**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549




**FORM
      10-KSB**




(Mark
      One)




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




For
      the
      fiscal year ended December 31, 200 7




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




*Commission
      file number* 333-97385





InfoSearch
                Media, Inc.(Name
                of small business issuer in its
                charter)




Delaware
            
            90-0002618(State
                or other jurisdiction
            
            (I.R.S.
                Employerof
                incorporation or organization)
            
            Identification
                No.)4086
                Del Rey Avenue, Marina Del Rey, California
            
            90292(Address
                of principal executive offices)
            
            (Zip
                Code)(310)
                437-7380(Registrant's
                telephone number, including area
                code)




(Former
      name, former address and former fiscal year,


if
      changed since last report)




Securities
      Registered Pursuant to Section 12(b) of the Act: None.




Securities
      Registered Pursuant to Section 12(g) of the Act: None.




Check
      whether the issuer is not required to file reports pursuant to Section
      13


or
      15(d)
      of the Exchange Act. o




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




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




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


o Yes x No




Issuer's
      revenues for the fiscal year ended December 31, 2007 were approximately
      $4,910,304.




The
      aggregate market value of the voting and non-voting common equity stock held
      by
      non-affiliates of the issuer **,** based on
      the average bid and asked prices on the Over the Counter Bulletin Board on
      April
      11, 2008 was approximately $3,805,785.




The
      number of shares outstanding of the issuer's common stock, $0.001 par value,
      as
      of the latest practicable date: 52,493,592 shares as of April 11,
      2008.




**DOCUMENTS
      INCORPORATED BY REFERENCE**




None.




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







**TABLE
      OF CONTENTS**




PART
                IITEM
                1.
            
            DESCRIPTION
                OF BUSINESS
            
            3ITEM
                1A.
            
            RISK
                FACTORS
            
            11ITEM
                2.
            
            DESCRIPTION
                OF PROPERTY
            
            19ITEM
                3.
            
            LEGAL
                PROCEEDINGS
            
            19ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            19PART
                IIITEM
                5.
            
            MMARKET
                FOR COMMON EQUITY**,**RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF
                EQUITY
                SECURITIES
            
            20ITEM
                6.
            
            MMANAGEMENT'S
                DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL CONDITION
            
            20ITEM
                7.
            
            FINANCIAL
                STATEMENTS
            
            28ITEM
                8.
            
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            28ITEM
                8A.
            
            CONTROLS
                AND PROCEDURES
            
            28ITEM
                8B.
            
            OTHER
                INFORMATION
            
            29PART
                IIIITEM
                9.
            
            DIRECTORS
                AND EXECUTIVE OFFICERS
            
            29ITEM
                10.
            
            EXECUTIVE
                COMPENSATION
            
            32ITEM
                11.
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT****AND
                RELATED STOCKHOLDER MATTERS
            
            39ITEM
                12.
            
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            
            42ITEM
                13.
            
            EXHIBITS
            
            42ITEM
                14.
            
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            44EXHIBIT
                INDEX
            
            46FINANCIAL
                STATEMENTS
            
            F-1










**Forward-Looking
      Statements**




This
      Annual Report on Form 10-KSB includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), **** and
      Section 21E of the Securities Exchange Act of **** 1934,
      as
      amended (the “Exchange Act”). These statements relate to future events or our
      future financial performance and are not statements of historical fact. In
      some
      cases, you can identify forward-looking statements by terminology such as "may,"
      "will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
      "predict," "potential," "objective," "forecast," "goal" or "continue," the
      negative of such terms, or other comparable terminology. These statements are
      only predictions, and actual events or results may differ materially. Although
      we believe that the expectations reflected in the forward-looking statements
      are
      reasonable, we cannot guarantee future results, levels of activity, performance
      or achievements; and in all cases, such statements are subject to our ability
      to
      secure sufficient financing or to increase revenues to support our operations.
      In this regard, our business and operations are subject to substantial risks
      that increase the uncertainty inherent in the forward-looking statements
      contained in this Form 10-KSB. In evaluating our business, you should give
      careful consideration to the information set forth herein, including the risks,
      uncertainties and assumptions that are more fully discussed in “Item 1.A Risk
      Factors.” ****




The
      inclusion of the forward-looking statements should not be regarded as a
      representation by us, or any other person, that such forward-looking statements
      will be achieved. We undertake no duty to update any of the forward-looking
      statements, whether as a result of new information, future events or otherwise.
      In light of the foregoing, readers are cautioned not to place undue reliance
      on
      the forward-looking statements contained in this report.




**PART
      I**




**Item
      1. Description of Business**




**Business
      Overview**




**Overview**





InfoSearch
      is a Los Angeles-based provider of search-targeted text and video content for
      the Internet, designed to provide increased search engine traffic, obtain higher
      rankings, brand recognition and better website performance for electronic
      commerce, media and publishing clients. InfoSearch's network of hundreds of
      professional writers, editors, other technical specialists help businesses
      succeed on the Web by implementing text and video content-based Internet
      marketing solutions. InfoSearch’s search marketing solutions involve online
      content that supports the non-paid search marketing initiatives of its clients.
      Non-paid search results, otherwise known as organic, are the search results
      that
      the search engines find on the World Wide Web as opposed to those listings
      for
      which companies pay for placement.





The
      Company was created on December 31, 2004, when Trafficlogic, Inc., a California
      corporation (“Trafficlogic”) merged with MAC Worldwide, Inc., a Delaware
      corporation incorporated on December 14, 2000 (“MAC”). MAC, the surviving
      company in the merger, changed its name to “InfoSearch Media, Inc.” on December
      31, 2004.





During
      fiscal 2007, the Company derived revenue from our two primary operating groups,
      TrafficBuilder and Web Properties.


3





**Content**




Through
      our Content operating group, we deliver, through sale or license agreements,
      branded original content for use by our clients on their websites. Utilizing
      sophisticated content and keywords analytics, content developed in the
      TrafficBuilder program drives traffic to the client’s website through improved
      search engine rankings. The TrafficBuilder content provides an environment
      engineered to stimulate a sale through the use of content focused on the
      client’s products and services. We derive revenue from this program through
      either the sale or license of the content. While many of our small to medium
      sized business clients prefer the leasing option over the purchase alternative
      because it provides a lower upfront cost without a long term commitment, larger
      firms generally prefer the outright purchase of the content. We are actively
      pursuing both methods and have created a dedicated team to focus on the larger
      clients. In addition, we have introduced related products, including Web
      analytics through our partnership with Load and links through our partnership
      with LinkWorth. For both Load and LinkWorth, InfoSearch acts as a reseller
      of
      their respective products.





Publishers


In
      the
      first quarter of 2007, the Company initiated an effort to target large, online
      publishers who are becoming increasingly aware of the monetization and brand
      value of driving traffic to their online properties, but understand that the
      content they write for their offline publications frequently does not drive
      search rankings and traffic. Our platform addresses this need through the
      development of content that meets the editorial standards and underlying themes
      of these clients and layers on the search optimization techniques we have
      learned through the deployment of our TrafficBuilder product. While this
      product, due principally to initial resistance of the established editorial
      groups within publisher organizations concerned over job security, while the
      Company did not generate significant revenue during 2007 it believes this to
      be
      a strong product opportunity as publishers are under increased pressure to
      reduce costs and outsource services. Spurred by declining advertising revenues,
      there have been recent organizational changes at several of the leading national
      publications, including The Washington Post, The Lost Angeles Times and the
      New
      York Times, and it now appears the business and editorial groups are more
      aligned and receptive to innovative methods to produce content.





Video


In
      February 2007, the Company launched a new search-targeted online video product
      to provide the same customer benefits as the Company’s written, text-based
      product line, TrafficBuilder, including improved organic search engine rankings,
      increased quality site traffic and brand recognition. *TrafficBuilder
      Video,* the
      search-targeted online video product. The Company has recently engaged a
      new partner to help produce our video products.  This new partner allows us
      to offer a wider more competitive range of video products to our
      customers.





**Web
      Properties**




Through
      our Web Properties operating group, **** we
      currently operate ArticleInsider and Popdex, from which we receive online
      advertising revenue. These websites are a collection of thousands of general
      information articles focused on various business topics and we continue to
      monetize traffic to these websites through the use of Google’s AdSense program,
      as well as Kontera’s advertising program more recently. In March
      2006, **** we
      purchased Answerbag **,** Inc.
      (“Answerbag”), a consumer information website built through content generated
      from its users. In October 2006, we entered into a multi-year alliance which
      extended through the First Quarter of 2008 with Demand Media, Inc. (“Demand
      Media”), a next generation media company, pursuant to which we sold all of the
      assets of Answerbag, and Demand Media agreed to purchase our products and
      services. During the period of our operation of Answerbag, the site generated
      revenue through the use of Google’s AdSense program.


4





**Industry
      Overview**




Internet
      search and online advertising are experiencing significant growth. Internet
      search is the second most popular activity on the Web, behind only email, with
      more than 550 million searches performed daily worldwide and 245 million
      searches performed in the United States alone. According to JP Morgan North
      America Equity Research’s January 2008 estimate, the global search market for
      performance-based advertising and search marketing, such as pay-per-click
      listings and paid inclusion, is expected to grow at a CAGR of 28% over the
      next
      four years to $60 billion by 2011. This growth in Search has led many
      advertisers to dramatically increase their level of advertising investment
      in
      search-based promotional methods. In addition, U.S. Bancorp Piper Jaffray
      predicts that online advertising in the United States will represent
      approximately 6% of total advertising spending in 2008 compared to approximately
      2% of total advertising spending in 2003.





This
      growth is fueled by the increased acceptance of the Internet as a
      commerce/marketing medium, the rapid expansion of early stage international
      markets, the growth of overall Internet usage and broadband Internet access,
      and
      by the advertiser’s realization of the cost-effectiveness of Internet search
      advertising. This growth may create future opportunities to generate revenues
      and profits through the introduction of new search engine-related marketing
      products.




**Key
      Growth Drivers**




·
            Increased
                E-Commerce - The growth in Internet search revenues has been proportional
                to growth in e-commerce. As consumers migrate to Internet-based
                purchasing, advertisers seek to promote their products or services
                using
                Internet methods, the most effective of which has proven to be****Internet
                search. If Internet sellers dedicate even 10% of revenues toward
                Internet
                marketing and advertising, as is typical of traditional merchants,
                search
                advertising opportunities should expand tremendously. In fact, U.S.
                Bancorp Piper Jaffray projects total e-commerce spending topped $150
                billion in 2007.****




·
            Growth
                of the Internet and Broadband Access -The organic growth of the Internet has created a domestic audience
                rivaling the use of television. This large audience provides a source
                of
                potential customers for merchants and a massive source of advertising
                and
                marketing dollars for those firms interested in search engine marketing.
                This audience is not only growing in size but increasing its time
                spent on
                the Internet due to the increased usage of broadband Internet access.




**·**
            Increased
                Acceptance of Internet Search as a Powerful Marketing Channel - Although
                Internet search was once considered only a method for Internet users
                to
                locate information, its potential as a marketing tool has now been
                established. The growth of those companies offering search engine
                marketing services reflects the realization among advertisers of
                the power
                of Internet search as a business acquisition medium. However, Internet
                search marketing still represents a very small portion of most advertising
                budgets and has a very strong growth
                potential.





·
            International
                Market Expansion - Most international Internet markets are still
                in the
                early stages of development but growing rapidly, in fact JP Morgan’s
                January 2008 report estimates that markets outside the United States
                will
                account for slightly more than half the $60 billion in search marketing
                in
                2011 . As the international market begins to approach the domestic
                market
                in terms of penetration, monetization opportunities are expected
                to be
                created, including strong e-commerce and search engine marketing
                opportunities.




·
            Cost
                Effectiveness/High Return on Investment - Due to its relatively low
                cost
                and high conversion rates, Internet search based marketing offers
                advertisers a high return on investment compared to traditional offline
                marketing vehicles. Forms of advertising such as the yellow pages
                can cost
                more than $1 per customer lead compared to $.35 per customer lead
                for
                Yahoo/Overture’s paid listings.




**Opportunity**




Despite
      the massive growth in Internet search, several problems in the industry have
      not
      been addressed adequately by the majority of search engine marketing companies
      including:




·
            Placement
                competition due to the concentration of Internet search traffic has
                lead
                to higher costs of effective paid listing keywords, limiting smaller
                businesses access to paid listings;




5




·
            Difficulty
                maintaining high rankings in unpaid listings, which represent a large
                portion of Internet search traffic;




·
            Low
                return on investment due to excessive cost-per-click (“CPC”)****charges
                from uninterested searchers; and




·
            Poor
                conversion/low close rates due to low quality
                traffic.




Our
      unique content-based products delivered through our TrafficBuilder and Web
      Properties programs, provide a solution to these problems by leveraging our
      content development expertise to deliver to businesses sustainable access to
      the
      unpaid portion of Internet search listings with screened leads, above average
      click-through rates and a price point that is below the current market
      average.





**Future
      Market Trends**




We
      continue to be in a position to benefit from major audience trends and the
      shift
      of advertising dollars from off-line to on-line. The success of Yahoo! /
      Overture and Google has proven that search listings can be translated into
      significant revenue streams generating high levels of advertising satisfaction
      and return on investment for customers.




Most
      engines only display three to five paid listings out of 20 or more per page
      of
      search results, leaving a large amount of room for the expansion of paid
      listings. Furthermore, search rates, which average approximately $.35 per lead,
      remain significantly less than other forms of advertising such as Yellow Pages,
      which currently average approximately $1.00 per lead. **** In
      addition, less than 1% of the more than 12 million small businesses in the
      United States currently use Internet search as method of customer acquisition,
      presenting another opportunity to expand the size of the paid listings and
      paid
      inclusion markets.




Our
      search engine marketing services can benefit significantly from future increases
      in volume and prices of search advertising, particularly in the small business
      segment.




**The
      Rise of Relevance**




It
      was
      once thought that as users became increasingly knowledgeable about the location
      of information throughout the Internet, search engines would become obsolete
      with users accessing the Web through specific websites or through the channels
      of an Internet portal. However, users have become more focused on quick and
      relevant search results and search engines have evolved to meet this demand,
      creating listing parameters that produce only the targeted information the
      user
      desires.





Our
      content-based services align perfectly with this trend. Our content may appeal
      to search engines looking for fresh, highly relevant information because the
      primary purpose of a search engine is to deliver the most relevant, informative
      and useful information to their users. Such search engines therefore have an
      incentive to place the best content at the top of their indexes and it is our
      belief that as our writer talent increases, and as the quality of our content
      improves, our goals become more and more aligned with those of the search
      engines. The result of this synergy is that users, advertisers, search engines
      and our company all receive equal benefit from our model.




**International
      Market Development**





International
      Internet traffic is already significantly larger in volume than domestic
      Internet traffic, with approximately 400 million Internet users abroad compared
      to close to 160 million in the United States. In addition, currently there
      are
      approximately 305 million searches occurring outside of the United States daily,
      growing at an annual rate of 20%. **** At
      this
      pace, the international market for search marketing services may soon eclipse
      the size of the domestic opportunity. This trend is amplified by the major
      portals and Internet companies adopting international models offering increased
      search and Internet services abroad.  Although
      this market does not currently have the monetization potential of the domestic
      opportunity, the growth rate of monetization in the international markets is
      much faster than in the United States. Currently the largest international
      Internet markets are Japan, Germany, Korea, United Kingdom, France, Italy and
      Spain. However, it is likely that within the next decade China, India and Latin
      America also **** will
      provide significant opportunities.


6





Our
      services are easily expandable to an international customer base and would
      benefit from increased use of search engines and e-commerce at a multinational
      level.





**Business
      Strategy**




Our
      business strategy focuses on building our client base for TrafficBuilder and
      doing so with a shift in customer focus toward higher performing clients. Based
      on research conducted in early 2007, the Company made the decision to eliminate
      sales to customers with immature websites and/or those whose advertising is
      directed toward less competitive and therefore less expensive keywords. Our
      findings have shown that such customers were not receiving the same high return
      on investment on our content based products as more established websites that
      were competing for higher priced keywords. Accordingly, our products, marketing
      and sales efforts have been re-focused on these higher performing
      clients.




For
      our
      TrafficBuilder program, we derive revenue through the licensing and sale of
      content to our customers. We intend to concentrate on building our base of
      licensing agreements and sales of content to both the small to medium business
      market and the large industry players.




We
      currently operate numerous content-based websites, including ArticleInsider
      and
      Popdex, as part of our Web Properties group. We are no longer seeking or
      engaging new customers nor creating new articles for these websites and are
      generating revenue through the use of Google’s AdSense program.




In
      February 2007 we **** expanded
      our core product line to include searchable online video content production
      services. *TrafficBuilder
      Video* ,
      the
      Company’s new search-targeted online video product provides the same customer
      benefits as the Company’s written, text-based product line, including improved
      organic search engine rankings, increased, quality site traffic and brand
      recognition. The Video product initially had been informational videos from
      thirty seconds to five minutes in length tagged with search optimized metadata
      and marketed to large businesses however the Company has begun to also market
      other video products gaining in popularity, including on screen “pop-up”
spokespersons produced by partners.





**Uniqueness
      of Service**




Several
      factors make our services relatively unique in the search engine advertising
      space.




·
            Content
                Based Model - Our model is unique in the search engine marketing
                space.
                Instead of simply including our clients’ sites in highly trafficked search
                engines through partnering with the major engines or by using deceptive
                search engine optimization techniques, we focus on developing unique,
                relevant and high-quality online content which improves search engine
                ranking and traffic.




·
            Conversion
                Rates - Internal research indicates that the Internet traffic that
                we
                drive to our clients’ sites through our developed content has a
                demonstrably higher conversion rate than existing practices or services.
                This results because searchers visiting our clients’ websites utilizing
                content developed for them by us view highly targeted keyword-based
                content tailored to the client’s underlying business. As a result, those
                visitors arriving on the client’s site are more likely to make a
                purchase.




·
            Solution
                for Dynamically Generated Sites - Many companies offering their products
                and services on the Internet maintain websites with large amounts
                of
                dynamic content which is difficult for major search engines to find
                due to
                the low visibility of such content to many of the popular search
                engines’
                search listing parameters. Because our keyword-based content model
                provides a solution easily found by the search engine spiders, major
                search engines are far more likely to find and index the client’s
                websites.




7





·
            Major
                Engine Coverage - Our clients typically receive a large portion of
                their
                traffic from Google, Yahoo!, MSN and AOL. These four sites account
                for a
                large majority of all searches performed on the Internet. Our ability
                to
                develop content that ranks highly with all four major search engines
                represents a beneficial approach to generating qualified traffic
                for our
                customers. Rather than using deceptive techniques, like doorway pages
                (a
                page designed to trick search engines into thinking that the site
                is
                focused on a topic other than the actual topic in an effort to trick
                people into visiting their websites) and link farms (a technique
                to
                artificially create links to a particular website, which is one of
                the key
                determinants to ranking in the search engines) which have become
                standard
                with other search engine optimization companies, we produce content
                which
                clients utilize on their websites to dramatically improve their search
                engine ranking and drive high volumes of relevant Internet
                traffic.




**Target
      Markets**




We
      have
      developed five major target markets that we are either currently focusing on
      or
      that we intend to focus on in the future.




·
            Current
                Paid Listings Customers - Our largest source of potential clients
                are
                those companies currently using other methods of online advertising,
                specifically those who are using search engine marketing techniques
                that
                are similar to those provided by us. This market group is familiar
                with
                search engine marketing and its benefits, making them amenable to
                our
                services especially at our discounted price. This group is expected
                to
                continue to be important to our customer acquisition strategy going
                forward.




·
            Small
                to Medium Businesses - Of the 12 million small to medium businesses
                in the
                United States, less than 1% currently use search as method of customer
                acquisition. These small to medium businesses present a customer
                acquisition opportunity for us. Such small to medium businesses are
                massive in numbers, largely ignored by the larger providers of search
                engine marketing services and often overshadowed by the larger competitors
                in their space when they must compete in an auction format. Because
                we
                specifically target the small to medium business market, we feel
                we are
                positioned to offer this market a higher level of customer service
                and
                personalized attention than larger online advertising services. These
                potential clients are also ideal for our TrafficBuilder service,
                because
                small to medium sized businesses often do not have the resources
                to hire
                internal copywriters and website developers to drive traffic to their
                sites.




·
            Niche
                Business Sectors - Niche business sectors are those sectors that
                offer a
                unique product or service that is not readily available to consumers
                and
                often can only be found by consumers online. Although these products
                and
                services are often difficult to find and are not typical consumer
                offerings, a strong demand for such products and services exists
                making
                these specialty businesses ideal candidates for search engine marketing.
                Similar to the small to medium size businesses, the niche sector
                is
                largely ignored by the large search engine marketing
                companies.




·
            Large
                Scale Content Opportunities - Large established firms are increasingly
                realizing the importance of online marketing. While they frequently
                have
                the resources to provide our services in-house, they understand that
                it is
                not their core competence and are open to outside service providers.
                We
                are pursuing these large firms to provide content on a large-scale,
                contractual basis. We plan to actively target this sector going forward,
                as we believe it will provide an additional method to leverage the
                strength of our team of copywriters and will potentially constitute
                a
                significant revenue opportunity.




8





·
            Publisher
                and Editorial Content Opportunities - Publishers and other companies
                who
                have regular needs for editorial content have historically relied
                on a
                combination of staff and contract writers. With the decline in advertising
                revenues, existing editorial departments have experienced significant
                reductions in staff and as a consequence, these firms are now increasingly
                open to outsourcing the development of that editorial content. In
                addition, many publishers are focusing on growing their online activities
                and websites already understand the benefit of receiving additional
                traffic to their websites as a result of search optimized content.
                We are
                pursuing these editorial content opportunities to provide content
                on a
                large-scale, contractual basis. We plan to continue actively targeting
                this sector, as we believe it will provide an additional method to
                leverage the strength of our team of copywriters and has the potential
                to
                constitute a large portion of revenue.




**Sales,
      Marketing, Advertising and Promotion**




As
      of
      December 31, 2007, we had 17 full-time employees in our sales department. Our
      sales department currently focuses on adding new clients to our TrafficBuilder
      program. Advertising and promotion of our services is broken into three main
      categories: direct sales, online promotion **** and
      value
      added resellers.




·
            Direct
                Sales: Our sales staff targets new client relationships through telesales
                efforts, direct marketing, and attendance and sponsorship at various
                trade
                shows and conferences.




·
            Online
                Promotion: We engage in certain advertising and direct marketing
                focused
                on acquiring new merchant advertisers and new distribution partners
                through online promotional methods.




·
            Value
                Added Resellers: We signed WSI, Inc.****(“WSI”)****as
                our first value added reseller during 2006 and expect to continue
                to
                expand this program after recently relaunching new “subscription” plan
                pricing in January of 2008. WSI operates or franchises
                approximately****2,000
                Independent Consultants worldwide, and with our new plans we currently
                have 120 Independent Consultants who have been qualified to sell
                our
                TrafficBuilder products through a private label brand WSI
                Webwords.





We
      intend
      to continue our strategy of growing our client base through sales and marketing
      programs and are reviewing more scalable methods and partnerships, especially
      the expansion of our value added reseller programs, with the goal of increasing
      our client base. Further, we continually evaluate our marketing and advertising
      strategies to maximize the effectiveness of our programs and their return on
      investment.





**Competition**




We
      are
      one of the few companies exclusively dedicated to providing online content-based
      marketing solutions to increase lead generation from unpaid search listings.
      Nonetheless, while our content-based solutions are relatively unique, there
      are
      other companies that use similar techniques in different ways to increase
      traffic leads and conversion rates. Yahoo! Answers is an example of a question
      and answer content site that leverages a large number of non-paid users to
      generate content to drive traffic and ad revenue. It does not, however, sell
      content to other companies. In contrast, Introspect provides search engine
      optimization services which include Web design and content development. It,
      however, does not own its own content network.




We
      believe that today’s typical Internet **** advertiser
      is becoming more sophisticated regarding the increased value of content-based
      solutions relative to the different forms of **** Internet
      advertising. These advertisers are increasingly aware of their return on
      investment and are more carefully developing their online marketing programs.
      While the significant growth in the industry has increased the competitive
      levels, we believe that our unique product offering will continue to provide
      an
      edge in developing new client relationships.




9





**Intellectual
      Property and Proprietary Rights**




We
      seek
      to protect our intellectual property through existing laws and regulations
      and
      by contractual restrictions. We rely upon trademark, patent and copyright law,
      trade secret protection and confidentiality or license agreements with our
      employees, customers, partners and others to help us protect our intellectual
      property.




Our
      policy is to apply for patents or for other appropriate statutory protection
      when we develop valuable new or improved technology. We currently do not have
      any patents or pending patent applications.





All
      of
      our copywriters are under contract assigning to us ownership of the content
      they
      create. In addition, we have copyrighted all content hosted throughout our
      network.




**Government
      Regulation**




We
      are
      subject to governmental regulation much like many other companies. There are
      still relatively few laws or regulations specifically addressed to the Internet.
      As a result, the manner in which existing laws and regulations should be applied
      to the Internet in general, and how they relate to our businesses in particular,
      is unclear in many cases. Such uncertainty arises under existing laws regulating
      matters, including user privacy, defamation, pricing, advertising, taxation,
      gambling, sweepstakes, promotions, content regulation, quality of products
      and
      services and intellectual property ownership and infringement.




To
      resolve some of the current legal uncertainty, we expect new laws and
      regulations to be adopted that will be directly applicable to our activities.
      Any existing or new legislation applicable to us could expose us to substantial
      liability, including significant expenses necessary to comply with such laws
      and
      regulations, and could dampen the growth in use of the Internet in
      general.




Several
      federal laws that could have an impact on our business have already been
      adopted. The Digital Millennium Copyright Act is intended to reduce the
      liability of online service providers for listing or linking to third party
      websites that include materials that infringe copyrights or rights of others.
      The Children’s Online Protection Act and the Children’s Online Privacy
      Protection Act are intended to restrict the distribution of certain materials
      deemed harmful to children and impose additional restrictions on the ability
      of
      online services to collect user information from minors. In addition, the
      Protection of Children from Sexual Predators Act requires online services
      providers to report evidence of violations of federal child pornography laws
      under certain circumstances.




The
      foregoing legislation may impose significant additional costs on our business
      or
      subject us to additional liabilities , if we
      were not to comply fully with their terms, whether intentionally or not. If
      we
      did not meet the safe harbor requirements of the Digital Millennium Copyright
      Act, we could be exposed to copyright actions, which could be costly and
      time-consuming. The Children’s Online Protection Act and the Children’s Online
      Privacy Protection Act impose fines and penalties to persons and operators
      that
      are not fully compliant with their requirements. The federal government could
      impose penalties on those parties that do not meet the full compliance practices
      of the Protection of Children from Sexual Predators Act. We intend to fully
      comply with the laws and regulations that govern our industry, and we intend
      to
      employ internal resources and incur outside professional fees to establish,
      review and maintain policies and procedures to reduce the risk of
      noncompliance.




We
      post
      our privacy policy and practices concerning the use and disclosure of any user
      data on our websites. Any failure by us to comply with posted privacy policies,
      Federal Trade Commission requirements or other domestic or international
      privacy-related laws and regulations could result in proceedings by governmental
      or regulatory bodies that could potentially harm our businesses, results of
      operations and financial condition. In this regard, there are a large number
      of
      legislative proposals before the United States Congress and various state
      legislative bodies regarding privacy issues related to our businesses. It is
      not
      possible to predict whether or when such legislation may be adopted, and certain
      proposals, if adopted, could harm our business through a decrease in user
      registrations and revenue. These decreases could be caused by, among other
      possible provisions, the required use of disclaimers or other requirements
      before users can utilize our services.





10





**Employees**




As
      of
      December 31, 2007, we employed a total of 30 full-time employees and hundreds
      of
      contracted copywriters. We have never had a work stoppage, and none of our
      employees are represented by a labor union. We consider our employee
      relationships to be positive. If we are unable to retain our key employees
      or we
      are unable to maintain adequate staffing of qualified employees, particularly
      during peak sales seasons, our business would be adversely
      affected.




**Geographic
      Information**




For
      the
      year ended December 31, 2007, approximately 90% of our revenue was generated
      from transactions originating in the United States. All of our fixed assets
      are
      located in the United States, principally in California at our
      headquarters.




**Item
      1A. Risk Factors.**




Our
      future revenues will be derived from sales of our search engine marketing
      services. There are numerous and varied risks, known and unknown, that may
      prevent us from achieving our goals, including those described below. If any
      of
      these risks actually occurs, our business, financial condition or results of
      operation may be materially adversely affected.




**RISKS
      RELATING TO THE COMPANY**





*We
      incurred losses in 2007, and while we experienced significant improvement
      during the third and fourth quarter, our losses may continue for the foreseeable
      future, which will adversely affect our ability to achieve
      profitability.*




We
      incurred a net loss of $1,536,309 for the fiscal year ended December 31, 2007,
      and a net loss of $4,039,908 for the fiscal year ended December 31, 2006.
      We may incur net losses in the future if, among other factors, our revenues
      decline, our stock option expenses rise, increases in our sales and marketing
      activities, regulatory and compliance costs or changes in fair value of issued
      warrants. These issues may prove to be larger than we currently anticipate
      which
      could further increase our net losses. We cannot predict when, or if, we will
      become profitable in the future. Even if we achieve profitability, we may not
      be
      able to sustain it. Through December 31, 2007 we had an accumulated deficit
      of
      $11,903,889.





*We
      may need additional funding to support our operations and capital expenditures,
      which may not be available to us and which lack of availability could adversely
      affect our business.*




We
      have
      no committed sources of additional capital and no current debt. For the
      foreseeable future, we intend to fund our operations and capital expenditures
      from limited cash flow from operations and our cash on hand. If our capital
      resources are insufficient, we will have to raise additional funds. We may
      need
      additional funds to continue our operations, pursue business opportunities
      (such
      as expansion, acquisitions of complementary businesses or the development of
      new
      products or services), to react to unforeseen difficulties or to respond to
      competitive pressures. There can be no assurance that any financing arrangements
      will be available in amounts or on terms acceptable to us, if at all.
      Furthermore, the sale of additional equity or convertible debt securities may
      result in further dilution to existing stockholders. If adequate additional
      funds are not available, we may be required to delay, reduce the scope of or
      eliminate material parts of the implementation of our business strategy,
      including the possibility of additional acquisitions or internally developed
      businesses.





