 31, 2008, the goodwill for each of iDNA’s business segments (information
      services and strategic communications services) was tested for impairment.
      As a
      consequence of the testing, iDNA determined that the carrying value of both
      its
      information services and its strategic communications services business segments
      exceeded their fair value, which was estimated based upon the present value
      of
      each reporting units expected future cash flows. As a consequence, iDNA charged
      to operations an aggregate of $8.0 million for the estimated impairment of
      goodwill and other intangible assets relating to (i) its information services
      segment in the amount of $5.9 million, and (ii) strategic communication services
      segment in the amount of $2.1 million, respectively, resulting in the carrying
      value of all goodwill and other intangible assets being reduced to zero. Prior
      to the impairment charge during the fourth quarter of Fiscal 2008, iDNA charged
      to operations $203,000 and $405,000 for the amortization of these intangibles
      for the three months and six months ended July 31, 2007.




26




**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 July 31, 2008 and January 31, 2008 was
      $142,000 and $172,000, 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.




27


**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 $40,000 and $74,000,
      respectively, for share-based compensation for the three months ended July
      31,
      2008 and 2007. iDNA charged to operations $162,000 and $151,000, respectively,
      for share-based compensation for the six months ended July 31, 2008 and
      2007.





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.




28




**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 July 31, 2008**


**as
      Compared to the Three Months Ended July 31, 2007**





The
      following table sets forth for the three months ended July 31, 2008 and 2007
      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
                  EliminationThree
                  Months Ended
              
              Three
                  Months Ended
              
              Three
                  Months EndedJuly
                  31,
              
              July
                  31,
              
              July
                  31,2008
              
              2007
              
              2008
              
              2007
              
              2008
              
              2007Revenues
              
              $
              2,189
              
              $
              2,337
              
              $
              1,984
              
              $
              514
              
              $
              (27
              )
              $
              (27
              )Cost
                  of revenues
              
              
              1,251
              
              
              1,438
              
              
              1,338
              
              
              634
              
              
              (27
              )
              
              (27
              )Selling,
                  general andadministrative
                  expenses
              
              
              1,029
              
              
              1,182
              
              
              718
              
              
              915
              
              
              -
              
              
              -Operating
                  income (loss)
              
              
              (91
              )
              
              (290
              )
              
              (72
              )
              
              (1,035
              )
              
              -
              
              
              -Depreciation
                  andamortization
                  expense
              
              
              138
              
              
              217
              
              
              60
              
              
              177
              
              
              -
              
              
              -
  UndistributedEntertainment
              
              Corporate
                  Expenses
              
              ConsolidatedThree
                  Months Ended
              
              Three
                  Months Ended
              
              Three
                  Months EndedJuly
                  31,
              
              July
                  31,
              
              July
                  31,2008
              
              2007
              
              2008
              
              2007
              
              2008
              
              2007Revenues
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              4,146
              
              $
              2,824Cost
                  of revenues
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,562
              
              
              2,045Selling,
                  general andadministrative
                  expenses
              
              
              -
              
              
              -
              
              
              340
              
              
              252
              
              
              2,087
              
              
              2,349Operating
                  income (loss)
              
              
              (22
              )
              
              65
              
              
              8,554
              
              
              (302
              )
              
              8,369
              
              
              (1,562
              )Depreciation
                  andamortization
                  expense
              
              
              -
              
              
              -
              
              
              11
              
              
              12
              
              
              209
              
              
              406


Revenues: Revenues
      increased $1.3 million to $4.1 million for the three months ended July
      31 ,
      2008 as
      compared to $2.8 million for the three months ended July 31, 2007.





Revenues
      attributed to the information services segment decreased $148,000 to $2.2
      million for the three months ended July 31, 2008 as compared to $2.3 million
      for
      the three months ended July 31, 2007. The decrease in revenues was principally
      due to a decline in electronic equipment sales of $161,000 during the three
      months ended July 31, 2008 as compared to the three months ended July 31, 2007.




29




**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 $1.5
      million to $2.0 million for the three months ended July 31, 2008 as compared
      to
      $514,000 for the three months ended July 31, 2007. The increase in revenues
      was
      principally due to an increase in the scope and size of projects completed
      during the three months ended July 31, 2008 as compared to the three months
      ended July 31, 2007.





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.





Cost
      of Service Revenues :
      Cost of
      revenues for the three months ended July 31, 2008 and 2007 was $2.6 million
      and
      $2.0 million, respectively.





