UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(MARK
ONE)





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





For the
quarterly period ended January 31, 2009





OR





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





For the
transition period from _____ to ____





Commission
File No. 000-53367





DOT VN, INC.


(Exact
name of registrant as specified in its charter)





Delaware
              20-3825987(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              Identification
      No.)





9449
Balboa Avenue, Suite 114


San Diego, California
92123


(Address
of principal executive offices, zip code)





(858)
571-2007


(Registrant’s
telephone number, including area code)





(Former
name, former address and former fiscal year,


if
changed since last report)





Check
whether the issuer (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.   Yes xNo  ̈





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





Large
      accelerated filer  ̈
              Accelerated
      filer  ̈
              Non-accelerated
      filer  ̈
              Smaller
      reporting company x(Do
      not check if a smallerreporting
      company)





Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2 of the Exchange Act):    Yes  ̈No x





APPLICABLE
ONLY TO CORPORATE ISSUERS





As of
March 10, 2009, there were 27,416,406 shares of the issuer’s common stock, par
value $0.001 per share, outstanding.








DOT
VN, INC.


QUARTERLY
REPORT ON FORM 10-Q


FOR
THE PERIOD ENDED JANUARY 31, 2009





INDEX





Index
                                                                
                                                                
                                                                PagePart
      I.
                                                                Financial
      InformationItem
      1.
                                                                Financial Statements
                                                                4Basis
      of Presentation
                                                                4Report
      of Independent Registered Public Accounting Firm
                                                                5Condensed
      Consolidated Balance Sheets as of January 31, 2009 (unaudited) and April
      30, 2008
                                                                6Condensed
      Consolidated Statements of Operations and Comprehensive Income for the
      Three Months ended January 31, 2009 and 2008 (unaudited)
                                                                7Condensed
      Consolidated Statements of Operations and Comprehensive Income for the
      Nine Months ended January 31, 2009 and 2008 (unaudited)
                                                                8Condensed
      Consolidated Statements of Changes in Stockholders Equity for the Nine
      Months ended January 31, 2009 (unaudited) and Year ended April 30,
      2008
                                                                9Condensed
      Consolidated Statements of Cash Flows for the Nine Months ended January
      31, 2009 and 2008 (unaudited)
                                                                11Notes
      to Condensed Consolidated Financial Statements (unaudited)
                                                                13Item
      2.
                                                                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                                                                32Item
      3.
                                                                Quantitative
      and Qualitative Disclosures About Market Risk.
                                                                47Item
      4T.
                                                                Controls
      and Procedures.
                                                                47Part
      II.
                                                                Other
      InformationItem
      1.
                                                                Legal
      Proceedings.
                                                                48Item
      2.
                                                                Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                                                48Item
      3.
                                                                Defaults
      Upon Senior Securities.
                                                                48Item
      4.
                                                                Submission
      of Matters to a Vote of Security Holders.
                                                                49Item
      5.
                                                                Other
      Information.
                                                                49Item
      6.
                                                                Exhibits.
                                                                49Signatures
                                                                
                                                                50Certifications




2


CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS





This
Quarterly Report on Form 10-Q of Dot VN, Inc., a Delaware corporation (the
“Company”), contains “forward-looking statements.” In some cases, you can
identify forward-looking statements by terminology such as “may”, “will”,
“should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”,
“estimates”, “predicts”, “potential” or “continue” or the negative of such terms
and other comparable terminology.  These forward-looking statements
include, without limitation, statements about our market opportunity, our
strategies, competition, expected activities and expenditures as we pursue our
business plan, and the adequacy of our available cash
resources.  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.  Actual results may
differ materially from the predictions discussed in these forward-looking
statements.  The economic environment within which we operate could
materially affect our actual results.  Additional factors that could
materially affect these forward-looking statements and/or predictions include,
among other things: (i) our limited operating history; (ii) our ability to
obtain additional financing to complete our business plan; (iii) our ability to
pay down existing debt; (iv) unforeseen costs and expenses; (v) potential
litigation with our shareholders, creditors and/or former or current investors;
(vi) the Company’s ability to comply with federal, state and local government
regulations; (vii) the Company’s ability to maintain current material agreements
with the government of Vietnam and secure additional agreements in furtherance
of the Company’s business in Vietnam, Laos and Cambodia; and (viii) the
exercise of the approximately 40.8% control Thomas Johnson, the Company’s Chief
Executive Officer and Chairman of the Board of Directors, holds of the Company’s
voting securities, (ix) the exercise of the approximately 38.0% control Lee
Johnson, the Company’s President, Chief Technology Officer, and Chief Financial
Officer and a Director, holds of the Company’s voting securities, (x) other
factors over which we have little or no control; and (xii) other factors
discussed in the Company’s filings with the Securities and Exchange Commission
(“SEC”).





Our
management has included projections and estimates in this Form 10-Q, which are
based primarily on management’s experience in the industry, assessments of our
results of operations, discussions and negotiations with third parties and a
review of information filed by our competitors with the Securities and Exchange
Commission or otherwise publicly available.  We caution readers not to
place undue reliance on any such forward-looking statements, which speak only as
of the date made.  We disclaim any obligation subsequently to revise
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.


3


Dot VN, INC. AND SUBSIDIARIES





PART
I. FINANCIAL INFORMATION





ITEM
            1.
            FINANCIAL
      STATEMENTS.





BASIS
OF PRESENTATION





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial reporting and the instructions
for Form 10-Q pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all information and
footnote disclosures necessary for a complete presentation of the financial
position, results of operations, cash flows, and stockholders equity in
conformity with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature.





The
unaudited condensed consolidated balance sheet of the Company as of January 31,
2009, and the related consolidated balance sheet of the Company as of April 30,
2008, which is derived from the Company's audited consolidated financial
statements, the un-audited condensed consolidated statement of operations and
cash flows for the nine months ended January 31, 2009 and January 31, 2008 and
the condensed consolidated statement of stockholders equity for the period of
April 30, 2007 to January 31, 2009 are included in this document. These
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and related notes
included in the Company’s most recently filed Form S-1/A.





Operating
results for the quarter and nine months ended January 31, 2009 are not
necessarily indicative of the results that can be expected for the year ending
April 30, 2009.


4


Chang G. Park, CPA, Ph. D.


t
2667 CAMINO
DEL RIO S. SUITE B t
SAN
DIEGO t
CALIFORNIA
92108 t


t
TELEPHONE
(858)722-5953 t
FAX (858)
761-0341 t
FAX (858)
764-5480


t
E-MAIL
changgpark@gmail.com

t







Report of Independent
Registered Public Accounting Firm




To the
Board of Directors of


Dot VN,
Inc.


9449
Balboa Avenue, Suite 114


San
Diego, CA 92123





We have
reviewed the accompanying condensed consolidated balance sheet of Dot VN, Inc.
(the “Company”) as of January 31, 2009, and the related condensed consolidated
statements of operations for the three months and nine months ended January 31,
2009, condensed consolidated statements of changes in stockholders’ equity
(deficit) and condensed consolidated cash flows for the nine months ended
January 31, 2009. These financial statements are the responsibility of the
Company’s management.





We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with the standards of the Public Company Accounting Oversight Board, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.





Based on
our review, we are not aware of any material modifications that should be made
to the financial statements referred to above for them to be in conformity with
U.S. generally accepted accounting principles.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 13 to the condensed
consolidated financial statements, the Company's losses from operations raise
substantial doubt about its ability to continue as a going concern. The
condensed consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.





/s/ Chang G.
      Park, CPAChang
      G. Park, CPAMarch
      17, 2009San
      Diego, CA





Member
of the California Society of Certified Public Accountants


Registered
with the Public Company Accounting Oversight Board


5


Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Balance Sheets





January
      31,
                  
                  
                  April
      30,2009
                  
                  
                  2008(unaudited)ASSETSCurrent
      assets:Cash
                  
                  $
                  143,573
                  
                  
                  $
                  480,350Accounts
      receivable
                  
                  
                  111,109
                  
                  
                  
                  29,845Prepaid
      warrant expense, current
                  
                  
                  -
                  
                  
                  
                  91,771Prepaid
      expenses and other current assets
                  
                  
                  58,504
                  
                  
                  
                  74,059Notes
      receivable, net
                  
                  
                  -
                  
                  
                  
                  -Total
      current assets
                  
                  
                  313,186
                  
                  
                  
                  676,025Equipment,
      net
                  
                  
                  709,892
                  
                  
                  
                  654,129Intangible
      assets
                  
                  
                  1,022,336
                  
                  
                  
                  1,022,336Other
      noncurrent assets
                  
                  
                  146,648
                  
                  
                  
                  328,149Total
      assets
                  
                  $
                  2,192,062
                  
                  
                  $
                  2,680,639LIABILITIES
      AND SHAREHOLDERS' EQUITY (DEFICIT)Current
      liabilities:Accounts
      payable
                  
                  $
                  80,575
                  
                  
                  $
                  52,997Customer
      deposits
                  
                  
                  25,501
                  
                  
                  
                  5,900Due
      to related party, net of zero and $444,149 discount
                  
                  
                  6,789,874
                  
                  
                  
                  5,983,630Short-term
      debt, net of zero and $434,410 discount
                  
                  
                  3,081,570
                  
                  
                  
                  2,076,075Accrued
      liabilities
                  
                  
                  1,459,307
                  
                  
                  
                  808,683Total
      current liabilities
                  
                  
                  11,436,827
                  
                  
                  
                  8,927,285Commitments
      and ContingenciesShareholders'
      equity (deficit):Preferred
      stock: 50,000,000 shares authorized of $0.001 par value; 120,000 shares
      designated Series A, $10.00 stated value; 0 issued and outstanding as of
      January 31, 2009 and April 30, 2008
                  
                  
                  -
                  
                  
                  
                  -Common
      stock: 250,000,000 shares authorized of $0.001 par
      value;  27,406,156 and 27,059,423 shares issued and outstanding
      as of January 31, 2009 and April 30, 2008
                  
                  
                  27,406
                  
                  
                  
                  27,059Additional
      paid-in capital
                  
                  
                  29,920,172
                  
                  
                  
                  28,079,334Accumulated
      deficit
                  
                  
                  (39,193,409
                  )
                  
                  
                  (34,353,039
                  )Accumulated
      comprehensive income
                  
                  
                  1,066
                  
                  
                  
                  -Total
      shareholders' equity (deficit)
                  
                  
                  (9,244,765
                  )
                  
                  
                  (6,246,646
                  )Total
      liabilities and shareholders' equity (deficit)
                  
                  $
                  2,192,062
                  
                  
                  $
                  2,680,639





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


6





Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)





Three Months Ended January
    31,2009
                
                
                2008Revenues
                
                $
                190,985
                
                
                $
                207,838Cost
      of revenues
                
                
                80,108
                
                
                
                107,001Gross
      profit
                
                
                110,877
                
                
                
                100,837General
      and administrative expenses:Consulting
      and professional fees
                
                
                48,888
                
                
                
                317,770Marketing
      and promotion
                
                
                12,357
                
                
                
                6,000Option
      bonus
                
                
                39,127
                
                
                
                945,684Bad
      debt expense
                
                
                329
                
                
                
                2,001Other
      general & administrative expenses
                
                
                482,779
                
                
                
                543,520Total
      general and administrative expenses
                
                
                583,480
                
                
                
                1,814,975(Loss)
      from operations
                
                
                (472,603
                )
                
                
                (1,714,138
                )Other
      income (expenses):Interest
      income
                
                
                262
                
                
                
                3,640Finance
      (expense)
                
                
                (120,058
                )
                
                
                (317,117
                )Interest
      (expense)
                
                
                (317,865
                )
                
                
                (716,967
                )Foreign
      exchange (loss) gain
                
                
                (8,606
                )
                
                
                34Other
      income and (expense)
                
                
                -
                
                
                
                (70
                )Total
      other income (expenses)
                
                
                (446,267
                )
                
                
                (1,030,480
                )Net
      loss
                
                $
                (918,870
                )
                
                $
                (2,744,618
                )Loss
      per common share:Basic
      and diluted
                
                $
                (0.03
                )
                
                $
                (0.10
                )Weighted
      average common shares outstanding:Basic
      and diluted
                
                
                27,358,671
                
                
                
                26,822,210Comprehensive
      income (loss):Net
      loss
                
                $
                (918,870
                )
                
                $
                (2,744,618
                )Other
      comprehensive income:Foreign
      currency translation
                
                
                1,008
                
                
                
                -Comprehensive
      loss
                
                $
                (917,862
                )
                
                $
                (2,744,618
                )





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


7





Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)





Nine Months Ended January
    31,2009
                
                
                2008Revenues
                
                $
                795,336
                
                
                $
                755,041Cost
      of revenues
                
                
                335,489
                
                
                
                327,690Gross
      profit
                
                
                459,847
                
                
                
                427,351General
      and administrative expenses:Consulting
      and professional fees
                
                
                231,852
                
                
                
                811,482Marketing
      and promotion
                
                
                36,357
                
                
                
                18,060Option
      bonus
                
                
                1,571,456
                
                
                
                5,784,549Bad
      debt expense
                
                
                27,514
                
                
                
                4,063Other
      general & administrative expenses
                
                
                1,589,338
                
                
                
                2,128,840Total
      general and administrative expenses
                
                
                3,456,517
                
                
                
                8,746,994(Loss)
      from operations
                
                
                (2,996,670
                )
                
                
                (8,319,643
                )Other
      income (expenses):Interest
      income
                
                
                2,644
                
                
                
                12,053Finance
      (expense)
                
                
                (414,157
                )
                
                
                (949,848
                )Interest
      (expense)
                
                
                (1,423,641
                )
                
                
                (1,750,663
                )Foreign
      exchange (loss) gain
                
                
                (10,466
                )
                
                
                87Other
      income and (expense)
                
                
                1,920
                
                
                
                (42
                )Total
      other income (expenses)
                
                
                (1,843,700
                )
                
                
                (2,688,413
                )Net
      loss
                
                $
                (4,840,370
                )
                
                $
                (11,008,056
                )Loss
      per common share:Basic
      and diluted
                
                $
                (0.18
                )
                
                $
                (0.41
                )Weighted
      average common shares outstanding:Basic
      and diluted
                
                
                27,262,555
                
                
                
                26,597,694Comprehensive
      income (loss):Net
      loss
                
                $
                (4,840,370
                )
                
                $
                (11,008,056
                )Other
      comprehensive income:Foreign
      currency translation
                
                
                1,066
                
                
                
                -Comprehensive
      loss
                
                $
                (4,839,304
                )
                
                $
                (11,008,056
                )





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


8


Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
(Unaudited)





Common
                    
                    
                    Additional
                    
                    
                    
                    
                    
                    AccumulatedCommon
                    
                    
                    stock
                    
                    
                    paid-in
                    
                    
                    Accumulated
                    
                    
                    comprehensivestock
                    
                    
                    amount
                    
                    
                    capital
                    
                    
                    deficit
                    
                    
                    income
                    
                    
                    TotalBalance,
      April 30, 2007
                    
                    
                    26,118,496
                    
                    
                    $
                    26,118
                    
                    
                    $
                    17,619,977
                    
                    
                    $
                    (20,730,728
                    )
                    
                    $
                    -
                    
                    
                    $
                    (3,084,633
                    )Shares
      issued to employees
                    
                    
                    368,613
                    
                    
                    
                    369
                    
                    
                    
                    656,174
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    656,543Shares
      issued for services
                    
                    
                    62,500
                    
                    
                    
                    63
                    
                    
                    
                    103,200
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    103,263Shares
      issued for intangible asset
                    
                    
                    285,000
                    
                    
                    
                    285
                    
                    
                    
                    569,715
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    570,000Shares
      issued under investor’s registration rights agreement
                    
                    
                    6,101
                    
                    
                    
                    6
                    
                    
                    
                    12,196
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    12,202Shares
      issued upon conversion of debenture
                    
                    
                    7,500
                    
                    
                    
                    7
                    
                    
                    
                    7,493
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    7,500Shares
      issued upon conversion of Spot-On Networks debenture
                    
                    
                    211,213
                    
                    
                    
                    211
                    
                    
                    
                    211,002
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    211,213Discount
      on convertible notes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,486,454
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,486,454Warrants
      issued for services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    682,889
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    682,889Stock
      options expensed
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6,730,234
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    6,730,234Comprehensive
      loss, April 30, 2008
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (13,622,311
                    )
                    