*Our
      limited operating history makes evaluation of our business
      difficult.*




We
      were
      incorporated in the State of Delaware on December 14, 2000, and we have limited
      historical financial data upon which to base planned operating expenses or
      forecast accurately our future operating results. Further, our limited operating
      history will make it difficult for investors and securities analysts to evaluate
      our business and prospects. You must consider our prospects in light of the
      risks, expenses and difficulties we face as an early stage company with a
      limited operating history.




11





*We
      may make acquisitions, which could divert management’s attention, cause
      ownership dilution to our stockholders and be difficult to
      integrate.*




Our
      business strategy depends in part upon our ability to identify, structure and
      integrate acquisitions that are complementary with our business model.
      Acquisitions, strategic relationships and investments in the technology and
      Internet sectors involve a high degree of risk. We may also be unable to find
      a
      sufficient number of attractive opportunities, if any, to meet our objectives.
      Although many technology and Internet companies have grown in terms of revenue,
      few companies are profitable or have competitive market share. Our potential
      strategic acquisition, strategic relationship or investment targets and partners
      may have histories of net losses and may expect net losses for the foreseeable
      future.




Acquisition
      transactions are accompanied by a number of risks that could harm us and our
      business, operating results and financial condition:




·
            we
                could experience a substantial strain on our resources, including
                time and
                money;




·
            our
                management’s attention may be diverted from our ongoing business
                operations;




·
            while
                integrating new companies, we may lose key executives or other employees
                of these companies;




·
            we
                could experience customer dissatisfaction or performance problems
                with an
                acquired company or technology;




·
            we
                may become subject to unknown or underestimated liabilities of an
                acquired
                entity or incur unexpected expenses or losses from such acquisitions;
                and




·
            we
                may incur possible impairment charges related to goodwill or other
                intangible assets or other unanticipated events or circumstances,
                any of
                which could harm our business.




Consequently,
      we might not be successful in integrating any acquired businesses, products
      or
      technologies, and might not achieve anticipated revenue and cost
      benefits.




*We
      may be unable to attract and retain key employees and the loss of our senior
      management could harm our current and future operations and
      prospect.*




We
      are
      heavily dependent on the continued services of George Lichter, our President
      and
      Chief Executive Officer and Scott Brogi, our Chief Financial Officer. Our
      success often depends on the skills, experience and performance of other key
      employees. The loss of any key employee, in particular the departure of Mr.
      Lichter or Mr. Brogi could have an adverse effect on our prospects, business,
      financial condition, and results of operations. Any member of our senior
      management team or key employees may voluntarily terminate his employment with
      us at any time upon short notice. All of our officers and employees are
      employed on an “at will” basis, which may mean they may have less of an
      incentive to stay with us when presented with alternative employment
      opportunities. In addition, **** our
      senior management and **** key
      operating employees hold stock options and restricted stock that have vested.
      These individuals may, therefore, be more likely to leave us if the shares
      of
      our common stock significantly appreciate in value. In addition, various senior
      members of the management team, including Messrs. Lichter and Brogi, have
      provisions in their employment agreements that provide for severance and other
      compensation and benefits upon termination of their employment under certain
      circumstances.





Failure
      to attract and retain necessary technical personnel and skilled management
      could
      adversely affect our business. Our success depends to a significant degree
      upon
      our ability to attract, retain and motivate highly skilled and qualified
      personnel. If we fail to attract, train and retain sufficient numbers of these
      highly qualified people, our prospects, business, financial condition and
      results of operations will be materially and adversely affected.




12





*Our
      senior management has never managed a public company.*




The
      individuals who now constitute our senior management have never had
      responsibility for managing a publicly traded company. Such responsibilities
      include complying with federal securities laws and making required disclosures
      on a timely basis. There can be no assurance that our senior management will
      be
      able to implement and affect programs and policies in an effective and timely
      manner that adequately respond to such increased legal, regulatory compliance
      and reporting requirements. Further, this could impair our ability to comply
      with legal and regulatory requirements such as those imposed by the
      Sarbanes-Oxley Act of 2002. Our failure to do so could lead to the imposition
      of
      fines and penalties and further result in the deterioration of our
      business.




*New
      rules, including those contained in and issued under the Sarbanes-Oxley Act
      of
      2002, may make it difficult for us to retain or attract qualified officers
      and
      directors, which could adversely affect the management of our business and
      our
      ability to obtain or retain listing of our common stock.*




We
      may be
      unable to attract and retain qualified officers, directors and members of board
      of directors **** committees
      required to provide for our effective management as a result of the recent
      and
      currently proposed changes in the rules and regulations which govern
      publicly-held companies, including, but not limited to, certifications from
      executive officers and requirements for financial experts on the board of
      directors. The perceived increased personal risk associated with these recent
      changes may deter qualified individuals from accepting these roles. The
      enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of
      a
      series of new rules and regulations and the strengthening of existing rules
      and
      regulations by the Securities and Exchange Commission **** (the
      “SEC”) **,** as well
      as the adoption of new and more stringent rules by the stock exchanges and
      NASDAQ.




We
      may be
      unable to maintain sufficient insurance as a public company to cover liability
      claims made against our officers and directors. If we are unable to adequately
      insure our officers and directors, we may not be able to retain or recruit
      qualified officers and directors to manage the Company.




**RISKS
      RELATING TO OUR BUSINESS**




*If
      we do not attract and maintain a critical mass of online advertisers and content
      purchasers or licensees, our operating results could continue to be adversely
      affected.*




Our
      success would depend, in part, on the development, growth and maintenance of
      a
      critical mass of online advertisers and content purchasers and licensees, as
      well as a stronger interest in our performance-based advertising and search
      marketing services. If our business is unable to achieve a growing base of
      online advertisers and content licensees, in particular, we may not successfully
      develop or market technologies, products or services that are competitive or
      accepted by online advertisers and content licensees, which comprise a large
      portion of the search marketing-based community. Any decline in the number
      of
      online advertisers and content licensees could adversely affect our operating
      results generally.




*We
      are dependent upon several of the major search engines to continue to provide
      us
      traffic that our merchant advertisers deem to be of value, and if they do not,
      it could have a material adverse effect on the value of our
      services.*




We
      are
      dependent upon several of the major Internet search engines namely Google,
      Yahoo!, MSN and AOL to provide us traffic that our merchant advertisers deem
      to
      be of value. The Web Properties business model is predicated on individuals
      performing keyword searches and through those searches finding our articles
      in
      the non-paid search results portion of the search results page and ultimately
      clicking through to the advertiser on the InfoSearch article. When our traffic
      from these search engines declines for any reason, we suffer a corresponding
      significant decline in revenue. We monitor the traffic delivered to our merchant
      advertisers in an attempt to optimize the quality of traffic we deliver. We
      review factors such as non-human processes, including robots (which create
      automated, artificial traffic), spiders (which review websites for search
      engines in order for the search engines to categorize the content of websites
      but have no direct commercial value to the website owner), scripts (or other
      software), mechanical automation of clicking and other sources and causes of
      low-quality traffic, including, but not limited to, other non-human clicking
      agents. Even with such monitoring in place, there is a risk that a certain
      amount of low-quality traffic will be provided to our merchant advertisers,
      which, if not contained, would detrimentally impact those relationships.
      Low-quality traffic (or traffic that is deemed to be less valuable by our
      merchant advertisers) may prevent us from growing our base of merchant
      advertisers and cause us to lose relationships with existing merchant
      advertisers.




13





*We
      may be subject to litigation for infringing the intellectual property rights
      of
      others.*




Our
      success depends, in part, on our ability to protect our intellectual property
      and to operate without infringing on the intellectual property rights of others.
      There can be no guarantee that any of our intellectual property will be
      adequately safeguarded, or that it will not be challenged by third parties.
      We
      may be subject to patent infringement claims or other intellectual property
      infringement claims that would be costly to defend and could limit our ability
      to use certain critical technologies.




For
      example, Overture Services, a subsidiary of Yahoo!, which operates in certain
      competitive areas with us, owns a patent (U.S. Patent No. 6,269,361), which
      purports to give Overture rights to certain bid-for-placement products and
      pay-per-performance search technologies. Overture is currently involved in
      litigation with two companies relating to this patent (FindWhat and Google).
      These companies are vigorously contesting Overture’s patent. If we were to
      acquire or develop a related product or business model that Overture construes
      as infringing upon the above-referenced patent, then we could be asked to
      license, re-engineer our product(s) or revise our business model according
      to
      terms that may be extremely expensive and/or unreasonable.




Any
      patent litigation could negatively impact our business by diverting resources
      and management attention from other aspects of the business and adding
      uncertainty as to the ownership of technology and services that we view as
      proprietary and essential to our business. In addition, a successful claim
      of
      patent infringement against us and our failure or inability to license the
      infringed or similar technology on reasonable terms, or at all, could have
      a
      material adverse effect on our business.




**RISKS
      RELATING TO OUR INDUSTRY**




*If
      we are unable to compete in the highly competitive performance-based advertising
      and search marketing industries, we may experience reduced demand for our
      products and services.*




We
      operate in a highly competitive environment. We compete with other companies
      in
      the following main areas:




·
            sales
                to online advertisers of performance-based advertising;
                and




·
            content
                licensing services that allow online advertisers and merchants to
                employ
                our content to drive traffic to their
                websites.




Although
      we currently pursue a strategy that allows us to potentially partner with all
      relevant companies in the industry, there are certain companies in the industry
      that may not wish to partner with us.




We
      expect
      competition to intensify in the future because current and new competitors
      can
      enter our market with little difficulty. The barriers to entering our market
      are
      relatively low. In fact, many current Internet and media companies presently
      have the technical capabilities and advertiser bases to enter the search
      marketing services industry. Further, if the consolidation trend continues
      among
      the larger media and search engine companies with greater brand recognition,
      the
      share of the market remaining for us and other smaller search marketing services
      providers could decrease, even though the number of smaller providers could
      continue to increase. These factors could adversely affect our competitive
      position in the search marketing services industry.




14





Some
      of
      our competitors, as well as potential entrants into our market, may be better
      positioned to succeed in this market. They may have:




·
            longer
                operating histories;




·
            more
                management experience;




·
            an
                employee base with more extensive
                experience;





·
            a
                better ability to service customers in multiple cities in the United
                States and internationally by virtue of the location of sales
                offices;




·
            larger
                customer bases;




·
            greater
                brand recognition; and




·
            significantly
                greater financial, marketing and other
                resources.




In
      addition, many current and potential competitors can devote substantially
      greater resources than we can to promotion, website development and systems
      development. Furthermore, currently and in the future to the extent the use
      of
      the Internet and other online services increase, there will likely be larger,
      more well-established and well-financed entities that acquire companies and/or
      invest in or form joint ventures in categories or countries of interest to
      us,
      all of which could adversely impact our business. Any of these trends could
      increase competition and reduce the demand for any of our services.




*If
      we are not able to respond to the rapid technological change characteristic
      of
      our industry, our products and services may not be
      competitive.*




The
      market for our services is characterized by rapid change in business models
      and
      technological infrastructure, and we will need to constantly adapt to changing
      markets and technologies to provide competitive services. We believe that our
      future success will depend, in part, upon our ability to develop our services
      for both our target market and for applications in new markets. We may not,
      however, be able to successfully do so, and our competitors may develop
      innovations that render our products and services obsolete or
      uncompetitive.




*Our
      technical systems are vulnerable to interruption and damage that may be costly
      and time-consuming to resolve and may harm our business and
      reputation.*




A
      disaster could interrupt our services for an indeterminate length of time and
      severely damage our business, prospects, financial condition and results of
      operations. Our systems and operations are vulnerable to damage or interruption
      from fire **,** floods **,** network
      failure **,** hardware
      failure **,** software
      failure **,** power
      loss **,** telecommunications failures **,** break-ins **,** terrorism, war or sabotage **,** computer
      viruses **,** denial
      of service attacks **,** penetration of our network by unauthorized computer users and “hackers” and
      other similar events **,** and
      other unanticipated problems.




We
      may
      not have developed or implemented adequate protections or safeguards to overcome
      any of these events. We also may not have anticipated or addressed many of
      the
      potential events that could threaten or undermine our technology network. Any
      of
      these occurrences could cause material interruptions or delays in our business,
      result in the loss of data or render us unable to provide services to our
      customers. In addition, if a person is able to circumvent our security measures,
      he or she could destroy or misappropriate valuable information or disrupt our
      operations. We have deployed firewall hardware intended to thwart hacker
      attacks. Although we maintain property insurance, our insurance may not be
      adequate to compensate us for all losses that may occur as a result of a
      catastrophic system failure or other loss, and our insurers may not be able
      or
      may decline to do so for a variety of reasons.




15





If
      we
      fail to address these issues in a timely manner, we may lose the confidence
      of
      our online advertisers and content licensees, our revenue may decline and our
      business could suffer.




*We
      rely on outside firms to host our servers, and a failure of service by these
      providers could adversely affect our business and
      reputation.*




We
      rely
      upon third party providers to host our main servers. In the event that these
      providers experience any interruption in operations or cease operations for
      any
      reason or if we are unable to agree on satisfactory terms for continued hosting
      relationships, we would be forced to enter into a relationship with other
      service providers or assume hosting responsibilities ourselves. If we are forced
      to switch hosting facilities, we may not be successful in finding an alternative
      service provider on acceptable terms or in hosting the computer servers
      ourselves. We may also be limited in our remedies against these providers in
      the
      event of a failure of service. In the past, we have experienced short-term
      outages in the service maintained by one of our current co-location providers.
      We also rely on third party providers for components of our technology platform,
      such as hardware and software providers, credit card processors and domain
      name
      registrars. A failure or limitation of service or available capacity by any
      of
      these third party providers could adversely affect our business and
      reputation.




*Our
      quarterly results of operations might fluctuate due to changes in the listing
      parameters employed by search engines to show the results of a particular search
      query, which could adversely affect our revenue and, in turn, the market price
      of our common stock.*




Our
      revenue is heavily dependent on how search engines treat our content in their
      indexes. In the event search engines determine that our content is not high
      quality, such search engines may not rank our content as highly in their indexes
      resulting in a reduction in our traffic, which may cause lower than expected
      revenues. We are greatly dependent on a small number of major search engines,
      namely Google, Yahoo!, MSN and AOL. Search engines tend to adjust their listing
      parameters periodically and each adjustment tends to have an impact on how
      our
      content ranks in their indexes. These constant fluctuations could make it
      difficult for us to predict future revenues.




*Our
      quarterly results of operations might fluctuate due to customer retention rates
      for our content licensing product, which could adversely affect our revenue
      and,
      in turn, the market price of our common stock.*




Our
      revenue is dependent on our client retention rate. A decrease in the retention
      rate could have a significant negative impact on our ongoing revenues, cash
      flows and stock price. An increase in the churn rate could also adversely affect
      our reputation, making it more difficult to obtain new clients, further
      negatively impacting our revenues and cash flows.




*We
      are susceptible to general economic conditions, and a downturn in advertising
      and marketing spending by merchants could adversely affect our operating
      results.*




Our
      operating results will be subject to fluctuations based on general economic
      conditions, in particular those conditions that impact merchant-consumer
      transactions. If there were to be a general economic downturn that affected
      consumer activity in particular, however slight, then we would expect that
      business entities, including our current **** online
      advertisers  potential
      online advertisers, **** current **** content
      licensees and potential **** content
      licensees, could substantially and immediately reduce their advertising and
      marketing budgets. We believe that during periods of lower consumer activity,
      online spending on advertising and marketing is more likely to be reduced,
      and
      more quickly, than many other types of business expenses. These factors could
      cause a material adverse effect on our operating results.




16





*We
      are exposed to risks associated with credit card fraud and credit payment,
      and
      we may suffer losses as a result of fraudulent data or payment failure by
      merchant advertisers.*




Many
      of
      our customers pay by credit card. We may suffer losses as a result of payments
      made with fraudulent credit card data. Our failure to control fraudulent credit
      card transactions adequately could reduce our gross profit margin. In addition,
      under limited circumstances, we extend credit to online advertisers who may
      default on their accounts payable to us.




*Government
      regulation of the Internet and online commerce may adversely affect our business
      and operating results.*




Companies
      engaging in online search, commerce and related businesses face uncertainty
      related to future government regulation of the Internet. Due to the rapid growth
      and widespread use of the Internet, legislatures at the federal and state levels
      are enacting and considering various laws and regulations relating to the
      Internet. Furthermore, the application of existing laws and regulations to
      Internet companies remains somewhat unclear. Our business and operating results
      may be negatively affected by new laws, and such existing or new regulations
      may
      expose us to substantial compliance costs and liabilities and may impede the
      growth in use of the Internet.




The
      application of these statutes and others to the Internet search industry is
      not
      entirely settled. Further, several existing and proposed federal laws could
      have
      an impact on our business, for instance:




·
            the
                Digital Millennium Copyright Act and its related safe harbors are
                intended
                to reduce the liability of online service providers for listing or
                linking
                to third-party websites that include materials that infringe copyrights
                or
                other rights of others; and




·
            the
                CAN-SPAM Act of 2003 and certain state laws are intended to regulate
                interstate commerce by imposing limitations and penalties on the
                transmission of unsolicited commercial electronic mail via the
                Internet.




With
      respect to the subject matter of each of these laws, courts may apply these
      laws
      in unintended and unexpected ways. As a company that provides services over
      the
      Internet, we may be subject to an action brought under any of these or future
      laws governing online services. Many of the services of the Internet are
      automated and companies, such as ours, may be unknowing conduits for illegal
      or
      prohibited materials. It is not known how courts will rule in many
      circumstances; for example, it is possible that some courts could find strict
      liability or impose “know your customer” standards of conduct in certain
      circumstances.




We
      may
      also be subject to costs and liabilities with respect to privacy issues. Several
      Internet companies have incurred costs and paid penalties for violating their
      privacy policies. Further, it is anticipated that new legislation will be
      adopted by federal and state governments with respect to user privacy.
      Additionally, foreign governments may pass laws which could negatively impact
      our business or may prosecute us for our products and services based upon
      existing laws. The restrictions imposed by, and costs of complying with, current
      and possible future laws and regulations related to our business could harm
      our
      business and operating results.




Online
      commerce is relatively new and rapidly changing, and federal and state
      regulations relating to the Internet and online commerce are evolving.
      Currently, there are few laws or regulations directly applicable to the Internet
      or online commerce on the Internet, and the laws governing the Internet that
      exist remain largely unsettled. New Internet laws and regulations could dampen
      growth in use and acceptance of the Internet for commerce. In addition,
      applicability to the Internet of existing laws governing issues such as property
      ownership, copyrights and other intellectual property issues, libel, obscenity
      and personal privacy is uncertain. The vast majority of those laws were adopted
      prior to the advent of the Internet and related technologies and, as a result,
      do not expressly contemplate or address the unique issues presented by the
      Internet and related technologies. Further, growth and development of online
      commerce have prompted calls for more stringent consumer protection laws, both
      in the United States and abroad. The adoption or modification of laws or
      regulations applicable to the Internet could have a material adverse effect
      on
      our Internet business operations. We also are subject to regulation not
      specifically related to the Internet, including laws affecting direct marketers
      and advertisers.




17





In
      addition, in 1998, the Internet Tax Freedom Act was enacted, which generally
      placed a three-year moratorium on state and local taxes on Internet access
      and
      on multiple or discriminatory state and local taxes on electronic commerce.
      This
      moratorium has been extended until but we cannot predict whether this moratorium
      will be extended in the future or whether future legislation will alter the
      nature of the moratorium. If this moratorium is not extended in its current
      form, state and local governments could impose additional taxes on
      Internet-based transactions, and these taxes could decrease our ability to
      compete with traditional retailers and could have a material adverse effect
      on
      our business, financial condition, results of operations and cash
      flow.




In
      addition, several telecommunications carriers have requested that the Federal
      Communications Commission (“FCC”) regulate telecommunications over the Internet.
      Due to the increasing use of the Internet and the burden it has placed on the
      current telecommunications infrastructure, telephone carriers have requested
      the
      FCC to regulate Internet service providers and impose access fees on those
      providers. If the FCC imposes access fees, the costs of using the Internet
      could
      increase dramatically. This could result in the reduced use of the Internet
      as a
      medium for commerce, which could have a material adverse effect on our Internet
      business operations.




*We
      may incur liabilities for the activities of users of our service, which could
      adversely affect our service offerings.*




The
      law
      relating to the liability of providers of online services for activities of
      their users and for the content of their merchant advertiser listings is
      currently unsettled and could damage our business, financial condition and
      operating results. Our insurance policies may not provide coverage for liability
      arising out of activities of our users or merchant advertisers for the content
      of our listings. Furthermore, we may not be able to obtain or maintain adequate
      insurance coverage to reduce or limit the liabilities associated with our
      businesses. We may not successfully avoid civil or criminal liability for
      unlawful activities carried out by consumers of our services or for the content
      of our listings. Our potential liability for unlawful activities of users of
      our
      services or for the content of our listings could require us to implement
      measures to reduce our exposure to such liability, which may require us, among
      other things, to spend substantial resources or to discontinue certain service
      offerings.




**RISKS
      RELATING TO OUR**  **COMMON
      STOCK**




*Applicable
      SEC rules governing the trading of “penny stocks” limits the trading and
      liquidity of our common stock which may affect the trading price of our common
      stock.*




Our
      common stock is currently quoted on the NASD’s OTC Bulletin Board, and trades
      below $5.00 per share **.** Therefore,
      our common stock is considered a “penny stock” and subject to SEC rules and
      regulations which impose limitations upon the manner in which such shares may
      be
      publicly traded. These regulations require the delivery, prior to any
      transaction involving a penny stock, of a disclosure schedule explaining the
      penny stock market and the associated risks. Under these regulations, certain
      brokers who recommend such securities to persons other than established
      customers or certain accredited investors must make a special written
      suitability determination regarding such a purchaser and receive such
      purchaser’s written agreement to a transaction prior to sale. These regulations
      have the effect of limiting the trading activity and reducing the liquidity
      of
      an investment in our common stock.




*The
      market price of our common stock is likely to be highly volatile and subject
      to
      wide fluctuations.*




The
      market price of our common stock is likely to be highly volatile and could
      be
      subject to wide fluctuations in response to a number of factors that are beyond
      our control, including:




·
            announcements
                of new products or services by our competitors;
                and




18





·
            fluctuations
                in revenue attributable to changes in the search engine listing parameters
                that rank the relevance of our
                content.




In
      addition, the market price of our common stock could be subject to wide
      fluctuations in response to:




·
            quarterly
                variations in our revenues and operating
                expenses;




·
            announcements
                of technological innovations or new products or services by us;
                and




·
            significant
                sales of our common stock by selling
                stockholders.




*Our
      operating results may fluctuate significantly, and these fluctuations may cause
      our common stock price to fall.*




Our
      operating results will likely vary in the future primarily as the result of
      fluctuations in our revenues and operating expenses. If our results of
      operations do not meet the expectations of current or potential investors,
      the
      price of our common stock may decline.




*There
      is a limited public market for shares of our common stock, which may make it
      difficult for investors to sell their shares.*




There
      is
      a limited public market for shares of our common stock. An active public market
      for shares of our common stock may not develop, or if one should develop, it
      may
      not be sustained. Therefore, investors may not be able to find purchasers for
      their shares of our common stock.




**Item
      2. Description of Property.**




The
      Company's corporate headquarters are located in Marina Del Rey, California.
      The
      Company’s lease runs through July 31, 2008, with monthly payments of $17,980
      from June 1, 2006 through May 31, 2007, $18,520 from June 1, 2007 through May
      31, 2008 and $19,075 from June 1, 2008 through July 31, 2008.





**Item
      3. Legal Proceedings.**





From
      time
      to time, we may be involved in litigation relating to claims arising out of
      our
      operations in the normal course of business. We currently are not a party to
      any
      legal proceedings, the adverse outcome of which, in management’s opinion,
      individually or in the aggregate, would have a material adverse effect on our
      results of operations or financial position. ****





On
      February 28, 2007, the SEC commenced an enforcement action against Mr. Louis
      Zehil, a partner of our former external legal counsel, McGuireWoods LLP, and
      our
      former corporate secretary, alleging that he had engaged in a fraudulent scheme
      to obtain and sell to the investing public shares of securities in several
      other
      companies in violation of the antifraud and registration provisions of the
      federal securities laws. The SEC enforcement proceeding does not include
      allegations with respect to our securities; however, we commenced a review
      into
      possible unauthorized trading in our common stock facilitated by Mr. Zehil.
      In
      the fourth quarter of 2007 we reached a settlement with McGuireWoods LLP related
      to their involvement in these activities. We cannot predict the outcome of
      this
      investigation or whether the investigation and/or any potential proceedings
      resulting from this conduct might have a material adverse impact on the
      Company.




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





None.




19




**PART
      II**





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





Our
      common stock is traded on the OTC Bulletin Board under the symbol “ISHM.OB”. The
      quotations reflect inter-dealer prices, without retail mark-up, mark-down or
      commission, and may not represent actual transactions.





The
      following table sets forth the high and low bid prices of our common stock
      on
      the OTC Bulletin Board for the stated calendar quarters.





2006
            
            2007High
            
            Low
            
            High
            
            LowFirst
                Quarter
            
            
            0.74
            
            
            0.41
            
            
            0.27
            
            
            0.18Second
                Quarter
            
            
            0.48
            
            
            0.23
            
            
            0.22
            
            
            0.12Third
                Quarter
            
            
            0.26
            
            
            0.10
            
            
            0.18
            
            
            0.11Fourth
                Quarter
            
            
            0.26
            
            
            0.12
            
            
            0.18
            
            
            0.08





The
      closing bid price of our common stock on April 11, 2008 was $0.06. As of April
      11, 2008, the Company had approximately 2,014 stockholders of record.





The
      Company has never declared or paid dividends on its common stock and currently
      does not intend to pay dividends on its common stock in the foreseeable future
      so that it may reinvest earnings in its business. The payment of dividends,
      if
      any, in the future is at the discretion of the board of directors.





**Item
      6. Management’s Discussion and Analysis of Operations and Financial
      Condition.**





The
      following discussion should be read in conjunction with the attached financial
      statements and notes thereto. Except for the historical information contained
      herein, the matters discussed below are forward-looking statements that involve
      certain risks and uncertainties, including, among others, the risks and
      uncertainties discussed below. **** Our
      actual results could differ materially from those anticipated in the
      forward-looking statements as a result of various factors, including the risks
      discussed in “Risk Factors” and elsewhere in this report. See “Forward-Looking
      Statements.”





CRITICAL
      ACCOUNTING POLICIES





Revenue
      Recognition





The
      Company recognizes revenue on arrangements in accordance with SEC **** Staff
      Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" and
      No. 104 "Revenue Recognition," and Emerging Issues Task Force Issue 00-21,
      "Revenue Arrangements with Multiple Deliverables." In all cases, revenue is
      recognized only when the price is fixed or determinable, persuasive evidence
      of
      an arrangement exists, the service is performed, and collectibility of the
      resulting receivable is reasonably assured.





The
      Company’s revenues are derived principally from the licensing or sale of unique
      content developed for its clients under the TrafficBuilder program or the sale
      of advertising on a CPC basis to one of the websites in the Web Properties
      group.




20





For
      the
      TrafficBuilder program, the Company derives revenue through the licensing and
      sale of content to third party website **** owners.
      Content sale revenue is recognized when the content is delivered to and accepted
      by the client. Revenue earned through a 12-month license agreement is treated
      as
      an installment sale and prorated revenue is recognized on a monthly basis over
      the life of the agreement. Clients subject to a 12-month licensing agreement
      have the right to continue leasing the content at the end of the term on a
      month-to-month basis. In late September 2005, the Company added a month-to-month
      licensing program with higher fees. Revenue earned under month-to-month
      licensing agreements is recognized on a monthly basis. As part of the
      TrafficBuilder program, the Company also earns revenue from related SEO
      services, Web Design services, Web **** Analytics
      and Link Building sales. Revenue earned from SEO and Web Design services are
      recognized as delivered while revenue from Web Analytics and Link Building
      services are recognized on a monthly basis pursuant to a month-to-month license
      agreement. Client deposits received in advance of work being completed for
      such
      services are deferred until the revenue is earned.





The
      Company derives revenue from the ArticleInsider and Popdex websites in the
      Web
      Properties group on a CPC basis as traffic is distributed to Google AdSense
      and
      Kontera advertisers. The Company has established relationships with Google
      and
      Kontera through which they pays the Company monthly fees for clicks on
      advertisements sponsored by Google or Kontera and displayed on the Company’s
      websites. The Company recognizes revenue associated with the Google
      AdSense **** and
      Kontera programs as reported by those partners to the Company at the end of
      each
      month.





Cost
      of Sales




A
      portion
      of the Company’s cost of sales is related to content developed under the
      TrafficBuilder program and for the ArticleInsider and Popdex websites as part
      of
      the Web Properties group.




For
      the
      TrafficBuilder program, content developed pursuant to outright sales and
      licensing is developed through editors, keyword analysts and independent
      contractor writers who analyze the keyphrases, write and edit the content.
      The
      Company recognizes and expenses those costs related to the content developed
      for
      outright sales to clients as the cost is incurred, while the cost of content
      development for licensing subject to a 12-month contract is amortized over
      the
      life of the contract.





Content
      developed pursuant to the Company's ArticleInsider website is capitalized to
      content development since it increases the value of the network and yields
      revenue to the Company over a period of years. These costs have been amortized
      over an expected life of thirty-six months. The Company is no longer developing
      new content for the ArticleInsider website, a practice which was discontinued
      in
      2005. The total value of unamortized content as of December 31, 2007 and
      December 31, 2006 was $0 and $4,082, respectively. Total amortization expense
      included in cost of sales for the year ended December 31, 2007 and 2006 was
      $4,082 and $394,333, respectively.





Valuation
      of Derivative Instruments





SFAS
      No.
      133 “Accounting for Derivative Instruments and Hedging Activities” requires that
      embedded derivative instruments be bifurcated and assessed, along with
      free-standing derivative instruments such as warrants, on their issuance date
      and in accordance with EITF 00-19 “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” to
      determine whether they should be considered a derivative liability and measure
      at their fair value for accounting purposes. In determining the appropriate
      fair
      value, the Company uses the Black-Scholes option pricing formula
      (“Black-Scholes”). At each period end, or when circumstances indicate that the
      Company reevaluate the accounting of the derivative liability, derivative
      liabilities are adjusted to reflect changes in fair value, with any increase
      or
      decrease in the fair value being recorded in results of operations as
      adjustments to fair value of derivatives.