Cost
      of
      revenues attributed to the information services segment was $1.3 million for
      the
      three months ended July 31, 2008 as compared to $1.4 million for the three
      months July 31, 2007.





The
      gross
      profit realized by the information services segment for the three months ended
      July 31, 2008 and 2007 was $938,000 and $899,000, respectively. The gross profit
      increase of $39,000 for the three months ended July 31, 2008 as compared to
      the
      three months ended July 31, 2007 is due principally to the net effect of (i)
      an
      increase in project margins for the period, (ii) a decrease of $18,000 in
      project overhead costs offset by (iii) a decrease in revenues. The gross margin
      for the three months ended July 31, 2008 increased 4.3% to 42.8% as compared
      to
      38.5% for the three months ended July 31, 2007, principally due to the net
      effect of (i) an increase of 17.8% associated with equipment sales due to a
      favorable product mix sold, (ii) a decrease in direct project costs of 3.7%
      that
      resulted in higher project margins, offset by (iii) an increase of 0.5% in
      indirect production overhead expenses as a percentage of revenues.




30




**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 $704,000
      to $1.3 million for the three months ended July 31, 2008 as compared to $634,000
      for the three months ended July 31, 2007. The increase in the costs of revenues
      was principally due to an increase in revenues for the three months ended July
      31, 2008 as compared to the three months ended July 31, 2007. The gross profit
      realized by the strategic communications segment for the three months ended
      July
      31, 2008 and 2007 was $646,000 and ($120,000), respectively. The gross profit
      increase of $766,000 for the three months ended July 31, 2008 as compared the
      three months ended July 31, 2007 was principally due to an increase in
      production projects completed during the period which utilized internal
      production staff and resources. 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 July 31, 2008 and the three months ended
      July 31, 2007 was $2.1 million and $2.3 million, respectively.





SG&A
      attributed to the information services segment was $1.0 million and $1.2 million
      respectively, for three months ended July 31, 2008 and the three months ended
      July 31, 2007. The decrease in SG&A of $153,000 was principally due to the
      net effect of (i) a decrease of $92,000 for depreciation and amortization
      expense as a consequence of the elimination of the amortization of certain
      intangible assets written off in Fiscal 2008, (ii) a reduction in corporate
      expense allocation offset by (iii) an increase of $28,000 in personnel and
      related cost and (iv) an increase of $33,000 for other SG&A
      costs.





SG&A
      attributable to the strategic communications services segment decreased $197,000
      to $718,000 for the three months ended July 31, 2008 as compared to $915,000
      for
      the three months ended July 31, 2007. The decrease in SG&A was due to (i) a
      decrease of $111,000 for depreciation and amortization expense as a consequence
      of the elimination of the amortization of certain intangible assets written
      off
      in Fiscal 2008, (ii) a decrease of $29,000 for facility expenses as a
      consequence of the consolidation of certain facilities implemented in Fiscal
      2008 and (iii) a decrease of $57,000 in personnel and related
      costs.




31


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





SG&A
      for undistributed corporate expenses for the three months ended July 31, 2008
      and July 31, 2007 was $340,000 and $252,000, 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 increase in corporate
      SG&A of $88,000 for the three months ended July 31, 2008 as compared to the
      three months ended July 31, 2007 was due principally to the net effect of (i)
      higher professional fees from company advisors offset by (ii) the reduction
      in
      facility rent and related occupancy costs as iDNA consolidated its New York
      City-based strategic communications operations into one facility and (iii)
      a net
      decrease in personnel and related benefit expenses.





Income
      from AFC Investment :
      iDNA
      accounts for its investment in AFC using the equity method. For the three months
      ended July 31, 2008 and July 31, 2007, iDNA recorded a loss of $22,000 and
      earnings of $65,000, respectively, representing iDNA’s share of AFC’s net income
      (loss).