                    
                    -
                    
                    
                    
                    (13,622,311
                    )Balance,
      April 30, 2008
                    
                    
                    27,059,423
                    
                    
                    
                    27,059
                    
                    
                    
                    28,079,334
                    
                    
                    
                    (34,353,039
                    )
                    
                    
                    -
                    
                    
                    
                    (6,246,646
                    )





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


9





Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)
(continued)





Common
                    
                    
                    Additional
                    
                    
                    
                    
                    
                    AccumulatedCommon
                    
                    
                    stock
                    
                    
                    paid-in
                    
                    
                    Accumulated
                    
                    
                    comprehensivestock
                    
                    
                    amount
                    
                    
                    capital
                    
                    
                    deficit
                    
                    
                    income
                    
                    
                    TotalBalance,
      April 30, 2008
                    
                    
                    27,059,423
                    
                    
                    
                    27,059
                    
                    
                    
                    28,079,334
                    
                    
                    
                    (34,353,039
                    )
                    
                    
                    -
                    
                    
                    
                    (6,246,646
                    )Shares
      issued to employees
                    
                    
                    26,000
                    
                    
                    
                    26
                    
                    
                    
                    16,824
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    16,850Shares
      issued for services
                    
                    
                    12,252
                    
                    
                    
                    13
                    
                    
                    
                    11,200
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,213Shares
      issued under investor’s registration rights agreement
                    
                    
                    15,300
                    
                    
                    
                    15
                    
                    
                    
                    13,602
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    13,617Shares
      issued upon conversion of debenture
                    
                    
                    191,213
                    
                    
                    
                    191
                    
                    
                    
                    191,021
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    191,212Shares
      issued upon conversion of Spot-On Networks debenture
                    
                    
                    25,000
                    
                    
                    
                    25
                    
                    
                    
                    24,975
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    25,000Shares
      issued as payment on term debt
                    
                    
                    11,667
                    
                    
                    
                    12
                    
                    
                    
                    11,772
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    11,784Shares
      issued upon exercise of warrants
                    
                    
                    53,250
                    
                    
                    
                    53
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    53Shares
      issued upon cashless exercise of warrants
                    
                    
                    12,051
                    
                    
                    
                    12
                    
                    
                    
                    (12
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Stock
      options expensed
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,571,456
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,571,456Comprehensive
      loss, nine months ended January 31, 2009
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,840,370
                    )
                    
                    
                    1,066
                    
                    
                    
                    (4,839,304
                    )Balance,
      January 31, 2009
                    
                    
                    27,406,156
                    
                    
                    $
                    27,406
                    
                    
                    $
                    29,920,172
                    
                    
                    $
                    (39,193,409
                    )
                    
                    $
                    1,066
                    
                    
                    $
                    (9,244,765
                    )





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


10




Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Cash Flows (Unaudited)





For the Nine Months Ended
                  January 31,2009
                
                
                2008Cash
      flows from operating activities:Net
      loss
                
                $
                (4,840,370
                )
                
                $
                (11,008,056
                )Adjustments
      to reconcile net loss to net cash (used in) provided by operating
      activities:Depreciation
                
                
                8,666
                
                
                
                4,795Accrued
      interest expense
                
                
                565,935
                
                
                
                471,480Accrued
      bad debt expense
                
                
                25,000
                
                
                
                -Amortization
      of debt issuance costs
                
                
                274,252
                
                
                
                317,311Amortization
      of service warrants
                
                
                91,771
                
                
                
                1,056,593Amortization
      of debt discounts
                
                
                878,559
                
                
                
                1,312,128Stock
      issued to convertible debentures holders for liquidating
      damages
                
                
                13,617
                
                
                
                12,202Stock
      options expensed
                
                
                1,571,456
                
                
                
                5,784,549Stock
      issued to employees
                
                
                36,350
                
                
                
                630,543Stock
      issued for services
                
                
                37,379
                
                
                
                24,762Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
                
                
                (81,264
                )
                
                
                (30,006
                )(Increase)
      decrease in prepaid expenses and other current assets
                
                
                (30,807
                )
                
                
                12,952(Increase)
      decrease in other noncurrent assets
                
                
                (98,061
                )
                
                
                (2,285
                )Increase
      (decrease) in accounts payable
                
                
                27,578
                
                
                
                (15,862
                )Increase
      (decrease) in customer deposits
                
                
                19,601
                
                
                
                42,492Increase
      (decrease) in accrued liabilities
                
                
                571,527
                
                
                
                629,502Net
      cash (used in) operating activities
                
                
                (928,811
                )
                
                
                (756,900
                )Cash
      flows from investing activities:Purchase
      of equipment
                
                
                (17,120
                )
                
                
                (5,895
                )Internet
      data center design services
                
                
                -
                
                
                
                (585,000
                )Proceeds
      from equipment sale
                
                
                870
                
                
                
                -Payment
      of landlord deposit
                
                
                (2,949
                )
                
                
                -Net
      cash (used in) investing activities
                
                
                (19,199
                )
                
                
                (590,895
                )Cash
      flows from financing activities:Proceeds
      from term notes
                
                
                670,000
                
                
                
                700,000Advances
      from related parties
                
                
                -
                
                
                
                608,230Repayments
      to related parties
                
                
                (68,650
                )
                
                
                (18,451
                )Proceeds
      from stock issuances
                
                
                53
                
                
                
                -Net
      cash provided by financing activities
                
                
                601,403
                
                
                
                1,289,779Effect
      of exchange rate changes on cash
                
                
                9,830
                
                
                
                -Net
      increase (decrease) in cash
                
                
                (336,777
                )
                
                
                (58,016
                )Cash,
      beginning of the period
                
                
                480,350
                
                
                
                329,151Cash,
      end of the period
                
                $
                143,573
                
                
                $
                271,135





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


11


Dot VN, INC. AND SUBSIDIARIES


Condensed
Consolidated Statements of Cash Flows (Unaudited) (continued)





For the Nine Months Ended
                        January 31,2009
                      
                      
                      2008Non-cash
      investing and financing activities:Common stock issued for intangible
      asset
                      
                      $
                      -
                      
                      
                      $
                      570,000Convertible note issued for
      intangible asset
                      
                      $
                      -
                      
                      
                      $
                      92,336Increase in construction in
      progress from accrued interest
                      
                      $
                      48,246
                      
                      
                      $
                      -Common stock issued in exchange
      for convertible note
                      
                      $
                      191,213
                      
                      
                      $
                      -Common stock issued to
      employees
                      
                      $
                      16,850
                      
                      
                      $
                      630,543Common stock issued for
      services
                      
                      $
                      11,213
                      
                      
                      $
                      103,263Common stock issued for note
      receivable
                      
                      $
                      25,000
                      
                      
                      $
                      7,500Common stock issued as payment on
      term debt
                      
                      $
                      11,784
                      
                      
                      $
                      -Common stock issued to convertible
      debenture holders for liquidated damages
                      
                      $
                      13,617
                      
                      
                      $
                      12,202Supplemental
      cash flow disclosure:Interest paid
                      
                      $
                      73,566
                      
                      
                      $
                      64,311Taxes paid
                      
                      $
                      -
                      
                      
                      $
                      1,600





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


12





Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





1.
            Condensed
      consolidated financial statements





The
accompanying January 31, 2009 condensed consolidated financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
January 31, 2009 and 2008 and for all periods presented have been made. Certain
information and footnote disclosures normally included in consolidated financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed consolidated financial statements be read in conjunction
with the Company's April 30, 2008 audited consolidated financial statements and
related notes included in the Company’s most recent Form S-1/A as filed with the
Securities and Exchange Commission. The results of operations for periods ended
January 31, 2009 and 2008 are not necessarily indicative of the operating
results for the full years.





2.
            Organization





The
Company





Dot VN,
Inc., its predecessors, and its subsidiaries (the “Company” or “Dot VN”), is an
Internet and telecommunications company focused on the Vietnamese market. The
Company intends to apply the benefits of best of breed technology through
strategic partnerships to deploy hardware, software and wireless solutions in
Vietnam. In order to maximize the benefits the Company can derive from the
technology, the Company also intends:





·
            to
      drive growth in registrations of the Vietnamese ccTLD
  .vn;


·
            to
      build and operate Internet data centers in major city centers in Vietnam;
      and


·
            to
      identify, deploy and commercialize best of breed technologies in Vietnam,
      including but not limited to wireless virtual
  fiber.





Dot VN
has signed agreements with the Vietnamese Internet Network Information Center
(“VNNIC”) to serve as the only domain name registrar empowered to approve domain
names, in real time, online which provides Dot VN with a competitive advantage
vis-à-vis other domain name registrars. In addition to its domain registration
business, Dot VN is currently in the process of designing an Internet data
center (“IDC” in the singular or “IDCs” in the plural) which will serve as an
internal data and telecommunications network within the country of Vietnam. The
IDCs will provide web hosting, collocation, and disaster recovery services as
well as serve as the basic infrastructure for additional Internet and data
technologies such as wireless broad brand connectivity, distance e-learning and
e-government projects. The Company has secured a 35-year lease for approximately
8,768 square meters of land in the Danang Industrial Zone in Danang, Vietnam
upon which it intends to construct a dedicated IDC building. In addition, the
Company intends to execute a material definitive agreement based on the current
procedural agreement with VNNIC to build an IDC in Hanoi, Vietnam, located in
the VNNIC building. The IDC developments are anticipated to occur in the near to
mid term. In long term, the Company intends to develop additional IDCs in the
rest of the Country of Vietnam. Dot VN will continue to explore and test, and
analyze, new and best of breed technology for deployment in Vietnam, including
but not limited to wireless virtual fiber.





Reverse
Merger





Malers,
Inc. was incorporated in the State of Delaware on May 27, 1998, under the name
Trincomali Ltd. (“Trincomali”). Over the course of its history, Trincomali
underwent additional name changes until being renamed Malers, Inc. (“Malers”) on
April 28, 2005. On June 19, 2006, Malers affected a 1 for 2,000 reverse stock
split of its 278,687,224 outstanding shares with fractional shares rounded up
resulting in 139,690 shares issued and outstanding post split.





Dot VN,
Inc., was incorporated in the State of California on March 27, 2001 under the
name Hi-Tek-Com-VN and was renamed Dot VN, Inc. (“Dot VN CA”) on August 3, 2005.
Dot VN CA signed its first contract September 18, 2003 with the Vietnamese
government to register the top level country code domain names
(“ccTLD”).





On July
17, 2006, Dot VN CA effected an Agreement and Plan of Merger by and among (i)
Dot VN CA, (ii) Malers, and (iii) Malers Acquisition Corp. (“MAC”), a Washington
corporation and wholly owned subsidiary of Malers, Inc., the completion of which
transaction resulted in (w) MAC merging with and into Dot VN CA there by ending
MAC’s corporate existence; (x)


13


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





2.
            Organization
      (continued)





Reverse Merger
(continued)





Dot VN CA
becoming a wholly owned subsidiary of Malers a Delaware corporation; (y) Dot VN
CA being renamed “Hi-Tek Multimedia, Inc.” a California corporation; and (z)
Malers being renamed “Dot VN, Inc.” a Delaware corporation (the “Malers
Merger”). Final state regulatory approval was received on August 17, 2006. In
connection with the merger, the 14,232,250 outstanding shares Dot VN CA Common
Stock were exchanged for 11,368,068 shares of the Company’s Common Stock. There
were no outstanding stock options or warrant to purchase a share of Dot VN CA
Common Stock.





Prior to
the merger, Malers was an inactive shell corporation quoted on the Pink Sheets
and had engaged in no substantive business operations.





For
accounting purposes, the acquisition has been treated as a recapitalization of
Dot VN CA with Dot VN CA as the acquirer (reverse acquisition). Dot VN CA was
treated as the acquirer for accounting purposes because after the acquisition
the shareholders of Dot VN CA controlled Malers and the officers and directors
of Dot VN CA assumed the same positions at Malers; Malers is the surviving
entity for legal purposes. The historical financial statements prior to July 17,
2006 are those of Dot VN CA.





3.
            Equipment





Equipment
at January 31, 2009 and April 30, 2008 consisted of the following:





January 31,
                  
                  
                  April 30,2009
                  
                  
                  2008Computer
      equipment
                  
                  $
                  50,895
                  
                  
                  $
                  36,534Other
      furniture and equipment
                  
                  
                  7,036
                  
                  
                  
                  5,214Internet
      data center, construction in progress
                  
                  
                  671,541
                  
                  
                  
                  623,295729,472
                  
                  
                  
                  665,043Less
      accumulated depreciation
                  
                  
                  19,580
                  
                  
                  
                  10,914Equipment,
      net
                  
                  $
                  709,892
                  
                  
                  $
                  654,129





Depreciation
expense charged to operations was $8,666 and $6,832 for the nine months ended
January 31, 2009 and the year ended April 30, 2008, respectively. Capitalized
interest on borrowings related to the Internet data center was $48,246 and
$38,295 for the nine months ended January 31, 2009 and the year ended April 30,
2008, respectively.





4.
            Intangibles
      assets





On
October 16, 2006 the Company acquired the rights to the US trademark “Dot VN”
including its logo and certain related domain names for $360,000 in the form of
a two year convertible note (see Note 7) from Hi-Tek, Inc. a privately held
California corporation (“Hi-Tek Private”), previously a related party (see Note
8). The trademark was determined to have an indefinite useful life and is not
amortized.





On June
29, 2007, the Company acquired the rights to the Vietnam trademark “Dot VN” from
Business.com.VN, Co. Ltd. for 285,000 shares of the Company’s Common Stock and a
convertible note (see Note 7) in the amount of $100,000 due in one year (the
“Business.com.VN Agreement”). The note, which accrues no interest during its
term, was recorded at its present value based on an 8% interest rate assumption.
The aggregate consideration of $662,336 was recorded as an indefinite lived
intangible asset and is not amortized.





Indefinite
lived assets are not amortized, but instead are evaluated for impairment
annually and if events or changes in circumstances indicate that the carrying
amount may not be recoverable in accordance with SFAS.142. If the carrying
amount of an intangible asset exceeds its fair value, an impairment loss is
recognized in an amount equal to that excess. After an impairment loss is
recognized, the adjusted carrying amount of the intangible asset is its new
accounting basis. Subsequent reversal of a previously recognized impairment loss
is prohibited. The change in the carrying amount of intangible assets is as
follows:


14


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





4.
            Intangibles
      assets (continued)





January 31,
                  
                  
                  April 30,2009
                  
                  
                  2008Balance,
      beginning of period
                  
                  $
                  1,022,336
                  
                  
                  $
                  360,000Purchased Vietnam
      trademark
                  
                  
                  -
                  
                  
                  
                  662,336Balance,
      end of period
                  
                  $
                  1,022,336
                  
                  
                  $
                  1,022,336





5.
            Notes
      receivable





During
the nine months ended January 31, 2009 and the year ended April 30, 2008, the
Company issued an aggregate of 25,000 and 211,213 restricted shares of its
Common Stock pursuant to the conversion of $25,000 and $211,213 in convertible
debentures issued by Spot-On Networks, LLC (“Spot-On”), respectively. On January
31 and February 9, 2007 the Company issued a series of convertible debentures
(see Note 7) for an aggregate of $1,148,212 due January 31, 2009 (the “February
Debentures”) which convert at the option of each individual noteholder (the
“February Investors”) into restricted shares of the Company’s Common Stock at
$1.00 per share. The February Debentures was funded in conjunction with a like
amount of convertible debentures issued concurrently by Spot-On to the February
Investors (the “Spot-On Debenture”). The February Debentures’ terms required
that the convertible debentures issued by Spot-On be convertible into either
membership units of Spot-On Networks, LLC or common stock of the Company (the
“Spot-On Conversion”), at the option of the February Investors. Upon the
February Investors’ election to convert a Spot-On Debenture into the Company’s
common stock the Spot-On Debenture is assigned and transferred into the name of
the Company (the “Assigned Spot-On Debentures”) at which time the Company issues
the Common Stock and records a note receivable. Future monthly interest
payments, at 10% per annum, are accrued for the benefit of the Company; as of
January 31, 2009 $21,438 of interest has accrued. On January 31, 2009, at
maturity, the Spot-On Conversion right expired and the Assigned Spot-On
Debentures principal and accrued interest was due to be paid by Spot-On. On
January 30, 2009, the Company received a request from Spot-On to (i) extend the
maturity date to March 31, 2009 and (ii) waive any defaults under the Assigned
Spot-On Debentures or any of the related documents or events of default which
are outstanding or have occurred (the “Spot-On Offer”). The Company has not
accepted the Spot-On Offer and is discussing options to receive the full amount
due, with accrued interest, prior to March 31, 2009.