Equity
      Warrant Asset





We
      account for the equity warrant asset with net settlement terms to purchase
      preferred stock of Demand Media as a derivative. Under the terms of the warrant,
      InfoSearch is entitled to purchase 125,000 shares of Series C Preferred Stock
      of
      Demand Media at an exercise price of $3.85 per share. Under the accounting
      treatment required by SFAS No. 133, equity warrant assets with net settlement
      terms are recorded at fair value and are classified as investments on the
      balance sheet.


21





The
      fair
      value of the Demand Media warrant is reviewed quarterly. We value the warrant
      using the Black-Scholes option pricing model, which incorporates the following
      material assumptions:





·
            Underlying
                asset value was estimated based on information available, including
                any
                information regarding subsequent rounds of funding or initial public
                offerings.





·
            Volatility,
                or the amount of uncertainty or risk about the size of the changes
                in the
                warrant price, was based on public stock indices similar in nature
                to the
                business in which Demand Media operates and yielded a volatility
                of
                123.05%.





·
            The
                risk-free interest rate was 3.45%





·
            Expected
                remaining life of 3.5 years based on the contractual term of the
                warrant.




Any
      changes from the grant date fair value of the equity warrant asset will be
      recognized as increases or decreases to the equity warrant asset on our balance
      sheet and as a change in the fair value of warrants within non-operating
      expenses in the consolidated statement of operations.





During
      the year ended December 31, 2007, the grant date fair value of the equity
      warrant asset decreased by $196,788 from its original value of $308,837 at
      December 31, 2006 primarily due to a shortening of duration and a change in
      the
      public securities used to estimate volatility.





**RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS**




In
      February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
      155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”),
      which amends SFAS No.133, “Accounting for Derivatives Instruments and Hedging
      Activities” (“SFAS No. 133”) and SFAS No. 140, “Accounting for Transfers and
      Servicing of Financial Assets and Extinguishment of Liabilities”(“SFAS No.
      140”). SFAS No. 155 amends SFAS No. 133 to narrow the scope exception for
      interest-only and principal-only strips on debt instruments to include only
      such
      strips representing rights to receive a specified portion of the contractual
      interest or principal cash flows. SFAS No. 155 amends SFAS No. 140 to allow
      qualifying special-purpose entities to hold a passive derivative financial
      instrument pertaining to a beneficial interest that itself is a derivative
      instrument. SFAS No. 155 is effective for financial instruments acquired,
      issued, or subject to a remeasurement event for fiscal years beginning after
      September 15, 2006. The Company has reviewed this pronouncement and
      believes it does not have a material impact on the Company's financial position,
      results of operations or cash flows.




In
      March
      2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
      Assets” (“SFAS No.156”), which provides an approach to simplify efforts to
      obtain hedge-like (offset) accounting. This Statement amends SFAS No. 140 with
      respect to the accounting for separately recognized servicing assets and
      servicing liabilities. SFAS No. 156(1) requires an entity to recognize a
      servicing asset or servicing liability each time it undertakes an obligation
      to
      service a financial asset by entering into a servicing contract in certain
      situations; (2) requires that a separately recognized servicing asset or
      servicing liability be initially measured at fair value, if practicable; (3)
      permits an entity to choose either the amortization method or the fair value
      method for subsequent measurement for each class of separately recognized
      servicing assets or servicing liabilities; (4) permits at initial adoption
      a
      one-time reclassification of available-for-sale securities to trading securities
      by an entity with recognized servicing rights, provided the securities
      reclassified offset the entity's exposure to changes in the fair value of the
      servicing assets or liabilities; and (5) requires separate presentation of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the balance sheet and additional disclosures for all separately recognized
      servicing assets and servicing liabilities. SFAS No. 156 is effective for all
      separately recognized servicing assets and liabilities as of the beginning
      of an
      entity's fiscal year that begins after September 15, 2006, with earlier adoption
      permitted in certain circumstances. The Statement also describes the manner
      in
      which it should be initially applied. The Company has reviewed this
      pronouncement and believes it does not have a material impact on the Company's
      financial position, results of operations or cash flows.


22





In
      July
      2006, the FASB released FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109* (FIN
      48).
      FIN 48 clarifies the accounting and reporting for uncertainties in income tax
      law. This interpretation prescribes a comprehensive model for the financial
      statement recognition, measurement, presentation and disclosure of uncertain
      tax
      positions taken or expected to be taken in income tax returns. This Statement
      is
      effective for fiscal years beginning after December 15, 2006. The adoption
      of
      FIN 48 did not have a material impact on The Company’s results of operations and
      financial position.





In
      September 2006, the FASB issued Statement of Financial Accounting Issues No.
      157, “Fair Value Measurements” (“SFAS No. 157”), which defines the fair value,
      establishes a framework for measuring fair value and expands disclosures about
      fair value measurements. SFAS No. 157 is effective for financial statements
      issued for fiscal years beginning after November 15, 2007, and interim periods
      within those fiscal years. Early adoption is encouraged, provided that the
      Company has not yet issued financial statements for that fiscal year, including
      any financial statements for an interim period within that fiscal year. The
      Company has reviewed this pronouncement and believes it does not have a material
      impact on the Company's financial position, results of operations or cash
      flows.





In
      September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements” (“SAB 108”). SAB108 provides guidance on the
      consideration of the effects of prior year misstatements in quantifying current
      year misstatements for the purpose of a materiality assessment. SAB 108
      establishes an approach that requires quantification of financial statement
      errors based on the effects of each of the company's balance sheet and statement
      of operations and the related financial statement disclosures. SAB 108 permits
      existing public companies to record the cumulative effect of initially applying
      this approach in the first year ending after November 15, 2006 by recording
      the
      necessary correcting adjustments to the carrying values of assets and
      liabilities as of the beginning of that year with the offsetting adjustment
      recorded to the opening balance of retained earnings. Additionally, the use
      of
      the cumulative effect transition method requires detailed disclosure of the
      nature and amount of each individual error being corrected through the
      cumulative adjustment and how and when it arose. The adoption of this
      pronouncement has not had a material impact on the Company's financial position
      or statement of operations and cash flows.





In
      September 2006, the FASB issued SFAS No. 158, “Employer's Accounting for Defined
      Benefit Pension and Other Post Retirement Plans”. SFAS No. 158 requires
      employers to recognize in its statement of financial position an asset or
      liability based on the retirement plan's over or under funded status. SFAS
      No.
      158 is effective for fiscal years ending after December 15, 2006. The adoption
      of this pronouncement has not had an impact on the Company's financial position
      or statement of operations and cash flows.





In
      February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
      Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits
      entities to choose to measure at fair value many financial instruments and
      certain other items that are not currently required to be measured at fair
      value. Subsequent changes in fair value for designated items will be required
      to
      be reported in earnings in the current period. SFAS No. 159 also establishes
      presentation and disclosure requirements for similar types of assets and
      liabilities measured at fair value. SFAS No. 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently assessing the effect
      of implementing this guidance, which directly depends on the nature and extent
      of eligible items elected to be measured at fair value, upon initial application
      of the standard on January 1, 2008.





In
      December 2007, the FASB issued SFAS No. 141(revised 2007), *Business
      Combinations* (“SFAS
      No. 141R”), which revises current purchase accounting guidance in SFAS
      No. 141, *Business
      Combinations* .
      SFAS
      No. 141R requires most assets acquired and liabilities assumed in a
      business combination to be measured at their fair values as of the date of
      acquisition. SFAS No. 141R also modifies the initial measurement and
      subsequent remeasurement of contingent consideration and acquired contingencies,
      and requires that acquisition related costs be recognized as expense as incurred
      rather than capitalized as part of the cost of the acquisition. SFAS
      No. 141R is effective for fiscal years beginning after December 15,
      2008 (the Company’s fiscal 2009) and is to be applied prospectively to business
      combinations occurring after adoption. The impact of SFAS No. 141R on the
      Company’s consolidated financial statements will depend on the nature and extent
      of the Company’s future acquisition activities.


23





In
      December 2007, the FASB issued SFAS No. 160. “Noncontrolling Interests in
      Consolidated Financial Statements-and Amendment of ARB No. 51.” SFAS 160
      establishes accounting and reporting standards pertaining to ownership interests
      in subsidiaries held by parties other than the parent, the amount of net income
      attributable to the parent and to the noncontrolling interest, changes in a
      parent’s ownership interest, and the valuation of any retained noncontrolling
      equity investment when a subsidiary is deconsolidated. This statement also
      establishes disclosure requirements that clearly identify and distinguish
      between the interests of the parent and the interests of the noncontrolling
      owners. SFAS 160 is effective for fiscal years beginning on or after December
      15, 2008. Management has reviewed this new standard and believes that it
      has no impact on the financial statements of the Company at this time; however,
      it may apply in the future.





In
      March
      2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve financial
      reporting about derivative instruments and hedging activities by requiring
      enhanced disclosures to enable investors to better understand their effects
      on
      an entity's financial position, financial performance, and cash flows. SFAS
      161
      achieves these improvements by requiring disclosure of the fair values of
      derivative instruments and their gains and losses in a tabular format. It also
      provides more information about an entity's liquidity by requiring disclosure
      of
      derivative features that are credit risk-related. Finally, it requires
      cross-referencing within footnotes to enable financial statement users to locate
      important information about derivative instruments. SFAS 161 will be effective
      for financial statements issued for fiscal years and interim periods beginning
      after November 15, 2008, will be adopted by the Company beginning in the first
      quarter of 2009. The Company does not expect there to be any significant impact
      of adopting SFAS 161 on its financial position, cash flows and results of
      operations.




In
      December 2007, the SEC issued SAB No. 110, *Certain Assumptions Used in
      Valuation Methods - Expected Term* (“SAB
      110”) According
      to SAB
      110, under certain circumstances the SEC staff will continue to accept beyond
      December 31, 2007 the use of the simplified method in developing an estimate
      term of share options that possess certain characteristics in accordance with
      SFAS 123(R) beyond December 31, 2007. We will adopt SAB 110 effective
      January 1, 2008 and continue to use the simplified method in developing the
      expected term used for our valuation of stock-based
      compensation.


RESULTS
      OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006





REVENUES





Revenues
      decreased 35.4% to $4,910,304 for the year ended December 31, 2007 from
      $7,600,060 for the year ended December 31, 2006. The decrease in revenue is
      a
      result of a 20.5% reduction in the sales and licensing of Content products
      due
      to the decision by Company Management to eliminate sales of our TrafficBuilder
      products to certain underperforming customer categories and a 92.0% reduction
      in
      revenue associated with our Web Properties group, although much of this decrease
      was simply due to the extinguishment of deferred revenue as described
      below.





For
      the
      fourth fiscal quarter of 2007, however, revenues increased 5.3% to $1,253,387
      from $1,190,000 for the three months ended September 30, 2007 as higher
      sequential levels of content sales more than overcame decreasing Web Properties
      revenue levels.





Revenue
      from TrafficBuilder was $4,784,068 in 2007 versus $6,016,080 in **** 2006.
      Revenue from TrafficBuilder products combined for 97.4% of total revenues for
      2007 while revenue **** for
      Web
      Properties accounted for only 2.6% in 2007. This compares with 79.2% and 20.8%
      of revenues attributable to TrafficBuilder and Web Properties, respectively,
      in
      2006.





Revenue
      from Web Properties was $126,236 in 2007 versus $1,583,980 in 2006. Most of
      the
      decrease was due to the extinguishment of deferred revenue in 2006, as the
      actual revenue through Google AdSense decreased by only $103,689 to $126,236
      in
      2007 from $229,925 in 2006, and the remaining approximately $1,354,055 booked
      as
      revenue was simply deferred revenue being relieved from the balance sheet for
      which cash had been received in 2004 and early 2005.





Looking
      forward to the fiscal year ending December 31, 2008, we expect revenues to
      be
      challenged as a result of the expiration of our 18 month agreement
      with Demand Media on March 31, 2008, which accounted for a significant portion
      (24.8%) of 2007 revenue. While the Company has signed a new agreement with
      Demand Media to produce expert content for one of its high-profile websites,
      at
      this point the Company only has commitments for $369,000 in 2008 revenue versus
      the $1,217,124 of total 2007 revenues generated from the initial contract.
      As a
      result, going forward revenues and cash flows will be significantly impacted
      unless this contract can effectively be replaced by Demand Media or other
      similar customers.


24





COST
      OF
      SALES AND GROSS PROFIT





The
      Company had a gross profit of $3,517,417 and a gross margin of 71.6% for the
      year ended December 31, 2007 versus gross profits of $4,926,375 and a gross
      margin of 64.8% for the comparable period of 2006. The cost of sales consists
      principally of traffic purchased for resale, customer service and content
      developed for sale or license to our clients.





The
      decrease in gross profit for the year ended December 31, 2007 over the year
      ended December 31, 2006 is mainly due to reduced revenues from the continued
      aging of inactive websites in the Web Properties Group resulting in a reduction
      in search engine traffic and revenue, combined with Management’s decision to
      focus sales of our TrafficBuilder products on a subset of potential clients
      who
      could benefit the most from our products and services. This was partially offset
      by the Company rationalizing headcount levels and costs to those required for
      these new targeted prospects. We spent $0 in 2007 acquiring traffic for our
      affiliate program that contributed to Web Properties revenue of $126,236 versus
      the $937,960 we spent in 2006 associated with $1,583,980 in Web Properties
      revenue. We discontinued the affiliate network program shortly after the
      first quarter of 2006 as we had harvested a substantial portion of the remaining
      deferred revenue associated with the Web Properties group.





For
      the
      years ended December 31, 2007 and 2006, $0 and $49,360, respectively, of content
      development costs **** of
      the
      Company were capitalized and amortized over their useful lives. The Company
      recorded $0 and $192,808 in amortization expenses during 2007 and 2006,
      respectively, associated with capitalized development costs for the Web
      Properties group and recorded $4,082 and $201,525 in amortization expenses
      during 2007 and 2006, respectively, associated with capitalized content
      development costs for TrafficBuilder.





The
      gross
      profit attributable to Web Properties was $69,282 in 2007 versus $596,940 in
      2006 and the gross profit attributable to TrafficBuilder was $3,448,135 in
      2007
      versus $4,329,435 in 2006. The gross margin experienced by Web Properties was
      54.9% in 2007 versus 37.7% in 2006 and the gross margin experienced by
      TrafficBuilder was **** 72.1%
      in
      2007 versus 72.0% in 2006.





OPERATING
      EXPENSES





Operating
      expenses consist of selling expenses and general and administrative expenses.





Selling
      expenses consist of costs incurred to develop and implement marketing and sales
      programs for the Company’s products for TrafficBuilder. These include costs
      associated with the marketing department participation in trade shows, media
      development and advertising. These selling expenses also include the costs
      of
      hiring and maintaining a sales department. These costs decreased 14.4% from
      $2,138,695 for the year ended December 31, 2006 to $1,831,548 in the same period
      of 2007 as the Company streamlined sales and marketing efforts and adjusted
      the
      compensation schedule to align the members of the sales team more specifically
      with the overall goals of the Company.





General
      and administrative expenses include personnel, rent, benefits, accounting,
      legal
      costs as well as the expensing of stock options and restricted stock grants,
      depreciation and amortization and other overhead related costs. These costs
      decreased 61.0% to $3,754,240 for the year ended December 31, 2007 **** from
      $9,600,049 for the year ended December 31, 2006. This decrease is primarily
      a
      result of a reduced number of employees and executive compensation costs
      including non-cash equity compensation expenses. Expenses associated with equity
      grants to consultants, employees and members of the board of directors from
      continuing operations for the year ended December 31, 2006 were $4,144,794,
      which included expenses associated with stock option grants of $1,280,890 and
      restricted stock issued to certain employees in lieu of cash compensation of
      $45,000, primarily resulting from the Company’s decision to accelerate the
      vesting of outstanding stock options and restricted stock grants on June 30,
      2006 and expensing them. Expenses for depreciation and amortization from
      continuing operations decreased to $118,535 for the year ended December 31,
      2007
      from $557,317 for the same period in 2006. Depreciation and amortization
      expenses decreased in 2007 primarily as a result of decreased amortization
      expenses associated with the reduction in amortization period to one year for
      capitalized content development costs associated with our Web Properties group
      in 2006. Amortization for capitalized content development decreased to $4,083
      in
      2007 from $394,333 the previous year.


25





LOSS
      FROM
      OPERATIONS


The
      resulting Loss from Operations decreased 69.6% to $2,068,371 for the year ended
      December 31, 2007 from $6,812,369 for the year ended December 31, 2006, largely
      due to significantly lower expense levels during the second half of 2007.





And
      for
      the fourth fiscal quarter ending December 31, 2007, the Company posted an
      Operating Profit of $24,390, continuing the trend of improvement during the
      second half of the year from an Operating Loss of $184,491 during the third
      quarter of 2007 which itself was 82.8% lower than the second quarter of
      2007.





OTHER
      NON-OPERATING INCOME/EXPENSE





Other
      non-operating net income in 2007 is comprised of $252,707 in net income from
      a
      lawsuit settlement in December 2007, a change in the fair value of warrants
      of
      $233,285 as compared to $1,728,433 in 2006 and net interest income of $52,153
      as
      compared to $92,414 in 2006.





Other
      non-operating net income in 2006 also included liquidated damages associated
      with the November 2005 private placement of the Company’s securities and
      interest income received on the cash balances the Company maintains in money
      market and restricted cash accounts. Liquidated damages expense (including
      interest) totaled $509,904 in for the year ended December 31, 2006.





DISCONTINUED
      OPERATIONS





During
      the year ended December 31, 2007 there were no discontinued
      operations.  During
      the year ended December 31, 2006, the gain on sale of the assets of
      Answerbag **** was
      $1,919,962, partially offset by the loss from discontinued operations of
      $412,132, which included depreciation and amortization expenses of $58,212
      and
      restricted stock expenses of $45,000. Expenses associated with option grants
      to
      employees involved in the operation of Answerbag were $33,451 for the year
      ended
      December 31, 2006.





TAXES





For
      the
      year ended December 31, 2007, the Company incurred a tax liability of $6,083,
      comprised of $1,783 for Delaware corporate taxes, $3,050 for California state
      taxes and $1,250 in Federal taxes.





For
      the
      year ended December 31, 2006, the Company incurred a tax liability of $18,585,
      comprised of $8,300 for Delaware corporate taxes and $10,285 for California
      state taxes.




NET
      LOSS





We
      had a
      net loss of $1,536,309 or $0.03 per share in the year ended December 31,
      2007, compared to net loss of **$** 4,039,908,
      or $0.09 per share **,** in the
      comparable period of 2006. This decrease was due to a decrease in revenues
      and
      gross profit more than offset by a larger decrease Operating Expenses such
      as
      non-cash equity compensation, employee compensation and professional fees as
      well as liquidated damages.





LIQUIDITY
      AND CAPITAL RESOURCES





Cash
      decreased by $1,708,415 to $787,239 for the year ended December 31, 2007
      relative to the Company’s fiscal year ending December 31, 2006. This decline is
      mainly due to the use of cash on hand to fund operations principally during
      the
      first half of the year ended December 31, 2007, partially offset by the proceeds
      of $450,000 from a legal settlement in the fourth quarter of 2007. ****


26





Cash
      used
      in operating activities consisted principally of cash used in the net loss
      of
      $1,536,309 along with the change in fair value of warrants of $233,285. This
      was
      offset by non-cash charges for equity based compensation of $157,959,
      depreciation and amortization of $118,535, plus the net change of current assets
      and current liabilities. The decrease in current assets and liabilities resulted
      primarily from increases in accounts receivable of $171,277 and an increase
      in
      deferred revenue of $72,127, and netted against a decrease in accounts payable,
      accrued expenses and other payables of $531,002.





Cash provided
      by investing activities for years ended December 31, 2007 and 2006 was $271,567
      and $1,989,729, respectively. For the year ended December 31, 2007, cash
      provided by investing activities consisted primarily of the release of
      restricted cash of $360,530. During 2006, cash provided by investing activities
      consisted principally of the net proceeds from the sale of the Answerbag assets
      of $2,937,149, offset by cash payments for the purchase of Answerbag of
      $479,888, an increase in restricted cash of $380,530, the purchase of property
      and equipment of $37,640 and $49,361 for development of content.





Cash
      used
      in financing activities for the year ended December 31, 2007 of $14,021,
      consisted primarily of $17,621 in payments related to capital lease obligations
      which are now entirely satisfied, partially offset by stock warrants exercised
      for $3,600. Cash used in financing activities for the year ended December 31,
      2006 of $27,229 consisted of $33,004 in principal payments on capital leases
      partially offset by $5,775 for the exercise of stock options.





As
      of
      December 31, 2007, the Company had cash and cash equivalents amounting to
      $787,239 a decrease of $1,708,415 from the balance at December 31, 2006.
      Restricted cash for the year ending 2007 was $20,000 in a certificate of deposit
      securing payment obligations. Cash and cash equivalents include cash on hand
      and
      cash in banks in demand and time deposit accounts with maturities of 90 days
      or
      less. At year ending December 31, 2006, the Company had $380,530 in restricted
      cash including $302,108 in escrow from the sale of Answerbag, Inc., $23,422
      held
      at various financial institutions and online payment processing firms, and
      $55,000 in certificate of deposits securing payment obligations. The Company
      had
      net working capital of $170,999 and $1,750,263 at December 31, 2007 and December
      31, 2006. The use of cash from operating activities declined significantly
      in
      the final quarter of 2007 due to significant reductions in going forward
      operating expense levels from earlier in the year. Accordingly, the Company
      did not need any additional capital during 2007, as forecast.





Going
      forward, we expect revenues to be challenged as a result of the expiration
      of an
      agreement with Demand Media signed in the fourth quarter of 2006 which expired
      on March 31, 2008 and accounted for a significant portion (24.8%) of 2007
      revenue. While the Company has signed a new agreement with Demand Media to
      produce expert content for one of its high-profile websites, at this point
      the
      Company only has commitments for $369,000 in 2008 revenue versus the $1,217,124
      of total 2007 revenues generated from the initial contract. As a result, going
      forward revenue and cash flows will be significantly impacted unless this
      contract can effectively be replaced by Demand Media or other similar customers.
      This change has resulted in the Company’s auditors issuing a going concern
      qualification in their opinion letter.





There
      are
      no material commitments for additional capital expenditures at December 31,
      2007
      or December 31, 2006. The operating lease for the offices has future minimum
      lease payments of $130,750 in 2008.





FINANCING


Although
      the Company posted a net loss of $1,536,309 and cash actually decreased by
      $1,922,201 for the first half of 2007, this was reduced to a net loss of $4,588
      for the second half of the year as a result of significantly lower operating
      expenses. As a result the Company had no need to seek outside financing during
      2007 due to its improved operating performance, as cash from operations met
      all
      cash requirements. After the extinguishment of its capital leases in the
      fourth quarter, the Company has no debt obligations.


27




The
      Company is attempting to attract major accounts to replace revenues
      from Demand Media, partnering with resellers to increase its effective
      distribution, providing new payment terms to clients as well as looking for
      acquisition opportunities. As a result the Company will seek external financing
      in 2008 to allow it to support both working capital and acquisition
      requirements.





OFF-BALANCE
      SHEET ARRANGEMENTS


The
      Company has no off-balance sheet arrangements at December 31, 2007 or December
      31, 2006.





**Item
      7. Financial Statements.**





The
      financial statements and related financial statement schedules are included
      herein and filed as a part of this report beginning on page F-1.





**Item
      8. Changes in and Disagreements With Accountants on Accounting and Financial
      Disclosure.**





None.





**Item
      8A. Controls and Procedures.**





**(a)
      Evaluation of Disclosure Controls and Procedures**





The
      term
“disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e)
      of the Exchange Act. This term refers to the controls and procedures of a
      company that are designed to ensure that information required to be disclosed
      by
      a company in the reports that it files under the Exchange Act is recorded,
      processed, summarized, and reported within the required time periods. Our Chief
      Executive Officer and our Chief Financial Officer have evaluated the
      effectiveness of our disclosure controls and procedures as of December 31,
      2006.
      As a result of the material weakness described below, they have concluded that
      our disclosure controls and procedures were not effective as of December 31,
      2006 in providing reasonable assurance that information required to be disclosed
      by the Company in reports that it files or submits under the Exchange Act was
      properly recorded, processed, summarized and reported within the time periods
      specified in SEC rules and forms.




As
      described below, the Company restated its financial statements for the fiscal
      year ended December 31, 2006. Management has concluded that this restatement
      resulted from how the Company accounted for cancelled stock options upon the
      termination of employees. Under standards established by the Public Accounting
      Oversight Board a “material weakness” is a significant deficiency, or
      combination of deficiencies, that results in more than a remote likelihood
      that
      a material misstatement of the annual or interim financial statements will
      not
      be prevented or detected. A “significant deficiency” is a control deficiency, or
      combination of control deficiencies, that adversely affects our ability to
      initiate, authorize, record, process, or report external financial data reliably
      in accordance with generally accepted accounting principles such that there
      is
      more than a remote likelihood that a misstatement of our annual or interim
      financial statements that is more than inconsequential will not be prevented
      or
      detected.




At
      the
      beginning of 2006, we adopted FASB 123R, *Share
      Based Payment* ,
      and
      began recording expenses associated with stock option and restricted stock
      grants to employees. The Company previously accounted for cancelled stock
      options upon the termination of employees by recording an expense for the
      unvested portion of each terminated employee’s options. Upon further examination
      of our accounting methodology for cancelled stock options, we determined this
      to
      be in error. We have determined that the cancelled stock options should not
      have been expensed and have restated our financial information for the fiscal
      year ended December 31, 2006.




In
      order
      to remediate this material weakness, the Company has hired an outside
      consultant to assist it in addressing and resolving accounting and
      reporting matters for certain equity issuances and other complex transaction
      that involve the application of highly specialized accounting principles so
      that
      as of December 31, 2007 this was no longer a material weakness.




28





The
      Sarbanes-Oxley Act of 2002 imposed many new requirements on public companies,
      the most significant of which involves the documentation, testing and reporting
      of the effectiveness of our internal control over financial reporting. We expect
      this effort will involve substantial time and expense. Because we have limited
      resources we can devote to this effort we cannot be sure that we will be able
      to
      complete the task in a timely manner or that our internal controls will meet
      the
      standards that are currently required. We are also reviewing other procedures
      with respect to equity issuances in connection with the internal investigation
      that we announced on March 9, 2007, of the potentially improper issuance of
      share certificates without legends restricting transfer that may have been
      facilitated by Mr. Zehil.




**(b)
      Management’s Report on Internal Control over Financial
      Reporting**





Our
      management is responsible for establishing and maintaining effective internal
      control over financial reporting (as defined in Rules 13a-15(f) under the
      Securities Exchange Act of 1934, as amended). Our management assessed the
      effectiveness of our internal control over financial reporting as of December
      31, 2007. In making this assessment, our management reviewed the criteria set
      forth by the Committee of Sponsoring Organizations of the Treadway Commission
      (“COSO”) in *Internal
      Control - Integrated Framework* .
      A
      material weakness is a deficiency, or a combination of deficiencies, in internal
      control over financial reporting, such that there is a reasonable possibility
      that a material misstatement of the Company’s annual or interim financial
      statements will not be prevented or detected on a timely basis. In performing
      the assessment, management has identified no material control deficiencies
      that
      we have concluded are material weakness in both the design and operating
      effectiveness of internal control over financial reporting as of December 31,
      2007.




**Item
      8B. Other Information.**





None.


**PART
      III**





**Item
      9. Directors and Executive Officers.**





The
      following table contains information with respect to our executive officers
      and
      directors, including their ages as of February 28, 2008. There are no family
      relationships between any of our executive officers or directors.




**Name**
            
            **Age**
            
            **Position**George
                Lichter
            
            55
            
            Director,
                President and Chief Executive OfficerScott
                Brogi
            
            43
            
            Vice
                President and Chief Financial OfficerClaudio
                Pinkus
            
            51
            
            Director,
                Executive ChairmanJohn
                LaValle
            
            51
            
            Director,
                Chairman of the Audit Committee





George
      Lichter **-** Mr.
      Lichter has served as a director, President and Chief Executive
      Officer **** of
      the
      Company since August 2005. Prior to joining the Company, Mr. Lichter co-founded
      and served as Co-Chief Executive Officer of the Whole Body/Yoga Works, a
      national family of Yoga and alternative health and fitness centers from January
      2002 through August 2005. He currently serves there as a member of the
      board **** of **** directors.
      Prior to co-founding Whole Body/Yoga Works, Mr. Lichter served concurrently
      as
      President of Ask Jeeves International and Chief Executive Officer of Ask Jeeves
      UK from May 1999 through January 2002. Prior to Ask Jeeves, Mr. Lichter was
      the
      Senior Vice President of Vivendi/Havas Interactive which, prior to its
      divestiture, was Cendant Software from 1994 through April 1999. Prior to that,
      Mr. Lichter was an entertainment attorney in the Beverly Hills law firm of
      Rosenfeld, Meyer & Susman. Mr. Lichter graduated Phi Beta Kappa with a
      bachelor’s degree from UCLA and received a Juris Doctor degree from Stanford Law
      School.




29





Scott
      Brogi **-** Mr.
      Brogi has served as the Chief Financial Officer **** of
      the
      Company since June 2007 and was elected Corporate Secretary on June 11, 2007.
      Prior to joining the Company, **** Mr.
      Brogi
      held senior finance and business development positions with a variety of public
      and private firms such Pictage, Inc. from May 2000 to May 2006 where he managed
      both finance and business development leading to a sale to global private equity
      firm Apax Partners. Prior to that, he ran operations and corporate development
      for several early stage digital entertainment and health care companies,
      including institutionally-funded AccentCare where he managed the entire
      acquisition process and before that at a division of publicly-traded ARV
      Assisted Living where he helped build a nationwide footprint of in-facility
      rehabilitation units that were ultimately sold to a public pharmaceutical
      company, from 1997 to 2000. Mr. Brogi began his career with progressively
      escalating responsibilities in corporate and investment banking at Chase
      Manhattan during the period from 1987 to 1993 and later at Houlihan, Lokey,
      Howard & Zukin with responsibility for financial analytics and relationship
      management with an emphasis on emerging digital technologies related to the
      Internet from 1995 to 1997. Mr. Brogi received his Bachelor of Science from
      Syracuse University in 1987 and his MBA from The UCLA Anderson School of
      Management in 1995.





