**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-KSB**




**x
      ANNUAL REPORT UNDER
      SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




**o
      TRANSITION REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




For
      the
      fiscal year ended: December 31, 2007




*Commission
      file number 000-33315*




**KNOBIAS,
      INC.**


(Exact
      name of registrant as specified in its charter)





Delaware
            13-3968990(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





415
                Bedford RoadPleasantville,
                New York
            10570(Address
                of principal executive offices)
            (zip
                code)




Registrant's
      telephone number, including area code (914) 449-6520




Securities
      registered under Section 12(b) of the Exchange Act:


None




Securities
      registered under Section 12(g) of the Exchange Act:


Common
      Stock, $.01 par value


(Title
      of
      Class)




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




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




Check
      if
      there is no disclosure of delinquent filers pursuant 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 Act). Yes o No x




The
      issuer's revenues for its most recent fiscal year ended December 31, 2007 were
      $2,007,123.




As
      of
      March 31, 2008 the aggregate market value of the voting and non-voting common
      equity held by non-affiliates of the registrant was approximately $323,537,
      based upon the average of the closing bid and ask prices on the Nasdaq
      Over-The-Counter Bulletin Board for that date.




The
      number of shares of Common Stock, $0.01 par value, outstanding on March 31,
      2008, was 530,389 shares, held by approximately 117 stockholders.




Transitional
      Small Business Disclosure Format (check one): Yes o No x








**KNOBIAS,
      INC.**


**ANNUAL
      REPORT ON FORM 10-KSB**


**For
      the Fiscal Year Ended December 31, 2007**




**TABLE
      OF CONTENTS**


PagePart
                IItem
                  1.
              
              Business
              1Item
                  2.
              
              Properties
              8Item
                  3.
              
              Legal
                  Proceedings
              8Item
                  4.
              
              Submission
                  of Matters to a Vote of Security Holders
              9PART
                  IIItem
                  5.
              
              Market
                  for Equity Securities and Related Stockholder Matters
              9Item
                  6.
              
              Management's
                  Discussion and Analysis or Plan Of Operation
              12Item
                  7.
              
              Financial
                  Statements
              17Item
                  8.
              
              Changes
                  in and Disagreements with Accountant on Auditing
                  Accounting and Financial Disclosure
              18Item
                  8A.
              
              Controls
                  and Procedures
              18Item
                  8B.
              
              Other
                  Information
              19PART
                  IIIItem
                  9.
              
              Directors,
                  and Executive Officers, Promoters, Control Persons, and Corporate
                  Governance; Compliance with Section 16(a) of the Exchange
                  Act
              19Item
                  10.
              
              Executive
                  Compensation
              23Item
                  11.
              
              Security
                  Ownership of Certain Beneficial Owners and Management
                  and Related Stockholder Matters
              24Item
                  12.
              
              Certain
                  Relationships, Related Transactions, and Director
                  Independence
              25PART
                  IVItem
                  13.
              
              Exhibits
              26Item
                  14.
              
              Principal
                  Accountant Fees and Services
              31Signatures
              32




This
      report contains forward-looking statements which we believe to be within the
      meaning of Section 27A of the Securities Act of 1933, as ame nded,
      and
      Section 21E of the Securities Exchange Act of 1934, as amended, that are based
      on beliefs of management as well as assumptions made by and information
      currently  available
      to our management. When used in this report, the words, “estimate,” “project,”
“believe,” “anticipate” “intend,” “expect,” “plan,” “predict,” “may,” “should,”
“will,” the negative thereof or other variations thereon or comparable
      terminology are intended to identify forward-looking statements. Such statements
      reflect our current views with respect to future events based on currently
      available information and are subject risks and uncertainties that could cause
      actual results to differ materially from those contemplated in those
      forward-looking statements. Factors that could cause actual results to differ
      materially from our expectations include but are not limited to those described
      in “Risk Factors.” Other factors may be described from time to time in our
      public filings with the Securities and Exchange Commission, news releases and
      other communications. The forward-looking statements contained in this report
      speak only as of the date hereof. We do not undertake any obligation to release
      publicly any revisions to these forward-looking statements to reflect events
      or
      circumstances after the date hereof or to reflect the occurrence of
      unanticipated events.





Readers
      are cautioned that such statements, which may be identified by words including
      “anticipates,” “believes,” “intends,” “estimates,” “expects,” and similar
      expressions, are only predictions or estimations and are subject to known and
      unknown risks and uncertainties. In evaluating such statements, readers should
      consider the various factors identified  in
      this
      Annual Report on Form 10-KSB including, but not limited to, matters set forth
      in
      "Management's Discussion and Analysis and Results of Operation" under Item
      6.




In
      this
      form 10-KSB references to "KNOBIAS", "the Company", "we," "us," and "our" refer
      to KNOBIAS, INC.










**PART
      I**





**ITEM
      1. BUSINESS**





**Overview**





Knobias,
      Inc., through its indirect wholly owned subsidiaries Knobias Holdings and
      Knobias.com, LLC, is a provider of financial information and data primarily
      focused on small to nano-cap companies and private placements in public
      companies commonly referred to as PIPES. Knobias has developed and compiled
      financial databases, information systems, tools and products which track over
      16,000 U.S. securities. We market our products and technically varied
      applications to individual investors, day-traders, financial oriented websites,
      public issuers, brokers, professional traders and institutional
      investors.





Knobias,
      Inc. was formed on January 31, 1968 under the laws of the State of Delaware
      pursuant to the Delaware General Corporation Law and was formerly known as
      Consolidated Travel Systems, Inc. On November 15, 2004, Consolidated Travel
      Systems, Inc. acquired, through a reverse merger transaction, all the
      outstanding stock of Knobias Holdings, Inc., and then changed its name to
      Knobias, Inc. For accounting purposes, the acquisition was treated as a
      recapitalization of Knobias, Inc. with Knobias, Inc. considered the acquirer
      (reverse acquisition).


The
      Company's primary subsidiary Knobias.com, LLC was initially formed as Penny
      PI,
      LLC on September 4, 1998 and renamed in March 2000 under the laws of the State
      of Mississippi pursuant to the Mississippi Limited Liability Company Act. Penny
      PI, LLC was organized to design and implement an Internet website for the
      provision of subscriber based information and investigative services relating
      to
      over-the-counter bulletin board companies, commonly referred to as “penny
      stocks."





The
      Company has two other subsidiaries, Knobias Holdings, Inc. and Kollage, LLC,
      which are inactive.





On
      June
      6, 2007, the Company consummated a capital restructuring with CAMOFI Master
      LDC
      (“CAMOFI”) and other principal creditors. As part of the restructuring, the
      Company entered into a Securities Purchase Agreement (the “Securities Purchase
      Agreement”) to sell $3,000,000 of its senior secured convertible notes (the
“Convertible Notes”). On June 6, 2007, CAMOFI purchased $1.53 million of the
      Convertible Notes and subsequently purchased, through December 31, 2007 along
      with another investor, an additional $700,563 of Convertible Notes. The
      Convertible Notes are due on June 6, 2010, and require that the Company (i)
      commencing on August 1, 2007, pay interest monthly in arrears at a rate equal
      to
      the prime rate plus 2.75% per annum, (ii) at the option of the holder, and
      until
      the Convertible Note(s) of such holder is no longer outstanding, convert the
      Convertible Notes into shares of the Company’s common stock at a conversion
      price of $.622 per share, and (iii) on the first of each month following the
      anniversary of the initial issue date of the Convertible Notes to make monthly
      sinking fund payments in an amount equal to 1/36 of the principal amount of
      the
      then outstanding Convertible Notes plus any accrued and unpaid interest and
      late
      fees to the Convertible Note holders’ sinking fund account. With respect to the
      total Convertible Notes outstanding at December 31, 2007, commencing July 1,
      2008, the Company is required to pay month sinking fund payments in the amount
      of $61,960. The Convertible Notes are secured by a first priority perfected
      security interest in all of the assets of the Company. In addition, the Company
      is obligated to prepare and file a Registration Statement with the Securities
      and Exchange Commission covering the resale of 125% of all the shares to be
      issued on conversion of the Convertible Notes within 120 days subsequent to
      the
      completion of the $3,000,000 sale of the Convertible Notes. At December 31,
      2007
      and to date, the Company has not been in compliance with its Convertible Note
      obligations to file a timely Registration Statement. In order to cure its
      existing non-compliance and enable the Company to continue as a going concern,
      the Company has requested that the majority principal Convertible Note holder
      grant the Company a waiver of its non-compliance and that the Securities
      Purchase Agreement and related Convertible Notes be amended respectively to
      increase the amount of Convertible Notes to be offered to provide for and assure
      the subscription to such increase or otherwise provide for the ongoing financing
      requirements of the Company. The Company is currently in discussions with its
      Convertible Note holders regarding a possible waiver of existing non-compliance.





In
      addition to the new financing, and pursuant to the restructuring: (i)
      outstanding indebtedness, accrued interest and penalties, in the aggregate
      amount of approximately $4.68 million, were converted into a new Series B
      Convertible Preferred Stock, (ii) remaining indebtedness of the Company, in
      the
      principal amount of approximately $250,000, was converted into 4-year
      subordinated loans, (iii) the terms of the Company's outstanding Series A
      Preferred Stock were amended to eliminate certain rights, preferences and
      privileges of the Series A Preferred Stock, (iv) prior to the completion of
      the
      restructuring certain holders of the Series A Preferred Stock converted those
      shares into Common Stock, (v) certain holders of existing warrants and options
      of the Company agreed to cancel their outstanding warrants and options, and
      (vi)
      additional indebtedness in the principal amount of $200,000 was
      repaid.





In
      January 2008, the Company relocated its principal executive offices at 415
      Bedford Road, Pleasantville, New York 10570. The telephone number of our
      headquarters is (914) 495-3100 and our Web site is www.knobias.com. Copies
      of
      all reports we file with the Securities and Exchange Commission are available
      on
      our Web site.





1




**Corporate
      Strategy**





Our
      goal
      is become a leading value added niche focused provider of comprehensive
      financial data and information servicing financial markets currently lacking
      such specialized services.





**What
      We Do**





We
      combine, maintain and market data, originating from our own database and the
      world’s largest electronic database of historical and real-time information,
      pertaining to companies that trade publicly in such markets as the New York
      Stock Exchange, the American Stock Exchange, the Over-the-Counter Bulletin
      BoardTM, Pink SheetsTM, the NASDAQ Capital MarketTM and equally important
      non-traded securities of both public and private companies. We are a market
      leader in news, data and information on public equities, with a particular
      niche
      in small to nano-cap stocks and PIPES (private placements in public equities);
      we believe that Knobias may be among the largest resources of unbiased market
      intelligence for these types of companies.





The
      multiple products we market originate from combined Knobias and third party
      databases which we provide to our customers via visually-efficient web &
Windows-based platforms uniquely capable of disseminating, in a standard, or
      otherwise client customized format, third party databases, news feeds and other
      financial content with internally generated content and analysis to create
      value-added, cost-effective information solutions.





These
      product platforms, which are primarily sold to clients on either a subscription
      or enterprise basis, contain:





·
            80+
                real-time news feeds, including Knobias proprietary
                content;


·
            Company
                fundamentals, including historical data, charts, financials, insiders
                and
                institutional holders, among
                others;


·
            A
                full suite of analysis****tools,
                including technical data;


·
            A
                broad array of filters &
screeners;


·
            SEC****filings****with
                search & sort features;


·
            Fully
                customizable email****alerts;


·
            Comprehensive
                market calendars;


·
            State-of-the-art
                technology; and


·
            Integrated
                transaction databases.





**Product
      Highlights**




·
            *Knobias+Plus*:
                Our main desktop platform. Gives users comprehensive command of financial
                data, news and a large suite of due diligence tools. Contains RAIDAR,
                our
                streaming real-time news delivery product sourced from 80+ feeds,
                screeners, fundamental, calendars, technical’s, sort, search & filter
                information based on portfolio, sector, industry, set up email alerts
                among other tools and
                characteristics.




·
            *Morning+Plus*:
                Our daily email service designed to give an institution’s clients a
                white-labeled information product. 15 distinct content modules combine
                with the client’s portfolios to provide a highly customized,
                information-packed resource.




·
            *PipeTRAC*:
                Our proprietary database product tracking over 300 data points related
                to
                PIPE transactions and their participants. Complete transaction details,
                participant profiles (including law, investor relations and accounting
                firms), rankings, powerful analysis tools and PIPE-specific alerts.
                PipeTRAC is the most cost-effective solution available for financial
                professionals engaged in this
                niche.




·
            *SmallCap
                Sleepers***:**The cornerstone of our growing research effort, Sleepers is a
                comprehensive look at a single small cap stock unlikely to be well
                known
                on the Street. This product delivers timely independent small cap
                information to professional
                investors.




·
            *Issuer
                Services*:
                Provide website, data and conference call hosting, press release
                distribution, and market awareness programs to public companies and
                their
                investor relations professionals.




·
            *Data*:
                We customize data from our database for integration into client’s
                institutional platforms and web
                sites.




**The
      Industry**




The
      financial information services industry is a multi-billion dollar industry
      primarily dominated by a number of well known established companies with a
      vast
      number of other both large and small public and private companies providing
      array of comparable or otherwise niche focused information and data platforms.
      As others in our industry, we obtain a broad base of financial data and
      information from a number of other data base providers. Acquired data and
      information is compiled in our proprietary data base thereby enabling us to
      provide value added niche market products as well as products competitively
      priced to broader interested market participants.




2




**Client
      Roster**




Our
      clients, among others, include traders, brokers, hedge funds, investment banks
      and other financial institutions, research analysts, investor relations and
      public relations firms, individual investors, U.S. exchanges and ECN’s, web
      portals and financial web sites, content providers and others interested in
      the
      NASDAQ small-cap market and PIPES marketplace.




For
      the
      years ended December 31, 2007 and 2006, one client accounted for approximately
      13% and 16% respectively, of our revenues. To the extent that we continue to
      have a heavily weighted sales concentration with one or more clients, the loss
      of any such client would have a material adverse effect on our
      earnings.




**Competition**




The
      market for financial information services is highly competitive, with hundreds
      of companies claiming to provide various services in the financial information
      services industry. In general, our competition is derived from two basic groups:
      broad-based information providers and companies that specialize in providing
      services to a focused market segment. Any number of companies in these groups
      has greater financial and marketing resources available then we do. Competitors
      in various aspects of our services include: Bloomberg LP, The Thomson
      Corporation, Dow Jones & Company, Inc., Reuters Group Plc, FactSet Research
      Systems, Inc., Sagient Research Systems, Inc., Briefing.com,
      TheFlyontheWall.com, and StreetAccount.com. Resulting from our technical
      capabilities, which enable clients flexible and ease of use of our services
      platforms, and our pricing strategy, we believe that we are able to effectively
      compete in our market space.




**Employees**




As
      of
      December 31, 2007, we had 25 employees, including one part-time employee. None
      of our employees are represented by a labor organization and we consider our
      relationship with our employees to be good.




**ITEM
      1.A. RISK FACTORS**





This
      report contains forward-looking statements which we believe to be within the
      meaning of Section 27A of the Securities Act of 1933, as ame nded,
      and
      Section 21E of the Securities Exchange Act of 1934, as amended, that are based
      on beliefs of management as well as assumptions made by and information
      currently  available
      to our management. When used in this report, the words, “estimate,” “project,”
“believe,” “anticipate” “intend,” “expect,” “plan,” “predict,” “may,” “should,”
“will,” the negative thereof or other variations thereon or comparable
      terminology are intended to identify forward-looking statements. Such statements
      reflect our current views with respect to future events based on currently
      available information and are subject risks and uncertainties that could cause
      actual results to differ materially from those contemplated in those
      forward-looking statements. Factors that could cause actual results to differ
      materially from our expectations include but are not limited to those described
      in “Risk Factors.” Other factors may be described from time to time in our
      public filings with the Securities and Exchange Commission, news releases and
      other communications. The forward-looking statements contained in this report
      speak only as of the date hereof. We do not undertake any obligation to release
      publicly any revisions to these forward-looking statements to reflect events
      or
      circumstances after the date hereof or to reflect the occurrence of
      unanticipated events.





Readers
      are cautioned that such statements, which may be identified by words including
      “anticipates,” “believes,” “intends,” “estimates,” “expects,” and similar
      expressions, are only predictions or estimations and are subject to known and
      unknown risks and uncertainties. As
      an
      investment in shares of our common stock is considered speculative, investors
      should carefully consider the risks described below before making an investment
      decision. In
      evaluating such statements, readers should consider the various factors
      identified  in
      this
      Annual Report on Form 10-KSB including, but not limited to, matters set forth
      in
      "Management's Discussion and Analysis and Results of Operation" under Item
      6.





***Recent
      Losses.*** We
      sustained a net loss of approximately $9,900,000 (inclusive of approximately
      $5,000,000 relating to the loss on extinguishment of debt associated with the
      Company’s capital restructuring) for the year ended December 31, 2007 and a net
      loss of approximately $2,300,000 for the year ended December 31, 2006. These
      losses were due in part to a constraint on the Company’s resources which limited
      an effective sales effort. There can be no assurances that future sales efforts
      will be successful, that we will be profitable in the future or that we will
      be
      able to stay in business.




***Need
      for Additional Funding to Continue as a Going Concern*** ***.*** In
      their
      report dated April 15, 2008, our independent registered public accounting firm
      stated that our consolidated financial statements for the year ended December
      31, 2007, were prepared assuming that we would continue as a going concern.
      Our
      ability to continue as a going concern is an issue raised as a result of our
      losses for the year ended December 31, 2007, our negative working capital and
      accumulated deficit as of December 31, 2007 and the non-complianceon the senior
      secured convertible notes in 2008, as described above. During the year, in
      conjunction with our capital restructuring, we obtained additional working
      capital from the sale to investors of $2,230,563 of our senior convertible
      notes
      which are due on June 6, 2010. Subsequent to December 31, 2007, the principal
      purchaser of our senior convertible notes has continued to provide short-term
      financing to us on a month-to-month, as-needed basis in support of our working
      capital needs. As of March 31 **,** 2008,
      this additional financing was **$** 515,704.
      We are currently in discussions with several potential investors to obtain
      financing for working capital purposes; however, there can be no assurance
      that
      funding will be available to us at the time it is needed or in the amount
      necessary to satisfy our needs, or, if funds are made available, that they
      will
      be available on terms that are favorable to us. If we are unable to secure
      financing when needed, our business may be materially adversely affected and
      we
      may be required to cease all or a substantial portion of our operations. If
      we
      issue additional shares of common stock or securities convertible into common
      stock in order to secure additional funding, current stockholders may experience
      dilution of their ownership. In the event we issue securities or instruments
      other than common stock, we may be required to issue such instruments with
      greater rights than those currently possessed by holders of common stock.





3




***Litigation.*** During
      2007, Knobias had two significant judgments entered against it, one from the
      State of New York, in the amount of $69,500, inclusive of continuing penalties
      through January 23, 2008, for failure to have provided workmen’s compensation
      insurance coverage for a New York employee terminated in November 2004, and
      the
      other from the State of Illinois and further entered in the State of
      Mississippi, in the amount of $369,000 (inclusive of penalties of approximately
      $361,000), for failure to withhold an adequate amount from an employee employed
      by Knobias during 2006 in compliance with an order to withhold income for
      support. With regard to the New York State judgment, we are in the currently
      in
      the process of negotiating a settlement, especially with respect to the
      penalties involved, with the Workmen’s Compensation Board. As to the Illinois
      and related Mississippi judgments, we have appealed the Illinois judgment and
      are awaiting the decision of the Appellate Court of the State of Illinois.
      There
      can be no assurance that we will receive a favorable response to our appeal
      or
      otherwise be able to recover any amounts from our insurance carrier, or
      negotiate an acceptable settlement with respect to the Illinois and Mississippi
      judgments or that we will be able to negotiate an acceptable settlement of
      the
      New York State judgment. Failure to receive a favorable ruling on our appeal
      in
      Illinois or otherwise lacking insurance coverage or failing to negotiate an
      acceptable settlement of both judgments could have a material adverse affect
      on
      our cash flows and business.




***An
      Event of Default has Occurred Under the Securities Purchase Agreement, Secured
      Convertible Notes or Security Agreement, the Investors Could Take Possession
      of
      All Our Goods, Inventory, Contractual Rights and General Intangibles,
      Receivables, Documents, Instruments, Chattel Paper, Intellectual Property and
      Equity Securities of Our Subsidiaries.*** In
      connection with the Securities Purchase Agreement entered into in June 2007,
      we
      executed a Security Agreement in favor of the investors granting them a first
      priority security interest in all of our goods, inventory, contractual rights
      and general intangibles, receivables, documents, instruments, chattel paper,
      intellectual property and equity securities in our subsidiaries. The Security
      Agreement states that if an event of default occurs under the Securities
      Purchase Agreement, Secured Convertible Notes or Security Agreement, the
      investors have the right to take possession of the collateral, to operate our
      business using the collateral, and have the right to assign, sell, lease or
      otherwise dispose of and deliver all or any part of the collateral, at public
      or
      private sale or otherwise to satisfy our obligations under these agreements.
      Accordingly, there can be no assurance that we will be able to cure the
      default in a timely manner, without having a material adverse effect on our
      operations and ability to continue in business.




***Need
      to Continually Enhance and Maintain Our Information Technology.*** The
      success of marketing our services and related products depends on our ability
      to
      have our technology currently supporting the product demands of our industry’s
      rapidly changing technologies and related client requirements. To the extent
      that we are unsuccessful in developing and marketing new products or product
      enhancements on a timely and or cost effective basis, our business may be
      significantly adversely affected.




***Need
      to Grow and Sustain Subscriber Base.*** As
      a
      business, the viability of which is primarily dependent on revenue from
      subscribers, it is essential that our products and related support services
      meet
      the then current and continuing needs of our existing subscriber base and our
      marketing efforts to attract new clients. In the event we are unable to
      significantly increase and maintain a subscriber base at a level much larger
      than our current base, we may be unable to operate profitably and continue
      as an
      operating company without continued funding support.




***Competition*** .
      The
      market for financial information services is extremely competitive and the
      barriers to entry are relatively low. Increased competition could result in
      reduced operating margins, as well as a loss of market share and brand
      recognition. Many of our competitors have greater financial and marketing
      resources, broader and more varied databases and libraries, technology and
      delivery systems that are more flexible or cost-effective, stronger alliances
      and/or lower cost structures than we do. We compete on the quality and degree
      of
      comprehensive services which we provide to our clients. There can be no
      assurance that we will be able to continue to compete successfully with existing
      or future industry competitors.




***Clients.*** A
      substantial portion of our revenue has been dependent on one or a limited
      concentration of clients. In particular, for the years ended December 31, 2007
      and 2006, one client accounted for approximately 13% and 16%, respectively,
      of
      our revenues. To the extent such dependency continues, significant fluctuations
      in revenues, results of operations and liquidity could arise if this client
      or
      any other significant client significantly reduces the use of the services
      we
      provide the result of which would have a material adverse effect on our ability
      to continue as an operating company.




