**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington
      D.C. 20549**







**FORM
      10-KSB**




(Mark
      One)




x
            ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      fiscal year ended **December
      31, 2007**




OR





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





For
      the
      transition period from: _______ to _______





Commission
      File Number: 333-141141





**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC** **.**


(Name
      of
      Small Business Issuer in Its charter)





**DELAWARE**
            
            **01-0692341**(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification No.)200
                Park Avenue South
              Suite
                908-909
              New
                York, NY
            
            10003(Address
                of Principal Executive Offices)
            
            (Zip
                code)




**877-712-0007**Issuer's
                Telephone Number


Securities
            registered under Section 12(b) of the Exchange Act:
  None
 
 Securities
            registered pursuant to Section 12(g) of the Act:
 
 Title
                      of Each Class
                  
                  Name
                      of Each Exchange on Which RegisteredCommon
                      Stock, $0.001 par value per share
                  
                  None
 Check
            whether the issuer is not required to file reports pursuant to Section
            13 or
            15(d) of the Exchange Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes xNo o


Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B contained in this form, and no disclosure will be contained,
        to
        the best of registrant’s knowledge, in definitive proxy or information
        statements incorporated by reference in Part III of this Form 10-KSB or any
        amendment to this Form 10-KSB. o




Indicate
      by check mark whether the registrant is a shell company (as defined in rule
      12b-2 of the Exchange Act).  Yes oNo
x


The
        issuer’s revenues for the fiscal year ended December 31, 2007 were
        $6,654,768.
 
 The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates computed by reference to the closing price of $3.73 on March
        26,
        2008 is $48,823,604.




As
      of
      March 26, 2008, 35,979,667 shares of issuer’s common stock, with $0.001 par
      value per share, were outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes oNo x









**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC.**


**ANNUAL
      REPORT ON FORM 10-KSB**


**Table
      of Contents**


PART
                  IItem
                  1.
              Description
                  of Business
              
              4Item
                  2.
              Description
                  of Property
              
              7Item
                  3.
              Legal
                  Proceedings
              
              7Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              
              7PART
                  IIItem
                  5.
              Market
                  for Common Equity and Related Stockholder Matters and Small Business
                  Issuer Purchases of Equity Securities
              
              8Item
                  6.
              Management’s
                  Discussion and Analysis or Plan of Operation
              
              8Item
                  7.
              Financial
                  Statements
              
              28Item
                  8.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              
              29Item
                  8A(T).
              Controls
                  and Procedures
              
              29Item
                  8B.
              Other
                  Information
              
              29PART
                  IIIItem
                  9.
              Directors,
                  Executive Officers, Promoters, Control Persons and Corporate Governance;
                  Compliance With Section 16(a) of the Exchange Act
              
              30Item
                  10.
              Executive
                  Compensation
              
              32Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              
              35Item
                  12.
              Certain
                  Relationships and Related Transactions, and Director
                  Independence
              
              36Item
                  13.
              Exhibits
              
              37Item
                  14.
              Principal
                  Accountant Fees and Services
              
              38
  2




**Forward-Looking
        Statements**
  This annual
        report on Form 10-KSB and other written reports and oral statements made
        from
        time to time by the Company may contain so-called “forward-looking statements,”
all of which are subject to risks and uncertainties. Forward-looking statements
        can be identified by the use of words such as “expects,” “plans,” “will,”
“forecasts,” “projects,” “intends,” “estimates,” and other words of similar
        meaning. One can identify them by the fact that they do not relate strictly
        to
        historical or current facts. These statements are likely to address our growth
        strategy, financial results and product and development programs. One must
        carefully consider any such statement and should understand that many factors
        could cause actual results to differ from our forward looking statements.
        These
        factors may include inaccurate assumptions and a broad variety of other risks
        and uncertainties, including some that are known and some that are not. No
        forward looking statement can be guaranteed and actual future results may
        vary
        materially.
  Information
        regarding market and industry statistics contained in this annual report
        on Form
        10-KSB is included based on information available to us that we believe is
        accurate. It is generally based on industry and other publications that are
        not
        produced for purposes of securities offerings or economic analysis. We have
        not
        reviewed or included data from all sources, and cannot assure investors of
        the
        accuracy or completeness of the data included in this Report. Forecasts and
        other forward-looking information obtained from these sources are subject
        to the
        same qualifications and the additional uncertainties accompanying any estimates
        of future market size, revenue and market acceptance of products and services.
        We do not assume any obligation to update any forward-looking statement.
        As a
        result, investors should not place undue reliance on these forward-looking
        statements.




3


**PART
      I**




**ITEM
      1. DESCRIPTION OF BUSINESS**




Company
      Overview


We
        are an
        emerging provider of Internet advertising solutions for Internet publishers
        and
        advertisers. We offer advertisers an integrated multi-channel Internet
        advertising solution designed to satisfy their growing demand for new customer
        leads and acquisitions. We intend to deliver pay-for-performance-based Internet
        advertising solutions known as cost-per-action, or CPA, cost-per-click, or
        CPC,
        and cost-per-thousand, or CPM. With CPA, an advertiser only pays when an
        Internet user completes an action as defined by the advertiser. Examples
        of CPA
        actions include, but are not limited to, the acquisition of qualified database
        entrants (such as opt-in email), driving sign-ups, downloads, inquiries or
        acquiring paying customers. In the case of CPC, an action is defined by an
        Internet user clicking on an advertisement.
 
 In
        the
        case of CPM, we believe we are revolutionizing the way advertisers are able
        to
        purchase online media. In the past, marketers have been unable to pinpoint
        exactly which websites attract a high percentage of the target audience they
        are
        trying to reach based on their desired metric. With our ad network, interCLICK,
        we empower the advertiser to reach the exact target audience by offering
        unparalleled transparency as well as a suite of advanced targeting capabilities
        that ensure brand metrics are achieved without sacrificing reach or quality.
        With this approach, interCLICK is taking the inefficiencies out of the
        buyer/seller dynamic by allowing CPM advertisers to achieve a direct response
        metric, whether it’s a click, lead or a sale. We believe that this
        fundamental difference allows online marketers to achieve a better ROI
        while still being able to target the premium websites.




Corporate
      History




Prior
      to
      August 28, 2007, we were a public company, without material assets or
      activities. On August 28, 2007, we completed a reverse merger, pursuant to
      which a wholly-owned subsidiary of ours merged with and into a private company,
      Customer Acquisition Network, Inc., with such private company being the
      surviving company. In connection with this reverse merger, we discontinued
      our
      former business and succeeded to the business of Customer Acquisition
      Network, Inc. as our sole line of business. For financial reporting
      purposes, Customer Acquisition Network, Inc., and not us, is considered the
      accounting acquirer. Accordingly, the historical financial statements presented
      and the discussion of financial condition and results of operations herein
      are
      those of Customer Acquisition Network, Inc. and do not include our
      historical financial results.




On
      August
      31, 2007, we consummated the acquisition of Desktop Interactive, Inc., known
      in
      the industry as interCLICK, one of the nation’s leading Internet advertising
      networks. ComScore, the industry standard utilized to measure an ad
      network’s capability to reach unique online visitors, recently rated interCLICK
      as the eleventh largest and fastest-growing Ad Network in the United States
      for
      2007. This growth was more than double the next fastest growing ad network.
      Based on its March 31, 2008 ComScore, interCLICK reaches approximately 109
      million unique U.S. visitors per month, or 59% of the U.S. online population,
      with impressions per month exceeding four billion. interCLICK’s rapidly
      expanding partner and customer base includes some of the world’s largest
      Internet publishers and advertisers.




On
      January 4, 2008, we consummated the acquisition of Options Newsletter, Inc.,
      known in the industry as Options Media, a leading email service provider
      (ESP).  Since the acquisition, Options Media has launched a Data Management
      Service offering and already has over 50 million email records under management.




Our
      common stock has been quoted on the OTC Bulletin Board since October 31, 2007
      under the symbol CACN.OB.  Prior to that date, there was no active market
      for our common stock. On March 26, 2008, the closing price of our common stock
      was $3.73 per share.


Our
        executive offices are located at 200 Park Avenue South, Suite 908-909, New
        York,
        NY, 10033 and our telephone number at such office is 877-712-0007.




4


**Competition**
  We
        expect
        to operate in a highly competitive environment. We principally will compete
        with
        other companies in the following main areas:
  ·
              Internet
                  Advertising Networks using a performance-based model, such as CPX
                  Interactive and Casale Media; and
  ·
              Multi-Channel
                  Internet Advertising firms using a pay-for-performance model, such
                  as
                  Value Click Media, Google, Microsoft and Yahoo!;
                  and
  ·
              CPM-based
                  Advertising Networks, media agencies and other companies that facilitate
                  the buying and selling of web advertising, such as Advertising.com
                  and
                  Omnicom.
  Although
        we expect to pursue a strategy that allows us to potentially partner with
        all
        relevant companies in the industry, there are certain companies in the industry
        that may not wish to partner with us.
  We
        expect
        competition to intensify in the future because current and new competitors
        can
        enter our market with little difficulty. The barriers to entering our market
        are
        relatively low. In fact, many current Internet and media companies presently
        have the technical capabilities and advertiser bases to enter the industry.
        Further, if the consolidation trend continues among the larger media companies
        with greater brand recognition, the share of the market remaining for us
        and
        other smaller providers could decrease, even though the number of smaller
        providers could continue to increase. These factors could adversely affect
        our
        competitive position in the Internet Advertising industry.
  Some
        of
        our competitors, as well as potential entrants into our market, may be better
        positioned to succeed in this market. They may have:
  ·
              longer
                  operating histories;
  ·
              more
                  management experience;
  ·
              an
                  employee base with more extensive
                  experience;
  ·
              a
                  better ability to service customers in multiple cities in the United
                  States and internationally by virtue of the location of sales
                  offices;
 
 ·
              larger
                  customer bases;
  ·
              greater
                  brand recognition; and
  ·
              significantly
                  greater financial, marketing and other
                  resources.
  5
  In
        addition, many current and potential competitors can devote substantially
        greater resources than we can to promotion, web site development and systems
        development. Furthermore, there are numerous larger, more well-established
        and
        well-financed entities with which we will compete and that could acquire
        or
        create competing companies and/or invest in or form joint ventures in categories
        or countries of interest to us, all of which could adversely impact our
        business. Any of these trends could increase competition and reduce the demand
        for any of our services.
  Our
        business plans depend in part on our ability to effectively offer an
        alternative, multi-channel pay-for-performance solution to advertisers relative
        to Google, Yahoo! and other competitive offerings.
  Should
        advertisers in this new, evolving business model choose to spend the dominant
        majority of their pay-for-performance advertising budgets with Google and
        Yahoo!, among others, this will limit our ability to grow our
        revenues.
  **INTELLECTUAL
        PROPERTY RIGHTS**
  We
        currently rely on a combination of copyright, trademark and trade secret
        laws
        and restrictions on disclosure to protect our intellectual property rights.
        Our
        success depends on the protection of the proprietary aspects of our technology
        as well as our ability to operate without infringing on the proprietary rights
        of others. We also enter into proprietary information and confidentiality
        agreements with our employees, consultants and commercial partners and control
        access to, and distribution of, our software documentation and other proprietary
        information. In addition, it is difficult to monitor unauthorized use of
        technology, particularly in foreign countries where the laws may not protect
        our
        proprietary rights as fully as in the United States, and our competitors
        may
        independently develop technology similar to our own. We will continue to
        assess
        appropriate occasions for seeking patent and other intellectual property
        protections for those aspects of our technology that we believe constitute
        innovations providing significant competitive advantages.
  **EMPLOYEES**
  As
        of
        December 31, 2007, we had 24 employees. None of these employees are covered
        by collective bargaining agreements. Management believes that our relations
        with
        our employees are good.




6




**ITEM
      2. DESCRIPTION OF PROPERTY**




As
      of December 31, 2007, we leased facilities at the following locations:


·
              New
                  York, New York (one location totaling 2,500 square-feet)




·
            Fort
                Lauderdale, Florida (one location totaling 3,000
                square-feet)




We
      believe that our current facilities are adequate for our immediate and near
      term
      needs. Additional space may be required as we expand our activities. We do
      not
      currently forsee any significant difficulties in obtaining any required
      additional facilities. For
      additional information regarding our obligation under leases, see note 10
“Commitments and Contingencies” to our consolidated financial statements
      included in this annual report on Form 10-KSB.




**ITEM
      3. LEGAL PROCEEDINGS**





From
      time
      to time we may be involved in claims arising in the ordinary course of business.
      To our knowledge there are no pending or threatened, legal proceedings,
      government actions, administrative actions, investigations or claims against
      us.





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




None.




7





**PART
      II**




**Item
      5. Market for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities**




**Market
      Information**




Our
      common stock has traded on the Over-The-Counter Bulletin Board ("OTCBB") under
      the symbol "CACN" since October 31, 2007.




The
      following table sets forth, for the periods indicated, the high and low sales
      prices per share of our common stock as reported on the OTCBB. On March 26,
      2008, the
      last sale price of our common stock reported by OTCBB was $3.73 per
      share.




**Price
                Range of**
              **Common
                Stock********High******
            
            **Low********Fiscal
                Year Ended December 31, 2007**Fourth
                Quarter
            
            $
            6.49
            
            $
            4.54




**Stockholders**




As
      of
      December 31, 2007, there were 109 stockholders of record who held shares of
      our common stock.




**Dividend
      Policy**




We
      have
      not declared or paid any cash dividends on our capital stock since our inception
      and we do not anticipate paying cash dividends in the foreseeable future.




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




*The
      following discussion and analysis should be read in conjunction with our
      consolidated financial statements and related notes appearing elsewhere in
      this
      annual report on Form 10-KSB. In addition to historical information, this
      discussion and analysis contains forward-looking statements that involve risks,
      uncertainties, and assumptions. Our actual results may differ materially from
      those anticipated in these forward-looking statements as a result of certain
      factors, including but not limited to those set forth under "Risk Factors"
      and
      elsewhere in this annual report on Form 10-KSB.*




**Company
      Overview**




We
      are an
      emerging provider of Internet advertising solutions for Internet publishers
      and
      advertisers. We offer advertisers an integrated multi-channel Internet
      advertising solution designed to satisfy their growing demand for new customer
      leads and acquisitions. We intend to deliver pay-for-performance-based Internet
      advertising solutions known as cost-per-action, or CPA, cost-per-click, or
      CPC,
      and cost-per-thousand, or CPM. With CPA, an advertiser only pays when an
      Internet user completes an action as defined by the advertiser. Examples of
      CPA
      actions include, but are not limited to, the acquisition of qualified database
      entrants (such as opt-in email), driving sign-ups, downloads, inquiries or
      acquiring paying customers. In the case of CPC, an action is defined by an
      Internet user clicking on an advertisement.





In
      the
      case of CPM, we believe we are revolutionizing the way advertisers are able
      to
      purchase online media. In the past, marketers have been unable to pinpoint
      exactly which websites attract a high percentage of the target audience they
      are
      trying to reach based on their desired metric. With our ad network, interCLICK,
      we empower the advertiser to reach the exact target audience by offering
      unparalleled transparency as well as a suite of advanced targeting capabilities
      that ensure brand metrics are achieved without sacrificing reach or quality.
      With this approach, interCLICK is taking the inefficiencies out of the
      buyer/seller dynamic by allowing CPM advertisers to achieve a direct response
      metric, whether it’s a click, lead or a sale. We believe that this
      fundamental difference allows online marketers to achieve a better ROI
      while still being able to target the premium websites.




8





**Corporate
      History**




Prior
      to
      August 28, 2007, we were a public company, without material assets or
      activities. On August 28, 2007, we completed a reverse merger, pursuant to
      which a wholly-owned subsidiary of ours merged with and into a private company,
      Customer Acquisition Network, Inc., with such private company being the
      surviving company. In connection with this reverse merger, we discontinued
      our
      former business and succeeded to the business of Customer Acquisition
      Network, Inc. as our sole line of business. For financial reporting
      purposes, Customer Acquisition Network, Inc., and not us, is considered the
      accounting acquirer. Accordingly, the historical financial statements presented
      and the discussion of financial condition and results of operations herein
      are
      those of Customer Acquisition Network, Inc. and do not include our
      historical financial results.




On
      August
      31, 2007, we consummated the acquisition of Desktop Interactive, Inc.,
      (“Desktop”) known in the industry as InterCLICK, one of the nation’s leading
      Internet advertising networks. ComScore, the industry standard utilized to
      measure an ad network’s capability to reach unique online visitors, recently
      rated interlock as the eleventh largest and fastest-growing ad network in the
      United States for 2007. InterCLICK reaches 85 million unique U.S. visitors
      per
      month, or 47% of the U.S. online population, with impressions per month
      exceeding four billion. interCLICK’s rapidly expanding customer base includes
      some of the world’s largest Internet publishers and advertisers.





On
      January 4, 2008, we consummated the acquisition of Options Newsletter, Inc.,
      known in the industry as Options Media, a leading provider of email delivery
      services.




9




**Results
      of Operations**





The
      following table presents our results of operations for the period June
      14, 2007 (inception) to December 31, 2007 and for the period October 1,
      2007 to December 31, 2007. It should be noted that our results of operations
      and
      our liquidity and capital resources discussions include the operations of
      Desktop for the four month period of December 31, 2007 and our operations for
      the period June 14, 2007 (inception) to December 31, 2007 (otherwise referred
      to
      as the “Period”).




**Results
      of Operations**


**From**
                **June
                  14, 2007**
                **(Inception)
                  to**
                **December
                  31, 2007**
              
              **From**
                **October
                  1, 2007 to December 31, 2007**Revenues
              
              $
              6,654,768
              
              $
              5,484,777Cost
                  of revenue
              
              
              5,315,418
              
              
              4,231,805Gross
                  profit
              
              
              1,339,350
              
              
              1,252,972Operating
                  expenses:General
                  and administrative (includes stock-based compensation of
                  $954,167)
              
              
              2,442,005
              
              
              1,726,823Sales
                  and marketing
              
              
              1,073,884
              
              
              869,374Technology
                  support
              
              
              748,968
              
              
              620,085Amortization
                  of intangible assets
              
              
              302,062
              
              
              210,512Merger,
                  acquisition and organizational costs
              
              
              187,353
              
              
              -Bad
                  debt expense
              
              
              116,055
              
              
              116,055Total
                  operating expenses
              
              
              4,871,027
              
              
              3,542,848Loss
                  from operations
              
              
              (3,531,677
              )
              
              (2,289,876
              )Other
                  income (expense)Interest
                  income
              
              
              36,727
              
              
              12,731Interest
                  expense
              
              
              (276,017
              )
              
              (276,017
              )Total
                  other income (expense), net
              
              
              (239,290
              )
              
              (263,285
              )(Loss)
                  before income tax benefit
              
              $
              (3,770,967
              )
              $
              (2,553,161
              )Income
                  tax benefit
              
              
              538,000
              
              
              257,981Net
                  loss
              
              $
              (3,232,967
              )
              $
              (2,295,180
              )Net
                  loss per share - basic
              
              $
              (0.12
              )
              $
              (0.07
              )Weighted
                  average shares outstanding - basic
              
              
              28,025,035
              
              
              34,754,305Net
                    loss per share - diluted
              
              $
              (0.12
              )
              $
              (0.07
              )Weighted
                  average shares outstanding - diluted
              
              
              28,025,035
              
              
              34,754,305




**Revenues**





Revenues
      for the period June 14, 2007 (inception) to December 31, 2007 were $6,654,748
      and represent four months of post acquisition Desktop operations. Revenues
      for
      the fourth quarter ended December 31, 2007 were $5,484,777 compared to the
      third
      quarter 2007 pro forma pre-acquisition Desktop revenues of $3,490,784 which
      represents a 57.2% quarter-over-quarter sequential growth. Fourth
      quarter 2007 revenues of $5,484,777 represents a 418% increase over pro forma
      pre-acquisition Desktop fourth quarter 2006 revenues of
      $1,059,232.




Given
      the
      continued overall growth in online advertising, coupled with other strategic
      initiatives undertaken by Desktop, including our continued enhancement of our
      behavioral targeting system, attendant ad serving optimization capabilities
      and
      our continued ability to acquire top tier publishing media, we expect to
      continue to increase and expand our advertising customer base and
      revenues.




10





Subsequent
      to the acquisition of Desktop, we implemented strategic growth plans which
      included the hiring of additional sales and marketing resources that would
      enable us to obtain greater geographic advertiser reach, lessen our dependency
      on any one particular advertiser as well as increase the percentage of our
      revenues generated on a cost per thousand (CPM) basis. Desktop's historical
      revenue mix has been focused on cost per action (CPA) advertisers.  For the
      four months ended December 31, 2007, a majority of our revenues were
      generated by CPM.  This significant shift in our revenue mix, to now
      garnering a majority of revenues from CPM advertisers, is a result of the
      momentum we are building with ad agencies and brand advertisers who prefer
      our unique approach of offering site-by-site transparency and
      results.




We
      expect
      that CPM based revenues will continue to grow as a percentage of
      our overall revenues in future quarters.




In
      the month of December, an ad network customer
      represented approximately $900,000 in revenues.  We do not expect that
      one-time positive seasonality revenue to continue into 2008.




**Cost
      of Revenue and Gross Profit**





Cost
      of
      revenue for the Period was $5,315,418 and represents the amounts we paid to
      website publishers on Desktop’s online advertising network. Cost of revenue and
      attendant gross margins represent four months of post acquisition operations
      of
      Desktop. We pay our publishers on a cost per thousand (CPM) or a revenue share
      basis. The amount of display advertisements we are able to deliver (e.g.
      impressions), is based upon the level of publishing media we can acquire. Based
      on our ComScore rating as of March 31, 2008, we currently reach 59% of the
      domestic online population and are ranked as the eleventh largest ad
      network in the domestic online marketplace. We expect to continue to expand
      our
      publisher base as well as increase the levels of acquired publishing media,
      particularly with tier one publishers.





Prior
      to
      our acquisition of Desktop on August 31, 2007, we made a strategic decision
      that
      on a going forward basis, we would discontinue our relationship with a
      previously underperforming ad network partner and replace it with the respective
      network’s primary advertiser. While we were successful in implementing our
      strategy, we experienced a decline in gross profit margin for the month of
      September to 7.4%, which had a dampening effect on overall gross profit margin,
      20.1%, for the four month period ended December 31, 2007. For the fourth quarter
      ended December 31, 2007, our gross profit margin was 22.8%.




In
      addition to our strategy relative to an underperforming ad network partner,
      we
      undertook initiatives to not only acquire more tier one publishing media, we
      also began the process of leveraging such publishing media by selling more
      advertising on a CPM versus CPA basis. While CPM related advertising revenues
      tend to generally generate higher and more predictable margins than CPA based
      revenues, we will continue to offer both in order to maximize gross profit
      margins over our entire composition of publishing media.





**Operating
      Expenses:**





***General
      and Administrative*** **





General
      and administrative expenses consist primarily of executive and administrative
      compensation, facilities costs, insurance, depreciation, professional and
      investor relations services fees. Total general and administrative expenses
      for
      the Period were $2,442,705 of which $322,715 represents four months of post
      acquisition operations of Desktop. The remaining expense primarily represents
      our executive and administrative salaries, facilities costs, insurance and
      professional and investor relations services fees. Total general and
      administrative expenses include $225,000 of expenses associated with signing
      bonuses and related costs associated with executive employment contracts,
      including the President of Desktop. In addition, we incurred $ 683,241 of non
      cash stock based compensation charges associated with amortization of warrants,
      of which $594,000 was recognized upon termination of a respective
      contract.




11





Professional
      and investor relations services fees (excluding non cash stock based
      compensation charges) was $521,715 of which $187,353 has been reclassified
      from
      general and administrative expenses to merger, acquisition and organizational
      costs due to the nature of the services rendered.





Also
      included in general and administrative costs are $270,926 of non cash stock
      based compensation associated with our stock option plans.