Summarized
      income statement data for AFC for the three months ended June 30, 2008 and
      2007,
      respectively, is as follows (in thousands):




Three
                  Months EndedJune
                  30,2008
              
              2007Revenues
              
              $
              1,043
              
              $
              1,288Operating
                  costs
              
              
              859
              
              
              941Depreciation
                  and amortization
              
              
              206
              
              
              195General
                  and administrative expenses
              
              
              22
              
              
              211,087
              
              
              1,157Net
                  income (loss)
              
              $
              (44
              )
              $
              131iDNA's
                  proportionate share of net income (loss)
              
              $
              (22
              )
              $
              65


32


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





AFC’s
      revenues decreased $245,000 to $1.0 million for the three months ended June
      30,
      2008 as compared to $1.3 million for the three months ended June 30, 2007,
      principally as a result of the net effects of (i) a decrease of 24.0% in
      attendance period-to-period, (ii) a decrease of $43,000 in other, concession
      and
      café revenues offset by (iii) an increase of 6.3% 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. Operating costs, as a percentage of revenue, increased 9.3% to 82.4%
      for the three months ended June 30, 2008, as compared to 73.1% for the three
      months ended June 30, 2007 due principally to (i) an increase in film rental
      expense of 1.6% and (ii) a decrease in revenues for the three months ended
      June
      30, 2008 as compared to the three months ended June 30, 2007. The nature of
      AFC’s operating costs tend generally to be more fixed overhead-related costs and
      advertising expenses. In addition, 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.





Interest
      Expense :
      For the
      three months ended July 31, 2008 and 2007, iDNA incurred interest expense of
      $290,000 and $58,000, respectively. The increase of $232,000 in interest expense
      for the three month period ended July 31, 2008 as compared to the three month
      period ended July 31, 2007 is due principally to an increase in interest costs
      attributable to the Term Loan (defined below) consummated in November
      2007.





Interest
      Abatement :
      As a
      consequence of the various terms of the Reduction Agreement, iDNA realized
      a
      reduction of interest expense from the abatement of previously accrued interest
      of $156,000 for the three months ended July 31, 2008.




Gain
      on Restructuring of Debt : As
      a
      consequence of the various terms of the Reduction Agreement, for the three
      months ended July 31, 2008, iDNA realized a gain of $9.0 million relating to
      the
      reduction of the Campus Group Purchase Price and the restructuring of the
      corresponding debt.




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 July 31, 2008 and July 31, 2007. Additionally, iDNA is in the process
      of
      analyzing the final tax treatment associated with the Reduction Agreement
      however, based upon currently available information, iDNA believes that the
      gain
      on the Reduction Agreement is not a gain for tax purposes. 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.
      For the three months ended July 31, 2008, iDNA has charged to income tax expense
      $6,000 relating to estimated state and local income taxes.




33




**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 Six Months Ended July 31, 2008**


**as
      Compared to the Six Months Ended July 31, 2007**





The
      following table sets forth for the six months ended July 31, 2008 and 2007
      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
                  EliminationSix
                  Months Ended
              
              Six
                  Months Ended
              
              Six
                  Months EndedJuly
                  31,
              
              July
                  31,
              
              July
                  31,2008
              
              2007
              
              2008
              
              2007
              
              2008
              
              2007Revenues
              
              $
              4,287
              
              $
              4,642
              
              $
              3,424
              
              $
              1,840
              
              $
              (62
              )
              $
              (58
              )Cost
                  of revenues
              
              
              2,676
              
              
              2,784
              
              
              2,282
              
              
              1,840
              
              
              (62
              )
              
              (58
              )Selling,
                  general andadministrative
                  expenses
              
              
              2,191
              
              
              2,367
              
              
              1,453
              
              
              1,846
              
              
              -
              
              
              -Operating
                  income (loss)
              
              
              (581
              )
              
              (516
              )
              
              (310
              )
              
              (1,846
              )
              
              -
              
              
              -Depreciation
                  andamortization
                  expense
              
              
              271
              
              
              437
              
              
              123
              
              
              362
              
              
              -
              
              
              -
  UndistributedEntertainment
              
              Corporate
                  Expenses
              
              ConsolidatedSix
                  Months Ended
              
              Six
                  Months Ended
              
              Six
                  Months EndedJuly
                  31,
              
              July
                  31,
              
              July
                  31,2008
              
              2007
              
              2008
              
              2007
              
              2008
              
              2007Revenues
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              7,649
              
              $
              6,424Cost
                  of revenues
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              4,896
              
              
              4,566Selling,
                  general andadministrative
                  expenses
              
              
              -
              
              
              -
              
              
              520
              
              
              470
              
              
              4,164
              
              
              4,683Operating
                  income (loss)
              
              
              214
              
              
              336
              
              
              8,141
              
              
              (573
              )
              
              7,464
              
              
              (2,599
              )Depreciation
                  andamortization
                  expense
              
              
              -
              
              
              -
              
              
              21
              
              
              27
              
              
              415
              
              
              826


Revenues: Revenues
      increased $1.2 million to $7.6 million for the six months ended July 31, 2008
      as
      compared to $6.4 million for the six months ended July 31, 2007.