Spot-On
Networks, LLC is a private company and does not furnish the Company with
financial statements to evaluate their ability to pay the Assigned Spot-On
Debentures principal and accrued interest at maturity. The Company’s ability to
collect the Assigned Spot-On Debentures is dependent on the cash reserves held
by Spot-On and/or their ability to raise additional financing. Due to the
uncertainty of collection the Company has recorded a bad debt expense for the
full amount of the Assigned Spot-On Debentures principal and does not record the
monthly accrual of interest. Interest income ($21,438) will be recognized upon
collection from Spot-On.





January 31,
                  
                  
                  April 30,2009
                  
                  
                  2008Notes
      receivable
                  
                  $
                  236,213
                  
                  
                  $
                  211,213Less
      allowance
                  
                  
                  (236,213
                  )
                  
                  
                  (211,213
                  )Notes
      receivable, net
                  
                  $
                  -
                  
                  
                  $
                  -




15


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





6.
            Other
      noncurrent assets





Other
noncurrent assets at January 31, 2009 and April 30, 2008 consisted of the
following:





January 31,
                            
                            
                            April 30,2009
                            
                            
                            2008Deposits
                            
                            $
                            12,269
                            
                            
                            $
                            9,071Deferred
      debt issuance cost
                            
                            
                            -
                            
                            
                            
                            317,310Prepaid
      land lease Danang, Vietnam
                            
                            
                            133,337
                            
                            
                            
                            -Other
      noncurrent assets
                            
                            
                            1,042
                            
                            
                            
                            1,768Total
      other noncurrent assets
                            
                            $
                            146,648
                            
                            
                            $
                            328,149





In
connection with the issuance of the convertible debentures (see Note 7) the
Company paid the placement agent a 10% cash fee ($114,821) and issued warrants
(see Note 12) for the purchase of an aggregate of 298,480 shares of the
Company’s common stock with a fair value of $731,340. The Company capitalized
the $846,161 as a deferred charge associated with the issuance of these debt
instruments. The deferred charge is amortized on a straight-line basis over the
two year term of the debt with $317,310 and $423,081 expensed in the nine months
ended January 31, 2009 and the year ended April 30, 2008,
respectively.





On August
21, 2008, Dot VN Company, Ltd. (Danang), an entity established under the laws of
the Country of Vietnam (“Dot VN Danang”) as a wholly owned subsidiary of Dot VN,
Inc. entered into a Land Sublease Agreement (the “Sublease Agreement”) with
Massda Land Company Limited, an entity existing under the laws of the Country of
Vietnam, pursuant to which Dot VN Danang leases approximately 8,768 square
meters of land in the Danang Industrial Zone in Danang, Vietnam, for the express
purpose of building an Internet data center and related uses, for a term of
approximately 35-years. The base rent of $32 per square meter, excluding value
added taxes (“VAT”) and other possible fees and costs, for the term is payable
50% one month after lease signing, 30% on the earlier of occupancy of the land
or six months after lease signing, and 20% on the earlier of building occupancy
or twelve months after lease signing. On September 8, 2008, the Company paid the
initial 50% payment of $154,322, including a 10% VAT. Lease expense for the
Danang land was $3,842 for the nine months ended January 31, 2009.





7.
            Convertible
      notes





As of
January 31, 2009, convertible notes consist of the following:





Issued date
                                
                                Maturity
                                
                                Conversion
                                  price
                                
                                
                                Amount
                                
                                
                                Debt
                                  discount
                                
                                
                                Accrued
                                  interest
                                
                                
                                Net amountConvertible
      Note 1
                                Oct.
      16, 2006
                                
                                June
      30, 2009
                                
                                $
                                1.00
                                
                                
                                $
                                360,000
                                
                                
                                $
                                -
                                
                                
                                $
                                92,614
                                
                                
                                $
                                452,614Convertible
      Notes 2
                                Feb.
      9, 2007
                                
                                Jan.
      31, 2009
                                
                                $
                                1.00
                                
                                
                                
                                949,500
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                949,500Convertible
      Note 3
                                June
      29, 2007
                                
                                June
      30, 2009
                                
                                $
                                1.43
                                
                                
                                
                                92,336
                                
                                
                                
                                -
                                
                                
                                
                                12,519
                                
                                
                                
                                104,855Convertible
      Notes 4
                                Aug.
      1, 2007
                                
                                Aug.
      1, 2008
                                
                                $
                                1.43
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -
                                
                                
                                
                                -Convertible
      Notes 5
                                Aug.
      14,2008
                                
                                Mar
      31, 2009
                                
                                $
                                1.43
                                
                                
                                
                                4,321,533
                                
                                
                                
                                -
                                
                                
                                
                                164,505
                                
                                
                                
                                4,486,0385,723,369
                                
                                
                                
                                -
                                
                                
                                
                                269,638
                                
                                
                                
                                5,993,007Less
      notes 1 and 5 included in due to related parties, current(see
      Note 8)
                                
                                
                                
                                
                                
                                4,681,533
                                
                                
                                
                                -
                                
                                
                                
                                257,119
                                
                                
                                
                                4,938,652Less
      notes 2 and 3 included in short-term debt, current (see Note
      9)
                                
                                
                                
                                
                                
                                1,041,836
                                
                                
                                
                                -
                                
                                
                                
                                12,519
                                
                                
                                
                                1,054,355Total
                                
                                
                                
                                
                                
                                
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -
                                
                                
                                $
                                -




16


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





7.
            Convertible
      notes (continued)





Convertible
note 1 for $360,000 was issued on October 16, 2006 with a two year term,
converts at the option of the holder into restricted shares of the Company’s
Common Stock at $1.00 per share and bears an interest rate of 10% per annum. The
note is payable to Hi-Tek Private, a former related party (see Note 8) (the
“Hi-Tek Trademark Loan”) (see Note 4), had accrued interest of $92,614 at
January 31, 2009. The beneficial conversion feature was calculated to be
$360,000 at the time of issuance in accordance with Financial Accounting
Standards Board (“FASB”) Emerging Issue Task Force (“EITF”) No 00-27 (“EITF
00-27”); the company recorded this amount as debt discount with a corresponding
credit to additional paid in capital. On October 13, 2008, the Hi-Tek Trademark
Loan was amended to extend the due date to June 30, 2009, with no other change
to the terms of the note. In accordance with EITF 00-27, there is no beneficial
conversion feature at the time of the extension. As of January 31, 2009 the
unamortized debt discount was zero.





Convertible
notes 2 are a set of convertible debentures with an aggregate face value of
$949,500 issued January 31 and February 9, 2007 (the “February Debentures”), net
of conversions, which were due January 31, 2009. The convertible debentures bear
no interest until July 2007 at which point they accrue 10 % per annum with
interest payable monthly. The Company accrues interest at an imputed rate of
approximately 8% per annum effective from the date the convertible debentures
were issued. The debentures convert at the option of each individual noteholder
(the “February Investors”) into restricted shares of the Company’s Common Stock
at $1.00 per share; representing a beneficial conversion feature. In addition,
the February Investor received a detachable warrant exercisable into restricted
shares of the Company’s Common Stock; the number of shares of each warrant is
equal to 30% of the note face value for an aggregate of 344,465 shares amount.
The detachable warrants have an exercise price of $2.00 per share and a term of
five years from the date of issuance. The combined fair value of the beneficial
conversion feature and detachable warrants calculated, in accordance with EITF
00-27, is limited to the proceeds of the debt and was allocated between the
beneficial conversion feature and detachable warrants as $888,258 and $259,954,
respectively. The beneficial conversion feature and detachable warrants are
recorded as debt discount with a corresponding credit to additional paid in
capital and are amortized over the life of the February Debentures. During the
nine months ended January 31, 2009, five February Investors exercised the
conversion option on an aggregate of $191,212 convertible debenture. Upon
conversion, $44,991 of unamortized debt discount for the converted debenture was
expensed. As of January 31, 2009, the unamortized debt discount was zero. The
Company has not repaid the $949,500 due the February Investors and is
negotiating an extension of the due date with the February Investors. . On March
10, March 13, and March 16, 2009, three February Investors agreed to modify the
terms of their February Debentures aggregating $50,000 as follows: (i) the
February Debenture plus the unpaid liquidated damages ($3,375) are combined into
a single amortized term note, (ii) interest accrues from February 1, 2009 at 12%
per annum, (iii) a one-time 15% principal payment will be made in March, and
(iv) commencing April 1, 2009, the unpaid balance will be amortized over
thirty-five (35) equal monthly payments. In addition, warrants equal to 5,338
shares will be issued with a $2 exercise price expiring on January 31,
2012.





The
February Debentures were funded in conjunction with a like amount of convertible
debentures issued concurrently by Spot-On Networks, LLC (“Spot-On”) to the
February Investors. The terms of the February Debentures required that the
convertible debentures issued by Spot-On be convertible into either membership
units of Spot-On Networks, LLC or common stock of the Company (the “Spot-On
Conversion”), at the option of the February Investors (see Note 5). The Spot-On
Conversion right expired on January 31, 2009.





Additionally,
pursuant to its engagement of Pali Capital, Inc., the Company’s placement agent
in the February Debentures, the Company paid a cash fee equal to 10% of the
aggregate convertible debentures and issued three series of warrants: (i)
retainer warrants issued on January 31, 2007 totaling in the aggregate 250,000
shares exercisable at a per share price of $0.001 (the “Pali Retainer
Warrants”); (ii) placement warrants issued on February 9, 2007 totaling in the
aggregate 229,600 shares exercisable at a per share price of $1.00 (the “Pali
Placement Warrants A”); and (iii) placement warrants issued on February 9, 2007
totaling in the aggregate 68,880 shares exercisable at a per share price of
$2.00 (the “Pali Placement Warrants B”) (collectively the “Pali Placement Agent
Warrants”). The Pali Placement Agent Warrants have a term of five years from the
date of issuance (see Note 12). The Pali Retainer Warrants were expensed over
the one year engagement term and the two placement warrants will be expensed
over the two year term of the February Debentures as deferred debt issuance
costs. Upon exercise of a Pali Placement Agent Warrants the unamortized deferred
debt issuance costs is expensed.


17


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





7.
            Convertible
      notes (continued)





On
February 9, 2007, in connection with the February Debentures, the Company
executed an investor’s registration rights agreement (the “IRRA”) by and between
the February Investor participating in the February Debentures and the Company.
Pursuant to the terms of the IRRA, in connection with the February Debentures,
the Company is required to file a registration statement on Form S-1 or SB-2 by
August 15, 2007 (the “Registration Deadline”) and further required that the
registration statement be declared effective 120 days from the date of the IRRA
filing. In the event that the Registration Deadline is not met, the February
Investors shall be entitled to liquidated damages equal to One Percent (1%) of
the outstanding convertible debentures issued in the February Debentures paid,
at the option of the February Investors, in cash or shares of the Company’s
common stock (the “Liquidated Damages”) for every thirty (30) day period that
the registration statement is not filed, limited to a total of ten such 30-day
periods. On August 10, 2007, in accordance with the requirements of Section 9 of
the IRRA, the Company and certain February Debentures Investors representing
two-thirds (2/3) of the amount invested executed an amendment to the IRRA
whereby (i) the Registration Deadline was extended to September 15, 2007 (the
“New Registration Deadline”); (ii) the February Investors received the
Liquidated Damages for one month; and (iii) the registration statement must be
declared effective within sixty (60) days if there are no comments by the SEC or
within in ninety (90) days if SEC comments are received (the “Effectiveness
Deadline”). In the event that either the New Registration Deadline or the
Effectiveness Deadline is not met, then the February Investors shall be entitled
to the Liquidated Damages for every or every thirty (30) day period that the New
Registration Deadline or the Effectiveness Deadline are not met, limited to a
total of ten such 30-day periods (see Note 10).





Convertible
note 3 for $100,000 was issued
onJune
29, 2007to Business.com.VN, a Vietnamese company, converts
at the option of the holder into shares of the Company’s restricted common stock
at $1.43 per share and bears no
interest during the one year term. The note was recorded at the present value of
$92,336 based on the state default interest rate of 8% per annum after the
original maturity date of June 29, 2008 (see Note 4) (the “Business.com.VN
Loan”). The beneficial conversion feature was calculated to be $39,860 at the
time of issuance in accordance with EITF 00-27; the Company recorded this amount
as debt discount with a corresponding credit to additional paid in capital. On
July 23, 2008, the Business.com.VN Loan was amended to extend the due date to
June 30, 2009 and accrues interest at the rate of 8% per annum. The Company has
accrued interest of $12,519 at January 31, 2009. In accordance with EITF 00-27,
there is no beneficial conversion feature at the time of the extension. As of
January 31, 2009 the unamortized debt discount was zero.




Convertible
notes 4 are a set of two individual
notes with an aggregate face value of $3,978,132 issued August 1, 2007 to Mr. Thomas Johnson (50%)
(the “TJ Note”) and Dr. Lee Johnson (50%) (the “LJ Note”). The notes are due
August 1, 2008 and accrue interest monthly at 8% per annum (see Note 8). At the
election of the holder, the amount due and owing pursuant to such note may be
converted in restricted shares of the Company’s Common Stock at a per share
price of $1.43 per share (the
“Conversion Price”). The Conversion Price shall be adjusted downward in the
event Dot VN issues common stock (or securities exercisable for or convertible
into common stock) at a price below the Conversion Price, to a price equal to
such issue price. The beneficial conversion feature was calculated to be an
aggregate of $1,446,594 at the time of issuance in accordance with EITF 00-27;
the company recorded this amount as debt discount with a corresponding credit to
additional paid in capital. On August 14, 2008, the unpaid notes and accrued
interest were replaced with new convertible notes with materially the same terms
and conditions as convertible notes 4, with an aggregate face value of
$4,321,533 issued to Mr. Thomas Johnson (50%) and Dr. Lee Johnson (50%) (see
convertible notes 5).




Convertible
notes 5 are a set of two individual
notes with an aggregate face value of $4,321,533 issued August 14, 2008 to Mr. Thomas Johnson (50%)
(the “TJ New Note”) and Dr. Lee Johnson (50%) (the “LJ New Note”). The notes are
due February 15, 2009 and accrue interest monthly at 8% per annum (see Note 8).
At the election of the holder, the amount due and owing pursuant to such note
may be converted in restricted shares of the Company’s Common Stock at a per
share price of $1.43 per share (the
“Conversion Price”). The Conversion Price shall be adjusted downward in the
event Dot VN issues common stock (or securities exercisable for or convertible
into common stock) at a price below the Conversion Price, to a price equal to
such issue price. The Company has accrued interest of $164,505 at January 31,
2009. In accordance with EITF 00-27, there is no beneficial conversion feature
at the time of issuance. As of January 31, 2009 there is no unamortized debt
discount. On February 15, 2009, the TJ New Note and the LJ New Note were amended
to extend the due date thirty days to March 17, 2009 with no other change to the
terms of the notes. On March 17, 2009, the TJ New Note and the LJ New Note were
amended to extend the due date fourteen days to March 31, 2009 with no other
change to the terms of the notes.


18


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





8.
            Loans
      from related party





The
Company’s historical cash requirements have been funded under a revolving credit
arrangement with Hi-Tek Private which previously was a related company (the
“Hi-Tek Revolver”). Dr. Lee Johnson and Mr. Thomas Johnson, the Company’s
President and Chief Executive Officer were the Chief Executive Officer and Chief
Financial Officer of Hi-Tek Private from October 2003 until their resignation
August 8, 2007, respectively; neither held nor currently owns an equity position
in Hi-Tek Private.





