##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

For the quarterly period ended: September 30, 2008

or



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

For the transition period from:    to





DYNAMIC RESPONSE GROUP, INC.

(Name of Small Business Issuer in its Charter)







|                             |  |                          |  |                    
|---------------------------- |  | ------------------------ |  | -------------------
|Florida                      |  | 000-28201                |  | 52-2369185         
|(State or Other Jurisdiction |  | (Commission File Number) |  | (I.R.S. Employer   
|of Incorporation)            |  |                          |  | Identification No.)

4770 Biscayne Boulevard, Suite 780, Miami, FL, 33137

(Address of Principal Executive Office) (Zip Code)

305-576-6889

(Registrants telephone number, including area code)

4770 Biscayne Boulevard, Suite 1400, Miami, FL, 33137

(Former name or former address, if changed since last report)





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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 1 2b-2 of the Exchange
Act).     ̈  Yes    x  No

As of September 30, 2008, there were 91,073,066 shares of common stock issued and outstanding.









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##### Table of Contents

|                               |  |                                                                                        |  |   
|------------------------------ |  | -------------------------------------------------------------------------------------- |  | --
|PART I - FINANCIAL INFORMATION |  | 3                                                                                     
|                               |  |                                                                                       
|ITEM 1.                        |  | FINANCIAL STATEMENTS.                                                                  |  | 3 
|                               |  |                                                                                       
|ITEM 2.                        |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |  | 16
|                               |  |                                                                                       
|ITEM 3.                        |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.                            |  | 29
|                               |  |                                                                                       
|ITEM 4T.                       |  | CONTROLS AND PROCEDURES.                                                               |  | 29
|                               | 
|PART II - OTHER INFORMATION    |  | 30                                                                                    
|                               |  |                                                                                       
|ITEM 1.                        |  | LEGAL PROCEEDINGS.                                                                     |  | 30
|                               |  |                                                                                       
|ITEM 1A.                       |  | RISK FACTORS.                                                                          |  | 30
|                               |  |                                                                                       
|ITEM 2.                        |  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.                           |  | 32
|                               |  |                                                                                       
|ITEM 3.                        |  | DEFAULTS UPON SENIOR SECURITIES.                                                       |  | 32
|                               |  |                                                                                       
|ITEM 4.                        |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                                   |  | 32
|                               |  |                                                                                       
|ITEM 5.                        |  | OTHER INFORMATION.                                                                     |  | 32
|                               |  |                                                                                       
|ITEM 6.                        |  | EXHIBITS.                                                                              |  | 33



2



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##### Table of Contents

PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

DYNAMIC RESPONSE GROUP, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---------------- | - | ----------- | -
|                                                                                                                                                                             |  | September 30,2008 |             |   | December 31,2007 |  
|                                                                                                                                                                             |  |                  
|                                                                                                                                                                             |  | (Unaudited)       |             |   | (Audited)        |  
|ASSETS                                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Current Assets:                                                                                                                                                              |  |                   |             |   |                  |   |             |  
|Cash                                                                                                                                                                         |  | $                 | 366,903     |   |                  | $ | 571,571     |  
|Accounts receivable, net                                                                                                                                                     |  |                   | 1,287,489   |   |                  |   | 1,656,618   |  
|Inventory, net                                                                                                                                                               |  |                   | 360,704     |   |                  |   | 566,899     |  
|Direct response advertising cost                                                                                                                                             |  |                   | 637,619     |   |                  |   | 186,463     |  
|Deferred tax asset                                                                                                                                                           |  |                   | 231,308     |   |                  |   |            |  
|Prepaid expenses and other current assets                                                                                                                                    |  |                   | 207,418     |   |                  |   | 103,517     |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total current assets                                                                                                                                                         |  |                   | 3,091,441   |   |                  |   | 3,085,068   |  
|Property and equipment-net                                                                                                                                                   |  |                   | 42,871      |   |                  |   | 29,835      |  
|Product prototype                                                                                                                                                            |  |                   | 10,500      |   |                  |   | 10,500      |  
|Intangible assets-trademark and patent                                                                                                                                       |  |                   | 1,540,000   |   |                  |   | 1,340,150   |  
|Restricted cash                                                                                                                                                              |  |                   | 225,067     |   |                  |   | 10,000      |  
|Other assets                                                                                                                                                                 |  |                   | 78,039      |   |                  |   | 24,188      |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total assets                                                                                                                                                                 |  | $                 | 4,987,918   |   |                  | $ | 4,499,741   |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                        |  |                   |             |   |                  |   |             |  
|Current Liabilities:                                                                                                                                                         |  |                   |             |   |                  |   |             |  
|Accounts payable and accrued expenses                                                                                                                                        |  | $                 | 6,455,510   |   |                  | $ | 4,253,707   |  
|Due to related parties                                                                                                                                                       |  |                   | 176,307     |   |                  |   | 279,411     |  
|Convertible promissory notes                                                                                                                                                 |  |                   | 2,130,858   |   |                  |   | 2,166,858   |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total current liabilities                                                                                                                                                    |  |                   | 8,762,675   |   |                  |   | 6,699,976   |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Commitments and contingencies                                                                                                                                                |  |                   |             |   |                  |   |             |  
|                                                                                                                                                                             |  |                  
|Stockholders Deficit:                                                                                                                                                       |  |                   |             |   |                  |   |             |  
|Common stock; $.0001 par value, 100,000,000 shares authorized, 91,073,066 and 85,273,066 issued and outstanding as of September 30, 2008
and December 31, 2007, respectively |  |                   | 8,527       |   |                  |   | 8,527       |  
|Additional paid-in capital                                                                                                                                                   |  |                   | 14,317,923  |   |                  |   | 14,317,923  |  
|Accumulated deficit                                                                                                                                                          |  |                   | (18,101,207 | ) |                  |   | (16,526,685 | )
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total stockholders deficit                                                                                                                                                  |  |                   | (3,774,757  | ) |                  |   | (2,200,235  | )
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  
|Total liabilities and stockholders deficit                                                                                                                                  |  | $                 | 4,987,918   |   |                  | $ | 4,499,741   |  
|                                                                                                                                                                             |  |                   |             |   |                  |   |             |  

See the accompanying notes to financial statements



3



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DYNAMIC RESPONSE GROUP, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|------------------------------------------------------------ |  | --------------------------------------- | ---------- | - | -------------------------------------- | - | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                                             |  | For the Three Months EndedSeptember 30, |            |   | For the Nine Months EndedSeptember 30, |  
|                                                             |  | 2008                                    |            |   | 2007                                   |   |            | 2008 |  |   | 2007       |  
|Gross revenues                                               |  | $                                       | 10,783,816 |   |                                        | $ | 4,773,530  |      |  | $ | 30,344,093 |   |  | $ | 12,715,685 |  
|Sales returns and allowances                                 |  |                                         | 1,125,527  |   |                                        |   | 1,357,587  |      |  |   | 5,415,331  |   |  |   | 3,838,375  |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Net revenues                                                 |  |                                         | 9,658,289  |   |                                        |   | 3,415,943  |      |  |   | 24,928,762 |   |  |   | 8,877,310  |  
|Cost of revenues                                             |  |                                         | 2,621,745  |   |                                        |   | 403,022    |      |  |   | 5,638,261  |   |  |   | 999,466    |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Gross profit                                                 |  |                                         | 7,036,544  |   |                                        |   | 3,012,921  |      |  |   | 19,290,501 |   |  |   | 7,877,844  |  
|Operating expenses:                                          |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Selling and marketing                                        |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Media and advertising                                        |  |                                         | 2,814,617  |   |                                        |   | 1,128,743  |      |  |   | 9,312,777  |   |  |   | 3,009,062  |  
|Fulfillment and shipping                                     |  |                                         | 1,254,292  |   |                                        |   | 496,245    |      |  |   | 3,230,138  |   |  |   | 1,146,328  |  
|Commissions                                                  |  |                                         | 222,536    |   |                                        |   | 239,576    |      |  |   | 1,338,553  |   |  |   | 1,246,346  |  
|Call Center                                                  |  |                                         | 549,317    |   |                                        |   | 143,089    |      |  |   | 1,403,978  |   |  |   | 409,261    |  
|Royalties                                                    |  |                                         | 257,194    |   |                                        |   | 2,400      |      |  |   | 661,122    |   |  |   | 16,900     |  
|Other                                                        |  |                                         | 87,634     |   |                                        |   | 12,862     |      |  |   | 294,304    |   |  |   | 124,619    |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total selling and marketing                                  |  |                                         | 5,185,590  |   |                                        |   | 2,022,915  |      |  |   | 16,240,872 |   |  |   | 5,952,516  |  
|Merchant charges                                             |  |                                         | 425,367    |   |                                        |   | 133,658    |      |  |   | 1,178,553  |   |  |   | 435,460    |  
|General and administrative                                   |  |                                         | 1,463,961  |   |                                        |   | 815,957    |      |  |   | 3,435,021  |   |  |   | 1,907,327  |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total operating expenses                                     |  |                                         | 7,074,918  |   |                                        |   | 2,972,530  |      |  |   | 20,854,446 |   |  |   | 8,295,303  |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Income (loss) from operations                                |  |                                         | (38,374    | ) |                                        |   | 40,391     |      |  |   | (1,563,945 | ) |  |   | (417,459   | )
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Other income (expense):                                      |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Other income                                                 |  |                                         |           |   |                                        |   | 7,230      |      |  |   | 14,198     |   |  |   | 20,162     |  
|Interest income                                              |  |                                         | 35         |   |                                        |   |           |      |  |   | 220        |   |  |   |           |  
|Interest expense                                             |  |                                         | (78,253    | ) |                                        |   | (69,851    | )    |  |   | (256,303   | ) |  |   | (239,393   | )
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Total other expense                                          |  |                                         | (78,218    | ) |                                        |   | (62,621    | )    |  |   | (241,885   | ) |  |   | (219,231   | )
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Loss before income taxes                                     |  |                                         | (116,592   | ) |                                        |   | (22,230    | )    |  |   | (1,805,830 | ) |  |   | (636,690   | )
|Benefit from income taxes                                    |  |                                         |           |   |                                        |   |           |      |  |   | 231,308    |   |  |   |           |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Net loss                                                     |  | $                                       | (116,592   | ) |                                        | $ | (22,230    | )    |  | $ | (1,574,522 | ) |  | $ | (636,690   | )
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted weighted average common shares outstanding |  |                                         | 90,624,733 |   |                                        |   | 81,457,984 |      |  |   | 89,250,986 |   |  |   | 73,580,216 |  
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  
|Basic and diluted loss per share                             |  | $                                       |           |   |                                        | $ |           |      |  | $ | (0.02      | ) |  | $ | (0.01      | )
|                                                             |  |                                         |            |   |                                        |   |            |      |  |   |            |   |  |   |            |  