***Dependence
      on Databases of Others.*** In
      order
      to effectively provide our proprietary online financial and information, we
      contract for and combine a variety of databases of other service providers
      with
      ours. Although we believe there are alternative sources to our existing
      suppliers, it is essential that we continue to access data and information
      from
      suppliers on favorable contract terms and that such data and information be
      accurate and delivered in a timely manner. Failure of our ability to
      successfully continue contractual relationships with our outside suppliers
      of
      data and information and or the failure of one or more of these suppliers to
      provide accurate and timely data and information could adversely affect our
      business.




4




***We
      May Be Unable to Protect Our Intellectual Property Adequately or Cost
      Effectively, Which May Cause Us to Lose Market Share or Reduce Our Prices.*** Our
      success depends in part on our brand identity and our ability to protect and
      preserve our proprietary rights. We cannot assure you that we will be able
      to
      prevent third parties from using our intellectual property rights and technology
      without our authorization. We do not own any patents on our technology. Rather,
      to protect our intellectual property, we rely on trade secrets, common law
      trademark rights and trademark registrations, as well as confidentiality and
      work for hire, development, assignment and license agreements with our
      employees, consultants, third party developers, licensees and customers.
      However, these measures afford only limited protection and may be flawed or
      inadequate. Also, enforcing our intellectual property rights could be costly
      and
      time-consuming and could distract management's attention from operating business
      matters.




***Our
      Intellectual Property May Infringe on the Rights of Others, Resulting in Costly
      Litigation.*** ****** In
      recent
      years, there has been significant litigation in the United States involving
      patents and other intellectual property rights. In particular, there has been
      an
      increase in the filing of suits alleging infringement of intellectual property
      rights, which pressure defendants into entering settlement arrangements quickly
      to dispose of such suits, regardless of their merits. Other companies or
      individuals may allege that we infringe on their intellectual property rights.
      Litigation, particularly in the area of intellectual property rights, is costly
      and the outcome is inherently uncertain. In the event of an adverse result,
      we
      could be liable for substantial damages and we may be forced to discontinue
      our
      use of the subject matter in question or obtain a license to use those rights
      or
      develop non- infringing alternatives. Any of these results would increase our
      cash expenditures, adversely affecting our financial condition.




***The
      Internet Could Become Subject to Regulations that Affect our Business.*** Our
      business relies on the Internet and other electronic communications gateways
      the
      use of which we intend to expand. To date, the use of the Internet has been
      relatively free from regulatory restraints. However, legislation, regulations,
      or interpretations may be adopted in the future that constrain our own and
      our
      customers' abilities to transact business through the Internet or other
      electronic communications gateways. There is a risk that any additional
      regulation of the use of such gateways could have a material adverse effect
      on
      our business and financial condition.





***The
      Adverse Affect of a Significant Economic Downturn or Changes in Financial Market
      Conditions.*** Deteriorating
      economic conditions and/or related or other reductions in spending by financial
      institutions, investment companies and related financial services organizations,
      such as asset managers, investment advisors, brokerage firms, banks, plan
      sponsors, hedge funds and others, could have a material adverse effect on our
      revenues and financial condition, as the demand for our services could be
      significantly reduced.




***Risks
      Associated with Strategic Relationships or Acquisitions.*** An
      integral part of our growth strategy is evaluating and, from time to time,
      engaging in discussions regarding acquisitions and strategic relationships.
      No
      assurance can be given that suitable acquisitions or strategic relationships
      can
      be identified, financed and completed on acceptable terms, or that future
      acquisitions, if any, will be successful.




***Risks
      Relating To Security or Other System Disruptions and Failures That Could Reduce
      the Attractiveness of Our Online Products.*** ****** Although
      we have implemented various security mechanisms, our business is vulnerable
      to
      computer viruses, physical or electronic break-ins and similar disruptions
      which
      could lead to interruptions, delays and/or loss of data. Additionally, our
      operations depend on our ability to protect systems against damage from fire,
      earthquakes, power loss, telecommunications failure, and other events beyond
      our
      control. Moreover, our website and business solutions have, in the past, and
      may
      in the future, experience slower response times or other problems for a variety
      of reasons, including hardware and communication line capacity restraints,
      software failures or during significant increases in traffic when there have
      been important business or financial news stories and during the seasonal
      periods of peak SEC filing activity. These strains on our system could cause
      customer dissatisfaction and could discourage visitors from becoming paying
      subscribers. These types of occurrences could cause users to perceive our
      website and technology solutions as not functioning properly and cause them
      to
      use other methods or services of our competitors. Any disruption resulting
      from
      these actions may harm our business and may be very expensive to remedy, and
      could damage our reputation and discourage new and existing users from using
      our
      products and services. Any disruptions could increase costs and make
      profitability even more difficult to achieve.




***Dependence
      on Key Personnel.*** Our
      business is managed by a limited number of key management and operating
      personnel. The loss of any one of those persons could have a material adverse
      impact on our business. We believe that our future success will depend in large
      part on our continued ability to attract and retain highly skilled and
      qualified.





***Control
      of the Company by a Holder of Our Senior Secured Convertible Notes and Series
      B
      Preferred Stock (“Controlling Person” as Defined by the Securities and Exchange
      Commission).*** The
      principal holder of our Senior Convertible Notes is also a holder of our Common
      Stock, Series A Convertible Preferred Stock and Series B Convertible Preferred
      Stock and, as such, in the aggregate beneficially owns approximately 52.1% of
      the
      Company. This controlling interest effectively precludes other investors or
      stockholders from having any voice in our management. Accordingly, the
      controlling person will have the ability to determine substantially all matters
      submitted to our stockholders for approval, including: (i) election of our
      board
      of directors; (i) removal of any of our directors; (ii) amendment of our
      certificate of incorporation or bylaws (subject to certain rights of holders
      of
      our preferred stock); and (iii) adoption of measures that could delay or prevent
      a change in control or impede a merger, takeover, or other business combination
      involving us. In addition, sales of significant amounts of shares held by this
      controlling person could adversely affect the market price of our common stock,
      and the stock ownership position of this controlling person may discourage
      a
      potential acquirer from making a tender offer or otherwise attempting to obtain
      control of the company, which in turn could reduce our stock price or prevent
      our stockholders from realizing a premium over our stock price.




5




***It
      May Be Difficult For A Third Party to Acquire Us, and This Could Depress Our
      Stock Price.*** Delaware
      corporate law and our Second Amended and Restated Certificate of Incorporation
      and Second Amended and Restated Bylaws contain provisions that could delay,
      defer or prevent a change in control of our company or our management. These
      provisions could discourage proxy contests and make it more difficult for you
      and other stockholders to elect directors and take other corporate actions.
      As a
      result, these provisions could limit the price that investors are willing to
      pay
      in the future for shares of common stock. For example: ****





·
            Without
                prior stockholder approval, the board of directors has the authority
                to
                issue one or more classes of preferred stock with rights senior to
                those
                of common stock and to determine the rights, privileges and preferences
                of
                that preferred stock;





·
            There
                is no cumulative voting in the election of directors, which would
                otherwise allow less than a majority of stockholders to elect director
                candidates;


·
            and





·
            Our
                Bylaws establish advance notice requirements for submitting nominations
                for election to the board of directors and for proposing matters
                that can
                be acted upon by stockholders at a
                meeting.





***Our
      Common Stock is Subject to the "Penny Stock" Rules of the Securities and
      Exchange Commission, and the Trading Market in Our Securities is Limited, Which
      Makes Transactions in Our Common Stock Cumbersome and May Reduce the Value
      of an
      Investment in Our Common Stock*** *.* Shares
      of our common stock are subject to rules adopted by the Securities and Exchange
      Commission that regulate broker-dealer practices in connection with transactions
      in "penny stocks." Penny stocks are generally equity securities with a price
      of
      less than $5.00 (other than securities registered on certain national securities
      exchanges or quoted on the NASDAQ system, provided that current price and volume
      information with respect to transactions in those securities is provided by
      the
      exchange or system). The penny stock rules require a broker- dealer, prior
      to a
      transaction in a penny stock not otherwise exempt from those rules, to deliver
      a
      standardized risk disclosure prepared by the Securities and Exchange Commission,
      which contains the following:




·
            A
                description of the nature and level of risk in the market for penny
                stocks
                in both public offerings and secondary
                trading;




·
            A
                description of the broker's or dealer's duties to the customer and
                of the
                rights and remedies available to the customer with respect to violation
                to
                such duties or other requirements of securities'
                laws;




·
            A
                brief, clear, narrative description of a dealer market, including
                "bid"
                and "ask" prices for penny stocks and the significance of the spread
                between the "bid" and "ask" price;




·
            A
                toll-free telephone number for inquiries on disciplinary
                actions;




·
            Definitions
                of significant terms in the disclosure document or in the conduct
                of
                trading in penny stocks; and




·
            Such
                other information and in such form (including language, type, size
                and
                format), as the Securities and Exchange Commission shall require
                by rule
                or regulation.




·
            Prior
                to effecting any transaction in a penny stock, the broker-dealer
                also must
                provide the customer the following:




·
            The
                bid and offer quotations for the penny
                stock;




·
            The
                compensation of the broker-dealer and its salesperson in the
                transaction;




·
            The
                number of shares to which such bid and ask prices apply, or other
                comparable information relating to the depth and liquidity of the
                market
                for such stock; and




·
            Monthly
                account statements showing the market value of each penny stock held
                in
                the customer's account.




In
      addition, the penny stock rules require that prior to a transaction in a penny
      stock not otherwise exempt from those rules, the broker-dealer must make a
      special written determination that the penny stock is a suitable investment
      for
      the purchaser and receive the purchaser's written acknowledgment of the receipt
      of a risk disclosure statement, a written agreement to transactions involving
      penny stocks, and a signed and dated copy of a written suitably
      statement.




These
      disclosure requirements may have the effect of reducing the trading activity
      in
      the secondary market for a stock that becomes subject to the penny stock rules.
      Holders of shares of our common stock may have difficulty selling those shares
      because our common stock will probably be subject to the penny stock rules
      for
      an indeterminate period of time.




***If
      We Fail to Remain Current on Our Reporting Requirements, We Could be Removed
      From the OTC Bulletin Board, Limiting the Ability of Broker-Dealers to Sell
      Our
      Securities and the Ability of Stockholders to Sell Their Securities in the
      Secondary Market*** **.** **** Companies
      trading on the OTC Bulletin Board must be reporting issuers under Section 12
      of
      the Securities Exchange Act of 1934, as amended, and must be current in their
      reports under Section 13, in order to maintain price quotation privileges on
      the
      OTC Bulletin Board. If we fail to remain current on our reporting requirements,
      we could be removed from the OTC Bulletin Board. As a result, the market
      liquidity for our securities could be severely adversely affected by limiting
      the ability of investors to buy or sell our stock.





6




***Risks
      Related to the Reverse Split of Our Common Stock.*** Effective
      November 12, 2007, our Common Stock was reverse-split 1 share for every 100
      shares. Implementation of the reverse stock split entails various risks and
      uncertainties, including but not limited to the following:




·
            As
                a result of the reverse split, there can be no assurance that the
                market
                price per share of the Common Stock will increase in proportion to
                the
                reduction in the number of shares of the Common Stock outstanding
                before
                the reverse stock split. Accordingly, the total market capitalization
                of
                the Company may be lower than the total market capitalization before
                the
                reverse stock split, and if the market price of the Common Stock
                declines,
                the percentage decline may be greater than would occur in the absence
                of a
                reverse stock split.





·
            There
                can be no assurance that the reverse stock split will result in a
                per
                share price that will attract institutional investors or investment
                funds
                or that such share price will satisfy the investing guidelines of
                institutional investors or investment funds. As a result, the trading
                liquidity of the Common Stock may not necessarily
                improve.





·
            The
                reduced number of shares outstanding after the reverse stock split
                could
                adversely affect the liquidity of the Common
                Stock.





·
            Although
                the reverse stock split does not affect the rights of stockholders
                or any
                stockholder’s proportionate equity interest in the Company, subject to the
                treatment of fractional shares, the number of authorized shares of
                Common
                Stock has not been reduced. This significantly increases the ability
                of
                the Board of Directors to issue authorized and unissued shares without
                further stockholder action. The issuance in the future of such authorized
                shares may have the effect of diluting the earnings per share and
                book
                value per share, as well as the stock ownership and voting rights,
                of the
                previously outstanding shares of Common Stock. At this time, we do
                not
                have any plans, proposals or arrangements to acquire any business
                or
                engage in any investment opportunity or otherwise to issue additional
                shares of our Common Stock, except with respect to the conversion
                of
                previously outstanding shares of preferred stock, , and the issuance
                of
                options to directors and executive officers. The effective increase
                in the
                number of authorized but unissued shares of Common Stock may be construed
                as having an anti-takeover effect by permitting the issuance of shares
                to
                purchasers who might oppose a hostile takeover bid or oppose any
                efforts
                to amend or repeal certain provisions of our Certificate of Incorporation
                or Bylaws. Management could issue additional shares of our Common
                Stock to
                resist or frustrate a proposed third-party transaction that would
                provide
                an above-market premium to stockholders and is favored by a majority
                of
                our stockholders.





***We
      May Not Be Able to Obtain, on a Timely Basis, the Effectiveness of a
      Registration Statement Covering the Resale of Outstanding Shares or Shares
      to be
      Purchased Upon the Conversion of Convertible
      Securities*** **.** **** We
      are
      obligated to file with the Securities and Exchange Commission one or more
      registration statements covering the resale of the shares of common stock to
      be
      issued upon conversion of our Series B Preferred Stock and the shares of common
      stock issuable on the conversion of the Convertible Notes. Under the terms
      of
      the various registration rights agreements executed by us in connection with
      these financing agreements, if we fail to timely file such registration
      statements or are unable to cause such registration statements to become
      effective on a timely basis, we are obligated to make certain payments as
      liquidated damages to the holders of such securities. We are currently in
      non-compliance for a failure to have required registration statements declared
      effective. There can be no assurance that when and if we file registration
      statements that such statements will be declared effective by the Securities
      and
      Exchange Commission or that any claim for liquidated damages can or will be
      mitigated without material adverse consequences for the Company which could
      prevent it from staying in business.





***Internal
      Controls May Be Ineffective.*** Management
      has identified the following three material weaknesses, which have caused
      management to conclude that, as of December 31, 2007, our disclosure controls
      and procedures were not effective at the reasonable assurance
      level:





1.
      We do
      not have written documentation of our internal control policies and procedures.
      Written documentation of key internal controls over financial reporting is
      a
      requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated
      the
      impact of our failure to have written documentation of our internal controls
      and
      procedures on our assessment of our disclosure controls and procedures and
      has
      concluded that the control deficiency that resulted represented a material
      weakness.





2.
      We do
      not have sufficient segregation of duties within accounting functions, which
      is
      a basic internal control. Due to our size and nature, segregation of all
      conflicting duties may not always be possible and may not be economically
      feasible. However, to the extent possible, the initiation of transactions,
      the
      custody of assets and the recording of transactions should be performed by
      separate individuals. Management evaluated the impact of our failure to have
      segregation of duties on our assessment of our disclosure controls and
      procedures and has concluded that the control deficiency that resulted
      represented a material weakness.





3.
      We had
      a significant number of audit adjustments during last two years. Audit
      adjustments are the result of a failure of the internal controls to prevent
      or
      detect misstatements of accounting information. The failure was due to
      inadequate design of the internal controls or to a misapplication or override
      of
      controls. Management evaluated the impact of our significant number of audit
      adjustments and has concluded that the control deficiency that resulted
      represented a material weakness.





7




4.
      The
      Company did not effectively monitor access to or maintain effective controls
      over changes to, certain financial application programs and related data. This
      control deficiency could result in a material misstatement of significant
      accounts or disclosures that would result in a material misstatement to the
      Company's interim or annual consolidated financial statements that would not
      be
      prevented or detected. Accordingly, management has determined that this control
      deficiency constitutes a material weakness.





5.
      The
      Company does not maintain a sufficient level of IT personnel to execute general
      computing controls over our information technology structure, which include
      the
      implementation and assessment of information technology policies and procedures.
      This control deficiency could result in a material misstatement of significant
      accounts or disclosures, which would not be prevented or detected. 
Accordingly, management has determined that this control deficiency constitutes
      a material weakness.





6.
      The
      Company lacked continuity in its accounting and management personnel during
      2007
      as a result of the Company’s restructuring. Furthermore, the Company’s ability
      to adequately staff its accounting functions continues to be adversely impacted
      by its limited working capital.





To
      address these material weaknesses, management performed additional analyses
      and
      other procedures to ensure that the financial statements included herein fairly
      present, in all material respects, our financial position, results of operations
      and cash flows for the periods presented. If we fail to maintain the adequacy
      of
      its internal controls, including any failure to implement required new or
      improved controls, or if we experience difficulties in our implementation,
      our
      business and operating results could be harmed, we could fail to meet its
      reporting obligations, and there could be a material adverse effect on the
      price
      of our stock.





***Trends,
      Risks and Uncertainties.*** ** We
      have
      sought to identify what we believe to be the most significant risks to our
      business, but we cannot predict whether, or to what extent, any of such risks
      may be realized nor can we guarantee that we have identified all possible risks
      that might arise. Investors should carefully consider all of such risk factors
      before making an investment decision with respect to our Common
      Stock.





**ITEM
      2. DESCRIPTION OF PROPERTY**





We
      occupy
      7,576 square feet of leased facilities as our operations center, which includes
      offices, computer and communication equipment and maintenance areas, at Building
      2, Suite 500, 875 North Park Drive, Ridgeland, Mississippi 39157. Monthly rental
      of the Mississippi space is $5,776. As of January 2, 2008, we have established
      a
      headquarters office of approximately 900 square feet of leased facilities in
      Suites 101 and 104 at 415 Bedford Road, Pleasantville, New York 10570. Monthly
      rental of the New York space is $2,538. We believe that our leased property
      is
      sufficient for our current and immediately foreseeable operating needs.





**ITEM
      3. LEGAL PROCEEDINGS**





During
      2007, Knobias had two significant judgments entered against it, one from the
      State of New York, in the amount of $69,500, inclusive of continuing penalties
      through January 23, 2008, for failure to have provided workmen’s compensation
      insurance coverage for a New York employee terminated in November 2004, and
      the
      other from the State of Illinois and further entered in the State of
      Mississippi, in the amount of $369,000, inclusive of penalties of approximately
      $361,000, for failure to withhold an adequate amount from an employee, employed
      by Knobias during 2006, in compliance with an order to withhold income for
      support. On obtaining knowledge of the status of the New York State
      judgment ,
      current management initiated discussions with the New York State Workmen’s Compensation Board in
      an
      attempt to mitigate the amount of the judgment and, pursuant to those
      discussions, is in the process of providing the Workmen’s Compensation Board
      with additional information requested by it.  As
      to the
      Illinois and related Mississippi judgments, we have appealed the Illinois
      judgment on a number of issues including (i) a conflict between Mississippi
      and
      Illinois law as to the maximum withholding permitted, (ii) excessive penalties
      under the circumstances giving rise to the judgment and (iii) other legal
      issues, and are awaiting the decision of the Appellate Court of the State of
      Illinois. As for the Illinois and Mississippi related judgment, on being advised
      of its status, current management gave notice of the judgment and presented
      a
      claim against the Company’s insurance policies to the Company’s various
      insurance carriers including the Company’s Directors and Officers Liability
      Insurance insurer. We have been advised by our insurers that their coverage
      is
      being denied on basis of either non-coverage under the policy or, as in the
      case
      of our Directors and Officers Liability policy, due to late notice. We are
      having our Directors and Officers policy as well as others further reviewed
      by
      counsel to ascertain whether or not our insurers’ denials are valid. While we
      believe that we may be able to mitigate the amount of the New York State
      judgment and have a satisfactory resolution of our appeal in the Illinois case,
      there can be no assurances of either occurring or the extent to which they
      might
      occur. Furthermore, in the event they do not occur, the outcome could have
      a
      material adverse affect on our cash flows and operations.





8




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





As
      we
      previously disclosed to our stockholders, on June 6, 2007, we consummated a
      capital restructuring with CAMOFI Master LDC (“CAMOFI”) and other principal
      creditors. As part of the restructuring, the Company entered into a Securities
      Purchase Agreement with CAMOFI (the **“** Securities
      Purchase Agreement **”** ),
      pursuant to which CAMOFI purchased $1.53 million in senior secured convertible
      notes, due June 6, 2010. In addition to the new financing, and pursuant to
      the
      restructuring: (i) outstanding indebtedness, accrued interest and penalties,
      in
      the aggregate amount of approximately $4.6 million, were converted into the
      Series B Preferred Stock, (ii) remaining indebtedness of the Company, in the
      principal amount of approximately $250,000, was converted into 4-year
      subordinated loans, (iii) subject to stockholder approval, the terms of the
      Company's outstanding Series A Preferred Stock were amended with the consent
      of
      certain holders of the Series A Preferred Stock in order to eliminate certain
      rights, preferences and privileges of the Series A Preferred Stock, (iv) certain
      holders of the Series A Preferred Stock agreed to convert those shares into
      Common Stock, upon the effectiveness of the proposed reverse stock split, (v)
      certain holders of existing warrants and options of the Company agreed to cancel
      their outstanding warrants and options, and (vi) additional indebtedness in
      the
      principal amount of $200,000 was repaid.




Accordingly,
      at a Special Meeting of the Company’s stockholders held on October 15, 2007, the
      Stockholders voted to approve a proposal by the Board of Directors of the
      Company to adopt a Second Amended and Restated Certificate of Incorporation
      of
      the Company which, among other things, (a) amended the rights, preferences,
      privileges, terms and conditions of the Company’s outstanding shares of Series A
      Preferred Stock, par value $0.01 per share; (b) effected a
      100-for-1 reverse stock split of the Common Stock, whereby, for every 100
      shares of Common Stock then owned, each stockholder received one share of Common
      Stock; (c) permitted the stockholders to act by written consent in lieu of
      a
      meeting, as permitted by the Delaware General Corporation Law; and (d)
      eliminated the requirement that amendments to certain provisions of the
      Company’s Certificate of Incorporation and stockholder amendments to the
      Company’s Bylaws must be approved by holders of at least 80% of the voting power
      of the Company’s outstanding stock.





Pursuant
      to the Company’s Certificate of Incorporation and the provisions of the Delaware
      General Corporation law, the holders of Preferred Stock vote with the holders
      of
      the Common Stock together, and not as a separate class, and are entitled to
      vote
      on all matters submitted to the Stockholders. Each share of Common Stock
      entitles its holder to one vote on each matter submitted to the Stockholders.
      Each share of Series A Preferred Stock entitles its holder to such number of
      votes as is equal to the number of shares of Common Stock then issuable upon
      the
      conversion of the Series A Preferred Stock, which was four (4) shares of Common
      Stock. Pursuant to the Certificate of Designation of the Series B Preferred
      Stock, effective June 6, 2007, until November 9, 2007, , each share of Series
      B
      Preferred Stock entitles the holder to such number of Shares
      of
      Common Stock into which the Series B Preferred Stock is then
      convertible.