Revenues
      attributed to the information services segment decreased $355,000 to $4.3
      million for the six months ended July 31, 2008 as compared to $4.6 million
      for
      the six months ended July 31, 2007. The decrease in revenues was principally
      due
      to (i) a decline in electronic equipment sales of $261,000 and (ii) a decrease
      in the scope and size of projects completed during the six months ended July
      31,
      2008 as compared to the six months ended July 31, 2007.




34




**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 $1.6
      million to $3.4 million for the six months
      ended July 31, 2008 as compared to $1.8 million for the six months ended July
      31, 2007. The increase in revenues was principally due to an increase in the
      scope and size of projects completed during the six months ended July 31, 2008
      as compared to the three months ended July 31, 2007.





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.





Cost
      of Service Revenues :
      Cost of
      revenues for the six months ended July 31, 2008 and 2007 was $4.9 million and
      $4.6 million, respectively.





Cost
      of
      revenues attributed to the information services segment was $2.7 million for
      the
      six months ended July 31, 2008 as compared to $2.8 million for the six months
      July 31, 2007.





The
      gross
      profit realized by the information services segment for the six months ended
      July 31, 2008 and 2007 was $1.6 million and $1.9 million, respectively. The
      gross profit decrease of $247,000 for the six months ended July 31, 2008 as
      compared to the six months ended July 31, 2007 is due principally to the net
      effect of (i) a decrease in project margins for the period, (ii) a decrease
      of
      $32,000 in project overhead costs offset by (iii) a decrease in revenues. The
      gross margin for the six months ended July 31, 2008 decreased 2.4% to 37.6%
      as
      compared to 40.0% for the six months ended July 31, 2007, principally due to
      the
      net effect of (i) an increase of 2.4% associated with equipment sales due to
      a
      favorable product mix sold offset by (ii) an increase in direct project costs
      of
      2.4% that resulted in lower project margins and (iii) an increase of 0.8% in
      indirect production overhead expenses as a percentage of revenues.




35




**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 $442,000
      to $2.3 million for the six months ended July 31, 2008 as compared to $1.8
      million for the six months ended July 31, 2007. The increase in the costs of
      revenues was principally due to an increase in revenues for the six months
      ended
      July 31, 2008 as compared to the six months ended July 31, 2007. The gross
      profit increase of $1.1 million for the six months ended July 31, 2008 as
      compared the six months ended July 31, 2007 was principally due to an increase
      in production projects completed during the period which utilized internal
      production staff and resources. 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 six months ended July 31, 2008 and the six months ended July
      31, 2007 was $4.2 million and $4.7 million, respectively.





SG&A
      attributed to the information services segment was $2.2 million and $2.4 million
      respectively, for six months ended July 31, 2008 and the six months ended July
      31, 2007. The decrease in SG&A of $176,000 was principally due to the net
      effect of (i) a decrease of $184,000 for depreciation and amortization expense
      as a consequence of the elimination of the amortization of certain intangible
      assets written off in Fiscal 2008, (ii) a decrease of $46,000 in personnel
      and
      related cost offset by (iii) an increase of $54,000 for other SG&A
      costs.





SG&A
      attributable to the strategic communications services segment decreased $393,000
      to $1.4 million for the six months ended July 31, 2008 as compared to $1.8
      million for the six months ended July 31, 2007. The decrease in SG&A was due
      to (i) a decrease of $222,000 for depreciation and amortization expense as
      a
      consequence of the elimination of the amortization of certain intangible assets
      written off in Fiscal 2008, (ii) a decrease of $62,000 for facility expenses
      as
      a consequence of the consolidation of certain facilities implemented in Fiscal
      2008 and (iii) a decrease of $109,000 in personnel and related
      costs.




36


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





SG&A
      for undistributed corporate expenses for the six months ended July 31, 2008
      and
      July 31, 2007 was $520,000 and $470,000, 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 increase in corporate SG&A
      of $50,000 for the six months ended July 31, 2008 as compared to the six months
      ended July 31, 2007 was due principally to the net effect of (i) higher
      professional fees from company advisors offset by (ii) 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 six months
      ended July 31, 2008 and July 31, 2007, iDNA recorded income of $214,000 and
      $336,000, respectively, representing iDNA’s share of AFC’s net income.