See the accompanying notes to financial statements



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DYNAMIC RESPONSE GROUP, INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)



|                                                                           |  |                                        |            |   |      |   |          |  
|-------------------------------------------------------------------------- |  | -------------------------------------- | ---------- | - | ---- | - | -------- | -
|                                                                           |  | For the Nine Months EndedSeptember 30, |           
|                                                                           |  | 2008                                   |            |   | 2007 |  
|Cash flows from operating activities:                                      |  |                                        |            |   |      |   |          |  
|Net loss                                                                   |  | $                                      | (1,574,522 | ) |      | $ | (636,690 | )
|Adjustments to reconcile net loss to net cash used in operating activities |  |                                        |            |   |      |   |          |  
|Depreciation                                                               |  |                                        | 10,025     |   |      |   |         |  
|Provision for returns                                                      |  |                                        | 62,000     |   |      |   | 55,000   |  
|Allowance for doubtful accounts                                            |  |                                        | 50,000     |   |      |   | 55,000   |  
|Changes in assets and liabilities:                                         |  |                                        |            |   |      |   |          |  
|Accounts receivable                                                        |  |                                        | 319,130    |   |      |   | (63,297  | )
|Inventory                                                                  |  |                                        | 144,195    |   |      |   | (183,393 | )
|Direct response advertising costs                                          |  |                                        | (451,156   | ) |      |   |         |  
|Prepaid expenses and other current assets                                  |  |                                        | (103,901   | ) |      |   | 73,618   |  
|Deferred tax asset                                                         |  |                                        | (231,308   | ) |      |   |         |  
|Restricted cash                                                            |  |                                        | (215,067   | ) |      |   |         |  
|Other assets                                                               |  |                                        | (53,851    | ) |      |   | (20,422  | )
|Accounts payable and accrued expenses                                      |  |                                        | 2,201,803  |   |      |   | (7,808   | )
|                                                                           |  |                                        |            |   |      |   |          |  
|Net cash provided by (used in) operating activities                        |  |                                        | 157,348    |   |      |   | (727,992 | )
|                                                                           |  |                                        |            |   |      |   |          |  
|Cash flows used in investing activities:                                   |  |                                        |            |   |      |   |          |  
|Capital expenditures                                                       |  |                                        | (23,062    | ) |      |   |         |  
|Payments toward patent agreement                                           |  |                                        | (199,850   | ) |      |   | (187,500 | )
|                                                                           |  |                                        |            |   |      |   |          |  
|Net cash used in investing activities                                      |  |                                        | (222,912   | ) |      |   | (187,500 | )
|                                                                           |  |                                        |            |   |      |   |          |  
|Cash flows from financing activities:                                      |  |                                        |            |   |      |   |          |  
|Proceeds from shareholder loans                                            |  |                                        |           |   |      |   | 222,579  |  
|Net repayment of related party loans                                       |  |                                        | (103,104   | ) |      |   | 208,319  |  
|Repayment of promissory note                                               |  |                                        | (36,000    | ) |      |   | (100,000 | )
|Proceeds from issuance of convertible promissory notes                     |  |                                        |           |   |      |   | 619,858  |  
|                                                                           |  |                                        |            |   |      |   |          |  
|Net cash provided by (used in) financing activities                        |  |                                        | (139,104   | ) |      |   | 950,756  |  
|                                                                           |  |                                        |            |   |      |   |          |  
|Net increase (decrease) in cash                                            |  |                                        | (204,668   | ) |      |   | 35,264   |  
|Cash, beginning of period                                                  |  |                                        | 571,571    |   |      |   | 364,121  |  
|                                                                           |  |                                        |            |   |      |   |          |  
|Cash, end of period                                                        |  | $                                      | 366,903    |   |      | $ | 399,385  |  
|                                                                           |  |                                        |            |   |      |   |          |  
|Supplemental disclosures of cash flow information:                         |  |                                        |            |   |      |   |          |  
|Cash paid for taxes                                                        |  | $                                      |           |   |      | $ |         |  
|                                                                           |  |                                        |            |   |      |   |          |  
|Cash paid for interest                                                     |  | $                                      | 292,303    |   |      | $ | 239,393  |  
|                                                                           |  |                                        |            |   |      |   |          |  

See the accompanying notes to financial statements



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

NOTE 1 - NATURE OF BUSINESS

Dynamic Response Group, Inc., (the
Company), is a leading innovative strategic marketing company engaged in the business of Electronic & Multi Media Retailing, including print, radio, television and the internet and considers itself an emerging leader in the
use of direct response transactional television programming, known as infomercials, to market consumer products.

NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, the Companys operating and capital requirements in connection with operations have been and will continue to
be significant. The recurring losses from operations raise doubt about the Companys ability to continue as a going concern. Based on current plans, the Company anticipates that revenues earned from product sales will be the primary source of
funds for operating activities. Our ability to continue as a going concern is dependent upon our ability to generate sales from our new products and our obtaining adequate capital to fund losses until we become profitable. There can be no assurance
that managements plans will be successful.

The financial statements have been prepared on a going concern basis and accordingly do not
include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 - BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying consolidated financial statements include the results of operations of all majority owned subsidiaries of the Company. The results of operations of these
companies are accounted for using the consolidated method of accounting. All material inter-company accounts and transactions have been eliminated.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim reporting

The accompanying interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 2008 and the related operating results and cash flows for the interim period presented have been
made. The results of operations of such interim period are not necessarily indicative of the results of the full year. This financial information should be read in conjunction with the Consolidated Financial Statements and Notes thereto
included in the Companys Annual Report on Form 10-KSB for the year ended December 31, 2007.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



Reclassification

Certain amounts in the prior period financial statements have been reclassified for comparative purposes to conform to the presentation in the current year financial statements.

Use of estimates

In preparing financial statements in conformity with accounting principles generally accepted in
the United States, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. Actual results will differ from those estimates. Significant estimates during the periods include the provision for doubtful accounts, provision for product returns, evaluation of obsolete inventory, and the
useful life of long-term assets, such as property, plant and equipment.

Revenue recognition

The Company recognizes product revenue, net of estimated sales discounts and returns and allowances, in accordance with Staff Accounting Bulletin (SAB) No. 104,
Revenue Recognition in Financial Statements, which established that revenue can be recognized when persuasive evidence of an arrangement exists, the product has been shipped, all significant contractual obligations have been satisfied,
the fee is fixed or determinable and collection is reasonably assured. In addition, the Company recognizes product revenue in accordance with Statement of Financial Accounting Standard (SFAS) No. 48 Revenue Recognition When Right of
Return Exists. This statement requires that in order to recognize revenue at the point of sale when the buyer has a return privilege, the amount of future returns must be reasonably estimable by the seller company.