Claudio
      Pinkus **-** Mr.
      Pinkus has been a director of the Company **** since
      April 4, 2005, and has served as **** Executive
      Chairman since **** August
      22, 2005. **** Mr.
      Pinkus brings 25 years of strategic technology management experience to the
      Company, with specific expertise in the search engine market. Mr. Pinkus served
      as Chief Operating Officer of Ask Jeeves International, Inc., as well as
      President and Chief Strategy Officer of Ask Jeeves, Inc. Prior to joining Ask
      Jeeves, he served as Chief Executive Officer of Bowne Global Solutions, the
      world’s largest localization services provider. Mr. Pinkus serves on the board
      of RevCube Media, a private Internet advertising company in San Francisco,
      California and World Links, a Washington, DC nonprofit entity. **** In
      addition, from August 23, 2005 until August 23, 2006, Mr. Pinkus provided
      consulting services to the Company with respect to its strategic direction,
      operation of its ContentLogic group **,** and
      raising of capital.




John
      LaValle **-** Mr.
      LaValle has been a director since May 3, 2005. Mr. LaValle has over 20 years
      of
      experience with high-growth technology companies during which time he has helped
      raise more than $700 million in funding through venture capitalists, bank and
      lease financing, and public offerings. He has completed three successful IPOs
      and one of the largest secondary offerings ever done by any Internet company.
      From July 2005 until June 2006, Mr. LaValle was the COO and CFO of National
      Beverage Properties, a real estate company. From February 2004 until July 2005,
      Mr. LaValle was the CFO of TelASIC Communications, a communication chips and
      subsystems manufacturer. From April 2001 until August 2002, Mr. LaValle was
      the
      CFO of Kotura, Inc., a manufacturer of integrated photonics. Mr. LaValle also
      provided consulting services to TelASIC Communications and Kotura, Inc. from
      August 2002 until February 2004. Prior to Kotura, Mr. LaValle was CFO of
      Lightcross, Inc. a manufacturer of integrated, silicon-based optical products
      for telecommunications equipment. Prior to that, he was CFO and Executive Vice
      President of Operations of Stamps.com (IPO in 1999), CFO of Comcore
      Semiconductor, a high-performance DSP company (acquired by National
      Semiconductor in 1998), and CFO of Trikon Technologies (IPO in 1995), a chemical
      vapor deposition and plasma etch semiconductor equipment manufacturer. Mr.
      LaValle also served as CFO of Superconductor Technologies (IPO in 1992), a
      manufacturer of high temperature thin film superconductors used in cellular
      base
      station applications, and as CFO of PS Medical, a manufacturer of implantable
      neurosurgery products. Early in his career, he held senior financial analyst
      positions with Chevron Corporation and Andersen Consulting. Mr. LaValle received
      his undergraduate degree with Summa Cum Laude honors from Boston College, and
      earned his MBA from Harvard Business School where he was awarded multiple
      Fellowships. Mr. LaValle also sits on the board of CyberDefender, a Santa
      Monica, CA based private company producing anti-spyware
      software.




**Code
      of Ethics**





We
      have
      adopted a code of ethics which is applicable to the Company’s principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions. A copy of our code of
      ethics may be requested without charge by contacting the Company’s Chief
      Financial Officer at the Company’s principal executive offices located at 4086
      Del Rey Avenue, Marina Del Rey, California 90292.


30




**Audit
      Committee and Audit Committee Financial Expert**





The
      board
      of directors established an Audit Committee on December 14, 2005. **** John
      LaValle is the **** initial
      and sole **** member **** of
      the
      Audit Committee. The board of directors has determined that Mr. LaValle is
      independent **** as
      defined in the standards established by the SEC, is financially literate and
      is
      a “financial expert” as defined in the SEC rules. ****





**Procedure
      for the Consideration of Board Candidates Submitted by
      Stockholders**





The
      board
      of directors established a Nominating Committee on May 9, 2006. John
      LaValle is the sole member of the Nominating Committee. The board of
      directors has **** adopted
      procedures for the
      submission of director nominees by stockholders for consideration by
      the board. If a determination is made that an additional director is
      required, the board will consider nominees submitted by the Company’s
      stockholders. Stockholders can submit qualified names of nominees for director
      by writing to our Corporate Secretary, Scott Brogi, at 4086 Del Rey Avenue,
      Marina Del Rey, California 90292. For such nominee to be considered, the
      nomination must be received by the Corporate Secretary not less than 90 days
      prior to the date of the Company’s proxy materials for the preceding year’s
      annual meeting and the nomination must include the following
      information:





·
            the
                name and address of the proposing stockholder as it appears on the
                Company’s books and the number of shares of Common Stock that are owned
                beneficially by such stockholder (if the stockholder is not a holder
                of
                record appropriate evidence of the stockholder’s ownership must be
                submitted with the nomination);





·
            the
                name, address and contact information of the nominee;





·
            a
                statement of the nominee’**s**business and educational
                experience;





·
            detailed
                information about any relationship or understanding between the proposing
                stockholder and the nominee or any other stockholder or group of
                stockholders; and





·
            a
                statement that the nominee is willing to be considered and willing
                to
                serve as a director if nominated and
                elected.





**Communications
      with the Board of Directors**




The
      board
      of directors has established a process for stockholders to communicate with
      members of the board. If you would like to contact the board **,** you can
      do so by forwarding your concern, question or complaint to the Company’s
      Corporate Secretary, Scott Brogi, at 4086 Del Rey Avenue, Marina Del Rey,
      California 90292.




31




**Item
      10. Executive Compensation.**





SUMMARY
      COMPENSATION TABLE





The
      following tables summarize the annual compensation paid and options granted
      for
      the two years ended December 31, 2007 and 2006 **** to
      the
      Company’s Chief Executive Officer and other executive officers whose total
      annual salary and bonus for 2007 or 2006 exceeded $100,000:




Name
                and
              Principal
                Position
              (a)
            
            Year
              (b)
            
            Salary
              ($)
              (c)
            
            Bonus
              ($)
              (d)
            
            Stock
              Awards
              ($)
              (e)
            
            Option
              Awards
              ($)
              (f)
            
            Non-
              Equity
              Incentive
              Plan
              Compensation
              ($)
              (g)
            
            Non-
              Qualified
              Deferred
              Compensation
              Earnings
              ($)
              (h)
            
            All
                other
              Compensation
              ($)
              (i)
            
            Total
              ($)
              (j)George
                Lichter (1)
            
            
            2007
            
            
            250,000
            
            
            139,255
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            7,200
            
            
            0Chief
                Executive Officer
            
            
            2006
            
            
            200,000
            
            
            359,501
            
            
            1,111,512
            
            
            32,500
            
            
            0
            
            
            0
            
            
            9,600
            
            
            1,713,113Scott
                Brogi (2)
            
            
            2007
            
            
            108,958
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Chief
                Financial
              Officer
            
            
            2006
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Frank
                Knuettel II (3)
            
            
            2007
            
            
            191,339
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Chief
                Financial
              Officer
            
            
            2006
            
            
            182,917
            
            
            138,236
            
            
            318,731
            
            
            174,651
            
            
            0
            
            
            0
            
            
            0
            
            
            814,535Bob
                Myers (4)
            
            
            2007
            
            
            137,397
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Vice
                President, Production
            
            
            2006
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Heather
                Gore (5)
            
            
            2007
            
            
            141,059
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Vice
                President, Marketing
            
            
            2006
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0David
                Warthen (6)
            
            
            2007
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0Vice
                President and Chief Technology Officer
            
            
            2006
            
            
            14,750
            
            
            0
            
            
            90,000
            
            
            7,333
            
            
            0
            
            
            0
            
            
            0
            
            
            112,083




(1)
      Mr.
      Lichter was hired as our Chief Executive Officer as of August 2005 and entered
      into an employment agreement on January 4, 2006. All Other Compensation for
      Mr.
      Lichter is comprised of a car allowance.




(2)
      Mr.
      Brogi was hired as our Chief Financial Officer as of June 2007.




(3)
      Mr.
      Myers was hired as our Vice President, Production as of January
      2007.





(4)
      Ms.
      Gore was hired as our Vice President, Marketing as of January 2007.





(5)
      Mr.
      Knuettel was hired as our Chief Financial Officer as of March 2005 and resigned
      effective June 2007.





(6)
      Mr.
      Warthen was hired as an Executive Vice President and Chief Technology Officer
      as
      of July 2006. Mr. Warthen’s employment agreement with the Company provides for
      an initial annual base salary of $180,000, which shall be paid in cash or shares
      of InfoSearch common stock issued, at the Company’s option,. The Company has the
      right to pay Mr. Warthen in cash or stock for the first year of his employment,
      which began on July 1, 2006. The Company elected to pay Mr. Warthen with stock
      for the first year and Mr. Warthen is receiving his base salary in the form
      of
      common stock, which amounts to 107,143 shares per month, or portion thereof,
      for
      a total of 1,285,714 shares through the one year anniversary date of his
      employment with the Company. The number of shares was determined based on the
      fair market value of the Company’s common stock on September 30, 2006. Through
      June 15, 2007, Mr. Warthen earned 641,000 shares of our common
      stock.





32





**OUTSTANDING
      EQUITY AWARDS AT FISCAL-YEAR END**




Option
                awards
            
            Stock
                awardsName
              (a)
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
              (b)
            
            Number
                of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
              (c)
            
            Equity
              Incentive
              Plan
              Awards:
              Number
                of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
              (d)
            
            Option
              Exercise
              Price
              ($)
              (e)
            
            Option
              Expiration
              Date
              (f)
            
            Number
              of
              Shares
              or
                Units
              of
              Stock
              That
              Have
              Not
              Vested
              (#)
              (g)
            
            Market
              Value
              of
              Shares
              or
                Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
              (h)
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares
                or
              Units
                or
              Other
              Rights
              That
              Have
                Not
              Vested
              (#)
              (i)
            
            Equity
                Incentive
              Plan
              Awards:
                Market
              or
                Payout
              Value
                of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
              Have
                Not
              Vested
              ($)
              (j)George
                Lichter
              CEO
                (1)
            
            
            325,000
            
            
            0
            
            
            0
            
            
            0.17
            
            
            12/10/2016
            
            
            0
            
            
            0
            
            
            0
            
            
            0447,150
            
            
            0
            
            
            0
            
            
            0.20
            
            
            1/12/2017
            
            
            0
            
            
            0
            
            
            0
            
            
            01,325,000
            
            
            1,325,000
            
            
            0
            
            
            0.20
            
            
            1/12/2017
            
            
            0
            
            
            0
            
            
            0
            
            
            0




(1)
      On
      December 12, 2006, the board of directors approved options to purchase up to
      2,097,150 shares of the Company’s common stock to George Lichter. Pursuant to
      the terms and subject to the limitations of the Stock Option Plan, such grant
      to
      Mr. Lichter could not exceed options to purchase up to 325,000 shares of common
      stock. The Company has treated the portion of such grant to the extent it
      exceeded options to purchase 325,000 options as invalid and void ab initio.
      The
      valid portion of the grant that survived was for options to purchase 325,000
      shares of common stock. Such options were 100% vested on the date of the grant,
      have a term of ten years, have an exercise price of $0.17 per share, and are
      subject to the terms and conditions of the Stock Option Plan. On January 12,
      2007, the Company granted Mr. Lichter options to purchase an aggregate of
      1,772,150 shares of common stock. Of this amount, options to purchase up to
      1,000,000 shares of common stock were granted under the Stock Option Plan,
      have
      a term of ten years, and have an exercise price of $0.20 per share, of which,
      options to purchase up to 447,150 shares of common stock were 100% vested on
      the
      date of the grant and options to purchase up to 552,850 shares of common stock
      vest in equal monthly installments over the 36 month period following the date
      of the grant. The remaining options to purchase 772,150 shares of common stock,
      pursuant to the January 12, 2007 grant, were granted pursuant to the terms
      of a
      separate grant agreement, which options will vest immediately upon the first
      occurrence of the Company reporting a net profit for a full fiscal year
      following fiscal year 2006. These options are for a term of ten years, have
      an
      exercise price of $0.20 per share, and are subject to terms substantially
      similar to grants under the Stock Option Plan.




33




**DIRECTOR
      COMPENSATION**





We
      compensate our non-employee directors, John LaValle and Claudio Pinkus for
      their
      service as members of our board of directors. Management directors do not
      receive any compensation for their services as directors other than the
      compensation they receive as our officers.




Name
              (a)
            
            Fees
              Earned
                or
              Paid
                in
              Cash
              ($)
              (b)
            
            Stock
              Awards
              ($)
              (c)
            
            Option
              Awards
              ($)
              (d)
            
            Non-
              Equity
              Incentive
              Plan
              Compensation
              ($)
              (d)
            
            Change
                in
              Pension
              Value
                and
              Nonqualified
              Deferred
              Compensation
              Earnings
              (f)
            
            All
                Other
              Compensation
              ($)
              (g)
            
            Total
              ($)
              (h)Claudio
                Pinkus (1)
            
            $
            37,500
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            37,500John
                LaValle (2)
            
            $
            50,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            50,000





(1)
      Mr.
      Pinkus receives $50,000 per year for his service as a director and Executive
      Chairman. On April 4, 2005, the date of his appointment to the board of
      directors, Mr. Pinkus was granted 100,000 shares of restricted stock which
      vested on April 4, 2006, the one year anniversary of his appointment. Pursuant
      to a consulting arrangement with the Company, Mr. Pinkus received during fiscal
      year 2006, 1,800,027 shares of restricted stock valued at $1,111,512, consulting
      income of $75,000, health care reimbursements of $7,200 and bonuses of
      $288,838.





(2)
      Mr.
      LaValle receives $25,000 per year for his service as a director and an
      additional $25,000 per year for his service as the chair and sole member of
      the
      Audit Committee.





**Employment
      Agreements**





We
      entered into an employment agreement effective August 23, 2005 with George
      Lichter as Chief Executive Officer, which was subsequently amended effective
      July 1, 2006 (as amended, **** the
      “Lichter Employment Agreement”). The Lichter Employment Agreement, as amended,
      provides for an annual base salary of $250,000, **** subject
      to annual increases, and an annual performance-based bonus of up to $150,000.
      In
      addition, Mr. Lichter receives an automobile allowance of $600 per
      month.  Pursuant
      to the Lichter Employment Agreement, Mr. Lichter was granted, under the Stock
      Option Plan, a restricted stock award representing 675,000 shares of our common
      stock, of which 225,000 shares vested on January 4, 2006 and the remaining
      shares vested in three installments of 150,000 shares each on February 23,
      2006,
      April 23, 2006 and August 23, 2006. **** Mr.
      Lichter may participate, as a selling stockholder, in any financing transaction
      undertaken by us for the purpose of satisfying the tax liability incurred by
      Mr.
      Lichter as a result of the restricted stock award. Pursuant to the Lichter
      Employment Agreement, the Company paid Mr. Lichter’s tax liability in connection
      with his restricted stock grant. **** Lichter
      was also subsequently granted an additional stock award representing 675,000
      shares of our common stock, of which 225,000 shares vested on January 4, 2006
      and the remaining shares vested in three installments of 150,000 shares each
      on
      February 23, 2006, April 23, 2006 and August 23, 2006. **** Pursuant
      to the decision by the board of directors to accelerate the vesting of
      outstanding options and shares of restricted stock, all of these options and
      shares of restricted stock became fully exercisable as of June 30, 2006.




Mr.
      Lichter may terminate the Lichter Employment Agreement and his employment with
      the Company for Good Reason (as defined in the Lichter Employment Agreement),
      including in connection with a Change of Control (as defined in the Lichter
      Employment Agreement) that results in the termination of Mr. Lichter’s
      employment with the Company or a material adverse change in Mr. Lichter’s duties
      and responsibilities. If Mr. Lichter terminates the Lichter Employment Agreement
      and his employment with the Company for Good Reason or in connection with a
      Change of Control as described above, or if the Company terminates the Lichter
      Employment Agreement and Mr. Lichter’s employment with the Company without Cause
      (as defined in the Lichter Employment Agreement) (and, with respect to (ii),
      (iii) and (iv) below, so long as Mr. Lichter has not and does not violate
      certain provisions of the Lichter Employment Agreement), the Company will
      pay **** or
      provide to Mr. Lichter: (i) any earned but unpaid base salary, unpaid pro rata
      annual bonus and unused vacation days accrued through his last day of employment
      with the **** Company,
      including any carryover days; (ii) Mr. Lichter’s full base salary for six
      months; (iii) Mr. Lichter’s annual bonuses that he would have been awarded
      during the same six month period; and (iv) continued coverage, at the Company’s
      expense, under all benefits plans in which Mr. Lichter was a participant
      immediately prior to his last date of employment with the Company. In addition,
      any unvested shares of restricted common stock granted pursuant to the Lichter
      Employment Agreement will automatically vest. **** Employment
      under the Lichter Employment Agreement is at will and therefore InfoSearch
      may
      terminate Mr. Lichter’s employment at any time and for any reason subject to the
      provisions set forth above.




34





On
      May 1,
      2007, the Company, entered into a Second Amendment to Employment Agreement
      (the
“Second Amendment”) with George Lichter, the Company's Chief Executive Officer
      and a director of the Company. The Second Amendment, effective as of January
      12,
      2007, amends Mr. Lichter's Employment Agreement dated January 4, 2006 and
      effective as of August 23, 2005, as amended by the Amendment to Employment
      Agreement, effective as of July 1, 2006 (as amended by the Amendment to
      Employment Agreement, the “Employment Agreement”) and among other things, that
      Mr. Lichter is eligible to receive a quarterly bonus in an amount not to exceed
      25% of his then current base salary for each calendar quarter (or a pro-rata
      portion of such bonus in the case of a period of less than three months) within
      the board of directors' sole discretion and also revises the definition of
      a
“Change of Control” so that a change of ownership in the outstanding voting
      securities of the Company constituting a “Change of Control” is determined based
      on the outstanding voting securities owned collectively by the common
      stockholders and warrant holders of the Company as of January 12, 2007, rather
      than August 23, 2005 as provided for in the Employment Agreement prior to the
      Second Amendment.




On
      June
      9, 2007, the Company entered into an employment agreement with Scott Brogi,
      the
      Company's Chief Financial Officer with an annual base salary of $200,000.
      Additionally Mr. Brogi is eligible for a bonus of 40% of his base salary. The
      basis for this bonus is revenue and operating income goals and individual goals
      to be determined. Mr. Brogi also received an option to purchase 1,000,000 shares
      of the Company's Common stock at $0.14 per share, the closing price as of June
      11, 2007. These options were granted on June l1, 2007, expire ten years after
      the grant date and vest on an equal monthly basis over a 36 month period. In
      the
      event Mr. Brogi’s employment is terminated or his responsibilities are
      materially reduced within 12 months of a change of control of the Company,
      Mr.
      Brogi will receive six months of base salary and a 6 month acceleration of
      vesting of these stock options. Change of control is defined as the acquisition
      by a single shareholder (or beneficial owner) of a minimum of 51% of the then
      outstanding ordinary shares of the Company. Upon termination, death or long
      term
      disability, Mr. Brogi receives additional benefits under the agreement. If
      termination is without cause, he is entitled to 3 months salary, any bonus
      earned through the date of termination and 3 months acceleration of vesting
      of
      his stock options.





We
      entered into an executive employment agreement with Frank Knuettel II, dated
      March 8, 2005 **** (the
      “Knuettel Employment Agreement”). The Knuettel Employment Agreement provides for
      an initial annual base salary of $175,000, provided that if Mr. Knuettel remains
      in the employment of the Company in the month following the second consecutive
      quarter that the Company is profitable on a GAAP basis, his **a** nnual
      base salary will be increased to $185,000. The Knuettel Employment Agreement
      further provides for a potential target bonus equal to 30% of **** his
      then
      current annual base salary, contingent on the Company’s achieving revenue and
      operating income goals and Mr. Knuettel’s attaining individual goals established
      by the board **** of
      directors. Under the Knuettel Employment Agreement, Mr. Knuettel received
      options to purchase up to 262,500 shares of our common stock at an exercise
      price of $0.76 per share pursuant to the Stock Option Plan, which vest over
      a
      four-year period. Additionally, Mr. Knuettel received an award of 352,500
      restricted shares of our common stock, which also vest over a four-year period
      of his employment with the Company. Mr. Knuettel was also subsequently granted
      an additional stock award representing 167,500 shares, under which 25% of the
      shares vested on January 4, 2006, 12.5% of the shares vested **** on
      July
      7, 2006 and the remaining shares will vest over three years in equal, monthly
      installments, ending on January 4, **** 2009. **** Mr.
      Knuettel was granted an additional option award representing 82,500 shares,
      under which 25% of the shares vested on January 4, 2006, 12.5% of the shares
      vested on July 7, 2006 and the remaining shares will vest over three years
      in
      equal, monthly installments, ending on January 4, 2009. Pursuant to the decision
      by the board of directors to accelerate the vesting of outstanding options
      and
      shares of restricted stock, all of these options and shares of restricted stock
      became fully exercisable as of June 30, 2006. Mr. Frank Knuettel, II, resigned
      as Chief Financial Officer of the Company effective June 15, 2007. Thereafter
      Mr. Knuettel was party to a consulting agreement whereby he provided certain
      ongoing services to the Company through September 15, 2007 for which he received
      cash compensation as well as 100,000 shares of restricted stock which have
      fully
      vested in three essentially equal monthly installments through September 15,
      2007.




35




We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to Robert Myers, our Vice President of Production on January 8,
      2008 **** (the
      “Myers Employment Agreement”). The Myers Employment Agreement does not have a
      termination date and sets forth the following terms and conditions: During
      the
      Term, the Company shall pay, and the Executive agrees to accept, in
      consideration for the Executive’s services hereunder, *pro
      rata* semi-monthly payments of the annual salary of $140,000.00, less all applicable
      taxes and other appropriate deductions. The Executive’s base salary will be
      subject to further adjustment pursuant to the Company’s employee compensation
      policies in effect from time to time. The
      Executive shall be entitled to a potential target bonus of thirty-five percent
      (35%) of Executive’s annual base salary. Subject to the Board’s consent, the
      Company shall issue to the Executive an option to acquire 250,000 shares of
      the
      Company’s common stock (the “Common Stock”) pursuant to the Company’s 2004 Stock
      Option Plan, as amended on December 12, 2006 (the “Plan”). The exercise
      price of the option to be granted pursuant to this paragraph 9(a) shall be
      equal
      to the fair market value per share of the Common Stock as determined by the
      closing price on the date of the grant. Such grant shall be evidenced by and
      subject to the terms and conditions of an option agreement in a form
      substantially similar to that attached hereto as Exhibit A. The vesting period
      of the grant shall be four years, with vesting commencing on the Effective
      Date.
      One-eighth of the shares shall vest on the six month anniversary of the
      Effective Date with the balance of the shares vesting in equal monthly
      installments over the following forty-two months. On each of the first two
      anniversaries of the Effective Date, subject to determination of merit during
      an
      annual performance review and Board’s consent, and provided that Executive
      continues to be employed by the Company on each of the anniversary dates,
      Executive shall be entitled to an additional grant of 62,500 shares on each
      anniversary.




At
      any
      time during the Term, the Company may terminate this Agreement and the
      Executive’s employment hereunder for Cause. For purposes of this Agreement,
“Cause” shall mean: (a) the willful and continued failure of the Executive to
      perform substantially his duties and responsibilities for the Company (other
      than any such failure resulting from a Disability) after a written demand by
      the
      Board for substantial performance is delivered to the Executive by the Company,
      which specifically identifies the manner in which the Board believes that the
      Executive has not substantially performed his duties and responsibilities,
      which
      willful and continued failure is not cured by the Executive within thirty (30)
      days of his receipt of such written demand; (b) the conviction of, or plea
      of
      guilty or *nolo
      contendere* to a
      felony, after the exhaustion of all available appeals; or (c) fraud,
      dishonesty, competition with the Company, unauthorized use of any of the
      Company’s or any of its subsidiary’s trade secrets or confidential
      information, or gross
      misconduct which is materially and demonstratively injurious to the Company.
      Termination under [for cause] shall not be subject to cure. Termination of
      the
      Executive for Cause pursuant to [subsection (a) ] shall be made by delivery
      to
      the Executive of a copy of the written demand referred to in [subsection (a),
      or
      pursuant to [subsection] (b) or (c) by delivery to the Executive of a written
      notice from the Board, either of which shall specify the basis of such
      termination, the conduct justifying such termination, and the particulars
      thereof and finding that in the reasonable judgment of the Board, the conduct
      set forth in [subsection] (a), [subsection] (b) or [subsection] (c), as
      applicable, has occurred and that such occurrence warrants the Executive’s
      termination of employment. Upon receipt of such demand or notice, the Executive,
      shall be entitled to appear before the Board for the purpose of demonstrating
      that Cause for termination does not exist or that the circumstances which may
      have constituted Cause have been cured in accordance with the provisions of
      [subsection] (a). No termination shall be final until the Board has reached
      a
      determination regarding “Cause” following such appearance. Upon termination of
      this Agreement for Cause, the Company shall have no further obligations or
      liability to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay the Executive any earned but unpaid base salary. The Company shall deduct,
      from all payments made hereunder, all applicable taxes, including income tax,
      FICA and FUTA, and other appropriate deductions.




36




At
      any
      time during the Term, the either Party shall be entitled to terminate this
      Agreement and the Executive’s employment with the Company without cause. If the
      Executive terminates this Agreement, the Executive shall provide prior written
      notice of at least 30 days to the Company. Upon termination of this Agreement
      and the Executive’s employment with the Company pursuant to this paragraph
      10(d)(i) by the Company, the Company shall have no further obligations to the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits thereafter, except for the obligation to pay to the Executive
      any
      earned but unpaid base salary, any unpaid expenses and base salary and
      acceleration of stock option vesting according to the following schedule: If
      the
      Company terminates this Agreement between January 8, 2007 and January 7, 2008,
      Executive will receive base salary for three (3) months after the date of
      termination and will forward vest an additional three (3) months after the
      date
      of termination. If the Company terminates this Agreement between January 8,
      2008
      and January 7, 2009, Executive will receive base salary for four (4) months
      after the date of termination and will forward vest an additional four (4)
      months after the date of termination. If the Company terminates this Agreement
      between January 8, 2009 and January 7, 2010, Executive will receive base salary
      for five (5) months after the date of termination and will forward vest an
      additional five (5) months after the date of termination. If the Company
      terminates this Agreement between January 8, 2010 and January 7, 2011, Executive
      will receive base salary for six (6) months after the date of termination and
      will forward vest an additional six (6) months after the date of termination.
      Under no circumstances shall the salary continuation or the forward vesting
      exceed six (6) months, regardless of length of service. The Company shall
      deduct, from all payments made hereunder, all applicable taxes, including income
      tax, FICA and FUTA, and other appropriate deductions. The amounts described
      in
      paragraph 10(d)(i) shall be paid to the Executive in the same manner as they
      would have been paid, in accordance with the provisions of paragraph 5(a),
      had
      the Executive remained employed by the Company.




We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to Heather Gore, our Vice President of Marketing on January 2,
      2008 **** (the
      “Gore Employment Agreement”). The Gore Employment Agreement does not have a
      termination date and provides for the following terms and conditions: to provide
      Ms. Gore with an annual salary of $130,000 ($5,416.66 per pay period) less
      payroll deductions and all required withholdings; a bonus plan - 35% of base
      pay, paid out quarterly, with metrics objectives developed and mutually agreed
      upon within the first 90 days of her employment. No bonus will be payable until
      such time as the metrics objectives are identified and agreed upon. Upon the
      commencement of Ms. Gore’s employment and subject to Board approval, the Company
      will grant her an option to purchase 125,000 shares of the Company’s Common
      Stock (the “Option”) at an exercise price equal to the fair market value on the
      date of grant. The Option shall be subject to the vesting restrictions and
      all
      other terms of the Company’s current Stock Option Plan and your Stock Option
      Agreement. However, we will propose to the Board that her initial cliff vesting
      period be reduced from twelve (12) months to six (6) months. Ms. Gore’s regular
      place of employment will be Austin, Texas. However, she will also work out
      of
      the Los Angeles area office at least one week per month. Reasonable travel
      expenses will be reimbursed to her according to the company’s travel and expense
      reimbursement policies. Ms. Gore’s employment with the company is “at-will.” The
      terms of her employment with the Company; however, does not constitute an
      employment contract for a specified duration. Ms. Gore’s employment may be
      terminated with our without cause or notice at any time, at the option of either
      her or the Company. Ms. Gore has executed the Company’s Employee Proprietary
      Information and Inventions Agreement, Insider Trading Agreement.





We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to David Warthen, our Chief Technology Officer on June 11, 2006
      (the
“Warthen Employment Agreement”) **.** The
      Warthen Employment Agreement does not have a termination date. Mr. Warthen
      also
      currently serves as the Chief Executive Officer of Eye Games, Inc., a developer
      of web-cam, interactive video games. We do not have any relationship with Eye
      Games, Inc., and we have never been a party to any transaction or agreement
      with
      Eye Games, Inc. The Warthen Employment Agreement provides for an initial annual
      base salary of $180,000, which shall be paid in cash or shares of InfoSearch
      common stock issued, at the Company’s option. The Company has the right to pay
      Mr. Warthen in cash or stock for the first year of his employment, which began
      on July 1, 2006. The Company elected to pay Mr. Warthen with stock for the
      first
      year and Mr. Warthen is receiving his base salary in the form of common stock,
      which amounts to 107,143 shares per month, or portion thereof, for a total
      of
      1,285,714 shares through the one year anniversary date of his employment with
      the Company. The number of shares was determined based on the fair market value
      of the Company’s common stock on September 30, 2006. Through March 31, 2007, Mr.
      Warthen earned 964,286 shares of our common stock. Under the Warthen
      Employment Agreement, Mr. Warthen received options to purchase up to 400,000
      share of our common stock pursuant to the Stock Option **** Plan,
      which shall vest in equal monthly installments over three years. Mr. Warthen’s
      employment with InfoSearch was on an “at will” basis, and Mr. Warthen resigned
      as of June 2007.




37




**2004
      Stock Option Plan**




The
      Stock
      Option Plan gives the board of directors the ability to provide incentives
      through grants or awards of stock options, stock appreciation rights, and
      restricted stock awards (collectively, “Awards”) to present and future employees
      of InfoSearch. Outside directors, consultants and other advisors are also
      eligible to receive Awards under the Stock Option Plan.