Summarized
      income statement data for AFC for the six months ended June 30, 2008 and 2007,
      respectively, is as follows (in thousands):




Six
                  Months EndedJune
                  30,2008
              
              2007Revenues
              
              $
              2,890
              
              $
              3,288Operating
                  costs
              
              
              2,015
              
              
              2,157Depreciation
                  and amortization
              
              
              403
              
              
              390General
                  and administrative expenses
              
              
              44
              
              
              682,462
              
              
              2,615Net
                  income
              
              $
              428
              
              $
              673iDNA's
                  proportionate share of net income
              
              $
              214
              
              $
              336
  37


**iDNA,
      Inc. and Subidiaries**


**Management’s
      Discussion and Analysis of**


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





AFC’s
      revenues decreased $398,000 to $2.9 million for the six months ended June 30,
      2008 as compared to $3.3 million for the six months ended June 30, 2007,
      principally as a result of the net effects of (i) a decrease of 17.5% in
      attendance period-to-period, (ii) a decrease of $63,000 in other, concession
      and
      café revenues offset by (iii) an increase of 6.2% 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. Operating costs, as a percentage of revenue, increased 4.1% to 69.7%
      for the six months ended June 30, 2008, as compared to 65.6% for the six months
      ended June 30, 2007 due principally to (i) an increase in film rental expense
      of
      0.6% and (ii) a decrease in revenues for the six months ended June 30, 2008
      as
      compared to the six months ended June 30, 2007. The nature of AFC’s operating
      costs tend generally to be more fixed overhead-related costs and advertising
      expenses. In addition, 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.





Interest
      Expense :
      For the
      six months ended July 31, 2008 and 2007, iDNA incurred interest expense of
      $524,000 and $113,000, respectively. The increase of $411,000 in interest
      expense for the six month period ended July 31, 2008 as compared to the six
      month period ended July 31, 2007 is due principally to an increase in interest
      costs attributable to the Term Loan (defined below) consummated in November
      2007.





Interest
      Abatement :
      As a
      consequence of the various terms of the Reduction Agreement, iDNA realized
      a
      reduction of interest expense from the abatement of previously accrued interest
      of $156,000 for the six months ended July 31, 2008.




Gain
      on Restructuring of Debt : As
      a
      consequence of the various terms of the Reduction Agreement, for the six months
      ended July 31, 2008, iDNA realized a gain of $9.0 million relating to the
      reduction of the Campus Group Purchase Price and the restructuring of the
      corresponding debt.




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 six month periods
      ended July 31, 2008 and July 31, 2007. Additionally, iDNA is in the process
      of
      analyzing the final tax treatment associated with the Reduction Agreement
      however, based upon currently available information, iDNA believes that the
      gain
      on the Reduction Agreement is not a gain for tax purposes. 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.
      For the six months ended July 31, 2008, iDNA has charged to income tax expense
      of $12,000 relating to estimated state and local income taxes.




38


**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 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 provided a term loan in an aggregate principal amount of $4.25
      million (the “Term Loan”) to Holdings (the “Term Loan Financing”). Interest
      accrues 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. At July 31, 2008, the “prime rate” was 5.0%. 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. At July 31, 2008, Holdings and iDNA were in compliance with the
      financial covenants under the Loan Agreement. At July 31, 2008, the principal
      balance of the Term Loan was $3.9 million. 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)
      National Cinemas, Inc. (“NCI”), which owns a 50% membership interest in AFC
      (with such guaranty being secured by a pledge of substantially all of NCI’s
      assets, other than its 50% membership interest in AFC).





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 July 31, 2008, iDNA had outstanding principal obligations
      under the terms of the OTI Promissory Notes of $855,000 and accrued interest
      obligations of $12,000.





As
      of
      January 31, 2008, OTI did not meet certain minimum financial performance
      criterion and, as a consequence, (i) iDNA retained an option to reduce the
      purchase price in an amount estimated between $206,000 and $412,000 and (ii)
      for
      the three and six months ended July 31, 2008 no interest was incurred under
      the
      OTI Promissory Notes. iDNA has not exercised its option to reduce the purchase
      price for its acquisition of OTI as of September 12, 2008 and no adjustment
      to
      the OTI Promissory Notes was recorded at July 31, 2008. Prospectively, interest
      may accrue pursuant to the terms of the OTI Promissory Notes once the minimum
      operating cash flow thresholds are achieved.