Total
      non
      cash stock based compensation included in general and administrative costs
      was
      $954,167 for the Period.




***Sales
      and Marketing***





Sales
      and
      marketing expenses consist primarily of compensation of sales and marketing
      and
      related support resources, sales commissions and trade shows. Sales and
      marketing expenses for the period were $1,073,884 and represent four months
      of
      post acquisition operations of Desktop. We expect sales and marketing costs
      to
      increase as a result of our continued expansion of sales and marketing resources
      and the expected overall growth in our business. Relative to our sales and
      marketing expansion, sales and marketing expense for the period ended December
      31, 2007 included approximately $426,000 associated with signing bonuses and
      recruiting fees.





***Technology
      Support***





Technology
      Support consists primarily of compensation of technology support and related
      consulting resources and third party ad server costs. Total technology costs
      for
      the Period were $748,968, including $518,052 of third party ad server
      costs representing four months of post acquisition operations of
      Desktop. During the four month period ended December 31, 2007, Desktop’s ad
      server system was certified by certain tier 1 publishers. This certification,
      coupled with Desktop’s continued expansion of its technological infrastructure
      enabling us to deliver increasing levels of ad impressions, should result in
      a
      significant reduction in third party ad server costs.





Technology
      support and related consulting support resources have been directed primarily
      towards continued enhancement of our consumer behavioral-targeting and
      predictive scoring capabilities, integration and optimization of captured and
      acquired consumer data, and ongoing maintenance and improvement of our ad server
      optimization technology platform. Technology support compensation and consulting
      fees were $127,134 for the Period.





***Amortization
      of Intangible Assets***





Amortization
      of intangible assets for the Period was $302,062. This amount represents the
      amortization of intangible assets, customer relationships and developed
      technology, acquired through the acquisition of Desktop.





Intangibles
      associated with customer relationships in the amount of $540,000 are being
      amortized on an accelerated basis wherein 46% was amortized by December 31,
      2007, 49% in 2008 and the remainder in 2009. We recorded amortization
      expense of $248,940 related to customer relationships for the Period .





***Merger,
      Acquisition and Organizational Costs***





Merger,
      Acquisition and Organizational Costs consist primarily of legal fees associated
      with the formation of our wholly-owned subsidiary, Customer Acquisition Network,
      Inc., legal fees related to the recapitalization and merger of Customer
      Acquisition Network, Inc. and audit and accounting services related to the
      acquisition of Desktop. Total merger, acquisition and organizational costs
      were
      $187,353. Due to the acquisitive nature of our company, we anticipate that
      we
      will continue to incur such costs.




12





***Income
      Tax Benefit***





Our income
      tax benefit associated with pretax operating losses of $3,770,967 was $538,000
      for the period and represents an effective benefit rate of 14.3%. This
      effective benefit rate differs from the expected combined federal and state
      rate
      of 40% due to a valuation allowance of $952,387, reducing recognition of the
      benefit of our net operating loss carryforward.




**Liquidity
      and Capital Resources**


At
          December 31, 2007, we had a cash and cash equivalent balance of approximately
          $3.7 million and working capital deficit of approximately $343,000. Net
          cash
          used in operations was approximately $2.2 million for the Period. The use
          of
          cash consisted primarily of net losses of approximately $3.2 million plus,
          increases in accounts receivable of approximately $1.8 million, primarily
          offset
          with increases in non-cash stock options and consulting expense for warrant
          grants of approximately $0.9 million and increases of accounts payable
          of
          approximately $1.0 million.
 Cash
        used
        in investing activities for the Period was approximately $5.7 million. The
        primary use of the cash was primarily to purchase our newly acquired subsidiary,
        Desktop. Cash used for the purchase of Desktop was approximately $5.2
        million.
 
 Cash
        provided by financing activities for the Period was approximately $11.6 million,
        net of offering costs and payments due under our capital leases. The completion
        of the private placement in August 2007 resulted in net proceeds to the company
        of approximately $7.0 million.
 
 The
        convertible note issued by the founders June, 2007 resulted in cash proceeds
        of
        $250,000. On November 30, 2007, we sold Senior Secured Promissory Notes (the
        “Notes”) in the original aggregate principal amount of $5,000,000. We received
        aggregate net proceeds in the amount of $4,450,000 from the sale of the
        Notes.
 
 The
        Notes
        will mature on May 30, 2008 (the “Maturity Date”) and are accruing interest at
        the rate of 8% per annum, payable quarterly in cash. We, in the absence of
        an
        event of default and the satisfaction of certain conditions set forth in
        the
        Notes, are able to extend the Maturity Date from the original six months
        to nine
        months (the “Extended Maturity Date”) by delivering a written notice to the
        holders of the Notes within at least ten (10) but not more than twenty (20)
        business days prior to the Maturity Date. We, as one of the conditions to
        such
        extension, are obligated to issue an aggregate of 40,000 shares of our common
        stock (the “Shares”), to be allocated among the buyers on the Maturity Date. In
        accordance with the terms and conditions of a purchase agreement that we
        entered
        into with the buyers of the Notes, we are obligated to grant to the buyers,
        in
        connection with the issuance of the Shares, “piggyback” registration rights with
        respect to the Shares in the event that we register any shares of common
        stock
        held by our other stockholders. Additionally, as one of the conditions to
        such
        extension, the interest rate will increase from 8% per annum to 12% per
        annum.
 
 We
        used
        the net proceeds from the sale of the Notes first, to pay expenses and
        commissions related to the sale of the Notes and second, for the general
        working
        capital needs and acquisitions of companies or businesses reasonably related
        to
        internet marketing and advertising.


In
      addition the Securities Purchase Agreement contained certain customary
      negative covenants, including, without limitation, certain restrictions (subject
      to limited exceptions) on (i) the issuance of variable priced securities, (ii)
      purchases and payments, (iii) limitations on prepayments, (iv) incurrence of
      indebtedness, (v) sale of collateral, (vi) affiliate transactions and (vii)
      the
      ability to make loans and investments.





13


**Off-Balance
      Sheet Arrangements**




None.





**Critical
      Accounting Policies and Estimates**




Management's
      discussion and analysis of financial condition and results of operations is
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America. The preparation of these consolidated financial statements requires
      us
      to make estimates and assumptions that affect the reported amounts of assets,
      liabilities, revenue, and expenses, and related disclosure of contingent assets
      and liabilities. On an ongoing basis, we evaluate our estimates and assumptions,
      including, but not limited to, those related to revenue recognition, allowance
      for doubtful accounts, income taxes, goodwill and other intangible assets,
      and
      contingencies and litigation. We base our estimates on historical experience
      and
      on various other assumptions that are believed to be reasonable under the
      circumstances, the results of which form the basis for making judgments about
      the carrying values of assets and liabilities that are not readily apparent
      from
      other sources. Actual results may differ from these estimates and assumptions.




We
      apply
      the following critical accounting policies in the preparation of our
      consolidated financial statements:




**Revenue
      Recognition**




We
      recognize revenue in accordance with Staff Accounting Bulletin (“SAB”)
      No. 104, “Revenue Recognition in Financial Statements.”  Under SAB
      No. 104, we recognize revenue when the following criteria have been
      met: persuasive evidence of an arrangement exists, the fees are fixed or
      determinable, no significant obligations remain remain on our part, and
      collection of the related receivable is reasonably assured.




Revenues
      consist of amounts charged to customers, net of discounts, credits and amounts
      paid or due under revenue sharing arrangements, for actions on advertisements
      placed on our publisher vendor’s websites. Our revenue is recognized in the
      period that the advertising impressions, click-throughs or actions occur, when
      lead-based information is delivered or, provided that no significant obligations
      remain on our part, collection of the resulting receivable is reasonably
      assured, and prices are fixed or determinable. Additionally, consistent with
      the
      provisions of EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal
      versus Net as an Agent,” we recognize revenue as a principal. Accordingly,
      revenue is recognized on a gross basis.





**Allowance
      for Doubtful Accounts**





We
      estimate our allowance for doubtful accounts by evaluating specific accounts
      where information indicates the customers may have an inability to meet
      financial obligations, such as bankruptcy proceedings and receivable amounts
      outstanding for an extended period beyond contractual terms. In these cases,
      we
      use assumptions and judgment, based on the best available facts and
      circumstances, to record a specific allowance for those customers against
      amounts due to reduce the receivable to the amount expected to be collected.
      These specific allowances are re-evaluated and adjusted as additional
      information is received. The amounts calculated are analyzed to determine the
      total amount of the allowance.




14





**Fair
      Value of Financial Instruments**




Our financial
      instruments, including cash and cash equivalents, accounts receivable, notes
      payable, accounts payable and accrued expenses, are carried at historical cost
      basis. At December 31, 2007, the carrying amounts of these instruments
      approximated their fair values because of the short-term nature of these
      instruments.




**Income
      Taxes**




We use
      the asset and liability method of accounting for income taxes in accordance
      with
      SFAS No. 109, “Accounting for Income Taxes.” Under this method, income tax
      expense is recognized for the amount of: (i) taxes payable or refundable
      for the current year; and, (ii) deferred tax consequences of temporary
      differences resulting from matters that have been recognized in an entity’s
      financial statements or tax returns. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on deferred tax assets and liabilities of a change in tax
      rates is recognized in the results of operations in the period that includes
      the
      enactment date. A valuation allowance is provided to reduce the deferred tax
      assets reported if, based on the weight of the available positive and negative
      evidence, it is assumed that some portion or all of the deferred tax assets
      will
      not be realized. A liability (including interest if applicable) is established
      in the consolidated financial statements to the extent a current benefit has
      been recognized on a tax return for matters that are considered contingent
      upon
      the outcome of an uncertain tax position. Applicable interest is included as
      a
      component of income tax expense and income taxes payables.




In
      June 2006, the FASB issued SFASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB
      Statement No. 109” (“FIN 48”). This statement which clarifies the accounting for
      uncertainty in income taxes recognized in an enterprise’s financial statements
      in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48, which is effective for fiscal years beginning
      after December 15, 2006, also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. We adopted the provisions of FIN 48 at inception.
      The adoption of the provisions of FIN 48 did not have a material impact on
      our
      financial position and results of operations.




**Intangible
      Assets**




We
      record
      the purchase of intangible assets in accordance with SFAS 142 “Goodwill and
      Other Intangible Assets” and we record intangible assets acquired in business
      combinations in accordance with SFAS 141 “Business Combinations.”




Customer
      relationships are amortized based upon the estimated percentage of annual or
      period projected cash flows generated by such relationships, to the total cash
      flows generated over the estimated three year life of the Customer
      relationships.





Developed
      Technology is being amortized on a straight-line basis over 5
      years.





**Goodwill**




We test
      goodwill for impairment in accordance with the provisions of Statement of
      Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other
      Intangible Assets”. Accordingly, goodwill is tested for impairment at least
      annually at the reporting unit level or whenever events or circumstances
      indicate that goodwill might be impaired. We have determined its reporting
      units
      based on the guidance in SFAS No. 142 and Emerging Issues Task Force
      (“EITF”) Issue D-101, “Clarification of Reporting Unit Guidance in
      Paragraph 30 of FASB Statement No. 142.” As of December 31, 2007, our
      reporting units consisted of Customer Acquisition Network, Inc. and Desktop.
      We
      have elected to test for goodwill impairment annually as of December 31,
      2007.





We
      completed our annual goodwill impairment test as of December 31, 2007 and
      determined that no adjustment to the carrying value of goodwill was required.


15


**Stock-based
      Compensation**




Compensation
      expense associated with the granting of stock based awards to employees and
      directors and non-employees is recognized in accordance with SFAS No.
      123(R), ”Share Based Payment” and related interpretations. SFAS No. 123(R)
      requires companies to estimate and recognize the fair value of stock-based
      awards to employees and directors. The value of the portion of an award that
      is
      ultimately expected to vest is recognized as an expense over the requisite
      service periods using the straight-line attribution method.





**Basic
      and Diluted Net Income Per Common Share**




Basic
      net
      income per common share is computed by dividing net income by the
      weighted-average number of shares of common stock outstanding for the period.
      Diluted net income per common share is computed using the weighted-average
      number of common shares outstanding for the period, and, if dilutive, potential
      common shares outstanding during the period. Potential common shares consist
      of
      the incremental common shares issuable upon the exercise of stock options,
      stock
      warrants, convertible debt instruments or other common stock
      equivalents.





**Contingencies
      and Litigation**





We
      evaluate contingent liabilities including threatened or pending litigation
      in
      accordance with SFAS No. 5, "Accounting for Contingencies" and record
      accruals when the outcome of these matters is deemed probable and the liability
      is reasonably estimable. We make these assessments based on the specific facts
      and circumstances of each matter.




**Recently
      Issued Accounting Standards**




In
      December 2007, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 141 (revised
      2007), "Business Combinations" ("SFAS 141R"). SFAS 141R requires that
      upon initially obtaining control, an acquirer will recognize 100% of the fair
      values of acquired assets, including goodwill, and assumed liabilities, with
      only limited exceptions, even if the acquirer has not acquired 100% of its
      target. Additionally, contingent consideration arrangements will be fair valued
      at the acquisition date and included on that basis in the purchase price
      consideration and transaction costs will be expensed as incurred. SFAS 141R
      also modifies the recognition for preacquisition contingencies, such as
      environmental or legal issues, restructuring plans and acquired research and
      development value in purchase accounting. SFAS 141R amends SFAS
      No. 109, "Accounting for Income Taxes," to require the acquirer to
      recognize changes in the amount of its deferred tax benefits that are
      recognizable because of a business combination either in income from continuing
      operations in the period of the combination or directly in contributed capital,
      depending on the circumstances. SFAS 141R is effective for us for business
      combinations for which the acquisition date is on or after January 1, 2009.
      The impact of adopting SFAS 141R will be dependent on the future business
      combinations that we may pursue after its effective date.




In
      December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
      Consolidated Financial Statements" ("SFAS 160"). This Statement amends
      Accounting Research Bulletin No. 51, "Consolidated Financial Statements,"
      to establish accounting and reporting standards for the non-controlling interest
      in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
      required to be adopted simultaneously with SFAS 141R and is effective for
      us on January 1, 2009. We do not currently have any non-controlling
      interests in our subsidiaries, and accordingly, the adoption of SFAS 160 is
      not expected to have a material impact on our consolidated financial position,
      cash flows or results of operations.




In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
      ("SFAS 157"). This Statement defines fair value as used in numerous
      accounting pronouncements, establishes a framework for measuring fair value
      under GAAP and expands disclosures related to the use of fair value measures
      in
      financial statements. SFAS 157 is effective for us on January 1, 2008.
      In February 2008, the FASB issued FASB Staff Position, "FSP
      FAS 157-2—Effective Date of FASB Statement No. 157," which delays the
      effective date of SFAS 157 for one year for certain nonfinancial assets and
      nonfinancial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (at least annually).
      Excluded from the scope of SFAS 157 are certain leasing transactions
      accounted for under SFAS No. 13, "Accounting for Leases." The exclusion
      does not apply to fair value measurements of assets and liabilities recorded
      as
      a result of a lease transaction but measured pursuant to other pronouncements
      within the scope of SFAS 157. We do not expect that the adoption of
      SFAS 157 will have a material impact on our consolidated financial
      position, cash flows or results of operations.




16




In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an Amendment of FASB
      Statement No. 115" ("SFAS 159"). This statement permits entities to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates, amends FASB Statement No. 115
      "Accounting for Certain Investments in Debt and Equity Securities" and expands
      disclosures related to the use of fair value measures in financial statements.
      SFAS 159 is effective for us on January 1, 2008. We do not believe
      that the adoption of SFAS 159 will have a material impact on our
      consolidated financial position, cash flows or results of operations.




**Inflation**





Inflation
      was not a material factor in either our revenue or operating expenses
      during the fiscal year ended December 31, 2007.


**Risk
          Factors**
  *There
          are numerous and varied risks, known and unknown, that may prevent us from
          achieving our goals. If any of these risks actually occur, our business,
          financial condition or results of operation may be materially adversely
          affected. In such case, the trading price of our common stock could decline
          and
          investors could lose all or part of their investment.*
  **Risks
          Relating to the Company**
  ***Our
          limited operating history makes evaluation of our business
          difficult.***
  Our
          wholly-owned subsidiary, Customer Acquisition Network, Inc. was formed
          in June
          2007. We have limited historical financial data upon which to base planned
          operating expenses or forecast accurately our future operating results.
          Further,
          our limited operating history will make it difficult for investors and
          securities analysts to evaluate our business and prospects. You must consider
          our prospects in light of the risks, expenses and difficulties we face
          as an
          early stage company with a limited operating history. Investors should
          evaluate
          an investment in our company in light of the uncertainties encountered
          by
          start-up companies in an intensely competitive industry. There can be no
          assurance that our efforts will be successful or that we will be able to
          attain
          profitability. We are also completely reliant on management on the prospects
          for
          acquisitions for our future operations and success.
  ***We
          may need additional funding to support our operations and capital expenditures,
          which may not be available to us and which lack of availability could adversely
          affect our business.***
  Although
          we have obtained $750,000 of additional equity capital on March 31, 2008,
          we
          have no committed sources of additional capital. We may need additional
          funds to
          support our growth, fund future acquisitions, pursue business opportunities,
          react to unforeseen difficulties or to respond to competitive pressures.
          There
          can be no assurance that any financing arrangements will be available in
          amounts
          or on terms acceptable to us, if at all. Furthermore, the sale of additional
          equity or convertible debt securities may result in further dilution to
          existing
          stockholders. If we raise additional funds through the issuance of debt,
          we will
          be required to service that debt and are likely to become subject to restrictive
          covenants and other restrictions contained in the instruments governing
          that
          debt, which may limit our operational flexibility. If adequate additional
          funds
          are not available, we may be required to delay, reduce the scope of or
          eliminate
          material parts of the implementation of our business strategy, including
          the
          possibility of additional acquisitions or internally developed
          businesses.
  ***We
            have experienced losses to date, and, as of our last audit at the end
            of 2007,
            our independent registered public accounting firm expressed substantial
            doubt
            about our ability to continue as a going concern.***
 
 Our
            independent registered public accounting firm has included an explanatory
            paragraph in their report on our consolidated financial statements included
            in this annual report on Form 10-KSB expressing substantial doubt as
            to our
            ability to continue as a going concern. The accompanying consolidated
            financial
            statements have been prepared assuming that we will continue as a going
            concern,
            however, there can be no assurance that we will be able to do so. Our
            losses and
            difficulty in generating sufficient cash flow to meet our obligations
            and
            sustain our operations, raises substantial doubt about our ability to
            continue
            as a going concern, and our consolidated financial statements do not
            include any
            adjustments that might result from the outcome of this uncertainty. In
            order to
            continue our operations we would need to generate sufficient operating
            cash
            flow, and raise additional funds through either debt financing or  the
            public or private offerings of our securities. However, there is no guarantee
            that we will be able to obtain further financing, or generate sufficient
            operating cash flows.
  ***We
          may make acquisitions, which could divert management’s attention, cause
          ownership dilution to our stockholders and be difficult to
          integrate.***
  Our
          business strategy depends in part upon our ability to identify, structure
          and
          integrate acquisitions that are complementary with our business model.
          Acquisitions, strategic relationships and investments in the technology
          and
          Internet sectors involve a high degree of risk. We may also be unable to
          find a
          sufficient number of attractive opportunities, if any, to meet our objectives.
          Although many technology and Internet companies have grown in terms of
          revenue,
          few companies are profitable or have competitive market share. Our potential
          acquisitions, relationships or investment targets and partners may have
          histories of net losses and may expect net losses for the foreseeable
          future.
  17
 Acquisition
          transactions are accompanied by a number of risks that could harm us and
          our
          business, operating results and financial condition:
  ·
                we
                    could experience a substantial strain on our resources, including
                    time and
                    money, and we may not be
                    successful;
  ·
                our
                    management’s attention may be diverted from our ongoing business
                    concerns;
  ·
                while
                    integrating new companies, we may lose key executives or other
                    employees
                    of these companies;
  ·
                we
                    could experience customer dissatisfaction or performance problems
                    with an
                    acquired company or technology;
  ·
                we
                    may become subject to unknown or underestimated liabilities of
                    an acquired
                    entity or incur unexpected expenses or losses from such acquisitions;
                    and
  ·
                we
                    may incur possible impairment charges related to goodwill or
                    other
                    intangible assets or other unanticipated events or circumstances,
                    any of
                    which could harm our business.
  Consequently,
          we might not be successful in integrating any acquired businesses, products
          or
          technologies, and might not achieve anticipated revenue and cost
          benefits.
  ***We
          may be unable to effect an acquisition or incorrectly ascertain the merits
          or
          risks of an acquired company.***
  To
          the
          extent we complete future acquisitions, we may be affected by numerous
          risks
          inherent in its business operations. Although our management will endeavor
          to
          evaluate the risks inherent in a business or industry, we cannot assure
          you that
          we will properly ascertain or assess all of the significant risk factors.
  ***We
          may be unable to attract and retain key employees.***
  Failure
          to attract and retain necessary technical personnel and skilled management
          could
          adversely affect our business. Our success depends to a significant degree
          upon
          our ability to attract, retain and motivate highly skilled and qualified
          personnel. If we fail to attract, train and retain sufficient numbers of
          these
          highly qualified people, our prospects, business, financial condition and
          results of operations will be materially and adversely affected. Our success
          will depend on the skills, experience and performance of key members of
          our
          management team. The loss of any key employee could have an adverse effect
          on
          our prospects, business, financial condition, and results of operations.
          Although we intend to issue stock options or other equity-based compensation
          to
          attract and retain employees, such incentives may not be sufficient to
          attract
          and retain key personnel.
  Although
          we have an experienced senior management team, the lack of depth of our
          management team could put us at a competitive disadvantage. Not all members
          of
          our management team will possess public company experience, which could
          impair
          our ability to comply with legal and regulatory requirements such as those
          imposed by Sarbanes-Oxley Act of 2002. Such responsibilities include complying
          with federal securities laws and making required disclosures on a timely
          basis.
          There can be no assurance that our management will be able to implement
          and
          affect programs and policies in an effective and timely manner that adequately
          respond to such increased legal, regulatory compliance and reporting
          requirements. Our failure to do so could lead to the imposition of fines
          and
          penalties and further result in the deterioration of our business.
  18
 ***We
          may not be able to effectively manage our growth.***
  Our
          strategy envisions growing our business. If we fail to effectively manage
          our
          growth, our financial results could be adversely affected. Growth may place
          a
          strain on our management systems and resources. We must continue to refine
          and
          expand our business development capabilities, our systems and processes
          and our
          access to financing sources. As we grow, we must continue to hire, train,
          supervise and manage new employees. We cannot assure you that we will be
          able
          to:
  ·
                meet
                    our capital needs;
 
 ·
                expand
                    our systems effectively or efficiently or in a timely
                    manner;
 
 ·
                allocate
                    our human resources optimally;
 
 ·
                identify
                    and hire qualified employees or retain valued employees;
                    or
  ·
                incorporate
                    effectively the components of any business that we may acquire
                    in our
                    effort to achieve growth.
  If
          we are
          unable to manage our growth, our operations and /or our financial results
          could be adversely affected.
  ***The
          loss of our management could harm our current and future operations and
          prospects.***
  We
          are
          heavily dependent on the continued services of the management and employees
          of
          acquired businesses. Even though all of the members of our senior management
          have entered into employment agreements with us, such agreements allow
          our
          executives, in certain circumstances, to terminate the term of their employment
          with us. We do not expect to enter into employment agreements with all
          the
          members of our senior management in the future. Each of those individuals
          without employment agreements may voluntarily terminate employment with us
          at any time. In certain cases, our senior members of management will be
          entitled
          to severance payments for termination by us or their own voluntary
          termination of their employment.
  ***If
          we are unable to obtain adequate insurance, our financial condition could
          be
          adversely affected in the event of uninsured or inadequately insured loss
          or
          damage. Our ability to effectively recruit and retain qualified officers
          and
          directors could also be adversely affected if we experience difficulty
          in
          obtaining adequate directors’ and officers’ liability
          insurance.***
  We
          may
          not be able to obtain insurance policies on terms affordable to us that
          would
          adequately insure our business and property against damage, loss or claims
          by
          third parties. To the extent our business or property suffers any damages,
          losses or claims by third parties, which are not covered or adequately
          covered
          by insurance, our financial condition may be materially adversely
          affected.
  We
          may be
          unable to maintain sufficient insurance as a public company to cover liability
          claims made against our officers and directors. If we are unable to adequately
          insure our officers and directors, we may not be able to retain or recruit
          qualified officers and directors to manage us.
  **Risks
          Relating to Our Organization**
  ***We
          are now subject to the reporting requirements of the federal securities
          laws,
          which can be expensive.***
  We
          became
          a public reporting company as a result of a reverse merger consummated
          on August
          28, 2007 and accordingly, are subject to the information and reporting
          requirements of the Securities Exchange Act of 1934, as amended, (the “Exchange
          Act”) and other federal and state securities laws, including compliance with
          the
          Sarbanes-Oxley Act of 2002. The costs of preparing and filing annual and
          quarterly reports, proxy statements and other information with the Securities
          Exchange Commission (the “SEC”) and furnishing audited reports to stockholders
          will cause our expenses to be higher than they would have been if we were
          not a
          public company.
  19
 It
          may be
          time consuming, difficult and costly for us to develop and implement the
          internal controls and reporting procedures required by the Sarbanes-Oxley
          Act.
          We may need to hire additional financial reporting, internal controls and
          other
          finance personnel in order to develop and implement appropriate internal
          controls and reporting procedures. If we are unable to comply with the
          internal
          controls requirements of the Sarbanes-Oxley Act, we may not be able to
          obtain
          the independent accountant certifications required by such Act, if
          applicable.
 