Fair value of financial instruments

The carrying amounts of
financial instruments, including cash, accounts receivable, lines of credit and accounts payable and accrued expenses approximate fair value at September 30, 2008 because of the relatively short maturity of the instruments. The carrying value
of long-term debt and convertible promissory notes approximate fair value at September 30, 2008 based upon terms available for companies under similar arrangements.

Cash and cash equivalents

The Company considers all highly liquid debt securities purchased with original or
remaining maturities of three months or less to be cash equivalents. The carrying value of cash equivalents approximates fair value.

Restricted cash

In accordance with Accounting Review Board (ARB) No. 43, Chapter 3A Current Assets and Current Liabilities, cash which is restricted
as to withdrawal is considered to be a noncurrent asset. Restricted cash consists of a reserve for credit card processing of approximately $10,067, which the Company holds in a separate escrow account as required by its third party inventory
fulfillment center. This amount is classified as non-current.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



The Company also maintains a cash account of approximately $215,000 as a reserve for future credit card returns as
required by a credit card processor.

Accounts receivable

Accounts receivable are reported at net realizable value. The Company has established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information.
Delinquent accounts are written-off when it is determined that the amounts are uncollectible. At September 30, 2008, the provision for doubtful accounts was $135,531.

Inventories

Inventories consist of finished goods and are stated at the lower of cost or market, with cost being
determined by the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon
assumptions about future demand and market conditions. The Company writes down inventory during the period in which such products are considered no longer effective.

Property and equipment

Property and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is recorded on the straight-line basis over the estimated useful lives of the assets, which range from three to ten years. Normal maintenance and repairs of property and equipment are expensed as incurred while renewals, betterments and
major repairs that materially extend the useful life of property and equipment are capitalized. Upon retirement or disposition of property and equipment, the asset and related accumulated depreciation or amortization is removed from the accounts and
any resulting gain or loss is charged to operations.

Intangible assets

The Company accounts for intangible assets in accordance with SFAS No. 142 Goodwill and Other Intangible Assets. Generally, intangible assets with indefinite lives, and goodwill, are no longer
amortized; they are carried at lower of cost or market and subject to annual impairment evaluation, or interim impairment evaluation if an interim triggering event occurs, using a new fair market value method. Intangible assets with finite lives are
amortized over those lives, with no stipulated maximum, and an impairment test is performed only when a triggering event occurs. Such assets are amortized on a straight-line basis over the estimated useful life of the asset.

Intangible assets consist of license payments made in accordance with an agreement to purchase the formula and patent used in the Companys primary product. The
Company considers the patent to have an indefinite life.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



Income taxes

The
Company uses the liability method for income taxes as required by SFAS No. 109 Accounting for Income Taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and
tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when it is more likely
than not that the deferred tax assets will not be realized.

Shipping and handling costs

Shipping and handling costs are included as selling, general and administrative expense, in accordance with guidance established by the Emerging Issues Task Force (EITF)
No. 00-10, Accounting for Shipping and Handling Costs. EITF 00-10 permits companies to adopt a policy of including shipping and handling costs in cost of sales or other income statement line items.

Advertising

Advertising costs are expensed as incurred, except for
direct response advertising. Direct response advertising consists primarily of costs associated with eliciting sales to customers, principally the direct response television advertising, and the e-commerce catalog mailings. In accordance with the
American Institute of Certified Public Accountants Statement of Position (SOP) 93-7, Reporting on Advertising Costs, these capitalized direct response advertising costs are amortized over the period during which the future benefits
are expected to be received, generally six to twelve months.

The Company incurred media and advertising expenses of $9,312,777 and $3,009,062 during the
nine months ended for 2008 and 2007, respectively. The Company capitalized direct response advertising costs of approximately $188,050 during the three months ended September 30, 2008. The balance of direct response advertising costs as of
September 30, 2008 is $637,619 and is classified as a current asset.

Income (loss) per share

The Company presents basic income (loss) per share and diluted earnings per share in accordance with the provisions of SFAS No. 128 Earnings per Share.

Under SFAS No. 128, basic net loss per share is computed by dividing the net loss for the year by the weighted average number of common shares
outstanding during the year. Diluted net loss per share is computed by dividing the net loss for the year by the weighted average number of common shares and common share equivalents outstanding during the year.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



Provision for Returns

In the normal course of business, the Company does not provide stock-balancing or price protection rights to its distributors; however, on a non-recurring basis, the Company has accepted product returns. Management establishes provisions
for estimated returns concurrently with the recognition of revenue. The provisions are established based upon consideration of a variety of factors, including, among other things, recent and historical return rates for both specific distributors and
projected economic conditions.

Concentration of credit risks

The Company is subject to concentrations of credit risk primarily from cash and cash equivalents and accounts receivable. The Company maintains accounts with financial institutions, which at times exceeds the insured Federal Deposit
Insurance Corporation limit of $100,000. The Company minimizes its credit risks associated with cash by periodically evaluating the credit quality of its primary financial institutions.

The Companys accounts receivables are due from the individuals to which it markets its products. The Company does not require collateral to secure its accounts receivables. No customers accounted for more than
10% of its net accounts receivables.

Supplier concentration risk

The Company currently buys two of its major products exclusively from two different suppliers. Although there are a limited number of manufacturers of these particular products, management believes that other
suppliers could provide similar products on comparable terms. A change in suppliers, however, could cause a delay in our ability to procure these products and a possible loss of sales, which would affect operating results adversely.

NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS

Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities

In June 2008, the FASB issued FSP EITF No. 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting
and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The FSP affects entities that accrue dividends on share-based payment awards during the awards service period when the
dividends do not need to be returned if the employees forfeit the award. This FSP is effective for fiscal years beginning after December 15, 2008. The Company does not believe that the adoption of FSP EITF 03-6-1 will have any impact on its
consolidated financial position and results of operations.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an entitys Own Stock

In June 2008, the FASB ratified EITF No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entitys Own
Stock (EITF 07-5). EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instruments
contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years
beginning after December 15, 2008. The Company currently has no such instruments and its adoption of EITF 07-5 will have no impact on its consolidated financial position and results of operations at this time.

Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)

In May 2008, the FASB issued FSP Accounting Principles Board (APB) Opinion No. 14-1, Accounting for Convertible Debt Instruments That
May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). The FSP clarifies the accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The FSP
requires issuers to account separately for the liability and equity components of certain convertible debt instruments in a manner that reflects the issuers nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized.
The FSP requires bifurcation of a component of the debt, classification of that component in equity and the accretion of the resulting discount on the debt to be recognized as part of interest expense in our consolidated statement of operations. The
FSP requires retrospective application to the terms of instruments as they existed for all periods presented. The FSP is effective for us as of January 1, 2009 and early adoption is not permitted. The Company is currently evaluating the
potential impact of FSP APB 14-1 upon its consolidated financial statements.

The Hierarchy of Generally Accepted Accounting Principles

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS No. 162). SFAS No. 162 identifies
the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS No. 162 is effective 60 days following the SECs approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The implementation of this standard will not have a material impact on the Companys consolidated
financial position and results of operations.

Determination of the Useful Life of Intangible Assets

In April 2008, the FASB issued FASB Staff Position on Financial Accounting Standard (FSP FAS) No. 142-3, Determination of the Useful Life of
Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under SFAS No. 142 Goodwill and Other Intangible
Assets. The



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



intent of this FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of the
expected cash flows used to measure the fair value of the asset under SFAS No. 141 (revised 2007) Business Combinations and other U.S. generally accepted accounting principles. The Company is currently evaluating the potential
impact of FSP FAS No. 142-3 on its consolidated financial statements.

Disclosure about Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, Disclosure about Derivative Instruments and Hedging Activities, an amendment of
SFAS No. 133, (SFAS No. 161). This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The Company is required to adopt SFAS No. 161 on
January 1, 2009. The Company does not believe that SFAS No. 161 will have any impact on the Companys consolidated financial statements at this time.

Delay in Effective Date

In February 2008, the FASB issued FSP FAS No. 157-2, Effective Date of FASB
Statement No. 157. This FSP delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to
fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. The impact of adoption was not material to the Companys consolidated financial condition or results of operations.

Business Combinations

In December 2007, the FASB issued SFAS
No. 141(R) Business Combinations (SFAS No. 141(R)). This Statement replaces the original SFAS No. 141. This Statement retains the fundamental requirements in SFAS No. 141 that the acquisition method of accounting
(which SFAS No. 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. The objective of SFAS No. 141(R) is to improve the relevance, and
comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, SFAS No. 141(R) establishes principles and requirements for how the acquirer:



| | a. | Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.
| | -- | ------------------------------------------------------------------------------------------------------------



| | c. | Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. The Company does not believe that adoption of SFAS No. 141(R) will have any impact on its consolidated results of operations and
financial condition.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51

In December 2007, the FASB issued SFAS No. 160 Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51 (SFAS
No. 160). This Statement amends the original Accounting Review Board (ARB) No. 51 Consolidated Financial Statements to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective
for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and may not be applied before that date. The Company does not believe that its adoption of SFAS No. 160 will have a material impact on
its consolidated results of operations and financial condition.

Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of SFAS
No. 115 (SFAS No. 159), which becomes effective for the Company on February 1, 2008, permits companies to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses
in earnings. Such accounting is optional and is generally to be applied instrument by instrument. The Company does not anticipate that the election of this fair-value option has a material impact on its consolidated financial condition, results of
operations, cash flows or disclosures.

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. SFAS No. 157 addresses the
requests from investors for expanded disclosure about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS
No. 157 applies whenever other standards require (or permit) assets or liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007 and will be adopted by the Company in the first quarter of fiscal year 2008. The Company does not believe that its adoption of SFAS No. 157 will have a material impact on its consolidated
results of operations and financial condition.

NOTE 6 - CONVERTIBLE PROMISSORY NOTES

The Company has extended the initial maturity dates of convertible promissory notes issued in 2005 and 2006. These convertible promissory notes allow for conversion to common stock prior to maturity date or repayment
of principal plus interest on the date of maturity, which was one year from the date of issuance. After extension, the notes will now mature between late 2009 and early 2010. The convertible promissory notes totaled $2,130,858 as of
September 30, 2008.



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



NOTE 7 - INVENTORIES

Inventories at September 30, 2008 and December 31, 2007 consist of the following:



|               |  |      |         |   |      |   |         |  
|-------------- |  | ---- | ------- | - | ---- | - | ------- | -
|               |  | 2008 |         |   | 2007 |  
|Finished goods |  | $    | 369,413 |   |      | $ | 637,535 |  
|Reserves       |  |      | (8,709  | ) |      |   | (70,636 | )
|               |  |      |         |   |      |   |         |  
|Inventory, net |  | $    | 360,704 |   |      | $ | 566,899 |  
|               |  |      |         |   |      |   |         |  

NOTE 8 - INCOME TAXES

The benefit from income taxes from continued operations for the six months ended June 30, 2008 and 2007 consists of the following:



|                                                 |  |      |          |   |      |   |          |  
|------------------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                                 |  | 2008 |          |   | 2007 |  
|Current:                                         |  |      |          |   |      |   |          |  
|Federal                                          |  | $    |         |   |      | $ |         |  
|State                                            |  |      |         |   |      |   |         |  
|Deferred:                                        |  |      |          |   |      |   |          |  
|Federal                                          |  |      | (251,542 | ) |      |   | (225,000 | )
|State                                            |  |      |         |   |      |   |         |  
|Benefit from the decrease in valuation allowance |  |      | 20,434   |   |      |   | 225,000  |  
|                                                 |  |      |          |   |      |   |          |  
|Benefit for income taxes, net                    |  | $    | (231,308 | ) |      | $ |         |  
|                                                 |  |      |          |   |      |   |          |  

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual
income tax expense is as follows:



|                                  |  |       |   
|--------------------------------- |  | ----- | --
|Statutory federal income tax rate |  | 35.0  | % 
|Decrease in valuation allowance   |  | (81.0 | )%
|State income taxes                |  | 5.5   | % 
|Other                             |  |      | % 
|Valuation allowance               |  | (40.5 | )%
|                                  |  |       |   
|Effective tax rate                |  | (0.0  | )%
|                                  |  |       |   

Deferred income taxes result from temporary differences in the recognition of income and expenses for financial
reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax assets and liabilities result principally from the following:



|                                |  |      |           
|------------------------------- |  | ---- | ----------
|                                |  | 2008
|Net operating loss-carryforward |  | $    | 16,694,363
|expiring between 2019-2028      |  |      |          
|Depreciation and amortization   |  |      |          
|Other                           |  |      |          
|                                |  |      |           
|Deferred income tax asset       |  | $    | 16,694,363
|                                |  |      |           



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DYNAMIC RESPONSE GROUPS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2008



The net deferred tax assets and liabilities are comprised of the following:



|                              |  |      |            |  
|----------------------------- |  | ---- | ---------- | -
|                              |  | 2008 |           
|Deferred tax assets:          |  | $    |           |  
|Current                       |  |      |           |  
|Non-current                   |  |      | 6,761,217  |  
|Less: valuation allowance     |  |      | (6,529,909 | )
|                              |  |      |            |  
|Net deferred income tax asset |  | $    | 231,308    |  
|                              |  |      |            |  



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Throughout this quarterly report on Form 10-Q (the Report), the terms DRG, Dynamic Response, the Company,
we, our, and us refer to Dynamic Response Group, Inc., a Florida corporation.

Cautionary Note Regarding
Forward-Looking Statements

This Report contains forward-looking statements that relate to, among other things, our business strategy;
the market opportunity for our products, including expected demand for our products; our estimates regarding our capital requirements; and other plans, objectives, and intentions. Any statements contained in this Report that are not statements of
historical fact may be deemed to be forward-looking statements, including any statements relating to future actions and outcomes including but not limited to prospective products, future performance or results of current or anticipated products,
sales and marketing efforts, costs and expense trends, future interest rates, outcome of contingencies and their future impact on financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and
other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as expects, anticipates, targets, goals,
projects, intends, plans, believes, seeks, estimates, may, will, should, contemplates, predicts,
potential, or continue or variations and/or the negative of these similar terms. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, our future performance,
our beliefs and our Managements assumptions. All forward-looking statements made in this Report, including any future written or oral statements made by us or on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section.

These forward-looking statements are not guarantees of future performance and involve risks,
uncertainties and assumptions that we cannot predict. Any assumptions, upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this Report. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking
statements. Please refer to Part II, Item 7 under Liquidity and Capital Resources and under Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2007 for additional discussion. We
assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.



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##### Table of Contents

Overview

We are a marketing company, developer and distributor of branded lifestyle products and solutions designed to appeal to consumers who value personal development, wellness, spirituality and entertainment. Our success depends in part on our
ability to offer products that reflect consumers tastes and preferences and therefore, items are added and removed from our product line accordingly. Our current line of products include:



| |  |  | ProCede - a hair thickening treatment system for men with thinning hair.
| | - |  | ------------------------------------------------------------------------



| |  |  | Riddex Plus - an electronic pest control product that incorporates patented Digital Pulse Technology to create an irritating environment for rodents, roaches
and other pests inside walls, chasing them from homes and preventing future pests from entering.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Legends of Soul - a DVD and CD series of current concerts of ten classic soul artists.
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | Turbo Cooker -steams, bakes, roasts and fries with easy clean-up. The Turbo Cooker has internal steam racks that cook different entrees on multiple layers
allowing for preparation of a full course meal all in one unit.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition to the products we currently offer, we have
several products in varying stages of testing and development as follows:



| |  |  | Spin Fryer - a patented technology that allows for the cooking of fried foods with 50% less oil on the food after cooking. This product is in the development
and design stage, has not been market tested and is not slated for testing until early 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Polar Delight - a patented technology that allows for the creation of low calorie, gourmet style deserts using a secret formula of ingredients that is
prepackaged for the consumer. This product has not been market tested and is not slated for testing until later this year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vibio - an exercise platform wholly owned and developed by us. It is currently in the testing phase and we anticipate rolling out and sourcing this product
in late 2008 in time for the first of the year exercise demand when consumers renew their interest in health and weight loss.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | AbFlexer - a patented product that targets the muscles of the abdomen. Wee are currently under contract with the product owner and have begun testing to make
a determination as to market viability for the first of the year health and weight loss shopping.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Areopedic - a mattress topper, constructed from high quality memory foam, with adjustable functions, providing adjustable support with the push of a button.
The difference is noticeable when added to an existing mattress for better quality sleep. Also designed to adjust both sides independently.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

We market and sell our products and programs through print catalogs, radio, direct mail but focus our
selling efforts primarily on direct response television (DRTV) programming and the Internet. DRTV is television advertising that asks consumers to respond directly to us, either by calling an 800 number or by visiting one of our product
web sites. DRTV programming is available to us through licensed distributors to more than 370 million households in seventy countries worldwide, including Argentina, Australia, Austria, Belarus, the Benelux countries, Brazil, China, Denmark,
Ecuador, most Eastern European countries, Finland, France, Germany, Greece, Ireland, Italy, Japan, Mexico, most Middle Eastern countries, New Zealand, Norway, Peru, Portugal, Russia, Spain, most South American countries, Sweden, Switzerland, Taiwan,
Turkey, Ukraine and the United Kingdom. Internationally, the infomercials are aired on one or more of three technologies by licensed distributors: (i) satellite transmission; (ii) cable operators who retransmit satellite broadcasts, and
(iii) terrestrial broadcast television. Domestically, we purchase most of our cable television time directly from cable networks and their respective media representatives. In addition to airtime purchased on cable networks, we purchase
broadcast television time from network affiliates and independent stations. Broadcast television time segments are purchased primarily in 30-minute spots.