39


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





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 July 31, 2008, the remaining
      balance of the SBA Loan of $286,000 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 are
      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 bears an implied interest
      rate of 10% and is payable in monthly installments with the last payment due
      in
      July 2009. At July 31, 2008, the remaining balance due under the capital lease
      was $35,000.





On
      January 31, 2008, ARS consummated an auto loan with a financing institution
      for
      the purchase of a delivery van in the principal amount of $24,000. The auto
      loan
      is repayable in monthly installments of $755 with the last payment due February
      2011. The auto loan bears interest at the rate of 9.0% and is collateralized
      by
      the van purchased with the proceeds from the loan. At July 31, 2008, the
      principal balance of the auto loan was $21,000.





In
      July
      2008, as set forth in the Reduction Agreement, iDNA (i) assumed certain
      obligations to redeem or repurchase from the Stockholders their Issued Shares
      and (ii) granted to the Stockholders certain rights to sell (or “put”) the
      Issued Shares to iDNA. iDNA is required to semi-annually offer to redeem certain
      Issued Shares from the Stockholders at the rate of $2.00 per share for a maximum
      total redemption payment equal
      to
      the ***excess*** (if any)
      of certain minimum operating cash flow thresholds of the Campus Group for the
      period from August 1, 2008 through July 31, 2013. At any time, the Stockholders
      are free to (i) accept or decline iDNA’s offer to redeem or repurchase the
      Issued Shares and (ii) sell,
      redeem, transfer or otherwise dispose of the Issued Shares to third parties.




Pursuant
      to the Reduction Agreement, iDNA also granted to the Stockholders the right,
      subject to certain criteria, to sell (or “put”) to iDNA, and require iDNA to
      purchase from the Stockholders, any or all of the Issued Shares (exclusive of all Excluded Shares) at the rate of $2.00 per share during
      the period October 31, 2013 through November 15, 2013 (the “Put
      Right”) .
      However, t he
      Put
      Right shall not be exercisable if one or more of the Stockholders shall have
      received (or be deemed to have received) aggregate consideration of at least
      five million dollars ($5,000,000) on account of or with respect to the sale,
      transfer, redemption or other disposition of some or all of the Issued Shares.




40


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





As
      a
      consequence of the iDNA’s redemption obligation of the Issued Shares under the
      terms of the Reduction Agreement, at July 31, 2008 iDNA recorded a $3.1 million
      obligation for the fair value of the redemption obligation. Prospectively,
      the
      fair value of the redemption obligation is subject to adjustment each reporting
      period as a consequence of changes, if any, to (i) the number of Issued Shares (exclusive
      of all Excluded Shares) held by the Stockholders at the end of a period, (ii)
      actual redemption accepted or declined, by the Stockholders and/or (iii) sales
      of Issued Shares to third parties.




In
      order
      to secure its obligations to the Stockholders under the Reduction Agreement,
      iDNA has (i) pledged to the Stockholders all of iDNA’s right, title and interest
      in and to all of the capital stock of the Campus Group held by iDNA and (ii)
      caused the Campus Group to guaranty such obligations, with such guaranty to
      be
      secured by the assets of the Campus Group.




For
      the
      six months ended July 31, 2008, iDNA’s cash and cash equivalents increased
      $392,000 due principally to the net effects of (i) proceeds from the sale of
      marketable securities of $1.2 million, (ii) AFC distributions of $600,000 offset
      by (iii) cash flows used in operations of $804,000, (iv) capital expenditures
      of
      $147,000, and (v) the repayment of debt and fees of $453,000.





Prior
      to
      the Term Loan, iDNA had limited external sources of financing and has operated
      on its existing cash balances, cash flows from operations and distributions
      from
      its investment in AFC. iDNA will continue to pursue reductions in its operating
      expenses, invest in marketing initiatives and seek new debt or equity financing
      (though there can be no assurance iDNA will obtain such financing) as means
      of
      supplementing iDNA’s resources available to pursue new acquisitions, joint
      ventures or other business development opportunities. At July 31, 2008, iDNA
      had
      unrestricted cash of $561,000 and investments in trading securities of $225,000
      which together with any cash flow derived from its investment in AFC and the
      operations of iDNA’s corporate communications business will be used to pursue
      such opportunities and reduce debt.





iDNA
      believes that its available cash and cash equivalents and investments in trading
      securities totaling $786,000 at July 31, 2008 and any cash distributions from
      its investment in AFC and cash flow from operations will be sufficient to pay
      operating expenses, existing liabilities, fund existing debt repayments and
      fund
      its activities through the next twelve months as iDNA explores new strategic
      business alternatives. However, as previously discussed, iDNA’s lack of external
      financing sources may limit its ability to pursue strategic business
      alternatives being considered by iDNA’s Board of Directors. Such limitations may
      have an adverse impact on iDNA’s financial position, results of operations and
      liquidity.