 ***Public
          company compliance may make it more difficult to attract and retain officers
          and
          directors.***
  The
          Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have
          required changes in corporate governance practices of public companies.
          As a
          public company, we expect these new rules and regulations to increase our
          compliance costs and to make certain activities more time consuming and
          costly
          than if we were not a public company. As a public company, we also expect
          that
          these new rules and regulations may make it more difficult and expensive
          for us
          to obtain director and officer liability insurance in the future and we
          may be
          required to accept reduced policy limits and coverage or incur substantially
          higher costs to obtain the same or similar coverage. As a result, it may
          be more
          difficult for us to attract and retain qualified persons to serve on our
          Board
          of Directors or as executive officers.
  ***Our
          largest stockholders can exert significant control over our business and
          affairs
          and have actual or potential interests that may depart from those of our
          other
          stockholders.***
  Our
          largest stockholders own a substantial number of shares of our common stock.
          Additionally, these figures do not reflect the increased percentages that
          they
          may have in the event that they exercise any of the warrants they may hold
          or in
          the future be granted, or exercise any conversion privilege under any
          convertible debt securities held or if they otherwise acquire additional
          shares
          of our common stock. The interests of such persons may differ from the
          interests
          of other stockholders. As a result, in addition to their positions with
          us, such
          persons will have significant influence over and control all corporate
          actions
          requiring stockholder approval, irrespective of how our other stockholders
          may
          vote, including the following actions:
  20
  ·
                elect
                    or defeat the election of our
                    directors;
 
 ·
                amend
                    or prevent amendment of our Certificate of Incorporation or
                    By-laws;
 
 
 
 ·
                effect
                    or prevent a merger, sale of assets or other corporate transaction;
                    and
 
 ·
                control
                    the outcome of any other matter submitted to the shareholders
                    for
                    vote.
  In
          addition, such persons’ stock ownership may discourage a potential acquirer from
          making a tender offer or otherwise attempting to obtain control of us,
          which in
          turn could reduce our stock price or prevent our stockholders from realizing
          a
          premium over our stock price.
  **Risks
          Relating to Our Business**
  ***We
          will be dependent upon several of the major search engines and website
          publishers to continue to provide us traffic that advertisers deem to be
          of
          value, and if they do not, it could have a material adverse effect on the
          value
          of our services.***
  We
          will
          be dependent upon several of the major top tier website publishers, as
          well as
          Internet search engines such as Google, Yahoo! and MSN to provide traffic
          that
          merchant advertisers deem to be of value. These publishers can change the
          amount
          of inventory they make available to us at any time. If a website publisher
          decides not to make advertising space available to us, we may not be able
          to
          adequately replace that space with other publishers, from a total inventory
          point-of-view or a user demographic point-of-view.
  ***We
          may be subject to litigation for infringing the intellectual property rights
          of
          others.***
  Our
          success will depend, in part, on our ability to protect our intellectual
          property and to operate without infringing on the intellectual property
          rights
          of others. There can be no guarantee that any of our intellectual property
          will
          be adequately safeguarded, or that they will not be challenged by third
          parties.
          We may be subject to patent infringement claims or other intellectual property
          infringement claims that would be costly to defend and could limit our
          ability
          to use certain critical technologies.
  If
          we
          were to acquire or develop a related product or business model that a third
          party construes as infringing upon a patent, then we could be asked to
          license,
          re-engineer our product(s) or revise our business model according to terms
          that
          may be extremely expensive and/or unreasonable. Additionally, if a third-party
          construes any of our current products or business models as infringing
          upon the
          above-referenced patent, then we could be asked to license, re-engineer
          our
          product(s) or revise our business model according to terms that could be
          extremely expensive and/or unreasonable.
  Any
          patent litigation could negatively impact our business by diverting resources
          and management attention from other aspects of the business and adding
          uncertainty as to the ownership of technology and services that we view
          as
          proprietary and essential to our business. In addition, a successful claim
          of
          patent infringement against us and our failure or inability to license
          the
          infringed or similar technology on reasonable terms, or at all, could have
          a
          material adverse effect on our business.
  21
 ***We
          may be involved in lawsuits to protect or enforce any patents that we may
          be
          granted, which could be expensive and time consuming.***
  We
          may
          initiate patent litigation against third parties to protect or enforce
          our
          patent rights, although we presently do not own any patents, and we may
          be
          similarly sued by others. We may also become subject to interference proceedings
          conducted in the patent and trademark offices of various countries to determine
          the priority of inventions. The defense and prosecution, if necessary,
          of
          intellectual property suits, interference proceedings and related legal
          and
          administrative proceedings is costly and may divert our technical and management
          personnel from their normal responsibilities. We may not prevail in any
          of these
          suits. An adverse determination of any litigation or defense proceedings
          could
          put our patents at risk of being invalidated or interpreted narrowly and
          could
          put our patent applications at risk of not being issued.
  Furthermore,
          because of the substantial amount of discovery required in connection with
          intellectual property litigation, there is a risk that some of our confidential
          information could be compromised by disclosure during this type of litigation.
          In addition, during the course of this kind of litigation, there could
          be public
          announcements of the results of hearings, motions or other interim proceedings
          or developments in the litigation. If securities analysts or investors
          perceive
          these results to be negative, it could have an adverse effect on the trading
          price of our common stock.
  **Risks
          Relating to Our Industry**
  ***Our
          ability to grow will depend on effectively competing against Google and
          other
          competitors that are competing in or about to enter the pay-for-performance
          business in the future.***
  Our
          business plans depend in part on our ability to effectively offer an
          alternative, multi-channel pay-for-performance solution to advertisers
          relative
          to Google and other competitive offerings.
  Should
          advertisers in this new, evolving business model choose to spend the significant
          majority of their pay-for-performance advertising budgets with Google and
          other
          competitors, this will limit our ability to grow our revenues.
  The
          Web
          sites that will list their unsold advertising space with us are not bound
          by
          contracts that ensure us a consistent supply of advertising space, called
          inventory. In addition, publishers can change the amount of inventory they
          make
          available to us at any time. If a Web site publisher decides not to make
          advertising space from its Web sites available to us, we may not be able
          to
          replace this advertising space with advertising space from other Web sites
          that
          have comparable traffic patterns and user demographics quickly enough to
          fulfill
          our advertisers' requests. This could result in lost revenues.
  Our
          growth is limited by our ability to expand our advertising inventory. In
          order
          to attract new customers, we must maintain a consistent supply of attractive
          advertising space. We intend to expand our advertising inventory by selectively
          adding to our networks new publishers that offer attractive demographics,
          innovative and quality content and growing user traffic.
  22
 The
          market for Internet advertising and related services is intensely competitive.
          We expect this competition to continue to increase because there are no
          significant barriers to entry. Increased competition may result in price
          reductions for advertising space, reduced margins and loss of our market
          share.
          We will compete with the following types of companies:
   ·
                Internet
                  advertisement
                  networks that focus on CPM generated revenues such as Advertising.com
                  and
                  Specific Media
  ·
                Internet
                    advertising networks that focus on the pay-for-performance model,
                    such as
                    Value Click Media and CPX
                    Interactive;
  ·
                Internet
                    affiliate networks using a performance based model, such as Media
                    Breakaway/CPA Empire, Hydra Media and Media Whiz
                    Holdings;
  ·
                Email
                    publishers and Data Management firms that utilize performance
                    based models
                    such as Datran Media.
  ·
                Web
                    Contextual search engine companies moving into the pay-for-performance
                    space such as Google.
  We
          also
          compete with traditional advertising media, such as direct mail, television,
          radio, cable and print, for a share of advertisers' total advertising budgets.
          Many of our current and potential competitors enjoy competitive advantages
          over
          us, such as longer operating histories, greater name recognition, larger
          customer bases, greater access to advertising space on high-traffic Web
          sites,
          and significantly greater financial, technical and marketing resources.
          We may
          not be able to compete successfully, and competitive pressures may materially
          and adversely affect our business, results of operations and financial
          condition.
  Some
          of
          our competitors, as well as potential entrants into our market, may be
          better
          positioned to succeed in this market. They may have:
  ·
                longer
                    operating histories;
 
 ·
                more
                    management experience;
  ·
                an
                    employee base with more extensive
                    experience;
 
 ·
                a
                    better ability to service customers in multiple cities in the
                    United
                    States and internationally by virtue of the location of sales
                    offices;
  ·
                larger
                    customer bases;
 
 ·
                greater
                    brand recognition; and
  ·
                significantly
                    greater financial, marketing and other
                    resources.
  In
          addition, many current and potential competitors can devote substantially
          greater resources than we can to promotion, web site development and systems
          development. Furthermore, there are numerous larger, more well-established
          and
          well-financed entities with which we will compete and that could acquire
          or
          create competing companies and/or invest in or form joint ventures in categories
          or countries of interest to us, all of which could adversely impact our
          business. Any of these trends could increase competition and reduce the
          demand
          for any of our services.
  ***If
          we are not able to respond to the rapid technological change characteristic
          of
          our industry, our products and services may not be
          competitive.***
  The
          market for our services is characterized by rapid change in business models
          and
          technological infrastructure, and we will need to constantly adapt to changing
          markets and technologies to provide competitive services. We believe that
          our
          future success will depend, in part, upon our ability to develop our services
          for both our target market and for applications in new markets. We may
          not,
          however, be able to successfully do so, and our competitors may develop
          innovations that render our products and services obsolete or
          uncompetitive.
  23
  ***Our
          technical systems in the future will be vulnerable to interruption and
          damage
          that may be costly and time-consuming to resolve and may harm our business
          and
          reputation.***
  A
          natural
          or man-made disaster or other cause could interrupt our services for an
          indeterminate length of time and severely damage our business, prospects,
          financial condition and results of operations. Our systems and operations
          will
          be vulnerable to damage or interruption from fire, floods, network failure,
          hardware failure, software failure, power loss, telecommunications failures,
          break-ins, terrorism, war or sabotage, computer viruses, denial of service
          attacks, penetration of our network by unauthorized computer users and
“hackers”
and other similar events, and other unanticipated problems.
  We
          presently may not possess and may not have developed or implemented adequate
          protections or safeguards to overcome any of these events. We also may
          not have
          anticipated or addressed many of the potential events that could threaten
          or
          undermine our technology network. Any of these occurrences could cause
          material
          interruptions or delays in our business, result in the loss of data, render
          us
          unable to provide services to our customers, expose us to material risk
          of loss
          or litigation and liability, materially damage our reputation and our visitor
          traffic may decrease as a result. In addition, if a person is able to circumvent
          our security measures, he or she could destroy or misappropriate valuable
          information or disrupt our operations which could cause irreparable damage
          to
          our reputation or business. Similar industry-wide concerns or events could
          also
          damage our reputation or business. Our insurance, if obtained, may not
          be
          adequate to compensate us for all losses that may occur as a result of
          a
          catastrophic system failure or other loss, and our insurers may not be
          able or
          may decline to do so for a variety of reasons.
  If
          we
          fail to address these issues in a timely manner, we may lose the confidence
          of
          our merchant advertisers, our revenue may decline and our business could
          suffer.
  ***We
          will rely on third party co-location providers, and a failure of service
          by
          these providers could adversely affect our business and
          reputation.***
  We
          will
          rely upon third party co-location providers to host our main servers. In
          the
          event that these providers experience any interruption in operations or
          cease
          operations for any reason or if we are unable to agree on satisfactory
          terms for
          continued hosting relationships, we would be forced to enter into a relationship
          with other service providers or assume hosting responsibilities ourselves.
          If we
          are forced to switch hosting facilities, we may not be successful in finding
          an
          alternative service provider on acceptable terms or in hosting the computer
          servers ourselves. We may also be limited in our remedies against these
          providers in the event of a failure of service. In the past, short-term
          outages
          have occurred in the service maintained by co-location providers which
          could
          recur. We also may rely on third party providers for components of our
          technology platform, such as hardware and software providers, credit card
          processors and domain name registrars. A failure or limitation of service
          or
          available capacity by any of these third party providers could adversely
          affect
          our business and reputation.
 
 ***We
          are susceptible to general economic conditions, and a downturn in advertising
          and marketing spending by advertisers could adversely affect our operating
          results.***
  Our
          operating results will be subject to fluctuations based on general economic
          conditions, in particular those conditions that impact merchant-consumer
          transactions. If there were to be a general economic downturn that affected
          consumer activity in particular, however slight, then we would expect that
          business entities, including our merchant advertisers and potential merchant
          advertisers, could substantially and immediately reduce their advertising
          and
          marketing budgets. We believe that during periods of lower consumer activity,
          merchant spending on advertising and marketing is more likely to be reduced,
          and
          more quickly, than many other types of business expenses. These factors
          could
          cause a material adverse effect on our operating results.
  24
 ***We
          depend on the growth of the Internet and Internet infrastructure for our
          future
          growth and any decrease or less than anticipated growth in Internet usage
          could
          adversely affect our business prospects.***
  Our
          future revenue and profits, if any, depend upon the continued widespread
          use of
          the Internet as an effective commercial and business medium. Factors which
          could
          reduce the widespread use of the Internet include:
  ·
                possible
                    disruptions or other damage to the Internet or telecommunications
                    infrastructure;
 
 ·
                failure
                    of the individual networking infrastructures of our merchant
                    advertisers
                    and distribution partners to alleviate potential overloading
                    and delayed
                    response times;
  ·
                a
                    decision by merchant advertisers to spend more of their marketing
                    dollars
                    in offline areas;
 
 ·
                increased
                    governmental regulation and taxation;
                    and
  ·
                actual
                    or perceived lack of security or privacy
                    protection.
  In
          particular, concerns over the security of transactions conducted on the
          Internet
          and the privacy of users may inhibit the growth of the Internet and other
          online
          services, especially online commerce. In order for the online commerce
          market to
          develop successfully, we, and other market participants, must be able to
          transmit confidential information, including credit card information, securely
          over public networks. Any decrease or less than anticipated growth in Internet
          usage could have a material adverse effect on our business
          prospects.
  ***Government
          regulation of the Internet may adversely affect our business and operating
          results.***
  We
          may be
          subject to additional operating restrictions and regulations in the future.
          Companies engaging in online search, commerce and related businesses face
          uncertainty related to future government regulation of the Internet. Due
          to the
          rapid growth and widespread use of the Internet, legislatures at the federal
          and
          state levels are enacting and considering various laws and regulations
          relating
          to the Internet. Furthermore, the application of existing laws and regulations
          to Internet companies remains somewhat unclear. Our business and operating
          results may be negatively affected by new laws, and such existing or new
          regulations may expose us to substantial compliance costs and liabilities
          and
          may impede the growth in use of the Internet.
  The
          application of these statutes and others to the Internet search industry
          is not
          entirely settled. Further, several existing and proposed federal laws could
          have
          an impact on our business:
  ·
                The
                    Digital Millennium Copyright Act and its related safe harbors,
                    are
                    intended to reduce the liability of online service providers
                    for listing
                    or linking to third-party web sites that include materials that
                    infringe
                    copyrights or other rights of
                    others.
  ·
                The
                    CAN-SPAM Act of 2003 and certain state laws are intended to regulate
                    interstate commerce by imposing limitations and penalties on
                    the
                    transmission of unsolicited commercial electronic mail via the
                    Internet.
  ·
                Pending
                    and adopted consumer protection and privacy
                    legislation.
  With
          respect to the subject matter of each of these laws, courts may apply these
          laws
          in unintended and unexpected ways. As a company that provides services
          over the
          Internet, we may be subject to an action brought under any of these or
          future
          laws governing online services. We may also be subject to costs and liabilities
          with respect to privacy issues. Several Internet companies have incurred
          costs
          and paid penalties for violating their privacy policies. Further, it is
          anticipated that new legislation will be adopted by federal and state
          governments with respect to user privacy. Additionally, foreign governments
          may
          pass laws which could negatively impact our business or may prosecute us
          for our
          products and services based upon existing laws. The restrictions imposed
          by, and
          costs of complying with, current and possible future laws and regulations
          related to our business could harm our business and operating
          results.
  25
 ***Future
          regulation of search engines may adversely affect the commercial utility
          of our
          publishers’ or our own future search marketing
          services.***
  The
          Federal Trade Commission (“FTC”) has recently reviewed the way in which search
          engines disclose paid placements or paid inclusion practices to Internet
          users.
          In 2002, the FTC issued guidance recommending that all search engine companies
          ensure that all paid search results are clearly distinguished from non-paid
          results, that the use of paid inclusion is clearly and conspicuously explained
          and disclosed and that other disclosures are made to avoid misleading users
          about the possible effects of paid placement or paid inclusion listings
          on
          search results. Such disclosures if ultimately mandated by the FTC or
          voluntarily made by us may reduce the desirability of any paid placement
          and
          paid inclusion services that we offer. We believe that some users may conclude
          that paid search results are not subject to the same relevancy requirements
          as
          non-paid search results, and will view paid search results less favorably.
          If
          such FTC disclosure reduces the desirability of our publishers’ or our own
          future paid placement and paid inclusion services, and “click-throughs” of paid
          search results decrease, the commercial utility of search marketing services
          could be adversely affected.
  **Risks
          Relating to the Common Stock**
  ***Since
          we are not obligated to register the shares of common stock sold in the
          private
          placement for resale, stockholders may need to rely on an exemption from
          the
          registration requirements in order to sell such shares of common
          stock.***
  In
          July
          and August 2007, we sold 7,138,000 shares of our common stock at an
          offering price of $1.00 per share in a private placement and received
          aggregate net proceeds of $6,990,547, net of offering costs of $139,453. We
          are not obligated to file a “resale” registration statement with the SEC that
          covers the common stock sold in the private placement. If we do not register
          all
          of the common stock, such unregistered shares would only be able to be
          sold
          pursuant to an exemption from registration under the Securities Act, such
          as
          Rule 144, that permits the resale of securities following twelve months
          after
          the issuance of such securities, subject to certain volume
          limitations.
  ***We
          may be unable to register for resale all of our shares of common stock
          included
          as part of the consideration in the merger by and among us, Desktop Interactive,
          Inc., Customer Acquisition Network, Inc., and Desktop Acquisition Subsidiary,
          Inc. (the “Desktop Merger”) in which case we may be subject to the payment of
          liquidated damages.***
  We
          are
          obligated to file a “resale” registration statement with the SEC that covers all
          3,500,000 shares of common stock included as consideration in the Desktop
          Merger. If such a resale registration statement fails to be declared effective
          by the SEC by August 31, 2009, then we must pay liquidated damages in cash
          (the
“Additional Amounts”). The Additional Amounts shall accrue at a rate equal to
          Seventy-Nine Cents ($0.79) per One Thousand (1,000) shares of common stock
          held
          per day for the first thirty (30) day period from August 31, 2009, and
          thereafter at a rate equal to One Dollar and Thirty-Two Cents ($1.32) per
          One
          Thousand share of common stock held per day, payable on the fifth (5 th )
          business day of each month following an Additional Amounts accrual period
          by
          wire transfer of immediately available funds. Following the cure of our
          failure
          to perform pursuant to registration rights provisions under the Shareholders
          Rights Letter, the accrual of Additional Amounts shall cease. Although
          we
          believe that we will be able to take all steps necessary to permit the
          SEC to
          declare our registration statement effective, it is possible that the SEC
          may,
          by application of policies or procedures, which may change over time, delay
          the
          effectiveness of the registration statement or make it impractical for
          us to
          respond to the SEC in a manner which permits the SEC to declare the registration
          statement effective.
  26
 If
          we are
          not able to cause the registration statement to be declared effective,
          then the
          Former Desktop Shareholders will need to rely on exemptions from the
          registration requirements of the Securities Act, such as Rule 144. Such
          exemptions typically limit the amount of shares that an investor can sell,
          require that the shares be sold in certain types of transactions, require
          that
          the investor have held the shares to be sold for a minimum period of time
          and
          limit the number of times that an investor may sell its shares.
  ***Persons
          associated with securities offerings, including consultants, may be deemed
          to be
          broker dealers, which may expose us to claims for rescission or
          damages.***
  If
          our
          securities are offered without engaging a registered broker-dealer we may
          face
          claims for rescission and other remedies. We may become engaged in costly
          litigation to defend these claims, which would lead to increased expenditures
          for legal fees and divert managements’ attention from operating the business. If
          we could not successfully defend these claims, we may be required to return
          proceeds of the Private Placement to investors, which would harm our financial
          condition.
  ***Our
          stock price may be volatile.***
  The
          market price of our common stock is likely to be highly volatile and could
          fluctuate widely in price in response to various factors, many of which
          are
          beyond our control, including the following:
  ·
                competitive
                    pricing pressures;
 
 ·
                our
                    ability to obtain working capital
                    financing;
 ·
                additions
                    or departures of key personnel;
 
 ·
                limited
                    “public float”, in the hands of a small number of persons whose sales or
                    lack of sales, could result in positive or negative pricing pressure
                    on
                    the market price for our common
                    stock;
  ·
                sales
                    of our common stock (particularly following effectiveness of
                    the resale
                    registration statement required to be filed in connection with
                    the
                    Shareholder Rights Letter);
 
 ·
                our
                    ability to execute our business
                    plan;
  ·
                operating
                    results that fall below
                    expectations;
 
 ·
                loss
                    of any strategic relationship;
  ·
                regulatory
                    developments;
 
 ·
                economic
                    and other external factors; and
  ·
                period-to-period
                    fluctuations in our financial
                    results.
  In
          addition, the securities markets have from time to time experienced significant
          price and volume fluctuations that are unrelated to the operating performance
          of
          particular companies. These market fluctuations may also materially and
          adversely affect the market price of our common stock.
  27
 ***We
          have not paid dividends in the past and do not expect to pay dividends
          in the
          future. Any return on investment may be limited to the value of our common
          stock.***
  We
          have
          never paid cash dividends on our common stock and do not anticipate doing
          so in
          the foreseeable future. The payment of dividends on our common stock will
          depend
          on earnings, financial condition and other business and economic factors
          affecting us at such time as our board of directors may consider relevant.
          If we
          do not pay dividends, our common stock may be less valuable because a return
          on
          investment will only occur if our stock price appreciates.
  ***Our
          common stock is deemed a “penny stock”, which may make it more difficult for our
          investors to sell their shares.***
  Our
          common stock is subject to the “penny stock” rules adopted under Section 15(g)
          of the Securities Exchange Act of 1934. The penny stock rules apply to
          companies
          whose common stock is not listed on a national securities exchange and
          trades at
          less than $5.00 per share or that have tangible net worth of less than
          $5,000,000 ($2,000,000 if the company has been operating for three or more
          years). These rules require, among other things, that brokers who trade
          penny
          stock to persons other than “established customers” complete certain
          documentation, make suitability inquiries of investors and provide investors
          with certain information concerning trading in the security, including
          a risk
          disclosure document and quote information under certain circumstances.
          Many
          brokers have decided not to trade penny stocks because of the requirements
          of
          the penny stock rules and, as a result, the number of broker-dealers willing
          to
          act as market makers in such securities is limited. If we remain subject
          to the
          penny stock rules for any significant period, it could have an adverse
          effect on
          the market, if any, for our securities. In as much as our securities are
          subject
          to the penny stock rules, investors will find it more difficult to dispose
          of
          our securities.
  ***Offers
          or availability for sale of a substantial number of shares of our common
          stock
          may cause the price of our common stock to decline.***
  If
          our
          stockholders sell substantial amounts of our common stock in the public
          market,
          or upon the expiration of any statutory holding period, under Rule 144,
          or
          expiration of lock-up periods applicable to outstanding shares, or issued
          upon
          the exercise of outstanding options or warrants, it could create a circumstance
          commonly referred to as an “overhang” and in anticipation of which the market
          price of our common stock could fall. The existence of an overhang, whether
          or
          not sales have occurred or are occurring, also could make more difficult
          our
          ability to raise additional financing through the sale of equity or
          equity-related securities in the future at a time and price that we deem
          reasonable or appropriate. The shares of common stock issued to our officers,
          directors, and greater than 10% stockholders in the Merger are subject
          to a
          lockup agreement prohibiting sales of such shares for a period of 18 months
          following the Private Placement. Following such date, all of those shares
          will
          become freely tradable, subject to securities laws and SEC regulations
          regarding
          sales by insiders. In addition, the shares of common stock sold in the
          Private
          Placement (including the shares underlying the Warrants sold therein) will
          be
          freely tradable upon the earlier of: (i) effectiveness of a registration
          statement covering such shares; and (ii) the date on which such shares
          may be
          sold without registration pursuant to Rule 144 under the Securities Act.
          Recently proposed revisions to Rule 144 may shorten the current holding
          period
          under Rule 144 in which case the overhang period may arise earlier than
          would
          otherwise be the case.
  ***Anti-takeover
          provisions may limit the ability of another party to acquire us, which
          could
          cause our stock price to decline.***
  We
          are
          subject to Section 203 of the Delaware General Corporation Law, which provides,
          subject to enumerated exceptions, that if a person acquires 15% or more
          of our
          voting stock, the person is an “interested stockholder” and may not engage in
“business combinations” with us for a period of three years from the time the
          person acquired 15% or more of our voting stock.