**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**





**Market
      Information**





Our
      common stock is traded on the NASD Over-The-Counter Bulletin Board (the “OTC”)
      under the symbol KBAS (formerly KNBS). The Over-The-Counter Bulletin Board
      is
      sponsored by the National Association of Securities Dealers (NASD) and is a
      network of security dealers who buy and sell stocks. The following table sets
      forth for the periods indicated, on an adjusted basis for the Company’s
      1-for-100 reverse split effected November 12, 2007, the high and low trade
      prices for our Common Stock as reported on the OTC for the periods indicated.
      The Quotations listed below reflect inter-dealer prices, without retail
      mark-ups, mark-downs or commissions, and may not necessarily represent actual
      transactions. During 2007 and through February 2008, trading in our common
      stock
      has been thin and sporadic with long intervals been trades.





High($)
            
            Low
                ($)2007First
                Quarter
            
            
            6.00
            
            
            2.20Second
                Quarter
            
            
            3.00
            
            
            1.60Third
                Quarter
            
            
            3.00
            
            
            1.50Fourth
                Quarter
            
            
            1.89
            
            
            1.002006First
                Quarter
            
            
            3.60
            
            
            2.10Second
                Quarter
            
            
            4.41
            
            
            3.10Third
                Quarter
            
            
            11.00
            
            
            5.00Fourth
                Quarter
            
            
            8.50
            
            
            5.00




The
      number of shares of Common Stock, $0.01 par value, outstanding on March
      31 **,** 2008,
      was 530,389 shares, held by approximately 542 stockholders.




There
      were no cash dividends declared or paid in the last two fiscal years. There
      are
      no restrictions on our ability to pay cash dividends currently or in the
      foreseeable future.




**Equity
      Compensation Plan Information**




***Description
      of Plan:*** The
      Company has a 2004 Stock Incentive Plan (the “Incentive Plan”) which provides
      for the grant of options, as determined by management and the Board of
      Directors, to employees and directors of the Company to purchase shares of
      the
      Company’s common stock at the fair market value of such shares on the date of
      grant. The Incentive Plan authorizes the issuance of up to 5,000,000 shares
      of
      the Company’s common stock. At December 31, 2007, options to purchase 404,741
      shares of common stock were granted and outstanding pursuant to the Incentive
      Plan. Another 404,741 have been granted but are performance-based.




9




The
      following table sets forth information with respect to equity compensation
      plans
      of the Company as of December 31, 2007.





Number of
              securities to be
              issued upon
              exercise of
              outstanding
              options, warrants
              andrights
            
            Weighted-average
              exercise
                price of
              outstanding
              options,
                warrants,
              and
                rights compensation
              plans
            
            Number
                of
              securities remaining
              available
                for future
              issuance
                under
              equity
                (excluding
              securities
                reflected
              in
                column (a)(a)
            
            (b)
            
            (c)**Plan
                Category**Equity
                    compensation plans approved by security
                    holders
            
            
            809,482
            (1)
            $
            .6222
            
            
            4,190,518Equity
                    compensation plans not approved by security
                    holders
            
            
            None
            
            
            n/a
            
            
            NoneTotal
            
            
            809,482
            
            $
            .6222
            
            
            4,190,518




(1)
            Represents
                the right of the Company’s chief executive officer to have options granted
                to purchase shares of common stock granted under the Company’s 2004 Stock
                Incentive Plan, pursuant to employment
                agreement.





***Description
      of Securities*** *:* The
      following summary descriptions of our capital stock and are qualified in their
      entirety by the provisions of our Second Amended and Restated Certificate of
      Incorporation dated November 9, 2007.





Our
      authorized capital stock of 100,000,000 shares include 95,000,000 shares of
      $.01
      par value per share of Common Stock, and 5,000,000 shares of Preferred Stock
      of
      which the Company’s Board of Directors have authorized the designation of
      2,000,000 shares as $.01 par value Series A Preferred Stock and 600,000 shares
      of $10 stated value Series B Convertible Preferred Stock. At March 31, 2008,
      530,389 shares of Common Stock, 541,666 shares of Series A Preferred Stock
      and
      517,520 shares of Series B Convertible Preferred Stock respectively, were
      outstanding.





***Common
      Stock:*** Our
      Common Stock is subject to the express terms of the Preferred Stock and any
      series thereof. Each share of Common Stock is equal to each other share of
      Common Stock, Except as provided for in the Company’s Second Amended and
      Restated Certificate of Incorporation or in a Preferred Stock designation,
      holders of shares of Common Stock are entitled to one vote for each such share
      upon all questions presented to stockholders. In order to provide for a
      sufficient number of authorized but unissued shares of Common Stock to allow
      for
      the conversions related to the Company’s June 6, 2007 capital restructuring, on
      November 12, 2007, a reverse split of 100 to 1 of the Company’s Common Stock was
      effected whereby 53,038,942 shares of our previously issued and outstanding
      shares of Common Stock were reduced to 530,389 shares.




***Preferred
      Stock:*** Our
      Board
      of Directors is authorized to provide for the issuance of shares of preferred
      stock in multiple series without the approval of stockholders. With respect
      to
      each series of preferred stock, the Board of Directors has the authority to
      fix
      the following terms:





·
            The
                designation of the series;


·
            The
                number of shares within the series;


·
            Whether
                dividends are cumulative and, if cumulative, the dates from which
                dividends are cumulative;


·
            The
                rate of any dividends, any conditions upon which dividends are payable,
                and the dates of payment of
                dividends;


·
            Whether
                the shares are redeemable, the redemption price and the terms of
                redemption;


·
            The
                amount payable for each share if we dissolve or
                liquidate;


·
            Whether
                the shares are convertible or exchangeable, the price or rate of
                conversion or exchange, and the applicable terms and
                conditions;


·
            Any
                restrictions on issuance of shares in the same series or any other
                series;


·
            Voting
                rights applicable to the series of preferred stock;
                and


·
            Any
                other rights, preferences or limitations of such
                series.




10




Rights
      with respect to shares of preferred stock will be subordinate to the rights
      of
      our general creditors. Shares of preferred stock that we issue will be fully
      paid and non-assessable, and will not be entitled to preemptive rights unless
      specified otherwise.





***Series
      A Preferred Stock:*** Pursuant
      to the Company’s Second Amended and Restated Certificate of Incorporation
      adopted on November 9, 2007, the rights, preferences, privileges, terms and
      conditions of the Company’s Series A Preferred Stock were amended to provide,
      among other things, an Amended and Restated Certificate of Designation of Series
      A Preferred Stock and the modifications to the rights, preferences and
      privileges of the Series A Preferred Stock effected thereby. The modifications
      of the terms and provisions of the Series A Preferred Stock are as
      follows:





·
            The
                Series A Preferred Stock will rank junior to all other series of
                preferred
                stock created and issued from time to
                time;


·
            No
                stated dividend is provided for with respect to the Series A Preferred
                Stock;


·
            After
                the payment of any liquidation preference to the holders of preferred
                stock that rank senior to the Series A Preferred Stock, the remaining
                assets will be distributed ratably to the holders of Common Stock,
                Series
                A Preferred Stock and any other series of participating preferred
                stock on
                an “as converted” basis, up to a maximum distribution to the holders of
                Series A Preferred Stock of $1.20 per share of Series A Preferred
                Stock
                (the “Liquidation Value”).


·
            At
                any time the Company may redeem, at its option, the Series A Preferred
                Stock at a redemption price equal to $1.20 per
                share.


·
            Each
                share of Series A Preferred Stock may be converted at any time at
                the
                option of the holder into a number of shares of Common Stock equal
                to the
                Liquidation Value divided by $.30 (the “Conversion
                Price”).





At
      the
      time of the execution of the Series A Amendment Agreement and Consent, in
      connection with our capital restructuring, two holders of a total of 291,666
      shares of the Series A Preferred Stock elected to convert their shares of Series
      A Preferred Stock into shares of Common Stock, at the rate of 124.623 shares
      of
      Common Stock for every share of Series A Preferred Stock then issued and
      outstanding and two holders of a total of 250,000 shares of the Series A
      Preferred Stock did not acknowledge any such election.





***Series
      B Convertible Preferred Stock:*** The
      Company is authorized to issue up to 600,000 shares of Series B Convertible
      Preferred Stock. The Series B Convertible Preferred Stock ranks senior to the
      common stock, Series A Preferred Stock, and to all other classes of equity
      which
      by their terms do not rank senior to the Series B shares. Series B shares are
      entitled to receive cash dividends, as and when declared by the board of
      Directors, out of funds legally available at a rate of $1.00 per share per
      year,
      payable quarterly.





Upon
      voluntary or involuntary liquidation, dissolution or winding up of the Company,
      each holder of Series B will be entitled to receive, out of the assets of the
      Company available for distribution, an aggregate amount equal to 1.1 times
      the
      stated value of $10.00 for each share, plus all accrued but unpaid dividends.
      After payment of this preference, remaining assets will be distributed pro
      rata
      on an “as converted” basis as all other types of equity. Each share of Series B
      is convertible at any time, at the sole option of the holder, into fully paid
      and non-assessable shares of common stock. The number of shares of common stock
      due upon conversion of Series B will be (i) the number of shares of Series
      B to
      be converted, multiplied by the stated value of $10.00 per share, plus (ii)
      any
      accrued unpaid dividends and divided by (iii) $1.43. The conversion ratio is
      also subject to proportional adjustment for stock splits, stock dividends,
      recapitalizations and similar transactions.





As
      long
      as 125,000 shares of Series B are issued and outstanding, the holders of the
      majority of the then outstanding shares of Series B, voting exclusively and
      as a
      separate class to the exclusion of all other classes of the Company’s voting
      stock, will have the right to designate and elect two members of the board
      of
      directors. Otherwise, the holders of Series B and common stock will vote
      together and not as a separate class and on an “as converted”
basis.





At
      December 31, 2007, the Series B shares were convertible into approximately
      3,620,000 shares of common stock.





**Recent
      Sales and Issuance of Unregistered Securities**





As
      part
      of the Company’s June 2007 capital restructuring, the Company sold, issued and
      or awarded, the following unregistered securities during 2007:





·
            $2,230,563
                of its senior secured convertible notes payable maturing in June
                2010. The
                notes have an interest rate at the prime rate (as adjusts from time
                to
                time) plus 2.75%, and in the aggregate are convertible into 3,597,682
                shares of Common Stock of the Company.


·
            Shares
                of its Series B Preferred Stock with a stated value of $10.00 per
                share
                which are currently convertible into 3,619,028 shares of Common Stock
                of
                the Company.


·
            404,741
                options, which vest through December 2010 and expire in June 2017,
                to
                purchase shares of Common Stock of the Company were awarded to the
                Company’s chief executive officer pursuant to his employment agreement. An
                additional 404,741 options to purchase shares of Common Stock of
                the
                Company which are performance based, to the extent performance goals
                are
                met, would vest through December 2010, and expire in June
                2017.





These
      transactions were effected in reliance upon an exemption from registration
      pursuant to Section 4(2) of the Securities Act, and Rule 506 of Regulation
      D
      promulgated thereunder.





11




**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION.**





**Forward-Looking
      Statements**


This
      report contains forward-looking statements which we believe to be within the
      meaning of Section 27A of the Securities Act of 1933, as ame nded,
      and
      Section 21E of the Securities Exchange Act of 1934, as amended, that are based
      on beliefs of management as well as assumptions made by and information
      currently  available
      to our management. When used in this report, the words, “estimate,” “project,”
“believe,” “anticipate” “intend,” “expect,” “plan,” “predict,” “may,” “should,”
“will,” the negative thereof or other variations thereon or comparable
      terminology are intended to identify forward-looking statements. Such statements
      reflect our current views with respect to future events based on currently
      available information and are subject risks and uncertainties that could cause
      actual results to differ materially from those contemplated in those
      forward-looking statements. Factors that could cause actual results to differ
      materially from our expectations include but are not limited to those described
      in “Risk Factors.” Other factors may be described from time to time in our
      public filings with the Securities and Exchange Commission, news releases and
      other communications. The forward-looking statements contained in this report
      speak only as of the date hereof. We do not undertake any obligation to release
      publicly any revisions to these forward-looking statements to reflect events
      or
      circumstances after the date hereof or to reflect the occurrence of
      unanticipated events.





**Overview**


During
      2007, we continued to sustain year-over-year operating losses, thereby
      necessitating a capital restructuring and reorganization which took place on
      June 6, 2007 with CAMOFI Master LDC (“CAMOFI”), other principal creditors and
      then management whereby (i) the Company entered into a Securities Purchase
      Agreement (the “Securities Purchase Agreement **”)** to
      sell **** $3,000,000
      of its senior secured convertible notes (the “Convertible Notes”) of which
      CAMOFI purchased $1.53 million of the Convertible Notes and subsequently
      purchased, through December 31, 2007, along with another investor, an additional
      $591,275 of Convertible Notes, (ii) **** outstanding indebtedness, accrued interest and penalties, in the aggregate
      amount of approximately $4.6 million, were converted into the Series B Preferred
      Stock, (iii) remaining indebtedness of the Company, in the principal amount
      of
      approximately $250,000, was converted into 4-year subordinated loans, (iv)
      the
      terms of the Company's outstanding Series A Preferred Stock were amended to
      eliminate certain rights, preferences and privileges of the Series A Preferred
      Stock, (v) the Company effected a 1 for 100 reverse stock split which occurred
      on November 12, 2007, (vi) certain holders of existing warrants and options
      of
      the Company agreed to cancel their outstanding warrants and options, (vii)
      additional indebtedness in the principal amount of $200,000 was repaid, and
      (viii) certain members of the Company’s management were replaced. Also, prior to
      the completion of the restructuring, certain holders of the Series A Preferred
      Stock converted those shares into Common Stock. As of December 31, 2007, we
      had
      sold and had outstanding in the aggregate $2,230,563 of the $3,000,000
      Convertible Notes intended for sale. The outstanding balance of the Convertible
      Notes included the conversion of $109,278 of interest otherwise payable into
      Convertible Notes, as provided for in the terms of the Convertible Notes. In
      addition, the Convertible Notes obligate the Company to prepare and file a
      Registration Statement with the Securities and Exchange Commission covering
      the
      resale of 125% of all the shares to be issued on conversion of the Convertible
      Notes within 120 days subsequent to the completion of the $3,000,000 sale of
      the
      Convertible Notes. At December 31, 2007 and to date, the Company has not been
      in
      compliance with its Convertible Note obligation to file a timely Registration
      Statement. In order to cure its existing non-compliance and enable the Company
      to continue as a going concern, the Company has requested that the majority
      Convertible Note holder grant the Company a waiver of its non-complianceand
      that
      the Securities Purchase Agreement and related Convertible Notes be amended
      respectively to increase the amount of Convertible Notes to be offered to
      provide for and assure the subscription to such increase or otherwise provide
      for the ongoing financing requirements of the Company. The Company is currently
      in discussions with its note holders regarding a possible waiver of such
      existing non-compliance.





While
      the
      capital restructuring and added financing, together with the implementation
      of
      cost savings, has enabled us to continue to further develop and upgrade our
      products, we still require additional working capital, which to date has been
      provided on a month-to-month basis by CAMOFI, in order to maintain ourselves
      as
      a going concern and enable us to employ senior talent to win new clients,
      support existing clients, and work to increase revenues. Subsequent to December
      31, 2007 through March 31, 2008, the aggregate of the monthly funding provided
      by CAMOFI amounted to $515,704 and there can be no assurance that any such
      additional funding will continue. During 2007, we began a much-needed but still
      minimum sales effort, the success of which, if any, is not yet known. As such,
      our revenues have decreased during the year primarily as a result of economic
      conditions giving rise to client cutbacks, reorganization and cessation of
      business activities. However, in spite of the lack of such effort and outreach
      to existing clients, we have been fortunate to continue to retain a significant
      number of existing clients in our subscriber base and believe that we can grow
      our user with the addition of a sales force capable of implementing our
      marketing and sales plans. Such activity commenced on January 2, 2008, with
      our
      employment of a senior vice president of marketing and sales, and in addition
      two other management changes with the employment of an executive vice president
      and chief financial officer and a controller. While we believe that with
      adequate additional funding the Company will be able to increase its subscriber
      client base and ultimately report profitable operating results, there can be
      no
      assurance that either any additional funding will utilized adequately and or
      that our sales efforts will be successful.





**Significant
      Customers**


For
      the
      years ended December 31, 2007 and 2006, one client accounted for approximately
      13% and 16% of our revenues.


To
      the
      extent our revenues are dependent on one client or a limited concentration
      of
      clients, and such dependency continues, significant fluctuations in revenues,
      results of operations and liquidity could arise should such client or clients
      reduce their use of our services.





12




**Significant
      Accounting Policies**





***Revenue
      Recognition and Accounts Receivable***


Revenues
      are recognized over the period in which services are provided. We recognize
      deferred revenue for customers who are billed and pay on a quarterly,
      semi-annual or annual basis. The amount received is amortized into income over
      the term of the pre-payment in order to match revenue with the proper period
      of
      service. Amounts deferred as of the balance sheet date are shown in the
      liabilities section as accrued liabilities.





We
      record
      an estimate of uncollectible accounts at the end of each accounting period
      based
      upon a detailed analysis of the aging of accounts receivable and specific
      customer account analysis. Our policy is to block access to services for users
      who become delinquent for a certain period of time on their accounts. Accounts
      receivable are periodically written off against the allowance for doubtful
      accounts after exhausts all collection efforts expended.





***Stock
      Based Compensation***


On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standard (“SFAS”) No. 123 (revised 2004), " *Share-Based
      Payment* ,"
      ("SFAS
      123(R)") which establishes standards for the accounting of transactions in
      which
      an entity exchanges its equity instruments for goods or services, primarily
      focusing on accounting for transactions where an entity obtains employee
      services in share-based payment transactions. SFAS 123(R) requires a public
      entity to measure the cost of employee services received in exchange for an
      award of equity instruments, including stock options, based on the grant-date
      fair value of the award and to recognize it as compensation expense over the
      period the employee is required to provide service in exchange for the award,
      usually the vesting period. SFAS 123(R) supersedes the Company's previous
      accounting under Accounting Principles Board Opinion No. 25,
“Accounting *for
      Stock Issued to Employees,"* ("APB
      25") for periods beginning in fiscal 2006. In March 2005, the SEC issued SAB
      No.
      107, “ *Valuation
      of Share-Based Payment Arrangements for Public Companies"* relating
      to SFAS 123(R). The Company has applied the provisions of SAB No. 107 in its
      adoption of SFAS 123(R). SFAS 123(R) requires companies to estimate the fair
      value of share-based payment awards on the date of grant using an option-pricing
      model. The value of the portion of the award that is ultimately expected to
      vest
      is recognized as expense over the requisite service periods in the Company's
      consolidated statement of operations. Stock-based compensation expense
      recognized during the period is based on the value of the portion of share-based
      payment awards that is ultimately expected to vest during the period.
      Stock-based compensation expense recognized in the Company's consolidated
      statement of operations for the periods ended December 31, 2007 and 2006,
      included compensation expense for share-based payment awards granted prior
      to,
      but not yet vested as of December 31, 2005 based on the grant date fair
      value estimated in accordance with the pro forma provisions of SFAS No. 123
      and
      compensation expense for the share-based payment awards granted subsequent
      to
      December 31, 2005 based on the grant date fair value estimated in
      accordance with the provisions of SFAS 123(R). As stock-based compensation
      expense recognized in the consolidated statements of operations for the periods
      ended December 31, 2007, is based on awards ultimately expected to vest, it
      has
      been reduced for estimated forfeitures. SFAS 123(R) requires forfeitures to
      be
      estimated at the time of grant and revised, if necessary, in subsequent periods
      if actual forfeitures differ from those estimates. The estimated forfeiture
      rate
      for the year ended December 31, 2007 was 0% based on estimated future
      forfeitures. See Note C to the consolidated financial statements for additional
      information.





***Beneficial
      Conversion Feature***


The
      convertible features of convertible notes provides for a rate of conversion
      that
      is below market value (see Note E). Such feature is normally characterized
      as a
      "beneficial conversion feature" ("BCF"). Pursuant to Emerging Issues Task Force
      (“EITF”) No. 98-5 " *Accounting
      For Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratio* "
      and
      EITF No. 00-27," *Application
      of EITF Issue No. 98-5 To Certain Convertible Instruments,* "
      the
      relative fair values of the BCFs have been recorded as discounts from the face
      amount of the respective debt instrument. The Company is amortizing the discount
      using the effective interest method through maturity of such instruments. The
      Company records the corresponding unamortized debt discount related to the
      BCF
      as interest expense when the related instrument is converted into the Company’s
      common stock.





**Results
      of Operations**





**Year
      Ended December 31, 2007 Compared to Year Ended December 31,
      2006**





The
      following table presents the reported operating results for the years ended
      December 31, 2007 and 2006:





DECEMBER
                31,2007
            
            2006
            
            $
                CHANGE
            
            %
                CHANGERevenues
            
            $
            2,007,123
            
            $
            2,321,960
            
            $
            314,837
            
            
            (13.6
            )%Operating
                Expenses:Product
                related costs
            
            
            2,187,700
            
            
            2,464,241
            
            
            (276,541
            )
            
            (11.2
            )%Selling,
                    general and administrative expenses
            
            
            2,604,688
            
            
            1,309,475
            
            
            1,295,213
            
            
            98.9
            %Depreciation
            
            
            50,623
            
            
            72,234
            
            
            21,611
            
            
            (29.9
            )%Total
                operating expenses
            
            
            4,843,011
            
            
            3,845,950
            
            
            997,061
            
            
            25.9
            %Loss
                from operations
            
            
            (2,835,888
            )
            
            (1,523,990
            )
            
            1,311,898
            
            
            86.1
            %Loss
                    on extinguishment of debt
            
            
            (5,049,052
            )
            
            -
            
            
            5,049,052
            
            
            -
            %Interest
                expense, net
            
            
            (1,973,978
            )
            
            (736,269
            )
            
            1,237,709
            
            
            168.1
            %Net
                loss
            
            $
            (9,858,918
            )
            $
            (2,260,259
            )
            $
            7,598,659
            
            
            336.2
            %





13




Revenues
      for 2007 were $2,007,123, compared to revenues of $2,321,960 for 2006, a
      decrease of $314,837, or 13.6%.  The
      decrease in our revenue for 2007 is primarily attributable to a reduction in
      our
      subscriber base due to clients (i) cutting back on users of our service and
      or
      (ii) ceasing to remain in business coupled with the lack of any significant
      sales effort on our part as a result of our restructuring which took place
      during the year.





Product
      related costs for 2007 were $2,187,700, compared to product related costs of
      $2,464,241 for 2006, a decrease of $276,541 or 11.2%.


Product
      related costs consist of the costs of vendor user licenses, services and fees
      and direct labor applicable to our research, content and technical personnel
      who
      are responsible delivering our products and services on a daily basis. The
      decrease in product related costs primarily resulted from a reduction of
      approximately $381,000 direct labor costs due to employee cutbacks and an
      offsetting increase of approximately $104,000 in overall vendor costs.