Pursuant
      to an amendment in December 2006, a total of 10,450,000 shares of our common
      stock are reserved for issuance under the Stock Option Plan. If an incentive
      award expires or terminates unexercised or is forfeited, or if any shares are
      surrendered to us in connection with an Award, the shares subject to such award
      and the surrendered shares will become available for further awards under the
      Stock Option Plan. As of December 31, 2007 and 2006, respectively, 3,897,150
      and
      5,277,511 shares or options were issued and outstanding, leaving a balance
      of
      6,552,850 and 5,172,489 shares in the Stock Option Plan for future
      issuance.





Shares
      issued under the Stock Option Plan through the settlement, assumption or
      substitution of outstanding Awards or obligations to grant future Awards as
      a
      condition of acquiring another entity will not reduce the maximum number of
      shares available under the Stock Option Plan. In addition, the number of shares
      subject to the Stock Option Plan, any number of shares subject to any numerical
      limit in the Stock Option Plan, and the number of shares and terms of any Award
      may be adjusted in the event of any change in our outstanding common stock
      by
      reason of any stock dividend, spin-off, split-up, stock split, reverse stock
      split, recapitalization, reclassification, merger, consolidation, liquidation,
      business combination or exchange of shares or similar transaction.




No
      more
      than 1,000,000 shares of the authorized shares may be allocated to Awards
      granted or awarded to any individual participant during any calendar year.
      Any
      shares of restricted stock and any shares underlying a grant of options that
      are
      forfeited will not count against this limit.




The
      board
      of directors or one of its committees administers the Stock Option Plan. If
      Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”),
      and Rule 16b-3 under the Exchange Act apply to us and the Stock Option Plan,
      then each member of the board of directors or committee, which must have at
      least two members, must meet the standards of independence necessary to be
      classified as an “outside director” for purposes of Section 162(m) of the Code
      and an outside director for the purposes of Rule 16b-3 of the Exchange Act.
      Subject to the terms of the Stock Option Plan, the board of directors or the
      committee administering the Stock Option Plan will have complete authority
      and
      discretion to determine the terms of Awards.




The
      Stock
      Option Plan authorizes the grant of incentive stock options and nonqualified
      stock options. Incentive stock options are stock options that satisfy the
      requirements of Section 422 of the Code. Nonqualified stock options are stock
      options that do not satisfy the requirements of Section 422 of the Code. Options
      granted under the Stock Option Plan entitle the grantee, upon exercise, to
      purchase a specified number of shares from us at a specified exercise price
      per
      share. The board of directors or the committee administering the Stock Option
      Plan determines the period of time during which an option may be exercised,
      as
      well as any vesting schedule, except that no option may be exercised more than
      ten years after the date of grant. The exercise price for shares of common
      stock
      covered by an option cannot be less than the fair market value of the common
      stock on the date of grant.




Under
      the
      Stock Option Plan, a participant may not surrender an option for the grant
      of a
      new option with a lower exercise price or another incentive award. In addition,
      if a participant’s option is cancelled before its termination date, the
      participant may not receive another option within six months of the cancellation
      date unless the exercise price of the new option equals or exceeds the exercise
      price of the cancelled option.




38




A
      stock
      option may also have a reload feature. Under this feature, if the grantee pays
      the exercise price in the form of previously owned shares of common stock,
      then
      the grantee may receive a reload option for the same number of shares
      surrendered in payment of the exercise price. The exercise price of the reload
      option will be equal to the fair market value of the common stock on the date
      the option is exercised.




The
      Stock
      Option Plan also authorizes the grant of restricted stock awards on terms and
      conditions established by the board of directors or the committee administering
      the Stock Option Plan. The terms and conditions will include the designation
      of
      a restriction period during which the shares are not transferable and are
      subject to forfeiture.




The
      board
      of directors or the committee administering the Stock Option Plan may grant
      stock appreciation rights (SARs) under the Stock Option Plan. Subject to the
      terms of the award, SARs entitle the participant to receive a distribution
      in an
      amount not to exceed the number of shares of common stock subject to the portion
      of the SAR exercised multiplied by the difference between the market price
      of a
      share of common stock on the date of exercise of the SAR and the market price
      of
      a share of common stock on the date of grant of the SAR. Such distributions
      are
      payable in cash or shares of common stock, or a combination thereof, as
      determined by the committee.




The
      board
      of directors may suspend or terminate the Stock Option Plan without stockholder
      approval or ratification at any time or from time to time. Unless sooner
      terminated, the Stock Option Plan will terminate on December 15, 2014. The
      board of directors may also amend the Stock Option Plan at any
      time.





**Item
      11. Security Ownership of Certain Beneficial Owners and
      Management**  **and
      Related Stockholder Matters.**





The
      following table sets forth certain information regarding the beneficial
      ownership of the Company’s common stock **** as
      of
      December 31, 2007 by (i) each person who, to our knowledge, beneficially owns
      more than 5% of our common stock; (ii) each of our directors and executive
      officers; and (iii) all of our executive officers and directors as a
      group : **.** Unless
      otherwise indicated, the address of each beneficial owner is 4086 Del Rey
      Avenue, Marina Del Rey, California 90292. ****




**Name
                and Address of Beneficial Owner**
            
            **Amount****(1)**
            
            **Percent**
              **Of****Class**George
                Lichter (2)
            
            
            3,201,864
            
            
            6.1
            %Claudio
                Pinkus
            
            
            1,259,427
            
            
            2.3
            %Scott
                Brogi
            
            
            300,000
            
            
            *John
                LaValle
            
            
            100,000
            
            
            *Trinad
                Capital Master Fund, Ltd. (3)
              2121
                Avenue of the Starts, Suite 1650
              Los
                Angeles, California 90067
            
            
            13,117,782
            
            
            25.0
            %Bruce
                Galloway (4)
            
            
            6,800,376
            
            
            13.0
            %All
                Executive Officers and Directors as a group (total of 5
              persons)
            
            
            4,861,291
            
            
            9.3
            %




*
      represents beneficial ownership of less than 1%





(1)
            Beneficial
                ownership is calculated based on 52,493,592 shares of common stock
                outstanding as of December 31, 2007. Beneficial ownership is determined
                in
                accordance with Rule 13d-3 of the Exchange Act. The number of shares
                beneficially owned by a person includes shares of common stock****subject
                to restricted stock grants, options or warrants held by that person
                that
                are currently exercisable or issuable or exercisable or issuable
                within 60
                days of December 31, 2007. The shares issuable pursuant to those
                restricted stock grants, options or warrants are deemed outstanding
                for
                computing the percentage ownership of the person holding these options
                and
                warrants but are not deemed outstanding for the purposes of computing
                the
                percentage ownership of any other person. The persons and entities
                named
                in the table have sole voting and sole investment power with respect
                to
                the shares set forth opposite the stockholder’s name, subject to community
                property laws, where applicable.




39




(2)
            Includes 517,617
                shares of common stock issuable upon exercise of stock options that
                are
                exercisable within 60 days of December 31, 2007.****(3)
            Based
                solely upon a Schedule 13G filed with the SEC by Trinad Capital Master
                Fund, Ltd. on December 24, 2007. These securities are owned directly
                by
                Trinad Capital Master Fund, Ltd. (the "Master Fund") which is a reporting
                person. These securities may be deemed to be beneficially owned by
                Trinad
                Management, LLC, the investment manager of the Master Fund and Trinad
                Capital LP; a controlling stockholder of the Master Fund; Trinad
                Advisors
                II LLC, the general partner of Trinad Capital LP; Robert S. Ellin,
                the
                managing director of and portfolio manager for Trinad Management,
                LLC and
                the managing director of Trinad Advisors II LLC and Jay A. Wolf a
                managing
                director of and portfolio manager for Trinad Management, LLC and
                a
                managing director of Trinad Advisors II LLC. Each such reporting
                person
                disclaims beneficial ownership of the reported securities except
                to the
                extent of his or its pecuniary interest therein, and this report
                shall not
                be deemed an admission that such reporting person is the beneficial
                owner
                of the securities for purposes of Section 16 of the Exchange Act,
                or for
                any other purpose. The business address for Trinad Capital Master
                Fund,
                Ltd. is 2121 Avenue of the Stars, Suite 1650, Los Angeles, California
                90067.(4)
            Based
                solely upon a Schedule 13D, filed with the SEC by Bruce Galloway
                on
                December 7, 2007.
              As
                of the date hereof, Strategic Turnaround Equity Partners, L.P. (Cayman),
                Galloway Capital Management LLC (as the general partner of Strategic
                Turnaround Equity Partners, L.P. (Cayman)), Bruce Galloway and Gary
                L.
                Herman (as a Managing Members of Galloway Capital Management LLC)
                are
                deemed to beneficially own an aggregate of 5,523,750 shares of Common
                Stock, representing approximately 10.44% of the number of shares
                of Common
                Stock stated to be outstanding by the Company in its Quarterly Report
                on
                Form 10-Q, as filed with the Securities and Exchange Commission on
                November 16, 2007. Strategic Turnaround Equity Partners, L.P. (Cayman)
                is
                deemed to be the direct beneficial owner of 5,523,750 shares of Common
                Stock. Galloway Capital Management LLC is deemed to be the indirect
                beneficial owner of 5,523,750 shares of Common Stock. Bruce Galloway
                and
                Gary L. Herman are deemed to be the indirect beneficial owners of
                5,523,750 shares of Common Stock. Each of Galloway Capital Management
                LLC,
                Bruce Galloway and Gary L. Herman disclaim beneficial ownership of
                the
                shares of Common Stock directly beneficially owned by Strategic Turnaround
                Equity Partners, L.P. (Cayman) (except for (i) the indirect interest
                of
                Galloway Capital Management LLC by virtue of being the general partner
                of
                Strategic Turnaround Equity Partners, L.P. (Cayman), (ii) the indirect
                interests of Bruce Galloway and Gary L. Herman by virtue of being
                members
                of Galloway Capital Management LLC, and (iii) the indirect interests
                of
                Bruce Galloway and Gary L. Herman by virtue of being limited partners
                of
                Strategic Turnaround Equity Partners, L.P. (Cayman). Galloway Capital
                Management LLC, Gary L. Herman and Bruce Galloway have shared power
                to
                direct the vote and shared power to direct the disposition of these
                shares
                of Common Stock.
              Of
                the total 1,276,626 shares of common stock directly reported by Mr.
                Galloway, 1,108,626 shares of Common stock are held by Mr. Galloway’s
                Individual Retirement Account, 70,000 shares of Common Stock are
                held by
                Mr. Galloway’s son for which Mr. Galloway has the power to vote and
                dispose, and 98,000 shares of Common Stock are held by RexonGalloway
                Capital Growth, an investment company in which Mr. Galloway is a
                member
                and for which Mr. Galloway retains investment and voting discretion.
              Of
                the total of 64,000 shares of common stock reported by Mr. Herman,
                25,000
                shares are directly beneficially owned by Mr. Herman and 39,000 are
                held
                by Mr. Herman’s retirement
                accounts.





40




**(a)
        Equity Compensation Plan Information**




The
      following table sets forth, as of December 31, 2007, the number of securities
      outstanding, the weighted average exercise price of such options, warrants
      and
      rights **** and
      the
      number of securities remaining available for future issuance under the Company’s
      compensation plans previously approved by the Company’s stockholders and the
      Company’s compensation plans not previously approved by the Company’s
      stockholders **:**




Plan category
            
            Number of
              securities to be
              issued on
              exercise of
              outstanding
              options, warrants
              and rights
              (a)
            
            Weighted
              average exercise
              price of
              outstanding
              options, warrants
              and rights
              (b)
            
            Number of
              securities
              remaining
              available for
              future issuance
              under equity
              compensation
              plans (excluding
              securities
              reflected in
              column(a))
              (c)Equity
                compensation plans approved by security holders
            
            
            3,897,150
            
            **$**
            0.18
            
            
            6,552,850Equity
                compensation plans not approved by security holders
            
            
            0
            
            
            0
            
            
            0Total
            
            
            3,897,150
            
            $
            0.18
            
            
            6,552,850





**Item
      12. Certain Relationships and Related Transactions.**





As
      of
      December 31, 2007 the Company had a remaining balance of accounts receivable
      from Mr. David Warthen, Chief Technology Officer until June of 2007, of $12,530,
      to repay the Company for income taxes paid on behalf of him.




The
      Company is listed on the OTC Bulletin Board which does not have a requirement
      that a majority of the board of directors be independent. The board of directors
      has adopted the definition of “independent” included in the New York Stock
      Exchange Listed Company Manual and has determined that, of the members of the
      board of directors, only John LaValle is independent. The board of directors
      established an Audit Committee on December 14, 2005, and established a
      Nominating Committee and a Compensation Committee on May 9, 2006. Mr. LaValle
      is
      the sole member of the Audit Committee and the Nominating Committee. Mr. LaValle
      and Claudio Pinkus are members of the Compensation Committee.





**Item
      13. Exhibits**





(a)  The
      following exhibits are to be filed as part of this report:





**Exhibit
                No.**
            
            **Description**
            
            **Incorporated
                by Reference to Filings Indicated**2.1
            
            Agreement
                and Plan of Merger and Reorganization dated as of December 30, 2004
                among
                Trafficlogic, Inc., MAC Worldwide, Inc. and Trafficlogic Acquisition
                Corp.
            
            Exhibit
                2.1 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-973852.2
            
            Split
                Off Agreement dated December 30, 2004 among MAC Worldwide, Inc.,
                Vincenzo
                Cavallo, Anthony Cavallo, Mimi & Coco, Inc. and Trafficlogic,
                Inc.
            
            Exhibit
                2.2 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-97385




41




3.1.1
            
            Certificate
                of Incorporation
            
            Exhibit
                3.1 to Company’s Form SB-2 filed on July 31, 2002, File Number
                333-97385)3.1.2
            
            Certificate
                of Amendment to Certificate of Incorporation of MAC Worldwide,
                Inc.
            
            Exhibit
                3.1.2 to Company’s Current Report on Form 8-K filed on January 4, 2005
                File No. 333-973853.1.3
            
            Certificate
                of Amendment to Certificate of Incorporation of MAC Worldwide,
                Inc.
            
            Exhibit
                3.1.3 to Company’s Current Report on Form 8-K filed on January 4, 2005
                File No. 333-973853.2
            
            Amended
                and Restated Bylaws
            
            Exhibit
                3.3 to Company’s Form SB-2/A filed on March 23, 2006, File Number
                333-1301734.1
            
            Specimen
                stock certificate representing the Company’s common stock
            
            Exhibit
                4.1 to the Registrant’s Registration Statement on Form SB-2 filed on July
                31, 2002 (Registration No.
                333-97385)





4.2
            
            Form
                of Warrant issued in connection with the Securities Purchase Agreement
                dated November 2, 2005 between InfoSearch and the signatory Investors
                thereto
            
            Exhibit
                4.1 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-973854.3
            
            Form
                of Warrants issued to Demand Media, Inc.
            
            Exhibit
                4.1 to InfoSearch's Current Report on Form 8-K filed on October 6,
                2006,
                File No. 333-973854.4
            
            Common
                Stock Purchase Warrant issued to Gemini Partners, Inc. on July 6,
                20064.5
            
            Form
                of Common Stock Purchase Warrants issued to GP Group LLC on August
                6,
                2006, September 6, 2006 and October 6, 200610.4
            
            Stock
                Option Plan (1)
            
            Exhibit
                10.5 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-9738510.5
            
            Subscription
                Agreement
            
            Exhibit
                10.6 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-9738510.6
            
            Employment
                Agreement dated March 8, 2005 between InfoSearch and Frank Knuettel
                II (1)
            
            Exhibit
                10.1 to Company’s Current Report on Form 8-K filed on March 14, 2005 File
                No. 333-9738510.7
            
            Employment
                Agreement dated August 23, 2005 between InfoSearch Media, Inc. and
                George
                Lichter (1)
            
            Exhibit
                10.1 to InfoSearch’s Current Report on Form 8-K filed on August 26, 2005
                File No. 333-97385




42




10.9
            
            Securities
                Purchase Agreement dated November 2, 2005 between InfoSearch and
                the
                signatory Investors thereto
            
            Exhibit
                10.1 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-9738510.10
            
            Registration
                Rights Agreement dated November 2, 2005 between InfoSearch and the
                signatory Investors thereto
            
            Exhibit
                10.2 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-9738510.11
            
            Agreement
                and Plan of Merger and Reorganization among InfoSearch, Apollo Acquisition
                Corp., Answerbag and Joel Downs, Sunny Walia and Richard Gazan dated
                as of
                February 21, 2006
            
            Exhibit
                2.1 to InfoSearch’s Current Report on Form 8-K filed on February 27, 2006
                File No. 333-9738510.12
            
            Employment
                Agreement dated March 14, 2006 between InfoSearch and Edan Portaro
                (1)
            
            Exhibit
                10.18 to InfoSearch’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-738510.13
            
            Consulting
                Agreement dated August 23, 2005 between InfoSearch and Claudio Pinkus
                (1)
            
            Exhibit
                10.19 to InfoSearch’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-7385





10.14
            
            Asset
                Purchase Agreement
            
            Exhibit
                10.21 to InfoSearch’s Current Report on Form 8-K filed on October 6, 2006
                File No. 333-9738510.15
            
            Amendment,
                dated as of November 3, 2006, to Employment Agreement, dated as of
                January
                4, 2006, between InfoSearch and George Lichter (1)
            
            Exhibit
                10.22 to InfoSearch’s Current Report on Form 8-K filed on November 6, 2006
                File No. 333-9738510.17
            
            Form
                of Indemnity Agreement
            
            Exhibit
                10.4 to InfoSearch's Current Report on Form 8-K filed on January
                4, 2005
                File No. 333-9738510.18
            
            Employment
                Agreement dated June 11, 2006 between InfoSearch and David Warthen
                (1)10.19
            
            Form
                of Incentive Stock Option Agreement under the MAC Worldwide, Inc.
                2004
                Stock Option Plan, as amended (1)10.20
            
            Form
                of Restricted Stock Agreement under the MAC Worldwide, Inc. 2004
                Stock
                Option Plan, as amended (1)14
            
            Code
                of Ethics
            
            Exhibit
                14 to Company’s Annual Report on Form 10-KSB filed on April 15, 2005 File
                No. 333-9738521
            
            List
                of Subsidiaries
            
            Exhibit
                21.1 to the Company’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-7385




43




23.1*
            
            Consent
                of Singer Lewak Greenbaum & Goldstein LLP.31.1*
            
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2*
            
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232.1*
            
            Certifications
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002







*
      Included in this filing.




(1)
      A
      management contract or compensatory plan or arrangement required to be filed
      as
      an exhibit to this report pursuant to Item 13 of Form 10-KSB.





**Item
      14. Principal Accountant Fees and Expenses.**





The
      Audit
      Committee has implemented policies and procedures for the pre-approval of all
      audit, audit-related and tax services for the Company, which meets the
      requirements under the Sarbanes-Oxley Act of 2002 and SEC rules. The Audit
      Committee has pre-approved certain audit, audit-related, and tax services to
      be
      performed by our independent auditors, Rose, Snyder & Jacobs.




Effective,
      December 31, 2007, by unanimous written consent of the Company’s Board of
      Directors, Rose, Snyder & Jacobs were selected to be the registered public
      accounting firm for the Company, replacing Singer Lewak Greenbaum and Goldstein
      LLP. Singer Lewak Greenbaum and Goldstein LLP was the independent registered
      public accounting firm that audited the Company’s financial statements for the
      fiscal years ending December 31, 2006. The aggregate fees for audit and related
      services by our previous accounting firm, Singer Lewak Greenbaum and Goldstein
      LLP, for fiscal years 2007 and 2006 are as follows:





Year
                Ended December 31,2007
            
            2006Audit
                Fees1
            
            $
            321,094
            
            $
            254,709Audit Related
                Fees2
            
            $
            2,000
            
            $
            110,619Tax
                Fees3
            
            $
            8,458
            
            $
            7,493All
                Other Fees4
            
            $
            0
            
            $
            0TOTAL
            
            $
            331,552
            
            $
            372,821





(1)
            Represents
                fees for professional services rendered in connection with the audit
                of
                our annual financial statements, reviews of our quarterly financial
                statements and advice provided on accounting matters that arose in
                connection with audit services.


44





(2)
            Represents
                fees for professional services related to the filing of SB-2 registration
                statements and other statutory or regulatory
                filings.





(3)
            Represents
                fees for tax services provided in connection with general tax
                matters.





(4)
            All
                other fees represent fees for services provided to the Company that
                are
                not otherwise included in the categories
                above.




**SIGNATURES**





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


INFOSEARCH
                MEDIA, INC./s/
                George LichterBy:
                George LichterIts:
                Chief Executive OfficerDate:
                April 15, 2008





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




/s/
                George LichterBy:
                George LichterIts:
                Chief Executive Officer and Director(Principal
                Executive Officer)Date:
                April 15, 2008




/s/
                Scott BrogiBy:
                Scott BrogiIts:
                Chief Financial Officer(Principal Financial and Accounting Officer)Date:
                April 15, 2008




/s/
                John LaValleBy:
                John LaValleIts:
                DirectorDate:
                April 15, 2008




45




**EXHIBIT
      INDEX**





**Exhibit
                No.**
            
            **Description**
            
            **Incorporated
                by Reference to Filings Indicated**2.1
            
            Agreement
                and Plan of Merger and Reorganization dated as of December 30, 2004
                among
                Trafficlogic, Inc., MAC Worldwide, Inc. and Trafficlogic Acquisition
                Corp.
            
            Exhibit
                2.1 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-973852.2
            
            Split
                Off Agreement dated December 30, 2004 among MAC Worldwide, Inc.,
                Vincenzo
                Cavallo, Anthony Cavallo, Mimi & Coco, Inc. and Trafficlogic,
                Inc.
            
            Exhibit
                2.2 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-973853.1.1
            
            Certificate
                of Incorporation
            
            Exhibit
                3.1 to Company’s Form SB-2 filed on July 31, 2002, File Number
                333-97385)3.1.2
            
            Certificate
                of Amendment to Certificate of Incorporation of MAC Worldwide,
                Inc.
            
            Exhibit
                3.1.2 to Company’s Current Report on Form 8-K filed on January 4, 2005
                File No. 333-973853.1.3
            
            Certificate
                of Amendment to Certificate of Incorporation of MAC Worldwide,
                Inc.
            
            Exhibit
                3.1.3 to Company’s Current Report on Form 8-K filed on January 4, 2005
                File No. 333-973853.2
            
            Amended
                and Restated Bylaws
            
            Exhibit
                3.3 to Company’s Form SB-2/A filed on March 23, 2006, File Number
                333-1301734.1
            
            Specimen
                stock certificate representing the Company’s common stock
            
            Exhibit
                4.1 to the Registrant’s Registration Statement on Form SB-2 filed on July
                31, 2002 (Registration No. 333-97385)4.2
            
            Form
                of Warrant issued in connection with the Securities Purchase Agreement
                dated November 2, 2005 between InfoSearch and the signatory Investors
                thereto
            
            Exhibit
                4.1 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-973854.3
            
            Form
                of Warrants issued to Demand Media, Inc.
            
            Exhibit
                4.1 to InfoSearch's Current Report on Form 8-K filed on October 6,
                2006,
                File No. 333-973854.4
            
            Common
                Stock Purchase Warrant issued to Gemini Partners, Inc. on July 6,
                20064.5
            
            Form
                of Common Stock Purchase Warrants issued to GP Group LLC on August
                6,
                2006, September 6, 2006 and October 6, 2006




46


10.4
            
            Stock
                Option Plan (1)
            
            Exhibit
                10.5 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-9738510.5
            
            Subscription
                Agreement
            
            Exhibit
                10.6 to Company’s Current Report on Form 8-K filed on January 4, 2005 File
                No. 333-97385




10.6
            
            Employment
                Agreement dated March 8, 2005 between InfoSearch and Frank Knuettel
                II (1)
            
            Exhibit
                10.1 to Company’s Current Report on Form 8-K filed on March 14, 2005 File
                No. 333-9738510.7
            
            Employment
                Agreement dated August 23, 2005 between InfoSearch Media, Inc. and
                George
                Lichter (1)
            
            Exhibit
                10.1 to InfoSearch’s Current Report on Form 8-K filed on August 26, 2005
                File No. 333-9738510.9
            
            Securities
                Purchase Agreement dated November 2, 2005 between InfoSearch and
                the
                signatory Investors thereto
            
            Exhibit
                10.1 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-9738510.10
            
            Registration
                Rights Agreement dated November 2, 2005 between InfoSearch and the
                signatory Investors thereto
            
            Exhibit
                10.2 to InfoSearch’s Current Report on Form 8-K filed on November 7, 2005
                File No. 333-9738510.11
            
            Agreement
                and Plan of Merger and Reorganization among InfoSearch, Apollo Acquisition
                Corp., Answerbag and Joel Downs, Sunny Walia and Richard Gazan dated
                as of
                February 21, 2006
            
            Exhibit
                2.1 to InfoSearch’s Current Report on Form 8-K filed on February 27, 2006
                File No. 333-9738510.12
            
            Employment
                Agreement dated March 14, 2006 between InfoSearch and Edan Portaro
                (1)
            
            Exhibit
                10.18 to InfoSearch’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-738510.13
            
            Consulting
                Agreement dated August 23, 2005 between InfoSearch and Claudio Pinkus
                (1)
            
            Exhibit
                10.19 to InfoSearch’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-738510.14
            
            Asset
                Purchase Agreement
            
            Exhibit
                10.21 to InfoSearch’s Current Report on Form 8-K filed on October 6, 2006
                File No. 333-9738510.15
            
            Amendment,
                dated as of November 3, 2006, to Employment Agreement, dated as of
                January
                4, 2006, between InfoSearch and George Lichter (1)
            
            Exhibit
                10.22 to InfoSearch’s Current Report on Form 8-K filed on November 6, 2006
                File No. 333-9738510.17
            
            Form
                of Indemnity Agreement
            
            Exhibit
                10.4 to InfoSearch's Current Report on Form 8-K filed on January
                4, 2005
                File No. 333-9738510.18
            
            Employment
                Agreement dated June 11, 2006 between InfoSearch and David Warthen
                (1)




47


10.19
            
            Form
                of Incentive Stock Option Agreement under the MAC Worldwide, Inc.
                2004
                Stock Option Plan, as amended (1)10.20
            
            Form
                of Restricted Stock Agreement under the MAC Worldwide, Inc. 2004
                Stock
                Option Plan, as amended (1)


14
            
            Code
                of Ethics
            
            Exhibit
                14 to Company’s Annual Report on Form 10-KSB filed on April 15, 2005 File
                No. 333-97385




21
            
            List
                of Subsidiaries
            
            Exhibit
                21.1 to the Company’s Quarterly Report on Form 10-Q/A filed on July 11,
                2006 File No. 333-738523.1*
            
            Consent
                of Singer Lewak Greenbaum & Goldstein LLP.31.1*
            
            Certification
                of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2*
            
            Certification
                of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232.1*
            
            Certifications
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002







*
      Included in this filing.




(1)
      A
      management contract or compensatory plan or arrangement required to be filed
      as
      an exhibit to this report pursuant to Item 13 of Form 10-KSB.


48




**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**


INFOSEARCH
      MEDIA, INC.


AUDITED
      CONSOLIDATED FINANCIAL STATEMENTS


FOR
      THE
      YEARS ENDED DECEMBER 31, 2007 AND 2006





PageReport
                of Independent Registered Public Accounting Firm
            F-1Report
                of Independent Registered Public Accounting Firm
            F-2Consolidated
                Balance Sheets as of December 31, 2007 and 2006
            F-3Consolidated
                Statements of Operations for the years ended December 31, 2007 and
                2006
            F-4Consolidated
                Statements of Stockholders’ Equity (Deficit) for the years ended December
                31, 2007 and 2006
            F-5Consolidated
                Statements of Cash Flows for the years ended December 31, 2007 and
                2006
            F-6Notes
                to Consolidated Financial Statements
            F-7




49


REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors and Stockholders


InfoSearch
      Media, Inc.


Marina
      Del Rey, California





We
      have
      audited the accompanying consolidated balance sheet of InfoSearch Media, Inc.,
      and subsidiaries (the “Company”) as of December 31, 2007, and the related
      consolidated statements of operations, stockholders’ equity, and cash flows for
      the year then ended. These consolidated financial statements are the
      responsibility of the Company’s management.  Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audit.





We
      conducted our audit in accordance with the standards established by the Public
      Company Accounting Oversight Board (United States).  Those standards
      require that we plan and perform the audit to obtain reasonable assurance about
      whether the financial statements are free of material misstatement.  The
      Company is not required to have, nor were we engaged to perform, an audit of
      its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the Company’s internal control
      over financial reporting. Accordingly, we express no such opinion. An audit
      also
      includes examining, on a test basis, evidence supporting the amounts and
      disclosures in the financial statements, assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation.  We believe that our audit
      provides a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of InfoSearch Media, Inc.,
      and
      subsidiaries as of December 31, 2007, and the results of its operations and
      its
      cash flows for the year then ended, in conformity with accounting principles
      generally accepted in the United States of America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company has sustained recurring operating
      losses and continues to generate negative cash flows from operations. These
      factors, among others, raise substantial doubt about the Company’s ability to
      continue as a going concern. Management’s plans in regards to these matters are
      also described in Note 1. The consolidated financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.





Rose,
      Snyder & Jacobs


A
      Corporation of Certified Public Accountants





Encino,
      California





April
      11,
      2008


F-1




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors


InfoSearch
      Media, Inc.


Marina
      Del Rey, California





We
      have
      audited the consolidated balance sheet of InfoSearch Media, Inc. and
      subsidiaries as of December 31, 2006, and the related consolidated statements
      of
      operations, stockholders' equity and cash flows for the year then ended. These
      financial statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. We believe that our audit provides a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of InfoSearch Media, Inc.
      and
      subsidiaries as of December 31, 2006, and the results of their operations and
      their cash flows for the year then ended, in conformity with U.S. generally
      accepted accounting principles.




Singer
      Lewak Greenbaum & Goldstein LLP


SINGER
      LEWAK GREENBAUM & GOLDSTEIN LLP




Los
      Angeles, California


April
      17,
      2007


F-2




INFOSEARCH
      MEDIA, INC.