**Item
      7. Financial Statements**





Our financial
      statements appear in a separate section of this annual report on this
      Form 10-KSB beginning on page F-1.







28




**ITEM
        7. FINANCIAL STATEMENTS**




**Customer
                  Acquisition Network Holdings, Inc. Index to Consolidated Financial
                  Statements**




**Page******Customer
                Acquisition Network Holdings, Inc. Consolidated Financial
                StatementsReport
                of Salberg & Company, P.A., Independent Registered Public Accounting
                Firm
            
            F-2Consolidated
                Balance Sheet at December 31, 2007
            
            F-3Consolidated
                Statements of Operations for the period from June 14, 2007 (inception)
                to
                December 31, 2007
            
            F-4Consolidated
                Statements of Changes in Stockholders' Equity for the period from
                June 14,
                2007 (inception) to December 31, 2007
            
            F-5Consolidated
                Statements of Cash Flows for the period from June 14, 2007 (inception)
                to
                December 31, 2007
            
            F-6Notes
                to Consolidated Financial Statements
            
            F-7


F-1


**Report
        of Independent Registered Public Accounting Firm**
 
 To
        the
        Board of Directors and Stockholders’ of:
 Customer
        Acquisition Network Holdings, Inc.
 
 We
        have
        audited the accompanying consolidated balance sheet of Customer Acquisition
        Network Holdings, Inc. and Subsidiaries as of December 31, 2007, and the
        related
        consolidated statements of operations, changes in stockholders’ equity, and cash
        flows for the period from June 14, 2007 (Inception) to December 31, 2007.
        These
        consolidated financial statements are the responsibility of the Company’s
        management. Our responsibility is to express an opinion on these consolidated
        financial statements based on our audit.
 
 We
        conducted our audit in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the
        consolidated financial statements are free of material misstatement. An audit
        includes examining, on a test basis, evidence supporting the amounts and
        disclosures in the consolidated financial statements. An audit also includes
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall consolidated financial
        statement presentation. We believe that our audit provides a reasonable
        basis for our opinion.
  In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Customer
        Acquisition Network Holdings, Inc. and Subsidiaries as of December 31, 2007,
        and
        the consolidated results of its operations and its cash flows for the period
        from June 14, 2007 (Inception) to December 31, 2007, in conformity with
        accounting principles generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        the
        Company will continue as a going concern. As discussed in Note 1 to the
        consolidated financial statements, the Company reported a net loss of $3,232,967
        and used cash for operating activities of $2,239,231 during the period from
        June
        14, 2007 (Inception) to December 31, 2007 and, as of December 31, 2007, had
        a
        working capital deficiency of $343,167. These matters raise substantial doubt
        about the Company’s ability to continue as a going concern. Management’s plans
        as to these matters are also described in Note 1. The consolidated financial
        statements do not include any adjustments that might result from the
        outcome of this uncertainty.
  /s/ SALBERG & COMPANY, P.A.
 SALBERG
        & COMPANY, P.A.
 Boca
        Raton, Florida
 March
        27,
        2008


F-2




**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEET**


**DECEMBER
      31, 2007**


**Assets**Current
                  assets:Cash
                  and cash equivalents
              
              $
              3,675,483Accounts
                  receivable, net
              
              
              3,390,302Prepaid
                  assets
              
              
              55,750Total
                  current assets
              
              
              7,121,535Property
                  and equipment, net
              
              
              512,031Intangible
                  assets (net of accumulated amortization of $302,062)
              
              
              1,028,621Goodwill
              
              
              7,909,571Deferred
                  debt issue costs, (net of $13,932 amortization)
              
              
              77,505Deferred
                  future acquisition costs
              
              
              129,333Other
                  assets
              
              
              66,937Total
                  assets
              
              $
              16,845,533**Liabilities
                  and Stockholders’ Equity**Current
                  liabilities:Secured
                  Senior Notes Payable (net of debt discount of $1,127,084)
              
              $
              3,872,916Capital
                  lease obligation, current portion
              
              
              9,290Accounts
                  payable
              
              
              2,499,604Accrued
                  expenses
              
              
              1,046,719Accrued
                  interest
              
              
              36,173Total
                  current liabilities
              
              $
              7,464,702Capital
                  lease obligation, net of current portion
              
              
              19,317Total
                  liabilities
              
              $
              7,484,019Commitments
                  and contingencies (note 10)
              
              
              -Stockholders’
                  equity:Preferred
                  Stock, $0.001 par value; 10,000,000 shares authorized, zero shares
                  issued
                  and outstanding
              
              $
              -Common
                  Stock, $0.001 par value; 140,000,000 shares authorized, 34,979,667
                  issued
                  and outstanding
              
              
              34,980Additional
                  paid-in capital
              
              
              12,737,982Accumulated
                  deficit
              
              
              (3,232,967
              )Deferred
                  consulting
              
              
              (178,481
              )Total
                  stockholders’ equity
              
              
              9,361,514**Total
                  liabilities and stockholders’ equity**
              
              $
              16,845,533




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




F-3




**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FROM
      JUNE 14, 2007 (INCEPTION) TO DECEMBER 31, 2007**


Revenues
              
              $
              6,654,768Cost
                  of revenue
              
              
              5,315,418Gross
                  profit
              
              
              1,339,350Operating
                  expenses:General
                  and administrative (includes stock-based compensation of
                  $954,167)
              
              
              2,442,705Sales
                  and marketing
              
              
              1,073,884Technology
                  support
              
              
              748,968Amortization
                  of intangible assets
              
              
              302,062Merger,
                  acquisition and organizational costs
              
              
              187,353Bad
                  debt expense
              
              
              116,055Total
                  operating expenses
              
              
              4,871,027Loss
                  from operations
              
              
              (3,531,677
              )Other
                  income (expense)Interest
                  income
              
              
              36,727Interest
                  expense
              
              
              (276,017
              )Total
                  other income (expense), net
              
              
              (239,290
              )(Loss)
                  before income tax benefit
              
              $
              (3,770,967
              )Income
                  tax benefit
              
              
              538,000Net
                  loss
              
              $
              (3,232,967
              )Net
                  loss per share - basic
              
              $
              (0.12
              )Weighted
                  average shares outstanding - basic
              
              
              28,025,035Net
                    loss per share - diluted
              
              $
              (0.12
              )Weighted
                average shares outstanding - diluted
              
              
              28,025,035




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




F-4


**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC. AND SUBSIDIARIES**


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


**FROM
      JUNE 14, 2007 (INCEPTION) TO DECEMBER 31, 2007**




**Additional**
              
              
              
              
              
              
              
              
              **Total****Common
                  Stock**
              
              
              **Paid-In**
              
              
              **Deferred**
              
              
              **Accumulated**
              
              
              **Stockholders'****Stock**
              
              
              **Amount**
              
              
              **Capital**
              
              
              **Consulting**
              
              
              **Deficit**
              
              
              **Equity****Balance
                  as of June 14, 2007 (Inception)**
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,232,967
              )
              
              (3,232,967
              )Issuance
                  of Common Stock to founders and officers
              
              
              16,600,000
              
              
              16,600
              
              
              -
              
              
              -
              
              
              -
              
              
              16,600Recapitalization
                  and split-off
              
              
              6,575,000
              
              
              6,575
              
              
              (6,575
              )
              
              -
              
              
              -
              
              
              -Issuance
                  of Common Stock through private placement, net of offering costs
                  of
                  $139,453
              
              
              7,138,000
              
              
              7,138
              
              
              6,991,409
              
              
              -
              
              
              -
              
              
              6,998,547Issuance
                  of Common Stock in connection with Desktop Interactive, Inc.
                  merger
              
              
              3,500,000
              
              
              3,500
              
              
              3,496,500
              
              
              -
              
              
              -
              
              
              3,500,000Conversion
                  of convertible notes to common stock
              
              
              500,000
              
              
              500
              
              
              249,500
              
              
              -
              
              
              -
              
              
              250,000Warrants
                  granted for professional services
              
              
              -
              
              
              -
              
              
              267,722
              
              
              (267,722
              )
              
              -
              
              
              -Amortization
                  of deferred consulting - warrants
              
              
              -
              
              
              -
              
              
              -
              
              
              89,241
              
              
              -
              
              
              89,241Warrants
                  granted for professional services
              
              
              -
              
              
              -
              
              
              594,000
              
              
              (594,000
              )
              
              -
              
              
              -Amortization
                  of deferred consulting - warrants
              
              
              -
              
              
              -
              
              
              -
              
              
              594,000
              
              
              -
              
              
              594,000Exercise
                of warrants
              
              
              600,000
              
              
              600
              
              
              5,400
              
              
              -
              
              
              -
              
              
              6,000Stock
                  Options expense
              
              
              
              
              
              
              
              
              270,926
              
              
              -
              
              
              -
              
              
              270,926Issuance
                  of Common Stock in connection with settlement of certain
                  liabilities
              
              
              66,667
              
              
              67
              
              
              66,600
              
              
              -
              
              
              -
              
              
              66,667Issuance
                  of Common Stock in connection with issuance of notes
                  payable
              
              
              -
              
              
              -
              
              
              802,500
              
              
              -
              
              
              -
              
              
              802,500**Balance,
                  December 31, 2007**
              
              
              34,979,667
              
              $
              34,980
              
              $
              12,737,982
              
              $
              (178,481
              )
              $
              (3,232,967
              )
              $
              9,361,514




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




F-5




**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENT OF CASH FLOWS**


FROM
      JUNE 14, 2007 (INCEPTION) TO DECEMBER 31,
      2007


**Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (3,232,967
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
              
              
              44,896Amortization
                  of debt issue costs
              
              
              13,932Bad
                  debt expense
              
              
              116,055Amortization
                  of intangibles
              
              
              301,379Amortization
                  of debt discount
              
              
              225,416Non-cash
                  stock consulting expense - warrant
              
              
              683,241Non-cash
                  stock compensation expense - options
              
              
              270,926Changes
                    in operating assets and liabilities, (net of effects of
                    acquisition)Increase
                  in Accounts receivable
              
              
              (1,785,866
              )Increase
                  in Prepaid expenses
              
              
              (55,750
              )Increase
                  in Other assets
              
              
              (31,064
              )Increase
                  in Accounts payable
              
              
              955,235Increase
                  in Accrued expenses
              
              
              219,163Increase
                  in Accrued interest
              
              
              36,173Net
                  cash used in operating activities
              
              $
              (2,239,231
              )**Cash
                  flows from investing activities:**Purchases
                  of equipment
              
              
              (464,371
              )Acquisition
                  of subsidiary
              
              
              (5,202,800
              )Deferred
                  future acquisition costs
              
              
              (129,333
              )Cash
                  acquired in acquisition
              
              
              82,260Net
                  cash used in investing activities
              
              $
              (5,714,244
              )**Cash
                  flows from financing activities:**Principal
                  payments under capital lease
              
              
              (751
              )Proceeds
                  from issuance of Notes Payable (net of $550,000 cash fees)
              
              
              4,450,000Debt
                  issue costs
              
              
              (91,438
              )Proceeds
                  from convertible promissory notes
              
              
              250,000Proceeds
                  from private placement (net of offering costs of $139,453)
              
              
              6,998,547Proceeds
                  from issuance of common stock - Founders
              
              
              16,600Proceeds
                  from exercise of warrants
              
              
              6,000Net
                  cash provided by financing activities
              
              $
              11,628,958Net
                  increase in cash and cash equivalents
              
              
              3,675,483Cash
                  and cash equivalents at beginning of year
              
              
              -Cash
                  and cash equivalents at end of year
              
              $
              3,675,483**Supplemental
                  disclosure of cash flow information**Cash
                  paid during the year for interest
              
              $
              -Cash
                  paid during the year for income taxes
              
              $
              -Non-cash
                  investing and financing activities:Issuance
                  of common stock in business combination
              
              $
              3,500,000Conversion
                    of convertible notes
              
              $
              250,000Issuance
                  of common stock in connection with issuance of Senior Secured Notes
                  Payable
              
              $
              802,500Stock
                  issued in settlement of accounts payable
              
              $
              66,667Capital
                  lease obligation and related equipment
              
              $
              29,358


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




F-6




**CUSTOMER
      ACQUISITION NETWORK HOLDINGS, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**DECEMBER
      31, 2007**





**Note
      1.**  **Nature
      of Operations and Basis of Presentation**





**Overview**





Customer
      Acquisition Network, Inc.  was formed in Delaware on June 14,
      2007.





Outsiders
      Entertainment, Inc.  was incorporated on March 4, 2002 under the laws of
      the State of Delaware. On August 28, 2007 the name was changed to Customer
      Acquisition Network Holdings, Inc.





On
      August
      28, 2007, Customer Acquisition Network Holdings, Inc. ("Holdings"), entered
      into
      an Agreement and Plan of Merger and Reorganization (the “CAN Merger Agreement”)
      by and among Holdings, Customer Acquisition Network, Inc. ("CAN"), and CAN
      Acquisition Sub Inc., a newly formed, wholly-owned Delaware subsidiary of
      Holdings (“CAN Acquisition Sub”). The merger transaction contemplated under the
      CAN Merger Agreement (the “CAN Merger”) was consummated on August 28, 2007, at
      which time CAN Acquisition Sub was merged with and into CAN, and CAN, as
      the surviving corporation, became a wholly-owned subsidiary of
      Holdings.




On
      August
      31, 2007, Holdings entered into an Agreement and Plan of Merger (the “Desktop
      Merger Agreement”) by and among Holdings, Desktop Interactive, Inc., a privately
      held Delaware corporation (“Desktop”), CAN and Desktop Acquisition Sub, Inc., a
      newly formed, wholly-owned Delaware subsidiary of Holdings (“Desktop Acquisition
      Sub”). The merger transaction contemplated under the Desktop Merger Agreement
      (the “Desktop Merger"), was consummated on August 31, 2007, at which time,
      Desktop Acquisition Sub was merged into Desktop, and Desktop, as the surviving
      corporation, became a wholly-owned subsidiary of Holdings.




After
      the
      CAN Merger, Holdings succeeded to the business of CAN as its sole line of
      business. Desktop owned and operated an Internet advertising network serving
      Internet advertising to website publishers including proprietary ad serving
      technology operated under the name “Interclick.” After the Desktop Merger, we
      also continued to operate the Desktop business.




Unless
      the context requires otherwise, references to the "Company," "CAN," "we," "our"
      and "us" for periods prior to the closing of our reverse merger on
      August 28, 2007, refer to Customer Acquisition Network, Inc., a
      private Delaware corporation that is now our wholly-owned subsidiary, and
      references to the "Company," “Holdings”, "we," "our" and "us" for periods
      subsequent to the closing of the reverse merger on August 28, 2007, refer
      to Customer Acquisition Network Holdings, Inc., a publicly traded company,
      and its subsidiaries, Customer Acquisition Network, Inc and Desktop
      Acquisition Sub, Inc.





The
      Company was previously presented as a development stage company. Upon its
      acquisition of Desktop on August 31, 2007, the Company exited the development
      stage.





On
      June
      28, 2007, the Company entered into employment contracts with the Company’s
      current Chief Executive Officer, Chief Operating Officer and Chief Financial
      Officer (the “Officers”). As part of their employment contracts, the Officers
      were granted collectively, 2.6 million shares of founders common stock for
      which they paid the fair market value. Coincident with entering into the
      Officers’ employment agreements, the Company’s then two majority shareholders
      advanced $250,000 to the Company in the form of convertible notes, convertible
      at $.50 or 500,000 shares.




In
      July
      2007, CAN commenced, through a private offering, the raising of additional
      equity capital for the primary purpose of acquiring internet platform networks
      across multiple channels of distribution (e.g. email, ad and affiliate
      networks) as well as funding general operations and expansion. As of the final
      closing of the private offering on August 31, of 2007, CAN and its parent
      Holdings raised $6,998,547, net of offering costs in permanent
      equity.





F-7





**Merger
      with Customer Acquisition Network Holdings, Inc.**





On
      August
      28, 2007, Holdings entered into the CAN Merger Agreement by and among Holdings,
      CAN and CAN Acquisition Sub. Upon closing of the CAN Merger, CAN Acquisition
      Sub
      merged with and into CAN, and CAN, as the surviving corporation, became a
      wholly-owned subsidiary of Holdings. Prior to the CAN Merger, Holdings’ name was
      changed to Customer Acquisition Network Holdings, Inc. and Holdings effected
      a
      10.9583333333 -for-1 share split of its common stock (the “Stock Split”). All
      share and per share data in the accompanying financial statements have been
      adjusted retroactively, for the effect of the recapitalization and subsequent
      stock split.




At
      the
      closing of the CAN Merger, each share of  CAN's common stock issued
      and outstanding, 24,238,000 immediately prior to the closing of the CAN Merger,
      was converted into the right to receive one share of Holdings’ common stock. In
      addition, pursuant to the CAN Merger Agreement and under the terms of an
      attendant Agreement of Conveyance, Transfer and Assignment of Assets and
      Assumption of Obligations, Holdings transferred all of its pre- CAN Merger
      assets and liabilities to its newly formed wholly owned subsidiary, Outsiders
      Entertainment Holdings, Inc. (“Splitco”). Subsequently, Holdings transferred all
      of its outstanding capital stock of Splitco to a major stockholder of Holdings
      in exchange for cancellation of all shares of Holdings’ common stock held by
      such shareholder (the “Split off”). The remaining shares outstanding (6,575,000,
      excluding the Holdings shares issued to CAN’s shareholders as a result of the
      CAN Merger), represent the surviving “Public Float” shares, of which 2.6 million
      shares are restricted.




**Recapitalization**




Prior
      to
      the closing of the CAN Merger, Holdings had limited operations and net assets.
      At the same time, CAN had significantly more capital than Holdings and had
      commenced certain publishing/advertising operations. In addition, as discussed
      in “Merger with Desktop,” below, after the closing of the CAN Merger, Holdings
      consummated the Desktop Merger and effected the Split off. As a result
      of these facts and the former shareholders of CAN obtaining voting and
      management control of the combined entity, the CAN Merger is considered and
      accounted for as a recapitalization of CAN, with CAN being considered as the
      acquirer and Holdings the acquiree for accounting purposes. Accordingly, the
      Company’s financial statements for periods prior to the CAN Merger become those
      of the accounting acquirer, retroactively restated for the equivalent number
      of
      shares received in the CAN Merger. Operations prior to the CAN Merger are those
      of the Company and earnings per share for the period prior to the CAN Merger
      are
      restated to reflect the equivalent number of shares outstanding.




On
      a
      recapitalized basis, as of December 31, 2007, upon the closing of the CAN Merger
      and reflecting the effects of the Split off, Desktop Acquisition and other
      issuances of shares, there are 34,979,667 total shares outstanding as of
      December 31, 2007 of which 6,575,000 shares represent the Public Float. There
      are 2.6 million Public Float shares that are restricted.




**Merger
      with Desktop**




On
      August
      31, 2007, Holdings entered into and consummated an Agreement and Plan of Merger
      (the “Desktop Merger”), wherein Holdings acquired 100% of Desktop Interactive,
      Inc. (“Desktop”), a privately held Delaware corporation engaged in the internet
      advertising business. The initial merger consideration (the “Merger
      Consideration”) consisted of $4.0 million in cash and 3.5 million shares of
      Holdings’ stock valued at $1 per share, for a total initial purchase price of
      $7.5 million. In addition, Holdings also incurred legal and other fees
      associated with the Desktop Merger of approximately $359,799, agreed to pay
      a
      past service bonus of $200,000 and subsequently paid an earn-out payment of
      $643,000, for a total purchase price of $8,702,799.





F-8




During
        the period from the issue date to the effective date of a resale registration
        statement which includes such shares or until a date the sellers are able
        to
        dispose of such shares without restriction and pursuant to the termination
        of a
        lock-up period (discussed below) if the parent sells or grants any option
        to
        purchase or sells or grants any right to reprice common stock or common
        stock equivalents at a price below $1.00 the Company shall issue additional
        shares to the seller as anti-dilution protection to ensure the value of such
        total stock based consideration value at $3,500,000.




The
      shares of Holdings’ stock issued in conjunction with the Desktop
      Merger are subject to a 12-month lockup beginning August 31, 2007. The
      3,500,000 shares also contain registration rights whereby the Company shall
      register the shares on or before the 24-month anniversary of the closing date
      or
      August 31, 2009 (effectiveness deadline) and maintain effectiveness until all
      stock is sold under the registration statement or Rule 144. Upon a default
      of
      effectiveness or maintenance of effectiveness as further defined in the
      shareholder rights letter the Company shall pay liquidated damages of $0.79
      per
      1,000 shares held per day for the first 30 days and thereafter at a rate of
      $1.32 per 1,000 shares held per day for each subsequent 30 day period until
      such
      default is cured.




In
      addition to the initial merger consideration, Holdings was obligated to pay
      an additional $1 million (the “Earn Out”) because Desktop achieved certain
      revenue and gross margins, as defined, in the 90 day period subsequent to
      closing the Desktop Merger. In addition, if Desktop achieves other certain
      revenues, as defined, the Earn Out is subject to acceleration.