We use the Internet to sell our products and to provide information for each product to consumers. We offer each of our products through their own websites and promote our websites through visual media, catalogs,
print publications, product packaging and Internet links.

We outsource order fulfillment, inventory management and customer service
through Planet E Shop and Innotrac Corporation that allow us to distribute our products, just-in-time, from fulfillment centers located in Dallas, Texas and Reno, Nevada. These centers oversee our customer support for Internet sales and returns and
exchanges. Products ordered through one of our in-bound call center partners are generally shipped no later than the next business day.

We
also have an exclusive agreement with Global DR, an international sourcing and distribution-company with distribution in over seventy countries worldwide. Global grants us exclusive rights on a right of first refusal basis to license Globals
internationally successful products and infomercials for marketing in the United States market. Conversely, the agreement grants Global the exclusive right to distribute our products in its distribution stream worldwide.

Subsidiaries

The Companys wholly owned
subsidiaries are TMK Holdings, Inc, a Florida corporation, Consumer Dynamix Corp, a Florida corporation, ProCede Corp, a Florida corporation and TV Short Force, Inc., a Florida corporation.

The Company is the majority shareholder of Medico Express, Inc. (f/k/a USA 24/7, Inc.), a Florida corporation



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##### Table of Contents

Recent Developments

In August 2008, we entered into an agreement with Innotrac Corporation to provide a second outlet for order fulfillment, inventory management and customer service. In addition to our fulfillment agreement with Planet
E Shop for use of its fulfillment center in Dallas, Texas, Innotrac also allows us to distribute our products, just-in-time, from a fulfillment center located in Reno, Nevada.

Results of Operations - Comparative Three-Month Periods Ended September 30, 2008 and 2007

Our
financial statements are consolidated to include the accounts of the Company and our wholly owned subsidiaries, TMK Holdings, Inc, a Florida corporation, Consumer Dynamix Corp, a Florida corporation, ProCede Corp, a Florida corporation and TV Short
Force, Inc., a Florida corporation. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and accompanying notes included under Part I,
Item 1 of this Quarterly Report and our audited financial statements and accompanying notes and the information set forth under Item 7 Managements Discussion and Analysis or Plan of Operations included in our Annual
Report on Form 10-K for our fiscal year ended December 31, 2007.

We recognized a net loss of $(116,592) for the three months ended
September 30, 2008, a 424% increase as compared to $(22,230) for the same period in 2007. The losses in the current period are due primarily to the Companys buyout of an agreement with the founder during the third quarter which is
reflected in our general and administrative expenses.

Net revenue increased $6,242,346 or 183% to $9,658,289 for the three months ended
September 30, 2008 as compared to $3,415,943 for the three months ended September 30, 2007.

NET REVENUE BY PRODUCT



|                                 |  |                                    |           |  |                                    |   |  |        |           |  |     |   |  |   |            |   |  |      |  
|-------------------------------- |  | ---------------------------------- | --------- |  | ---------------------------------- | - |  | ------ | --------- |  | --- | - |  | - | ---------- | - |  | ---- | -
|PRODUCT                          |  | THREE MONTHSENDEDSEPTEMBER 30,2008 |           |  | THREE MONTHSENDEDSEPTEMBER 30,2007 |   |  | CHANGE |          
|ProCede                          |  | $                                  | 399,415   |  | 4                                  | % |  | $      | 1,852,153 |  | 54  | % |  | $ | (1,452,739 | ) |  | -78  | %
|                                 |  |                                    |           |  |                                    |  
|Riddex Plus                      |  | $                                  | 7,622,142 |  | 79                                 | % |  | $      | 849,896   |  | 25  | % |  | $ | 6,772,246  |   |  | 797  | %
|                                 |  |                                    |           |  |                                    |  
|Legends of Soul                  |  | $                                  | 507,782   |  | 5                                  | % |  |        |          |  |    |   |  | $ | 507,782    |   |  | 100  | %
|                                 |  |                                    |           |  |                                    |  
|The Official NASCAR Members Club |  | $                                  | 61,646    |  | 1                                  | % |  | $      | 21,206    |  | 1   | % |  | $ | 40,440     |   |  | 191  | %
|                                 |  |                                    |           |  |                                    |  
|Turbo Cooker                     |  | $                                  | 641,357   |  | 7                                  | % |  | $      |          |  |    |   |  | $ | 641,357    |   |  | 100  | %
|                                 |  |                                    |           |  |                                    |  
|Clear Machine                    |  | $                                  | 2,332     |  |                                   |   |  | $      | 467,042   |  | 14  | % |  | $ | (464,710   | ) |  | -100 | %
|                                 |  |                                    |           |  |                                    |  
|Back Yard Drills                 |  |                                    |          |  |                                   |   |  | $      | 82,036    |  | 2   | % |  | $ | (82,036    | ) |  | -100 | %
|                                 |  |                                    |           |  |                                    |  
|Other                            |  | $                                  | 423,615   |  | 4                                  | % |  | $      | 143,610   |  | 4   | % |  | $ | 280,005    |   |  | 195  | %
|                                 |  |                                    |           |  |                                    |  
|NET REVENUE                      |  | $                                  | 9,658,289 |  | 100                                | % |  | $      | 3,415,943 |  | 100 | % |  |   |            |   |  |      |  

The increase was primarily the result of Riddex Plus sales. Returns and allowances, for all of
products collectively, decreased 17% to $1,125,527 as compared to $1,357,587 for the same three month period in 2007. Returns and allowances for the third



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quarter were down approximately 50% as compared to returns for the previous quarter. Cost of sales increased $2,218,723 or 551% during the three months ended
September 30, 2008 as compared to $403,022 for the same three month period in 2007. The increase was the result of higher revenues. As compared to the previous quarter ended June 30, 2008, cost of sales increased from 11% of our gross
revenue to 24% as a result of higher inventory costs for the Turbo Cooker. However, returns and allowances decreased to 10% as compared to 24% due to lower returns on our Riddex Plus product as compared to higher returns on our NASCAR and Legends of
Soul Products.

As a result of an increase in our sales, gross profit increased $4,023,623 or 134% to $7,036,544 for the three months ended
September 30, 2008 as compared to $3,012,921 for the three months ended September 30, 2007. Total operating expenses increased $4,102,388 or 138% to $7,074,918 for the three months ended September 30, 2008 as compared to $2,972,530
for the three months ended September 30, 2007. This change was primarily a result of the following:

Selling and marketing expensesincreased $3,162,675 or 156% to $5,185,590 as compared to $2,022,915 for the three months ended September 30, 2007. Selling and marketing expenses consist generally of shipping advertising, fees paid to fulfillment vendors for processing
customer orders and related customer services, costs for shipping, sales commissions to our marketers and product owners, call center costs and other costs incurred to sell our products. The increase in the third quarter of 2008 as compared to the
third quarter of 2007 was due primarily to a 10,616% increase in royalties payable to product owners as a result of in greater product mix in 2008 and resulting royalty payments as compared to 2007; a 284% increase in call center expenses as a
result of higher returns on our NASCAR and Legends of Soul products; a 153% increase in fulfillment and freight expenses due to the greater mix of products sold in 2008; and a 149% increase in media and advertising costs as a result of increased
sales. In addition, our Other selling and marketing expenses, which consists of product development, testing and infomercials, and development of an in-house ecommerce center, increased $74,772 or 581% due to an increase in the number of
products tested in 2008 and a higher internet sales traffic.

Merchant Charges increased $291,709 or 218% to $425,367 as compared to
$133,658 for the three months ended September 30, 2007. The increase in credit card merchant fees is directly related to our increase in revenue.

General and administrative expensesincreased $648,004 or 79% to $1,463,961 as compared to $815,957 during the third quarter of 2007 primarily as a result of an across the board cost of living increase to
employees, salaries for additional senior staff personnel, increased legal and investor relations expenses and the buyout of an agreement with the founder.

Results of Operations - Comparative Nine-Month Periods Ended September 30, 2008 and 2007

The foregoing trend of
increasing revenues due to sales of Riddex Plus reported during the nine months ended September 30, carried over into our results of operations for the nine months ended September 30.

We recognized a net loss of $(1,574,522) for the nine months ended September 30, 2008, a 147% increase as compared to $(636,690) for the same period
in 2007.



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Net revenue increased $16,051,452 or 181% to $24,928,762 for the nine months ended September 30,
2008 as compared to $8,877,310 for the nine months ended September 30, 2007.