Selling,
      general and administrative expenses for 2007 were $2,604,688, compared to
      selling, general and administrative expenses of $1,309,475 for 2006, an increase
      of $1,295,213 or 98.9%. The increase in selling, general and administrative
      expenses is primarily the result of restructuring expenses of approximately
      $461,000, increases in accounting costs of approximately $176,000, management
      and consulting fees of approximately $85,000, legal fees of approximately
      $33,000, a net increase in compensation costs inclusive of commissions of
      approximately $143,000 and net of a reduction in share based compensation,
      providing a reserve in the amount of approximately $452,000 for the pending
      resolution of the judgments awarded and outstanding against the Company, less
      an
      overall net decrease in other expenses of approximately $55,000,





The
      2007
      compared with 2006 decrease in depreciation and amortization expense of $21,611
      is primarily due to an increase in fully depreciated equipment during the
      year.





Interest
      expense for 2007 was $1,973,978, compared to interest expense of $736,269 for
      2006, an increase of $1,237,709 or 168.1%. The increase in interest expense
      is
      primarily related to cash and non-cash charges of approximately $1,503,000
      resulting from our June 6, 2007 capital and debt restructuring. These charges
      were offset by a decrease of approximately $134,000 for the amortization of
      the
      beneficial conversion features and a decrease in interest expense of
      approximately $131,000 incurred on the new notes issued and previously
      outstanding notes during the year.




**Liquidity
      and Capital Resources**





At
      December 31, 2007, we had cash of $42,276 and a working capital deficit of $1,323,325 .
      In
      comparison, at December 31, 2006, we had cash of $30,255 and a working capital
      deficit of $4,737,212 . While
      our
      working capital position improved as a result of our capital restructuring,
      our  working
      capital deficit is the result of our inability to generate sufficient cash
      and
      receivables from our services to offset our current liabilities, which consist
      primarily of obligations to vendors and other accounts and accrued for payables
      (inclusive of a $452,000 accrual for pending judgments), and note financing
      required to be paid within from the date of determination. We are continuing
      our
      efforts to increase revenues by adding to our subscriber base, in addition
      to
      our efforts to increase the Company’s capital, or otherwise provided funding,
      for the Company’s ongoing working capital requirements, but to date these
      efforts have not been sufficiently successful. We have been able to operate
      throughout the year with negative working capital due primarily to the
      $2,171,285 of cash provided from the senior secured convertible notes financing
      related to our June 6, 2007 debt and equity restructuring. Subsequent to year
      end and through March 31, 2008, we have been provided with working capital
      on a
      month-to-month basis in the aggregate amount of $515,704 from the holder of
      a
      majority of our senior secured convertible notes and there can be no assurances
      that any such funding will continue to be provided.





The
      following is a description of certain transactions that were entered into during
      2006 and 2007 to help provide funds for ongoing operations:





·
            Beginning
                in June 2005 and through January 2007, we obtained advances from
                Bushido
                Capital Master Fund, L.P. which totaled $2,240,000. These advances
                were
                later reclassified as loans which were convertible into equity upon
                execution of our next level of fund-raising. These loans had an interest
                rate of 8% per annum.





·
            On
                June 6, 2007, we completed our debt and equity restructuring with
                CAMOFI
                Master LDC (“CAMOFI”) and other principal creditors. As a part of the
                restructuring, we entered into a Securities Purchase Agreement with
                CAMOFI
                pursuant to which CAMOFI purchased $1,530,000 in senior secured
                convertible notes, due June 6, 2010. These notes bear interest at
                the
                prime rate plus 2.75%. A portion of this money was used to retire
                $200,000
                principal balance of the formerly outstanding notes payable. The
                holder of
                this note agreed to forego all accrued interest. Subsequent to the
                June
                purchase of our notes, proceeds from purchases of additional senior
                secured convertible notes in the amount of $591,285 was received
                from
                CAMOFI and another investor prior to December 31, 2007. In addition,
                as at
                December 31, 2007, accrued interest on the aforementioned notes in
                the
                amount of $109,278 was converted into additional senior secured
                convertible notes.




14




Pursuant
      to the restructuring, outstanding indebtedness, accrued interest and penalties
      in the aggregate amount of approximately $4.6 million were converted into
      463,810 shares of Series B. In addition, we entered into a Securities Purchase
      Agreement with CAMOFI pursuant to which CAMOFI purchased $1,530,000 in senior
      secured convertible notes, due June 6, 2010. These notes bear interest at the
      prime rate plus 2.75%. CAMOFI purchased an additional $150,000 of senior secured
      convertible notes in September 2007 under the same terms.





The
      conversion of amounts owed has been accounted for under the guidelines of
      Accounting Principles Bulletin No. 26 *,
      “Accounting for the Early Extinguishment of Debt* ,”
and
      a
      loss on extinguishment was recognized in other income and expense. The value
      of
      the 463,810 shares of Series B was $9,730,290, based on the estimated fair
      value
      of the underlying common shares on the measurement date. Accordingly, based
      on
      the conversion of $4,681,238 of indebtedness, the Company recorded a loss on
      extinguishment of $5,049,052 related to the estimated fair value of the Series
      B
      in excess of the notes payable converted. In addition, the Company issued an
      aggregate of 37,710 shares of Series B to the note holders as additional
      consideration for the conversion of debt. The value of the 37,710 shares of
      Series B was $791,119, based on the estimated fair value of the underlying
      common shares on the measurement date and was recorded as interest expense
      in
      the accompanying consolidated statements of operations.





We
      converted two existing notes payable into term loans with payouts of four years.
      The first was a note payable to a bank in the principal amount of $170,000
      with
      accrued interest of $14,269. The accrued interest was added to the principal
      balance and we will repay this loan in equal installments over 48 months plus
      interest. The second note payable converted had a principal balance of $50,000
      plus accrued interest of $12,995, which was converted into a term loan with
      a
      stated interest of 0% but imputed interest of 6%.





The
      Series A Preferred stock was amended in the restructuring. The primary change
      was to eliminate dividends which had been previously required.





For
      the
      year ended December 31, 2007, net cash used in operating activities was
      $1,904,493. The net cash used in operating activities was primarily attributable
      to the Company’s net loss for the year, excluding increases in the non-cash
      charges relating to the Company’s recapitalization of approximately $6,483,000,
      increases in accounts payable and accrued liabilities of approximately
      $1,169,000, increases in the allowance for doubtful accounts of approximately
      $88,000, increases in stock-based compensation of approximately $183,000,
      together with the changes in other operating assets and liabilities of
      approximately $32,000, respectively.





For
      the
      year ended December 31, 2007, net cash used in investing activities of consisted
      of $13,705, which was used for the purchase of fixed assets.





For
      the
      year ended December 31, 2007, net cash provided by financing activities amounted
      to $1,930,219, resulting primarily from the proceeds of the sale of our senior
      secured convertible notes of approximately $2,171,000 offset by approximately
      $241,000 in repayment of other notes payable.





**Off-Balance
      Sheet Transactions**




We
      are
      not a party to any “off-balance sheet transactions” as defined in Item 301 of
      Regulation S-K. We do not have any off-balance sheet transactions.




**Inflation**




Inflation
      has not had, and we do not expect it to have, a material effect on our
      operations.




**Contractual
      Obligations**




The
      table
      below sets forth as of December 31, 2007, future minimum payments we are
      required to make in respect of debt obligations, finance and operating
      leases.




**Payments
      Due Year Ending December 31**





Total
            
            2008
            
            2009
            
            2010
            
            2011Contractural
                ObligationsCreditor
                Note
            
            $
            60,646
            
            $
            17,748
            
            $
            17,748
            
            $
            17,748
            
            $
            7,402Creditor
                Note
            
            
            153,557
            
            
            46,068
            
            
            46,068
            
            
            46,068
            
            
            15,353Senior
                Secured Notes
            
            
            2,230,563
            
            
            433,721
            
            
            743,520
            
            
            743,520
            
            
            309,802Finance
                Lease
            
            
            36,572
            
            
            13,215
            
            
            12,192
            
            
            11,165
            
            
            0Operating
                Leases
            
            
            184,000
            
            
            69,000
            
            
            69,000
            
            
            46,000
            
            
            0Total
            
            $
            2,665,338
            
            $
            579,752
            
            $
            888,528
            
            $
            864,501
            
            $
            332,557





15




**Impact
      of Recently Issued Accounting Standards**





In
      September 2006, the FASB issued SFAS No. 157, entitled "Fair Value
      Measurements," to define fair value, establish a framework for measuring fair
      value and expand disclosures about fair value measurements. This statement
      provides guidance related to the definition of fair value, the methods used
      to
      measure fair value and disclosures about fair value measurements. SFAS No.
      157
      is effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The Company
      is
      currently evaluating the impact of adopting SFAS No. 157 on its consolidated
      financial statements.





In
      February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      159, The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159
      permits entities to choose to measure many financial instruments and certain
      other items at fair value. The objective is to improve financial reporting
      by
      providing entities with the opportunity to mitigate volatility in reported
      earnings caused by measuring related assets and liabilities differently without
      having to apply complex hedge accounting provisions. SFAS No. 159 also
      establishes presentation and disclosure requirements designed to facilitate
      comparison between entities that choose different measurement attributes for
      similar types of assets and liabilities. The Company will adopt SFAS No. 159
      in
      the first quarter of 2008, is still evaluating the effect, if any, on its
      consolidated financial position and consolidated results of operations and
      has
      not yet determined its impact.





**Certain
      Transactions**





***Resignation
      of President and Chief Executive Officer, and Chief Operating
      Officer***


In
      conjunction with the Company’s aforementioned June 2007 capital restructuring,
      (i) on June 6, 2007, the Board of Directors accepted the then effective
      resignation of (i) E. Key Ramsey, as our President, Chief Executive Officer
      and
      as a member of our Board of Directors, and appointed Steven B. Lord as President
      and Chief Executive Officer and a member of our Board of Directors, and (ii)
      on
      July 15, 2007, the Board accepted the resignation of Gregory E. Ballard as
      our
      Chief Operating Officer and as a member of our Board of Directors. In
      conjunction with his appointment as President and Chief Executive Officer,
      we
      entered into a three-year employment agreement with Mr. Lord which provides
      him
      with:





·
            An
                annual base salary of $190,000 for the initial twelve-month period
                and,
                respectively, $205,000 and $220,000 for each of the subsequent
                twelve-month periods.


·
            An
                annual bonus based on the achievement of annual performance targets
                approved of by our Board of
                Directors.


·
            An
                initial grant of ten year options to acquire, at a deemed fair market
                value exercise price of $.6222 per share, such number of shares of
                the
                Company’s common stock, representing 4.5% of the Company’s fully diluted
                common stock after giving effect to the conversion of the convertible
                debt
                financing associated with the Company’s June 2007 capital restructuring.
                These options vest annually on ratable basis over three years on
                each
                anniversary of employment.


·
            The
                grant of additional ten year options to acquire at an exercise price
                or
                $.6222 per share, representing 4.5% of the Company’s common stock on the
                same fully diluted common as the initial grant, however, subject
                to such
                options vesting at the rate of 1.5% upon the Company achieving
                pre-established and set forth performance milestones for each of
                its years
                ending December 31, 2008, 2009 and 2010, respectively.





In
      addition, pursuant to the employment agreement, in the event that Mr. Lord’s
      employment is terminated by us without “Cause” or by Mr. Lord for “Good Reason”,
      Mr. Lord will be entitled to six months’ severance pay.





***Appointment
      of Executive Vice President and Chief Operating
      Officer***


As
      of
      January 2, 2008, our Board of Directors appointed Kenneth L. Ivey to serve
      as
      Executive Vice President and Chief Operating Officer at an annual salary of
      $125,000. Mr. Ivey continues to be employed by the Company on a non-documented,
      at-will basis as he had been for a number of years. Prior to his appointment
      Mr.
      Ivey served as our General Manager of Operations. Mr. Ivey’s appointment
      provided for the grant of ten-year options to acquire 50,000 shares of the
      Company’s common stock at an exercise price determined to be the fair market
      value of the Company’s common stock at the grant date. Such options are to vest
      annually on a ratable basis on each of the three years ended December 31, 2008,
      2009 and 2010, respectively.





***Resignation
      of Chief Financial Officer***


Pursuant
      to discussions during the fall of 2007 between the Company and Susan R. Walker,
      our Chief Financial Officer, we and Ms. Walker agreed to Ms. Walker’s
      resignation as Chief Financial Officer and the termination of her employment
      with us effective December 31, 2007. Following
      the resignation of Ms. Walker, as of January 2, 2008, our Board of Directors
      appointed Donald A. Bernard as the Company’s Executive Vice President, Chief
      Financial Officer and Secretary at an initial annual salary of $120,000. Mr.
      Bernard’s employment provides for the grant of ten year options to acquire
      250,000 shares of the Company’s common stock at an exercise price being the fair
      market value of the Company’s common stock at the grant date and such options
      are to vest quarterly on a ratable basis over an eighteen month period
      commencing on March 31, 2008. Prior to Mr. Bernard’s appointment, from October
      through December 2007, we engaged him as a consultant.





16




**ITEM
      7. FINANCIAL STATEMENTS**




**Table
                of Contents**Page No.Report
                of Independent Registered Public Accounting Firm
            F-1Consolidated
                Balance Sheet as of December 31, 2007
            F-2Consolidated
                Statements of Operations For the Years EndedDecember
                31, 2007 and 2006
            F-3Consolidated
                Statements of Stockholders' DeficitFor
                the Years Ended December 31, 2007 and 2006
            F-4Consolidated
                Statements of Cash Flows For the Years EndedDecember
                31, 2007 and 2006
            F-5Notes
                to Consolidated Financial Statements
            F-6





17




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





**To
      the Board of Directors of Knobias, Inc.:**





We
      have
      audited the accompanying consolidated balance sheet of Knobias, Inc. and
      subsidiaries (the "Company") as of December 31, 2007, and the related
      consolidated statements of operations, stockholders' deficit and cash flows
      for
      each of the years in the two-year period then ended. 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 audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. The Company is not required to have, nor were we engaged to perform,
      an audit of its internal control over financial reporting. Our audits included
      consideration of internal control over financial reporting as a basis for
      designing audit procedures that are appropriate in the circumstances, but not
      for the purpose of expressing an opinion on the effectiveness of the Company's
      internal control over financial reporting. Accordingly, we express no such
      opinion. An audit also includes assessing the accounting principles used and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audits provide 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 Knobias, Inc.
      and subsidiaries at December 31, 2007, and the results of their operations
      and
      their cash flows for each of the years in the two-year period then ended in
      conformity with accounting principles generally accepted in the United States
      of
      America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note B to the
      consolidated financial statements, the Company has incurred recurring losses
      and
      has a working capital deficit of $ 1,323,325
      and stockholders’ deficit of $1,332,377 as of December 31, 2007. In addition,
      the Company is in non-compliance under its senior secured convertible notes
      in
      2008. These factors raise substantial doubt about the Company's ability to
      continue as a going concern. Management's plans in regard to these matters
      are
      also described in Note B. The consolidated financial statements do not include
      any adjustments relating to the recoverability and classification of asset
      carrying amounts or the amount and classification of liabilities that might
      result should the Company be unable to continue as a going concern.





As
      described in Note C to the consolidated financial statements, effective January
      1, 2006, the Company changed its method of accounting for share-based
      compensation to adopt Statement of Financial Accounting Standards No. 123(R),
      “Share-Based Payment.”





/s/
                KMJ Corbin & Company LPIrvine,
                CaliforniaApril
                15, 2008




F-1




**KNOBIAS,
      INC.**


**CONSOLIDATED
      BALANCE SHEET**


**DECEMBER
      31, 2007**





AssetsCurrent
                assets:Cash
            
            $
            42,276Accounts
                receivable, net of allowance
            
            
            97,420Prepaid
                expenses
            
            
            14,391Total
                current assets
            
            
            154,087Property
                and equipment, net
            
            
            146,465Other
                assets
            
            
            13,438Total
                assets
            
            $
            313,990Liabilities
                and Stockholders' deficitCurrent
                liabilities:Accounts
                payable
            
            $
            243,166Accrued
                liabilities
            
            
            689,550Short-term
                debt
            
            
            468,700Current
                portion of long-term debt
            
            
            75,996Total
                current liabilities
            
            
            1,477,412Long-term
                debt
            
            
            168,955Total
                liabilities
            
            
            1,646,367Stockholders'
                deficit:Series
                A Convertible Preferred stock, $0.01 par value; 2,000,000 shares
                authorized; 541,666 shares issued and Outstanding (liquidation preference
                of $650,000)
            
            
            650,000Series
                      B Convertible Preferred stock, $10 stated value, 600,000 shares
                      authorized; 517,520 shares issued and outstanding (liquidation
                      preference
                      of $5,692,720)
            
            
            10,857,071Common
                      stock, $0.01 par value; 95,000,000 shares authorized; 530,389
                      shares
                      issued and outstanding
            
            
            5,304Additional
                paid-in capital
            
            
            13,538,581Accumulated
                deficit
            
            
            (26,383,333
            )Total
                stockholders' deficit
            
            
            (1,332,377)Total
                liabilities and stockholders' deficit
            
            $
            313,990




See
      accompanying notes to consolidated financial statements




F-2




**KNOBIAS,
      INC.**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006**




2007
            
            2006Revenues
            
            $
            2,007,123
            
            $
            2,321,960Operating
                expenses:Product
                related costs
            
            
            2,187,700
            
            
            2,464,241Selling,
                general and administrative
            
            
            2,604,688
            
            
            1,309,475Depreciation
                and amortization
            
            
            50,623
            
            
            72,234Total
                operating expenses
            
            
            4,843,011
            
            
            3,845,950Loss
                from operations
            
            
            (2,835,888
            )
            
            (1,523,990
            )Other
                expenses:Loss
                on extinguishment of debt
            
            
            5,049,052
            
            
            -Interest
                expense, net
            
            
            1,973,978
            
            
            736,269Total
                other expenses
            
            
            7,023,030
            
            
            736,269Net
                loss
            
            $
            (9,858,918
            )
            $
            (2,260,259
            )Loss
                per share (basic and diluted)
            
            $
            (18.68
            )
            $
            (4.45
            )Basic
                    and diluted weighted average shares
                    outstanding
            
            
            527,895
            
            
            507,665




See
      accompanying notes to consolidated financial statements




F-3




**KNOBIAS,
        INC.**
 **STATEMENTS
        OF STOCKHOLDERS' DEFICIT**
 **FOR
        THE YEARS ENDED DECEMBER 31,2007 AND 2006**


**Series A Preferred**
              
              **Series B Preferred**
              
              **Common Stock**
              
              **Paid-in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total**Balance,
                  January 1, 2006
              
              
              958,333
              
              $
              1,150,000
              
              
              -
              
              $
              -
              
              
              507,665
              
              $
              5,076
              
              $
              10,486,776
              
              $
              (14,264,156
              )
              $
              (2,622,304
              )Share-based
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              300,333
              
              
              -
              
              
              300,333Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,260,259
              )
              
              (2,260,259
              )Balance,
                  December 31, 2006
              
              
              958,333
              
              
              1,150,000
              
              
              -
              
              
              -
              
              
              507,665
              
              
              5,076
              
              
              10,787,109
              
              
              (16,524,415
              )
              
              (4,582,230
              )Series
                  A preferred stock converted to common stock
              
              
              (416,667
              )
              
              (500,000
              )
              
              -
              
              
              -
              
              
              16,667
              
              
              167
              
              
              499,833
              
              
              -
              
              
              0Cashless
                  exercise of warrants to purchase common stock
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,057
              
              
              61
              
              
              (61
              )
              
              -
              
              
              0Issuance
                  of Series B convertible preferred stock for conversion of debt,
                  accrued
                  interest and penalties
              
              
              -
              
              
              -
              
              
              463,810
              
              
              9,730,287
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              9,730,287Issuance
                  of Series B preferred stock for employee service
              
              
              -
              
              
              -
              
              
              16,000
              
              
              335,665
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              335,665Issuance
                  of series B preferred stock for services
              
              
              -
              
              
              -
              
              
              37,710
              
              
              791,119
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              791,119Beneficial
                  conversion feature related to issuance of Convertible
                  notes
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,069,140
              
              
              -
              
              
              2,069,140Share-based
                  compensation
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              182,560
              
              
              -
              
              
              182,560Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (9,858,918
              )
              
              (9,858,918
              )Balance,
                  December 31, 2007
              
              
              541,666
              
              $
              650,000
              
              
              517,520
              
              $
              10,857,071
              
              
              530,389
              
              $
              5,304
              
              $
              13,538,581
              
              $
              (26,383,333
              )
              $
              (1,332,377
              )




See
      accompanying notes to consolidated financial statements




F-4


**KNOBIAS,
      INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE YEARS ENDED DECEMBER 31, 2007 AND 2006**




2007
            
            2006Cash
                flows from operating activities:Net
                loss
            
            $
            (9,858,918
            )
            $
            (2,260,259
            )Adjustments
                to reconcile net loss to net cash
                used in operating activities:Depreciation
                and amortization
            
            
            50,623
            
            
            72,234Loss
                on extinguishment of debt
            
            
            5,049,052
            
            
            -Estimated
                    fair value of stock issued for employee
                    services
            
            
            335,665
            
            
            -Estimated
                fair value of stock issued for services
            
            
            791,119Amortization
                of debt discount
            
            
            307,377
            
            
            443,497Provision
                for bad debts
            
            
            88,018
            
            
            55,500Stock
                based compensation cost
            
            
            182,560
            
            
            300,333Changes
                in operating assets and liabilities:Increase
                in accounts receivable
            
            
            (15,512
            )
            
            (156,451
            )Decrease
                in prepaid expenses
            
            
            1,963
            
            
            7,163Increase
                in other assets
            
            
            (5,267
            )
            
            (200
            )Increase
                in accounts payable and accrued liabilities
            
            
            1,168,827
            
            
            84,325Net
                cash used in operating activities
            
            
            (1,904,493
            )
            
            (1,453,858
            )Cash
                flows used in investing activities:Capital
                expenditures
            
            
            (13,705
            )
            
            (33,708
            )Cash
                flows from financing activities:Repayment
                of notes payable
            
            
            (241,066
            )
            
            (274
            )Proceeds
                from notes payable
            
            
            2,171,285
            
            
            1,415,000Net
                cash provided by financing activities
            
            
            1,930,219
            
            
            1,414,726Net
                increase (decrease) in cash
            
            
            12,021
            
            
            (72,840
            )Cash,
                beginning of year
            
            
            30,255
            
            
            103,095Cash,
                end of year
            
            $
            42,276
            
            $
            30,255Supplemental
                disclosure of cash flow informationCash
                paid during the year for:Interest
            
            $
            9,372
            
            $
            16,241Income
                taxes
            
            
            -
            
            
            -Non-cash
                investing and financing activities:Conversion
                of Series A preferred stock to common stock
            
            
            500,000
            
            
            -Beneficial
                conversion features of new indebtedness
            
            
            2,069,140
            
            
            -Conversion
                of debt to preferred stock
            
            
            3,665,000
            
            
            -Conversion
                of interest to debt
            
            
            136,542
            
            
            -Conversion
                of interest and penalties to Series BPreferred
                stock
            
            
            1,016,235
            
            
            -Cashless
                exercise of warrants to purchase common stock
            
            
            61
            
            
            -Equipment
                purchases under vendor finance agreements
            
            
            36,572
            
            
            -




See
      accompanying notes to consolidated financial statements


F-5





**KNOBIAS,
      INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007 and 2006**





**Note
      A – Organization and Nature of Business**





Knobias,
      Inc., through its wholly owned subsidiary Knobias.com, LLC, is a provider of
      financial information and data primarily focused on small to nano-cap companies
      and private placements in public companies commonly referred to as PIPES.
      Knobias has developed and compiled financial databases, information systems,
      tools and products, which track over 16,000 U.S. securities. The Company markets
      its products and technically varied applications to individual investors,
      day-traders, financial oriented websites, public issuers, brokers, professional
      traders and institutional investors.