Starting
in April 2002, Hi-Tek Private advanced funds to cover the Company’s operating
costs and capital requirements under the Hi-Tek Revolver which accrues interest
monthly at 10% per annum with no fixed repayment terms. Hi-Tek Private is under
no obligation to advance funds in the future. Changes in the carrying amount of
the Hi-Tek Revolver for the nine months ended January 31, 2009 and the year
ended April 30, 2008 are:





January
      31,
                    
                    
                    April
      30,2009
                    
                    
                    2008Balance
      at beginning of period
                    
                    $
                    1,120,928
                    
                    
                    $
                    1,025,066Funds advanced
                    
                    
                    -
                    
                    
                    
                    8,230Repayments
                    
                    
                    (68,650
                    )
                    
                    
                    (19,271
                    )Interest
accrued
                    
                    
                    82,741
                    
                    
                    
                    106,903Balance
      at end of period
                    
                    $
                    1,135,019
                    
                    
                    $
                    1,120,928





Loans
from relate parties at January 31, 2009 and April 30, 2008 consisted of the
following:





January 31,
                                
                                
                                April 30,2009
                                
                                
                                2008Hi-Tek
      Revolver
                                
                                $
                                1,135,019
                                
                                
                                $
                                1,120,928Hi-Tek
      Trademark Loan, net of zero and $82,500discount
      at January 31, 2009 and April 30, 2008
                                
                                
                                452,614
                                
                                
                                
                                337,276Hi-Tek
      IDC Loan
                                
                                
                                716,203
                                
                                
                                
                                663,560TJ
      Notes, net of zero and $180,824 discount atJanuary
      31, 2009 and April 30, 2008
                                
                                
                                2,243,019
                                
                                
                                
                                1,930,933LJ
      Notes, net of zero and $180,825 discount atJanuary
      31, 2009 and April 30, 2008
                                
                                
                                2,243,019
                                
                                
                                
                                1,930,9336,789,874
                                
                                
                                
                                5,983,630Less
      current portion
                                
                                
                                6,789,874
                                
                                
                                
                                5,983,630Balance,
      end of period
                                
                                $
                                -
                                
                                
                                $
                                -




On
October 16, 2006 the Company acquired the rights to the US trademark “Dot VN”
including its logo from Hi-Tek Private for $360,000 (see Note 4) upon the
issuance of a two year convertible note due October 16, 2008 (the “Hi-Tek
Trademark Loan”). The Hi-Tek Trademark Loan converts at the option of the holder
into shares of the Company’s restricted common stock at $1.00 per share and
bears an interest rate of 10% per annum. On October 13, 2008, the Hi-Tek
Trademark Loan was amended to extend the due date to June 30, 2009, with no
other change to the terms of the note (see Note 7).





On May 1,
2007, the Company executed a short-term note with Hi-Tek Private for $600,000
due November 1, 2007 with interest at 10% per annum (the “Hi-Tek IDC Loan”).
Proceeds were used to fund general operations and the initial design services
for the first Internet data center (“IDC”) in Vietnam. On April 30, 2008, the
Hi-Tek IDC Loan was amended to extend the due date to September 1, 2008 with no
other change to the terms. On September 2, 2008, the Hi-Tek IDC Loan was amended
to extend the due date to June 30, 2009 with no other change to the
terms.


19


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





8.
            Loans
      from related party (continued)





On August
1, 2007, the Company executed a convertible note with Mr. Thomas Johnson, the
Company’s Chief Executive Officer and Chairman of the Board of Directors, in the
amount of $1,989,065.78 for unpaid accrued salary, including interest, from
January, 2003 through June, 2007 (the “TJ Note”). The TJ Note had a term of one
year and accrues interest at a rate of 8% per annum. At the election of the
holder, the amount due and owing pursuant to such note may be converted into
shares of the Company’s common stock at a per share price of $1.43 per share
(see Note 7). On August 14, 2008, the Company executed a convertible promissory
note for $2,160,766 due February 15, 2009 plus accrued interest at 8% per annum
with Mr. Johnson (the “TJ New Note”) in exchange for the unpaid TJ Note
(collectively the “TJ Notes”). The terms and conditions of the TJ New Note are
materially the same as the TJ Note that expired August 1, 2008. At the election
of the holder, the amount due and owing pursuant to such note may be converted
into shares of the Company’s common stock at $1.43 per share (the “Conversion
Price”). The Conversion Price shall be adjusted downward in the event Dot VN
issues common stock (or securities exercisable for or convertible into common
stock) at a price below the Conversion Price, to a price equal to such issue
price. On February 15, 2009, the TJ New Note was amended to extend the due date
thirty days to March 17, 2009 with no other change to the terms of the note. On
March 17, 2009, the TJ New Note was amended to extend the due date fourteen days
to March 31, 2009 with no other change to the terms of the Note (see Note
7).





On August
1, 2007, the Company executed a convertible note with Dr. Lee Johnson, the
Company’s President, Chief Technology Officer, and Chief Financial Officer, in
the amount of $1,989,065.78 for unpaid accrued salary, including interest, from
January, 2003 through June, 2007 (the “LJ Note”). The LJ Note had a term of one
year and accrues interest at a rate of 8% per annum. At the election of the
holder, the amount due and owing pursuant to such note may be converted into
shares of the Company’s common stock at a per share price of $1.43 per share
(see Note 7). On August 14, 2008, the Company executed a convertible promissory
note for $2,160,767 due February 15, 2009 plus accrued interest at 8% per annum
with Dr. Lee Johnson (the “LJ New Note”) in exchange for the unpaid LJ Note
(collectively the “LJ Notes”). The terms and conditions of the LJ New Note are
materially the same as the LJ Note that expired August 1, 2008. At the election
of the holder, the amount due and owing pursuant to such note may be converted
into shares of the Company’s common stock at $1.43 per share (the “Conversion
Price”). The Conversion Price shall be adjusted downward in the event Dot VN
issues common stock (or securities exercisable for or convertible into common
stock) at a price below the Conversion Price, to a price equal to such issue
price. On February 15, 2009, the LJ New Note was amended to extend the due date
thirty days to March 17, 2009 with no other change to the terms of the note. On
March 17, 2009, the LJ New Note was amended to extend the due date fourteen days
to March 31, 2009 with no other change to the terms of the Note (see Note
7).





9.
            Short-term
      debt





As of
January 31, 2009 and April 30, 2008, short-term debt consists of the
following:





January 31,
                    
                    
                    April 30,2009
                    
                    
                    2008IDCG
      SA de CV
                    
                    $
                    1,368,101
                    
                    
                    $
                    746,000Convertible
      Notes 2, net of zero and
      $427,767discount
      at January 31, 2009 and April 30, 2008
                    
                    
                    949,500
                    
                    
                    
                    735,009Convertible
      Note 3, net of zero and
      $6,643 discountat
      January 31, 2009 and April 30, 2008
                    
                    
                    104,855
                    
                    
                    
                    92,076Aussy
      Manuhu
                    
                    
                    260,523
                    
                    
                    
                    252,573Darron
      Raymond Rishwain Living Trust
                    
                    
                    270,283
                    
                    
                    
                    250,417John
      T. Butler, IRA
                    
                    
                    74,846
                    
                    
                    
                    -Tupou
      U. Kaho, IRA
                    
                    
                    53,462
                    
                    
                    
                    -Balance
      at end of period
                    
                    $
                    3,081,570
                    
                    
                    $
                    2,076,075








On
September 14, 2007, the Company executed a promissory note with Vina Mex
Capital, a California limited liability company, for $700,000 due November 14,
2007. Interest accrues monthly at a rate of 10% per annum (the “Vina Mex 1st Loan”).
Proceeds were used to fund general operations and the initial design services
for the first IDC in Vietnam. On April 30, 2008, the Vina Mex 1st Loan
was amended to extend the due date to September 1, 2008 with no other


20




Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009




9.
            Short-term
      debt (continued)





change to
the terms. On September 2, 2008, the Vina Mex 1st Loan
was amended to extend the due date to June 30, 2009 with no other change to the
terms. On February 3, 2009 Vina Mex Capital assigned, without recourse, the Vina
Mex 1st Loan to
IDCG SA de CV, a corporation established under the laws of the Country of
Mexico.





On
September 16, 2008, the Company executed a promissory note with Vina Mex
Capital, for $200,000 due March 31, 2009. Interest accrues monthly at a rate of
10% per annum (the “Vina Mex 2nd Loan”).
Proceeds were primarily used to fund the initial Dot VN Danang payment on the
Sublease Agreement pursuant to which Dot VN Danang leases approximately 8,768
square meters of land in the Danang Industrial Zone in Danang, Vietnam, for the
express purpose of building an Internet data center and related uses, for a term
of approximately 35-years. On February 3, 2009 Vina Mex Capital assigned,
without recourse, the Vina Mex 2nd Loan to
IDCG SA de CV.





On
October 17, 2008, the Company executed a promissory note with Vina Mex Capital,
for $100,000 due September 17, 2009. Interest accrues monthly at a rate of 10%
per annum (the “Vina Mex 3rd Loan”).
Proceeds were used to fund general operations. On February 3, 2009 Vina Mex
Capital assigned, without recourse, the Vina Mex 3rd Loan to
IDCG SA de CV.





On March
29, 2008, the Company executed a promissory note with Ms. Aussy Manuhu for
$250,000 due March 30, 2009. Interest accrues monthly at a rate of 10% per annum
(the “Aussy Note”). Proceeds were used to fund general operations. On October
31, 2008, the Company issued 11,667 restricted shares of the Company’s Common
Stock valued at the market close and recorded as an $11,784 payment on the Aussy
Note. On March 4, 2009, the Company and Ms. Manuhu modified the terms of the
Aussy Note to i) extend the due date to September 30, 2009 and ii) allow the
Company, at its option, to make partial payments of accrued interest and/or
principal during the term of the Note with limitation or penalty.





On April
26, 2008, the Company executed a promissory note with Mr. Darron Raymond
Rishwain, trustee of the Darron Raymond Rishwain Living Trust for $250,000 due
March 30, 2009. Interest accrues monthly at a rate of 10% per annum. Proceeds
were used to fund general operations.





On June
1, 2008, the Company executed a promissory note with the Equity Trust Company,
custodian FBO John T. Butler, IRA for $70,000 due June 1, 2009. Interest accrues
monthly at a rate of 10% per annum. Proceeds were used to fund general
operations.





On June
1, 2008, the Company executed a promissory note with the Equity Trust Company,
custodian FBO Tupou U. Kaho, IRA for $50,000 due June 1, 2009. Interest accrues
monthly at a rate of 10% per annum. Proceeds were used to fund general
operations.





On
December 1, 2008, the Company executed a promissory note with IDCG SA de CV, a
corporation established under the laws of the Country of Mexico, for $50,000 due
November 30, 2009. Interest accrues monthly at a rate of 10% per annum. Proceeds
were used to fund general operations.





On
December 19, 2008, the Company executed a promissory note with IDCG SA de CV for
$100,000 due November 30, 2009. Interest accrues monthly at a rate of 10% per
annum. Proceeds were used to fund general operations.





On
January 27, 2009, the Company executed a promissory note with IDCG SA de CV for
$100,000 due November 30, 2009. Interest accrues monthly at a rate of 10% per
annum. Proceeds were used to fund general operations.


21


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





10.
            Accrued
      liabilities





Accrued
liabilities at January 31, 2009, and April 30, 2008 consisted of the
following:





January 31,
                  
                  
                  April 30,2009
                  
                  
                  2008Officer
      salaries
                  
                  $
                  1,323,428
                  
                  
                  $
                  703,609Other
      payroll accruals
                  
                  
                  16,289
                  
                  
                  
                  21,929Liquidated
      damages
                  
                  
                  91,941
                  
                  
                  
                  57,509Other
      accrued liabilities
                  
                  
                  27,649
                  
                  
                  
                  25,636Total
      accrued liabilities
                  
                  $
                  1,459,307
                  
                  
                  $
                  808,683





As of
January 31, 2009 and April 30, 2008, the Company has unpaid salaries and accrued
interest owed to officers of $1,323,428 and $703,609, respectively. The unpaid
salaries bear interest at a rate of 10 percent per annum. As of January 31, 2009
and April 30, 2008, accrued interest on the salaries was $113,705 and $42,886,
respectively. On August 1, 2007, the Company executed convertible notes with Mr.
Thomas Johnson and Dr. Lee Johnson each in the amount of $1,989,066 for unpaid
salary, including interest, accrued through June, 2007 (see Notes 7 and
8).





On
February 9, 2007, in connection with the February Debentures, the Company
executed an investor’s registration rights agreement (the “IRRA”) by and between
the February Investors participating in the February Debentures and the Company
(see Note 7). Pursuant to the terms of the IRRA as amended on August 10, 2007,
the February Investors shall be entitled to liquidated damages equal to One
Percent (1%) of the outstanding convertible debentures issued in the February
Debentures (the “Liquidated Damages”) for every thirty (30) day period that the
registration statement is not declared effective by December 14, 2007 (the
“Effectiveness Deadline”), limited to a total of ten such 30-day periods. On
September 21, 2007 the February Investors were paid one such thirty day period
as a condition of the August 10, 2007 IRRA amendment. As of October 9, 2008, the
February Investors are owed for the remaining nine such thirty day periods
($103,441). On January 31, 2009, the company issued an aggregate of 15,300
restricted shares of the Company’s Common Stock to four February Investors in
satisfaction of their Liquidated Damages recorded as an $11,500 payment of
accrued Liquidated Damages and $2,117 of additional Liquidated Damage expense
based on the market close.





11.
            Related
      party transactions





On August
2, 2006, the Company issued to Thomas Johnson, 4,000,000 shares of the Company’s
restricted common stock valued at $40,000 as additional
compensation.




On August
3, 2006, the Company issued to Lee Johnson, 4,000,000 shares of the Company’s
restricted common stock valued at $40,000 as additional
compensation.





On
October 16, 2006, the Company entered into an agreement whereby it acquired
certain intellectual property from Hi-Tek Private (see Notes 4, 7 and 8).
Included within the assets acquired by the Company are the rights to the
trademark “Dot VN” in the United States including its logo and certain related
domain names (the “Dot VN US Trademark”). Pursuant to the acquisition of the Dot
VN US Trademark, the Company executed a convertible promissory note in the
amount of $360,000 (the “Hi-Tek Trademark Loan”). The Hi-Tek Trademark Loan, at
the election of the holder, may convert the balance due and owing at the time of
conversion into restricted shares of the Company’s Common Stock at a per share
price of $1.00 per share. The Hi-Tek Trademark Loan accrues interest at a rate
of 10% per annum and was due two years from the date of execution. On October
13, 2008, the Hi-Tek Trademark Loan was amended to extend the due date to June
30, 2009, with no other change to the terms of the note (see Note
8).





On August
7, 2007, the Company issued an aggregate of 233,334 shares of the Company’s
restricted common stock valued at $420,001 as additional compensation to Thomas
Johnson (116,667 shares) and Lee Johnson (116,667 shares).


22


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





11.
            Related
      party transactions (continued)





Employment
Agreements





Dr. Lee
Johnson and Mr. Thomas Johnson have entered into employment agreements with the
Company, for which the Company has accrued unpaid Salaries.





On July
18, 2006, at the completion of the Malers Merger, Dr. Lee Johnson and Mr. Thomas
Johnson were appointed to the Board of Directors of the Company. In addition,
Mr. Thomas Johnson was elected to serve as Chairman of the Board of
Directors





On
October 8, 2006, Dr. Lee Johnson’s employment agreement was approved by the
Board of Directors., making him the President, Chief Technical Officer, and
Chief Financial Officer. Pursuant to the terms of the employment agreement, Dr.
Lee Johnson shall receive an annual salary of Three Hundred Sixty Thousand
Dollars ($360,000) and shall receive stock options totaling in the aggregate
3,600,000 shares and are exercisable, at a per share price of $0.50, into shares
of the Company’s common stock (the “LJ Employment Options”). The LJ Employment
Options shall vest one third at the date of grant and one third at the end of
the first and second year from the date of grant and expire ten years from the
date of vesting. Dr. Johnson is also eligible to receive additional equity and
cash bonuses in connection with the successful performance of his
duties.





As
President, CTO, and CFO, Dr. Lee Johnson shall serve as such until the earlier
of (i) his resignation, (ii) appointment of his successor or (iii) his
termination. As a director of the Company, he shall serve until the earlier of
(i) his resignation, (ii) election of his successor or (iii) his removal by the
shareholders of the Company.