CONSOLIDATED
      BALANCE SHEETS




**December
                31,**
              **2007**
            
            **December
                31,**
              **2006****ASSETS****CURRENT
                ASSETS:**Cash
                and cash equivalents
            
            $
            787,239
            
            $
            2,495,654Restricted
                cash
            
            
            20,000
            
            
            380,530Accounts
                receivable, net of allowance for doubtful accounts of $25,500 and
                $0 for
                2007 and 2006, respectively
            
            
            215,518
            
            
            68,941Due
                from related parties
            
            
            **-**
            
            
            50,732Prepaid
                and other current assets
            
            
            104,245
            
            
            201,604**TOTAL
                CURRENT ASSETS**
            
            
            1,126,702
            
            
            3,197,461EMPLOYEE
                ADVANCE
            
            
            1,800
            
            
            1,000CONTENT
                DEVELOPMENT
            
            
            **-**
            
            
            4,083PROPERTY
                AND EQUIPMENT, NET
            
            
            130,650
            
            
            131,139SECURITY
                DEPOSIT
            
            
            37,500
            
            
            37,500EQUITY
                WARRANT ASSET
            
            
            112,049
            
            
            308,837**TOTAL
                ASSETS**
            
            $
            1,408,701
            
            $
            3,680,020**LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)****CURRENT
                LIABILITIES:**Accounts
                payable
            
            $
            228,308
            
            $
            204,271Accrued
                bonuses
            
            
            12,553
            
            
            264,515Accrued
                expenses
            
            
            172,132
            
            
            400,052Accrued
                expenses Answerbag acquisition
            
            
            **-**
            
            
            75,156Capital
                leases
            
            
            **-**
            
            
            17,621Deferred
                revenue
            
            
            526,868
            
            
            454,741Provision
                for refunds payable/chargebacks
            
            
            15,842
            
            
            30,842**TOTAL
                CURRENT LIABILITIES**
            
            
            955,703
            
            
            1,447,198FAIR
                VALUE OF WARRANT LIABILITY
            
            
            967,651
            
            
            1,396,215**TOTAL
                LIABILITIES**
            
            
            1,923,354
            
            
            2,843,413COMMITMENTS
                AND CONTINGENCIES (Note 13)**STOCKHOLDERS'
                EQUITY (DEFICIT):**Preferred
                stock, undesignated, par value $.001per share, 25,000,000
                sharesAuthorized;
                no shares issued and outstanding;
            
            
            -
            
            
            -Common
                  stock, $.001 par value, authorized 200,000,000 shares;issued
                  and outstanding 52,493,592 and 51,491,197, at December 31, 2007
                  and 2006,
                  respectively
            
            
            52,494
            
            
            51,491Committed
                stock, 0 and 164,282 shares at December 31, 2007 and 2006,
                respectively
            
            
            **-**
            
            
            22,586Additional
                paid in capital
            
            
            11,336,742
            
            
            11,130,109Accumulated
                deficit
            
            
            (11,903,889
            )
            
            (10,367,580
            )**TOTAL
                STOCKHOLDERS' EQUITY (DEFICIT):**
            
            
            (514,653
            )
            
            836,606**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)**
            
            $
            1,408,701
            
            $
            3,680,020





See
      reports of independent registered public accounting firms and notes to
      consolidated financial statements.


F-3


INFOSEARCH
      MEDIA, INC.


CONSOLIDATED
      STATEMENTS OF OPERATIONS




Year
                Ended December 31,2007
            
            2006TRAFFICBUILDER
                SALES
            
            $
            4,784,068
            
            $
            6,016,080WEB
                PROPERTIES SALES
            
            
            126,236
            
            
            1,583,980NET
                SALES
            
            
            4,910,304
            
            
            7,600,060TRAFFICBUILDER
                COST OF SALES
            
            
            1,335,933
            
            
            1,686,645WEB
                PROPERTIES COST OF SALES
            
            
            56,954
            
            
            987,040COST
                OF SALES
            
            
            1,392,887
            
            
            2,673,685GROSS
                PROFIT
            
            $
            3,517,417
            
            
            4,926,375OPERATING
                EXPENSESGeneral
                & administrative
            
            
            3,754,240
            
            
            9,600,049Sales
                & marketing
            
            
            1,831,548
            
            
            2,138,695TOTAL
                COSTS AND EXPENSES
            
            
            5,585,788
            
            
            11,738,744LOSS
                FROM OPERATIONS
            
            $
            (2,068,371
            )
            
            (6,812,369
            )CHANGE
                IN FAIR VALUE OF WARRANTS
            
            
            233,285
            
            
            1,728,443LIQUIDATED
                DAMAGES
            
            
            -
            
            
            (502,397
            )OTHER
                INCOME (EXPENSE) (NOTE 13)
            
            
            252,707
            
            
            (35,244
            )INTEREST
                EXPENSE
            
            
            (7,044
            )
            
            (13,406
            )INTEREST
                INCOME
            
            
            59,197
            
            
            105,820LOSS
                FROM CONTINUING OPERATIONS BEFORE TAX
            
            
            (1,530,226
            )
            
            (5,529,153
            )TAXES
                FROM CONTINUING OPERATIONS
            
            
            6,083
            
            
            18,585NET
                LOSS FROM CONTINUING OPERATIONS
            
            
            (1,536,309
            )
            
            (5,547,738
            )DISCONTINUED
                OPERATIONS (NOTE 12)Loss
                from discontinued operations of Answerbag, Inc.
            
            
            -
            
            
            (412,132
            )Gain
                on disposal of discontinued operations
            
            
            -
            
            
            1,919,962EARNINGS
                FROM DISCONTINUED OPERATIONS
            
            
            -
            
            
            1,507,830NET
                LOSS
            
            $
            (1,536,309
            )
            $
            (4,039,908
            )LOSS
                PER SHARE FROM CONTINUING OPERATIONS -BASIC
            
            $
            (0.03
            )
            $
            (0.12
            )DILUTED
            
            $
            (0.03
            )
            $
            (0.12
            )LOSS
                PER SHARE FROM DISCONTINUED OPERATIONS -BASIC
            
            $
            -
            
            $
            0.03DILUTED
            
            $
            -
            
            $
            0.03LOSS
                PER SHAREBASIC
            
            $
            (0.03
            )
            $
            (0.09
            )DILUTED
            
            $
            (0.03
            )
            $
            (0.09
            )WEIGHTED
                AVERAGE SHARES OUTSTANDING –
                BASIC
            
            
            51,887,244
            
            
            47,202,261WEIGHTED
                AVERAGE SHARES OUTSTANDING – DILUTED
            
            
            51,887,244
            
            
            47,202,261




See
      reports of independent registered public accounting firms and notes to
      consolidated financial statements.


F-4


INFOSEARCH
      MEDIA, INC.


CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)





Common
                Stock
            
            Comitted
              Common
            
            Additional
              Paid-In
            
            Accumulated
            
            Total
              Stockholders'
              EquityShares
            
            Amount
            
            Stock
            
            Capital
            
            Deficit
            
            (Deficit)BALANCE
                - December 31, 2005
            
            
            42,277,775
            
            $
            42,278
            
            $
            -
            
            $
            6,056,291
            
            $
            (6,327,670
            )
            $
            (229,101
            )Restricted
                stock
            
            
            4,645,586
            
            
            4,975
            
            
            
            
            
            2,889,450
            
            
            
            
            
            2,894,425Answerbag
                acquisition
            
            
            844,748
            
            
            844
            
            
            
            
            
            264,930
            
            
            
            
            
            265,774Returned
                shares Steve Lazuka
            
            
            (1,000,000
            )
            
            (1,000
            )
            
            
            
            
            1,000
            
            
            
            
            
            -Committted
                stock
            
            
            
            
            
            
            
            
            22,586
            
            
            
            
            
            
            
            
            22,586Stock
                option exercise
            
            
            41,250
            
            
            41
            
            
            
            
            
            5,734
            
            
            
            
            
            5,775Employee
                option compensation expense
            
            
            
            
            
            
            
            
            
            
            
            1,314,341
            
            
            
            
            
            1,314,341Stock
                grants
            
            
            27,500
            
            
            28
            
            
            
            
            
            8,222
            
            
            
            
            
            8,250Stock-bright
                star award
            
            
            18,525
            
            
            19
            
            
            
            
            
            6,211
            
            
            
            
            
            6,230Liquidated
                damages
            
            
            4,306,613
            
            
            4,306
            
            
            
            
            
            505,598
            
            
            
            
            
            509,904Gemini
                warrants
            
            
            
            
            
            
            
            
            
            
            
            68,752
            
            
            
            
            
            68,752GP
                Group warrants
            
            
            
            
            
            
            
            
            
            
            
            9,580
            
            
            
            
            
            9,580Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (4,039,908
            )
            
            (4,039,908
            )BALANCE
                - December 31, 2006
            
            
            51,491,197
            
            
            51,491
            
            
            22,586
            
            
            11,130,109
            
            
            (10,367,580
            )
            
            836,606Restricted
                stock
            
            
            264,477
            
            
            265
            
            
            
            
            
            36,612
            
            
            
            
            
            36,877Gemini
                warrants
            
            
            360,000
            
            
            360
            
            
            
            
            
            3,240
            
            
            
            
            
            3,600Sale
                of Answerbag
            
            
            164,282
            
            
            164
            
            
            (22,586
            )
            
            22,422
            
            
            
            
            
            -Employee
                option compensation expense
            
            
            
            
            
            
            
            
            
            
            
            104,906
            
            
            
            
            
            104,906Shares
                issued for sales and consulting agreements
            
            
            213,636
            
            
            214
            
            
            
            
            
            39,453
            
            
            
            
            
            39,667Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (1,536,309
            )
            
            (1,536,309
            )BALANCE
                - December 31,2007
            
            
            52,493,592
            
            $
            52,494
            
            $
            -
            
            $
            11,336,742
            
            $
            (11,903,889
            )
            $
            (514,653
            )




See
      reports of independent registered public accounting firms and notes to
      consolidated financial statements.


F-5




INFOSEARCH
      MEDIA, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS





Year
                ended December 31,2007
            
            2006CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                Loss
            
            $
            (1,536,309
            )
            $
            (4,039,908
            )Adjustment
                  to reconcile net loss to net cashused
                  in operating activities:Depreciation
                and amortization
            
            
            118,535
            
            
            615,529Equity
                based compensation
            
            
            157,959
            
            
            4,223,245Issuance
                of warrants
            
            
            -
            
            
            78,331Loss
                from disposal of fixed assets
            
            
            -
            
            
            10,937Liquidated
                damages
            
            
            -
            
            
            509,904Change
                in fair value of warrants
            
            
            (233,285
            )
            
            (1,728,443
            )Gain
                on sale of Answerbag assets
            
            
            -
            
            
            (1,919,962
            )Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (171,277
            )
            
            (64,492
            )Prepaid
                expenses and other current assets
            
            
            147,291
            
            
            (16,074
            )Accounts
                payable, accrued expenses and other liabilities
            
            
            (531,002
            )
            
            222,141Provision
                for refunds
            
            
            10,000
            
            
            (13,309
            )Deferred
                revenue
            
            
            72,127
            
            
            (2,173,306
            )NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (1,965,961
            )
            
            (4,295,406
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Restricted
                cash
            
            
            360,530
            
            
            (380,530
            )Net
                cash payments in purchase of Answerbag
            
            
            -
            
            
            (479,888
            )Net
                proceeds from sales of Answerbag assets
            
            
            -
            
            
            2,937,149Capital
                expenditures –
                fixed
                assets
            
            
            (88,963
            )
            
            (37,640
            )Capital
                expenditures – content development
            
            
            
            
            
            (49,361
            )NET
                CASH PROVIDED BY INVESTING ACTIVITIES
            
            
            271,567
            
            
            1,989,729CASH
                FLOWS FROM FINANCING ACTIVITIES:Principal
                payments of capital lease obligations
            
            
            (17,621
            )
            
            (33,004
            )Stock
                option / warrant exercise
            
            
            3,600
            
            
            5,775NET
                CASH USED IN FINANCING ACTIVITIES
            
            
            (14,021
            )
            
            (27,229
            )Net
                decrease in cash and cash equivalents
            
            
            (1,708,415
            )
            
            (2,332,906
            )CASH
                AND CASH EQUIVALENTS - BEGINNING OF PERIOD
            
            
            2,495,654
            
            
            4,828,560CASH
                AND CASH EQUIVALENTS - END OF PERIOD
            
            $
            787,239
            
            $
            2,495,654SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATIONCash
                paid for interest
            
            $
            7,044
            
            $
            13,406Income
                tax paid
            
            $
            6,083
            
            $
            18,585NON-CASH
                  SUPPLEMENTAL DISCLOSURE OF INVESTINGAND
                  FINANCING ACTIVITIES:Stock
                issued for purchase of property and equipment
            
            $
            25,000
            
            $
            -Stock
                issued or committed to be issued for the acquisition of
                Answerbag
            
            $
            -
            
            $
            462,499




See
      reports of independent registered public accounting firms and notes to
      consolidated financial statements.


F-6





**InfoSearch
      Media, Inc.**


**Notes
      to the Consolidated Financial Statements**


**For
      the Years Ended December 31, 2007 and 2006**





**1.**
            **Organization
                and Nature of Operations**





On
      December 31, 2004, Trafficlogic, Inc., a California corporation (“Trafficlogic”)
      merged with MAC Worldwide, Inc. (“MAC”); the surviving company changed its name
      to InfoSearch Media, Inc. (“InfoSearch” or the “Company”). Such merger consisted
      of three related transactions: (1) the merger (the “Merger”) of Trafficlogic
      with and into a newly organized and wholly-owned subsidiary of MAC, Trafficlogic
      Acquisition Corp., a Delaware corporation, which later changed its name to
      Trafficlogic, Inc. (“Acquisition Sub”); (2) the disposition of MAC’s
      wholly-owned operating subsidiary, Mimi & Coco, Inc., a Canadian
      corporation; and (3) the closing of a private placement offering of common
      stock, par value $0.001 per share (the “Private Placement Transaction”). The
      current officers and directors of the Company are contained in Part III of
      this
      Annual Report on Form 10-KSB for the year ended December 31,
      2007. ****





The
      Company’s principal executive offices are located at 4086 Del Rey Avenue, Marina
      Del Rey, California 90292. The Company’s telephone number is (310) 437-7380.




The
      Company is a Los Angeles-based provider of "smart" search-targeted text and
      video content for the Internet, designed to improve traffic, brand recognition
      and website performance for publishing and media clients. InfoSearch's network
      of professional writers, editors, technical specialists and video production
      resources help businesses succeed on the Web by implementing text and video
      content-based internet marketing solutions. InfoSearch's search marketing
      solutions involve **** online
      content that supports the non-paid search marketing initiatives of its clients.
      Non-paid search **** results **,** otherwise
      known as organic **,** are **** the
      search results that the search engines find on the World Wide Web as opposed
      to
      those listings for which companies pay for placement. During **** the
      first
      half of **** 2007,
      we
      derived revenue from our two primary operating groups, Content and Web
      Properties, and launched several new products including TrafficBuilder Text
      and
      TrafficBuilder Video. In the third quarter of 2007, we launched an updated
      website better describing the Company’s new suite of products and
      services.





Content


We
      deliver, through sale or license agreements, branded original content for use
      by
      our clients on their websites **.** Utilizing sophisticated content and keywords analytics, content developed in
      the
      TrafficBuilder Text program drives traffic to the client's website through
      additional pages of text content which helps deliver improved search engine
      performance. The TrafficBuilder content provides an environment engineered
      to
      stimulate a sale through the use of content focused on the client's products
      and
      services. We derive revenue from this content through either the sale or
      licensing of products and services. While many of our small to medium sized
      business clients prefer the leasing option over the purchase alternative because
      it provides a lower upfront cost, larger firms generally prefer the outright
      purchase of the content. We are actively pursuing both methods and have created
      a dedicated team to focus on the larger clients and affiliate or reseller
      relationships.





We
      also
      offer supplemental products, including Web analytics and links through
      partnerships with specialized service providers where the Company acts as a
      reseller of certain products. The analytics and links products are both sold
      on
      a month-to-month basis.




In
      February 2007, the Company launched a new search-targeted online video product
      called *TrafficBuilder
      Video* to
      provide the same customer benefits as the Company's written, text-based product
      line, TrafficBuilder Text, including improved organic search engine performance,
      increased quality site traffic and brand recognition. *TrafficBuilder Video* is
      primarily being offered to a select number of major online media partners such
      as Rodale Publishing.


See
        reports of independent registered public accounting
        firms.


F-7





Web
      Properties


We
      currently operate numerous content-based websites, including ArticleInsider,
      through which we distribute traffic to advertisers. These websites are a
      collection of general informational articles focused on various business
      topics. **** We
      are no
      longer seeking or engaging new customers for these websites and are harvesting
      the deferred revenues associated with customers we previously engaged for these
      websites. However **,** we
      continue to monetize traffic to these websites through the use of Google's
      AdSense program. In March 2006, **** we
      purchased Answerbag, Inc. (“Answerbag”), a consumer information website built
      through content generated from its users. In October 2006, we entered into
      a
      multi-year alliance with Demand Media, Inc. (“Demand Media”), a next generation
      media company, pursuant to which we sold all of the assets of Answerbag to
      Demand Media, and Demand Media also agreed to purchase our products and
      services. During the period of our operation of Answerbag, the site generated
      revenue through the use of Google's AdSense program.





Going
      Concern


The
      accompanying financial statements of the Company have been prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America, which contemplate continuation of the Company as a going concern.
      Although the Company reduced its net loss to $4,588 for the second half of
      the
      year by significantly lowering operating expenses and has increased cash to
      $787,239 as of December 31, 2007, the Company has historically experienced
      recurring net losses and negative cash flows from operations. During the year
      ending December 31, 2007 the Company reported a net loss of $1,531,721 and
      negative flows from operations of $1,536,309. In view of these conditions,
      the
      Company’s ability to continue as a going concern is contingent upon its ability
      to ultimately maintain profitable operations or secure additional financing.
      Management believes that its current and future plans provide an opportunity
      to
      continue as a going concern. The accompanying financial statements do not
      include any adjustments relating to the recoverability and classification of
      recorded assets, or the amounts and classification of liabilities that may
      be
      necessary in the event the Company cannot continue as a going
      concern.





**2.**
            **Summary
                of Significant Accounting
                Policies**





Basis
      of Consolidation


The
      consolidated financial statements include the accounts of the Company and one
      subsidiary, Answerbag, Inc., a California corporation, which was acquired by
      the
      Company in March 2006 and the assets of which were subsequently sold in October
      2006. All significant inter company accounts and transactions have been
      eliminated in consolidation and there are no consolidating information presented
      for the fiscal year ended December 31, 2007.





Revenue
      Recognition


The
      Company recognizes revenue on arrangements in accordance with SEC Staff
      Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" and
      No. 104 "Revenue Recognition," and Emerging Issues Task Force Issue
      00-21,"Revenue Arrangements with Multiple Deliverables." In all cases, revenue
      is recognized only when the price is fixed or determinable, persuasive evidence
      of an arrangement exists, the service is performed, and collectibility of the
      resulting receivable is reasonably assured.





The
      Company's revenues are derived principally from the sale or licensing of Content
      to third party web site owners through its TrafficBuilder suite of products
      and
      services. Revenue from Content sales is recognized when the content is delivered
      to the client. Revenue earned from Content licensing is treated as an
      installment sale and prorated revenue is recognized on a monthly basis over
      the
      life of the agreement. The Company offers a 12 month license agreement under
      which Clients have the right to continue leasing the content at the end of
      the
      term on a month-to-month basis. The Company offers a month-to-month licensing
      agreement and revenue earned on this type of licensing agreement is recognized
      on a monthly basis. The Company also earns revenue from supplemental services
      such as web analytics, directory submissions and link building. These services
      are provided under month-to-month license agreements and revenue earned from
      these services is recognized on a monthly basis. Client deposits received in
      advance of work being completed for such services are treated as deferred
      revenue until the services are performed and the revenue is then
      recognized.


See
      reports of independent registered public accounting firms.


F-8





The
      Company also derives revenue from the sale of interactive advertising on a
      CPC
      basis through its Web Properties such as ArticleInsider. The Company has
      established a relationship with Google whereby Google pays InfoSearch fees
      for
      clicks on advertisements sponsored by Google and displayed on the ArticleInsider
      web site. The Company recognizes revenue associated with the Google AdSense
      program as reported by Google to the Company at the end of each
      month.





Cost
      of Sales


The
      majority of the Company's cost of sales is related to its Content products
      developed under the TrafficBuilder product line. For the TrafficBuilder program,
      content developed pursuant to outright sales and licensing is developed through
      keyword analysts, writers, editors, and other independent contractors who
      analyze the keywords, write and edit the content. The Company recognizes and
      expenses those costs related to the content developed for outright sales and
      for
      month-to-month licensing to clients as the cost is incurred, while the cost
      of
      content development for licensing subject to a 12-month contract is amortized
      over the life of the contract.





Content
      developed pursuant to the Company's ArticleInsider website was capitalized
      to
      content development since it increases the value of the network and yields
      revenue to the Company over a period of years. These costs have been amortized
      over an expected life of twelve months. The Company is no longer developing
      new
      content for the ArticleInsider website, a practice which was discontinued in
      2005. The total value of unamortized content as of December 31, 2007 and
      December 31, 2006 was $0 and $4,082, respectively. Total amortization expense
      included in cost of sales for the year ended December 31, 2007 and 2006 was
      $4,082 and $394,333, respectively.





Cash
      and Cash Equivalents


Cash
      includes cash on hand and cash in banks in demand and time deposit accounts
      with
      original maturities of 90 days or less. At December 31, 2007, the Company had
      restricted cash of 20,000 in a certificate of deposit securing payment
      obligations. At December 31, 2006, the Company had restricted cash of $380,530,
      including $302,108 in escrow from the sale of Answerbag, Inc., $23,422 held
      at
      various financial institutions and payment processing firms, and $55,000 in
      certificates of deposit securing payment obligations.





Use
      of
      Estimates


The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the amounts reported in the financial statements and accompanying notes.
      Actual results could differ from those estimates.





Reclassifications


Certain
      account balances in the prior year may have been reclassified to permit
      meaningful comparison with the current year.





Concentrations


Financial
      instruments, which potentially subject the Company to concentrations of credit
      risk, consist principally of cash and cash equivalents and trade receivables.
      The Company maintains cash and cash equivalents with high-credit, quality
      financial institutions. At December 31, 2007 and 2006, the cash balances held
      at
      financial institutions in excess of federally insured limits.





One
      client, Demand Media, represented approximately 25% of the Company’s revenue for
      the year ended December 31, 2007 and 11% of the Company’s accounts receivable at
      December 31, 2007. For the year ended December 31, 2006, no client represented
      greater than 10% of our revenues. Accounts receivable from Google and Linkworth
      represented approximately 24% of the Company’s accounts receivable at December
      31, 2006.




Accounts
        Receivable
 Credit
        is
        generally extended based upon an evaluation of each customer's financial
        condition, with terms consistent in the industry and no collateral required.
        The
        Company determines an allowance for collectibility on a periodic basis. Amounts
        are written off against the allowance in the period the Company determines
        that
        the receivable is uncollectible.


See
      reports of independent registered public accounting firms.


F-9




Long-Lived
      Asset Impairment


The
      Company periodically evaluates whether events and circumstances have occurred
      that indicate that the remaining estimated useful life of long-lived assets
      may
      warrant revision or that the remaining balance may not be recoverable. When
      factors indicate that the asset should be evaluated for possible impairment,
      the
      Company uses an estimate of the undiscounted net cash flows over the remaining
      life of the asset in measuring whether the asset is recoverable. Based upon
      the
      anticipated future income and cash flow from operations and other factors,
      relevant in the opinion of the Company’s management, there has been no
      impairment.





Fair
      Value of Financial Instruments


To
      meet
      the reporting requirements of SFAS No. 107, “Disclosures About Fair Value of
      Financial Instruments” (“SFAS 107”), the Company calculates the fair value of
      financial instruments and includes this additional information in the notes
      to
      financial statements when the fair value is different than the book value of
      those financial instruments. When the fair value is equal to the book value,
      no
      additional disclosure is made. The Company uses quoted market prices whenever
      available to calculate these fair values.





Valuation
      of Derivative Instruments


SFAS
      No.
      133 “Accounting for Derivative Instruments and Hedging Activities” requires that
      embedded derivative instruments be bifurcated and assessed, along with
      free-standing derivative instruments such as warrants, on their issuance date
      and in accordance with EITF 00-19 “Accounting for Derivative Financial
      Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” to
      determine whether they should be considered a derivative liability and measure
      at their fair value for accounting purposes. In determining the appropriate
      fair
      value, the Company uses the Black-Scholes option pricing formula (“Black
      Scholes”). At each period end, or when circumstances indicate that the Company
      reevaluate the accounting of the derivative liability, derivative liabilities
      are adjusted to reflect changes in fair value, with any increase or decrease
      in
      the fair value being recorded in results of operations as Change in Fair Value
      of Warrants.





Property
      and Equipment


Property
      and equipment is stated at cost and depreciation is calculated using the
      straight-line method over the related assets' estimated economic lives ranging
      from three to five years. Amortization of leasehold improvements is calculated
      using the straight-line method over the lesser of the estimated economic useful
      lives or the lease term. Property under capital leases is amortized over the
      lease terms and included in depreciation and amortization expense.





Deferred
      Revenue


Deferred
      revenue primarily represents payments received from customers as deposits in
      advance of the delivery of content, links or analytics under its TrafficBuilder
      program. In addition, a small remaining amount of the deferred revenue is
      associated with the ArticleInsider program. Deferred revenue results from
      payments received from customers as deposits in excess of revenue earned as
      content is delivered for the TrafficBuilder program and based on click-through
      activity (web site visitations) for ArticleInsider advertisements and will
      be
      recognized as traffic is delivered.





For
      the
      years ended December 31, 2007 and 2006, the Company recorded an expense related
      to chargebacks of $28,703 and $181,375, respectively. These chargebacks arise
      when monthly prepayments made, typically in electronic form, are rejected by
      the
      credit card processor. In limited situations, this can arise due to a dispute
      with the Company. In other situations, this arises when the client will no
      longer honor charges on this card. A provision has been recorded for estimated
      chargebacks at year-end.




Income
      Taxes


The
      Company follows Statement of Financial Accounting Standards No. 109, “Accounting
      for Income Taxes”, which requires recognition of deferred tax assets and
      liabilities for the expected future tax consequences of events that have been
      included in the financial statements or tax returns. Under this method, deferred
      tax assets and liabilities are based on the differences between the financial
      statement and tax bases of assets and liabilities using enacted tax rates in
      effect for the year in which the differences are expected to reverse. The
      Company also follows FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109* (FIN
      48)
      which clarifies the accounting and reporting for uncertainties in income tax
      law
      have been included in the financial statements or tax returns.


See
      reports of independent registered public accounting firms.


F-10




The
      significant components of the provision for income tax expense for the years
      ended December 31, 2007 and 2006 were $6,083 and $18,585 respectively, for
      the
      state current provision. There was no state deferred provision or federal tax
      provision. Due to its current net loss position, the Company has provided a
      valuation allowance in full on its net deferred tax assets in accordance with
      SFAS 109 and in light of the uncertainty regarding ultimate realization of
      the
      net deferred tax assets.




The
      Company  adopted FASB issued Interpretation No. 48 (“Fin 48”) “Accounting
      for Uncertainty in Income Taxes - an interpretation of FASB Statement 109” on
      January 1, 2007, which was issued in July 2006 and clarifies the accounting
      for
      uncertain tax positions. Uncertain tax positions are recognized in the financial
      statements for positions which are considered more likely than not of being
      sustained based on the technical merits of the position on audit by the tax
      authorities. The measurement of the tax benefit recognized in the financial
      statements is based upon the largest amount of the tax benefit that, in
      management’s judgment, is greater than 50% likely of being realized based on a
      cumulative probability assessment of the possible outcomes. The Company 
implementation of Fin 48 did not have a material impact on the amount, reporting
      and disclosures of our fully reserved deferred tax assets resulting primarily
      from tax loss carryforwards.




Accounting
      for Stock-Based Compensation


Effective
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123(R), “Share-Based Payment” ** (“SFAS
      123(R)”), which requires the measurement and recognition of compensation expense
      for all share-based payment awards made to employees and directors, including
      stock options based on their fair values. As a result expenses were recorded
      during 2006 related to the acceleration of these option costs in accordance
      with
      the adoption of this provision.




On
      June 30, 2006, all of the stock option grants issued
      to employees prior to June 30, 2006 had exercise prices above the closing price
      at the end of the second quarter. The board of directors, in an effort to
      maintain employee retention, approved the acceleration of vesting of stock
      option grants and restricted stock grants in the amount of 1,428,403 shares
      and
      1,042,240 share, respectively. Grants for all employees employed as of the
      closed of business on June 30, 2006 were accelerated as of June 30, 2006. 
This resulted in a shre-based compensation expense of $1,041,029 associated
      with
      the acceleration of stock option grants and $718.790 associated with restricted
      stock gains. Both of these values are included in the total share-based
      compensation expense of $4,223,245 for the year ended December 31,
      2006.





Share-based
      compensation expense recognized is based on the value of the portion of
      share-based payment awards that is ultimately expected to vest. Share-based
      compensation expense recognized in the Company's Consolidated Statement of
      Operations during the years ended December 31, 2007 and 2006 includes
      compensation expense for share-based payment awards granted prior to, but not
      yet vested as of December 31, 2006 and 2005, respectively, based on the grant
      date fair value estimated in accordance with the pro forma provisions of SFAS
      123.




In
      March 2005, the SEC issued staff Accounting Bulletin
      No. 107 (SAB 107) to provide guidance on SFAS 123(R).  The Company has
      applied SAB 107 in its adoption of SFAS 123(R).