Pursuant
      to the terms of the Desktop Merger, on October 5, 2007, $643,000 was paid as
      part of the Desktop earn-out and the purchase price and goodwill was adjusted
      for purposes of applying purchase accounting under Statement of Financial
      Accounting Standards (SFAS) No. 141, “Business Combinations”.




Holdings
      has accounted for the acquisition utilizing the purchase method of accounting
      in
      accordance with SFAS 141. The results of operations of Desktop Interactive,
      Inc.
      is included in the consolidated results of operations of the Company beginning
      on September 1, 2007. The net purchase price, including acquisition costs paid,
      was allocated to the fair value of assets acquired and liabilities assumed
      as
      follows:




Current
                assets (including cash of $82,260)
            
            $
            1,802,751Property
                and equipment
            
            
            63,197Other
                assets
            
            
            35,873Goodwill
            
            
            7,909,571Other
                intangibles
            
            
            1,330,000Liabilities
                assumed
            
            
            (1,882,593
            )Deferred
                tax liability
            
            
            (556,000
            )Net
                purchase price
            
            $
            8,702,799




Prior
      to
      its acquisition, the Company’s strategic evaluation of Desktop centered on
      Desktop’s publisher relationships and its achievable reach, otherwise referred
      to as scale. Reach is defined in terms of the percentage of the domestic online
      population that can be reached through advertisements served by Desktop. As
      December 31, 2007, as indicated by ComScore, the industry standard on which
      an ad network’s reach in terms of advertising impressions delivered is measured,
      Desktop ranks eleventh nationally with a 47% reach. This level of reach/scale
      is
      critical to Desktop’s ability to attract, retain and increase its advertising
      customer base and is the basis for recognizing $7,909,571, in goodwill as of
      December 31, 2007.




Intangible
      assets acquired include Customer Relationships valued at
      $540,000, Developed Technology valued at $790,000, and a domain name at
      $683, which is included in other assets in the above
      allocation.




Goodwill
      is expected to be deductible for income tax purposes over a period of 15
      years.




Unaudited
      pro forma results of operations data as if the Desktop Merger had occurred
      as of
      January 1, 2007 are as follows:


**Holdings
                  and Desktop****For
                  the year ended****December
                  31, 2007**Pro
                  forma revenues
              
              $
              11,896,788Pro
                  forma (loss) income from operations
              
              
              (3,671,555
              )Pro
                  forma net loss
              
              
              (3,133,555
              )Pro
                  forma loss per share
              
              $
              (.012
              )Pro
                  forma diluted loss per share
              
              $
              (.012
              )


F-9





**Merger
      with Options Media** **(See also subsequent events, Note 13)**





Subsequent
      to year end, on January 4, 2008, Holdings consummated an Agreement and Plan
      of
      Merger (the “Options Merger”), wherein Holdings formed, Options Acquisition Sub,
      Inc. (“Options Acquisition”), and Options Newsletter, Inc. (“Options
      Newsletter”) was merged into Options Acquisition, which is the surviving
      corporation and a subsidiary of Holdings.




Going
      Concern


As
          reflected in the accompanying consolidated financial statements, the Company
          has
          a net los of $3,232,967 and net cash used in operations of $2,239,231 for
          the
          year ended December 31, 2007, and working capital deficiency of $343,167,
          which
          includes $3,872,916 of net carrying value of Senior Secured
          Notes maturing at May 30, 2008. These matters and the Company’s expected
          needs for capital investments required to support operational growth, maturing
          debt and acquisition related earnout obligations, raise substantial doubt
          about
          its ability to continue as a going concern. Our consolidated financial
          statements do not include any adjustments to reflect the possible effects
          on
          recoverability and classification of assets or the amounts and classification
          of
          liabilities that may result from our inability to continue as a going
          concern.
 
 Since
          inception, we have financed our working capital and capital expenditure
          requirements primarily from the issuance of short term debt securities
          and sales
          of common stock as well as sales of online advertising services. With the
          acquisition of Options Media on January 4, 2008, we further expect to
          additionally finance our working capital, capital expenditures and ongoing
          operations through the provision of email and data management services
          as well
          as continuing to access the capital markets. In addition, the Company is
          pursuing the refinancing of its currently maturing debt and/or extending
          the
          maturity of such debt beyond December 31, 2008. In addition, we will pursue
          deferral of acquisition related earnout obligations on an as needed
          basis.
 
 On
        March
        31, 2008, we obtained $750,000 through the issuance of 300,000 shares of
        our
        common stock plus warrants. While we have heavily invested in our online
        advertising and will continue to invest in online advertising as well as
        email
        and data management services, we believe that based on our current cash and
        working capital position, our current and projected operations and our
        assessment of how potential equity and/or debt investors have viewed, and
        will
        continue to view, us and the expected growth in our business, we will be
        able to
        obtain the required capital and cash flows from operations to execute our
        business plan successfully and continue operations through December
        2008.
 
 Our
        business plan is based on our ability to generate future revenues from the
        sale
        of advertising, email and data management services and the obtaining of adequate
        capital to support our growth and operating activities. However, the time
        required for us to become profitable from operations is uncertain, and we
        cannot
        assure you that we will achieve or sustain operating profitability or generate
        sufficient cash flow and obtain the necessary capital to meet our planned
        capital expenditures, working capital and debt service
        requirements.
 
 We
        believe that actions being taken by management as discussed above provide
        the
        opportunity to allow us to continue as a going concern.




**Note
      2.** **Significant
      Accounting Policies**





**Use
      of Estimates**





Our
      consolidated financial statements are prepared in accordance with accounting
      principles generally accepted in the United States (“GAAP”). These accounting
      principles require us to make certain estimates, judgments and assumptions.
      We
      believe that the estimates, judgments and assumptions upon which we rely are
      reasonable based upon information available to us at the time that these
      estimates, judgments and assumptions are made. These estimates, judgments and
      assumptions can affect the reported amounts of assets and liabilities as of
      the
      date of our consolidated financial statements as well as the reported amounts
      of
      revenues and expenses during the periods presented. Our consolidated financial
      statements would be affected to the extent there are material differences
      between these estimates and actual results. In many cases, the accounting
      treatment of a particular transaction is specifically dictated by GAAP and
      does
      not require management’s judgment in its application. There are also areas in
      which management’s judgment in selecting any available alternative would not
      produce a materially different result. Significant estimates in 2007 include
      the
      valuation of accounts receivable, purchase price fair value allocation for
      business combinations, valuation and amortization periods of intangible assets
      and deferred costs, valuation of goodwill, valuation of capital stock, options
      and warrants granted for services or recorded as debt discounts, or other
      non-cash purposes including business combinations and the estimate of the
      valuation allowance on deferred tax assets.





**Cash
      and Cash Equivalents**




The
      Company considers all short-term highly liquid investments with an original
      maturity at the date of purchase of three months or less to be cash equivalents.
      There were no cash equivalents at December 31, 2007.


F-10


**Principals
      of Consolidation**




The
      consolidated financial statements include the accounts of Customer Acquisition
      Network Holdings, Inc. and its wholly-owned subsidiaries. All significant
      inter-company balances and transactions have been eliminated in the
      consolidation.





**Accounts
      Receivable and Allowance for Doubtful Accounts Receivable**




Trade
      accounts receivables are stated at gross invoice amounts less an allowance
      for
      doubtful accounts receivable.




The
      Company estimates its allowance for doubtful accounts by evaluating specific
      accounts where information indicates the customers may have an inability to
      meet
      financial obligations, such as bankruptcy proceedings and receivable amounts
      outstanding for an extended period beyond contractual terms. In these cases,
      the
      Company uses assumptions and judgment, based on the best available facts and
      circumstances, to record a specific allowance for those customers against
      amounts due to reduce the receivable to the amount expected to be collected.
      These specific allowances are re-evaluated and adjusted as additional
      information is received. The amounts calculated are analyzed to determine the
      total amount of the allowance.




Direct
      write-offs are taken in the period when the Company has exhausted its efforts
      to
      collect overdue and unpaid receivables or otherwise evaluates
      other circumstances that indicate that the Company should abandon such
      efforts.





**Business
      Combinations**




The
      Company accounts for its acquisitions utilizing the purchase method of
      accounting. Under the purchase method of accounting, the total consideration
      paid is allocated to the underlying assets and liabilities, based on their
      respective estimated fair values. The excess of the purchase price over the
      estimated fair values of the net assets acquired is recorded as goodwill.
      Determining the fair value of certain acquired assets and liabilities,
      identifiable intangible assets in particular, is subjective in nature and often
      involves the use of significant estimates and assumptions including, but not
      limited to: estimates of revenue growth rates, determination of appropriate
      discount rates, estimates of advertiser and publisher turnover rates, and
      estimates of terminal values. These assumptions are generally made based on
      available historical information. Definite-lived identifiable intangible assets
      are amortized on a straight-line basis, as this basis approximates the expected
      cash flows from the Company’s existing definite-lived identifiable intangible
      assets.


**Property
        and Equipment**
 
 Property
        and equipment is stated at cost. Depreciation is computed using the straight
        line method and is expensed upon the estimated useful lives of the assets.
        Expenditures for additions and improvements are capitalized while repairs
        and
        maintenance are expensed as incurred.


**Intangible
      Assets**




The
      Company records the purchase of intangible assets not purchased in a
      business combination in accordance with SFAS 142 “Goodwill and Other Intangible
      Assets” and records intangible assets acquired in a business combination in
      accordance with SFAS 141 “Business Combinations”.




Customer
      Relationships are amortized based upon the estimated percentage of annual or
      period projected cash flows generated by such relationships, to the total cash
      flows generated over the estimated three year life of the Customer
      Relationships. Accordingly, amortization for the four month period ending
      December 31, 2007 is 46%, and amortization is 49% and 5% for the years
      ended December 31, 2008 and 2009, respectively.





Developed
      Technology is being amortized on a straight-line basis over 5
      years.





**Goodwill**




The
      Company tests goodwill for impairment in accordance with the provisions of
      Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and
      Other Intangible Assets”. Accordingly, goodwill is tested for impairment at
      least annually at the reporting unit level or whenever events or circumstances
      indicate that goodwill might be impaired. The Company has determined its
      reporting units based on the guidance in SFAS No. 142 and Emerging Issues
      Task Force (“EITF”) Issue D-101, “Clarification of Reporting Unit Guidance
      in Paragraph 30 of FASB Statement No. 142.” As of December 31, 2007, the
      Holdings reporting units consisted of the Company and Desktop. The Company,
      and
      now Holdings, has elected to test for goodwill impairment annually as of
      December 31, 2007.





We
      completed our annual goodwill impairment test as of December 31, 2007 and
      determined that no adjustment to the carrying value of goodwill was required.


F-11
  **Long-lived
        Assets**




Management
      evaluates the recoverability of the Company’s identifiable intangible assets and
      other long-lived assets in accordance with SFAS No. 144, “Accounting for
      the Impairment or Disposal of Long-lived Assets,” which generally requires the
      assessment of these assets for recoverability when events or circumstances
      indicate a potential impairment exists. Events and circumstances considered
      by
      the Company in determining whether the carrying value of identifiable intangible
      assets and other long-lived assets may not be recoverable include, but are
      not
      limited to: significant changes in performance relative to expected operating
      results, significant changes in the use of the assets, significant negative
      industry or economic trends, a significant decline in the Company’s stock price
      for a sustained period of time, and changes in the Company’s business strategy.
      In determining if impairment exists, the Company estimates the undiscounted
      cash
      flows to be generated from the use and ultimate disposition of these assets.
      If
      impairment is indicated based on a comparison of the assets’ carrying values and
      the undiscounted cash flows, the impairment loss is measured as the amount
      by
      which the carrying amount of the assets exceeds the fair market value of the
      assets.




**Revenue
      Recognition**




The
      Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”)
      No. 104, “Revenue Recognition in Financial Statements.”  Under SAB
      No. 104, the Company recognizes revenue when the following criteria have
      been met: persuasive evidence of an arrangement exists, the fees are fixed
      or
      determinable, no significant Company obligations remain, and collection of
      the
      related receivable is reasonably assured.




Revenues
      consist of amounts charged to customers, net of discounts, credits and amounts
      paid or due under revenue sharing arrangements, for actions on advertisements
      placed on our publisher vendor’s websites. The Company’s revenue is recognized
      in the period that the advertising impressions, click-throughs or actions occur,
      when lead-based information is delivered or, provided that no significant
      Company obligations remain, collection of the resulting receivable is reasonably
      assured, and prices are fixed or determinable. Additionally, consistent with
      the
      provisions of EITF Issue No. 99-19, “Reporting Revenue Gross as a Principal
      versus Net as an Agent,” the Company recognizes revenue as a principal.
      Accordingly, revenue is recognized on a gross basis.





**Cost
      of Revenue**




Cost
      of
      revenue consists of publisher fees. The Company becomes obligated to make
      payments related to the above fees in the period the advertising impressions,
      click-throughs, actions or lead-based information are delivered or occur. Such
      expenses are classified as cost of revenue in the corresponding period in which
      the revenue is recognized in the accompanying statement of operations.




**Fair
      Value of Financial Instruments**




The
      Company’s financial instruments, including cash and cash equivalents, accounts
      receivable, notes payable, accounts payable and accrued expenses, are carried
      at
      historical cost basis. At December 31, 2007, the carrying amounts of these
      instruments approximated their fair values because of the short-term nature
      of
      these instruments.




**Income
      Taxes**




The
      Company uses the asset and liability method of accounting for income taxes
      in
      accordance with SFAS No. 109, “Accounting for Income Taxes.” Under this
      method, income tax expense is recognized for the amount of: (i) taxes
      payable or refundable for the current year, and (ii) deferred tax
      consequences of temporary differences resulting from matters that have been
      recognized in an entity’s financial statements or tax returns. Deferred tax
      assets and liabilities are measured using enacted tax rates expected to apply
      to
      taxable income in the years in which those temporary differences are expected
      to
      be recovered or settled. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized in the results of operations in the period
      that includes the enactment date. A valuation allowance is provided to reduce
      the deferred tax assets reported if, based on the weight of the available
      positive and negative evidence, it is more likely than not some portion or
      all
      of the deferred tax assets will not be realized. A liability (including interest
      if applicable) is established in the consolidated financial statements to the
      extent a current benefit has been recognized on a tax return for matters that
      are considered contingent upon the outcome of an uncertain tax position.
      Applicable interest is included as a component of income tax expense and income
      taxes payables.




In
      June 2006, the FASB issued ***SFASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an
      interpretation of FASB Statement No. 109” (“FIN 48”).*** This
      statement which clarifies the accounting for uncertainty in income taxes
      recognized in an enterprise’s financial statements in accordance with SFAS No.
      109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold
      and measurement attribute for the financial statement recognition and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48, which is effective for fiscal years beginning after December 15, 2006,
      also
      provides guidance on derecognition, classification, interest and penalties,
      accounting in interim periods, disclosure, and transition. We adopted the
      provisions of FIN 48 on our inception date of June 14, 2007. The adoption of
      the
      provisions of FIN 48 did not have a material impact on our financial position
      and results of operations.




F-12




**Stock-based
      Compensation**




Compensation
      expense associated with the granting of stock based awards to employees and
      directors and non-employees is recognized in accordance with SFAS No.
      123(R), ”Share Based Payment” and related interpretations. SFAS No. 123(R)
      requires companies to estimate and recognize the fair value of stock-based
      awards to employees and directors. The value of the portion of an award that
      is
      ultimately expected to vest is recognized as an expense over the requisite
      service periods using the straight-line attribution method.




**Basic
      and Diluted Net Income Per Common Share**




Basic
      net
      income per common share is computed by dividing net income by the
      weighted-average number of shares of common stock outstanding for the period.
      Diluted net income per common share is computed using the weighted-average
      number of common shares outstanding for the period, and, if dilutive, potential
      common shares outstanding during the period. Potential common shares consist
      of
      the incremental common shares issuable upon the exercise of stock options,
      stock
      warrants, convertible debt instruments or other common stock equivalents.




**Recently
      Issued Accounting Standards**




In
      December 2007, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards ("SFAS") No. 141 (revised
      2007), "Business Combinations" ("SFAS 141R"). SFAS 141R requires that
      upon initially obtaining control, an acquirer will recognize 100% of the fair
      values of acquired assets, including goodwill, and assumed liabilities, with
      only limited exceptions, even if the acquirer has not acquired 100% of its
      target. Additionally, contingent consideration arrangements will be fair valued
      at the acquisition date and included on that basis in the purchase price
      consideration and transaction costs will be expensed as incurred. SFAS 141R
      also modifies the recognition for preacquisition contingencies, such as
      environmental or legal issues, restructuring plans and acquired research and
      development value in purchase accounting. SFAS 141R amends SFAS
      No. 109, "Accounting for Income Taxes," to require the acquirer to
      recognize changes in the amount of its deferred tax benefits that are
      recognizable because of a business combination either in income from continuing
      operations in the period of the combination or directly in contributed capital,
      depending on the circumstances. SFAS 141R is effective for us for business
      combinations for which the acquisition date is on or after January 1, 2009.
      The impact of adopting SFAS 141R will be dependent on the future business
      combinations that we may pursue after its effective date.




In
      December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in
      Consolidated Financial Statements" ("SFAS 160"). This Statement amends
      Accounting Research Bulletin No. 51, "Consolidated Financial Statements,"
      to establish accounting and reporting standards for the non-controlling interest
      in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
      required to be adopted simultaneously with SFAS 141R and is effective for
      us on January 1, 2009. We do not currently have any non-controlling
      interests in our subsidiaries, and accordingly, the adoption of SFAS 160 is
      not expected to have a material impact on our consolidated financial position,
      cash flows or results of operations.





In
      September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
      ("SFAS 157"). This Statement defines fair value as used in numerous
      accounting pronouncements, establishes a framework for measuring fair value
      under GAAP and expands disclosures related to the use of fair value measures
      in
      financial statements. SFAS 157 is effective for us on January 1, 2008.
      In February 2008, the FASB issued FASB Staff Position, "FSP
      FAS 157-2—Effective Date of FASB Statement No. 157," which delays the
      effective date of SFAS 157 for one year for certain nonfinancial assets and
      nonfinancial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (at least annually).
      Excluded from the scope of SFAS 157 are certain leasing transactions
      accounted for under SFAS No. 13, "Accounting for Leases." The exclusion
      does not apply to fair value measurements of assets and liabilities recorded
      as
      a result of a lease transaction but measured pursuant to other pronouncements
      within the scope of SFAS 157. We do not expect that the adoption of
      SFAS 157 will have a material impact on our consolidated financial
      position, cash flows or results of operations.




F-13




In
      February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an Amendment of FASB
      Statement No. 115" ("SFAS 159"). This statement permits entities to
      choose to measure many financial instruments and certain other items at fair
      value at specified election dates, amends FASB Statement No. 115
      "Accounting for Certain Investments in Debt and Equity Securities" and expands
      disclosures related to the use of fair value measures in financial statements.
      SFAS 159 is effective for us on January 1, 2008. We do not believe
      that the adoption of SFAS 159 will have a material impact on our
      consolidated financial position, cash flows or results of operations.




**Note
        3.** **Accounts
        Receivable**




Accounts
      Receivable at December 31, 2007 is as follows:




**2007**Accounts
                receivable
            
            $
            3,540,302Less:
                Allowance for doubtful accounts
            
            
            (150,000
            )**Accounts
                Receivable, net**
            
            $
            3,390,302




As
      of
      December 31, 2007, we recorded an allowance for doubtful accounts of
      $150,000 which represents an allowance percentage of 4.2% of our gross accounts
      receivable balance of $3,540,302.





Bad
      debt
      expense was $116,055 for the year ended December 31, 2007 as a portion of the
      allowance for doubtful accounts was allocated to identifiable assets acquired
      related to the August 31, 2007 Desktop Acquisition.




**Note
        4. **Property
        and equipment****


At December
      31, 2007, Property and equipment consisted of the following:




**Estimated
                useful life in
                years**
            
            **2007**Computer
                equipment and software
            
            
            3
            
            $
            453,226Office
                equipment
            
            
            3-5
            
            
            7,471Furniture
                and Fixtures. (Including equipment under capital lease. See Note
                6)
            
            
            5
            
            
            96,230Accumulated
                depreciation
            
            
            
            
            
            (44,896
            )**Property
                and equipment, net**
            
            
            
            
            $
            512,031




Depreciation
      expense was
      $44,896 for the year ended December 31, 2007.





**Note
      5.**  **Intangible
      Assets**





The
      Company records the purchase of intangible assets not purchased in a business
      combination in accordance with SFAS 142 “Goodwill and Other Intangible Assets”
and records intangible assets acquired in a business combination in accordance
      with SFAS 141 “Business Combinations”.




F-14





Intangible
      assets which were all acquired from the Desktop business combination were as
      follows at December 31, 2007:




Customer
                  relationships
              
              $
              540,000Developed
                  technology
              
              
              790,000Domain
                  name
              
              
              6831,330,683Accumulated
                  amortization
              
              
              (302,062
              )**Intangible
                  assets, net**
              
              $
              1,028,621





Customer
      Relationships are amortized based upon the estimated percentage of annual or
      period projected cash flows generated by such relationships, to the total cash
      flows generated over the estimated three year life of the Customer
      Relationships. Accordingly, amortization for the four month period ending
      December 31, 2007 is 46% and will be 49% and 5% for the years ended December
      31,
      2008 and 2009, respectively.





Developed
      Technology is being amortized on a straight-line basis over 5
      years.





The
      domain name is being amortized over its remaining life at acquisition date
      of
      six months.




Amortizaton
      expense for the period from June 14, 2007
      (Inception) to December 31, 2007 was $302,062.





**Note
        6. **Notes
        Payable and other obligations****




Secured
      Senior Notes payable and other obligations at December 31, 2007 consist
      of:




Debt
                  Discount
              
              AccumulatedPrincipal
              
              Original
                  Issue Discount
              
              Lender
                  Fee
              
              Common
                  Stock
              
              Amortization
                  of Debt Discount
              
              Notes
                  Payable net of Debt DiscountCustomer
                  Acquisition Network Holdings, Inc.8%
                  Senior Secured Promissory Notes due (May 2008)
              
              $
              5,000,000
              
              $
              (500,000
              )
              $
              (50,000
              )
              $
              (802,500
              )
              $
              225,416
              
              $
              3,872,916Equipment
                  - Capital lease obligation
              
              
              28,607
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              28,607Total
                  notes payable, long-term debt and other obligations
              
              
              5,028,607
              
              
              (500,000
              )
              
              (50,000
              )
              
              (802,500
              )
              
              225,416
              
              
              3,901,523Less:Current
                  maturities
              
              
              (5,009,290
              )
              
              500,000
              
              
              50,000
              
              
              802,500
              
              
              (225,416
              )
              
              (3,882,206
              )Amount
                  due after one year
              
              $
              19,317
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              19,317


***8%
      Senior Secured Promissory Notes due (May 2008)***





On
      November 30, 2007, pursuant to a purchase agreement we sold senior secured
      promissory notes (the “Notes”) in the original aggregate principal amount of
      $5,000,000. We received net proceeds in the amount of $4,500,000 net of $500,000
      of an Original Issue Discount upon sale of the Notes.





The
      Notes
      will mature on May 30, 2008 (the “Maturity Date”) and are accruing interest
      at the rate of 8% per annum, payable quarterly in cash. The Company, in the
      absence of an event of default and the satisfaction of certain conditions set
      forth in the Notes, shall be able to extend the Maturity Date from the original
      six months to nine months (the “Extended Maturity Date”) by delivering a written
      notice to the holders of the Notes within at least ten (10) but not more than
      twenty (20) business days prior to the Maturity Date. The Company, as one of
      the
      conditions to such extension, is obligated to issue an aggregate of 40,000
      shares of its common stock (the “Shares”), to be allocated among the Buyers on
      the Maturity Date. In accordance with the terms and conditions of the Purchase
      Agreement, the Company will grant to the Buyers, in connection with the issuance
      of the Shares, “piggyback” registration rights with respect to the Shares in the
      event that the Company registers any shares of common stock held by other
      stockholders of the company. Additionally, as one of the conditions to such
      extension, the interest rate will increase from 8% per annum to 12% per annum.