Knobias,
      Inc. was formed on January 31, 1968 under the laws of the State of Delaware
      pursuant to the Delaware General Corporation Law. On November 15, 2004,
      Consolidated Travel Systems, Inc. ("COVSA") acquired all the outstanding stock
      of Knobias, Inc. For accounting purposes, the acquisition was treated as a
      recapitalization of Knobias, Inc. with Knobias, Inc. considered the acquirer
      (reverse acquisition). Upon completion of the transaction, the entity was
      renamed Knobias, Inc. reflecting the exchange of equity interests with COVSA.





The
      Company's primary subsidiary Knobias.com, LLC was initially formed as Penny
      PI,
      LLC on September 4, 1998 and renamed March 2000 under the laws of the State
      of
      Mississippi pursuant to the Mississippi Limited Liability Company Act. Penny
      PI,
      LLC was organized to design and implement an Internet website for the provision
      of subscriber based information and investigative services relating to
      over-the-counter bulletin board companies, commonly referred to as “penny
      stocks."





The
      Company has two other subsidiaries, Knobias Holdings, Inc. and Kollage, LLC,
      which are inactive.





The
      accompanying consolidated financial statements include the accounts of Knobias,
      Inc. and its wholly owned subsidiary, Knobias.com, LLC. All intercompany
      balances and transactions have been eliminated in consolidation.





On
      November 12, 2007, the Company effected a 1-for-100 reverse stock split. The
      effects of this split have been reflected retroactively in the accompanying
      consolidated financial statements.





**Note
      B – Going Concern**





The
      accompanying consolidated financial statements have been prepared on a going
      concern basis, which contemplates the realization of assets and the satisfaction
      of liabilities in the normal course of business. As shown in the consolidated
      financial statements during the years ended December 31, 2007 and 2006, the
      Company incurred losses of $ $9,858,918 and $2,260,259, respectively. In
      addition, the Company has a working capital deficit of $ 1,323,325 and
      a
      stockholders’ deficit of $1,332,377 as of December 31, 2007. Also, the Company
      is in non-compliance under its senior secured convertible debt. These factors
      raise substantial doubt about the Company’s ability to continue as a going
      concern for a reasonable period of time.





The
      Company's existence is dependent upon management's ability to develop profitable
      operations and resolve its liquidity problems. Management anticipates the
      Company will attain profitable status and improve its liquidity through the
      continued developing, marketing and selling of its products and additional
      equity investment in the Company. The accompanying consolidated financial
      statements do not include any adjustments that might result should the Company
      be unable to continue as a going concern.





In
      order
      to improve the Company's liquidity, the Company entered into a restructuring
      agreement in June 2007 (the “Agreement”) which provided it with $2,230,563
      received during the year from the proceeds of senior secured convertible debt
      of
      $2,121,285 and the conversion of interest expense due on the debt in the amount
      of $109,278 to senior secured convertible debt (see Note E). Subsequent to
      December 31, 2007, the Company’s principal senior secured convertible debt
      holder has funded the Company’s working capital requirements on a month-to-month
      basis in the aggregate of $515,704 through March 31, 2008 (see Note J). The
      Company is also actively marketing its products in order to increase its
      customer base and revenues. To support this effort, on January 2, 2008, the
      Company employed a senior vice president of marketing and sales and while
      management believes that with adequate additional funding the Company will
      be
      able to increase its subscriber base and ultimately report profitable operating
      results, there can be no assurance that either additional funding will be
      available or otherwise utilized adequately and or that these sales efforts
      will
      be successful.





The
      Company is currently in discussions with its senior secured lenders and several
      potential investors to obtain financing for working capital purposes; however,
      there can be no assurance that funding will be available to the Company at
      the
      time it is needed or in the amount necessary to satisfy its needs, or, if funds
      are made available, that they will be available on terms that are favorable
      to
      the Company. If the Company is unable to secure financing when needed, its
      business may be materially adversely affected and it may be required to cease
      all or a substantial portion of its operations. If the Company issues additional
      shares of common stock or securities convertible into common stock in order
      to
      secure additional funding, current stockholders may experience dilution of
      their
      ownership. In the event the Company issues securities or instruments other
      than
      common stock, it may be required to issue such instruments with greater rights
      than those currently possessed by holders of common stock.




F-6




In
      order
      to cure its existing non-compliance and enable the Company to continue as a
      going concern, the Company has requested that the majority principal Convertible
      Note holder grant the Company a waiver of its non-compliance and that the
      Securities Purchase Agreement and related Convertible Notes be amended
      respectively to increase the amount of Convertible Notes to be offered to
      provide for and assure the subscription to such increase or otherwise provide
      for the ongoing financing requirements of the Company. The Company is currently
      in discussions with it Convertible Note holders regarding a possible waiver
      of
      existing non-compliance.





**Note
      C – Summary of Significant Accounting Policies**





**Estimates**


The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make certain estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported amounts
      of
      revenue and expenses during the reporting period. Significant estimates made
      by
      management are, among others, the realizability of accounts receivable,
      recoverability of long-lived assets, and the valuation of stock options,
      warrants, embedded conversion features and deferred taxes. Actual results could
      differ from those estimates.





**Fair
      Value of Financial Instruments**


The
      carrying values of the Company’s financial instruments, including cash
      equivalents, short-term investments, accounts receivable, accounts payable,
      accrued expenses, and debt approximate their fair value due to their short-term
      maturities.





**Accounts
      Receivable and Concentration of Credit Risk**


The
      Company records an estimate for its uncollectible accounts at the end of each
      period based upon a detailed analysis of the aging of accounts receivable and
      specific customer account analysis. The Company's policy is to block access
      to
      services for users who become delinquent for a certain period of time on their
      accounts. Accounts receivable are written off against the allowance for doubtful
      accounts after the Company exhausts all collection efforts. The allowance for
      doubtful accounts at December 31, 2007, is approximately $135,000. At December
      31, 2007, the Company had three customers who accounted for approximately 47%
      of
      its accounts receivable **.** In
      addition, for the years ended December 31, 2007 and 2006, one customer, other
      than any of the aforementioned customers, accounted for approximately 13% and
      16%, respectively, of the Company’s revenues. To the extent our revenues are
      dependent on one customer or a limited concentration of customers, and such
      dependency continues, significant fluctuations in revenues, results of
      operations and liquidity could arise should such customer or customers reduce
      their use of our services.





**Property
      and Equipment**


Property
      and equipment are stated at cost. Maintenance and repairs are expensed in the
      period incurred. Major renewals and betterments are capitalized. When items
      of
      property and equipment are sold or retired, the related costs are removed from
      the accounts, and any gain or loss is included in operations.




Depreciation
      and amortization is provided on a straight-line basis. Furniture and fixtures
      are depreciated over an estimated life of ten years; computer and other
      equipment are depreciated over an estimated life of five to seven years;
      computer software is amortized over an estimated life of five years, and the
      shorter of lease terms or estimated useful lives for leasehold
      improvements.





**Internal
      Database Development and Amortization**


Website
      development costs are accounted for in accordance with Statement of Position
      98-1, "Accounting for the Costs of Computer Software Developed or Obtained
      for
      Internal Use", issued by the American Institute of Certified Public Accountants.
      Accordingly, all external and direct internal costs incurred during the
      application development stage are capitalized. Costs incurred during the
      preliminary project stage and the post-implementation stages are expensed as
      incurred. Website development costs are being amortized over three years on
      the
      straight-line basis beginning with the date of the website launch and were
      fully
      amortized prior to January 1, 2005. The Company expenses costs related to
      updating and minor upgrades of the website and product as they are incurred.
      No
      project costs have been capitalized since the initial development of the
      Company's website.





**Impairment
      of Long-Lived Assets**


The
      Company periodically reviews the carrying values of property and equipment,
      website and data development costs, whenever events and circumstances indicate
      a
      potential impairment. If indicators of impairment are present, and the
      undiscounted cash flows to be derived from the use and eventual disposal of
      the
      related assets are not expected to be sufficient to recover the asset's carrying
      amount, impairment loss is charged to operations in the period identified.
      The
      impairment loss is based upon the difference between the carrying amount and
      the
      fair value of such asset, as determined based upon the related discounted cash
      flows.




F-7





**Business
      Segment**


The
      Company operates in a single business segment which consists of the compiling
      of
      externally obtained and internally generated financial data and information
      into
      a Company platform which is made available to customers for their internal
      use
      and otherwise enabling the Company to provide a non-subscribing customer a
      source from which to release a message to the public.





**Income
      Taxes**


Knobias,
      Inc. is a "C Corporation" and, therefore, will, upon achieving taxable earnings,
      pay taxes as a corporation. The Company accounts for corporate income taxes
      using the asset and liability method of accounting prescribed by Statement
      of
      Financial Accounting Standards (“SFAS”) No. 109, "Accounting for Income Taxes."
      Because the Company has incurred losses since its inception, no income tax
      expense has been incurred. The Company has not yet generated taxable income.
      A
      valuation allowance is provided for deferred tax assets when it is more likely
      than not that such asset will not be recovered.





**Deferred
      Revenue**


The
      Company generally receives monthly subscription fees for its services. From
      time
      to time, the Company will receive quarterly or annual subscriptions paid in
      advance and deferred revenue is recorded at that time. The deferred revenue
      is
      amortized into revenue on a pro-rata basis each month. Customers with quarterly
      or annual subscriptions may cancel their subscriptions and request a refund
      for
      future months' revenues at any time. Therefore, a liability is recorded to
      reflect the amounts which are potentially refundable ($39,245) at December
      31,
      2007 and is included in accrued liabilities in the accompanying consolidated
      balance sheet at December 31, 2007.





**Revenue
      Recognition**


The
      Company recognizes revenue in accordance with the Securities and Exchange
      Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, "Revenue
      Recognition in Financial Statements.” SAB No. 104 requires that four basic
      criteria must be met before revenue can be recognized: (1) persuasive evidence
      of an arrangement exists; (2) delivery has occurred or services have been
      rendered; (3) the selling price is fixed and determinable; and (4)
      collectibility is reasonably assured. Determination of criteria (3) and (4)
      are
      based on management's judgments regarding the fixed nature of the selling prices
      of the products delivered/services rendered and the collectibility of those
      amounts. Provisions for discounts and rebates to customers, estimated returns
      and allowances, and other adjustments are provided for in the same period the
      related sales are recorded. The Company defers any revenue for which the product
      has not been delivered or for which services have not been rendered or are
      subject to refund until such time that the Company and the customer jointly
      determine that the product has been delivered or services have been rendered
      or
      no refund will be required.





Subscription
      revenues are recognized over the period that services are provided. Revenue
      for
      our services periodically requested and used Periodic requests and used is
      recognized as services are performed or when goods are delivered. Deferred
      revenue consists primarily of monthly, semi-annual, and annual prepaid
      subscription fees billed or collected in advance.





**Stock
      Based Compensation**


On
      January 1, 2006, the Company adopted SFAS No. 123 (revised 2004),
      " *Share-Based
      Payment* ,"
      ("SFAS
      123(R)") which establishes standards for the accounting of transactions in
      which
      an entity exchanges its equity instruments for goods or services, primarily
      focusing on accounting for transactions where an entity obtains employee
      services in share-based payment transactions. SFAS 123(R) requires a public
      entity to measure the cost of employee services received in exchange for an
      award of equity instruments, including stock options, based on the grant-date
      fair value of the award and to recognize it as compensation expense over the
      period the employee is required to provide service in exchange for the award,
      usually the vesting period. SFAS 123(R) supersedes the Company's previous
      accounting under Accounting Principles Board Opinion No. 25,
“Accounting *for
      Stock Issued to Employees,”* for
      periods beginning in fiscal 2006. In March 2005, the SEC issued SAB No. 107,
      “ *Valuation
      of Share-Based Payment Arrangements for Public Companies"* relating
      to SFAS 123(R). The Company has applied the provisions of SAB No. 107 in its
      adoption of SFAS 123(R). SFAS 123(R) requires companies to estimate the fair
      value of share-based payment awards on the date of grant using an option-pricing
      model. The value of the portion of the award that is ultimately expected to
      vest
      is recognized as expense over the requisite service periods in the Company's
      consolidated statement of operations. Stock-based compensation expense
      recognized in the Company's consolidated statement of operations for the years
      ended December 31, 2007 and 2006, included compensation expense for share-based
      payment awards granted prior to, but not yet vested as of December 31, 2005
      based on the grant date fair value estimated in accordance with the pro forma
      provisions of SFAS No. 123 and compensation expense for the share-based payment
      awards granted subsequent to December 31, 2005 based on the grant date fair
      value estimated in accordance with the provisions of SFAS 123(R). As stock-based
      compensation expense recognized in the consolidated statements of operations
      for
      the years ended December 31, 2007 and 2006 is based on awards ultimately
      expected to vest, it has been reduced for estimated forfeitures. SFAS 123(R)
      requires forfeitures to be estimated at the time of grant and revised, if
      necessary, in subsequent periods if actual forfeitures differ from those
      estimates. The estimated weighted average forfeiture rate for the year ended
      December 31, 2007 of 0% was based on estimated future forfeitures.





F-8




***Description
      of Company’s 2004 Stock Incentive Plan***


The
      Company's 2004 Stock Incentive Plan provides for grants of options to employees
      and directors of the Company to purchase the Company's shares, as determined
      by
      management and the board of directors, at the fair value of such shares on
      the
      grant date. As of December 31, 2007, the Company is authorized to issue up
      to
      5,000,000 shares under the plan. In connection with the Company’s June 2007
      capital and debt restructuring, all prior holders of options and warrants agreed
      to cancel their outstanding options and warrants and on June 6, 2007, the newly
      appointed chief executive officer of the Company was awarded 404,741 incentive
      options (intended to represent 4.5% of the Company’s fully diluted common stock
      after giving effect to the conversion of $3 million of senior secured
      convertible debt to be raised pursuant to the restructuring) which vest ratably
      on each of the three years ending June 6, 2008, 2009 and 2010. In addition,
      the
      chief executive officer was awarded the right to receive an additional 404,741
      of options which would vest annually from December 31, 2008 through December
      31,
      2010 based on the Company achieving performance milestones pre-determined the
      Company’s board of directors. The Company has recognized $182,560 as
      compensation cost solely with respect to the incentive options and has not
      recognized any compensation cost related to the performance based options,
      as
      the vesting of these options is currently deemed unlikely. Accordingly, at
      December 31, 2007, of the 5,000,000 share options authorized for issuance,
      404,741 options were outstanding and 404,741 were reserved for potential future
      issuance based on performance pursuant to an executive’s employment agreement,
      thereby leaving 4,190,518 shares available for grant.





***Summary
      of Assumptions and Activity***


The
      fair
      value of stock-based awards to employees and directors is calculated using
      the
      Black-Scholes option pricing model even though the model was developed to
      estimate the fair value of freely tradable, fully transferable options without
      vesting restrictions, which differ significantly from the Company’s stock
      options. The Black-Scholes model also requires subjective assumptions, including
      future stock price volatility and expected time to exercise, which greatly
      affect the calculated values. The expected term of options granted is derived
      from historical data on employee exercises and post-vesting employment
      termination behavior. The risk-free rate selected to value any particular grant
      is based on the U.S. Treasury rate that corresponds to the pricing term of
      the
      grant effective as of the date of the grant. The expected volatility is based
      on
      the historical volatility of the Company’s stock price. These factors could
      change in the future, affecting the determination of stock-based compensation
      expense in future periods.





The
      fair
      value of options granted in 2007 was estimated using the following
      weighted-average assumptions:


**Stock options:**Expected
                  term (in years)
              
              
              10Expected
                  volatility
              
              
              117
              %Risk-free
                  interest rate
              
              
              4.96
              %Dividend
                  yield
              
              
              -




A
      summary
      of option activity as of December 31, 2007, and changes during each of the
      years
      in the two-year period then ended, is presented below:


Weighted-AverageOptions
              
              Exercise
                Price
              
              Remaining
                Contractual
                Term (Years)
              
              Aggregate
                Intrinsic
                ValueOptions
                  outstanding at January 1, 2006
              
              
              30,700
              
              $
              76.00Options
                  canceled or expired
              
              
              (4,319
              )
              $
              72.00Options
                  outstanding December 31, 2006
              
              
              26,381
              
              $
              73.00
              
              
              8.23
              
              $
              -Options
                  granted
              
              
              809,482
              
              $
              0.62Options
                  cancelled or expired
              
              
              (26,381
              )
              $
              73.00Options
                  outstanding and reserved for at December 31, 2007
              
              
              809,482
              
              $
              0.62
              
              
              9.4
              
              $
              307,603Options
                  vested and expected to vest as of December 31, 2007
              
              
              407,741
              
              $
              0.62
              
              
              9.4.
              
              $
              154,942Options
                  exercisable at,December 31, 2007
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -




Upon
      the
      exercise of options, the Company issues new shares from its authorized shares.
      The weighted average grant date fair value of options granted during 2007 was
      $2.94 per option. No options were granted during 2006.





As
      of
      December 31, 2007, there was approximately $1,007,000 of unrecognized
      compensation cost (not including approximately $1,190,000 related to performance
      based options) related to employee and director stock option compensation
      arrangements. The unrecognized cost is expected to be recognized on a
      straight-line basis over the next 2.4 years.





The
      following table summarizes stock-based compensation expense related to employee
      and director stock options under SFAS 123(R) for the years ended December 31,
      2007 and 2006, net of estimated forfeitures, which was allocated as
      follows:





Year ended
            
            Year endedDecember 31, 2007
            
            December 31, 2006Product
                related costs
            
            $
            -
            
            $
            188,073Selling,
                general and administrative expense
            
            
            182,560
            
            
            112,260Total
            
            $
            182,560
            
            $
            300,333





F-9




All
      issuances of the Company's stock for non-cash consideration have been assigned
      a
      dollar amount equaling either the market value of the shares issued or the
      value
      of consideration received whichever is more readily determinable. The majority
      of the non-cash consideration received pertains to services rendered by
      consultants and others and has been valued at the market value of the shares
      issued. In certain issuances, the Company may discount the value assigned to
      the
      issued shares for illiquidity and restrictions on resale.





**Beneficial
      Conversion Feature**


The
      convertible features of convertible notes provides for a rate of conversion
      that
      is below market value (see Note E). Such feature is normally characterized
      as a
      "beneficial conversion feature" ("BCF"). Pursuant to Emerging Issues Task Force
      (“EITF”) No. 98-5 " *Accounting
      For Convertible Securities with Beneficial Conversion Features or Contingently
      Adjustable Conversion Ratio* "
      and
      EITF No. 00-27," *Application
      of EITF Issue No. 98-5 To Certain Convertible Instruments,* "
      the
      relative fair values of the BCFs have been recorded as discounts from the face
      amount of the respective debt instrument. The Company is amortizing the discount
      using the effective interest method through maturity of such instruments. The
      Company records the corresponding unamortized debt discount related to the
      BCF
      as interest expense when the related instrument is converted into the Company’s
      common stock.





**Advertising
      Costs**


Advertising
      costs are expensed as incurred. Total advertising expenses were $8,900 and
      $27,000 for the year ended December 31, 2007 and 2006,
      respectively.





**Prior
      Year Reclassifications**


Revenue
      previously reported as information provisioning revenue in the amount of
      $536,388 and subscriptions revenue of $1,730,072 for the year ended December
      31,
      2006 have been included as part of the Company’s total revenue in the 2007
      presentation. In addition, 2006 revenues included an allowance for doubtful
      accounts in the amount of $55,500, which has been reclassified and included
      in
      general and administrative expenses for 2006. Such reclassifications had no
      impact on the reported losses or cash flows for 2006.




**Loss
      Per Share**


Basic
      loss per share is computed by dividing loss available to common stockholders
      by
      the weighted average number of common shares assumed to be outstanding during
      the period of computation. Diluted loss per share is computed similar to basic
      loss per share except that the denominator is increased to include the number
      of
      additional common shares that would have been outstanding if the potential
      shares had been issued and if the additional common shares were dilutive. 
All potentially dilutive shares, approximately 8,869,780 and 67,800 as of
      December 31, 2007 and 2006, respectively, have been excluded from diluted loss
      per share, as their effect would be anti-dilutive for the periods then ended.





**Recently
      Issued Accounting Pronouncements**


In
      February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an Amendment of FASB Statement No. 115.” SFAS No. 159 permits entities
      to choose to measure many financial instruments and certain other items at
      fair
      value. The objective is to improve financial reporting by providing entities
      with the opportunity to mitigate volatility in reported earnings caused by
      measuring related assets and liabilities differently without having to apply
      complex hedge accounting provisions. SFAS No. 159 also establishes presentation
      and disclosure requirements designed to facilitate comparison between entities
      that choose different measurement attributes for similar types of assets and
      liabilities. The Company will adopt SFAS No. 159 in the first quarter of 2008,
      is still evaluating the effect, if any, on its consolidated financial position
      and consolidated results of operations and has not yet determined its
      impact.





In
      September 2006, the FASB issued SFAS No. 157, entitled “Fair Value
      Measurements,” to define fair value, establish a framework for measuring fair
      value and expand disclosures about fair value measurements. This statement
      provides guidance related to the definition of fair value, the methods used
      to
      measure fair value and disclosures about fair value measurements. SFAS No.
      157
      is effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The adoption
      of this pronouncement did not have a material impact on the Company’s
      consolidated results of operations or financial condition.





In
      July
      2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in
      Income Taxes--an interpretation of FASB Statement No. 109” ("FIN 48"), which
      clarifies the accounting and disclosure for uncertainty in tax positions, as
      defined. FIN 48 seeks to reduce the diversity in practice associated with
      certain aspects of the recognition and measurement related to accounting for
      income taxes. The Company is subject to the provisions of FIN 48 as of January
      1, 2007. The Company believes that its income tax filing positions and
      deductions will be sustained on audit and does not anticipate any adjustments
      that will result in a material change to its financial position. Therefore,
      no
      reserves for uncertain income tax positions have been recorded pursuant to
      FIN
      48. The cumulative effect, if any, of applying FIN 48 is to be reported as
      an
      adjustment to the opening balance of retained earnings in the year of adoption.
      The Company did not record a cumulative effect adjustment related to the
      adoption of FIN 48. Tax years since 1992 remain subject to examination by the
      major tax jurisdictions in which the Company is subject to tax. The Company's
      policy for recording interest and penalties associated with income-based tax
      audits is to record such items as a component of income taxes.