NET REVENUE BY PRODUCT



|                                 |  |                                   |            |  |                                   |   |  |        |           |  |     |   |  |   |            |   |  |      |  
|-------------------------------- |  | --------------------------------- | ---------- |  | --------------------------------- | - |  | ------ | --------- |  | --- | - |  | - | ---------- | - |  | ---- | -
|PRODUCT                          |  | NINE MONTHSENDEDSEPTEMBER 30,2008 |            |  | NINE MONTHSENDEDSEPTEMBER 30,2007 |   |  | CHANGE |          
|ProCede                          |  | $                                 | 42,217,432 |  | 9                                 | % |  | $      | 5,222,211 |  | 59  | % |  | $ | (3,004,779 | ) |  | -58  | %
|                                 |  |                                   |            |  |                                   |  
|Riddex Plus                      |  | $                                 | 17,419,725 |  | 70                                | % |  | $      | 849,896   |  | 10  | % |  | $ | 16,569,829 |   |  | 1950 | %
|                                 |  |                                   |            |  |                                   |  
|Legends of Soul                  |  | $                                 | 2,214,058  |  | 9                                 | % |  |        |          |  |    |   |  | $ | 2,214,058  |   |  | 100  | %
|                                 |  |                                   |            |  |                                   |  
|The Official NASCAR Members Club |  | $                                 | 1,372,876  |  | 6                                 | % |  | $      | 418,866   |  | 5   | % |  | $ | 954,010    |   |  | 228  | %
|                                 |  |                                   |            |  |                                   |  
|Turbo Cooker                     |  | $                                 | 641,357    |  | 3                                 | % |  |        |          |  |    |   |  | $ | 641,357    |   |  | 100  | %
|                                 |  |                                   |            |  |                                   |  
|Clean Machine                    |  | $                                 | 28,988     |  |                                  |   |  | $      | 1,507,141 |  | 17  | % |  | $ | (1,478,153 | ) |  | -98  | %
|                                 |  |                                   |            |  |                                   |  
|Back Yard Drills                 |  | $                                 | 1,327      |  |                                  |   |  | $      | 131,921   |  | 1   | % |  | $ | (130,594   | ) |  | -99  | %
|                                 |  |                                   |            |  |                                   |  
|Other                            |  | $                                 | 1,032,999  |  | 3                                 | % |  | $      | 747,275   |  | 8   | % |  | $ | 285,724    |   |  | 38   | %
|                                 |  |                                   |            |  |                                   |  
|NET REVENUE                      |  | $                                 | 24,928,762 |  | 100                               | % |  | $      | 8,877,310 |  | 100 | % |  |   |            |   |  |      |  
|                                 |  |                                   |            |  |                                   |   |  |        |           |  |     |   |  |   |            |   |  |      |  

As discussed in our results of operations for the three months ended September 30, the increase
was due primarily to increase in our product mix. Gross revenues were offset by returns and allowances of $5,415,331 for the nine months ended September 30, 2008, as compared to $3,838,375 for the same nine month period in 2007, an increase of
$1,576,956 or 41%; however, the percentage of returns and allowances to gross revenues decreased to 18% for the nine months ended September 30, 2008 as compared to 30% for the same period in 2007.

As a result of new mix of product offerings in 2008, cost of revenues increased $4,638,795 or 464% to $5,638,261 for the nine months ended
September 30, 2008 as compared to $999,466 for the nine months ended September 30, 2007. Cost of revenues was 19% of our gross revenue during the nine months ended September 30, 2008 as compared to 8% for the nine months ended 2007.
The increase was the result of the increase in our product mix. As a result of an increase in our sales, gross profit increased $11,412,657 or 145% to $19,290,501 for the nine months ended September 30, 2008 as compared to $7,877,844 for the
nine months ended September 30, 2007.

Total operating expenses increased $12,559,143 or 151% to $20,854,446 for the nine months ended
September 30, 2008 as compared to $8,295,303 for the nine months ended September 30, 2007 as follows:

Selling and marketing
expensesincreased $10,288,356 or 173% to $16,240,872 as compared to $5,952,516 for the nine months ended September 30, 2007. The increase was due primarily to a 3812% increase in royalties payable to product owners; a 243% increase in call
center expenses; a 209% increase in media and advertising; and a 182% increase in fulfillment and shipping. Other selling and marketing expenses, which consists of product development, testing and infomercials, and development of an
in-house ecommerce center, increased 136% due to an increase in the number of products tested in 2008 and a higher interest sales traffic.



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Merchant Chargesincreased $743,093 or 171% to $1,178,553 as compared to $435,460 for the nine
months ended September 30, 2007. The increase in credit card merchant fees is directly related to our increase in revenue.

General
and administrative expenses increased $1,527,694 or 80% to $3,435,021 for the nine months ended September 30, 2008 compared to $1,907,327 for the same period in 2007. The increase was the result of an across the board cost of living
increase to employees, salaries for senior staff personnel, increased legal and investor relations expenses and the buyout of an agreement with the founders.

Liquidity and Capital Resources

Cash Flows for the Nine Months Ended September 30, 2008

Our cash and current assets remained consistent at $3,091,441 as of September 30, 2008 as compared to $3,085,068 as of
December 31, 2007.

The following is a summary of the Companys cash flows provided by (used in) operating, investing, and
financing activities for the nine months ended September 30, 2008, the nine months ended September 30, 2007 and for the cumulative period from inception:



|                                                     |  |                                   |          |   |                                   |   |          |                                                                  |  |   |            |  
|---------------------------------------------------- |  | --------------------------------- | -------- | - | --------------------------------- | - | -------- | ---------------------------------------------------------------- |  | - | ---------- | -
|                                                     |  | Nine MonthsEndedSeptember 30,2008 |          |   | Nine MonthsEndedSeptember 30,2007 |   |          | CumulativePeriod frominception(October 1982)to September 30,2008 | 
|Net Cash From/(Used in) Operating Activities         |  | $                                 | 157,348  |   |                                   | $ | (727,992 | )                                                                |  | $ | (3,968,851 | )
|Net Cash Provided by (Used in) Investing Activities  |  | $                                 | 222,912  |   |                                   |   | (187,500 | )                                                                |  | $ | (1,490,000 | )
|Net Cash Provided by (Used in) Financing Activities  |  | $                                 | (139,104 | ) |                                   | $ | 950,756  |                                                                  |  | $ | 5,825,754  |  
|Net Increase/(Decrease) in Cash and Cash Equivalents |  | $                                 | (204,668 | ) |                                   | $ | 35,264   |                                                                  |  | $ | 366,903    |  

Cash Flows from Operating Activities

Operating activities used net cash of $157,348 for the nine months ended September 30, 2008. Net cash used reflects cash used to support net changes
in working capital items, which included a $2,209,611 increase in accounts payable and accrued expenses primarily as a result of higher media and advertising costs. We also recognized a $382,427 increase in accounts receivable as a result of
increased sales of NASCAR and Legends of Soul in 2008; and a $177,519 increase in prepaid expenses as a result of prepayments for Turbo cooker inventory.Net changes in working capital items were offset by a $451,156 increase in direct
response advertising costs; a $10,025 depreciation expense attributed to furniture and equipment; and a $231,308 estimated deferred tax asset incurred as a result of a negotiated amnesty program to catch up back sales taxes. The deferred tax asset
is an estimate of our net operating loss that we expect to recover and offset against future taxable income in 2009.



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Cash Flows used in Investing Activities

Our investing activities used $(222,911) in net cash during the nine months ended September 30, 2008. Net cash used is composed entirely of capital
expenditures and payments made on our patent agreement for the formula that is used in manufacturing our ProCede product.

Cash Flows
from Financing Activities

Our financing activities used net cash of $(103,104) for the nine months ended September 30, 2008 due to
the repayment of a loan to unrelated third party.

Financial Position

Our total assets increased $488,177 or 11% to $4,987,918 as of September 30, 2008 from $4,499,741 as of December 31, 2007. The increase was
primarily associated with a $451,156 increase in direct response advertising cost, a 215,067 increase in restricted cash; a $199,850 increase in intangible assets; and a $103,901 increase in prepaid expenses which was partially offset by a $206,195
decrease in inventory and a $369,129 decrease in accounts receivable, all related to supporting our increasing sales. Our restricted cash consists of a reserve for credit card processing of approximately $225,067, which we hold in a merchant
services account as required by our format merchant service account provider.

Obligations Outstanding

As of September 30, 2008 we owe $6,455,510 in accounts payable and accrued expenses and $176,307 to officers, employees and consultants to the
Company for accrued wages and consulting expenses. The balance due to our officers, employees and consultants accrues interest at 12%.