F-15





We
      used
      the net proceeds f rom
      the
      sale of the Notes first, to pay expenses and commissions related to the sale
      of
      the Notes and second, for the general working capital needs and acquisitions
      of
      companies or businesses reasonably related to internet marketing and
      advertising.





In
      addition, the Purchase Agreement contains certain customary negative covenants,
      including, without limitation, certain restrictions (subject to limited
      exceptions) on (i) the issuance of variable priced securities, (ii) purchases
      and payments, (iii) limitations on prepayments, (iv) incurrence of indebtedness,
      (v) sale of collateral, (vi) affiliate transactions and (vii) the ability to
      make loans and investments.





In
      consideration of the execution and delivery by the Buyers of the Agreement,
      by
      and among the Company and the Buyers, the Buyers purchased 150,000 common shares
      at a negotiated purchase price of $0.01 per share from a third party stockholder
      of the Company. On such date, the closing trading price of the Company's common
      stock on the Over The Counter Bulletin Board was $5.35. The purchase of the
      common shares at a favorable price from such third party stockholder was a
      material inducement to the Buyers entering into the transactions. Accordingly,
      under U.S. Generally Accepted Accounting Principles, of the $4.5 million
      received by the Company in connection with the sale of the senior notes to
      the
      Buyers, $802,500 has been allocated to the value of the common shares sold
      to
      the Buyers as if such common shares were contributed to the Company by the
      third
      party and then reissued by the Company in connection with the
      transactions.





The
      resulting debt discount created by the original issue discount, lender fees
      and
      the 150,000 common
      shares issued of
      $1,352,500 ,
      is
      being amortized to interest expense over the term of the debt using the straight
      line method. Amortization expense for the year ended December 31, 2007 is
      $225,416 and is included in interest expense. In addition, the Company incurred
      legal and other fees associated with the issuance of the Notes. Such fees of
      $91,437 are included in Deferred debt issue costs and are being amortized to
      interest expense over the term of the debt using the straight line
      method. Amortization included in interest expense is $13,932.





Accrued
      interest related to the above notes at December 31, 2007, was
      $33,333.




The
      Notes
      are secured by a first security interest on all of Holding’s and its
      subsidiaries’ assets pursuant to a security agreement. The Purchase Agreement
      also provides for the pledge by Holdings and each of its subsidiaries of all
      of
      the capital stock or other equity interests held by them as collateral for
      the
      Notes, pursuant to a pledge agreement. In addition, each of the Holding’s
      subsidiaries has entered into a guaranty, guaranteeing Holding’s performance
      under the Purchase Agreement, Notes and related transaction
      documents.




In
      addition, the Company shall transfer all existing funds on deposit in each
      of
      its bank accounts on a daily basis to one or more deposit account(s) that are
      subject to an Account Control Agreement. The Account Control Agreement serves
      as
      collateral for all of the Company’s and its subsidiaries cash accounts. In the
      event of default the lenders will have full access to all of the Company’s cash
      accounts as set forth in the Account Control Agreement.




**Convertible
                Promissory Notes**




In
      June
      2007, the Company’s then two majority shareholders advanced $250,000 to the
      Company in the form of convertible notes at $125,000 each, bearing interest
      at
      8% per annum mandatorily convertible at $.50 or 500,000 shares upon the Company
      entering into a financing arrangement of over $2,000,000. The
      Company determined that in accordance with SFAS 133, the embedded conversion
      options were not derivatives at the debt issuance date of June 28, 2007 or
      the
      balance sheet date of July 31, 2007, because the Company was not publicly traded
      prior to the August 28, 2007, merger and therefore, the underlying shares were
      not easily convertible to cash. In addition, there was no intrinsic beneficial
      conversion value of the conversion rights. On August 28, 2007, the shareholders
      converted the principal and interest of $250,000 into 500,000 shares (See
      Note 9.)


**Furniture
        and Fixtures – Capital lease obligation**
  In
        December 2007, Desktop purchased Furniture and Fixtures for $ 29,358 through
        a
        Financing agreement, payable in 36 installments of $ 882. Interest is calculated
        at 5.57% per annum.




F-16





**Note
      7.**  **Net Loss per Share**





Basic
      earnings per share are computed using the weighted average number of common
      shares outstanding during the period. Diluted earnings per share are computed
      using the weighted average number of common and potentially dilutive securities
      outstanding during the period. Potentially dilutive securities consist of the
      incremental common shares issuable upon exercise of stock options and warrants
      and conversion of convertible debt (using the treasury stock method).
      Potentially dilutive securities are excluded from the computation if their
      effect is anti-dilutive. The treasury stock effect of options, warrants and
      conversion of convertible debt to shares of common stock outstanding at December
      31, 2007, respectively, has not been included in the calculation of the net
      loss
      per share as such effect would have been anti-dilutive. As a result of these
      items, the basic and diluted loss per share for all periods presented are
      identical. The following table summarizes the weighted average shares
      outstanding:


From June
                    14, 2007 (Inception) to December 31, 2007Net
                  (loss)
              
              $
              (3,232,967
              )Weighted-average
                  common shares outstanding—basic
              
              
              28,025,035Dilutive
                  effect of stock options
              
              
              -Number
                  of shares used to compute net income per common
                  share—diluted
              
              
              28,025,035Net
                  (loss) per common share:Basic
              
              $
              (0.12
              )Diluted
              
              $
              (0.12
              )


At
      December 31, 2007 there were common stock options for 4,331,000 shares and
      common stock warrants for 500,000 shares which if exercised, may dilute future
      earnings per share.




**Note
      8.**  **Income
      Taxes**





The
      Company files a consolidated U.S. income tax return that includes its
      U.S. subsidiaries. The amounts provided for income taxes are as follows:




**From June
                  14, 2007 (Inception) to Decemebr 31, 2007**Current:U.S.
                  Federal
              
              $
              -State
              
              
              18,000$
              18,000Deferred
                  (Benefit):U.S.
                  Federal
              
              $
              (486,500
              )State
              
              
              (69,500
              )$
              (556,000
              )Total
                  Benefit
              
              $
              (538,000
              )


F-17




The
      difference between the statutory overall
      combined federal and state benefit of 40% and the effective 14.3% benefit for
      the period from June 14, 2007 (inception) to December 31, 2007 is primarily
      a
      result of a $959,587 valuation allowance provision.




The
      tax
      effect of temporary differences which give rise to a significant portion of
      deferred tax assets and liabilities are as follows:


December
                  31, 2007Deferred
                  Tax
              
              Deferred
                  TaxAssets
              
              LiabilitiesBook/tax
                  differences Intangible assets
              
              $
              -
              
              $
              435,358Unrestricted
                  U.S. tax loss carryforwards
              
              
              1,197,256Accounts
                  receivable
              
              
              46,422Deferred
                  Compensation - Stock Options
              
              
              108,370Amortization
                  of Warrants
              
              
              35,696Valuation
                  allowance
              
              
              (952,387
              )$
              435,358
              
              $
              435,358




At
      December 31, 2007 the Company had approximately $2,655,139 of net operating
      loss
      carryforwards which will expire in 2027.




As
      part
      of the allocation of purchase price associated with the Desktop Merger (see
      Note
      1) deferred tax liabilities of $556,000 were established as a result of
      differences between the book and tax basis of acquired intangible assets. In
      addition, as of December 31, 2007 the company has a net deferred tax asset
      of
      $435,358 recognized as of result of $3,770,967 consolidated net loss before
      income taxes and other temporary difference presented above for the period
      from June 14, 2007 (inception) to December 31, 2007. The deferred tax asset
      is
      net of a $959,587 valuation allowance. The deferred tax asset is netted against
      the deferred tax liability for a net zero amount and accordingly neither is
      presented on the accompanying consolidated balance sheet.




**Note
      9.**  **Stockholders’ Equity**




**Preferred
      Stock**


The
        Company is authorized to issue up to 10,000,000 shares of $0.001 par value
        preferred stock of which none is issued and outstanding at December 31,
        2007.


**Common
      Stock**


The
      Company is authorized to issue up to 140,000,000 shares of $0.001 par value
      common stock of which 34,979,667 was issued and outstanding at December 31,
      2007.




At
      inception, CAN issued 14,000,000 common shares to two founders for a
      subscription receivable of $14,000 or $0.001 per share. The subscription payment
      was received in August 2007.






F-18




On
      June
      28, 2007, CAN issued 2,600,000 common shares to three officers pursuant to
      their
      employment agreements. A subscription receivable of $2,600 or $0.001 per share
      was recorded as of July 31, 2007. The subscription payment was received in
      August 2007.





During
      July and August 2007, the Company issued 7,138,000 common stock for proceeds
      of
      $6,998,547 net of offering costs of $139,453.





On
      August
      28, 2007, the Company is deemed to have issued 6,575,000 common shares pursuant
      to a recapitalization (See Note 1).





On
      August
      28, 2007, the Company issued 500,000 common shares upon conversion of $250,000
      mandatory redeemable convertible debt. The Company has recorded issuable shares
      of 5,668 related to accrued interest due upon conversion.




On
      August
      31, 2007, the Company issued 3,500,000 common shares in consideration for the
      purchase of Desktop (See Note 1).





On
      October 22, 2007, a consultant exercised 600,000 warrants for $6,000 (See
      below).





On
      October 12, 2007, the Company agreed to issue 66,667 shares in settlement of
      $100,000 outstanding legal fees. The shares were valued at $1.00 per share
      resulting in a gain of $33,333 which was credited to legal expenses and netted
      in general and administrative expenses in the accompanying statement of
      operations.





**Consulting
      Agreements and Warrants Granted**




On
      August
      29, 2007, Holdings assumed CAN’s obligations pursuant to a consulting agreement
      with a provider of investor and public relation services (the “Consulting
      Agreement”). Under the terms of the Consulting Agreement, the service provider
      is to provide described services under a 12-month term at fees of $7,000
      monthly. In connection with the Holdings entering into the Consulting Agreement,
      Holdings issued, on September 5, 2007, 500,000 warrants for Holdings stock
      at an
      exercise price of $2.00 per share (the “Warrant”). The Warrant expires on
      September 5, 2012 and it and the underlying warrant shares are subject to an
      18-month lock-up. In addition, as of the date Holdings entered into the
      Consulting Agreement, the Warrant issued under such Consulting Agreement is
      fully vested and non-forfeitable. Accordingly, in accordance with Emerging
      Issues Task Force 00-18, “Accounting Recognition for Certain Transactions
      Involving Equity Instruments Granted to Other Than Employees” the fair market
      value of the Warrant, $267,772. The Company estimated fair value using the
      Black-Scholes option-pricing model, based on 80% volatility (based on comparable
      companies) 5 year expected life of the warrant and a risk free rate for expected
      life of 4.16%. The $267,772 is being deferred and recognized pro rata over
      the
      term of the agreement. The Company recorded compensation expense of $89,241
      for
      the period ended December 31, 2007 in connection with this
      warrant.





On
      October 12, 2007, the Company entered into an additional consulting agreement
      with a provider of investor and public relation services (the “Second Consulting
      Agreement”). Under the terms of the Second Consulting Agreement, the service
      provider is to provide described services under an 18-month term at fees of
      $12,000 monthly. In connection with the Company entering into the Second
      Consulting Agreement, The Company issued, on October 12, 2007, 600,000
      additional warrants for Holdings common stock at an exercise price of $0.01
      per
      share (the “Additional Warrants”). The Additional Warrants were to expire on
      October 31, 2007, In addition, as of the date Holdings entered into the Second
      Consulting Agreement, the Additional Warrants to be issued under such Second
      Consulting Agreement are fully vested and non-forfeitable. Accordingly, in
      accordance with Emerging Issues Task Force 00-18, “Accounting Recognition for
      Certain transactions Involving Equity Instruments Granted to Other Than
      Employees” the fair market value of the Additional Warrants, $594,000, was
      deferred and to be recognized pro rata over the agreement term. The Company
      estimated the fair value using the Black Scholes option pricing model based
      on a
      80% volatility (based on comparable volatilities) expected term of 30 days
      and interest rate of 4.25%.




F-19




On
        October 22, 2007, the consultant exercised the Additional Warrants and the
        Company received $6,000.
  On
        December 11, 2007, in mutual agreement with the Company, the Second Consulting
        agreement was terminated and the remaining portion of the $594,000 of
        unamortized deferred consulting costs as expensed and included in general
        and
        administrative expenses.
 
 **Stock
        Incentive Plan and Option Grants**
  Pursuant
        to the CAN Merger, Holdings’ Board of Directors approved the 2007 Stock
        Incentive Plan (the “Plan”) that provides for the grant of up to 4,500,000
        shares of common stock and/or options to purchase common stock to directors,
        employees and consultants.
  Immediately
        following the CAN Merger, on August 28, 2007 ( the “Measurement Date”), Holdings
        granted to three officers, options to purchase shares of Holdings common
        stock
        pursuant to their respective employment agreements. In connection with such
        grants, Holdings’ Chief Executive Officer, Chief Operating Officer and Chief
        Financial Officer each received options to purchase 1,350,000, 500,000, and
        285,000 shares of our common stock, respectively. The term of each option
        granted to Holdings’ senior executives under the 2007 Stock Incentive Plan is 5
        years expiring June 28, 2012. The per share exercise price of each option
        is
        $1.00. One-twelfth (1/12) of the options granted will vest and become
        exercisable each quarter that the executive remains employed with us after
        giving effect to the CAN Merger.
  In
        addition to options granted to officers, on August 28, 2007, we granted 100,000
        common stock options to each of five Board directors, two of whom were also
        officers, pursuant to the 2007 Stock Incentive Plan. The term of each option
        granted to Holdings’ senior executives under the 2007 Stock Incentive Plan is 5
        years expiring August 28, 2012. The per share exercise price of each option
        is
        $1.00. With respect to the two employee directors, one-twelfth (1/12) of
        the
        options granted will vest and become exercisable each quarter that the executive
        remains employed with us after giving effect to the CAN Merger. The options
        granted to the Company’s other directors vest 25% on each anniversary of the
        date of grant except in the event that a non employee director is terminated
        for
“Cause” in accordance with the Company’s by-laws, options continue to vest as
        set forth above and are exercisable at any time prior to the expiration date
        in
        the event that such director no longer serves on our board.
  Immediately
        following the Desktop Merger on August 31, 2007, Holdings, pursuant to the
        Plan,
        granted the President of Desktop Interactive, options to purchase 300,000
        shares
        of Holdings’ common stock at an exercise price of $1.00 per share. The term of
        these options is 5 years expiring August 31, 2012. One-quarter of the options
        granted will become exercisable each year the President remains employed
        with
        Holdings, after giving effect to the Desktop Merger. The exercise price per
        share of each option is $1.00.
  On
        September 21, 2007, Holdings granted 465,000 common stock options at an exercise
        price of $1.00 per share to certain employees of Desktop. Such options expire
        September 21, 2012 and vest one quarter per year over 4 years.
  On
        October 12, 2007, Holdings granted 671,000 common stock options at an exercise
        price of $1.00 per share to certain employees of Holdings. Of this amount,
        625,000 options expire September 21, 2012 and vest one quarter per year over
        three years and the remaining 46,000 options expire September 21, 2012 and
        vest
        one quarter per year over four years.
  During
        October through December 2007, we granted 260,000 stock options, each
        exercisable at the fair value of the common stock on the respective grant
        dates
        ranging from $3.98 to $4.98 pursuant to the employment contracts. The options
        vest pro rata over 4 years and expire 5 years from the grant date. The total
        value of the options of $1,219,746 was computed using a Black-Scholes option
        pricing method with volatility of 80% (based on comparative companies) an
        expected term of 5 years (based on contracted term since we have no history
        and
        using the SAB 107 simplified method does not produce a material difference),
        dividends of 0% and an interest rate ranging from 3.23% to 3.77%. The value
        will
        be recognized pro rata over the respective 4-year requisite service periods
        and
        the amount to be recognized in 2007 was not material.
  The
        total
        value related to the aforementioned options granted is approximately $449,000,
        to be recognized over the respective vesting periods.
  On
        November 13, 2007, Holdings adopted the Customer Acquisition Network Holdings
        Inc., 2007 Incentive Stock and Award Plan (the “ 2007
        Award  Plan ”),
        that
        provides for the grant of up to 1,000,000 **** shares
        of
        common stock and/or options to purchase common stock to directors, employees
        and
        consultants and in order to provide a means whereby employees, officers,
        directors and consultants of Registrant and its affiliates and others performing
        services to Registrant may be given an opportunity to purchase shares of
        the
        common stock of Registrant.




F-20




The
        2007
        Award Plan shall be administered by a committee consisting of two or more
        independent, non-employee and outside directors (the “Committee”). In the
        absence of such a Committee, the Board of Directors of Registrant shall
        administer the Plan.
  The
        material terms of each option granted pursuant to the 2007 Award Plan by
        Registrant shall contain the following terms: (i) that the purchase price
        of
        each share of common stock purchasable under an incentive option shall be
        determined by the Committee at the time of grant, but shall not be less than
        100% of the Fair Market Value (as defined in the 2007 Award Plan) of such
        share
        of common stock on the date the option is granted, (ii) the term of each
        option
        shall be fixed by the Committee, but no option shall be exercisable more
        than
        ten years after the date such option is granted and (iii) in the absence
        of any
        option vesting periods designated by the Committee at the time of grant,
        options
        shall vest and become exercisable as to one-third of the total number of
        shares
        subject to the option on each of the first, second and third anniversaries
        of
        the date of grant.




For
      options granted under the 2007 Stock Incentive Plan, the Company estimated
      fair
      values using the Black-Scholes option-pricing model, based on the following
      assumptions:




Dividend
                Yield
            
            
            0.0
            %Risk
                free interest rates
            
            
            4.25%-4.42
            %Volatility
                (Based on comparative Companies)
            
            
            80
            %Expected
                Life (years)
            
            
            5




The
      total value related to the Stock Incentive Plan for options granted is
      approximately $2,719,317, to be recognized over the respective vesting periods.
      The Company recorded compensation expense of $270,926 for the period ended
      December 31, 2007 in connection with these options with unrecognized value
      to be
      expensed in future years of $2,448,391





A
      summary
      of employee stock option transactions follows:


**Number
                  of Shares**
              
              **Weighted
                  Average Exercise Price**
              
              **Weighted-Average
                  Remaining Contractual Term (Years)**Outstanding
                  on June 14, 2007 (inception)
              
              
              -Granted
              
              
              4,331,000
              
              $
              1.06
              
              
              4.68Exercised
              
              
              -Cancelled
              
              
              -Outstanding
                  on December 31, 2007
              
              
              4,331,000





Additional
      information relating to options outstanding at December 31, 2007
      follows:


**December
                  31, 2007****Range
                  of Exercise Prices**
              
              **Outstanding
                  as of 12/31/2007**
              
              **Weighted-Average
                  Remaining Contractual Life (Years)**
              
              **Weighted-Average
                  Exercise Price**
              
              **Exercisable
                  as of 12/31/2007**
              
              **Weighted-Average
                  Exercise Price**$1.00
              
              
              4,331,000
              
              
              4.68
              
              $
              1.06
              
              
              221,186
              
              $
              1.004,331,000
              
              
              4.68
              
              $
              1.06
              
              
              221,186
              
              $
              1.00





F-21




**Note
      10.**  **Commitments
      and Contingencies**




**Leases**





As
      of
      December 31, 2007, the
      minimum future lease payments for the New York lease with
      noncancelable terms in excess of one year are as follows:




Year
                  ended December 31,2008
            
            $
            105,5702009
            
            
            105,5702010
            
            
            105,5702011
            
            
            105,5702012
            
            
            52,785$
            475,065




Rent
      expense was $90,764 for the period ended December 31, 2007.





The
      Company leases office space for its Fort Lauderdale location under a yearly
      renewable lease agreement. Monthly lease expense associated with this lease
      is
      approximately $11,300.




Guaranteed
      Bonus




On
        December 2007, the Company entered into an employment agreement whereby the
        Company is obligated to pay a guaranteed bonus of $500,000 during the first
        year
        of the employment agreement.




***Legal
      Matters:***





From
      time
      to time, we may be involved in litigation relating to claims arising out of
      our
      operations in the normal course of business. As of December 31, 2007, there
      were
      no pending or threatened lawsuits that could reasonably be expected to have
      a
      material effect on the results of our operations.





There
      are
      no proceedings in which any of our directors, officers or affiliates, or any
      registered or beneficial shareholder, is an adverse party or has a material
      interest adverse to our interest.





**Note
      11.** **Concentrations**




**Concentration
      of Credit Risk**




Financial
      instruments that potentially subject the Company to concentration of credit
      risk
      consist of cash and cash equivalents and accounts receivable. Cash and cash
      equivalents are deposited in the local currency with a limited number of
      financial institutions in the United States. The balances in the United States
      held at any one financial institution may be in excess of Federal Deposit
      Insurance Corporation (“FDIC”) insurance limits. As of December 31, 2007,
      there was approximately $1,136,000 and $2,806,000 in excess of insurable
      limits at two different locations.




**Concentration
      of Revenues and Accounts Receivable**





Credit
      is
      extended to customers based on an evaluation of their financial condition and
      other factors. The Company generally does not require collateral or other
      security to support accounts receivable. The Company performs ongoing credit
      evaluations of its customers and maintains an allowance for potential bad debts.




F-22




For
      the
      year ended December 31, 2007, the Company had various significant customers
      with
      individual percentage of total revenues equaling 10% or greater as
      follows:


December
                  31, 2007Customer
                  1
              
              
              34.26
              %Customer
                  2
              
              
              32.89
              %%
                  of Total Revenues
              
              
              67.15
              %




All
      revenues during 2007 were comprised of advertising sales.




At
      December 31, 2007 concentration of accounts receivable with Significant
      Customers representing 10% or greater of accounts receivable was as
      follows:


Customer
                  1
              
              
              39.79
              %Customer
                  2
              
              
              25.35
              %Customer
                  3
              
              
              11.04
              %%
                  of Accounts receivable
              
              
              76.18
              %




**Note
      12.**  **Related Party transactions**




The
        Company’s two majority shareholders advanced $250,000 to the Company in the form
        of convertible notes at $125,000 each, bearing interest at 8% per annum,
        mandatorily convertible at $.50 or 500,000 shares upon the Company entering
        into
        a financing arrangement of over $2,000,000. On August 28, 2007, the shareholders
        converted the principal of $250,000 into 500,000 shares (See Note
        9.)
 
 In
        connection with the acquisition of Desktop, Holdings is obligated to pay
        an
        additional $1 million (the “Earn Out”) if Desktop achieves certain revenue and
        gross margins, as defined, in the 90 day period subsequent to closing the
        Dektop
        Merger. In addition, if Desktop achieves other certain revenues, as defined,
        the
        Earn Out is subject to acceleration. Pursuant to the terms of the Desktop
        Merger, on October 5, 2007, $643,000 was paid as part of the Desktop earn-out.
        (See Note 1.) Additionally, in connection with the payout of the Earn Out,
        a
        balance of approximately $20,000 was netted against the Earn Out payment
        to the
        controlling director.
 
 In
        connection with the sale of the senior notes a related party issued 150,000
        common shares to the Buyers of the notes for a value of $802,500. (See Note
        9.)
 
 Included
        in revenues during 2007 is approximately $154,000 of revenue from a related
        party affiliate which is controlled by one of our directors who was one of
        the
        former owners of Desktop Interactive, Inc., the Company we acquired on August
        31, 2007.





**Note
      13.**  **Subsequent events**





**Merger
      with Options Media**





On
      January 4, 2008, Holdings consummated an Agreement and Plan of Merger (the
      “Options Merger”), wherein Holdings formed, Options Acquisition Sub, Inc.
      (“Options Acquisition”), and Options Newsletter, Inc. (“Options Newsletter” or
      "Options") was merged into Options Acquisition, which is the surviving
      corporation and a wholly-owned subsidiary of Holdings.