The
      Company attributes the value of share-based compensation to expense using the
      straight-line method. Share-based compensation expense related to stock
      options was recorded in the accompanying Statements of Operations as
      follows:




Year
                  Ended
                December
                  31,
                2007
              
              Year
                  Ended
                December
                  31,
                2006Selling
                  and marketing
              
              $
              1,865
              
              $
              194,267General
                  and administration
              
              
              103,041
              
              
              1,086,712Discontinued
                  Operations
              
              
              
              
              
              33,451Total
                  share-based compensation expense for stock options
              
              $
              104,906
              
              $
              1,314,341




The
      Company’s calculations were made using the Black-Scholes option pricing model
      with the following weighted average assumptions for the years ended December
      31,
      2007 and 2006: expected life, five years following the grant date; stock
      volatility, 135.04% and 110.75%, respectively; risk-free interest rates of
      3.45%
      and 4.57%, respectively; and no dividends during the expected term. As
      stock-based compensation expense recognized in the consolidated statements
      of
      operations pursuant to SFAS No. 123(R) is based on awards ultimately expected
      to
      vest, expense for grants beginning upon adoption of SFAS No. 123(R) on January
      1, 2006 is reduced for estimated forfeitures. SFAS No. 123(R) requires
      forfeitures to be estimated at the time of grant and revised, if necessary,
      in
      subsequent periods if actual forfeitures differ from those estimates.
      Forfeitures are estimated based on historical experience of forfeited stock
      options as a percent of total options granted.


See
      reports of independent registered public accounting firms.


F-11




Recently
      Issued Accounting Pronouncements


In
        February 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No.
        155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”),
        which amends SFAS No.133, “Accounting for Derivatives Instruments and Hedging
        Activities” (“SFAS No. 133”) and SFAS No. 140, “Accounting for Transfers and
        Servicing of Financial Assets and Extinguishment of Liabilities”(“SFAS No.
        140”). SFAS No. 155 amends SFAS No. 133 to narrow the scope exception for
        interest-only and principal-only strips on debt instruments to include only
        such
        strips representing rights to receive a specified portion of the contractual
        interest or principal cash flows. SFAS No. 155 amends SFAS No. 140 to allow
        qualifying special-purpose entities to hold a passive derivative financial
        instrument pertaining to a beneficial interest that itself is a derivative
        instrument. SFAS No. 155 is effective for financial instruments acquired,
        issued, or subject to a remeasurement event for fiscal years beginning after
        September 15, 2006. The Company has reviewed this pronouncement and
        believes it does not have a material impact on the Company's financial position,
        results of operations or cash flows.
  In
        March
        2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial
        Assets” (“SFAS No.156”), which provides an approach to simplify efforts to
        obtain hedge-like (offset) accounting. This Statement amends SFAS No. 140
        with
        respect to the accounting for separately recognized servicing assets and
        servicing liabilities. SFAS No. 156(1) requires an entity to recognize a
        servicing asset or servicing liability each time it undertakes an obligation
        to
        service a financial asset by entering into a servicing contract in certain
        situations; (2) requires that a separately recognized servicing asset or
        servicing liability be initially measured at fair value, if practicable;
        (3)
        permits an entity to choose either the amortization method or the fair value
        method for subsequent measurement for each class of separately recognized
        servicing assets or servicing liabilities; (4) permits at initial adoption
        a
        one-time reclassification of available-for-sale securities to trading securities
        by an entity with recognized servicing rights, provided the securities
        reclassified offset the entity's exposure to changes in the fair value of
        the
        servicing assets or liabilities; and (5) requires separate presentation of
        servicing assets and servicing liabilities subsequently measured at fair
        value
        in the balance sheet and additional disclosures for all separately recognized
        servicing assets and servicing liabilities. SFAS No. 156 is effective for
        all
        separately recognized servicing assets and liabilities as of the beginning
        of an
        entity's fiscal year that begins after September 15, 2006, with earlier adoption
        permitted in certain circumstances. The Statement also describes the manner
        in
        which it should be initially applied. The Company has reviewed this
        pronouncement and believes it does not have a material impact on the Company's
        financial position, results of operations or cash flows.
  In
        July
        2006, the FASB released FASB Interpretation No. 48, *Accounting
        for Uncertainty in Income Taxes, an interpretation of FASB Statement No.
        109* (FIN
        48).
        FIN 48 clarifies the accounting and reporting for uncertainties in income
        tax
        law. This interpretation prescribes a comprehensive model for the financial
        statement recognition, measurement, presentation and disclosure of uncertain
        tax
        positions taken or expected to be taken in income tax returns. This Statement
        is
        effective for fiscal years beginning after December 15, 2006. The adoption
        of
        FIN 48 did not have a material impact on The Company’s results of operations and
        financial position.
 
 In
        September 2006, the FASB issued Statement of Financial Accounting Issues
        No.
        157, “Fair Value Measurements” (“SFAS No. 157”), which defines the fair value,
        establishes a framework for measuring fair value and expands disclosures
        about
        fair value measurements. SFAS No. 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007, and interim periods
        within those fiscal years. Early adoption is encouraged, provided that the
        Company has not yet issued financial statements for that fiscal year, including
        any financial statements for an interim period within that fiscal year. The
        Company has reviewed this pronouncement and believes it does not have a material
        impact on the Company's financial position, results of operations or cash
        flows.
 
 In
        September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements in
        Current Year Financial Statements” (“SAB 108”). SAB108 provides guidance on the
        consideration of the effects of prior year misstatements in quantifying current
        year misstatements for the purpose of a materiality assessment. SAB 108
        establishes an approach that requires quantification of financial statement
        errors based on the effects of each of the company's balance sheet and statement
        of operations and the related financial statement disclosures. SAB 108 permits
        existing public companies to record the cumulative effect of initially applying
        this approach in the first year ending after November 15, 2006 by recording
        the
        necessary correcting adjustments to the carrying values of assets and
        liabilities as of the beginning of that year with the offsetting adjustment
        recorded to the opening balance of retained earnings. Additionally, the use
        of
        the cumulative effect transition method requires detailed disclosure of the
        nature and amount of each individual error being corrected through the
        cumulative adjustment and how and when it arose. The adoption of this
        pronouncement has not had a material impact on the Company's financial position
        or statement of operations and cash flows.
   
 F-12


In
        September 2006, the FASB issued SFAS No. 158, “Employer's Accounting for Defined
        Benefit Pension and Other Post Retirement Plans”. SFAS No. 158 requires
        employers to recognize in its statement of financial position an asset or
        liability based on the retirement plan's over or under funded status. SFAS
        No.
        158 is effective for fiscal years ending after December 15, 2006. The adoption
        of this pronouncement has not had an impact on the Company's financial position
        or statement of operations and cash flows.
 
 In
        February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 permits
        entities to choose to measure at fair value many financial instruments and
        certain other items that are not currently required to be measured at fair
        value. Subsequent changes in fair value for designated items will be required
        to
        be reported in earnings in the current period. SFAS No. 159 also establishes
        presentation and disclosure requirements for similar types of assets and
        liabilities measured at fair value. SFAS No. 159 is effective for fiscal
        years
        beginning after November 15, 2007. The Company is currently assessing the
        effect
        of implementing this guidance, which directly depends on the nature and extent
        of eligible items elected to be measured at fair value, upon initial application
        of the standard on January 1, 2008.
 
 In
        December 2007, the FASB issued SFAS No. 141(revised 2007), *Business
        Combinations* (“SFAS
        No. 141R”), which revises current purchase accounting guidance in SFAS
        No. 141, *Business
        Combinations* .
        SFAS
        No. 141R requires most assets acquired and liabilities assumed in a
        business combination to be measured at their fair values as of the date of
        acquisition. SFAS No. 141R also modifies the initial measurement and
        subsequent remeasurement of contingent consideration and acquired contingencies,
        and requires that acquisition related costs be recognized as expense as incurred
        rather than capitalized as part of the cost of the acquisition. SFAS
        No. 141R is effective for fiscal years beginning after December 15,
        2008 (the Company’s fiscal 2009) and is to be applied prospectively to business
        combinations occurring after adoption. The impact of SFAS No. 141R on the
        Company’s consolidated financial statements will depend on the nature and extent
        of the Company’s future acquisition activities.
  In
        December 2007, the FASB issued SFAS No. 160. “Noncontrolling Interests in
        Consolidated Financial Statements-and Amendment of ARB No. 51.” SFAS 160
        establishes accounting and reporting standards pertaining to ownership interests
        in subsidiaries held by parties other than the parent, the amount of net
        income
        attributable to the parent and to the noncontrolling interest, changes in
        a
        parent’s ownership interest, and the valuation of any retained noncontrolling
        equity investment when a subsidiary is deconsolidated. This statement also
        establishes disclosure requirements that clearly identify and distinguish
        between the interests of the parent and the interests of the noncontrolling
        owners. SFAS 160 is effective for fiscal years beginning on or after December
        15, 2008. Management has reviewed this new standard and believes that it
        has no impact on the financial statements of the Company at this time; however,
        it may apply in the future.
 
 In
        March
        2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
        and
        Hedging Activities ("SFAS 161"). SFAS 161 is intended to improve financial
        reporting about derivative instruments and hedging activities by requiring
        enhanced disclosures to enable investors to better understand their effects
        on
        an entity's financial position, financial performance, and cash flows. SFAS
        161
        achieves these improvements by requiring disclosure of the fair values of
        derivative instruments and their gains and losses in a tabular format. It
        also
        provides more information about an entity's liquidity by requiring disclosure
        of
        derivative features that are credit risk-related. Finally, it requires
        cross-referencing within footnotes to enable financial statement users to
        locate
        important information about derivative instruments. SFAS 161 will be effective
        for financial statements issued for fiscal years and interim periods beginning
        after November 15, 2008, will be adopted by the Company beginning in the
        first
        quarter of 2009. The Company does not expect there to be any significant
        impact
        of adopting SFAS 161 on its financial position, cash flows and results of
        operations.


See
        reports of independent registered public accounting firms.


F-13




**3.**
            **Property
                and Equipment**




The
      property and equipment for the year ended December 31, 2007 and 2006
      was:





2007
            
            2006Computer
                equipment
            
            $
            365,632
            
            $
            355,794Software
            
            
            86,606
            
            
            35,907Website
            
            
            53,425
            
            
            **-**Other
                equipment
            
            
            42,918
            
            
            42,918Leasehold
                improvements
            
            
            62,076
            
            
            62,076Furniture
                and fixtures
            
            
            48,167
            
            
            48,167Total
                fixed assets
            
            
            658,824
            
            
            544,862Less:
                Accumulated depreciation
            
            
            (528,174
            )
            
            (413,723
            )Net
                property and equipment
            
            $
            130,650
            
            $
            131,139




Depreciation
      and amortization expense for the years ended December 31, 2007 and 2006 was
      $118,535 and $167,220, respectively.





Property
      and equipment under capital leases was $90,348 at December 31, 2007 and 2006,
      respectively. Accumulated depreciation related to equipment under capital leases
      was $90,348 at December 31, 2007 and $77,142 at December 31, 2006.





**4.**
            **Equity
                Warrant Asset**





The
      Company accounts for the equity warrant asset with net settlement terms to
      purchase preferred stock of Demand Media as a derivative in accordance with
      (SFAS 133) as this is a non-public security. Under the terms of the warrant,
      InfoSearch is entitled to purchase 125,000 shares of Series C Preferred Stock
      of
      Demand Media at an exercise price of $3.85 per share. Under the accounting
      treatment required by SFAS No. 133, equity warrant assets with net settlement
      terms are recorded at fair value and are classified as investments on the
      balance sheet.





The
      fair
      value of the Demand Media warrant is reviewed quarterly. We value the warrant
      using the Black-Scholes option pricing model, which incorporates the following
      material assumptions at December 31, 2007 and 2006:





·
            Underlying
                asset value was estimated based on information available, including
                any
                information regarding subsequent rounds of funding or initial public
                offerings.·
            Volatility,
                or the amount of uncertainty or risk about the size of the changes
                in the
                warrant price, was based on indices similar in nature to the business
                in
                which Demand Media operates and yielded a volatility of 123.05% and
                75.00%, respectively.·
            The
                risk-free interest rate was 4.7% and 3.45%,
                respectively.·
            Expected
                remaining life of 3.5 and 4.5 years, respectively, based on the
                contractual term of the warrant.


See
        reports of independent registered public accounting firms.




F-14




Changes
      from the grant date fair value of the equity warrant asset is recognized as
      increases or decreases to the equity warrant asset on the consolidated balance
      sheet and as net change in the fair value of warrants within the non-operating
      section of the consolidated statement of operations.





During
      the year ended December 31, 2007 and 2006, the grant date fair value of the
      equity warrant asset decreased by $196,788 and $0, respectively.





**5.**
            **Deferred
                Revenue**





As
      of
      December 31, 2007 and December 31, 2006, the Company had deferred revenue of
      $526,868 and $454,741, respectively, all of which is classified as current.
      The
      Company allocates between the current portion and the long term portion based
      upon its historical experience and its estimate of click through activity over
      the succeeding 12 months.





**6.**
            **Income
                Taxes**





The
      following table reconciles the Federal statutory rate of 35% to the Company’s
      effective tax rate:





Year Ended December 31,2007
            
            2006Expected
                income tax (benefit)
            
            $
            (430,166
            )
            $
            (1,367,249
            )State
                tax (benefit), net of Federal effect
            
            
            1,600
            
            
            1,056Permanent
                differences
            
            
            (31,722
            )
            
            (31,722
            )Increase
                in valuation allowance
            
            
            285,824
            
            
            1,268,058Other
            
            
            (180,547
            )
            
            148,442Actual
                Income tax
            
            $
            6,083
            
            $
            18,585




The
      components of the Company’s deferred tax asset at December 31, 2007 are as
      follows:





Net
                operating loss
            
            $
            4,170,150
            
            $
            3,772,813Share-based
                compensation
            
            
            637,434
            
            
            597,634Other
            
            
            (42,055
            )
            
            109,258Valuation
                allowance
            
            
            (4,765,528
            )
            
            (4,479,705
            )Deferred
                tax asset
            
            $
            -
            
            $
            -





As
      of
      December 31, 2007, the Company had Federal net operating losses totaling
      approximately $10,355,012, which will expire in 2025. The change in valuation
      analysis of the Federal deferred tax asset at December 31, 2007 was
      $285,824. As of December 31, 2007, the Company had California net operating
      losses totaling approximately $10,297,105, which will expire in between 2014
      and
      2017. The change in valuation analysis of the state deferred tax asset at
      December 31, 2006 was $336,509.





**7.**
            **Net
                Loss Per Share**





Net
      loss
      per share is computed as net loss divided by the weighted average number of
      common shares outstanding for the period. As of December 31, 2007 and December
      31, 2006, 9,246,281 and 13,035,918 shares exercisable from stock options,
      restricted stock and warrants were excluded from the computation of net loss
      per
      share as their effect would be anti-dilutive.


See
        reports of independent registered public accounting firms.




F-15




**8.**
            **Stockholders’
                Equity (Deficit)**





The
      authorized capital stock currently consists of 200,000,000 shares of common
      stock, par value $0.001 per share, and 25,000,000 shares of preferred stock,
      par
      value $0.001 per share, the rights and preferences of which may be established
      from time to time by the Company’s board of directors. As of December 31, 2007
      and December 31, 2006, there were 52,493,592 and 51,491,197 shares of the
      Company’s common stock issued and outstanding, respectively, and options
      exercisable, warrants exercisable or restricted stock for 9,597,709 and
      13,035,918 shares of common stock, respectively. No other securities, including
      without limitation any preferred stock, convertible securities, options,
      warrants, promissory notes or debentures are outstanding.




Common
      Stock


Holders
      of common stock are entitled to one vote for each share held on all matters
      submitted to a vote of stockholders and do not have cumulative voting rights.
      Accordingly, holders of a majority of the shares of common stock **** entitled
      to vote in any election of directors may elect all of the directors standing
      for
      election. Subject to preferences that may be applicable to any shares of
      preferred stock outstanding at the time, holders of common stock **** are
      entitled to receive dividends ratably, if any, as may be declared from time
      to
      time by **** the
      board
      of directors out of funds legally available therefore.





Upon
      our
      liquidation, dissolution or winding up, the holders of our common stock are
      entitled to receive ratably, our net assets available after the payment
      of:





a.
            all
                secured liabilities, including any then outstanding secured debt
                securities which we may have issued as of such time;b.
            all
                unsecured liabilities, including any then unsecured outstanding secured
                debt securities which we may have issued as of such time;
                andc.
            all
                liquidation preferences on any then outstanding preferred
                stock.





Holders
      of common stock have no preemptive, subscription, redemption or conversion
      rights, and there are no redemption or sinking fund provisions applicable to
      the
      common stock. The rights, preferences and privileges of holders of common stock
      are subject to, and may be adversely affected by, the rights of the holders
      of
      shares of any series of preferred stock which we may designate and issue in
      the
      future.





In
      connection with a private placement transaction on November 7, 2005 for which
      8,359,375 shares of common stock was issued for total proceeds of $5.35 million,
      the investors received 4,179,686 warrants to purchase 4,179,686 shares of common
      stock. The warrants expire on November 7, 2010 and are exercisable at a price
      of
      $0.88 per share. These securities where offered and sold by the Company in
      reliance on exemptions from registration provided by Section 4(2) of the
      Securities Act and Regulation D promulgated thereunder. The investors were
      “accredited investors” as that term is defined under Regulation D.




As
      required by the private placement transaction on November 7, 2005, since a
      registration statement was not declared effective by the SEC within the
      timeframe set forth in the Registration Rights Agreement, the Company was
      required to pay liquidated damages and related interest of $509,904 during
      the
      year ended December 31, 2006. On August 22, 2006, the investors agreed to accept
      4,306,613 shares of the Company’s common stock in exchange for extinguishment of
      this liability. The number of shares issued in exchange for the liquidated
      damages was determined based on a discount to the average of the Company’s stock
      price for the five days preceding the first **** issuance
      date, which is the date three days following receipt of the minimum two-thirds
      majority necessary to amend the Registration Rights Agreement. These shares
      were
      issued to the investors on October 4, 2006, and are recorded as equity as of
      December 31, 2006. The interest expense associated with the liquidated damages
      was $7,507.




The
      warrants issued to all participants in the November 7, 2005 private placement
      require the Company to settle the contracts by the delivery of registered
      shares. At the date of issuance, the Company did not have an effective
      registration statement related to the shares that could be issued should the
      warrant holders exercise the warrants. In addition, the warrant holders have
      the
      right to require that the Company settle the warrant on a net-cash basis in
      a
      fundamental transaction, regardless of the form of tender underlying the
      fundamental transaction. As the contracts must be settled by the delivery of
      registered shares and the delivery of the registered shares are not controlled
      by the Company and the rights of the warrant holders to settle in cash
      potentially in preference to other stockholders **** receiving
      other forms of consideration, pursuant to EITF 00-19, "Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company's Own
      Stock", the warrants are being treated as a liability.


See
        reports of independent registered public accounting firms.




F-16




The
      fair
      value of the warrants at the date of issuance was recorded as a warrant
      liability on the consolidated balance sheet and the change in fair value at
      each
      reporting date is included in net change in fair value of warrants within the
      non-operating section of the consolidated statement of operations. The value
      of
      the warrants on December 31, 2007 and 2006 was $309,567 and $485,138,
      respectively. In addition, the fair value decreased from December 31, 2006
      through December 31, 2007 by $175,571. The change in fair value was calculated
      by using the Black-Scholes pricing model with the following assumptions at
      December 31, 2007 and 2006: expected life, 34 and 46 months, respectively;
      stock
      volatility, 135.04% and 110.12%, respectively; risk-free interest rate of 3.45%
      and 4.6%, respectively; and no dividends during the expected term.




On
      July
      6, 2006 **,** the
      Company entered into a Settlement Agreement and Release of Claims (the
“Settlement Agreement”), with Gemini Partners, Inc. (“Gemini”), pursuant to
      which the Company issued to Gemini a Common Stock Purchase Warrant immediately
      exercisable into 300,000 shares of the Company’s common stock at a price of
      $0.01 per share. Such warrant expires on January 1, 2010. Pursuant to the
      Settlement Agreement, Gemini agreed to cancel **** its
      existing warrant to purchase 300,000 shares of our common stock at a purchase
      price of $1.00 per share. **** The
      Company has performed an EITF 00-19 analysis of the warrants issued pursuant
      to
      the Settlement Agreement and determined that they will be accounted for as
      equity. The **** fair
      value of the warrant **** was
      calculated as of July 6, 2006 using the Black-Scholes pricing model with the
      following assumptions: expected life **** of **** 54
      months
      following the grant date; stock volatility of 104.13%; risk-free interest rate
      of 5.2%; and no dividends during the expected term. The fair value of the
      warrant was determined to be $68,752.  The warrant was offered and sold by
      the Company in reliance on exemptions from registration provided by Section
      4(2)
      of the Securities Act as such transaction did not involve any public offering.
      During the year ended December 31, 2007, these warrants were exercised in
      full.





On **** July
      6,
      2006, the Company entered into a GP Group Consulting Agreement (the “Consulting
      Agreement”) with **** GP
      Group,
      LLC (“GP Group”), pursuant to which it issued to GP Group a Common Stock
      Purchase Warrant on August 6, 2006, September 6, 2006 and October 6, 2006,
      each such warrant immediately exercisable into 20,000 shares of the Company’s
      common stock at a price of $0.01 per share. Each such warrant expires on January
      1, 2010. **** The
      Company has performed an EITF 00-19 analysis of the warrants issued pursuant
      to
      the Consulting Agreement and determined that they will be accounted for as
      equity. The fair values of the warrants were calculated as of each respective
      issuance dates using the Black-Scholes pricing model with the following
      assumptions: expected life of 46, 45, and 44 months following the grant dates;
      stock volatility , **** of **** 104.12%,
      106.98%, and 109.50%; risk-free interest rates of 4.88%, 4.76% and 4.66%; and
      no
      dividends during the expected term, for warrants issued August 6, September
      6,
      and October 6, 2006, respectively. The fair values of the three warrants were
      determined to be $4,165, $2,804 and $2,611, respectively. The Consulting
      Agreement was terminated effective October 24, 2006. The warrants were offered
      and sold by the Company in reliance on exemptions from registration provided
      by
      Section 4(2) of the Securities Act as such transaction did not involve any
      public offering. During the year ended December 31, 2007, these warrants were
      exercised in full.




In
      conjunction with the Asset Purchase Agreement the Company entered into on
      October 3, 2006 to sell substantially all of the assets of Answerbag to Demand
      Media, Demand received a five year warrant to purchase 5,000,000 shares of
      the
      Company's common stock at a purchase price of $0.158 per share that expires
      on
      October 3, 2011. The exercise price of the warrant was determined by calculating
      the average of the closing price of the Company’s common stock from the average
      of the ten day period from September 11, 2006 to September 22, 2006, and the
      average of the ten day period from October 4, 2006 to October 17, 2006. In
      accordance with EITF 00-19, the warrant will be treated as a liability because
      of the requirement to maintain an effective registration statement for a period
      of two years. The fair value of the warrant was calculated as of October 4,
      2006
      using the Black-Scholes pricing model with the following assumptions: expected
      life of 60 months following the grant date; stock volatility, 109.79%; risk-free
      interest rates of 4.50%; and no dividends during the expected term. The fair
      value of the warrant was determined to be $598,836 and appears on the balance
      sheet as Fair Value of Warrant Liability along with the warrants issued pursuant
      to the private placement transaction closed in November 2005. As of December
      31,
      2007 and 2006, the fair value of the warrant was calculated using the
      Black-Scholes pricing model with the following assumptions: expected life of
      45
      and 57 months, respectively; stock volatility of 135.04% and 110.12%,
      respectively; risk-free interest rates of 3.45% and 4.71%, respectively; and
      no
      dividends during the expected term. As of December 31, 2007 and 2006, the fair
      value of the warrant was determined to be $658,084 and $911,077, respectively,
      resulting in a decrease of the fair value of the warrant issued to Demand Media
      of $252,993. The warrant was offered and sold by the Company in reliance on
      exemptions from registration provided by Section 4(2) of the Securities Act
      as
      such transaction did not involve any public offering.


See
        reports of independent registered public accounting firms.




F-17




During
      2006, the Company issued 4,510,411 shares of restricted common stock to members
      of the Company’s board of directors and certain officers. The Company incurred
      $2,894,423 in non-cash equity compensation expenses associated with these
      grants, of which $2,849,423 was included in general and administrative expense
      and $45,000 was included in discontinued operations. The Company issued 46,025
      shares of common stock to certain employees as part of incentive or severance
      programs, incurring $14,480 in non-cash equity compensation expenses.





Preferred
      Stock


The
      board
      of directors is authorized, without further stockholder approval, to issue
      up to
      25,000,000 shares of preferred stock in one or more series and to fix the
      rights, preferences, privileges and restrictions of these shares, including
      dividend rights, conversion rights, voting rights, terms of redemption and
      liquidation preferences, and to fix the number of shares constituting any series
      and the designations of these series. These shares may have rights senior to
      the
      common stock. At December 31, 2007 and 2006, the Company had no shares of
      preferred stock outstanding.





The
      description of our securities contained herein is a summary only and may be
      exclusive of certain information that may be important to you. For more complete
      information, you should read our Certificate of Incorporation and its
      restatements and amendments, together with our corporate bylaws.





**9.**
            **Stock
                Option Plan**





The
      2004
      Stock Option Plan gives the board of directors the ability to provide incentives
      through grants or awards of stock options, stock appreciation rights, and
      restricted stock awards (collectively, “Awards”) to present and future employees
      of us and our affiliated companies. Outside directors, consultants, and other
      advisors are also eligible to receive Awards under the 2004 Stock
      Option **** Plan.





On
      June
      30, 2006, all of the stock option grants issued to employees prior to June
      30,
      2006 had exercise prices above the closing price at the end of the second
      quarter. The board of **** directors,
      in an effort to maintain employee retention, approved the acceleration of
      vesting of stock option grants and restricted stock grants, in the amount of
      1,428,403 shares and 1,042,240 shares, respectively. Grants for all employees
      employed as of the close of business on June 30, 2006 were accelerated as of
      June 30, 2006. This resulted in a share-based compensation expense of
      $1,041,029, associated with the acceleration of stock option grants and $718,790
      associated with restricted stock grants. Both of these values are included
      in
      the total share-based compensation expense of $4,223,245 for the year-ended
      December 31, 2006.




On
      December 12, 2006, the 2004 Stock Option Plan was amended (as amended, the
      “Plan”) **** by
      a vote
      of the stockholders **** to
      increase the number of shares of common stock reserved to issuance to 10,425,000
      from 5,212,500. If an incentive award expires or terminates unexercised or
      is
      forfeited, or if any shares are surrendered to us in connection with an Award,
      the shares subject to such award and the surrendered shares will become
      available for further awards under the Plan.





Shares
      issued under the Plan through the settlement, assumption or substitution of
      outstanding Awards or obligations to grant future Awards as a condition of
      acquiring another entity will not reduce the maximum number of shares available
      under the Plan. In addition, the number of shares subject to the Plan, any
      number of shares subject to any numerical limit in the Plan, and the number
      of
      shares and terms of any Award may be adjusted in the event of any change in
      our
      outstanding common stock by reason of any stock dividend, spin-off, split-up,
      stock split, reverse stock split, recapitalization, reclassification, merger,
      consolidation, liquidation, business combination or exchange of shares or
      similar transaction.


See
        reports of independent registered public accounting firms.




F-18




No
      more
      than 1,000,000 shares of the authorized shares may be allocated to Awards
      granted or awarded to any individual participant during any calendar year.
      Any
      shares of restricted stock and any shares underlying a grant of options that
      are
      forfeited will not count against this limit.




The
      Plan
      authorizes the grant of Incentive Stock Options and Nonqualified Stock Options.
      Incentive Stock Options are stock options that satisfy the requirements of
      Section 422 of the Code. Nonqualified Stock Options are stock options that
      do
      not satisfy the requirements of Section 422 of the Code. Options granted under
      the Plan entitle the grantee, upon exercise, to purchase a specified number
      of
      shares from us at a specified exercise price per share. The committee determines
      the period of time during which an Option may be exercised, as well as any
      vesting schedule, except that no Option may be exercised more than ten years
      after the date of grant. The exercise price for shares of common stock covered
      by an Option cannot be less than the fair market value of the common stock
      on
      the date of grant.




A
      summary
      of the Company’s stock option activity is as follows:





#
                of Shares
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Term
            
            Aggregate
              Intrinsic
              ValueOutstanding
                as of December 31, 2006
            
            
            3,151,619
            
            $
            0.58Granted
            
            
            3,427,150
            
            $
            0.18Exercised
            
            
            -
            
            $Cancelled
                / Forfeited
            
            
            2,681,619
            
            $
            0.63Outstanding
                as of December 31, 2007
            
            
            3,897,150
            
            $
            0.18
            
            
            9.11
            
            $
            157,361Exercisable
                as of December 31, 2007
            
            
            1,321,672
            
            $
            0.22
            
            
            8.97
            
            $
            81,554-Expected
                to vest in future years
            
            
            2,575,478
            
            $
            0.17
            
            
            9.25
            
            $
            75,807-





The
      weighted average grant date fair value of options granted during the year ended
      December 31, 2007 and December 31, 2006, respectively, was $0.18 and $0.22.
      The
      intrinsic value of options exercised during the year ended December 31, 2006
      was
      $2,888.





Additional
      information regarding options outstanding at December 31, 2007 is as
      follows:





Options outstanding
            
            Options exercisableExercise
                prices
            
            Number of
              shares
            
            Weighted
              average
              remaining
              contractual
              Life (Years)
            
            Weighted
              Average
              Exercise
              Price
            
            Number
                of
              Shares
            
            Weighted
              Average
              Exercise
              Price$0.14
            
            
            1,010,000
            
            
            9.44
            
            $
            0.14
            
            
            169,793
            
            $
            0.14$0.15
            
            
            210,000
            
            
            9.84
            
            $
            0.15
            
            
            -
            
            $
            0.15$0.17
            
            
            345,000
            
            
            8.94
            
            $
            0.17
            
            
            330,000
            
            $
            0.17$0.19
            
            
            440,000
            
            
            9.16
            
            $
            0.19
            
            
            94,821
            
            $
            0.19$0.20
            
            
            1,772,150
            
            
            9.03
            
            $
            0.20
            
            
            631,434
            
            $
            0.20$0.22
            
            
            17,500
            
            
            8.57
            
            $
            0.22
            
            
            8,750
            
            $
            0.22$0.23
            
            
            15,000
            
            
            8.77
            
            $
            0.23
            
            
            4,374
            
            $
            0.23$0.39
            
            
            10,000
            
            
            8.26
            
            $
            0.39
            
            
            10,000
            
            $
            0.39$0.41
            
            
            5,000
            
            
            8.35
            
            $
            0.41
            
            
            5,000
            
            $
            0.41$0.78
            
            
            50,000
            
            
            7.84
            
            $
            0.78
            
            
            50,000
            
            $
            0.78$0.81
            
            
            22,500
            
            
            6.09
            
            $
            0.81
            
            
            17,500
            
            $
            0.81Total
                Options
            
            
            3,897,150
            
            
            9.11
            
            $
            0.18
            
            
            1,321,672
            
            $
            0.22


See
        reports of independent registered public accounting firms.