F-10




**Note
      D – Property and Equipment**





Major
      classes of property and equipment at December 31, 2007, consist of the
      following:





Furniture,
                equipment and leasehold improvements
            
            $
            202,877Computer
                hardware and software
            
            
            506,090Website
                and database development
            
            
            608,544Total
                property, equipment, and database development
            
            
            1,317,511Less:
                accumulated depreciation and amortization
            
            
            (1,171,046
            )Property
                and equipment, net
            
            $
            146,465





**Note
      E – Debt**





Long-term
      debt at December 31, 2007, consists of the following:


Capital
                  lease, due in 36 equal consecutive monthly payments of $1,016,
                  inclusive
                  of 11.8% interest, through November 30, 2010
              
              $
              36,572Subordinated
                  Note payable, due in 48 equal consecutive monthly payments of $1,479
                  through May 2011, 0% stated interest rate, 6% imputed interest
                  rate.
              
              
              60,745Less
                  imputed interest not yet earned
              
              
              (5,923
              )54,822Subordinated
                  Note payable to a bank, interest at prime plus 1% (8.25% at December
                  31,
                  2007), maturing on May 1, 2011, due in monthly installments of
                  $3,839 plus
                  interest
              
              
              153,557Total
              
              
              244,951Less:
                  current portion of long-term debt
              
              
              (75,996
              )Long-term
                  debt
              
              $
              168,955




Short-term
      debt at December 31 st ,
      2007
      consists of the following:


Senior
                  secured convertible notes, due June 6, 2010, interest at prime
                  plus 2.75%
                  per annum (10.0% at September 30, 2007), interest payable monthly,
                  convertible at $0.62 per share, secured by substantially all Company
                  assets
              
              $
              2,230,563Discount
                  for beneficial conversion feature (net of accumulated amortization
                  of
                  ($307,377)
              
              
              (1,761,863
              )Short-term
                  debt
              
              $
              468,700






F-11


**Payments
                  Due Year Ending December, 31,****Total**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **2011**
              
              **2012**Debt
                  Payment ScheduleCreditor
                  Note
              
              $
              60,646
              
              $
              17,748
              
              $
              17,748
              
              $
              17,748
              
              $
              7,402
              
              $
              -Creditor
                  Note
              
              
              153,557
              
              
              46,068
              
              
              46,068
              
              
              46,068
              
              
              15,353
              
              
              -Senior
                  Secured Notes
              
              
              2,230,563
              
              
              2,230,563
              (1)
              
              -
              
              
              -
              
              
              -
              
              
              -Finance
                  Lease
              
              
              36,572
              
              
              13,215
              
              
              12,192
              
              
              11,165
              
              
              -
              
              
              -Total
              
              $
              2,481,338
              
              $
              2,307,594
              
              $
              76,008
              
              $
              74,981
              
              $
              22,755
              
              $
              -




(1)
            Amount
                shown as current because we are not in compliance with the related
                note
                agreements.





At
      December 31, 2007, the Company was not in compliance with the provisions of
      its
      Senior Secured Convertible Notes. As such, the entire outstanding balance of
      these Notes is included as a current liability in the Company’s December 31,
      2007 balance sheet.





In
      connection with issuance of the Senior Secured Convertible Notes, the Company
      recognized an embedded beneficial conversion feature (“BCF”). $2,069,240 was
      recorded as a discount attributable to the BCF. This discount has been recorded
      as additional paid-in capital and as a discount against the debt. The debt
      discount attributed to the BCF is being amortized as interest expense, on a
      monthly basis from the date that the debt was incurred through June 2010. For
      the year ended December 31, 2007, the Company amortized $307,377 related to
      the
      debt discount.





With
      respect to the Senior Convertible Notes, additional terms and conditions, among
      others, consist of the following:





·
            through
                December 31, 2007, interest could be paid in cash or in shares of
                common
                stock at 85% of the average ten volume-weighted average prices (VWAP’s) of
                the Company’s shares of common stock immediately prior to the applicable
                interest payment date. past due interest entails a late fee at the
                rate of
                18% per annum;


·
            at
                any time after the second anniversary of the issuance of the notes,
                the
                Company may prepay, in cash, all of the notes at 115% of the principal
                amount thereof plus accrued interest to the date of repayment, and
                may
                apply any sinking fund payments previously made toward such
                prepayment;


·
            beginning
                on July 1, 2008, the Company is to make a monthly sinking fund payment
                equal to 1/36th of the principal amount of the notes ($61,960 at
                December
                31, 2007) plus accrued but unpaid interest, the sum of all liquidated
                damages and any other amounts then owing under the notes;
                and


·
            the
                Company may not (i) enter into, create, incur, assume or suffer to
                exist
                any indebtedness or liens of any kind, other than indebtedness owed
                to the
                above noted subordinated note holders, (ii) amend its certificate
                of
                incorporation, bylaws or other charter documents so as to adversely
                affect
                any rights of the holders of the notes (iii) repay, repurchase or
                offer to
                repay, repurchase, make any payment in respect of or otherwise acquire
                any
                of its Common Stock, Preferred Stock, or other equity securities,
                (iv)
                  engage in any transactions with any officer, director, employee or
                any affiliate of the Company, in excess of $10,000 other than (a)
                for
                payment of salary or consulting fees for services rendered, (b)
                reimbursement for expenses incurred on behalf of the Company, (c) for
                other employee benefits, including stock option agreements under
                any stock
                option plan of the Company and (d) transactions with the holders
                of the
                notes and;


·
            the
                Company is obligated to prepare and file a registration statement
                with the
                Securities and Exchange Commission covering the resale of 125% of
                all the
                shares to be issued on conversion of the convertible notes within
                120 days
                subsequent to the completion of the $3,000,000 sale of the convertible
                notes. At December 31, 2007 and to date, the Company has not been
                in
                compliance with its convertible note obligations to file a timely
                Registration Statement. In order to cure its existing non-compliance,
                the
                Company has requested that the majority principal convertible note
                holder
                grant the Company a waiver of its non-compliance and that the Securities
                Purchase Agreement and related convertible notes be amended respectively
                to increase the amount of convertible notes to be offered to provide
                for
                and assure the subscription to such increase or otherwise provide
                for the
                ongoing financing requirements of the Company. The Company is currently
                in
                discussions with its note holders to provide a cure for the existing
                non-compliance and its further continuance.




**Note
      F – Accrued Liabilities**





Accrued
      Liabilities at December 31, 2007 consist of the following:





Accrual
                for pending litigation, (see Note I)
            
            $
            451,855Accrual
                for legal and accounting fees
            
            
            72,000Accrued
                vendor expenses
            
            
            102,786Deferred
                revenue
            
            
            39,245Accrued
                commissions and employee expenses
            
            
            23,664Total
                accrued liabilities
            
            $
            689,550




F-12




**Note
      G – Stockholder’s Equity**





***Series
      A Preferred Stock***


In
      November 2004, the Company accepted subscription agreements for gross proceeds
      of $1,150,000 for 958,333 shares of its Series A Preferred Stock (“Series A”)
      for $1.20 per share. In February 2007, one of the Company’s preferred
      shareholders converted all of its 416,667 Series A with a recorded value of
      $500,000 into 16,667 shares of the Company’s common stock. The terms of the
      Series A were amended with the issuance of Series B Preferred Stock in June
      2007. Series A will rank junior to all other series of preferred stock created
      and issued from time to time. There will be no stated dividend provided for
      holders of Series A. After payment of any liquidation preference to the holders
      of preferred stock that rank senior to the Series A Preferred Stock, the
      remaining assets will be distributed ratably to the holders of common stock,
      Series A Preferred Stock and any other series of participating preferred stock
      on an “as converted” basis up to a maximum of $1.20 per share of Series A
      Preferred Stock (the “Liquidation Value”). Each share of the Series A may be
      converted at any time at the option of the holder into the number of shares
      of
      common stock equal to the Liquidation Value divided by $.30. At the time of
      the
      execution of the Series A Amendment Agreement and Consent, in connection with
      the capital restructuring, certain holders of the Series A Preferred
      Stock holding
      291,666 shares, elected to convert their shares of Series A
      Preferred Stock into share of Common Stock, at the rate of 1.24623 shares of
      Common Stock for every share of Series A Preferred Stock then issued and
      outstanding. As a result, at December 31, 2007, the outstanding Series A shares
      were convertible into approximately 363,483 shares of common stock. At any
      time,
      the Company may redeem, at its option, the Series A Preferred Stock at a
      redemption price equal to $1.20 per share.




***Series
      B Convertible Preferred Stock***


The
      Company has authorized 600,000 shares of Series B Convertible Preferred Stock
      (“Series B”) with a stated value of $10 share (the “Stated Value). Series B
      ranks senior to the common stock, Series A Preferred Stock, and to all other
      classes of equity, which by their terms do not rank senior to the Series B
      shares. Series B shares are entitled to receive cash dividends, as and when
      declared by the board of Directors, out of funds legally available at a rate
      of
      $1.00 per share per year, payable quarterly. Upon voluntary or involuntary
      liquidation, dissolution or winding up of the Company, each holder of Series
      B
      will be entitled to receive, out of the assets of the Company available for
      distribution, an aggregate amount equal to 1.1 times the stated value of $10.00
      for each share, plus all accrued but unpaid dividends (the “Liquidation
      Preference”). After payment of this preference, remaining assets will be
      distributed pro rata on an “as converted” basis as all other types of equity.
      Each share of Series B is convertible at any time, at the sole option of the
      holder, into fully paid and non-assessable shares of common stock. The number
      of
      shares of common stock due upon conversion of Series B will be (i) the number
      of
      shares of Series B to be converted, multiplied by the stated value of $10.00
      per
      share, plus (ii) any accrued but unpaid dividends and divided by (iii) $1.43.
      The conversion ratio is also subject to proportional adjustment for stock
      splits, stock dividends, recapitalizations and similar transactions. The Company
      may redeem, at its option, the Series B Preferred Stock, at any time or from
      time to time, in whole or in part, at a redemption price equal to 1.1 times
      the
      per share Liquidation Preference, plus accrued and unpaid dividends, if any,
      to
      the date of redemption As long as 125,000 shares of Series B are issued and
      outstanding, the holders of the majority of the then outstanding shares of
      Series B, voting exclusively and as a separate class to the exclusion of all
      other classes of the Company’s voting stock, will have the right to designate
      and elect two members of the board of directors. Otherwise, the holders of
      Series B and common stock will vote together and not as a separate class and
      on
      an “as converted” basis. In connection with the Company’s debt restructuring
      (See Note I), the Company issued 463,810 shares of Series B for the conversion
      of notes payable approximating $4.6 million of principal, accrued interest
      and
      penalties, and 37,710 shares for additional consideration to transact the
      restructuring and recorded as interest expense valued at $791,119. In June
      2007,
      the Company issued 16,000 shares of Series B in connection with severance
      payments to former employees. The estimated fair value of the Series B shares
      was $335,665, based on the estimated fair value of the underlying common shares
      on the measurement date. At December 31, 2007, the Series B shares were
      convertible into approximately 3,620,000 shares of common stock. We are
      obligated to file with the Securities and Exchange Commission a registration
      statements covering the resale of the shares of common stock issued upon
      conversion of our Series B Preferred Stock . Under
      the
      terms of the various registration rights agreements executed by us in connection
      with these financing agreements, if we fail to timely file such registration
      statements or are unable to cause such registration statements to become
      effective on a timely basis, we are obligated to make certain payments as
      liquidated damages to the holders of such securities. We are currently in not
      in
      compliance with our Senior Secured Convertible Notes for a failure to have
      required registration statements declared effective. There can be no assurance
      that when and if we file registration statements that such statements will
      be
      declared effective by the Securities and Exchange Commission or that any claim
      for liquidated damages can or will be mitigated without material adverse
      consequences for the Company which could prevent it from staying in business.





***Common
      Stock***


The
      Company is authorized to issue 95,000,000 shares of its common stock and has
      530,389 shares outstanding at December 31, 2007. Holders of the Class A common
      stock are entitled to one vote per share.





F-13




During
      the year ended December 31, 2007, the Company issued 6,057 shares of common
      stock in connection with the cashless exercise of 7,500 warrants and converted
      416,667 shares of Series A Preferred Stock with a value of $500,000 into 16,667
      shares of common stock.




***Stock
      Options***


At
      December 31, 2006, the Company had approximately 26,377 options outstanding
      at
      exercise prices ranging from $72.00 per share to $200.00 per share. In
      connection with the Company’s capital and debt restructuring in June 2007 all
      previously existing options were cancelled and new options totaling 809,482
      were
      awarded to the Company’s newly appointed chief executive officer (See Note C).





***Warrants***


At
      December 31, 2006, the Company had approximately 35,598 warrants outstanding
      at
      exercise prices ****** ranging
      from $13.00 per share to $85.00 per share, valued at $0.00 (based on Black
      Sholes option pricing model). During the year ended December 31, 2007, warrants
      to purchase 7,500 shares of the Company’s common stock were exercised via a
      cashless exercise with a net issuance of 6,057 shares and the remaining
      outstanding warrants were cancelled in conjunction with the Company’s capital
      and debt restructuring in June 2007.





**Note
      H – Significant Risk and Uncertainties**





The
      Company has a limited operating history and is currently pursuing a business
      strategy that is yet to be proven. As a result, its ability to successfully
      implement its business plan is dependent on, among other things, its ability
      to
      generate sufficient cash flow through operations or additional debt or equity
      transactions to sustain business development efforts until revenues from
      customers reach levels that can support ongoing operations. The Company expects
      to continue to incur operating losses for the near future and there can be
      no
      assurance that profitability will be achieved or sustained.





The
      Company is heavily dependent upon its developed and purchased database, software
      and hardware products. As mentioned previously, the Company amortizes
      capitalized database and internal use software and depreciates purchased
      hardware and software on a straight-line basis over an estimated useful life
      of
      three to five years. Due to inherent technological changes in the computer
      hardware and software industry, the period over which such items are being
      amortized and depreciated may be longer than its actual useful life. In the
      event that this fact becomes apparent, the amortization and depreciation will
      have to be accelerated.





The
      Company is also heavily dependent on other vendors to provide access to the
      information it markets through its website. Various contracts have been entered
      into, mostly for a term of one year or on a month-to-month basis for the
      provision of this information. The failure of these vendors to supply the
      information contracted for would have a severe adverse impact on the Company's
      ability to provide future services to its customers.





**Note
      I – Legal Proceedings**





During
      the year, the Company had two significant judgments entered against it, one
      from
      the State of New York, in the amount of $69,500, inclusive of continuing
      penalties through January 23, 2008, for failure to have provided workmen’s
      compensation insurance coverage for a New York employee terminated in November
      2004, and the other from the State of Illinois and further entered in the State
      of Mississippi, in the amount of $369,000, inclusive of penalties of
      approximately $361,000, for failure to withhold an adequate amount from an
      employee, employed by Knobias during 2006, in compliance to withhold income
      for
      support. The Company accrued for these judgments in 2007 (see Note F). With
      regard to the New York State judgment, the Company is in the process of
      negotiating a mitigation of the overall judgment, especially with respect to
      the
      penalties involved, with the Workmen’s Compensation Board. As to the Illinois
      and related Mississippi judgment, the Company has appealed the Illinois judgment
      and is awaiting the decision of the Appellate Court of the State of Illinois.
      There can be no assurance that the Company will receive a favorable response
      to
      its appeal or otherwise be able to recover any amounts from its insurance
      carrier, or negotiate an acceptable settlement with respect to the Illinois
      and
      Mississippi judgments or that the Company will be able to negotiate an
      acceptable settlement of the New York State judgment. Failure of the Company
      receiving a favorable ruling on its appeal in Illinois and or otherwise having
      insurance coverage or negotiating an acceptable settlement of both judgments
      could have a material adverse affect on the Company’s cash flows and business.





**Note
      J – Debt Restructuring**





On
      June
      6, 2007, the Company completed its debt and equity restructuring with CAMOFI
      Master LDC (“CAMOFI”) and other principal creditors. Pursuant to the
      restructuring, outstanding indebtedness, accrued interest and penalties in
      the
      aggregate amount of approximately $4.6 million were converted into 463,810
      shares of Series B. In addition, the Company entered into a Securities Purchase
      Agreement with CAMOFI pursuant to which CAMOFI initially purchased $1,530,000
      in
      senior secured convertible notes, due June 6, 2010. Subsequently and through
      December 31, 2007, CAMOFI and another investor purchased additional of these
      notes in the amounts of $291,285 and $300,000, respectively. These notes bear
      interest at the prime rate plus 2.75%. Interest earned on these notes through
      December 31, 2007 in the amount of $109,278 was converted into additional senior
      secured convertible notes.





F-14




The
      conversion of amounts owed has been accounted for under the guidelines of
      Accounting Principles Bulletin No. 26, “Accounting for the Early Extinguishment
      of Debt,” and a loss on extinguishment was recognized in other income and
      expense. The value of the 463,810 shares of Series B was $9,730,287, based
      on
      the estimated fair value of the underlying common shares on the measurement
      date. Accordingly, based on the conversion of $4,681,235 of indebtedness and
      accrued interest and penalties, the Company recorded a net loss on
      extinguishment of $5,049,052 related to the estimated fair value of the Series
      B
      in excess of the notes payable converted. In addition, the Company issued an
      aggregate of 37,710 shares of Series B to the note holders as additional
      consideration for the conversion of debt. The value of the 37,710 shares of
      Series B was $791,119, based on the estimated fair value of the underlying
      common shares on the measurement date and was recorded as interest expense
      in
      the accompanying consolidated statements of operations.





The
      Company converted two existing notes payable into term loans with payouts of
      four years. The first was a note payable to a bank in the principal amount
      of
      $170,000 with accrued interest of $14,269. The accrued interest was added to
      the
      principal balance and the Company will repay this loan in equal installments
      over 48 months plus interest. The second note payable converted had a principal
      balance of $50,000 plus accrued interest of $12,995, which was converted into
      a
      term loan with a stated interest of 0% but imputed interest of 6%. The
      modifications of these debts did not result in any gain or loss.





The
      Series A Preferred stock was amended in the restructuring. The primary change
      was to eliminate dividends and modify the conversion rate from that which had
      been previously required (see Note G).





Subsequent
      to December 31, 2007, the Company received an additional $515,704 from CAMOFI.
      The Company is treating these amounts as advances (see Note M).




**Note
      K – Income Taxes**





The
      Company has adopted SFAS No. 109, which requires the recognition of deferred
      tax
      liabilities and assets for the expected future tax consequences of events that
      have been included in the financial statements or tax returns. Under this
      method, deferred tax liabilities and assets are determined based on the
      difference between financial statements and tax basis of assets and liabilities
      using enacted tax rates in effect for the year in which the differences are
      expected to reverse. Temporary differences between taxable income reported
      for
      financial reporting purposes and income tax purposes are
      insignificant.





For
      income tax reporting purposes, the Company's aggregate unused net operating
      losses approximate $17,369,000, expire at various times from 2015 through 2027,
      subject to limitations of Section 382 of the Internal Revenue Code, as amended.
      The deferred tax asset related to the net operating loss carry forward is
      approximately $6,135,000. The Company has provided a valuation reserve against
      the full amount of the net operating loss benefit, since in the opinion of
      management based upon the earning history of the Company, it is more likely
      than
      not that the benefits will not be realized.





The
      tax
      asset increased due to the accumulation during the year ended December 31,
      2007,
      of additional net operating losses of approximately $4,809,000 or additional
      deferred tax assets of $1,683,000. The provision for income taxes differs from
      the amount using the statutory federal income tax rate of 34% as
      follows:





2007
            
            2006Federal
                tax benefit of statutory rate
            
            $
            3,352,000
            
            $
            768,000Permanent
                    difference – loss on debt extinguishment
            
            
            (1,669,000
            )
            
            -Increase
                in valuation allowance
            
            
            (1,683,000
            )
            
            (768,000
            )Provision
                for income taxes
            
            $
            -
            
            $
            -





**Note
      L – Leases and Commitments**





The
      Company has two non-cancelable operating leases for office space that expire
      through 2010. Rent expense for the year ended December 31, 2007 and 2006
      amounted to approximately $107,000 and $135,000, respectively. Future
      non-cancelable minimum lease payments under all the leases as of December 31,
      2007 are approximately as follows:




Year
      ending December 31,




2008
            
            $
            69,0002009
            
            
            69,0002010
            
            
            46,000$
            184,000




F-15




**Note
      M – Subsequent Events**




From
      February 1, 2008 through March 31, 2008 and continuing currently, the Company
      has been and is not in compliance for not paying the monthly interest (totaling
      $51,009 at March 31, 2008) required to be paid pursuant to the terms of the
      Company’s senior secured convertible notes. The Company is currently in
      discussions with its note holders to provide a cure for the existing
      non-compliance and their further continuance.





Subsequent
      to December 31, 2007, CAMOFI Master LDC, the majority holder of the Company’s
      senior secured convertible notes, on a monthly basis through March 31, 2008,
      has
      in the aggregate advanced $515,704 to the Company to provide the funding of
      the
      Company’s working capital requirements. There can be no assurance that in the
      future such advances will continue.





On
      January 2, 2008, the Company appointed a new chief operating officer, a new
      chief financial officer, and a senior vice president of marketing and sales.
      These appointments are on an at will basis with annual salaries of $125,000,
      $120,000 and $130,000, respectively.





In
      February 2008, the Company relocated its executive offices into approximately
      900 square feet of leased space in Pleasantville, New York. The lease is for
      a
      two year term at an annual rental of approximately $30,000. .





The
      Company on March 28, 2008 and April 1, 2008 entered into agreements with
      Sichenzia Ross Friedman Ference LLP and Melissa A. Mahler, respectively,
      primarily pursuant to which, in addition to other services, these parties will
      assist the Company in identifying sources and facilitating transactions which
      enable the Company to increase its capital base and provide for the Company’s
      ongoing working capital requirements.





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





None.





**ITEM
      8A. CONTROLS AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





We
      conducted an evaluation, with the participation of our Chief Executive Officer
      and Chief Financial Officer, of the effectiveness of the design and operation
      of
      our disclosure controls and procedures, as defined in Rules 13a-15(e) and
      15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
      Act, as of December 31, 2007, to ensure that information required to be
      disclosed by us in the reports filed or submitted by us under the Exchange
      Act
      is recorded, processed, summarized and reported, within the time periods
      specified in the Securities Exchange Commission's rules and forms, including
      to
      ensure that information required to be disclosed by us in the reports filed
      or
      submitted by us under the Exchange Act is accumulated and communicated to our
      management, including our principal executive and principal financial officers,
      or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure. Based on that evaluation, our Chief
      Executive Officer and Chief Financial Officer have concluded that as of December
      31, 2007, our disclosure controls and procedures were not effective at the
      reasonable assurance level due to the material weaknesses described
      below.