Options
      Newsletter, a privately held Delaware corporation, now known as Options
      MEDIA, began selling advertising space within free electronic newsletters
      that Options Newsletter published and emailed to subscribers. Options Newsletter
      also generated leads for customers by emailing its customers’ advertisements to
      various email addresses from within the Options Newsletter’s database. Options
      Newsletter is also an email service provider (“ESP”) and offers customers an
      email delivery platform to create, send and track email campaigns. During 2007,
      the majority of Options Newsletter’s revenue was derived from being an ESP, but
      the Options Acquisition continues to publish newsletters as well as email
      customer advertisements on a cost per lead generated basis.





The
      initial merger consideration (the “Options Merger Consideration”) consisted of
      $1.5 million in cash of which $150,000 is held in escrow pending passage of
      deferred representation and warranty time period and 1.0 million shares of
      Holdings’ stock valued at $5.72 per share (applying EITF 99-12 “Determination of
      the Measurement Date for the Market Price of Acquirer Securities Issued in
      a
      Purchase Business Combination”) , for a total initial purchase price of
      $7,373,771, which includes legal fees of $42,998 and brokers fees of
      $50,000 and 10,000 warrants with an exercise price of $5.57 per share valued
      at
      $63,500 associated with the Options Merger, all totalling approximately
      $156,498 and which are considered part of the purchase price.




F-23





The
      shares of Holdings’ stock issued in conjunction with the Options
      Merger are subject to a 12-month lockup.




In
      addition to the Options Media Merger Consideration, Holdings is obligated to
      pay
      an additional $1 million (the “Options Earn Out”) if the objectives are achieved
      and Options Media achieves its profitability projections.




Holdings
      has accounted for the acquisition utilizing the purchase method of accounting
      in
      accordance with Statement of Financial Accounting Standards (SFAS) No. 141,
      “Business Combinations”. The results of operations of Options Acquisition will
      be included in the consolidated results of operations of the Company beginning
      on January 1 , 2008. The net purchase price, including acquisition costs paid,
      was allocated to assets acquired and liabilities assumed as follows:




Current
                  assets (including cash of $41,424)
              
              $
              58,153Property
                  and equipment
              
              
              112,289Other
                  assets (Software)
              
              
              67,220Goodwill
              
              
              7,004,860Intangible
                  assets
              
              
              650,000Liabilities
                  assumed
              
              
              (258,751
              )Deferred
                  tax liability
              
              
              (260,000
              )Net
                  purchase price
              
              **$**
              **7,373,771**


Unaudited
      pro forma results of operations data as if the Desktop Merger and Options Merger
      had occurred as of January 1, 2007 are as follows:




**Holdings
                  and Desktop**
              
              **Options
                  Media**
              
              **Holdings****For
                  the year ended**
                **December
                  31, 2007**
              
              **For
                  the year ended**
                **December
                  31, 2007**
              
              **For
                  the year ended**
                **December
                  31, 2007**Pro
                  forma revenues
              
              $
              11,896,788
              
              $
              1,819,060
              
              $
              13,715,848Pro
                  forma (loss) income from operations
              
              
              (3,671,555
              )
              
              353,323
              
              $
              (3,318,232
              )Pro
                  forma net loss
              
              
              (3,133,555
              )
              
              (36,677
              )
              $
              (3,170,232
              )Pro
                  forma loss per share
              
              $
              (0.12
              )
              $
              (0.001
              )
              $
              (0.013
              )Pro
                  forma diluted loss per share
              
              $
              (0.12
              )
              $
              (0.001
              )
              $
              (0.013
              )


The
      net
      purchase price allocation is preliminary and subject to change based on the
      completion of a third party valuation of the intangible assets acquired and
      the
      obtaining of additional information necessary to complete such valuation. The
      intangible assets acquired were recorded at their preliminary fair market value
      and included Customer Relationships and Covenant Not to Compete. A third party
      valuation is in process and is expected to be completed in the second quarter
      of
      2008.





Pro
      forma
      data does not purport to be indicative of the results that would have been
      obtained had these events actually occurred at January 1, 2007, and is not
      intended to be a projection of future results.




In
      connection with the purchase of options, the Company
      executed a three year employment agreement with the former owner of Options
      to
      pay him $250,000 per year plus 300,000 options which cliff vest 1/3 at the
      end
      of each of three years and are exercised at $1.00 per share.




In
        January 2008, the Company granted 42,500 common stock options, each exercisable
        at the fair value of the common stock on the respective grant dates ranging
        from
        $5.65 to $6.16 to certain employees of the Company. Such options expire in
        5
        years from the grant date and vest over 4 years. The total value of the options
        of approximately $165,000, was computed using a Black-Scholes option pricing
        method with volatility of 80% (based on comparative companies) an expected
        term
        of 5 years (based on contracted term since we have no history and using the
        SAB
        107 simplified method does not produce a material difference), dividends
        of zero
        and an interest rate ranging from 2.86% to 3.16%, The value will be recognized
        pro rata over the respective 4-year requisite service period.
  Sale
        of
        Common Stock
  On
        March
        28, 2008, the Company sold an aggregate of (i) 300,000 shares of its common
        stock, par value $0.001 per share and (ii) five-year warrants to purchase
        150,000 shares of its common stock at an exercise price of $2.75 per share.
        The
        Company received aggregate gross proceeds of $750,000 from the sale of the
        Common Stock and Warrants. These shares and warrants are price protected
        and the
        Company may be obligated to issue additional shares and/or warrants in the
        event
        the Company issues common stock at a price less than $2.50 per share or warrants
        at an exercise price of less than $2.75.


F-24




**ITEM
      8.** **CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURES**


None.


ITEM 8A
      (T).  CONTROLS AND
      PROCEDURES




We
      maintain disclosure controls and procedures that are designed to ensure that
      information required to be disclosed
      in our reports under the Exchange Act is recorded, processed, summarized and
      reported within the time periods
      specified in the Commission's rules and forms and that such information is
      accumulated and communicated to our management, including our Chief Executive
      Officer and Chief Financial Officer, as appropriate, to allow for timely
      decisions regarding required disclosure. In designing and evaluating the
      disclosure controls and procedures, management recognizes that any controls
      and
      procedures, no matter how well designed and operated, can provide only
      reasonable assurance of achieving the desired control objectives, and management
      is required to apply its judgment in evaluating the cost-benefit relationship
      of
      possible controls and procedures.


As
          required by Commission Rule 13a-15(b), we carried out an evaluation, under
          the
          supervision and with the participation of our management, including our
          Chief
          Executive Officer and the Chief Financial Officer, of the effectiveness
          of the
          design and operation of our disclosure controls and procedures as of the
          end of
          the quarter covered by this annual report on Form 10-KSB. Based on the
          foregoing, our Chief Executive Officer and Chief Financial Officer concluded
          that our disclosure controls and procedures were effective at the reasonable
          assurance level.


This
      annual report does not include a report of management's assessment regarding
      internal control over financial reporting or an attestation report on the
      company's registered public accounting firm due to a transition period
      established by rules of the Securities and Exchange Commission for newly public
      companies.


**ITEM
      8B.** **OTHER
      INFORMATION**




**Unregistered
      Sales of Equity Securities and Use of Proceeds**




Except
      as
      previously included in our Current Reports on Form 8-K filed with the Securities
      and Exchange Commission, we have not sold any equity securities during the
      period covered by this annual report on Form 10-KSB that were not registered
      under the Securities Act of 1933, as amended.




29





**PART
      III**





**ITEM
      9.** **DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT**





**Executive
      Officers and Directors**




The
      following table sets forth information regarding our executive officers and
      directors.




**Name**
            
            **Age**
            
            **Position**Michael
                D. Mathews
            
            **46**
            
            Chief
                Executive Officer, President and DirectorDevon
                M. Cohen
            
            **50**
            
            Chief
                Operating Officer and SecretaryBruce
                G. Kreindel
            
            **60**
            
            Chief
                Financial Officer, Treasurer and DirectorMichael
                Katz
            
            **29**
            
            President
              of InterCLICK and DirectorMichael
                Brauser
            
            **51**
            
            DirectorBarry
                Honig
            
            **36**
            
            DirectorSanford
                Rich
            
            **48**
            
            Director





Our
      directors hold office for one-year terms and until their successors have been
      elected and qualified. Our officers are elected annually by the board of
      directors and serve at the discretion of the board.




**Biographies**




*Michael
      D. Mathews* has
      served as our Chief Executive Officer and President and a member of our board
      of
      directors since August 28, 2007. Mr. Mathews is a founder of the Company
      and has served as its Chief Executive Officer, President and a director since
      its inception in June 2007. From 2004 to 2007, Mr. Mathews served as the senior
      vice-president of marketing and publisher services for World Avenue USA, LLC,
      an
      Internet promotional marketing company. From 2002 to 2004, Mr. Mathews served
      as
      the founder and president of Ripple Effect International, Inc. From 1999 to
      2002, Mr. Mathews served as the president of AGENCY.COM, an Internet marketing
      company. Mr. Mathews holds a MBA from Golden Gate University, San Francisco,
      CA
      and a BS in Marketing from San Francisco State University, San Francisco,
      CA.




*Devon
      M. Cohen* has
      served as our Chief Operating Officer and Secretary since August 28, 2007. 
Mr. Cohen has served as the Company’s Chief Operating Officer and Secretary
      since its inception in June 2007.  From 2005 to 2006, Mr. Cohen was the VP
      of Vertical Development for World Avenue USA, LLC, an Internet promotional
      marketing company. From 2003 to 2005, Mr. Cohen was the Vice President of
      LiveDeal.com, an Internet classifieds marketplace. From 2002 to 2003, Mr. Cohen
      was the CEO of PASC, LLC., an Ambulatory Surgical Center development
      startup.  From 2000 to 2002, Mr. Cohen was the CEO of FordDirect.com, which
      is Ford’s retail Internet sales presence. Prior to this Mr. Cohen was a VP for
      DaimlerChrysler, Group Executive for HSBC and Director of Finance at Merrill
      Lynch and CPA with KPMG.  Mr. Cohen holds a BS in Accounting from SUNY
      Binghamton.




*Bruce
      G. Kreindel,* has
      served as our CFO and a Director since August 28, 2007, and the CFO of the
      Company since August 28, 2007. Mr. Kreindel was in practice with
      PricewaterhouseCoopers(PwC) for 28 years (17 as a Partner)from 1977 to 2005.
      Mr.
      Kreindel served an array of clients in PwC’s Assurance services practice. His
      clients included both SEC and non SEC registrants, including many multinational
      branded consumer products and emerging growth technology companies. Mr. Kreindel
      graduated Summa Cum Laude in 1977 from The University of Hartford with a BS
      in
      Accounting. He is a member of the American Institute of Certified Public
      Accountants, the Connecticut Society of Certified Public Accountants, the
      National Association of Certified Valuation Analysts and is licensed in the
      State of Florida.




*Michael
      Katz*has
      served as one of our Directors since August 31, 2007.  From 2003 to 2007,
      Mr. Katz was the founder, CEO, and President of the interCLICK ad network,
      a DE
      based company.  Prior to that, Mr. Katz was a financial analyst for
      Accenture from 2001 to 2003. Michael graduated from Syracuse University with
      degrees in Finance and Economics.




*Michael
      Brauser* has
      served as a member of our board of directors since August 28, 2007. Mr. Brauser
      has served as a director of the Company since August 28, 2007. Mr. Brauser
      served as Chairman of the Board of Directors of SendTec, Inc. from October
      2005
      through November 2006. Prior to that, Mr. Brauser was the founder, President
      and
      CEO of Marlin Capital Partners, a private investment company since 2003. From
      1999 through 2002, he served as President and Chief Executive Officer of
      Naviant, Inc. (eDirect, Inc.), an internet marking company. He also was the
      founder of Seisant Inc. (eData.com, Inc.) and served as a member of its Board
      of
      Directors from 1999 through 2003.




30




*Barry
      Honig* has
      served as a member of our board of directors since August 28, 2007 *.* Mr.
      Honig has served as a director of the Company since its inception in June 2007.
      Barry, is currently the President and founder of GRQ Consultants Inc, an
      investor and consultant to early stage companies. Since 2003, Mr. Honig has
      advised and consulted in diverse areas including capital structure, debt
      financing, merger and acquisition, capital introductions all the way thru till
      the IPO/reverse merger is completed. Prior to GRQ, Mr. Honig was a co-founder
      of
      Marlin Capital LLC, a registered broker- dealer and market maker in over 500
      Nasdaq securities. From 1998-2001, he worked at Ramius Capital trading in
      distressed equities, arbitrage, long/short and other specialized trading
      strategies.





*Sanford
      Rich* has
      served as one of our directors since August 28, 2007. He is currently a director
      and Audit Committee Chairman for Health Benefits Direct Corporation, serving
      since April 2006, and Senior Vice President of Investments and Portfolio Manager
      at GEM Capital Management Inc., a specialist manager of High Yield and
      Convertible Securities portfolios for institutions, and has held this position
      since November 1995. From 1993 to 1995, Mr. Rich was a Managing Director of
      High
      Yield Finance, Capital Markets & North American Loan Syndicate, Sales and
      Trading at Citicorp Securities. From 1985 to 1993, he served as Managing
      Director of Debt Capital Markets at Merrill Lynch. From 1978 to 1985, Mr. Rich
      held various Analyst positions in numerous companies, including Cypress Capital
      Management, Inc. (Vice President and Analyst from 1983 to 1985), FIAMCO
      (Distressed/High Yield Bond Analyst from 1981 to 1983), Progressive Corporation
      (Financial Analyst from 1980 to 1981) and Prescott, Ball and Turben
      (Distressed/High Yield Bond Analyst from 1978 to 1980). Mr. Rich has an MBA
      from
      NYU Stern School of Business.




There
      are
      no family relationships among our directors and executive officers.


**Section
        16(a) Beneficial Ownership Reporting Compliance**
 
 No
        person
        who, during the fiscal year ended December 31, 2007, was one of our directors
        or
        officers, or beneficial owner of more than ten percent of our Common Stock
        (which is the only class of securities registered under Section 12 of the
        Exchange Act), failed to file on a timely basis reports required by Section
        16
        of the Exchange Act during such fiscal year. The foregoing is based solely
        upon
        our review of Forms 3 and 4 relating to the most recent fiscal year as furnished
        to us under Rule 16a-3(d) under the Exchange Act, and Forms 5 and amendments
        thereto furnished to us with respect to our most recent fiscal year, and
        any
        representation received by us from any reporting person that no Form 5 is
        required.
 
 **Code
        of Ethics**
  We
        have
        not adopted a formal code of ethics and business conduct as of December 31,
        2007
        or as of the date of the filing of the Form 10-KSB. We intend to adopt a
        formal
        code of ethics and business conduct in the near future.
 
 **Board
        Committees**
  We
        intend
        to appoint such persons to the Board of Directors and committees of the Board
        of
        Directors as are expected to be required to meet the corporate governance
        requirements imposed by a national securities exchange, although we are not
        required to comply with such requirements until we elect to seek listing
        on a
        securities exchange. We intend that a majority of our directors will be
        independent directors. Additionally, the Board of Directors is expected to
        appoint an audit committee, nominating committee and compensation committee,
        and
        to adopt charters relative to each such committee, in the near
        future.
  Our
        Board
        of Directors, sitting as a board, performs the role of a compensation
        committee.
  **Director
        Independence**
  We
        believe that Sanford Rich is an “independent director,” as that term is defined
        by applicable listing standards of The Nasdaq Stock Market and Securities
        and
        Exchange Commission rules, including the rules relating to the independence
        standards of an audit committee and the non-employee director definition
        of Rule
        16b-3 promulgated under the Exchange Act.


31


**ITEM
        10. EXECUTIVE COMPENSATION**
 
 The
        following table sets forth for the periods presented certain information
        concerning all compensation earned by or awarded or paid to our principal
        executive officer, our two most highly compensated executive officers other
        than
        the principal executive officer who were serving as executive officers on
        December 31, 2007.
 
 **Summary
        Compensation Table**
 Name
                
                Year
                
                Salary
                    ($)
                
                Option
                    Awards ($)
                
                
                
                Total
                    ($)Michael
                    D. Mathews Chief Executive Officer, President and Director
                
                
                2007
                
                $
                166,071
                
                $
                122,545
                
                
                (1)
                
                $
                288,616Devon
                    M. Cohen Chief Operating Officer and Secretary
                
                
                2007
                
                $
                153,297
                
                $
                47,795
                
                
                (2)
                
                $
                201,092Bruce
                    G. Kreindel Chief Financial Officer, Treasurer and
                    Director
                
                
                2007
                
                $
                127,747
                
                $
                37,830
                
                
                (3)
                
                $
                165,577Michael
                    Katz, President of InterCLICK and Director
                
                
                2007
                
                $
                116,896
                
                $
                -
                
                
                (4)
                
                $
                116,896
  (1)
              On
                  August 28, 2007, Mr. Mathews was granted an option to purchase
                  1,450,000
                  (including 100,000 related to Director Option awards) shares of our
                  common stock at an exercise price of $1.00 per share, such option
                  fully
                  vests on August 28, 2010. On October 12, 2007, Mr. Mathews was
                  granted an
                  additional option to purchase 250,000 shares of our common stock
                  at an
                  exercise price of $1.00 per share, such option fully vests on October
                  12,
                  2010. Amount reflects the compensation cost for the year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(2)
              On
                  August 28, 2007, Mr. Cohen was granted an option to purchase 500,000
                  shares of our common stock at an exercise price of $1.00 per share,
                  such
                  option fully vests on August 28, 2010. On October 12, 2007, Mr.
                  Cohen was
                  granted an additional option to purchase 200,000 shares of our
                  common
                  stock at an exercise price of $1.00 per share, such option fully
                  vests on
                  October 12, 2010. Amount reflects the compensation cost for the
                  year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(3)
              On
                  August 28, 2007, Mr. Kreindel was granted an option to purchase
                  385,000
                  (including 100,000 related to Director Option awards) which include
                  shares
                  of our common stock at an exercise price of $1.00 per share, such
                  option
                  fully vests on August 28, 2010. On October 12, 2007, Mr. Kreindel
                  was
                  granted an additional option to purchase 175,000 shares of our
                  common
                  stock at an exercise price of $1.00 per share, such option fully
                  vests on
                  October 12, 2010. Amount reflects the compensation cost for the
                  year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(4)
              On
                  August 31, 2007, Mr. Katz was granted an option to purchase 300,000
                  shares
                  of our common stock at an exercise price of $1.00 per share, such
                  option
                  fully vests on August 31, 2012. Amount reflects the compensation
                  cost for
                  the year ended December 31, 2007 of the named executive officer's
                  stock
                  option,calculated
                  in accordance with SFAS 123R. See Note 9 to our consolidated financial
                  statements includedherein
                  for a discussion of assumptions made by us in determining the grant
                  date
                  fair value and compensation costs of this equity
                  award.
  32


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




The
      following table sets forth certain information concerning outstanding stock
      option awards held by the Named Executive Officers as of December 31,
      2007.


Option
                  AwardsName
              
              
              Grant
                  Date
              
              
              Number
                  of Securities Underlying Unexercised Options (#)
                  Exercisable
              
              
              Number
                  of Securities Underlying Unexercised Options (#)
                  Unexercisable
              
              
              Option
                  Exercise Price ($)
              
              
              Option
                  Expiration DateMichael
                  D. Mathews (1)
              
              
              08/28/2007
              
              
              121,715
              
              
              -
              
              
              1.00
              
              
              8/28/201210/12/2007
              
              
              -
              
              
              -
              
              
              1.00
              
              
              10/12/2012Devon
                  M. Cohen (2)
              
              
              08/28/2007
              
              
              41,971
              
              
              -
              
              
              1.00
              
              
              8/28/201210/12/2007
              
              
              -
              
              
              -
              
              
              1.00
              
              
              10/12/2012Bruce
                  G. Kreindel (3)
              
              
              08/28/2007
              
              
              32,318
              
              
              -
              
              
              1.00
              
              
              8/28/201210/12/2007
              
              
              -
              
              
              -
              
              
              1.00
              
              
              10/12/2012Michael
                Katz (4)
              
              
              08/31/2012
              
              
              -
              
              
              -
              
              
              1.00
              
              
              08/31/2012


(1)
              On
                  August 28, 2007, Mr. Mathews was granted an option to purchase
                  1,450,000
                  (including 100,000 related to Director Option awards) shares of
                  our common
                  stock at an exercise price of $1.00 per share, such option fully
                  vests on
                  August 28, 2010. On October 12, 2007, Mr. Mathews was granted an
                  additional option to purchase 250,000 shares of our common stock
                  at an
                  exercise price of $1.00 per share, such option fully vests on October
                  12,
                  2010. Amount reflects the compensation cost for the year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(2)
              On
                  August 28, 2007, Mr. Cohen was granted an option to purchase 500,000
                  shares of our common stock at an exercise price of $1.00 per share,
                  such
                  option fully vests on August 28, 2010. On October 12, 2007, Mr.
                  Cohen was
                  granted an additional option to purchase 200,000 shares of our
                  common
                  stock at an exercise price of $1.00 per share, such option fully
                  vests on
                  October 12, 2010. Amount reflects the compensation cost for the
                  year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(3)
              On
                  August 28, 2007, Mr. Kreindel was granted an option to purchase
                  385,000
                  (including 100,000 related to Director Option awards) shares of
                  our common
                  stock at an exercise price of $1.00 per share, such option fully
                  vests on
                  August 28, 2010. On October 12, 2007, Mr. Kreindel was granted
                  an
                  additional option to purchase 175,000 shares of our common stock at
                  an exercise price of $1.00 per share, such option fully vests on
                  October
                  12, 2010. Amount reflects the compensation cost for the year ended
                  December 31, 2007 of the named executive officer’s stock option,
                  calculated in accordance with SFAS 123R. See Note 9 to our
                  consolidated financial statements included herein for a discussion
                  of
                  assumptions made by us in determining the grant date fair value
                  and
                  compensation costs of this equity award.(4)
              On
                  August 31, 2007, Mr. Katz was granted an option to purchase 300,000
                  shares
                  of our common stock at an exercise price of $1.00 per share, such
                  option
                  fully vests on August 31, 2012. Amount reflects the compensation
                  cost for
                  the year ended December 31, 2007 of the named executive officer's
                  stock
                  option,calculated
                  in accordance with SFAS 123R. See Note 9 to our consolidated financial
                  statements includedherein
                  for a discussion of assumptions made by us in determining the grant
                  date
                  fair value and compensation costs of this equity
                  award.
  **Employment
        Agreements**




*Mathews
      employment agreement.* On
      June
      28, 2007, we entered into an employment agreement with Michael Mathews, to
      serve as our Chief Executive Officer. The agreement may be terminated
      by us or by Mr. Mathews under certain circumstances. Pursuant to the
      agreement, Mr. Mathews is to receive an annual base salary of $325,000, $340,000
      and $350,000, respectively, for the first three years, and then an agreed upon
      salary for all future years of employment. In addition to a base salary, Mr.
      Mathews is eligible to receive an annual bonus (pro-rated for partial calendar
      years during the employment period) upon the achievement of pre-established
      performance goals tied to our revenues and earnings, as to be determined
      by our board of directors after consultation with Mr. Mathews. Depending
      upon achievement of the performance goals, Mr. Mathews’ bonus for each calendar
      year during the employment period will be 50% of his base salary earned during
      such year. The bonus is to be paid 50% in cash and 50% in company stock. We
      agreed to pay Mr. Mathews a guaranteed $50,000 minimum bonus subject to
      forfeiture if certain conditions set forth in his employment agreement are
      not
      achieved.




In
      addition to his base salary and bonus, we agreed to pay Mr. Mathews’ former
      employer, World Avenue LLC, $100,000. Mr. Mathews also received a relocation
      payment of $50,000, subject to forfeiture if certain conditions set forth in
      his
      employment agreement are not achieved.