On
October 9, 2006, Mr. Thomas Johnson’s employment agreement was approved by the
Board of Directors, making him the Chief Executive Officer. Pursuant to the
terms of the employment agreement, Mr. Johnson shall receive an annual salary of
Three Hundred Sixty Thousand Dollars ($360,000) and shall receive stock options
totaling in the aggregate 3,600,000 shares; such shares are exercisable, at a
per share price of $0.50, into shares of the Company’s common stock (the “TJ
Employment Options”). The TJ Employment Options shall vest one third at the date
of grant and one third at the end of the first and second year from the date of
grant and expire ten years from the date of vesting. Mr. Johnson is also
eligible to receive additional equity and cash bonuses in connection with the
successful performance of his duties.





As CEO,
Mr. Thomas Johnson shall serve as such until the earlier of (i) his resignation,
(ii) appointment of his successor or (iii) his termination. As a director of the
Company, he shall serve until the earlier of (i) his resignation, (ii) election
of his successor or (iii) his removal by the shareholders of the
Company.





As stated
previously, the above referenced employment agreements contained an aggregate of
7,200,000 stock options, of which an aggregate 7,200,000 have vested and none
are exercised. As the October 2006, employment agreements provided for the
options to be purchased at below the Company’s market price on the date of
grant, the Company has recorded Option bonuses relating to these options of
$1,299,900 and $5,719,392 for the nine months ended January 31, 2009 and year
ended April 30, 2008, respectively, in accordance with FASB Statement of
Financial Accounting Standards (“SFAS”) No 123R (“SFAS 123R”) (see Note
12).





On August
1, 2007, the Company executed a convertible note with Dr. Lee Johnson in the
amount of $1,989,065.78 for unpaid accrued salary, including interest, through
June, 2007 (the “LJ Note”). The LJ Note had a term of one year and accrues
interest at a rate of 8% per annum. On August 14, 2008, the Company executed a
convertible promissory note for $2,160,767 due February 15, 2009 plus accrued
interest at 8% per annum with Dr. Lee Johnson (the “LJ New Note”) in exchange
for the unpaid LJ Note. The terms and conditions of the LJ New Note are
materially the same as the LJ Note that expired August 1, 2008. At the election
of the holder, the amount due and owing pursuant to such note may be converted
into shares of the Company’s common stock at $1.43 per share (the “Conversion
Price”). The Conversion Price shall be adjusted downward in the event Dot VN
issues common stock (or securities exercisable for or convertible into common
stock) at a price below the Conversion Price, to a price equal to such issue
price. On February 15, 2009, the LJ New Note was amended to extend the due date
thirty days to March 17, 2009 with no other change to the terms of the note. On
March 17, 2009, the LJ New Note was amended to extend the due date fourteen days
to March 31, 2009 with no other change to the terms of the Note (see Note
7).


23


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





11.
            Related
      party transactions (continued)





On August
1, 2007, the Company executed a convertible note with Mr. Thomas Johnson in the
amount of $1,989,065.78 for unpaid accrued salary, including interest, through
June, 2007 (the “TJ Note”). The TJ Note had a term of one year and accrues
interest at a rate of 8% per annum. On August 14, 2008, the Company executed a
convertible promissory note for $2,160,767 due February 15, 2009 plus accrued
interest at 8% per annum with Mr. Johnson (the “TJ New Note”) in exchange for
the unpaid TJ Note. The terms and conditions of the TJ New Note are materially
the same as the TJ Note that expired August 1, 2008. At the election of the
holder, the amount due and owing pursuant to such note may be converted into
shares of the Company’s common stock at $1.43 per share (the “Conversion
Price”). The Conversion Price shall be adjusted downward in the event Dot VN
issues common stock (or securities exercisable for or convertible into common
stock) at a price below the Conversion Price, to a price equal to such issue
price. On February 15, 2009, the TJ New Note was amended to extend the due date
thirty days to March 17, 2009 with no other change to the terms of the note. On
March 17, 2009, the TJ New Note was amended to extend the due date fourteen days
to March 31, 2009 with no other change to the terms of the Note (see Note
7).





12.
            Warrants,
      options and stock based
compensation





On July
18, 2006, the Company issued two warrants exercisable into an aggregate of
500,000 restricted shares of the Company’s Common Stock with an estimated fair
value of $1,366,625 to Sausalito Capital Partners, LLC with such terms as
follows; (i) one warrant, with a two year term, exercisable into 250,000 shares
at exercise price of $2.00 per share; and (ii) one warrant, with a two year
term, exercisable into 250,000 shares at exercise price of $3.00 per share. The
value of the warrants was expensed at the time of issuance; on July 18, 2008,
the warrants expired unexercised.





The fair
value of these warrants was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 220.3%; risk-free interest rate of 5.19%; contractual life of two
years; and a closing market price of $3.00. The warrant holder received
piggy-back registration rights if the Company was to file a Form S-1 or SB-2
during the term of the warrants. Expected volatility is calculated based on the
historic Friday stock market closing price from the first week the Company was
publically traded over the counter on the Pink Sheets to the date of grant, a
sixty-one week period, in accordance with SFAS 123R implementation guidance
provided in paragraph 32(c) of appendix A.





On
September 1, 2006, the Company issued two warrants exercisable into an aggregate
of 5,100,000 restricted shares of the Company’s Common Stock in exchange for and
cancellation of a like number of five cent warrants that would have expired on
December 31, 2006. The new warrants have a three year term and an exercise price
of $2.00 per share. The fair value of the warrant modification was zero; the
fair value of the modified warrants at the date of grant ($14,640,318) was less
than the fair value of the cancelled warrants immediately before the terms were
modified ($15,049,512). As of January 31, 2009, no warrants were
exercised.





The fair
value of these warrants was estimated at the date of the grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 219.7%; risk-free interest rate of 5.02% and 4.70%; contractual
life of four months (remaining) and three years; and a closing market price of
$3.00, respectively for the cancelled warrants and the new warrants issued.
Expected volatility is calculated based on the historic Friday stock market
closing price of the preceding sixty-seven week period (from Pink Sheet
inception).





On
October 9, 2006, the Company issued options to purchase an aggregate of
7,650,000 restricted shares of the Company’s Common Stock with an estimated fair
value of $19,886,786 to three officers (see Note 11) and an employee. The
options have an exercise price of $0.50 per share, vest one third at the date of
grant and one third at the end of the first and second year from the date of
grant and expire ten years from the date of vesting. As of January 31, 2009,
7,650,000 options have vested and no options were exercised. Compensation cost,
using the graded vesting attribute method in accordance with SFAS 123R, is
recognized over the requisite service period during which each tranche (one
third) of shares is earned (zero, one, and two years). The value of each tranche
is amortized on a straight-line basis; $1,381,145 and $6,076,853 were expensed
during the nine months ended January 31, 2009 and the year ended April 30, 2008,
respectively. Amortization for the year ending April 30, 2009 will be
$1,381,145. As of January 31, 2009, no options were exercised.


24


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





12.
            Warrants,
      options and stock based compensation
(continued)





The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 212.1%; risk-free interest rate of 4.70%; contractual life of ten
years; and a closing market price of $2.60. Expected volatility is calculated
based on the historic Friday stock market closing price of the preceding
seventy-three week period (from Pink Sheet inception).





In
connection with the February Debentures (see Note 7), the Company issued
detachable warrants to the investors exercisable into an aggregate 344,465
restricted shares of the Company’s Common Stock at a per share price of $2.00,
with an estimated fair value of $901,632. The warrants have a term of five years
from the date of issuance. The combined fair value of the warrants and the
associated beneficial conversation feature of the Convertible Debentures are
limited to the proceeds of the debt; $259,954 was allocated to the warrants.
These warrants have been recorded as a discount against the Convertible
Debentures and will be amortized to interest expense over the term of the debt
(generally two years) or upon the earlier conversion of the debt; the
unamortized balance at January 31, 2009 was zero. As of January 31, 2009, no
warrants were exercised.





Additionally,
pursuant to its engagement of Pali Capital, Inc., the Company’s placement agent
in the February Debentures, the Company issued three series of warrants: (i)
Pali Retainer Warrants issued on January 31, 2007 totaling in the aggregate
250,000 restricted shares exercisable at a per share price of $0.001, with an
estimated fair value of $712,404; (ii) Pali Placement Warrants A issued on
February 9, 2007 totaling in the aggregate 229,600 restricted shares exercisable
at a per share price of $1.00, with an estimated fair value of $563,640; and
(iii) Pali Placement Warrants B issued on February 9, 2007 totaling in the
aggregate 68,880 restricted shares exercisable at a per share price of $2.00,
with an estimated fair value of $167,700 (collectively the “Pali Placement Agent
Warrants”). The Pali Placement Agent Warrants have a term of five years from the
date of issuance. The retainer warrants were expensed over the one year
engagement term and the two placement warrants will be expensed over the two
year term of the February Debentures or upon the earlier election to exercise;
the unamortized balance of the two placement warrants at January 31, 2009 was
zero. As of January 31, 2009, 53,250 $0.001 Pali Retainer Warrants and 42,180
$1.00 Pali Placement Warrants A have been exercised. In addition, the Company
agreed to register the shares associated with the Pali Placement Agent Warrants
in the registration statement required in connection with the February
Debentures (see Note 7).





The fair
value of these warrants was estimated at January 31 and February 9, 2007 (the
dates of grant) using the Black-Scholes option-pricing model with dividend yield
of 0%; expected volatility of 192.8% and 190.7%; risk-free interest rate of
4.82% and 4.78%; contractual life of five years; and a closing market price of
$2.85 and $2.50; respectively. Expected volatility is calculated based on the
historic Friday stock market closing price of the preceding eighty-nine and
ninety-one week periods (from Pink Sheet inception).





The
Company issued a series of six monthly warrants exercisable into 40,000
restricted shares of the Company’s Common Stock on July 5, August 5, September
5, October 5, November 5, and December 5, 2007 for an aggregate of 240,000
restricted shares to Double Barrel, LLC for monthly performance of services,
with an estimated fair value of $73,086, $58,021, $66,771, $77,954, $67,900, and
$63,845 respectively. Each warrant is exercisable at $1.50 per share and expires
three years from the date of grant. The warrants are earned in the month of
grant and the fair value is expensed in the month; there is no unamortized
balance at January 31, 2009. As of January 31, 2009, no warrants were
exercised.





The fair
value of these warrants were estimated at the dates of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 188.7%, 184.7%, 181.7%, 179.5%; 176.1%, and 174.9%, risk-free
interest rate of 5.00%, 4.45%, 4.05%, 4.16%, 3.71%, and 2.91%; contractual life
of three years; and a closing market price of $1.99, $1.61, $1.85, $2.15, $1.90,
and $1.80; respectively. Expected volatility is calculated based on the historic
Friday stock market closing price of the preceding 111 week, 116 week, 120 week,
125 week, 130 week, 133 week periods (from Pink Sheet inception).





On August
7, 2007, the Company issued options to purchase an aggregate of 350,000
restricted shares of the Company’s Common Stock with an estimated fair value of
$628,847 to an officer (Louis Huynh) and an employee. The options have an
exercise price of $1.80 per share, vest one third at the date of grant and one
third at the end of the first and second year from the date of grant and expire
ten years from the date of vesting. On January 15, 2009, 150,000 options expired
unexercised upon an employee’s termination. As of January 31, 2009, 133,334
options have vested and no options were exercised. Compensation cost, using the
graded vesting attribute method in accordance with SFAS 123R, is recognized over
the requisite service period during which each tranche (one third) of shares is
earned (zero, one, and two years). The value of each tranche is amortized on a
straight-line basis; $131,080 was expensed in the nine months ended January 31,
2009. Amortization for the years ending April 30, 2009, and 2010 will be
$144,192, and $14,984, respectively.





25





Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





12.
            Warrants,
      options and stock based compensation
(continued)





The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 184.7%; risk-free interest rate of 4.77%; contractual life of ten
years; and a closing market price of $1.80. Expected volatility is calculated
based on the historic Friday stock market closing price of the preceding 116
week period (from Pink Sheet inception).





On
September 7, 2007, the Company issued options to purchase 10,000 restricted
shares of the Company’s Common Stock with an estimated fair value of $16,400 to
an employee. The options have an exercise price of $2.00 per share, vest at the
date of grant and expire three years from the grant date. As of January 31,
2009, 10,000 options have vested and no options were exercised. Compensation
cost, in accordance with SFAS 123R, was recognized over the requisite service
period (date of grant).





The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 181.2%; risk-free interest rate of 4.38%; contractual life of
three years; and a closing market price of $1.85. Expected volatility is
calculated based on the historic Friday stock market closing price of the
preceding 121 week period (from Pink Sheet inception).





On
September 18, 2007, the Company issued a 200,000 share warrant pursuant to the
terms of a consulting agreement exercisable into restricted shares of the
Company’s Common Stock with an estimated fair value of $275,312 to IR.VN, LLC
with a three year term and an exercise price of $2.00 per share. The value of
the warrants will be expensed over the one year term of service; there is no
unamortized balance at January 31, 2009. As of January 31, 2009, no warrants
were exercised.





The fair
value of these warrants was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 181.5%; risk-free interest rate of 4.04%; contractual life of two
years; and a closing market price of $1.57. Expected volatility is calculated
based on the historic Friday stock market closing price of the preceding 122
week period (from Pink Sheet inception).





On
October 14, 2007, the Company issued options to purchase 150,000 restricted
shares of the Company’s Common Stock with an estimated fair value of $306,777 to
Michael Weller, an officer of the Company. The options had an exercise price of
$1.80 per share, vest one third at the end of the first, second, and third year
from the date of grant and expire three years from the date of vesting.
Compensation cost, using the graded vesting attribute method in accordance with
SFAS 123R, is recognized over the requisite service period during which each
tranche (one third) of shares is earned (one, two, and three years), with the
value of each tranche amortized on a straight-line basis. On May 15, 2008, the
Company’s Employment Agreement with Michael Weller was terminated, as a
consequence, the unvested options to purchase 150,000 common shares of the
Company’s stock were extinguished. Prior to termination of the agreement, $6,394
was expensed in the nine months ended January 31, 2009.





The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 178.8%; risk-free interest rate of 4.70%; contractual life of ten
years; and a closing market price of $2.05. Expected volatility is calculated
based on the historic Friday stock market closing price of the preceding 126
week period (from Pink Sheet inception).





On August
5, 2008, the Company issued options to purchase 75,000 restricted shares of the
Company’s Common Stock with an estimated fair value of $75,561 to an employee.
The options have an exercise price of $1.80 per share, vest one third at the
date of grant and one third on February 14, 2009 and 2010 and expire ten years
from the date of vesting. As of January 31, 2009, 25,000 options have vested and
no options were exercised. Compensation cost, using the graded vesting attribute
method in accordance with SFAS 123R, is recognized over the requisite service
period during which each tranche (one third) of shares
is earned (zero, seven, and nineteen months). The value of each tranche is
amortized on a straight-line basis; $54,711 was expensed during the nine months
ended January 31, 2009. Amortization for the year ending April 30, 2009 will be
$62,291.


26





Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





12.
            Warrants,
      options and stock based compensation
(continued)





The fair
value of these options was estimated at the date of grant using the
Black-Scholes option-pricing model with dividend yield of 0%; expected
volatility of 185.1%; risk-free interest rate of 4.04%; contractual life of ten
years; and a closing market price of $1.01. Expected volatility is calculated
based on the historic Friday stock market closing price of the preceding one
hundred and sixty-seven week period (from Pink Sheet inception).