In
      light
      of the material weaknesses described below, we performed additional analysis
      and
      other post-closing procedures to ensure our financial statements were prepared
      in accordance with generally accepted accounting principles. Accordingly, we
      believe that the consolidated financial statements included in this report
      fairly present, in all material respects, our financial condition, results
      of
      operations and cash flows for the periods presented.





A
      material weakness is a control deficiency (within the meaning of the Public
      Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or
      combination of control deficiencies, such that there is a reasonable possibility
      that a material misstatement of the annual or interim financial statements
      will
      not be prevented or detected. Management has identified the following five
      material weaknesses, which have caused management to conclude that, as of
      December 31, 2007, our disclosure controls and procedures were not effective
      at
      the reasonable assurance level:





1.
      We do
      not have written documentation of our internal control policies and procedures.
      Written documentation of key internal controls over financial reporting is
      a
      requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated
      the
      impact of our failure to have written documentation of our internal controls
      and
      procedures on our assessment of our disclosure controls and procedures and
      has
      concluded that the control deficiency that resulted represented a material
      weakness.





2.
      We do
      not have sufficient segregation of duties within accounting functions, which
      is
      a basic internal control. Due to our size and nature, segregation of all
      conflicting duties may not always be possible and may not be economically
      feasible. However, to the extent possible, the initiation of transactions,
      the
      custody of assets and the recording of transactions should be performed by
      separate individuals. Management evaluated the impact of our failure to have
      segregation of duties on our assessment of our disclosure controls and
      procedures and has concluded that the control deficiency that resulted
      represented a material weakness.





18




3.
      We had
      a significant number of audit adjustments during last two years. Audit
      adjustments are the result of a failure of the internal controls to prevent
      or
      detect misstatements of accounting information. The failure was due to
      inadequate design of the internal controls or to a misapplication or override
      of
      controls. Management evaluated the impact of our significant number of audit
      adjustments and has concluded that the control deficiency that resulted
      represented a material weakness.





4.
      The
      Company did not effectively monitor access to or maintain effective controls
      over changes to, certain financial application programs and related data. This
      control deficiency could result in a material misstatement of significant
      accounts or disclosures that would result in a material misstatement to the
      Company's interim or annual consolidated financial statements that would not
      be
      prevented or detected. Accordingly, management has determined that this control
      deficiency constitutes a material weakness.





5.
      The
      Company does not maintain a sufficient level of IT personnel to execute general
      computing controls over our information technology structure, which include
      the
      implementation and assessment of information technology policies and procedures.
      This control deficiency could result in a material misstatement of significant
      accounts or disclosures, which would not be prevented or detected. 
Accordingly, management has determined that this control deficiency constitutes
      a material weakness.





To
      address these material weaknesses, management performed additional analyses
      and
      other procedures to ensure that the financial statements included herein fairly
      present, in all material respects, our financial position, results of operations
      and cash flows for the periods presented.




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


Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in Exchange Act
      Rule 13a-15(f). Under the supervision and with the participation of our
      management, including our Chief Executive Officer and our Chief Financial
      Officer, we conducted an evaluation of the effectiveness of our internal control
      over financial reporting based on the framework in *Internal
      Control — Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission. Based
      on
      our evaluation under the framework in *Internal
      Control — Integrated Framework* ,
      our
      management concluded that our internal control over financial reporting was
      not
      effective as of December 31, 2007 as a result of the material weaknesses
      listed above.





***Inherent
      Limitations Over Internal Controls***


Internal
      control over financial reporting cannot provide absolute assurance of achieving
      financial reporting objectives because of its inherent limitations, including
      the possibility of human error and circumvention by collusion or overriding
      of
      controls. Accordingly, even an effective internal control system may not prevent
      or detect material misstatements on a timely basis. Also, projections of any
      evaluation of effectiveness to future periods are subject to the risk that
      controls may become inadequate because of changes in conditions or that the
      degree of compliance with the policies or procedures may
      deteriorate.





***Attestation
      Report of the Registered Public Accounting Firm.***


This
      annual report does not include an attestation report of our registered public
      accounting firm regarding internal control over financial reporting.
      Management's report was not subject to attestation by our registered public
      accounting firm pursuant to temporary rules of the SEC that permit us to provide
      only management's report in this annual report.




***Changes
      in Internal Control Over Financial Reporting***


There
      was
      no change in our internal control over financial reporting during our most
      recent quarter that has materially affected, or is reasonably likely to
      materially affect, our internal controls over financial reporting.




**ITEM
      8B. OTHER INFORMATION**




None.




**PART
      III**




**ITEM
      9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**




***Directors
      and Executive Officers***


As
      part
      of the Company’s earlier and herein previously disclosed restructuring of June
      6, 2007, as part of the restructuring, (i) each of the two largest holders
      of
      the Company’s new Series B Preferred Stock have the right to designate one of
      the Company's directors, (ii) a majority in interest of the holders of the
      Company’s Senior Secured Convertible Notes also have the right to designate two
      directors, (iii) the Board of Directors of the Company adopted an amendment
      to
      the Bylaws of the Company providing that the number of directors of the Company
      would not be less than one nor more than seven (7), the exact number to be
      fixed
      from time to time by resolution of the Board of Directors, (iv) Messrs. Gregory
      E. Ballard, Danny M. Dunnaway and Joseph L. Stephens resigned as directors
      of
      the Company, and E. Key Ramsey, prior to his resignation, as the sole remaining
      director, appointed John S. Gross to fill one of the vacancies on the Board
      of
      Directors, (v) the Board of Directors appointed Steven B. Lord and Stephen
      R.
      Wilson to two of the vacancies on the Board of Directors, and (vi) the Company,
      pursuant to an employment agreement, employed Steven B. Lord as its President
      and Chief Executive Officer. In addition, effective January 2, 2008, Susan
      R.
      Walker, the Company’s prior chief financial officer was replaced by Donald A.
      Bernard who was elected executive vice president, chief financial officer and
      secretary and Kenneth L. Ivey was elected executive vice president and chief
      operating officer.




19





The
      following table sets forth as of March 15, 2008 the directors and executive
      officers of the Company, their ages, positions held and the date the position
      was first held.




NAME
            
            AGE
            
            POSITION
            
            Date Position First HeldSteven
                B. Lord
            
            39
            
            President,
                Chief Executive Officer and Director
            
            June
                6, 2007Kenneth
                L. Ivey
            
            38
            
            Executive
                Vice President and Chief Operating Officer
            
            January
                2, 2008Donald
                A. Bernard
            
            75
            
            Executive
                Vice President, Chief Financial Officer and Secretary
            
            January
                2, 2008(1)John
                S. Gross
            
            47
            
            Director
            
            June
                6, 2008Stephen
                R. Wilson
            
            60
            
            Director
            
            July
                9, 2008




(1)
      From
      October through December 2007, Mr. Bernard served as a paid consultant to the
      Company on a monthly retainer of $5,000.





Our
      directors hold office until the next annual meeting of our shareholders or
      until
      their successors is duly elected and qualified. Our executive officers serve
      at
      the pleasure of the Board of Directors. Set forth below is a summary description
      of the principal occupation and business experience of each of our directors
      and
      executive officers for at least the last five years.





·
            Mr.
                Lord is an analyst, editor and publisher of investment-related
                publications. He was the founder and Chief Investment Strategist
                for the
                Trend Investment Group (TIG), a joint venture with Agora Publishing,
                and
                was the editor of the group’s flagship publication,*Trend
                Investor*.
                Prior to founding TIG, he worked with New York-based financial services
                company Leeb Group as founding editor of*Emerging
                Investments*,
                a
                service dedicated to small-capitalization stocks and emerging markets,
                and
                as contributing editor to Leeb's main publication,*The
                Complete Investor*.
                In addition, Mr. Lord served on the investment committee of Leeb's
                capital
                management division. Beforehand, he was a partner in New York-based
                financial services company L.M. Waterhouse, Inc., for five
                years.





·
            Mr.
                Ivey has a master’s degree of engineering science in computer science and
                has been with Knobias since 1999 having served from 1999 through
                June 2007
                as Chief Information Officer with the responsibility for the design
                and
                implementation of all IT technical aspects of the Company’s products and
                operations. Prior to his current role, from July 2007 through December
                2007, Mr. Ivey served was appointed as a Vice President and our General
                Manager of Operations. Before joining Knobias in 1999, Mr. Ivey was
                the
                manager of network support at the University of Mississippi Medical
                Center.





·
            Mr.
                Bernard is a certified public accountant. In 1992, he together with
                two
                other partners founded CoActive Marketing Group, Inc. and from the
                company’s formation through 2006, served as its executive vice president,
                chief financial officer and secretary and subsequent thereto continues
                to
                be employed as a consulting vice president on as needed basis. Prior
                to
                1992, Mr. Bernard has had extensive business and financial experience
                having been the founder, president and chief executive of a multi-national
                equipment leasing and finance company, the chief financial officer
                and
                subsequently president and chief executive officer of the United
                States
                subsidiary of a long established diversified multi-national publicly
                held
                British company and having initially started his career working as
                a
                certified public accountant for in excess of six years with one of
                the
                then “big eight” accounting firms.





·
            Mr. Gross
                has served as Executive Vice President and Chief Financial Officer
                of
                Majesco Entertainment Company since July 12, 2005. Majesco
                Entertainment Company, a reporting company under the Securities Exchange
                Act of 1934, provides interactive entertainment products in the United
                States and internationally. It offers video game software and other
                digital entertainment products. From December 2000 through
                June 2005, Mr. Gross served as Vice President, Corporate
                Development, for FactSet Research Systems Inc. Prior to such time,
                Mr. Gross served as Chief Financial Officer of Rare Medium and
                FactSet and held senior financial positions at PepsiCo, Reader’s Digest
                and Cadbury Schweppes.





·
            Mr.
                Wilson is currently a partner with Camelot Equity Partners, Darien,
                Connecticut. From May 2001 to February 2006, Mr. Wilson was
                Executive Vice President, Chief Financial Officer and Chief Administrative
                officer at Footstar, Inc. He has also served as Executive Vice President
                and Chief Financial Officer of Bridge Information Systems, Reader’s Digest
                Association and RJR Nabisco. His additional prior experience includes
                senior management and financial positions at Cadbury Beverages North
                America and Pepsico Inc. He is currently a director of Majesco
                Entertainment Company.


20




***Family
      Relationships***





There
      are
      no family relationships among any of our directors and executive officers.
      Except as described above, no other arrangements or understandings exist among
      present or former controlling stockholders with respect to the election of
      members of our Board of Directors and, to our knowledge, no other arrangements
      exist that might result in a change of control in the future.





***Involvement
      in Certain Legal Proceeding***





To
      the
      best of our knowledge, we believe that no officer, director or control person
      of
      the Company has during the last five years:





·
            Been
                the subject of any order, judgment, or decree of any Court of competent
                jurisdiction, or any regulatory agency permanently or temporarily
                enjoining, barring suspending or otherwise limiting him from acting
                as an
                investment advisor, underwriter, broker or dealer in the securities
                industry, or as an affiliated person, director or employee of an
                investment company, bank, savings and loan association, or insurance
                company or from engaging in or continuing any conduct or practice
                in
                connection with any such activity or in connection with the purchase
                or
                sale of any securities and or
                commodities;





·
            Had
                any bankruptcy petition filed by or against any business of which
                such
                person was a general partner or executive officer either at the time
                of
                the bankruptcy or within two years prior to that time;





·
            Had
                any conviction in a criminal proceeding or being subject to a pending
                criminal proceeding (excluding traffic violations and other minor
                offenses;





·
            Been
                found by a court of competent jurisdiction (in a civil action) the
                Securities and Exchange or the Commodity Futures Trading Commission
                to
                have violated a federal or state securities or commodities law, and
                the
                judgment has not been reversed, suspended or vacated. No Executive
                Officer
                or Director of the Company has been convicted in any criminal proceeding
                (excluding traffic violations) or is the subject of a criminal proceeding
                which is currently pending.





***Compliance
      with Section 16(a) of the Securities Exchange Act of
      1934***





Section 16(a)
      of the Securities and Exchange Act of 1934 requires our officers and directors
      and persons who beneficially own more than 10% of the Company’s common stock
      (collectively, “Reporting Persons”) to file reports of beneficial ownership and
      changes in beneficial ownership with the SEC. Reporting Persons are required
      by
      SEC regulations to furnish us with copies of all Section 16(a) forms they file. We
      believe that all Reporting Persons complied with all applicable reporting
      requirements.





***Limitation
      of Liability of Officers and Directors***





Our
      Second Amended and Restated Certificate of Incorporation provides that we will
      indemnify our officers, directors, employees, and agents to the fullest extent
      permitted by the Delaware General Corporate Law. Under the Delaware General
      Corporate Law, other than in actions brought by or in the right of the
      corporation, such indemnification would apply if it were determined in the
      specific case that the proposed indemnitee acted in good faith and in a manner
      such person reasonably believed to be in or not opposed to the best interests
      of
      the corporation and, with respect to any criminal proceeding, if such person
      had
      no reasonable cause to believe that the conduct was unlawful. In actions brought
      by or in the right of the corporation, such indemnification probably would
      be
      limited to reasonable expenses (including attorneys' fees) and would apply
      if it
      were determined in the specific case that the proposed indemnitee acted in
      good
      faith and in a manner such person reasonably believed to be in or not opposed
      to
      the best interests of the corporation, except that no indemnification may be
      made with respect to any matter as to which such person is adjudged liable
      to
      the corporation, unless, and only to the extent that, the court determines
      upon
      application that, in view of all the circumstances of the case, the proposed
      indemnitee is fairly and reasonably entitled to indemnification for such
      expenses as the court deems proper. To the extent that any director, officer,
      employee, or agent of ours has been successful on the merits or otherwise in
      defense of any action, suit, or proceeding, as discussed herein, whether civil,
      criminal, administrative or investigative, such person must be indemnified
      against reasonable expenses incurred by such person in connection therewith.
      Accordingly, we are providing such required indemnification.





***Director
      Independence***





Our
      Board
      of Directors is currently composed of three directors, of which the Board of
      Directors has determined that each of the following two directors is an
“independent director” as defined in Rule 4200(a)(15) of the listing standards
      of the National Association of Securities Dealers (the “NASD listing
      standards”): John S. Gross and Stephen R. Wilson and that each of these
      independent directors, as members of the three committees listed below meets
      the
      independence requirements applicable to those committees prescribed by the
      NASD
      listing standards and the Securities and Exchange Commission, as currently
      in
      effect.


21




**Committees
      of the Board of Directors**





The
      Board
      of Directors has a standing Audit Committee, Compensation Committee and
      Nominating Committee. The primary responsibilities of each of these committees
      and their members are listed below.





***Audit
      Committee***


The
      Audit
      Committee is composed of John S. Gross and Stephen R. Wilson. The Audit
      Committee oversees the Company’s accounting and financial reporting process. For
      this purpose, the Audit Committee performs several functions. The Audit
      Committee evaluates the performance and assesses the qualifications of the
      independent auditors; determines whether to retain or terminate the existing
      independent auditors or to appoint and engage new independent auditors; reviews
      and approves the retention of the independent auditors to perform any proposed
      permissible non-audit services; monitors the rotation of partners of the
      independent auditors on the Company’s audit engagement team as required by law;
      confers with management and the independent auditors regarding the effectiveness
      of internal controls over financial reporting; establishes procedures, as
      required under applicable law, for the receipt, retention, and treatment of
      complaints received by the Company regarding accounting, internal accounting
      controls or auditing matters and the confidential and anonymous submission
      by
      employees of concerns regarding questionable accounting or auditing matters;
      reviews the financial statements to be included in the Company’s Annual Report
      on Form 10KSB; and discuss with management and the independent auditors the
      results of the annual audit and the results of the Company’s quarterly financial
      statements but is not responsible for their content. Both Messrs. Gross and
      Wilson qualify as an “audit committee expert” as such term is defined in Item
      401(h) of Regulation S-K. During the past year the audit committee had one
      meeting **.**





The
      Audit
      Committee operates pursuant to a charter which has recently been duly adopted
      by
      the Board of Directors. A copy of the charter can be viewed on the Company’s
      website at http://www.knobias.com .





***Compensation
      Committee***


We
      did
      not have a Compensation Committee in 2007. The recently constituted Compensation
      Committee is composed of Stephen R. Wilson and John S. Gross. The Compensation
      Committee is responsible for determining the compensation packages of the
      Company’s executives. The Compensation Committee acts on behalf of the Board of
      Directors to review, adopt and oversee the Company’s compensation strategy,
      policies, plans and programs including: establishment of corporate and
      individual performance objectives relevant to the compensation of the Company’s
      executive officers, other senior management and directors and evaluation of
      performance in light of these stated objectives; review and approval of the
      compensation and other terms of employment or service, including severance
      and
      change-in-control arrangements, of the Company’s Chief Executive Officer and the
      other executive and directors; and administration of the Company’s equity
      compensation plans.




The
      Company, on behalf of the Compensation Committee, from time to time may retain
      the services of an outside compensation consultant to review and make
      recommendations with regard to executive compensation.





The
      Compensation Committee operates pursuant to a charter which has recently been
      duly adopted by the Board of Directors. A copy of the charter can be viewed
      on
      the Company’s website at http://www.knobias.com .





***Nominating
      Committee***


We
      did
      not have a Nominating Committee in 2007. The recently constituted Nominating
      Committee is composed of Stephen R. Wilson, John S. Gross and Steven B. Lord.
      The Nominating Committee is responsible for, among other things, identifying
      individuals qualified to become members of the Board of Directors, and
      recommending to the Board of Directors individuals for nomination as Board
      members.




As
      part
      of the Company’s June 6, 2007 restructuring, each of the two largest holders of
      the Company’s new Series B Preferred Stock have the right to designate one of
      the Company's directors, and a majority in interest of the holders of the
      Company’s Senior Secured Convertible Notes also have the right to designate two
      directors, Both John S. Gross and Stephen R. Wilson are the designated members
      to the Company’s Board of Directors of the majority interest holders of the
      Company’s Series B Preferred Stock.





The
      Nominating Committee operates pursuant to a charter which has recently been
      duly
      adopted by the Board of Directors. A copy of the charter can be viewed on the
      Company’s website at http://www.knobias.com .





***Code
      of Ethics***


We
      did
      not adopt a Code of Ethics in 2007. A Code of Ethics contains written standards
      that are designated to deter wrongdoing and to promote honest and ethnical
      conduct, including the ethical handling of actual or apparent conflicts of
      interest; full, fair, accurate, timely and understandable public disclosures
      and
      communications, including financial reporting; compliance with applicable laws,
      rules and regulations; prompt internal reporting of violations of the Code;
      and
      accountability for adherence to the Code.





The
      Company in concert with its Board of Directors is currently in the process
      of
      compiling for adoption a Company Code of Conduct which satisfies the
      requirements of a “code of ethics” under applicable Securities and Exchange
      Commission rules.


22





**ITEM
      10. EXECUTIVE COMPENSATION**




**SUMMARY
      COMPENSATION TABLE**




The
      following table sets forth for the years ended December 31, 2007, 2006 and
      2005
      compensation awarded or earned by Steven B. Lord, the Company’s Chief Executive
      Officer; E. Key Ramsey, Chief Executive Officer of the Company during a portion
      of 2007; and Susan R. Walker, the Company’s Chief Financial Officer during 2007;
      (collectively, the “Named Executive Officers”). Other than the Named Executive
      Officers, the Company had no executive officers serving in such capacity at
      December 31, 2007 whose total compensation exceeded $100,000.




SUMMARY
                COMPENSATION TABLEANNUAL
                COMPENSATION
            
            LONG-TERM
                COMPENSATIONAWARDS
            
            PAYOUTSNAME
                AND PRINCIPAL POSITION
            
            YEAR
            
            SALARY
              ($)
            
            BONUS
              ($)
            
            OTHER ANNUAL
              COMPENSATION
              ($)
            
            RESTRICTED
              STOCK
              AWARD(S)
              ($)
            
            SECURITIES
              UNDERLYING
              OPTIONS/
              SARS (#)
            
            LTIP
              PAYOUTS
              ($)
            
            ALL OTHER
              COMPENSATION
              ($)E.
                Key Ramsey, President and
            
            
            2007
            
            
            116,442
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Chief
                Executive Officer (until
            
            
            2006
            
            
            175,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0June
                2007)
            
            
            2005
            
            
            175,000
            
            
            0
            
            
            0
            
            
            0
            
            
            250,000
            
            
            0
            
            
            0Gregory
                E. Ballard, Vice President
            
            
            2007
            
            
            121,154
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0and
                Chief Operating Officer
                (until
            
            
            2006
            
            
            175,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0July
                2007)
            
            
            2005
            
            
            175,000
            
            
            0
            
            
            0
            
            
            0
            
            
            250,000
            
            
            0
            
            
            0Steven
                B. Lord, President andChief
                Executive Officer(since
                June 2007)
            
            
            2007
            
            
            111,077
            
            
            0
            
            
            0
            
            
            0
            
            
            404,741
            (1)
            
            0
            
            
            0Susan
                R. Walker, Chief FinancialOfficer
                (until January 2008)
            
            
            2007
            
            
            88,662
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0





(1)
      Pursuant to a three year employment agreement dated June 6, 2007, Mr. Lord
      was
      employed by the Company as its President and Chief Executive Officer. The
      employment agreements provides for an initial annual salary of $190,000, (i)
      the
      grant of stock options to purchase 4.5% of the Company’s common stock on a fully
      diluted basis after giving effect to the conversion of the notes to be issued
      as
      part of the Company’s June 2007 capital restructuring and the conversion of all
      of the Company’s preferred stock, and (ii) the grant of an additional options to
      purchase up another 4.5% of the Company’s common stock, on the same diluted
      basis as aforementioned, subject to and on achieving pre-established earnings
      levels. The value of these options under SFAS 123(R) (see Note C) was $1,190,000
      each, of which none has vested and the Company has expensed $183,000 during
      the
      year ended December 31, 2007.




**Option/SAR
      Grants in Last Fiscal Year**





Option
              Awards
            
            
            
            
            
            
            
            
            
            Stock
                AwardsName
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
            
            Equity
              Incentive
              Plan
              Awards:
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Options
              Exercise
              Price
            
            Option
              Expiration
              Date
            
            Number of
                Shares or
              Units of
              Stock That
                Have
              Not
              Vested
              (#)
            
            Market
              Value of
              Shares or
              Unitsof
              Stock That
              Have Not
              Vested
              ($)
            
            Equity
              Incentive
              Plan
              Awards:
              Number of
              Unearned
              Shares,
              Units or
              Other
                Rights
              That Have
              Not Vested
              (#)
            
            Equity
              Incentive
              Plan
              Awards:
              Market or
              Payout
              Value of
              Unearned
              Shares,
              Units or
              Other Rights
              That Have
              Not Vested
              ($)Exercisable
            
            Unexercisable
            
            
            
            ($)Steven
                B. Lord
            
            
            -
            
            
            404,741
            
            
            0
            
            
            0.622
            
            
            2017
            
            
            0
            
            
            0
            
            
            0
            
            
            0




***Compensation
      of Directors***




Our
      directors have not received any compensation for their service to our
      Company.