41


**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





**Other**





*New
      Accounting Pronouncements*


In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued 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. The FASB agreed to a one-year deferral of the effective date for
      non-financial assets and liabilities that are recognized or disclosed at fair
      value on a non-recurring basis. The application of this pronouncement did not
      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. The adoption of this pronouncement did not have a material impact on
      iDNA’s reported consolidated financial position or results of
      operations.





In
      December 2007, the FASB issued SFAS No. 141-R, *Business
      Combinations* .
      SFAS
      No. 141-R applies prospectively to business combinations for which the
      acquisition date is on or after the beginning of the first annual reporting
      period beginning on or after December 15, 2008. The objective of SFAS No. 141-R
      is to improve the relevance, representational faithfulness and comparability
      of
      the information that a reporting entity provides in its financial reports about
      a business combination. SFAS No, 141-R changes the requirements for an
      acquirer’s recognition and measurement of the assets acquired and the
      liabilities assumed in a business combination. 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
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interest in Consolidated Financial Statements - an amendment to ARB
      No.51* .
      SFAS
      No. 160 requires that (i) noncontrolling (minority) interests be reported as
      a
      component of shareholders’ equity, (ii) net income attributable to the parent
      and to the noncontrolling interest be separately identified in the consolidated
      statement of operations, (iii) changes in a parent’s ownership interest while
      the parent retains its controlling interest be accounted for as equity
      transactions, (iv) any retained noncontrolling equity investment upon the
      deconsolidation of a subsidiary be initially measured at fair value, and (v)
      sufficient disclosures are provided that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS No.160 is effective for annual periods beginning after December
      15,
      2008. 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.




42




**iDNA,
      Inc. and Subsidiaries**


**Management’s
      Discussion and Analysis of**


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





In
      March
      2008, the FASB issued SFAS No. 161, *“Disclosures
      about Derivative Instruments and Hedging Activities”* (“SFAS
      161”). SFAS 161 enhances disclosure requirements for derivative instruments in
      order to provide users of financial statements with an enhanced understanding
      of
      (i) how and why an entity uses derivative instruments, (ii) how derivative
      instruments and related hedged items are accounted for under SFAS No. 133, *“Accounting
      for Derivative Instruments and Hedging Activities”* and its
      related interpretations, and (iii) how derivative instruments and related hedged
      items affect an entity’s financial position, financial performance and cash
      flows. SFAS 161 is to be applied prospectively for the first annual reporting
      period beginning on or after November 15, 2008. 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.





*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).




**Forward
      Looking Statements**





Some
      of
      the information in this Quarterly Report on Form 10-Q (including the section
      titled Management’s Discussion and Analysis of Financial Condition and Results
      of Operations) 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 iDNA or iDNA’s 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 iDNA’s 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 iDNA’s actual results as well as those of the markets it serves, 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. iDNA undertakes no obligation to
      publicly update or review any forward-looking statements, whether as a result
      of
      new information, future developments or otherwise.




43




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





Not
      applicable





**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
      Securities and Exchange 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 iDNA’s most recent fiscal quarter. In compliance with Rules 13a-14(a) and
      15d-14(a) under the Exchange Act and 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.




In
      accordance with Rules 13a-15(d) and 15d-15(d) of the Exchange Act, 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
      iDNA’s internal control over financial reporting during its most recent fiscal
      quarter covered by this Quarterly Report on Form 10-Q that has materially
      affected, or is reasonably likely to materially affect, iDNA’s internal control
      over financial reporting.




44


**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 July 31, 2008 and January 31, 2008 was
      $142,000 and $172,000, 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.




45




*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****.**




Such
      description is incorporated by reference to the Current Report of iDNA on Form
      8-K dated July 15, 2008.