A summary
of the Company’s stock options as of January 31, 2009 and April 30, 2008 and
changes during the periods is as follows:





Period endedJanuary 31, 2009
                
                
                April 30, 2008Options
                
                
                Weighted
                  average
                  exercise
                  price
                
                
                Weighted
                  average
                  intrinsic
                  value
                  per
      share
                
                
                Options
                
                
                Weighted
                  average
                  exercise
                  price
                
                
                Weighted
                  average
                  intrinsic
                  value
                  per
      shareOutstanding
      at the beginning ofthe
      period
                
                
                8,160,000
                
                
                $
                0.581
                
                
                
                
                
                
                7,650,000
                
                
                $
                0.500Granted
                
                
                75,000
                
                
                $
                1.800
                
                
                
                
                
                
                510,000
                
                
                $
                1.804Exercised
                
                
                -
                
                
                $
                -
                
                
                
                
                
                
                -
                
                
                $
                -Cancelled
                
                
                300,000
                
                
                $
                1.800
                
                
                
                
                
                
                -
                
                
                $
                -Outstanding
      at the end of the period
                
                
                7,935,000
                
                
                $
                0.547
                
                
                $
                2.03
                
                
                
                8,160,000
                
                
                $
                0.581
                
                
                $
                1.97Vested
      at the end of the period
                
                
                7,818,334
                
                
                
                
                
                
                
                
                
                
                
                5,226,667Exercisable
      at the end of period
                
                
                7,818,334
                
                
                
                
                
                
                $
                2.06
                
                
                
                5,226,667
                
                
                
                
                
                
                $
                2.05Weighted
      average fair value peroption
      of options granted duringthe
      period
                
                
                
                
                
                $
                1.007
                
                
                
                
                
                
                
                
                
                
                $
                1.867





The
following table summarizes information regarding employee stock options
outstanding at January 31, 2009:





Options Outstanding
                                                              
                                                              Options ExercisableExercise prices
                                                              
                                                              
                                                              Number
                                                                Outstanding
                                                              
                                                              Weighted
                                                                average
                                                                remaining
                                                                contractual
                                                                life (years)
                                                              
                                                              Weighted
                                                                average
                                                                exercise
                                                                price
                                                              
                                                              Number
                                                                exercisable
                                                              
                                                              Weighted
                                                                average
                                                                remaining
                                                                contractual
                                                                life (years)
                                                              
                                                              Weighted
                                                                average
                                                                exercise
                                                                price$
                                                              0.50
                                                              
                                                              
                                                              7,650,000
                                                              
                                                              8.4
                                                              
                                                              $
                                                              0.500
                                                              
                                                              7,650,000
                                                              
                                                              
                                                              
                                                              $
                                                              0.500$
                                                              1.80
      to 2.00
                                                              
                                                              
                                                              285,000
                                                              
                                                              9.1
                                                              
                                                              $
                                                              1.805
                                                              
                                                              168,334
                                                              
                                                              
                                                              
                                                              $
                                                              1.8077,935,000
                                                              
                                                              8.5
                                                              
                                                              $
                                                              0.547
                                                              
                                                              7,818,334
                                                              
                                                              8.5
                                                              
                                                              $
                                                              0.528





27


Dot VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





12.
            Warrants,
      options and stock based compensation
(continued)





A summary
of the Company’s warrants as of January 31, 2009 and April 30, 2008 and changes
during the periods is as follows:





Period endedJanuary 31, 2009
                          
                          April 30, 2008Warrants
                          
                          Weighted
                            average
                            exercise
                            price
                          
                          Warrants
                          
                          Weighted
                            average
                            exercise
                            priceOutstanding
      at the beginning ofthe
      period
                          
                          6,932,945
                          
                          $
                          1.914
                          
                          6,492,945
                          
                          $
                          1.926Granted
                          
                          -
                          
                          $
                          -
                          
                          440,000
                          
                          $
                          1.727Exercised
                          
                          95,430
                          
                          $
                          0.443
                          
                          -
                          
                          $
                          -Cancelled
                          
                          500,000
                          
                          $
                          2.500
                          
                          -
                          
                          $
                          -Outstanding
      at the end of the period
                          
                          6,337,515
                          
                          $
                          1.890
                          
                          6,932,945
                          
                          $
                          1.914Vest
      and exercisable at the end of period
                          
                          6,337,515
                          
                          
                          
                          
                          6,932,945Weighted
      average fair value peroption
      of warrants granted duringthe
      period
                          
                          
                          
                          $
                          -
                          
                          
                          
                          $
                          1.552





The
following table summarizes information regarding stock purchase warrants
outstanding at January 31, 2009:





Warrants Outstanding
                                    
                                    Warrants ExercisableExercise prices
                                    
                                    Number
                                      Outstanding
                                    
                                    Weighted
                                      average
                                      remaining
                                      contractual
                                      life (years)
                                    
                                    Weighted
                                      average
                                      exercise
                                      price
                                    
                                    Number
                                      exercisable
                                    
                                    Weighted
                                      average
                                      remaining
                                      contractual
                                      life (years)
                                    
                                    Weighted
                                      average
                                      exercise
                                      price$
                                    0.001
                                    
                                    196,750
                                    
                                    3.0
                                    
                                    $
                                    0.001
                                    
                                    196,750
                                    
                                    
                                    
                                    $
                                    0.001$
                                    1.000
                                    
                                    187,420
                                    
                                    3.0
                                    
                                    $
                                    1.000
                                    
                                    187,420
                                    
                                    
                                    
                                    $
                                    1.000$
                                    1.500
                                    
                                    240,000
                                    
                                    1.6
                                    
                                    $
                                    1.500
                                    
                                    240,000
                                    
                                    
                                    
                                    $
                                    1.500$
                                    2.000
                                    
                                    5,713,345
                                    
                                    0.8
                                    
                                    $
                                    2.000
                                    
                                    5,713,345
                                    
                                    
                                    
                                    $
                                    2.0006,337,515
                                    
                                    1.0
                                    
                                    $
                                    1.889
                                    
                                    6, 337,515
                                    
                                    1.0
                                    
                                    $
                                    1.889





13.
            Going
      concern





To date
the Company has had limited revenues due to the early stage of its efforts to
transition into the marketing of its Internet resources. Consequently, the
Company has incurred recurring losses from operations. These factors, as well as
the risks associated with raising capital through the issuance of equity and/or
debt securities creates uncertainty as to the Company’s ability to continue as a
going concern.


28







Dot
VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





13.           Going concern
(continued)





The
Company’s plans to address its going concern issues include:





·
            Increasing
      revenues of its services, specifically its domain names sales, through the
      development and deployment of an application program interface which the
      Company anticipates will increase its reseller network and international
      distribution channels and through direct marketing to existing customers
      both online, via e-mail and direct mailings;·
            Completion
      and Operation of the IDCs and revenue derived from the IDC
      services;·
            Commercialization
      and Deployment of certain new wireless technology; and·
            Raising
      capital through the sale of debt and/or equity
  securities.





There can
be no assurance that the Company will be successful in its efforts to increase
revenues, issue debt and/or equity securities for cash or as payment for
outstanding obligations.  Capital raising efforts may be influenced by
factors outside of the control of the Company, including, but not limited to,
capital market conditions.





The
Company is in various stages of finalizing implementation strategies on a number
of services and is actively attempting to market its services nationally in
Vietnam.  As a result of capital constraints it is uncertain when it
will be able to deploy the application program interface or complete
construction of the IDCs.





14.           Stock
issuances





On June
6, 2008, the Company issued to one employee, a sophisticated purchaser, in
consideration for the execution of Non-Disclosure and Invention Assignment
Agreements 3,000 restricted shares of the Company’s Common Stock valued at the
market close and recorded as a $5,100 bonus.





Also on
June 6, 2008, pursuant to the terms of a February Debentures, the Company issued
to Scott Clark 7,500 restricted shares of the Company’s Common Stock exempt from
registration pursuant to Rule 506 of Regulation D, as amended, in exchange for
the cancellation of Clark’s $7,500 February Debentures upon
conversion.




Additional
on June 6, 2008, pursuant to the terms of the Spot-On Debenture, the Company
issued to Gary Blum 25,000 restricted shares of the Company’s Common Stock
exempt from registration pursuant to Rule 506 of Regulation D, as amended, for
$25,000 recorded as a note receivable due January 31, 2009 plus accrued interest
at 10% per annum.





On June
26, 2008, pursuant to the terms of a Pali Placement Agent Warrants, the Company
issued to Scott Clark (i) 53,250 restricted shares of the Company’s Common Stock
exempt from registration pursuant to Rule 506 of Regulation D, as amended, upon
the exercise of 53,250 $0.001 Pali Retainer Warrants for $53.25 and (ii) 12,051
net restricted shares of the Company’s Common Stock exempt from registration
pursuant to Rule 506 of Regulation D, as amended, upon the cashless exercise of
42,180 $1.00 Pali Placement Warrants A with 30,129 warrant shares surrendered to
cover the exercise price.





On August
1, 2008, pursuant to the terms of a February Debentures, the Company issued to
Tara Roy 50,000 restricted shares of the Company’s Common Stock exempt from
registration pursuant to Rule 506 of Regulation D, as amended, in exchange for
the cancellation of Roy’s $50,000 February Debentures upon
conversion.





On August
6, 2008, pursuant to the terms of a February Debentures, the Company issued to
2030617 Ontario Ltd. (“Ontario”) 21,213 restricted shares of the Company’s
Common Stock exempt from registration pursuant to Rule 506 of Regulation D, as
amended, in exchange for the cancellation of Ontario’s $21,212 February
Debentures upon conversion.





Also on
August 6, 2008, pursuant to the terms of a February Debentures, the Company
issued to Jimmy Sarbh 100,000 restricted shares of the Company’s Common Stock
exempt from registration pursuant to Rule 506 of Regulation D, as amended, in
exchange for the cancellation of Sarbh’s $100,000 February Debentures upon
conversion.





On
September 16, 2008, pursuant to the terms of a consulting agreement, the Company
issued to Mai Liem Truc, a sophisticated purchaser, 1,000 restricted shares of
the Company’s Common Stock for services valued at the market closing price and
recorded as $1,150 in consulting fees.


29







Dot
VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





14.           Stock
issuances (continued)





On
October 29, 2008, pursuant to the terms of a consulting agreement, the Company
issued to Gary Shehorn, a sophisticated purchaser, 1,250 restricted shares of
the Company’s Common Stock for services valued at the market closing price and
recorded as $1,262 in consulting fees.





On
October 31, 2008, the Company issued 11,667 restricted shares of the Company’s
Common Stock to Aussy Manuhu, a sophisticated purchaser, valued at the market
close and recorded as an $11,784 payment on Aussy Note.





On
December 17, 2008, the Company issued to Louis Huynh, an officer, and ten
employees, each a sophisticated purchaser, for yearend bonuses 5,000
and an aggregate of 15,000 restricted shares of the Company’s Common Stock
valued at the market close and recorded as a $2,000 and $6,000 bonuses,
respectively.





On
January 6, 2009, pursuant to the terms of a consulting agreement, the Company
issued to Mai Liem Truc, a sophisticated purchaser, 5,000 restricted shares of
the Company’s Common Stock for services valued at the market closing price and
recorded as $5,050 in consulting fees.





Also on
January 6, 2009, the Company issued to one employee, a sophisticated purchaser,
in consideration for the execution of Non-Disclosure and Invention Assignment
Agreements 3,000 restricted shares of the Company’s Common Stock valued at the
market close and recorded as a $3,750 bonus.





Additional
on January 6, 2009, pursuant to the terms of a consulting agreement, the Company
issued to Kenneth Le, a sophisticated purchaser, 5,000 restricted shares of the
Company’s Common Stock for services valued at the market closing price and
recorded as $3,750 in consulting fees.





On
January 31, 2009, pursuant to the terms of a February Debentures, the Company
issued to Kevin Fisher 12,500 shares of the Company’s Common Stock exempt from
registration pursuant to Rule 506 of Regulation D, as amended, in exchange for
the cancellation of Fisher’s $12,500 February Debentures upon
conversion.  The 12,500 shares were issued without restriction
pursuant to the Company’s S-1 registration statement declared effective August
4, 2008.





Also on
January 31, 2009, pursuant to the terms of the August 10, 2007 investor’s
registration rights agreement amendment (see Note 7), the Company issued to four
February Investors, each a sophisticated purchaser, an aggregate 15,300
restricted shares of the Company’s Common Stock valued at the market closing
price and recorded as an $11,500 payment of accrued Liquidated Damages (see Note
10) and $2,117 of additional Liquidated Damage expense in general and
administrative expenses.





15.           Subsequent events





On
January 31, 2009 the February Debentures matured.  Currently, $949,500
is due the February Investors and the Company is negotiating an extension of the
due date with the February Investors.  On March 10, March 13, and
March 16, 2009, three February Investors agreed to modify the terms of their
February Debentures aggregating $50,000 as follows: (i) the February Debenture
plus the unpaid liquidated damages ($3,375) are combined into a single amortized
term note, (ii) interest accrues from February 1, 2009 at 12% per annum, (iii) a
one-time 15% principal payment will be made in March, and (iv) commencing April
1, 2009, the unpaid balance will be amortized over thirty-five (35) equal
monthly payments.  In addition, warrants equal to 5,338 shares will be
issued with a $2 exercise price expiring on January 31, 2012.





On
February 3, 2009 Vina Mex Capital assigned, without recourse, the Vina Mex
1st
Loan, Vina Mex 2nd Loan,
and Vina Mex 3rd Loan to
IDCG SA de CV, a corporation formed under the laws of Mexico (see Note
9).





On
February 15, 2009, the TJ New Note and the LJ New Note were amended to extend
the due date thirty days to March 17, 2009 with no other change to the terms of
the notes (see Note 7).


30




Dot
VN, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


As
of January 31, 2009





15.           Subsequent events
(continued)





On
February 17, 2009, pursuant to the terms of a Pali Placement Agent Warrants, the
Company issued to Hilary Bergman 10,250 restricted shares of the Company’s
Common Stock exempt from registration pursuant to Rule 506 of Regulation D, as
amended, upon the exercise of 10,250 $0.001 Pali Retainer Warrants for
$10.25.





On
February 28, 2009, the Company executed a promissory note with IDCG SA de CV for
$100,000 due November 30, 2009.  Interest accrues monthly at a rate of
10% per annum.  Proceeds were used to fund general
operations.





On March
4, 2009, the Company and Ms. Manuhu modified the terms of the Aussy Note to i)
extend the due date to September 30, 2009 and ii) allow the Company, at its
option, to make partial payments of accrued interest and/or principal during the
term of the Note with limitation or penalty.





On March
12, 2009, the Company and Quang Trung Software City Development Company, a 100%
State-owned (Vietnamese government) enterprise, (“QTSC”) mutually agreed to
terminate, without penalty, that certain agreement dated January 23, 2008 by and
between QTSC and the Company’s wholly owned subsidiary, Dot VN Limited, a Ho Chi
Minh City Company, to develop an IDC in Ho Chi Minh City, Vietnam located in the
QTSC telecommunications building.






31


ITEM
      2.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS.





The
following information should be read in conjunction with (i) the condensed
consolidated financial statements of Dot VN, Inc. and the notes thereto
appearing elsewhere in this Form 10-Q together with (ii) the more detailed
business information and the April 30, 2008 and 2007 audited consolidated
financial statements and related notes included in the Company’s most recent
Form S-1/A as filed with the Securities and Exchange
Commission.  Statements in this section and elsewhere in this Form
10-Q that are not statements of historical or current fact constitute
“forward-looking statements”.





OVERVIEW





Dot VN,
Inc. (“Dot VN” or the “Company”) was incorporated in the State of Delaware on
May 27, 1998, under the name Trincomali Ltd. (“Trincomali”).  Over the
course of its history, Trincomali underwent additional name changes until
becoming renamed Malers, Inc. on April 28, 2005.  On June 21, 2006,
Malers, Inc. effected a transaction by and among (i) Dot VN, Inc., a California
corporation (“Dot VN CA”), (ii) Malers, Inc., a Delaware corporation (“Malers”)
and (iii) Malers Acquisition Corp. (“MAC”), a Washington corporation and wholly
owned subsidiary of Malers, Inc., the completion of  which transaction
resulted in (w) Malers being renamed “Dot VN, Inc.” a Delaware corporation; (x)
Dot VN CA being renamed “Hi-Tek Multimedia, Inc.” a California corporation; (y)
MAC merging with and into “Hi-Tek Multimedia, Inc.” a California corporation
thereby ending MAC’s corporate existence; and (z) Hi-Tek Multimedia, Inc., a
California corporation, becoming a wholly owned subsidiary of Dot VN, Inc. a
Delaware corporation.