23




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




As
      of
      March 31, 2008, the Company's authorized capitalization consisted of 100,000,000
      Shares, comprised of (i) 95,000,000 shares of Common Stock, of which 530,389
      shares were issued and outstanding; and (ii) 5,000,000 shares of Preferred
      Stock, 2,000,000 of which have been designated as Series A Preferred Stock,
      of
      which 541,667 were issued and outstanding, and 600,000 of which have been
      designated as Series B Preferred Stock, of which 517,520 were issued and
      outstanding. Holders of shares of capital stock have no preemptive rights to
      acquire or subscribe to any additional Shares.





Pursuant
      to our current Certificate of Incorporation and the provisions of the Delaware
      General Corporation law (the “DGCL”), the holders of the Preferred Stock vote
      with the holders of the Common Stock together, and not as a separate class,
      and
      are entitled to vote on all matters submitted to the stockholders. Each share
      of
      Common Stock entitles its holder to one vote on each matter submitted to the
      stockholders. Each share of Series A Preferred Stock and Series B Preferred
      Stock entitles its holder to such number of votes as is equal to the number
      of
      shares of Common Stock then issuable upon the conversion of the Series A
      Preferred Stock or Series B Preferred Stock, as the case may be.





The
      following table presents information, to the best of the Company's knowledge,
      relating to the beneficial ownership of Common Stock, Series A Preferred Stock
      and Series B Preferred Stock as of the Record Date, by those persons known
      to
      beneficially own more than 5% of each class of such shares and by its directors
      and executive officers.





**Name
                and Address**
            
            **Common Stock**
            
            **Series A Preferred Stock**
            
            **Series B Preferred Stock****Number**
            ****
            **%**
            ****
            **Number**
            ****
            **%**
            ****
            **Number**
            ****
            **%*****Beneficial
                Owners***E.
                Key Ramsey
              P.O.
                Box 2785
              Ridgeland,
                MS 39158
            
            
            51,995
            (1)
            
            9.8
            
            
            0
            
            
            0
            
            
            8,000
            
            
            1.5Gregory
                E. Ballard
              P.O.
                Box 2785
              Ridgeland,
                MS 39158
            
            
            52,709
            (2)
            
            9.9
            
            
            0
            
            
            0
            
            
            8,000
            
            
            1.5Danny
                M. Dunnaway
              875
                Northpark Drive, Bldg. 2, Suite 500
              Ridgeland,
                MS 39157
            
            
            30,749
            (3)
            
            5.8
            
            
            0
            
            
            0
            
            
            0
            
            
            0Duncan
                Capital Grp, LLC
              420
                Lexington Ave
              Ste
                450
              New
                York, NY 10170
            
            
            96,988
            (4)
            
            18.3
            
            
            250,000
            (4)
            
            46.1
            
            
            7,500
            (4)
            
            1.4CAMOFI
                Master LDC
              350
                Madison Avenue
              8th
                Floor
              New
                York, NY 10017
            
            
            0
            
            
            0
            
            
            83,333
            
            
            15.4
            
            
            201,058.4
            
            
            38.8Bushido
                Capital Partners,
              Ltd.
              145
                East 57th Street
              11th
                Floor
              New
                York, NY 10022
            
            
            0
            
            
            0
            
            
            208,333
            
            
            38.5
            
            
            96,147
            
            
            18.6BCMF
                Trustees, LLC
              145
                East 57th Street
              11th
                Floor
              New
                York, NY 10022
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            156,311
            
            
            30.2ACM
                SPV, LLC
              152
                West 57thStreet
              19thFloor
              New
                York, NY
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            31,392
            
            
            6.0***Directors
                and Executive Officers***John
                S. Gross
              415
                Bedford Road
              Suite
                104
              Pleasantville,
                NY 10570
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Steven
                B. Lord
              415
                Bedford Road
              Suite
                104
              Pleasantville,
                NY 10570
            
            
            0
            (5)
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Donald
                A. Bernard
              415
                Bedford Road
              Suite
                104
              Pleasantville,
                NY 10570
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Stephen
                R. Wilson
              1070
                Park Avenue
              New
                York, NY 10128
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0All
                Directors and
              Executive
                Officers as a
              Group
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0







*
      Less
      than 1% of the class.




24




(1)
      Includes (i) 44,413 shares owned individually and (ii) 8,282 shares held by
      Ramsey Children's' Trust.


(2)
      Includes (i) 42,292 shares owned individually and (ii) 11,042 shares held by
      Ballard Children's Trust.


(3)
      Includes (i) 3,044 shares through Danny M. Dunnaway, LLC in which Mr. Dunnaway
      owns a 90% membership interest; (ii) 861 shares owned by Mr. Dunnaway as
      custodian for a minor child; (iii) 2,511 shares held in an IRA account for
      Mr.
      Dunnaway; (iv) 8,510 shares owned by his wife; (v) 1,735 shares held in an
      IRA
      account for his wife; (vi) 4,130 shares owned by Danny M. Dunnaway Charitable
      Remainder Unitrust; (vii) 4,130 shares owned by the Danny M. Dunnaway
      Foundation; and (viii) 13,586 shares owned individually.


(4)
      Duncan Capital Group, LLC owns 41,667 shares of Series A Preferred Stock, and
      Bridges and PIPES, LLC owns 208,333 shares of Series A Preferred Stock and
      7,500
      shares of Series B Preferred Stock. In connection with the recent Restructuring
      transactions, certain
      holders of the Series A Preferred Stock elected to convert their shares of
      Series A Preferred Stock into shares of Common Stock, at the rate of 124.623
      shares of Common Stock for every share of Series A Preferred Stock. However,
      neither Duncan
      Capital Group, LLC nor Bridges and PIPES, LLC made such election.


(5)
      Excludes options to purchase 404,741 options to purchase shares of the Company’s
      Common Stock which were awarded pursuant to Mr. Lord’s employment agreement with
      the Company. The options vest ratably over three years commencing with the
      first
      anniversary of Mr. Lord’s employment, in June 2008.





Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and does not necessarily indicate beneficial ownership
      for
      any other purpose. Under these rules, beneficial ownership includes those shares
      of Common Stock over which the stockholder has sole or shared voting or
      investment power. It also includes shares of Common Stock that the stockholder
      has a right to acquire within 60 days through the exercise of any option,
      warrant or other right. The percentage ownership of the outstanding Common
      Stock, however, is based on the assumption, expressly required by the rules
      of
      the Securities and Exchange Commission, that only the person or entity whose
      ownership is being reported has converted options or warrants into shares of
      our
      Common Stock.




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




In
      conjunction with the Company’s capital and debt restructuring of June 2007,
      CAMOFI Master LDC (“CAMOFI”), in addition to being a holder of the Company’s
      common stock and series A and B preferred stock, purchased a majority of the
      Company’s senior secured convertible notes. Based on the voting and conversion
      rights of these securities, CAMOFI may be deemed to be a controlling shareholder
      of the Company.




**PART
      IV**




**ITEM
      13. EXHIBITS**




Exhibit
      No. Description




2.1
      Agreement and Plan of Reorganization, dated as of June 30, 2004, by and among
      Knobias Holdings, Inc., Consolidated Travel Systems, Inc. And KHI Acquisition,
      Inc., filed as an exhibit to the current report on Form 8-K filed with the
      Commission on July 14, 2004 and incorporated herein by reference.





2.2
      First
      Amendment to Agreement and Plan of Reorganization, dated as of October 25,
      2004,
      by and among Knobias Holdings, Inc., Consolidated Travel Systems, Inc. And
      KHI
      Acquisition, Inc., filed as an exhibit to the current report on Form 8-K filed
      with the Commission on November 19, 2004 and incorporated herein by
      reference.





3.1
      Certificate of Incorporation of the Company and all amendments thereto prior
      to
      the Merger transaction, filed as an exhibit to the registration statement on
      Form 10-SB filed with the Commission on November 9, 2001 and incorporated herein
      by reference.





3.2
      By-Laws of the Company prior to the Merger transaction, filed as an exhibit
      to
      the registration statement on Form 10-SB filed with the Commission on November
      9, 2001 and incorporated herein by reference.





3.3
      Amended and Restated Certificate of Incorporation of Knobias, Inc., filed as
      an
      exhibit to the current report on Form 8-K filed with the Commission on November
      19, 2004 and incorporated herein by reference.


25





3.4
      Amended and Restated Bylaws of Knobias, Inc., filed as an exhibit to the current
      report on Form 8-K filed with the Commission on November 19, 2004 and
      incorporated herein by reference.





3.5
      Certificate of Designation of Series A Preferred Stock of Knobias, Inc., filed
      as an exhibit to the current report on Form 8-K filed with the Commission on
      November 19, 2004 and incorporated herein by reference.





3.6
      Certificate of Merger of KHI Acquisition, Inc. with and into Knobias Holdings,
      Inc., filed as an exhibit to the current report on Form 8-K filed with the
      Commission on November 19, 2004 and incorporated herein by
      reference.





3.7
      Certificate of Designation of Series B Convertible Preferred Stock of Knobias,
      Inc., filed as an exhibit 3(a) to the current report on Form 8-K filed with
      the
      Commission on June 13, 2007 and incorporated herein by reference.





3.8
      Amended and Restated Certificate of Incorporation of Knobias, Inc., filed as
      an
      exhibit 3(a) to the current report on Form 8-K filed with the Commission on
      November 13, 2007 and incorporated herein by reference.





3.9
      Amendment to Bylaws of Knobias, Inc. filed as an exhibit 3(c) to the current
      report on Form 8-K filed with the Commission on June 13, 2007 and incorporated
      herein by reference.





4.1
      Instruments defining rights of holders, filed as an exhibit to the registration
      statement on Form 10-SB filed with the Commission on November 9, 2001 and
      incorporated herein by reference.





4.2
      Standby Equity Distribution Agreement dated as of November 15, 2004, by and
      between Cornell Capital Partners, LP and the Company, filed as an exhibit to
      the
      current report on Form 8-K filed with the Commission on November 19, 2004 and
      incorporated herein by reference.





4.3
      Registration Rights Agreement dated as of November 15, 2004, by and between
      Cornell Capital Partners, LP and the Company, filed as an exhibit to the current
      report on Form 8-K filed with the Commission on November 19, 2004 and
      incorporated herein by reference.





4.4
      Escrow Agreement dated as of November 15, 2004, by and among Cornell Capital
      Partners, LP, the Company and David Gonzalez, Esq., filed as an exhibit to
      the
      current report on Form 8-K filed with the Commission on November 19, 2004 and
      incorporated herein by reference.





4.5
      Placement Agent Agreement dated as of November 15, 2004, by and among Cornell
      Capital Partners, LP, the Company and incorporated herein by
      reference.





4.6
      Registration Rights Agreement dated as of November 15, 2004, by and among the
      Company and the holders of the Company's Series A Preferred Stock, filed as
      an
      exhibit to the current report on Form 8-K filed with the Commission on November
      19, 2004 and incorporated herein by reference.





4.7
      Securities Purchase Agreement dated as of November 15, 2004, by and between
      the
      Company and the Note Purchasers, filed as an exhibit to the current report
      on
      Form 8-K filed with the Commission on November 19, 2004 and incorporated herein
      by reference.





4.8
      Form
      of 8% Secured Convertible Note due November 1, 2006 of the Company, filed as
      an
      exhibit to the current report on Form 8-K filed with the Commission on November
      19, 2004 and incorporated herein by reference.





4.9
      Registration Rights Agreement dated as of November 15, 2004, by and between
      the
      Company and the Note Purchasers, filed as an exhibit to the current report
      on
      Form 8-K filed with the Commission on November 19, 2004 and incorporated herein
      by reference.





4.10
      Form
      of Common Stock Purchase Warrant dated November 15, 2004, issued by the Company
      to the Note Purchasers, filed as an exhibit to the current report on Form 8-K
      filed with the Commission on November 19, 2004 and incorporated herein by
      reference.





4.11
      Security Agreement dated as of November 15, 2004, by and between the Company
      and
      the Note Purchasers, filed as an exhibit to the current report on Form 8-K
      filed
      with the Commission on November 19, 2004 and incorporated herein by
      reference.





4.12
      Form
      of Subsidiary Guarantee dated as of November 15, 2004, filed as an exhibit
      to
      the current report on Form 8-K filed with the Commission on November 19, 2004
      and incorporated herein by reference.





4.13
      Form
      of Warrant issued to former holders of Knobias warrants, filed as an exhibit
      to
      the current report on Form 8-K filed with the Commission on November 19, 2004
      and incorporated herein by reference.


26





4.14
      Warrant to purchase 25,000 shares of common stock issued to Bridges and Pipes,
      LLC, filed as an exhibit to the current report on Form 8-K filed with the
      Commission on November 19, 2004 and incorporated herein by reference.





4.15
      Warrant to purchase 178,750 shares of common stock issued to Duncan Capital,
      LLC, filed as an exhibit to the current report on Form 8-K filed with the
      Commission on November 19, 2004 and incorporated herein by
      reference.





4.16
      Securities Purchase Agreement, dated as of March 15, 2005, by and between the
      Company and DCOFI Master LDC, filed as an exhibit to the current report on
      Form
      8-K filed with the Commission on March 21, 2005, and incorporated herein by
      reference.





4.17
      Form
      of 12% Senior Subordinate Secured Note, dated as of March 15, 2005, due
      September 1, 2006, of the Company issued to DCOFI Master LDC, filed as an
      exhibit to the current report on Form 8-K filed with the Commission on March
      21,
      2005, and incorporated herein by reference.





4.18
      Form
      of Common Stock Purchase Warrant, dated March 15, 2005, issued by the Company
      to
      DCOFI Master LDC, filed as an exhibit to the current report on Form 8-K filed
      with the Commission on March 21, 2005, and incorporated herein by
      reference.





4.19
      Security Agreement, dated as of March 15, 2005, by and between the Company
      and
      DCOFI Master LDC, filed as an exhibit to the current report on Form 8-K filed
      with the Commission on March 21, 2005, and incorporated herein by
      reference.





4.20
      Registration Rights Agreement, dated as of March 15, 2005, by and between the
      Company and DCOFI Master LDC, filed as an exhibit to the current report on
      Form
      8-K filed with the Commission on March 21, 2005, and incorporated herein by
      reference.





4.21
      Form
      of 12% Subordinate Promissory Note, dated as of April 7, 2005, due October
      7,
      2005, of the Company issued to Timothy J. Aylor, filed as an exhibit to the
      current report on Form 8-K filed with the Commission on April 28, 2005, and
      incorporated herein by reference.





4.22
      Form
      of Common Stock Purchase Warrant, dated as of April 7, 2005, issued by the
      Company to Timothy J. Aylor, filed as an exhibit to the current report on Form
      8-K filed with the Commission on April 28, 2005, and incorporated herein by
      reference.





4.23
      Form
      of 8% Convertible Promissory Note, dated as of April 22, 2005, of the Company
      issued to Bridges & PIPEs, LLC, filed as an exhibit to the current report on
      Form 8-K filed with the Commission on April 28, 2005, and incorporated herein
      by
      reference.





4.24
      Form
      of Common Stock Purchase Warrant, dated as of April 22, 2005, issued by the
      Company to Bridges & PIPEs, LLC, filed as an exhibit to the current report
      on Form 8-K filed with the Commission on April 28, 2005, and incorporated herein
      by reference.





4.25
      Line
      of Credit Agreement, dated as of April 27, 2005, by and between the Company
      and
      the Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.26
      Guaranty Agreement, dated as of April 27, 2005, by Robert Atkins in favor of
      the
      Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.27
      Guaranty Agreement, dated as of April 27, 2005, by Tim Aylor in favor of the
      Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.28
      Guaranty Agreement, dated as of April 27, 2005, by Gregory Ballard in favor
      of
      the Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.29
      Guaranty Agreement, dated as of April 27, 2005, by Danny M. Dunnaway in favor
      of
      the Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.30
      Guaranty Agreement, dated as of April 27, 2005, by E. Key Ramsey in favor of
      the
      Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.31
      Guaranty Agreement, dated as of April 27, 2005, by Joseph Stephens in favor
      of
      the Bank of Brookhaven, filed as an exhibit to the current report on Form 8-K/A
      filed with the Commission on May 10, 2005, and incorporated herein by
      reference.





4.32
      Form
      of 8% Convertible Promissory Note, of the Company issued to Bushido Capital
      Master Fund, LP, filed as an exhibit to the current report on Form 8-K filed
      with the Commission on March 1, 2006, and incorporated herein by
      reference.




27




4.33
      Securities Purchase Agreement dated as of June 6, 2007, filed as an exhibit
      to
      the current report on Form 8-K filed with the Commission on June 13, 2007,
      and
      incorporated herein by reference.





4.34
      Senior Secured Convertible Note of Knobias, Inc., due June 6, 2010, filed as
      an
      exhibit to the current report on Form 8-K filed with the Commission on June
      13,
      2007, and incorporated herein by reference.





4.35
      Registration Rights Agreement dated June 6, 2007, due June 6, 2010, filed as
      an
      exhibit to the current report on Form 8-K filed with the Commission on June
      13,
      2007, and incorporated herein by reference.





4.36
      Exchange Agreement dated June 6, 2007, due June 6, 2010, filed as an exhibit
      to
      the current report on Form 8-K filed with the Commission on June 13, 2007,
      and
      incorporated herein by reference.





4.37
      Series A Amendment Agreement and Consent dated June 6, 2007, due June 6, 2010,
      filed as an exhibit to the current report on Form 8-K filed with the Commission
      on June 13, 2007, and incorporated herein by reference.





4.38
      Subordinated Promissory Note from Knobias, Inc. to the Bank of Brookhaven,
      due
      June 6, 2010, filed as an exhibit to the current report on Form 8-K filed with
      the Commission on June 13, 2007, and incorporated herein by
      reference.





4.39
      Subordinated Promissory Note from Knobias, Inc. to Timothy Aylor, due June
      6,
      2010, filed as an exhibit to the current report on Form 8-K filed with the
      Commission on June 13, 2007, and incorporated herein by reference.





10.1
      Knobias, Inc. 2004 Stock Incentive Plan, filed as an exhibit to the current
      report on Form 8-K filed with the Commission on November 19, 2004 and
      incorporated herein by reference.





10.2
      Form
      of Option Agreement entered into with former holders of Knobias options, filed
      as an exhibit to the current report on Form 8-K filed with the Commission on
      November 19, 2004 and incorporated herein by reference.





10.3
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and E. Key Ramsey, filed as an exhibit to the registration statement
      on
      Form SB-2 filed with the Commission on December 30, 2004 and incorporated herein
      by reference.





10.4
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Robert L. Atkins, filed as an exhibit to the registration statement
      on Form SB-2 filed with the Commission on December 30, 2004 and incorporated
      herein by reference.





10.5
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Joseph L. Stephens, filed as an exhibit to the registration
      statement on Form SB-2 filed with the Commission on December 30, 2004 and
      incorporated herein by reference.





10.6
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Danny M. Dunnaway, filed as an exhibit to the registration statement
      on Form SB-2 filed with the Commission on December 30, 2004 and incorporated
      herein by reference.





10.7
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Gregory E. Ballard, filed as an exhibit to the registration
      statement on Form SB-2 filed with the Commission on December 30, 2004 and
      incorporated herein by reference.





10.8
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Timothy J. Aylor, filed as an exhibit to the registration statement
      on Form SB-2 filed with the Commission on December 30, 2004 and incorporated
      herein by reference.





10.9
      Indemnification Agreement, dated as of November 19, 2004, by and between the
      Company and Kevin T. Crow, filed as an exhibit to the registration statement
      on
      Form SB-2 filed with the Commission on December 30, 2004 and incorporated herein
      by reference.





10.10
      E.
      Key Ramsey Employment Agreement, filed as an exhibit to the registration
      statement on Form SB-2 filed with the Commission on December 30, 2004 and
      incorporated herein by reference.





10.11
      Greg Ballard Employment Agreement, filed as an exhibit to the registration
      statement on Form SB-2 filed with the Commission on December 30, 2004 and
      incorporated herein by reference.





10.12  Security
      Agreement dated June 6, 2007, filed as an exhibit to the current report on
      Form
      8-K filed with the Commission on June 13, 2007, and incorporated herein by
      reference.





10.13  Subsidiary
      Agreement and Guarantee dated June 6, 2007, filed as an exhibit to the current
      report on Form 8-K filed with the Commission on June 13, 2007, and incorporated
      herein by reference.




28




10.14  Employment
      Agreement between Knobias, Inc. and Steven B. Lord, dated June 6, 2007, filed
      as
      an exhibit to the current report on Form 8-K filed with the Commission on June
      13, 2007, and incorporated herein by reference.





21.1
      List
      of Subsidiaries, filed as an exhibit to the current report on Form 8-K filed
      with the Commission on November 19, 2004 and incorporated herein by
      reference.





31.1
      Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule
      15d-14(a), promulgated under the Securities and Exchange Act of 1934, as
      amended





31.2
      Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d
      14(a), promulgated under the Securities and Exchange Act of 1934, as
      amended





32.1
      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer)





32.2
      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer)




29




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





**Audit
      Fees**





The
      aggregate fees billed for professional services rendered by our independent
      registered public accounting firm for the audit of the registrant's annual
      financial statements and review of the financial statements included in the
      registrant's Form 10-QSBs or services that are normally provided by the
      accountant in connection with statutory and regulatory filings or engagements
      for fiscal years 2007 and 2006 were $87,100 and $58,700
      respectively.





**Audit-Related
      Fees**





None.





**Tax
      Fees**





None.





**All
      Other Fees**





None.





**Policy
      On Audit Committee Pre-Approval Of Audit And Permissible Non-Audit Services
      Of
      Independent Auditors**





Consistent
      with the policies and guidelines of the Securities and Exchange Commission
      regarding audit independence, the Audit Committee is responsible for the
      pre-approval of all audit and permissible non-audit services provided by our
      principal accountants on a case-by-case basis. Our Audit Committee has
      established a policy regarding approval of all audit and permissible non-audit
      services provided by our principal accountants. Our Audit Committee pre-
      approves these services by category and service. Our Audit Committee has
      pre-approved all of the services provided by our principal
      accountants.




30




**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the registrant has duly caused this report to be signed on our behalf
      by
      the undersigned, thereunto duly authorized.




**KNOBIAS,
                INC.**Dated:
                April 15, 2008
            
            By:
            /s/
                Steven B. LordSteven
                B. LordPresident,
                Chief Executive Officer(Principal
                Executive Officer)By:
            /s/
                Donald A. BernardDonald
                A. BernardChief
                Accounting Officer (PrincipalAccounting
                Officer)and Chief FinancialOfficer
                (Principal Financial Officer)




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





/s/
                Steven B. Lord
            
            Chief
                Executive Officer,Steven
                B.Lord
            
            President
                and Director
            
            April
                15, 2008/s/
                Donald A. Bernard
            
            Executive
                vice President,Donald
                A. Bernard
            
            Chief Financial Officer andSecretary
            
            April
                15, 2008/s/
                John S. Gross
            
            Director
            
            April
                15, 2008John
                S. Gross/s/
                Stephen R. Wilson
            
            Director
            
            April
                15, 2008Stephen
                R. Wilson




31