In
connection with unsecured convertible promissory notes that we issued to investors during 2005 and 2006, we owe $2,130,858 as of September 30, 2008. The convertible promissory notes bear interest at the rate of 15% per annum and may be
converted into shares of common stock at $1.00 per share any time prior to maturity. The notes will mature between late 2009 and early 2010.

Material Commitments, Expenditures and Contingencies

We believe our available cash, cash expected to be generated from
operations, and borrowing capabilities should be sufficient to fund our operations on both a short-term and long-term basis; however, as of September 30, 2008, the Company had cash and cash equivalents of $3 million, current liabilities of $8.7
million, stockholders deficit of $3.7 million and a net loss of $1.5 million which may raise doubts about our ability to continue as a going concern without successfully deferring or reducing certain operating costs or raising funds. As a
result, the accompanying unaudited financial statements have been prepared on the basis of a going concern assumption and do not reflect any adjustments that might result from the outcome of this uncertainty.



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Off Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation
of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Note 4 of the Notes to our consolidated financial statements describes the
significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies. A critical accounting policy is defined as one that
is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically,
critical accounting estimates have the following attributes: 1) we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and 2) different estimates we could reasonably have used, or changes in the
estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates
and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These
estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they
became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our consolidated financial statements are fairly stated in
accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our consolidated financial statements:

Revenue Recognition:Our revenue, to date, has been derived from the sales of our products and services. Revenue is recognized in accordance with
the provisions of Staff Accounting Bulletin (SAB) No. 104 Revenue Recognition in Financial Statements, which states that revenue is realized or realizable and earned when all of the following criteria are met:



| |  |  | persuasive evidence of an arrangement exists,
| | - |  | ---------------------------------------------



| |  |  | delivery has occurred or services have been rendered,
| | - |  | -----------------------------------------------------



| |  |  | the sellers price to the buyer is fixed or determinable, and
| | - |  | -------------------------------------------------------------



| |  |  | collectability is reasonably assured.
| | - |  | -------------------------------------



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These conditions are typically met upon shipment of products to our customers. In addition, the Company
recognizes product revenue in accordance with Statement of Financial Accounting Standard (SFAS) No. 48 Revenue Recognition When Right of Return Exists. This statement requires that in order to recognize revenue at the point of sale
when the buyer has a return privilege, the amount of future returns must be reasonably estimable by the seller company.

Fair Value of
Financial Instruments:We are required to disclose the fair value of financial instruments, which includes cash, accounts receivable, lines of credit and accounts payable and accrued expenses. We consider all highly liquid debt securities with
original or remaining maturities of three months of less to be cash equivalents. Based on the relatively short maturity of these current liabilities, we believe that the carrying amounts at September 30, 2008 of our cash and cash equivalents
reflect the approximate fair value. The carrying value of long-term debt and convertible promissory notes approximate fair value at September 30, 2008 based upon terms available for companies under similar arrangements.

Accounts Receivable:Accounts receivable are reported at net realizable value. The Company has established an allowance for doubtful accounts
based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. We write off delinquent accounts when we determine the amounts are uncollectible. At September 30, 2008, our provision for
doubtful accounts and allowance for returns was $135,531, as compared to $110,000 at December 31, 2007, $223,000 at March 31, 2008 and $170,537 at June 30, 2008.

Inventories:Inventories consist of finished goods held for sale and are stated at the lower of cost (first-in, first-out method) or market. We
identify the inventory items to be written down for obsolescence based on the items current sales status and condition. We write down discontinued or slow moving inventories based on an estimate of the markdown to retail price needed to sell
through our current stock level of the inventories and write down inventory during the period in which such products are considered no longer effective. For the three months ended September 30, 2008 and 2007, the Company has written down $0 and
$0, respectively.

Intangible Assets:Intangible assets consist of license payments made in accordance with an agreement to purchase
the formula and patent used in our ProCede product. We consider the patent to have an indefinite life.

Advertising:Except for
direct response advertising, we expense advertising costs as they are incurred. Direct response advertising consists primarily of costs associated with eliciting sales to customers, principally the direct response television advertising, and the
e-commerce catalog mailings. Capitalized direct response advertising costs are amortized over the period during which the future benefits are expected to be received, generally six to 12 months. We incurred advertising expenses of $9,312,777 and
$3,009,062 during the nine months ended September 30, 2008 and 2007, respectively. We capitalized direct response advertising costs of approximately $188,050 during the three months ended September 30, 2008. The balance of deferred
advertising costs as of September 30, 2008 is $637,619.



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Provisions for Returns:We generally do not provide stock-balancing or price
protection rights to our distributors; however, on a non-recurring basis, we have accepted product returns. Management establishes provisions for estimated returns concurrently with the recognition of revenue. The provisions are established based
upon consideration of a variety of factors, including, among other things, recent and historical return rates for both specific distributors and projected economic conditions.

New Accounting Pronouncements

Recent accounting pronouncements that the Company has adopted or that
will be required to adopt in the future are summarized in the notes to our financial statements and below:

Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities:In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities. The FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share
under the two-class method. The FSP affects entities that accrue dividends on share-based payment awards during the awards service period when the dividends do not need to be returned if the employees forfeit the award. This FSP is effective
for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of FSP EITF 03-6-1 on its consolidated financial position and results of operations.

Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an entitys Own Stock:In June 2008, the FASB ratified EITF 07-5,
Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entitys Own Stock. EITF 07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or
embedded feature) is indexed to its own stock, including evaluating the instruments contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock
option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008. The Company is currently assessing the impact of EITF 07-5 on its consolidated financial position and results of
operations.

Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement):In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). The FSP clarifies the
accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion. The FSP requires issuers to account separately for the liability and equity components of certain convertible debt
instruments in a manner that reflects the issuers nonconvertible debt (unsecured debt) borrowing rate when interest cost is recognized. The FSP requires bifurcation of a component of the debt, classification of that component in equity and the
accretion of the resulting discount on the debt to be recognized as part of interest expense in our consolidated statement of operations. The FSP requires retrospective application to the terms of instruments as they existed for all periods
presented. The FSP is effective for us as of January 1, 2009 and early adoption is not permitted. The Company is currently evaluating the potential impact of FSP APB 14-1 upon its consolidated financial statements.



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The Hierarchy of Generally Accepted Accounting Principles:In May 2008, the FASB issued SFAS 162,
The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. SFAS 162 is effective 60
days following the SECs approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. The implementation of
this standard will not have a material impact on the Companys consolidated financial position and results of operations.

Determination of the Useful Life of Intangible Assets:In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of intangible assets under SFAS 142 Goodwill and Other Intangible Assets. The intent of this FSP is to improve the consistency between the useful life of a recognized
intangible asset under SFAS 142 and the period of the expected cash flows used to measure the fair value of the asset under SFAS 141 (revised 2007) Business Combinations and other U.S. generally accepted accounting principles. The
Company is currently evaluating the potential impact of FSP FAS 142-3 on its consolidated financial statements. The adoption of FSP FAS 142-3 is not expected to have a material effect on its financial position, results of operations or cash flows.

Disclosure about Derivative Instruments and Hedging Activities:In March 2008, the FASB issued SFAS 161, Disclosure about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133. This statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. The
Company is required to adopt SFAS 161 on January 1, 2009. The Company is currently evaluating the potential impact of SFAS 161 on the Companys consolidated financial statements.

Delay in Effective Date :In February 2008, the FASB issued FSP FAS No. 157-2, Effective Date of FASB Statement No. 157.
This FSP delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to fiscal years beginning after
November 15, 2008, and interim periods within those fiscal years. The impact of adoption was not material to the Companys consolidated financial condition or results of operations.

Business Combinations:In December 2007, the FASB SFAS 141(R) Business Combinations. This Statement replaces the original FASB 141.
This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each
business combination. The objective of this SFAS 141(R) is to improve the relevance, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that,
SFAS 141(R) establishes principles and requirements for how the acquirer:



| | a. | Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | b. | Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase.
| | -- | ------------------------------------------------------------------------------------------------------------



| | c. | Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. The Company is unable at this time to determine the effect that its adoption of SFAS 141(R) will have on its consolidated results
of operations and financial condition.

Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51:In December 2007, the FASB issued SFAS 160 Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB No. 51. This Statement amends the original ARB 51 Consolidated Financial
Statements to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the
consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years and interim periods within those fiscal years, beginning on or after December 15, 2008 and may not be
applied before that date. The Company is unable at this time to determine the effect that its adoption of SFAS 160 will have on its consolidated results of operations and financial condition.

Fair Value Option for Financial Assets and Financial Liabilities:In February 2007, the FASB issued SFAS 159, The Fair Value Option for
Financial Assets and Financial Liabilities  Including an amendment of SFAS No. 115, which becomes effective for the Company on February 1, 2008, permits companies to choose to measure many financial instruments and certain
other items at fair value and report unrealized gains and losses in earnings. Such accounting is optional and is generally to be applied instrument by instrument. The Company does not anticipate that the election, of this fair-value option will have
a material effect on its consolidated financial condition, results of operations, cash flows or disclosures.