Dot VN is
an Internet and telecommunications company focused on the Vietnamese
market.  The Company intends to apply the benefits of best of breed
technology through strategic partnerships to deploy hardware, software and
wireless solutions in Vietnam.  In order to maximize the benefits the
Company can derive from the technology, the Company also intends:





·
            to
      drive growth in registrations of the Vietnamese ccTLD
  .vn;


·
            to
      build and operate Internet data centers in major city centers in Vietnam;
      and


·
            to
      identify, deploy and commercialize best of breed technologies in Vietnam,
      including but not limited to wireless virtual
  fiber.





Dot VN
has signed agreements with the Vietnamese Internet Network Information Center
(“VNNIC”) to serve as the only domain name registrar empowered to approve domain
names, in real time, online which provides Dot VN with a competitive advantage
vis-à-vis other domain name registrars.  In addition to its domain
registration business, Dot VN is currently in the process of designing an
Internet data centers (“IDC” in the singular or “IDCs” in the plural) which will
serve as an internal data and telecommunications network within the country of
Vietnam.  The IDCs will provide web hosting, collocation and disaster
recovery services as well as serves as the basic infrastructure for additional
Internet and data technologies such as wireless broad brand connectivity,
distance e-learning and e-government projects.  The Company has
secured a 35-year lease for approximately 8,768 square meters of land in the
Danang Industrial Zone in Danang, Vietnam upon which it intends to construct a
dedicated IDC building.  In addition, the Company intends to execute a
material definitive agreement based on the current procedural agreement with
VNNIC to build an IDC in Hanoi, Vietnam, located in the VNNIC
building.  The IDC developments are anticipated to occur in the near
to mid term.  In the long term, the Company intends to develop
additional IDCs in the rest of the Country of Vietnam.  Dot VN will
continue to explore and test, and analyze, new and best of breed technology for
deployment in Vietnam, including but not limited to wireless virtual
fiber.





Going
Concern





To date
the Company has had limited revenues due to the early stage of its efforts to
transition into the marketing of its Internet
resources.  Consequently, the Company has incurred recurring losses
from operations.  These factors, as well as the risks associated with
raising capital through the issuance of equity and/or debt securities creates
uncertainty as to the Company’s ability to continue as a going
concern.





The
Company’s plans to address its going concern issues include:




·
            Increasing
      revenues of its services, specifically its domain names sales, through the
      development and deployment of an application program interface which the
      Company anticipates will increase its reseller network and international
      distribution channels and through direct marketing to existing customers
      both online, via e-mail and direct
mailings;


·
            Completion
      and operation of the IDCs and revenue derived from the IDC
      services;


·
              Commercialization
      and Deployment of certain new wireless technology;
  and


32




·
            Raising
      capital through the sale of debt and/or equity
  securities.




There can
be no assurance that the Company will be successful in its efforts to increase
revenues, issue debt and/or equity securities for cash or as payment for
outstanding obligations.  Capital raising efforts may be influenced by
factors outside of the control of the Company, including, but not limited to,
capital market conditions.





The
Company is in various stages of finalizing implementation strategies on a number
of services and is actively attempting to market its services nationally in
Vietnam.  As a result of capital constraints it is uncertain when it
will be able to start deploy the application program interface or complete
construction of the IDCs.





CRITICAL
ACCOUNTING POLICIES





The
discussion and analysis of our financial condition and results of operations are
based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States (“US GAAP”).  The preparation of these condensed
consolidated financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities.  On an
ongoing basis, we evaluate our estimates based on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources.  Actual results may differ from these estimates under
different assumptions or conditions.  We have identified the policies
below as critical to our business operations and to the understanding of our
financial results:





Basis of
Presentation





The
Company’s condensed consolidated financial statements are prepared using the
accrual method of accounting and include its wholly-owned subsidiaries, which
conforms to US GAAP.  All significant intercompany accounts and
transactions have been eliminated in consolidation.





Revenue
Recognition





We
recognize revenue in accordance with Security and Exchange Commission (“SEC”)
Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial
Statements,” as amended by SAB 101A and 101B and as revised by SAB 104, “Revenue
Recognition” and Emerging Issue Task Force (“EITF”) No. 99-19 “Reporting Revenue
Gross as a Principal Versus Net as an Agent” (“EITF
99-19”).  Accordingly, we recognize revenue and the related costs
when: (1) persuasive evidence of an arrangement exists; (2) delivery and
acceptance has occurred or service has been rendered; (3) the fee is fixed
or determinable; and (4) collectability of the resulting receivable is
reasonably assured.





The
Company principally generates revenues from the sale of ccTLD domain names (.vn)
for the government of Vietnam.  These revenues consist primarily of
registration and renewal fees, which are recorded gross in accordance with EITF
99-19.





Amounts
invoiced or collected in advance of delivery or providing service are recorded
as a deferred revenue liability; revenue is recognized when the domain names are
authorized and released to the customer.





Stock-Based
Compensation





Financial
Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards
(“SFAS”) No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”) replaces
SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”) and
supersedes Accounting Principles Board (“APB”) Opinion No. 25 “Accounting for
Stock Issued to Employees” (“APB 25”).  SFAS 123R requires that the
cost resulting from all share-based transactions be recorded in the financial
statements and establishes fair value as the measurement objective for
share-based payment transactions with employees and acquired goods or services
from non-employees.  Prior to the May 1, 2005 (fiscal year 2006)
adoption of SFAS 123R, the Company applied SFAS 123, which provided for the use
of a fair value based method of accounting for stock-based
compensation.  However, SFAS 123 allowed the measurement of
compensation cost for stock options granted to employees using the intrinsic
value method of accounting prescribed by APB 25, which only required charges to
compensation expense for the excess, if any, of the fair value of the underlying
stock at the date a stock option is granted (or at an appropriate subsequent
measurement date) over the amount the employee must pay to acquire the
stock.  Prior to fiscal year 2006, the Company had elected to account
for employee stock options using the intrinsic value method under APB 25 and
provided, as required by SFAS 123, pro forma footnote disclosures of net loss as
if a fair value based method of accounting had been applied.


33





The
Company adopted 123R in accordance with the modified retrospective application
and has restated the consolidated financial statements from the beginning of
fiscal year 2006 for the impact of 123R.  Under this transition
method, stock-based compensation expense in fiscal year 2006 included
stock-based compensation expense for all share-based payment awards granted
prior to, but not yet vested as of May 1, 2005, based on the grant-date fair
value estimated in accordance with the original provision of SFAS
123.  Stock-based compensation expense for all share-based payment
awards granted after May 1, 2005 is based on the grant-date fair value estimated
in accordance with the provisions of SFAS 123R.  The Company
recognizes these compensation costs on a straight-line basis over the requisite
service period of the award, which is generally the option vesting term of two
years.





Foreign Currency
Translation





The
functional currency of the Company’s Vietnam subsidiaries is the applicable
local currency.  The functional currency is translated into U.S.
dollars for balance sheet accounts using current exchange rates in effect as of
the balance sheet date and for revenue and expense accounts and cash flow items
using a weighted-average exchange rate during the reporting
period.  Adjustments resulting from translation are included in
accumulated comprehensive income (loss), a separate component of shareholders’
equity (deficit).  Gains or losses resulting from transactions
denominated in foreign currencies are included in other income and expense, net
in the consolidated statements of operations.





Use of
Estimates





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of revenues and
expenses during the reporting periods presented.  Actual results could
differ from those estimates or assumptions.





Significant
estimates made by management are, realizability of fixed assets and long-lived
assets, income taxes, stock option and warrant valuation, and accounts
receivable.  The Company bases our estimates on our limited historical
experience and various other assumptions we believe to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying value of assets and liabilities that are not readily apparent from
other sources and, where necessary, makes adjustments
prospectively.





As the
Company is entering into a new market it is difficult to estimate if its
investments in long term assets will be realizable in the future.  The
Company’s assumptions, in part, include an evaluation of Internet growth within
Vietnam and its acceptance and availability to the population (less than 4% of
the population in December 2003 to 20% by November 2007), the country’s economic
growth rate at over 8% per year, and the increasing capital investment from
foreign companies.





The
Company at this time estimates it will be able to fully recover its investment
in intangible assets and has not recognized a charge for
impairment.  The Company’s intangible assets consist of its US
trademark ($360,000) and Vietnam trademark ($662,336) which could be subject to
impairment in the future if the assumptions noted above change
adversely.





At this
time, the Company has suffered losses so it has not recorded any deferred tax
assets.





The
Company estimates the useful life of its fixed assets to be generally three to
five years for assets purchased new and two to three years for assets purchased
used and has made no changes to the depreciation life of its fixed
assets.  At January 31, 2009 net fixed assets to be recovered in the
future are $709,892.





The
Company estimates the fair value of stock-based transactions (options and
warrants) using a Black-Sholes option pricing model which requires the Company
to estimate the market volatility of our common stock among other input
variables.  The Company calculates market volatility based on the
historic Friday stock market closing price from the first week the Company was
publically traded over the counter on the Pink Sheets to the specific date of
the grant in accordance with SFAS 123R implementation guidance provided in
paragraph 32(c) of appendix A.  Based on the Pink Sheet trading
history of our common stock the market volatility has ranged from 230% (61
weekly data points) to 174% (133 weekly data points).  The future
market volatility of our common stock could continue to fluctuate which will
impact the fair value of future stock-based transactions.





Management
reviews its estimates on a quarterly basis and, where necessary, makes
adjustments prospectively.





34




Concentration of
Risks





The
Company derives the majority of its revenues from the registration of country
code top level domain names (“ccTLD”) for the Vietnamese Ministry of Information
and Communications under a contract with the Vietnam Internet Network
Information Center (“VNNIC”).  The Company signed its first contract
with VNNIC on September 18, 2003 which has since been renewed
annually.  On January 3, 2006, the Company and VNNIC signed a new
contract for registration of top level country domain names with no fixed
term.





On
September 28, 2006, the Company and VNNIC signed a procedural agreement, with a
profit sharing component, for the design, construction, and operation of an IDC
in Hanoi, Vietnam with a fifty year term.  VNNIC will provide four
finished floors (approximately 10,000 square feet) rent free for ten years
within a facility under construction.  In exchange the Company will
design and construction the IDC, acquire the equipment (hardware and software),
and manage the operation.





In the
event of a change in the business conditions within Vietnam; enactment,
application or interpretation of any law in Vietnam the effect of which is to
nationalize or expropriate or enforce disposal the Company’s assets within
Vietnam; or a change in the Company’s contractual relationship with VNNIC the
Company could be adversely affected.





On
January 31 and February 9, 2007 the Company issued a series of convertible
debentures for an aggregate of $1,148,212 due January 31, 2009 (the “February
Debentures”).  The debentures convert at the option of each individual
noteholder (the “February Investors”) into restricted shares of the Company’s
Common Stock at $1.00 per share.  The February Debentures was funded
in conjunction with a like amount of convertible debentures issued concurrently
by Spot-On Networks, LLC (“Spot-On”) to the February Investors (the “Spot-On
Debenture”).  The February Debentures terms required that the
convertible debentures issued by Spot-On be convertible into either membership
units of Spot-On Networks, LLC or common stock of the Company (the “Spot-On
Conversion”), at the option of the February Investors.  Upon the
February Investors’ election to convert a Spot-On Debenture into the Company’s
common stock the Spot-On Debenture is assigned and transferred into the name of
the Company (the “Assigned Spot-On Debentures”) at which time the Company issues
the Common Stock and records a note receivable.  Future monthly
interest payments, at 10% per annum, are accrued for the benefit of the
Company.  On January 31, 2009, at maturity, the Spot-On Conversion
right expired and the Assigned Spot-On Debentures principal and accrued interest
was due to be paid to the Company by Spot-On.





Spot-On
participated in the February Debentures because, at the time, the Company and
Spot-On contemplated consummating a business combination transaction, such as a
merger, share exchange or acquisition, provided that the Company could obtain a
larger amount of financing, contemplated by the parties to be approximately
$10,000,000.  The Company never obtained a larger amount of financing
and, as a consequence, terms and conditions of the contemplated business
combination transaction by and between the Company and Spot-On were never
negotiated.  The holders of the Spot-On Debentures are the same
persons as the Company’s February Debentures.  No holder of a Spot-On
Debenture, on an as-converted basis, is a beneficial holder of 5% or more of
common stock of the Company.





The
number of February Investors who may convert their Spot-On Debenture into the
Company’s common stock is not known but could total an aggregate of $1,148,212
in principal.  The Company’s ability to collect the Assigned Spot-On
Debentures principal and subsequent accrued interest on January 31, 2009, at
maturity, is dependent on the cash reserves of Spot-On and/or their ability to
raise additional financing.  On January 30, 2009, the Company received
a request from Spot-On to extend the maturity date to March 31,
2009.  The Company is discussing options with Spot-On to receive the
full amount due, with accrued interest, prior to March 31, 2009.





Basic and Diluted Net Loss
Per Share





Net loss
per share is calculated in accordance with SFAS No. 128, “Earnings Per Share”
for the periods presented.  Basic net loss per share is computed using
the weighted average number of common shares outstanding.  Diluted
loss per share has not been presented because the assumed exercise of the
Company’s outstanding options and warrants would be antidilutive during periods
of net loss.  Diluted earnings loss per share is based on the
assumption that all dilutive stock options, warrants, and convertible debt are
converted or exercised by applying the treasury stock method.  Under
this method, options and warrants are assumed exercised at the beginning of the
period (or at the time of issuance, if later), and as if funds obtained thereby
were used to purchase common stock at the average market price during the
period.  Options and/or warrants will have a dilutive effect, during
periods of net profit, only when the average market price of the common stock
during the period exceeds the exercise price of the options and/or
warrants.  There were options to purchase 7,935,000 shares of common
stock and 6,337,515 warrants potentially issuable at January 31, 2009 which were
not included in the computation of net loss per share.


35





Comprehensive Income
(Loss)





Comprehensive
income (loss) is defined as the change in equity (net assets) of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources, and is comprised of “net income (loss)” and “other
comprehensive income (loss).” The Company’s other comprehensive income is
comprised exclusively of changes in the Company’s currency translation
adjustment account.





Cash and Cash
Equivalent





The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.





Fair Value of Financial
Instruments





SFAS No.
107, “Disclosures about Fair Value of Financial Instruments”, requires
disclosure of fair value information about financial instruments when it is
practicable to estimate that value.  The carrying amounts of the
Company’s financial instruments as of January 31, 2009 and April 30, 2008
approximate their respective fair values because of the short-term nature of
these instruments.  Such instruments consist of cash, accounts
receivable, accounts payable, promissory notes, due to related parties, and
accrued liabilities.





Equipment





Equipment
is carried at cost.  Depreciation is computed using a straight-line
method over the estimated useful lives of the depreciable property generally
three to five years for assets purchased new and two to three years for assets
purchased used.  Management evaluates useful lives regularly in order
to determine recoverability taking into consideration current technological
conditions.  Maintenance and repairs are charged to expense as
incurred; additions and betterments are capitalized.  Upon retirement
or disposal of any item of equipment, the cost and related accumulated
depreciation of the disposed assets is removed, and any resulting gain or loss
is credited or charged to operations.





Interest
on borrowings related to eligible capital expenditures is capitalized as part of
the cost of the qualified asset and amortized over the estimated useful life of
the asset in accordance with SFAS No. 34 “Capitalization of Interest
Cost”.





Goodwill and Other
Intangible Assets





Goodwill
and acquired intangible assets determined to have an indefinite useful lives are
not amortized, but instead are evaluated for impairment annually and if events
or changes in circumstances indicate that the carrying amount may not be
recoverable in accordance with SFAS No.142 “Goodwill and Other Intangible
Assets” (“SFAS 142”).  The impairment test consists of a comparison of
the fair value of an intangible asset with its carrying amount.  If
the carrying amount of an intangible asset exceeds its fair value, an impairment
loss is recognized in an amount equal to that excess.  After an
impairment loss is recognized, the adjusted carrying amount of the intangible
asset is its new accounting basis.  Subsequent reversal of a
previously recognized impairment loss is prohibited.  SFAS 142 also
requires that intangible assets with estimable useful lives be amortized over
their respective estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with SFAS No. 144, “Accounting for
Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).