If
      Mr.
      Mathews’ employment is terminated without cause or if he resigns for good
      reason, we will be obligated to pay him, as severance, his then current
      annual base salary and annual bonuses (as such is defined within the agreement)
      for eighteen months. Under the agreement, if Mr. Mathews is terminated with
      cause or if he voluntarily resigns (other than for good reason), he is
      prohibited from competing with us for eighteen months after the termination
      of his employment.




*Cohen
      employment agreement.* One
      June
      28, 2007, we entered into an employment agreement with Devon Cohen, to
      serve as our Chief Operation Officer. The agreement may be terminated
      by us or by Mr. Cohen under certain circumstances. Pursuant to the
      agreement, Mr. Cohen is to receive an annual base salary of $300,000, $315,000
      and $330,000, respectively, for the first three years, and then an agreed upon
      salary for all future years of employment. In addition to a base salary, Mr.
      Cohen is eligible to receive an annual bonus (pro-rated for partial calendar
      years during the employment period) upon the achievement of pre-established
      performance goals tied to our revenues and earnings, as to be determined
      by our board of directors after consultation with Mr. Cohen. Depending upon
      achievement of the performance goals, Mr. Cohen’s bonus for each calendar year
      during the employment period will be 50% of his base salary earned during such
      year. The bonus is to be paid 50% in cash and 50% in our
      stock.


33


If
      Mr.
      Cohen’s employment is terminated without cause or if he resigns for good
      reason, we will be obligated to pay him, as severance, his then current
      annual base salary and annual bonuses (as such is defined within the agreement)
      for twelve months. Under the agreement, if Mr. Mathews is terminated with cause
      or if he voluntarily resigns (other than for good reason), he is prohibited
      from
      competing with us for twelve months after the termination of his
      employment.




*Kreindel
      employment agreement.* We
      have
      entered into an employment agreement with Bruce Kreindel, to serve as our
      Chief Financial Officer. The agreement may be terminated by us or by
      Mr. Kreindel under certain circumstances. Pursuant to the agreement, Mr.
      Kreindel is to receive an annual base salary of $250,000, $265,000 and $280,000,
      respectively, for the first three years, and then an agreed upon salary for
      all
      future years of employment. In addition to a base salary, Mr. Kreindel is
      eligible to receive an annual bonus (pro-rated for partial calendar years during
      the employment period) upon the achievement of pre-established performance
      goals
      tied to our revenues and earnings, as to be determined by our board of
      directors after consultation with Mr. Kreindel. Depending upon achievement
      of
      the performance goals, Mr. Kreindel’s bonus for each calendar year during the
      employment period will be 50% of his base salary earned during such year. The
      bonus is to be paid 50% in cash and 50% in our stock.




If
      Mr.
      Kreindel’s employment is terminated without cause or if he resigns for good
      reason, we will be obligated to pay him, as severance, his then current
      annual base salary and annual bonuses (as such is defined within the agreement)
      for twelve months. Under the agreement, if Mr. Kreindel is terminated with
      cause
      or if he voluntarily resigns (other than for good reason), he is prohibited
      from
      competing with us for twelve months after the termination of his
      employment.




Upon
      consummation of the CAN Merger, we assumed the obligations under these
      employment agreements.




*Katz
      employment agreement.* On
      August
      31, 2007 (the “Effective Date”), we entered into an employment agreement with
      Michael Katz, to serve as the President of our Desktop subsidiary. The agreement
      may be terminated by us or by Mr. Katz under certain circumstances. Pursuant
      to
      the agreement, Mr. Katz is to receive an annual base salary of $250,000. Mr.
      Katz also received a signing bonus of $75,000 payable on the Effective Date.
      In
      addition to a base salary, Mr. Katz is eligible to receive an annual bonus
      (pro-rated for partial calendar years during the employment period) upon the
      achievement of pre-established performance goals tied to the Desktop’s revenues
      and earnings, as to be determined by the board of directors after consultation
      with Mr. Katz. Depending upon achievement of the performance goals, Mr. Katz’s
      bonus for each calendar year during the employment period will be 30% of his
      base salary earned during such year (with straight-line interpolation applied
      in
      the event that Desktop achieves at least 75% of such targets). In the event
      that
      we are unable to agree on a mutually acceptable bonus target with Mr. Katz
      then
      he will receive a guaranteed annual bonus for such fiscal year of not less
      than
      fifteen percent (15%) of his base salary. In his sole discretion, Mr. Katz
      may
      elect to receive such annual bonus in capital stock at the basis determined
      by
      our board if directors in good faith.





If
      Mr.
      Katz’s employment is terminated without cause or if he resigns for good reason,
      we will be obligated to pay him, as severance, his then current annual base
      salary and annual bonuses (as such is defined within the agreement) for twelve
      months. Under the agreement, if Mr. Katz is terminated with cause or if he
      voluntarily resigns (other than for good reason), he is prohibited from
      competing with us or any of our subsidiaries for twelve months after the
      termination of his employment.





**Stock
      Incentive Plan**




We
      have
      adopted a 2007 Stock Incentive Plan that provides for the grant of up to
      4,500,000 **** shares
      of
      common stock and/or options to purchase common stock to directors, employees
      and
      consultants. Immediately following the CAN Merger we granted to members of
      our
      management options to purchase shares of our common stock. In connection with
      such grants, Messrs. Mathews, Cohen, and Kreindel, members of our management,
      received options to purchase 1,350,000, 400,000, and 285,000 shares of our
      common stock respectively. Additionally, on August 28, 2007, we granted an
      additional 100,000 options to each of our five Board directors totalling 500,000
      options.




34




The
      term
      of each option granted to our executives under our 2007 Stock Incentive Plan
      is
      June 28, 2010. The per share exercise price of each option is $1.00. One-twelfth
      (1/12) of the options granted will become exercisable each quarter that the
      executive remains employed with us after giving effect to the CAN Merger.




Immediately
      following the Desktop Merger we granted to Mr. Katz options to purchase 300,000
      shares of our common stock. The term of the option granted to our executives
      under our 2007 Stock Incentive Plan is August 31, 2012. The per share exercise
      price of each option is $1.00. One-quarter of the options granted will become
      exercisable each year that Mr. Katz remains employed with us after giving effect
      to the Desktop Merger.




On
      November 13, 2007, Holdings adopted the Customer
      Acquisition Network Holdings Inc., 2007 Incentive Stock and Award Plan (the
      “2007
      Award Plan”),that
      provides for the grant of up to 1,000,000****shares
      of
      common stock and/or options to purchase common stock to directors, employees
      and
      consultants and in order to provide a means whereby employees, officers,
      directors and consultants of Registrant and its affiliates and others performing
      services to Registrant may be given an opportunity to purchase shares of
      the common stock of Registrant.




**Director
      Compensation**




As
      of
      December 31, 2007, the Company did not have compensation arrangements in place
      for members of their Board of Directors.





**Director
      Compensation**




The
      following table summarizes the compensation awarded to our directors in
      2007:


**Name**
              
              **Fees
                  Earned or Paid in Cash**
              
              **Option
                  Awards**
              
              **Total
                    (1)**Michael
                  D. Mathews
              
              $
              -
              
              
              100,000
              
              $
              7,608Bruce
                  G. Kreindel
              
              $
              -
              
              
              100,000
              
              $
              7,608Michael
                  Brauser
              
              $
              -
              
              
              100,000
              
              $
              7,608Barry
                  Honig
              
              $
              -
              
              
              100,000
              
              $
              7,608Sanford
                  Rich
              
              $
              -
              
              
              100,000
              
              $
              7,608Michael
                Katz
              
              $
              -
              
              
              -
              
              $
              -





(1)
            Based
                upon the aggregate grant date fair valuecalculated
                in accordance with SFAS 123R and using a Black-Scholes valuation
                model. Assumptions used in the calculation of these amounts are included
                in Note 9 to our consolidated financial
                statements.





**ITEM
        11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
        RELATED STOCKHOLDER MATTERS**
 
 The
        following table set forth certain information as of March 26, 2008,
        regarding the beneficial ownership of our common stock by (i) each person
        or
        entity who, to our knowledge, owns more than 5% of our common stock; (ii)
        our
        Chief Executive Officer; (iii) each director; and (iv) all of our executive
        officers and directors as a group. Unless otherwise indicated in the footnotes
        to the following table, each person named in the table has sole voting and
        investment power with respect to shares of common stock and that person’s
        address is c/o Customer Acquisition Network Holdings, Inc.,200 Park Avenue
        South, Suite 908-909, New York, New York 10003. Shares of common stock subject
        to options, warrants, or other rights currently exercisable or exercisable
        within 60 days of March 26, 2008, are deemed to be beneficially owned and
        outstanding for computing the share ownership and percentage of the stockholder
        holding such options, warrants or other rights, but are not deemed outstanding
        for computing the percentage of any other stockholder.


35
  **Name
                  and Address of**
                **Beneficial
                  Owner**
              
              **Number
                  of Shares**
                **Beneficially
                  Owned**
              
              
              **Percentage**
                **Beneficially
                  Owned (1)**Barry
                  Honig
              
              
              8,492,288
              (2)
              
              
              23.60
              %595
                  S. Federal Hwy. Ste. 600Boca
                  Raton, FL 33432Michael
                  Brauser
              
              
              8,234,788
              (3)
              
              
              22.89
              %595
                  S. Federal Hwy. Ste. 600Boca
                  Raton, FL 33432Michael
                  Katz
              
              
              2,000,000
              
              
              
              5.56
              %Michael
                  D. Mathews
              
              
              1,735,173
              (4)
              
              
              4.82
              %Hagai
                  Schecter
              
              
              1,000,000
              
              
              
              2.78
              %240
                  Old Federal Hwy Suite #100Hallandale,
                  FL 33009Devon
                  Cohen
              
              
              817,336
              (5)
              
              
              2.27
              %401
                  E. Las Olas Blvd. Suite 1560Fort
                  Lauderdale, FL, 33301Bruce
                  G. Kreindel
              
              
              593,855
              (6)
              
              
              1.65
              %401
                  E. Las Olas Blvd. Suite 1560Fort
                  Lauderdale, FL, 33301Sanford
                  Rich
              
              
              16,788
              (7)
              
              
              *950
                  Third Avenue 22nd FloorNew
                  York, NY 10022All
                directors and executive officers as a group (8 persons)
              
              
              22,890,229
              
              
              
              63.57
              %
  
  (1)
              Based
                on
                35,979,667 shares of our common stock issued and oustanding as of
                March
                26, 2008.(2)
              Includes
                  16,788 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26, 2008.(3)
              Includes
                  16,788 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26, 2008.(4)
              Includes
                  265,173 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26, 2008.(5)
              Includes
                  117,336 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26, 2008.(6)
              Includes
                  93,855 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26, 2008.
 (7)
              Includes
                  16,788 shares issuable upon exercise of options to purchase shares
                  of our
                  common stock that are currently exercisable or will become exercisable
                  within 60 days after March 26,
                  2008.


**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**


Our
          two
          former majority shareholders advanced $250,000 to us in the form of convertible
          notes at $125,000 each, bearing interest at 8% per annum, mandatorily
          convertible at $.50 or 500,000 shares upon our entering into a financing
          arrangement of over $2,000,000. On August 28, 2007, the shareholders converted
          the principal of $250,000 into 500,000 shares (See Note 9 of our consolidated
          financial statements included in this annual report on Form
          10-KSB.)
 
 In
          connection with the acquisition of Desktop, we are obligated to pay an
          additional $1 million (the “Earn Out”) if Desktop achieves certain revenue and
          gross margins, as defined, in the 90 day period subsequent to closing the
          Dektop
          Merger. In addition, if Desktop achieves other certain revenues, as defined,
          the
          Earn Out is subject to acceleration. Pursuant to the terms of the Desktop
          Merger, on October 5, 2007, $643,000 was paid as part of the Desktop earn-out.
          (See Note 1 of our consolidated financial statements included in this annual
          report on Form 10-KSB.)
  In
          connection with the sale of the senior secured notes a related party issued
          150,000 common shares to the buyers of the notes for a value of $802,500.
          (See
          Note 9 of our consolidated financial statements included in this annual
          report
          on Form 10-KSB.)
 
 Included
          in revenues during 2007 is approximately $154,000 of revenue from a related
          party affiliate which is controlled by one of our directors who was one
          of the
          former owners of Desktop Interactive, Inc., the Company we acquired on
          August
          31, 2007.





36




**ITEM
      13. EXHIBITS**


**Exhibit
                  No.**
              
              **Description**2.1
              
              Agreement
                  of Merger and Plan of Reorganization, dated as of August 28, 2007,
                  by and
                  among Customer Acquisition Network Holdings, Inc., (the "Company"),
                  Customer Acquisition Network, Inc. and CAN Acquisition Sub, Inc.
                  (incorporated herein by reference to Exhibit 2.1 to the Company's
                  Current
                  Report on Form 8-K filed with the Commission on September 4,
                  2007).2.2
              
              Agreement
                  and Plan of Merger dated August 31, 2007, by and among Customer
                  Acquisition Network Holdings, Inc., Customer Acquisition Network,
                  Inc.,
                  Desktop Acquisition Sub, Inc., Desktop Interactive, Inc. and Michael
                  Katz,
                  Brandon Guttman and Stephen Guttman (incorporated herein by reference
                  to
                  Exhibit 2.2 to the Company’s Current Report on Form 8-K filed with the
                  Commission on September 4, 2007).2.3
              
              Certificate
                  of Merger, dated August 28, 2007, between Customer Acquisition
                  Network
                  Inc. and Acquisition Corp. (incorporated herein by reference to
                  Exhibit
                  2.3 to the Company’s Current Report on Form 8-K filed with the Commission
                  on September 4, 2007).2.4
              
              Certificate
                  of Merger dated August 31, 2007, between Desktop Interactive, Inc.
                  and
                  Desktop Acquisition Sub, Inc. (incorporated herein by reference
                  to Exhibit
                  2.4 to the Company’s Current Report on Form 8-K filed with the Commission
                  on September 4, 2007).3.1
              
              Articles
                  of Incorporation (incorporated herein by reference to Exhibit 3.1
                  to the
                  Company’s Registration Statement on Form SB-2 filed with the Commission
                  on
                  March 8, 2007).3.2
              
              Amended
                  and Restated Articles of Incorporation (incorporated herein by
                  reference
                  to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the
                  Commission on August 30, 2007).3.3
              
              Amended
                  and Restated By-laws (incorporated herein by reference to Exhibit
                  3.2 to
                  the Company’s Current Report on Form 8-K filed with the Commission on
                  August 30, 2007).10.1
              
              Form
                  of Subscription Agreement (incorporated herein by reference to
                  Exhibit
                  10.1 to the Company’s Current Report on Form 8-K filed with the Commission
                  on September 4, 2007).10.2
              
              Resignation
                  letter from Brian D. Wolff, dated August 28, 2007 (incorporated
                  herein by
                  reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K
                  filed with the Commission on September 4, 2007).10.3
              
              Resignation
                  letter from Stephen Schneer, dated August 27, 2007 (incorporated
                  herein by
                  reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K
                  filed with the Commission on September 4, 2007).10.4
              
              Agreement
                  of Conveyance, Transfer and Assignment of Assets and Assumption
                  of
                  Obligations, dated September 4, 2007, between Customer Acquisition
                  Network
                  Holdings, Inc. and SplitCo (incorporated herein by reference to
                  Exhibit
                  10.14 to the Company’s Current Report on Form 8-K filed with the
                  Commission on September 4, 2007).10.5
              
              Stock
                  Purchase Agreement, dated September 4, 2007, between Customer Acquisition
                  Network Holdings, Inc., Inc, Customer Acquisition Network, Inc.
                  and Brian
                  D. Wolff (incorporated herein by reference to Exhibit 10.15 to
                  the
                  Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.6
              
              Placement
                  Agreement dated August 16, 2007, between the Company and WFG Investments,
                  Inc. (incorporated herein by reference to Exhibit 10.16 to the
                  Company’s
                  Current Report on Form 8-K filed with the Commission on September
                  4,
                  2007).10.7
              
              Consulting
                  Agreement dated August 1, 2007, between the Company and Michael
                  Baybak and
                  Company, Inc. (incorporated herein by reference to Exhibit 10.17
                  to the
                  Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.8
              
              Form
                  of Baybak Warrant (incorporated herein by reference to Exhibit
                  10.2 to the
                  Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.9
              
              Form
                  of Lockup Agreement (incorporated herein by reference to Exhibit
                  10.3 to
                  the Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.10
              
              Form
                  of Directors and Officers Indemnification Agreement (incorporated
                  herein
                  by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
                  filed with the Commission on September 4, 2007).10.11
              
              2007
                  Equity Incentive Plan (incorporated herein by reference to Exhibit
                  10.5 to
                  the Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.12
              
              Form
                  of 2007 Incentive Stock Option Agreement (incorporated herein by
                  reference
                  to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the
                  Commission on September 4, 2007).10.13
              
              Form
                  of 2007 Non-Qualified Stock Option Agreement (incorporated herein
                  by
                  reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K
                  filed with the Commission on September 4, 2007).10.14
              
              Employment
                  Agreement, dated June 28, 2007, between Customer Acquisition Network
                  and
                  Michael Mathews (incorporated herein by reference to Exhibit 10.8
                  to the
                  Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.15
              
              Employment
                  Agreement, dated April 1, 2007, between Customer Acquisition Network
                  and
                  Devon Cohen (incorporated herein by reference to Exhibit 10.9 to
                  the
                  Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.16
              
              Employment
                  Agreement, dated June 28, 2007, between Customer Acquisition Network,
                  Inc.
                  and Bruce Kreindel (incorporated herein by reference to Exhibit
                  10.8 to
                  the Company’s Current Report on Form 8-K filed with the Commission on
                  September 4, 2007).10.17
              
              Employment
                  Agreement, dated August 31, 2007, between Customer Acquisition
                  Network
                  Holdings, Inc. and Michael Katz (incorporated herein by reference
                  to
                  Exhibit 10.11 to the Company’s Current Report on Form 8-K filed with the
                  Commission on September 4, 2007).10.18
              
              Shareholder
                  Rights Letter, dated August 31, 2007, between the Company, its
                  officers
                  and directors, Michael Katz, Brandon Guttman and Stephen Guttman
                  (incorporated herein by reference to Exhibit 10.18 to the Company’s
                  Current Report on Form 8-K filed with the Commission on September
                  4,
                  2007).10.19
              
              2007
                  Incentive Stock and Award Plan (incorporated herein by reference
                  to
                  Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the
                  Commission on November 16, 2007).10.20
              
              First
                  Amendment to the Securities Purchase Agreement, dated as of November
                  15,
                  2007, among the Company and the investors listed therein (incorporated
                  herein by reference to Exhibit 10.2 to the Company’s Current Report on
                  Form 8-K filed with the Commission on December 6,
                  2007).10.21
              
              Form
                  of 8% Senior Note (incorporated herein by reference to Exhibit
                  10.2 to the
                  Company’s Current Report on Form 8-K filed with the Commission
                  on November 20, 2007).10.22
              
              Form
                  of Security Agreement, among the Company, the debtors listed therein
                  and
                  Viking Asset Management, LLC (“Viking”), as collateral agent (incorporated
                  herein by reference to Exhibit 10.3 to the Company’s Current Report on
                  Form 8-K filed with the Commission on November 20,
                  2007).10.23
              
              Form
                  of Pledge Agreement between the Registrant and Viking (incorporated
                  herein
                  by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K
                  filed with the Commission on November 20, 2007).10.24
              
              Form
                  of Guaranty, made by Customer Acquisition Network, Inc. and Desktop
                  Acquisition Sub, Inc. in favor of Viking (incorporated herein by
                  reference
                  to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the
                  Commission on November 20, 2007).10.25
              
              Form
                  of Deposit Account Control Agreement (incorporated herein by reference
                  to
                  Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the
                  Commission on November 20, 2007).10.26
              
              Agreement
                  and Plan of Merger, dated as of December 18, 2007, by and among
                  the
                  Company, Options Acquisition Sub, Inc., Options Newsletter, Inc.
                  and Hagai
                  Shecter. (incorporated herein by reference to Exhibit 10.1 to the
                  Company’s Current Report on Form 8-K filed with the Commission
                  on November 20, 2007).10.27
              
              Second
                  Amendment, dated January 4, 2008, to the Securities Purchase Agreement,
                  dated November 15, 2007, by and among Registrant and the buyers
                  named
                  therein. (incorporated herein by reference to Exhibit 10.2 to the
                  Company’s Current Report on Form 8-K filed with the Commission
                  on January 9, 2008).10.28
              
              Subscription
                  Agreement, dated as of March 28, 2008, between the Company and
                  Whalehaven
                  Capital Fund Limited. (incorporated herein by reference to Exhibit
                  10.1 to
                  the Company’s Current Report on Form 8-K filed with the Commission on
                  April 3, 2008).10.29
              
              Form
                  of Equity Financing Warrant (incorporated herein by reference to
                  Exhibit
                  10.3 to the Company’s Current Report on Form 8-K filed with the Commission
                  on April 3, 2008).10.30
              
              Subscription
                  Agreement, dated as of March 28, 2008, between the Company and
                  Chestnut
                  Ridge Capital LLC. (incorporated herein by reference to Exhibit
                  10.2 to
                  the Company’s Current Report on Form 8-K filed with the Commission
                  on April 3, 2008).21.1*
              
              List
                  of subsidiaries.31.1*
              
              Section
                  302 Certification of Principal Executive Officer.31.2*
              
              Section
                  302 Certification of Principal Financial Officer.32*
              
              Section 906
                  Certification of Principal Executive Officer and Principal Financial
                  Officer.







* Filed herewith.
  37


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





Aggregate
      fees for professional services rendered to the company by Salberg &
Company, P.A., for the period from June 14, 2007 (inception) to
      December 31, 2007 were:





Audit
                fees
            $82,000Audit
                related fees
            $130,000Total
            $212,000





*Audit
      Fees.*The Audit
      Fees for the
      period from June 14, 2007 (inception) to December 31, 2007 were for
      professional services rendered for audits and quarterly reviews of our
      consolidated financial statements.





*Audit
      related fees.*The Audit
      related fees for the
      period from June 14, 2007 (inception) to December 31, 2007 were for
      professional services rendered for assistance with reviews of documents
      filed with the SEC, primarily related to the recapitalization and for audits
      of
      acquired companies.




*Tax
      fees.* There were no tax fees billed from
      June 14, 2007 (inception) to December 31, 2007.




38


**SIGNATURES**
  In
        accordance with the requirements of Section 13 of 15(d) of the Exchange Act,
        the
        registrant caused this report to be signed on its behalf by the undersigned,
        thereunto duly authorized.
  CUSTOMER
                  ACQUISITION NETWORK HOLDINGS, INC.By:
              /s/
                  Michael D. MathewsName:
                  Michael D. MathewsTitle:
                  Chief Executive Officer, President and DirectorDate:
                  April 15, 2008
  In
        accordance with the requirements of the Exchange Act, this report has been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
  **Signature**
              
              **Title**
              
              **Date**/s/
                  Michael D. Mathews
              
              
              
              April
                  15, 2008Michael
                  D. Mathews
              
              President,
                  Chief Executive Officer and Director
                (Principal
                  Executive Officer)/s/
                  Bruce G. Kreindel
              
              
              
              April
                  15, 2008Bruce
                  G. Kreindel
              
              Chief
                  Financial Officer Treasurer and Director
                (Principal
                  Accounting and Financial Officer)/s/
                  Michael Brauser
              
              
              
              April
                  15, 2008Michael
                  Brauser
              
              Director/s/
                  Barry Honig
              
              
              
              April
                  15, 2008Barry
                  Honig
              
              Director/s/
                  Michael Katz
              
              
              
              April
                  15, 2008Michael
                  Katz
              
              President
                  of InterCLICK and Director/s/
                  Sanford Rich
              
              
              
              April
                  15, 2008Sanford
                  Rich
              
              Director
  39