Fair Value Measurements:In September 2006, the FASB issued SFAS 157, Fair Value Measurements. SFAS 157 provides guidance for using fair value to measure assets and liabilities. SFAS 157 addresses the requests from investors for expanded disclosure about the
extent to which Companies measure assets and liabilities at fair value, the information used to measure fair value and the effect of fair value measurements on earnings. SFAS 157 applies whenever other standards require (or permit) assets or
liabilities to be measured at fair value, and does not expand the use of fair value in any new circumstances. In February 2008, the FASB issued FSP 157-2, Effective Date of FASB Statement No. 157. This FSP delays the effective date
of FAS 157 for all



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nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually) to
fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. SFAS 157 will be adopted by the Company in the first quarter of fiscal year 2009. The Company is unable at this time to determine the effect that its
adoption of SFAS 157 will have on its consolidated results of operations and financial condition.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

We are a smaller reporting company as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.



|Item 4T. | Controls and Procedures.
|-------- | ------------------------

Managements
Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal
control over our financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance
that transactions are recorded as necessary for preparation of our financial statements and that receipts and expenditures of company assets are made in accordance with management authorization; and (iii) provide reasonable assurance that
unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial
reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

For the period ending September 30, 2008, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was
conducted by Melissa K. Rice, our Chief Executive Officer and Principal Financial Officer. Based upon her evaluation, she concluded that the Companys disclosure controls and procedures are currently effective to ensure that information
required to be disclosed by Dynamic Response in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. As we develop new business
or if we engage or hire a chief financial officer or similar financial expert, we will review our disclosure controls and procedures and make sure that they remain adequate.

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



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Lack of Segregation of Duties

Management is aware that there is a lack of segregation of duties at the Company due to the small number of employees dealing with general administrative
and financial matters. However, at this time management has decided that considering the abilities of the employees now involved and the control procedures in place, the risks associated with such lack of segregation are low and the potential
benefits of adding employees to clearly segregate duties do not justify the substantial expenses associated with such increases. Management will periodically reevaluate this situation.

Changes in Internal Controls

There
were no changes in the Companys internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the nine months ended September 30, 2008, that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

We are occasionally subject to
legal proceedings and claims that arise in the ordinary course of our business. It is impossible for us to predict with any certainty the outcome of pending disputes, and unless otherwise stated below, we cannot predict whether any liability arising
from pending claims and litigation will be material in relation to our consolidated financial position or results of operations. We are currently not a party to any material litigation and are not aware of any threatened litigation that would have a
material adverse effect on our business.



|Item 1A. | Risk Factors.
|-------- | -------------

Please consider the following risk
factors carefully. The descriptions below include material changes to the description of the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2007 as filed on March 31,
2008 (our Annual Report). The risks described below and in our Annual Report could materially and adversely affect our business, financial condition and results of operations. We also may be adversely affected by risks not currently
known or risks that we do not currently consider to be material.

1) We have had changes in our board composition in 2008. Effective
October 22, 2008, Joseph I. Emas stepped down as a director to pursue other interests. His board seat remains vacant and at this time, Melissa K. Rice is our sole executive officer and sole director. As a result, she has the sole authority to
manage the business and operations of the Company without input or approval from any other person or, except in limited circumstances provided under the Florida Business Corporation Act, from our shareholders. Unless she resigns or is removed from
office by our shareholders, she will continue to have sole authority over the day to day to operations and management of our business, including identifying and evaluating companies that we may want to acquire and/or products and services we add to
our current product line. As sole officer and director, Ms. Rice may not have the time or all of the



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skills necessary to manage the day to day and general operations of the Company which could materially and adversely impact our business operations. Although
we intend to hire additional executive level employees and fill the vacancy on the Board left by Mr. Emas departure, there can be no assurance that our current or future management will be able to determine and implement strategies in an
effective and timely manner that adequately respond to the markets for our products and services which in turn may adversely affect our business and results of operations.

2) The ongoing global financial crisis affecting the banking system and financial markets has resulted in a severe tightening in credit markets, a low
level of liquidity in many financial markets, and extreme volatility in credit and equity markets which could impact our business in a number of ways. A decrease in the general availability of credit cards, or a decrease in the credit available
to consumers from credit card issuers, or uncertainty about current and future global economic conditions may cause consumers to defer or avoid purchasing our products and services in response to tighter credit and decreased cash availability.
Consumers purchases of discretionary items, including our products, may decline during periods when credit is tight and disposable income is lower which could adversely impact our financial condition and results of operations and also result
in future demand for our products differing materially from our current expectations. Further, our ability to meet customers demands depends, in part, on our ability to obtain products from our suppliers. If suppliers become capacity
constrained or insolvent as a result of the financial crisis, it could result in a reduction or interruption in products or a significant increase in the price of products which could adversely impact our financial condition and results of
operations. In addition, credit constraints of suppliers could result in accelerated payment of accounts payable by us or a reduction in the maximum amount of trade credit available to us., adversely impacting our cash flow. Any one or a combination
of the foregoing changes could significantly affect our liquidity and could have a material adverse effect on our results of operations and financial condition. If we are unable to successfully anticipate changing economic and financial markets
conditions, we may be unable to effectively plan for and respond to those changes, and our business could be negatively affected.

3)
The Company has incurred recurring losses from operations, has limited cash and cash equivalents that raises substantial doubt about the Companys ability to continue as a going concern.As of September 30, 2008, the Company had
cash and cash equivalents of $3 million, current liabilities of $8.7 million and stockholders deficit of $3.7 million. During the nine months ended September 30, 2008, the Company incurred a net loss of $1.5 million. During the nine
months ended September 30, 2008, operating activities used approximately $121,000 of cash. Given the Companys results from operations, current forecasts, and financial position as of September 30, 2008, our present capital resources
may not be sufficient to fund our planned operations through and beyond [the second quarter of 2009], and/or the Company may require significant additional funds in maintain operations. These conditions raise substantial doubt about the
Companys ability to continue as a going concern.

As a result of its limited capital resources, the Company intends to increase
profitability by monitoring inventory, increasing the product mix and seeking less expensive modes of shipping.



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If we are not able to reduce or defer our expenditures, secure additional sources of revenue or otherwise
secure additional funding, we may be unable to continue as a going concern, and we may be forced to restructure or significantly curtail our operations, file for bankruptcy or cease operations. We cannot assure you that we will successfully defer,
reduce or eliminate certain operating expenditures or that we can obtain additional funding on reasonable terms, or at all. Further, if we raise additional funds by issuing equity securities, our stock price may decline, our existing stockholders
will experience significant dilution, and the newly issued securities may have rights superior to those of existing shareholders.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

In September 2008, we issued an aggregate of 25,000 shares due to an unrelated third party for investments made in November 2004 and August 2007. At the time of purchase, certificates were inadvertently not properly
issued. Of the 25,000 shares, 20,000 were acquired in November at a purchase price of $0.60 per share and the balance of 5,000 shares were acquired in August 2007 at a purchase price of $1.00 per share. All of the foregoing shares were acquired
under one of the exemptions from registration provided for in Sections 4(2) and 4(6) of the Securities Act including Regulation D promulgated thereunder.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

None.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

None.



|Item 5. | Other Information.
|------- | ------------------

We filed a Current Report on
Form 8-K on October 24, 2008 to announce the resignation of Joseph I. Emas who stepped down as a director to pursue other interests. Mr. Emas resignation was not the result of any disagreement on any matter relating to the Companys
operations, policies or practices. As of October 22, 2008, the effective date of Mr. Emas resignation, Mr. Emas is not entitled to receive, nor does the Company owe, any compensation for his services as director to the Company.
Mr. Emas board seat remains vacant and Melissa K. Rice is now our sole director and officer.

There have been no material
changes to the procedures by which security holders may recommend nominees to the Companys Board of Directors.



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|Item 6. | Exhibits.
|------- | ---------



|     |  |                                                                                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                           
|31.1 |  | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|     | 
|32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                               



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SIGNATURES

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



|                        |  |  |  |                                                            
|----------------------- |  |  |  | -----------------------------------------------------------
|Date: November 14, 2008 |  |  |  | DYNAMIC RESPONSE GROUP, INC.                               
|                        |  | 
|                        |  |  |  | /s/ Melissa K. Rice                                        
|                        |  |  |  | Melissa K. Rice                                            
|                        |  |  |  | Principal Executive Officer and Principal Financial Officer



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Exhibit Index



|     |  |                                                                                                                                       
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                           
|31.1 |  | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|     | 
|32.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                               



35