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




Not
      applicable




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




iDNA
      held
      its annual meeting of shareholders on July 30, 2008. The following matters
      were
      voted upon and approved by the shareholders:




VotesBrokerFor
              
              Against
              
              Withheld
              
              Abstained
              
              Non-Votes1
              To
                  elect directors of the Company to serve until thenext
                  annual meeting of stockholdersJames
                  M. Augur
              
              
              
              5,979,299
              
              -
              
              874,008
              
              -
              
              -John
                  A. Gleason
              
              
              
              5,982,199
              
              -
              
              871,108
              
              -
              
              -James
                  McNamara
              
              
              
              5,975,897
              
              -
              
              877,410
              
              -
              
              -Donald
                  Shek
              
              
              
              5,982,299
              
              -
              
              871,008
              
              -
              
              -Henry
                  Y. L. Toh
              
              
              
              5,982,199
              
              -
              
              871,108
              
              -
              
              -2
              To
                  ratify the appointment of Grant Thornton LLP asindependent
                  registered public accountants for Fiscal 2009
              6,592,986
              
              87,326
              
              -
              
              172,993
              
              -3
              To
                  consider and act upon a proposal to ratify and approvean
                  amendment to our 2005 Equity Compensation Planto
                  increase the number of shares issuable thereunder byone
                  million (1,000,000) shares
              
              1,632,676
              
              513,397
              
              -
              
              32,822
              
              4,674,412


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




Not
      applicable




46




**Item
              6.**
            **Exhibits.**




**Exhibit**
              
              **Page****Number**
              **Title
                  of Exhibit**
              **Number**3.1
              Second
                Amended and Restated Certificate of
                Incorporation of theCompany
                (incorporated by reference to Exhibit 99.1 to theCompany’s
                Current Report on Form 8-K filed with the SEC onNovember
                4, 2005, SEC File No. 1-11601).
              N/A3.2
              Second
                  Amended and Restated By-Laws of the Company dated asof
                  November 4, 2005 (incorporated by reference to Exhibit 99.2
                  tothe
                  Company’s Current Report on Form 8-K filed with the SEC onNovember
                  4, 2005, SEC File No. 1-11601).
              N/A4.1
              Certificate
                  of Designation Preferences and Rights of Series D JuniorParticipating
                  Preferred Stock of the Company (incorporated byreference
                  to Exhibit 4.1 to the Company’s Current Report on Form 8-Kfiled
                  with the SEC 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’sAnnual
                  Report on Form 10-K for the fiscal year endedJanuary
                  31, 1996, filed with the SEC on April 25, 1996,SEC
                  File No. 1-11601).
              N/A4.3
              Rights
                  Agreement, dated as of September 26, 2001, by and betweenthe
                  Company and American Stock Transfer & Trust Company,including
                  the form of Certificate of Designation, Preferencesand
                  Rights for the Series D Junior Participating Preferred
                  Stockattached
                  as Exhibit “A”, the form of Rights Certificate attached asExhibit
                  “B” and the Summary of Rights to Purchase PreferredStock
                  attached as Exhibit “C” (incorporated by reference toExhibit
                  4.1 to the Company’s Current Report on Form 8-K,filed
                  with the SEC on October 9, 2001, SEC File No. 1-11601).
              N/A31.1
              Certification
                  of Principal Executive Officer Pursuant toRule
                  13a-14(a)/15d-14(a) of the Securities Exchange Act of
                  1934,As
                  adopted pursuant to Section 302 of the Sarbanes-Oxley Act
              4931.2
              Certification
                  of Principal Financial Officer Pursuant toRule
                  13a-14(a)/15d-14(a) of the Securities Exchange Act of
                  1934,As
                  adopted pursuant to Section 302 of the Sarbanes-Oxley Act
              5032.1
              Certification
                  of Principal Executive Officer Pursuant toRule
                  13a-14(b) of the Securities Exchange Act of 1934 and 18
                  U.S.C.Section
                  1350, as adopted pursuant to Section 906 of theSarbanes-Oxley
                  Act of 2002
              5132.2
              Certification
                  of Principal Financial Officer Pursuant toRule
                  13a-14(b) of the Securities Exchange Act of 1934 and 18
                  U.S.C.Section
                  1350, as adopted pursuant to Section 906 of theSarbanes-Oxley
                  Act of 2002
              52




47




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: September
              16, 2008
            By:
            /s/ James
              J.
              McNamaraJames J. McNamaraChairman
                of the
                Board and Chief Executive Officer
              (principal
                executive officer)




Date: September
                16, 2008
              By:
              /s/ Robert
                V.
                Cuddihy, Jr.Robert V. Cuddihy, Jr.Chief
                  Financial Officer, Secretary and Treasurer
                  (principal
                    accounting and financial officer)




48