F-19




Subject
      to Section 14 of the InfoSearch Media, Inc. 2004 Stock Option Plan (the “Plan”)
      as amended, there shall be reserved for issuance under the Plan an aggregate
      of
      10,450,000 shares of Common Stock. At December 31, 2007, 6,552,850 shares were
      available for future grants under the Company's Stock Option Plan (remaining
      balance reflects issuance of restricted stock).





As
      of
      December 31, 2007, the total compensation related to non-vested option awards
      yet to be expensed was $351,190 to be recognized over a weighted average period
      of 3.54 years.





As
      of
      December 31, 2007, we had 5,700,559 shares of restricted stock grants
      outstanding to employees and directors of the Company.





A
      summary
      of the Company’s restricted stock activity is as follows:





Shares
            
            Weighted
              Average
              Grant Date Fair
              ValueNon
                Vested Shares as of January 1, 2007
            
            
            642,857
            
            $
            0.14Granted
            
            
            100,000
            
            
            0.16Forfeited
            
            
            -
            
            
            0.00Vested
            
            
            742,857
            
            
            0.14Non
                Vested Shares as of December 31, 2007
            
            
            0
            
            
            0.00





**10.**
            **Related
                Party Transactions**





At
      December 31, 2007 and December 31, 2006, accounts receivable from related
      parties was $0 and $50,732, respectively, including amounts due from George
      Lichter, Chief Executive Officer, of $0 and $19,338, respectively, and amounts
      due from David Warthen, Chief Technology Officer until June 2007, of $12,530
      and
      $31,394, to repay the Company for income taxes paid on behalf of each
      individual. Mr. Lichter paid the full amount to the Company in January 2007
      and
      Mr. Warthen paid $18,864 to the Company in March 2007.





As
      of
      December 31, 2005, the Company had a loan due from Walter Lazuka, an InfoSearch
      stockholder and brother of our former director and executive officer Steve
      Lazuka, totaling $25,000. This loan was entered into with Mr. Walter Lazuka
      in a
      series of transactions from March 19, 2004 through September 16, 2004. This
      loan
      was written off as uncollectible as of June 30, 2006.




On
      August
      23, 2005, we entered into a 12-month consulting agreement with Claudio Pinkus,
      a
      member of our board of directors (the **“** Pinkus
      Consulting Agreement”). The Pinkus Consulting Agreement provided **** for
      an
      annual consulting fee of $100,000 to be paid in semi-monthly payments. The
      Pinkus Consulting Agreement also provided for a quarterly bonus payment of
      up to
      $25,000 for each quarter, as determined by the Company’s board **** of
      directors. Pursuant to the Pinkus Consulting Agreement, Mr. Pinkus provided
      strategic and financial advisory consulting services to us as requested by
      our
      Chief Executive Officer or our board of directors. Pursuant to the Pinkus
      Consulting Agreement, Mr. Pinkus was also granted 1,350,000 shares of restricted
      stock, of which 450,000 shares vested on January 4, 2006, 300,000 shares vested
      on each of February 23, 2006 and April 23, 2006 and a remaining installment
      of
      300,000 shares vested on June 30, 2006. Pursuant to the Pinkus Consulting
      Agreement, on April 5, 2006, the board of directors **** approved
      the payment of $203,513 in cash and a grant of 450,027 shares of common stock
      to
      Mr. Pinkus in repayment of his tax obligations. The Pinkus Consulting Agreement
      expired pursuant to its terms on August 23, 2006, and on November 9, 2006 our
      board of directors granted Mr. Pinkus his full quarterly bonus for the second
      and third quarters of 2006.


See
        reports of independent registered public accounting firms.




F-20




**11.**
            **Commitments
                and Contingencies**





The
      Company has entered into a non-cancelable operating lease for facilities
      originally through May 31, 2009 but which has an early termination provision
      effective July 31, 2008 which has been exercised. Rental expense was $229,073
      and $193,360 for years ended December 31, 2007 and 2006, respectively. At
      December 31, 2007 **,** the
      future minimum lease payments for the years ending December 31 are as
      follows:





2008
            
            
            130,750Total
                Minimum Lease Payments
            
            $
            130,750




The
      Company had capital leases for equipment that ended in 2006. The leases were
      for
      24 and 36 months and contained bargain purchase provisions so that the Company
      could purchase the equipment at the end of each lease. The capitalized lease
      payments for the years ended December 31, 2007 and 2006 were $17,621 and
      $39,949, respectively. Total interest expense for the years ended December
      31,
      2007 and 2006 was $1,165 and $5,793, respectively.





Employment
      Agreements





We
      entered into an employment agreement effective August 23, 2005 with George
      Lichter as Chief Executive Officer, which was subsequently amended effective
      July 1, 2006 (as amended, **** the
      “Lichter Employment Agreement”). The Lichter Employment Agreement, as amended,
      provides for an annual base salary of $250,000, **** subject
      to annual increases, and an annual performance-based bonus of up to $150,000.
      In
      addition, Mr. Lichter receives an automobile allowance of $600 per
      month.  Pursuant
      to the Lichter Employment Agreement, Mr. Lichter was granted, under the Stock
      Option Plan, a restricted stock award representing 675,000 shares of our common
      stock, of which 225,000 shares vested on January 4, 2006 and the remaining
      shares vested in three installments of 150,000 shares each on February 23,
      2006,
      April 23, 2006 and August 23, 2006. **** Mr.
      Lichter may participate, as a selling stockholder, in any financing transaction
      undertaken by us for the purpose of satisfying the tax liability incurred by
      Mr.
      Lichter as a result of the restricted stock award. Pursuant to the Lichter
      Employment Agreement, the Company paid Mr. Lichter’s tax liability in connection
      with his restricted stock grant. **** Lichter
      was also subsequently granted an additional stock award representing 675,000
      shares of our common stock, of which 225,000 shares vested on January 4, 2006
      and the remaining shares vested in three installments of 150,000 shares each
      on
      February 23, 2006, April 23, 2006 and August 23, 2006. **** Pursuant
      to the decision by the board of directors to accelerate the vesting of
      outstanding options and shares of restricted stock, all of these options and
      shares of restricted stock became fully exercisable as of June 30, 2006.




Mr.
      Lichter may terminate the Lichter Employment Agreement and his employment with
      the Company for Good Reason (as defined in the Lichter Employment Agreement),
      including in connection with a Change of Control (as defined in the Lichter
      Employment Agreement) that results in the termination of Mr. Lichter’s
      employment with the Company or a material adverse change in Mr. Lichter’s duties
      and responsibilities. If Mr. Lichter terminates the Lichter Employment Agreement
      and his employment with the Company for Good Reason or in connection with a
      Change of Control as described above, or if the Company terminates the Lichter
      Employment Agreement and Mr. Lichter’s employment with the Company without Cause
      (as defined in the Lichter Employment Agreement) (and, with respect to (ii),
      (iii) and (iv) below, so long as Mr. Lichter has not and does not violate
      certain provisions of the Lichter Employment Agreement), the Company will
      pay **** or
      provide to Mr. Lichter: (i) any earned but unpaid base salary, unpaid pro rata
      annual bonus and unused vacation days accrued through his last day of employment
      with the **** Company,
      including any carryover days; (ii) Mr. Lichter’s full base salary for six
      months; (iii) Mr. Lichter’s annual bonuses that he would have been awarded
      during the same six month period; and (iv) continued coverage, at the Company’s
      expense, under all benefits plans in which Mr. Lichter was a participant
      immediately prior to his last date of employment with the Company. In addition,
      any unvested shares of restricted common stock granted pursuant to the Lichter
      Employment Agreement will automatically vest. **** Employment
      under the Lichter Employment Agreement is at will and therefore InfoSearch
      may
      terminate Mr. Lichter’s employment at any time and for any reason subject to the
      provisions set forth above.


See
        reports of independent registered public accounting firms.




F-21




On
      May 1,
      2007, the Company, entered into a Second Amendment to Employment Agreement
      (the
“Second Amendment”) with George Lichter, the Company's Chief Executive Officer
      and a director of the Company. The Second Amendment, effective as of January
      12,
      2007, amends Mr. Lichter's Employment Agreement dated January 4, 2006 and
      effective as of August 23, 2005, as amended by the Amendment to Employment
      Agreement, effective as of July 1, 2006 (as amended by the Amendment to
      Employment Agreement, the “Employment Agreement”) and among other things, that
      Mr. Lichter is eligible to receive a quarterly bonus in an amount not to exceed
      25% of his then current base salary for each calendar quarter (or a pro-rata
      portion of such bonus in the case of a period of less than three months) within
      the board of directors' sole discretion and also revises the definition of
      a
“Change of Control” so that a change of ownership in the outstanding voting
      securities of the Company constituting a “Change of Control” is determined based
      on the outstanding voting securities owned collectively by the common
      stockholders and warrant holders of the Company as of January 12, 2007, rather
      than August 23, 2005 as provided for in the Employment Agreement prior to the
      Second Amendment.




On
      June
      9, 2007, the Company entered into an employment agreement with Scott Brogi,
      the
      Company's Chief Financial Officer with an annual base salary of $200,000.
      Additionally Mr. Brogi is eligible for a bonus of 40% of his base salary. The
      basis for this bonus is revenue and operating income goals and individual goals
      to be determined. Mr. Brogi also received an option to purchase 1,000,000 shares
      of the Company's Common stock at $0.14 per share, the closing price as of June
      11, 2007. These options were granted on June l1, 2007, expire ten years after
      the grant date and vest on an equal monthly basis over a 36 month period. In
      the
      event Mr. Brogi’s employment is terminated or his responsibilities are
      materially reduced within 12 months of a change of control of the Company,
      Mr.
      Brogi will receive six months of base salary and a 6 month acceleration of
      vesting of these stock options. Change of control is defined as the acquisition
      by a single shareholder (or beneficial owner) of a minimum of 51% of the then
      outstanding ordinary shares of the Company. Upon termination, death or long
      term
      disability, Mr. Brogi receives additional benefits under the agreement. If
      termination is without cause, he is entitled to 3 months salary, any bonus
      earned through the date of termination and 3 months acceleration of vesting
      of
      his stock options.





We
      entered into an executive employment agreement with Frank Knuettel II, dated
      March 8, 2005 **** (the
      “Knuettel Employment Agreement”). The Knuettel Employment Agreement provides for
      an initial annual base salary of $175,000, provided that if Mr. Knuettel remains
      in the employment of the Company in the month following the second consecutive
      quarter that the Company is profitable on a GAAP basis, his **a** nnual
      base salary will be increased to $185,000. The Knuettel Employment Agreement
      further provides for a potential target bonus equal to 30% of **** his
      then
      current annual base salary, contingent on the Company’s achieving revenue and
      operating income goals and Mr. Knuettel’s attaining individual goals established
      by the board **** of
      directors. Under the Knuettel Employment Agreement, Mr. Knuettel received
      options to purchase up to 262,500 shares of our common stock at an exercise
      price of $0.76 per share pursuant to the Stock Option Plan, which vest over
      a
      four-year period. Additionally, Mr. Knuettel received an award of 352,500
      restricted shares of our common stock, which also vest over a four-year period
      of his employment with the Company. Mr. Knuettel was also subsequently granted
      an additional stock award representing 167,500 shares, under which 25% of the
      shares vested on January 4, 2006, 12.5% of the shares vested **** on
      July
      7, 2006 and the remaining shares will vest over three years in equal, monthly
      installments, ending on January 4, **** 2009. **** Mr.
      Knuettel was granted an additional option award representing 82,500 shares,
      under which 25% of the shares vested on January 4, 2006, 12.5% of the shares
      vested on July 7, 2006 and the remaining shares will vest over three years
      in
      equal, monthly installments, ending on January 4, 2009. Pursuant to the decision
      by the board of directors to accelerate the vesting of outstanding options
      and
      shares of restricted stock, all of these options and shares of restricted stock
      became fully exercisable as of June 30, 2006. Mr. Frank Knuettel, II, resigned
      as Chief Financial Officer of the Company effective June 15, 2007. Thereafter
      Mr. Knuettel was party to a consulting agreement whereby he provided certain
      ongoing services to the Company through September 15, 2007 for which he received
      cash compensation as well as 100,000 shares of restricted stock which have
      fully
      vested in three essentially equal monthly installments through September 15,
      2007.


See
        reports of independent registered public accounting firms.




F-22




We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to Robert Myers, our Vice President of Production on January 8,
      2008 **** (the
      “Myers Employment Agreement”). The Myers Employment Agreement does not have a
      termination date and sets forth the following terms and conditions: During
      the
      Term, the Company shall pay, and the Executive agrees to accept, in
      consideration for the Executive’s services hereunder, *pro
      rata* semi-monthly payments of the annual salary of $140,000.00, less all applicable
      taxes and other appropriate deductions. The Executive’s base salary will be
      subject to further adjustment pursuant to the Company’s employee compensation
      policies in effect from time to time. The Executive shall be entitled to a
      potential target bonus of thirty-five percent (35%) of Executive’s annual base
      salary. Subject to the Board’s consent, the Company shall issue to the Executive
      an option to acquire 250,000 shares of the Company’s common stock (the “Common
      Stock”) pursuant to the Company’s 2004 Stock Option Plan, as amended on December
      12, 2006 (the “Plan”). The exercise
      price of the option to be granted pursuant to this paragraph 9(a) shall be
      equal
      to the fair market value per share of the Common Stock as determined by the
      closing price on the date of the grant. Such grant shall be evidenced by and
      subject to the terms and conditions of an option agreement in a form
      substantially similar to that attached hereto as Exhibit A. The vesting period
      of the grant shall be four years, with vesting commencing on the Effective
      Date.
      One-eighth of the shares shall vest on the six month anniversary of the
      Effective Date with the balance of the shares vesting in equal monthly
      installments over the following forty-two months. On each of the first two
      anniversaries of the Effective Date, subject to determination of merit during
      an
      annual performance review and Board’s consent, and provided that Executive
      continues to be employed by the Company on each of the anniversary dates,
      Executive shall be entitled to an additional grant of 62,500 shares on each
      anniversary.




At
      any
      time during the Term, the Company may terminate this Agreement and the
      Executive’s employment hereunder for Cause. For purposes of this Agreement,
“Cause” shall mean: (a) the willful and continued failure of the Executive to
      perform substantially his duties and responsibilities for the Company (other
      than any such failure resulting from a Disability) after a written demand by
      the
      Board for substantial performance is delivered to the Executive by the Company,
      which specifically identifies the manner in which the Board believes that the
      Executive has not substantially performed his duties and responsibilities,
      which
      willful and continued failure is not cured by the Executive within thirty (30)
      days of his receipt of such written demand; (b) the conviction of, or plea
      of
      guilty or *nolo
      contendere* to a
      felony, after the exhaustion of all available appeals; or (c) fraud,
      dishonesty, competition with the Company, unauthorized use of any of the
      Company’s or any of its subsidiary’s trade secrets or confidential
      information, or gross
      misconduct which is materially and demonstratively injurious to the Company.
      Termination under [for cause] shall not be subject to cure. Termination of
      the
      Executive for Cause pursuant to [subsection (a) ] shall be made by delivery
      to
      the Executive of a copy of the written demand referred to in [subsection (a),
      or
      pursuant to [subsection] (b) or (c) by delivery to the Executive of a written
      notice from the Board, either of which shall specify the basis of such
      termination, the conduct justifying such termination, and the particulars
      thereof and finding that in the reasonable judgment of the Board, the conduct
      set forth in [subsection] (a), [subsection] (b) or [subsection] (c), as
      applicable, has occurred and that such occurrence warrants the Executive’s
      termination of employment. Upon receipt of such demand or notice, the Executive,
      shall be entitled to appear before the Board for the purpose of demonstrating
      that Cause for termination does not exist or that the circumstances which may
      have constituted Cause have been cured in accordance with the provisions of
      [subsection] (a). No termination shall be final until the Board has reached
      a
      determination regarding “Cause” following such appearance. Upon termination of
      this Agreement for Cause, the Company shall have no further obligations or
      liability to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay the Executive any earned but unpaid base salary. The Company shall deduct,
      from all payments made hereunder, all applicable taxes, including income tax,
      FICA and FUTA, and other appropriate deductions.


See
        reports of independent registered public accounting firms.




F-23




At
      any
      time during the Term, the either Party shall be entitled to terminate this
      Agreement and the Executive’s employment with the Company without cause. If the
      Executive terminates this Agreement, the Executive shall provide prior written
      notice of at least 30 days to the Company. Upon termination of this Agreement
      and the Executive’s employment with the Company pursuant to this paragraph
      10(d)(i) by the Company, the Company shall have no further obligations to the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits thereafter, except for the obligation to pay to the Executive
      any
      earned but unpaid base salary, any unpaid expenses and base salary and
      acceleration of stock option vesting according to the following schedule: If
      the
      Company terminates this Agreement between January 8, 2007 and January 7, 2008,
      Executive will receive base salary for three (3) months after the date of
      termination and will forward vest an additional three (3) months after the
      date
      of termination. If the Company terminates this Agreement between January 8,
      2008
      and January 7, 2009, Executive will receive base salary for four (4) months
      after the date of termination and will forward vest an additional four (4)
      months after the date of termination. If the Company terminates this Agreement
      between January 8, 2009 and January 7, 2010, Executive will receive base salary
      for five (5) months after the date of termination and will forward vest an
      additional five (5) months after the date of termination. If the Company
      terminates this Agreement between January 8, 2010 and January 7, 2011, Executive
      will receive base salary for six (6) months after the date of termination and
      will forward vest an additional six (6) months after the date of termination.
      Under no circumstances shall the salary continuation or the forward vesting
      exceed six (6) months, regardless of length of service. The Company shall
      deduct, from all payments made hereunder, all applicable taxes, including income
      tax, FICA and FUTA, and other appropriate deductions. The amounts described
      in
      paragraph 10(d)(i) shall be paid to the Executive in the same manner as they
      would have been paid, in accordance with the provisions of paragraph 5(a),
      had
      the Executive remained employed by the Company.




We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to Heather Gore, our Vice President of Marketing on January 2,
      2008 **** (the
      “Gore Employment Agreement”). The Gore Employment Agreement does not have a
      termination date and provides for the following terms and conditions: to provide
      Ms. Gore with an annual salary of $130,000 ($5,416.66 per pay period) less
      payroll deductions and all required withholdings; a bonus plan - 35% of base
      pay, paid out quarterly, with metrics objectives developed and mutually agreed
      upon within the first 90 days of her employment. No bonus will be payable until
      such time as the metrics objectives are identified and agreed upon. Upon the
      commencement of Ms. Gore’s employment and subject to Board approval, the Company
      will grant her an option to purchase 125,000 shares of the Company’s Common
      Stock (the “Option”) at an exercise price equal to the fair market value on the
      date of grant. The Option shall be subject to the vesting restrictions and
      all
      other terms of the Company’s current Stock Option Plan and your Stock Option
      Agreement. However, we will propose to the Board that her initial cliff vesting
      period be reduced from twelve (12) months to six (6) months. Ms. Gore’s regular
      place of employment will be Austin, Texas. However, she will also work out
      of
      the Los Angeles area office at least one week per month. Reasonable travel
      expenses will be reimbursed to her according to the company’s travel and expense
      reimbursement policies. Ms. Gore’s employment with the company is “at-will.” The
      terms of her employment with the Company; however, does not constitute an
      employment contract for a specified duration. Ms. Gore’s employment may be
      terminated with our without cause or notice at any time, at the option of either
      her or the Company. Ms. Gore has executed the Company’s Employee Proprietary
      Information and Inventions Agreement, Insider Trading Agreement.





We
      made
      an offer of employment, which was accepted and may be deemed an employment
      agreement, to David Warthen, our Chief Technology Officer on June 11, 2006
      (the
“Warthen Employment Agreement”) **.** The
      Warthen Employment Agreement does not have a termination date. Mr. Warthen
      also
      currently serves as the Chief Executive Officer of Eye Games, Inc., a developer
      of web-cam, interactive video games. We do not have any relationship with Eye
      Games, Inc., and we have never been a party to any transaction or agreement
      with
      Eye Games, Inc. The Warthen Employment Agreement provides for an initial annual
      base salary of $180,000, which shall be paid in cash or shares of InfoSearch
      common stock issued, at the Company’s option. The Company has the right to pay
      Mr. Warthen in cash or stock for the first year of his employment, which began
      on July 1, 2006. The Company elected to pay Mr. Warthen with stock for the
      first
      year and Mr. Warthen is receiving his base salary in the form of common stock,
      which amounts to 107,143 shares per month, or portion thereof, for a total
      of
      1,285,714 shares through the one year anniversary date of his employment with
      the Company. The number of shares was determined based on the fair market value
      of the Company’s common stock on September 30, 2006. Through March 31, 2007, Mr.
      Warthen earned 964,286 shares of our common stock. Under the Warthen
      Employment Agreement, Mr. Warthen received options to purchase up to 400,000
      share of our common stock pursuant to the Stock Option **** Plan,
      which shall vest in equal monthly installments over three years. Mr. Warthen’s
      employment with InfoSearch was on an “at will” basis, and Mr. Warthen resigned
      as of June 2007.


See
        reports of independent registered public accounting firms.




F-24




**12.**
            **Answerbag**





Acquisition
      of Answerbag





On
      February 22, 2006, InfoSearch entered into an Agreement and Plan of Merger
      and
      Reorganization ("Merger Agreement") with Answerbag, Inc., a privately held
      California corporation ("Answerbag") and Apollo Acquisition Corp., a California
      corporation and a wholly-owned subsidiary of InfoSearch ("Merger Sub"). Pursuant
      to the terms of the Merger Agreement, Merger Sub merged with and into Answerbag,
      with Answerbag surviving as a wholly-owned subsidiary of InfoSearch (the
      "Answerbag **** Merger").
      The proforma results of operations for the current period and a comparable
      prior
      period as though the acquisition of Answerbag had been completed at the
      beginning of the periods is not presented since the results of operations of
      Answerbag for those periods is not material.




The
      Merger closed on March 3, 2006. Under the terms of the transaction, the Company
      acquired 100% of the issued and outstanding capital stock of Answerbag for
      $161,875 in cash and issuance of 351,902 shares of InfoSearch common stock
      with
      a market value of $161,875, based on the five day average closing price of
      $0.46
      per share prior to the consummation of the transaction. Answerbag is a
      user-generated question and answer content website, which can be found at www.answerbag.com .
      Questions, answers and ranking of answers on the Answerbag website are supplied
      by a growing community of registered users. In addition, the Company incurred
      $27,460 in direct acquisition costs.





Per
      the
      Merger **** Agreement,
      the Company will pay up to an additional $300,625 in cash and issue up to
      653,533 additional shares of common stock having a market value of
      $300,625. These amounts will be issued in four installments at 90, 180, 270
      and
      360 days after the close based on performance contingencies as detailed in
      the
      Merger Agreement, which states that the purchase price will be adjusted if
      Mr.
      Joel Downs, founder of Answerbag, terminates his employment with the Company
      or
      if average traffic volume falls below certain levels. The Company has made
      the
      first three contingent payments aggregating $225,469 pursuant to the agreement,
      one third on each of **** June
      9,
      2006, September 12, 2006 and December **** 7,
      2006, **** and
      issued our common stock aggregating 492,846 shares, one third on each
      of **** June
      9,
      2006, September 7, 2006 and November 29, 2006.




The
      total
      purchase price is summarized as follows:





Cash
                consideration
            
            $
            462,500Common
                stock
            
            
            288,361Acquisition
                related costs
            
            
            27,460Total
                purchase price
            
            $
            778,321The
                Company’s allocation of the purchase price is summarized as follows:Accounts
                Receivable
            
            $
            14,935Intangible
                assets
            
            
            763,386Total
                Assets
            
            $
            778,321




The
      intangible assets that the Company purchased were the Answerbag.com website,
      Answerbag.com trade name and the website's registered users. The Company has
      performed a valuation analysis, including the purchase price allocation and
      determination of the useful life of the intangible assets. The valuation
      analysis concluded that there was no goodwill acquired as part of the purchase
      transaction. The analysis further concluded that the amortizable life of the
      acquired definite-lived intangible assets is five years.


See
        reports of independent registered public accounting firms.




F-25




As
      a
      result of the sale of substantially all of the assets of Answerbag to Demand
      Media, Inc., the performance contingencies no longer apply. As a result of
      the
      elimination of the performance contingencies, the obligation of the Company
      to
      make the one remaining payment is no longer contingent.




Discontinued
      Operations of Answerbag





Due
      to
      the rise in competition and the considerable investment that would be needed
      to
      bring Answerbag to fruition, the board of directors approved the sale of
      Answerbag on September 30, 2006. On October 3, 2006, the Company entered into
      an
      Asset Purchase Agreement to sell substantially all of the assets of Answerbag
      to
      Demand Answers, Inc. and its parent, Demand Media, Inc. in exchange for cash
      proceeds of $3,000,000. Of this amount, $300,000 was deposited into escrow
      for a
      period of up to 12 **** months
      pending any unknown contingent liabilities.





The
      board **** of
      directors approved the sale of substantially all of the assets of Answerbag
      on
      September 30, 2006. On October 3, 2006, the Company entered into an Asset
      Purchase Agreement (the “Asset Purchase Agreement”) **** to
      sell
      substantially all of the assets of Answerbag to Demand Answers, Inc. and its
      parent, Demand Media. In conjunction with the agreement, Demand Media received
      a
      five year warrant to purchase 5,000,000 shares of the Company's common stock
      at
      a purchase price of $0.158 per share that expires on October 3, 2011 (refer
      to
      Note 8). Pursuant to the Asset Purchase Agreement, Demand Media also received
      the right to appoint one member to the board of directors of the Company, which
      they have not exercised.




In
      accordance with SFAS 144, “Accounting for the Impairment or Disposal of Long
      Lived Assets”, the Company is accounting for the operations of Answerbag as a
      discontinued operation. The results of operations of Answerbag are reflected
      as
      discontinued operations for the year ended December 31, 2006. The revenues
      and
      net loss of Answerbag for the year ended December 31, 2006 are summarized
      below:





Revenues
            
            $
            59,777Pretax
                Loss
            
            
            (412,132
            )Gain
                on sale
            
            
            1,919,962Net Earnings
                from Discontinued Operations
            
            $
            1,507,830





Demand
      Media also agreed to purchase content from the Company for a total consideration
      of $2,000,000. The purchase price for existing content will be paid in two
      installments totaling $200,000 within five days of October 4, 2006 and the
      amount related to new, original content will be paid in equal installments
      of
      $300,000 to be paid quarterly over six consecutive quarters, beginning October
      1, 2006. In addition, as further discussed in Note 6, Demand Media issued
      warrants to the Company to purchase 125,000 shares of Series C Preferred Stock
      of Demand Media, which preferred stock represents less than one-tenth of a
      percent of the outstanding capital stock of Demand Media. Upon the close of
      the
      transaction with Demand Media, Inc. InfoSearch received initial payments of
      $3,200,000.





**13.**
            **Other
                Income**





The
      company entered into a Settlement Agreement dated as of December 11, 2007,
      with
      McGuire Woods LLP with respect to claims asserted by the Company arising from
      acts or omissions by Mr. Louis Zehil, a former partner of McGuire Woods LLP
      and
      the Company’s former corporate secretary including transactions in Company
      securities by an affiliate of Mr. Zehil. The Settlement Agreement provides
      for:
      (1) a cash payment to the Company of $450,000 by McGuire Woods LLP which has
      been received by the Company, and (2) the mutual release of certain claims
      by
      the Company and McGuire Woods LLP. The proceeds of this settlement less certain
      legal fees associated with the investigation have been displayed as Other Income
      to differentiate them from recurring Operating Results.


See
        reports of independent registered public accounting firms.




F-26




**14.**
            **Subsequent
                Events**





On
      January 2, 2008, the Company dismissed Singer Lewak Greenbaum &
Goldstein, LLP ("SLGG") as its independent registered public accounting firm.
      The decision to change independent registered public accounting firms was
      approved by the Company’s Audit Committee. SLGG's reports on the Company's
      financial statements for the last two fiscal years ended December 31, 2006
      (collectively, the "Prior Fiscal Years"), did not contain an adverse opinion
      or
      disclaimer of opinion, nor were such reports qualified or modified as to
      uncertainty, audit scope or accounting principles. There were no disagreements
      ("Disagreements") between the Company and SLGG during either (i) the Prior
      Fiscal Years, or (ii) the period January 1, 2007 through January 2, 2008 (the
      "Current Fiscal Year") on any matter of accounting principles or practices,
      financial statement disclosure, or auditing scope or procedure, which
      Disagreement, if not resolved to the satisfaction of SLGG, would have caused
      SLGG to make reference to the subject matter of the Disagreement in connection
      with its reports. There were no reportable events as defined under Item
      304(a)(1) of Regulation S-B, during either (i) the Prior Fiscal Years or (ii)
      the Current Fiscal Year. This was originally disclosed on Form 8-K on January
      7,
      2008 as amended by Form 8-K/A on January 23, 2008.





On
      January 23, 2008, Claudio Pinkus, Chairman of the Board of Directors of
      InfoSearch Media, Inc., a Delaware corporation (the “Company” or “Registrant”),
      informed the Company that he was resigning as Chairman and as a director
      effective as of January 23, 2008, for personal reasons, as originally disclosed
      in Form 8-K filed on January 29, 2008.





On
      March
      7, 2008, Bob Myers, Vice President, Production was terminated.





On
      March
      10, 2008, Heather Gore, Vice President, Marketing resigned effective immediately
      but entered into a consulting agreement to provide the Company with certain
      ongoing marketing services.





The
      Company’s contract with its largest single client, Demand Media, Inc. expired as
      of March 31, 2008, and on April 9, 2008 the Company entered into a new contract
      to provide similar content to Demand Media, Inc. in support of the one of its
      high profile web properties - although discussed earlier in this report the
      business levels and terms are not as advantageous to the Company as the previous
      contract.


See
        reports of independent registered public accounting firms.




F-27