Long-lived
Assets





Long-lived
assets, such as property and equipment and purchased intangibles with finite
lives (subject to amortization), are evaluated for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not
be recoverable in accordance with SFAS 144.  Circumstances which could
trigger a review include, but are not limited to: significant decreases in the
market price of the asset; significant adverse changes in the business climate
or legal factors; accumulation of costs significantly in excess of the amount
originally expected for the acquisition or construction of the asset; current
period cash flow or operating losses combined with a history of losses or a
forecast of continuing losses associated with the use of the asset; and current
expectation that the asset will more likely than not be sold or disposed
significantly before the end of its estimated useful life.





Recoverability
of assets is measured by a comparison of the carrying amount of an asset to
estimated undiscounted future cash flows expected to be generated by an
asset.  If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized as the amount by which the
carrying amount exceeds the estimated fair value of the asset.  The
estimated fair value is determined using a discounted cash flow
analysis.  Any impairment in value is recognized as an expense in the
period when the impairment occurs.





36




Deferred
Charges





The
Company capitalizes costs associated with the issuance of debt instruments as a
non-current asset.  These costs are amortized on a straight-line basis
over the term of the debt instruments.





Convertible
Debt





In
accordance with the provisions of EITF No. 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios” and EITF No. 00-27 “Application of Issue No. 98-5 to Certain
Convertible Instruments” (“EITF 00-27”) the Company evaluates debt securities
(“Debt”) for beneficial conversion features.  A beneficial conversion
feature is present when the conversion price per share is less than the market
value of the common stock at the commitment date.  The intrinsic value
of the feature is then measured as the difference between the conversion price
and the market value (the “Spread”) multiplied by the number of shares into
which the Debt is convertible and is recorded as debt discount with an
offsetting amount increasing additional paid-in-capital.  The debt
discount is accreted to interest expense over the term of the Debt with any
unamortized discount recognized as interest expense upon conversion of the
Debt.  If a debt security contains terms that change upon the
occurrence of a future event the incremental intrinsic value is measured as the
additional number of issuable shares multiplied by the commitment date market
value and is recognized as additional debt discount with an offsetting amount
increasing additional paid-in-capital upon the future event
occurrence.  The total intrinsic value of the feature is limited to
the proceeds allocated to the Debt instrument.





Income
Taxes





Income
taxes are provided in accordance with SFAS No. 109, “Accounting for Income
Taxes” (“SFAS 109”).  Current income tax expense (benefit) is the
amount of income taxes expected to be payable (receivable) for the current
year.  A deferred tax asset and/or liability is computed for both the
expected future impact of differences between the financial statement and tax
bases of assets and liabilities and for the expected future tax benefit to be
derived from tax loss and tax credit carry forwards.  Deferred income
tax expense is generally the net change during the year in the deferred income
tax asset and liability.  Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be “more
likely than not” realized in future tax returns.  Tax rate changes and
changes in tax laws are reflected in income in the period such changes are
enacted.





Guarantees of
Others





FASB
Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”)
requires an initial recognition and measurement of guarantees in which the
guarantor obligation represents a liability, as defined.  FIN 45
excludes the from recognition guarantees which may be settled in equity shares
of the guarantor, at its option, and instead establishes minimum disclosure
requirements.  The Company evaluated FIN 45 and determined that the
Company currently has no guarantees which require recognition of a
liability.





Segment
Information





SFAS No.
131, “Segment Information” (“SFAS 131”), amends the requirements for companies
to report financial and descriptive information about their reportable operating
segments.  Operating segments, as defined in SFAS 131, are components
of an enterprise for which separate financial information is available and is
evaluated regularly by a Company in deciding how to allocate resources and in
assessing performance.  It also establishes standards for related
disclosures about products and services, geographic areas and major
customers.  The Company evaluated SFAS No. 131 and determined that the
Company currently operates in one segment, domain name registration, and will
operate a second segment when it commences future operation of Internet data
centers.


37





RESULTS
OF OPERATIONS





Three
months ended January 31, 2009 compared to three months ended January 31,
2008.





REVENUES





Revenues
of $190,985 for the three months ended January 31, 2009 (the “Current Quarter”)
decreased 8.1% or $16,853 as compared to $207,838 for the three months ended
January 31, 2008 (the “Prior Quarter”).  This decrease from the Prior
Quarter is the result of a small decrease in total number of domain name
registrations processed by the Company (1,797 compared to 1,967 or an 8.6%
decrease when compared to the previous quarter).





During
the Current Quarter, the small decrease in registrations is the net of two
factors (i) new domain name registrations decreased 40% to represent
approximately 27% of total revenues (36% in the Prior Quarter) offset by (ii)
domain name renewals increased 15% to represent approximately 68% of total
revenues (47% in the Prior Quarter).  The average domain name renewal
revenue is less than that for a new domain name.  The balance of the
Company’s revenues come from fees charged to process changes in an existing
domain name record as maintained by VNNIC and other related support services
which decreased from 390 transactions in the Prior Quarter to 87 in the Current
Quarter.





COST OF
REVENUES and GROSS PROFIT





For the
three months ended January 31, 2009, cost of revenues decreased 25.1% to $80,108
compared to $107,001 for the three months ended January 31, 2008, a decrease of
$26,893.  Gross profit was $110,877 or 58.1% (as a percentage of
revenues) for the three months ended January 31, 2009 compared to $100,837 or
48.5% for the three months ended January 31, 2008.  The increase in
gross profit (10.0%) was principally due to the 78% reduction in changes to
existing domain name records during the Current Quarter when compared to the
Prior Quarter.





GENERAL
AND ADMINISTRATIVE EXPENSES





For the
three months ended January 31, 2009, general and administrative expenses, which
includes consulting and professional fees, marketing and promotion, option
bonus, bad debt expense, and other general and administrative, were $583,480
compared to $1,814,975 for the three months ended January 31, 2008, a decrease
of $1,231,495 or 67.9%.  The decrease in total general and
administrative expenses was primarily attributable to the following offsetting
factors:





·
            Option
      Bonus expenses decreased to $39,127 for the three months ended January 31,
      2009, from $945,684 for the three months ended January 31, 2008, a
      decrease of $906,557 or 95.9%.  The decrease results from the
      Company’s application of the graded vesting attribute method, in
      accordance with SFAS 123R, to record compensation costs for stock
      options.  Under this method the Company records compensation
      costs for one third of the fair value at the first vesting date (generally
      the date of grant) and one third during the second vesting period
      (generally one year) and the remaining third during final vesting period
      (generally two years).  In October 2006, the Company issued
      options for an aggregate of 7,650,000 shares with an estimated fair value
      of $19,886,786; during the Prior Quarter $828,686 was expensed compared to
      zero during the Current Quarter, for a decrease of $828,687 in the Current
      Quarter.  During the quarter ending October 31, 2007 the Company
      issued options for an aggregate of 510,000 shares with an estimated fair
      value of $952,025; during the Prior Quarter $116,998 was expensed compared
      to $24,350 during the Current Quarter, for a decrease of $92,648 in the
      Current Quarter.  During August 2008, the Company issued options
      for an aggregate of 75,000 shares with an estimated fair value of $75,561
      resulting in the recording of $14,777 in compensation costs in the Current
      Quarter compared to no expense in the Prior
  Quarter.





·
            Consulting
      and professional fees decreased to $48,888 for the three months ended
      January 31, 2009, from $317,770 for the three months ended January 31,
      2008, a decrease of $268,882 or 84.6%.  The decreased expense is
      the result of both cash fees paid and the amortization of the fair value
      of stock warrants issued for business development and consulting services
      for the Company, the significant items
were:





o
            Consulting
      services decreased to $35,105 for the Current Quarter from $111,317 for
      the Prior Quarter a decrease of $76,212 or 68.5%; in addition to general
      administrative support services the Prior Quarter included additional
      services in support of the audit of two years and general marketing
      services within Vietnam.


o
            Warrants
      for an aggregate of 80,000 shares exercisable at a per share price of
      $1.50, with an estimated fair value of $131,745 were expensed in the Prior
      Quarter as issued.  Also during the Prior Quarter warrants
      issued September 18, 2007, with an estimated fair value of $275,312 and a
      service period of twelve months were amortized with an expense of $68,828
      during the Prior Quarter compared to zero in the Current
      Quarter.


38





·
            Other
      general and administrative expenses decreased to $482,779 for the three
      months ended January 31, 2009 from $543,520 for the three months ended
      January 31, 2008, a decrease of $60,741 or 11.2%.  The decreased
      expense is the net result the following significant
  items:





o
            Employee
      wages and payroll taxes decreased to $319,562 for the Current Quarter from
      $357,461 for the Prior Quarter, a decrease of $37,899 or
      10.6%.


o
            Services
      outsourced in Vietnam to manage the domain name registry increased to
      $30,000 for the Current Quarter from $15,000 for the Prior Quarter, an
      increase of $15,000 or 100.0%.


o
            Travel
      and related expenses decreased to $15,199 for the Current Quarter from
      $43,730 for the Prior Quarter, a decrease of $28,531 or
    65.2%.


o
            Stock
      based payments to employee and advisory board members increased to 27,050
      for the Current Quarter from zero for the Prior
  Quarter.


o
            IR
      and PR expenses decreased to zero for the Current Quarter from $30,000 for
      the Prior Quarter, a decrease of
100%.


o
            Liquidated
      damages on the February Debentures decreased to $2,117 for the Current
      Quarter from $22,964 for the Prior Quarter, a decrease of $20,847 or
      90.8%


o
            All
      other general and administrative expenses increased to $88,851 for the
      Current Quarter from $74,365 for the Prior Quarter, an increase of $14,486
      or 19.5%.





LOSS FROM
OPERATIONS





We
reported a loss from operations of $472,603 for the three months ended January
31, 2009 as compared to a loss from operations of $1,714,138 for the three
months ended January 31, 2008, a decrease of $1,241,535 or 72.4%.  The
decrease is primarily attributed to decreases in option bonus expense ($906,557)
and consulting and professional fees ($268,882).





OTHER
INCOME AND EXPENSES





Total
other income and expense decreased to a net expense of $446,267 for three months
ended January 31, 2009 as compared to a net expense of $1,030,480 for the three
months ended January 31, 2008.  Included in this net expense decrease
of $584,213 or 56.7% are:





·
            Interest
      income decreased to $262 for the three months ended January 31, 2009 as
      compared to interest income of $3,640 for the three months ended January
      31, 2008; the decrease of $3,378 or 92.8% is attributable to a decrease in
      average cash balances.





·
            The
      finance expense was $120,058 for the three months ended January 31, 2009
      as compared to finance expense of $317,117 for the three months ended
      January 31, 2008, a decrease of $197,059 or 62.1%.  The net
      decreased expense is the result of the amortization of both cash fees paid
      and the fair value of stock warrants issued to obtain equity and/or debt
      financing for the Company, the significant items
  were:





o
            Pursuant
      to its engagement of Pali Capital, Inc. (“Pali”), the Company’s placement
      agent in the February Debentures, the Company paid a cash fee equal to 10%
      of the proceeds from the February Debentures ($141,821) which was recorded
      as a deferred debt issuance cost (other noncurrent assets).  The
      fees will be amortized over the approximate two year term of the February
      Debentures with $14,353 amortized in both the Current Quarter and in the
      Prior Quarter.


o
            Additionally,
      pursuant to its engagement of Pali, the Company issued three series of
      warrants: (i) Pali Retainer Warrants totaling in the aggregate 250,000
      shares exercisable at a per share price of $0.001, with an estimated fair
      value of $712,404; (ii) Pali Placement Warrants A totaling in the
      aggregate 229,600 shares exercisable at a per share price of $1.00, with
      an estimated fair value of $563,640; and (iii) Pali Placement Warrants B
      totaling in the aggregate 68,880 shares exercisable at a per share price
      of $2.00, with an aggregate estimated fair value of $167,700 (collectively
      the “Pali Placement Agent Warrants”) recorded as a deferred debt issuance
      cost.  The Pali Placement Agent Warrants have a term of 5 years
      from the date of issuance.  The retainer warrants were expensed
      over the one year engagement term and the two placement warrants will be
      expensed over the approximate two year term of the February
      Debentures.  The Company had no expense for the retainer warrant
      during the three months ended January 31, 2009 compared to $178,101
      expensed in the Prior Quarter.  During the three months ended
      January 31, 2009, the Company expensed $78,474 for the two placement
      warrants compared to $91,417 expensed in the Prior
  Quarter.


39





o
            Warrants
      for an aggregate of 344,465 shares exercisable at a per share price of
      $2.00, with an estimated fair value of $259,954, as allocated, were issued
      to the February Debentures investors which are amortized over the
      approximate two year term of the convertible debt or upon
      conversion.  During the three months ended January 31, 2009, the
      Company expensed $27,231 compared to $33,246 expensed in the Prior
      Quarter.





·
            Interest
      expense decreased by $399,102 or 55.7% for the three months ended January
      31, 2009 to $317,865 as compared to $716,967 for the three months ended
      January 31, 2008 reflecting (i) interest expense on borrowings from
      related parties, short term debt, to include the February Debentures,
      increased $54,377, (ii) accretion of the debt discount associated with the
      February Debentures and other convertible notes decreased $434,627, and
      (iii) a credit of $18,852 for interest capitalized as part of the Internet
      data center construction in progress.  The accretion of debt
      discount decrease results from:





o
            The
      Company issued a series of convertible debentures in the aggregate amount
      of $1,148,212 which are convertible into 1,148,212 shares of the Company’s
      restricted common stock at a per share price of $1.00 which represented a
      beneficial conversion feature with an estimated fair value at inception of
      $888,258, as allocated, which has been recorded as a discount against the
      convertible debentures and will be expensed over the term of the debt or
      upon conversion.  For the three months ended January 31, 2009
      the Company expensed $93,019 of the beneficial conversion feature as
      compared to $111,032 for the three months ended January 31,
      2008.  The combined fair value allocated to the warrants
      (finance expense) and the beneficial conversion features are limited to
      the $1,148,212 proceeds of the
debt.


o
            On
      August 1, 2007, the Company issued a convertible note for previous unpaid
      salaries to Mr. Thomas Johnson ($1,989,066) and Dr. Lee Johnson
      ($1,989,066) which are convertible into shares of the Company’s restricted
      common stock at a per share price of $1.43 which represents a beneficial
      conversion feature with an estimated aggregate fair value at inception of
      $1,446,594 which has been recorded as a discount against the convertible
      notes and will be expensed over the term of the debt or upon
      conversion.  For the three months ended January 31, 2009 the
      Company expensed zero of the beneficial conversion feature as compared to
      $361,649 for the three months ended January 31,
  2008.


o
            Other
      convertible notes issued by the Company with a beneficial conversion
      feature resulted in the expensing of zero beneficial conversion feature
      during the three months ended January 31, 2009 as compared to $54,965 for
      the three months ended January 31,
2008.





·
            Foreign
      exchange loss increased to $8,606 for the three months ended January 31
      2009, from a foreign exchange gain of $34 for the three months ended
      January 31, 2008, an increase of $8,640 or 25,412%.  The
      increase in foreign exchange expense was primarily attributable to the
      commencement of operations in Danang Vietnam with the initial 50%
      prepayment on the 35 year land
lease.





OVERALL





We
reported a net loss for the three months ended January 31, 2009 of $918,870
compared to a net loss for the three months ended January 31, 2008 of
$2,744,618.  This translates to an overall basic and diluted per-share
loss available to shareholders of $0.03 for the three months ended January 31,
2009, compared to basic and diluted per-share loss of $0.10 for the three months
ended January 31, 2008 based on 27,358,671 and 26,822,210 weighted average
common shares outstanding, respectively.





Nine
months ended January 31, 2009 compared to nine months ended January 31,
2008.





REVENUES





Revenues
of $795,336 for the nine months ended January 31, 2009 (the “Current Period”)
increased 5.3% or $40,295 as compared to $755,041 for the nine months ended
January 31, 2008 (the “Prior Period”).  This increase from the Prior
Period is the result of an increase in total number of domain name registrations
processed by the Company (7,493 compared to 6,700 or an 11.8% increase when
compared to the previous period).  The total number of domain names
under registration by the Company at January 31, 2009 increased to 10,349
compared to 8,753 at January 31, 2008 or an 18.2% increase during the twelve
month period.


40





During
the Current Period, the growth in the registration of (i) new domain names
decreased 14% to represent approximately 26% of total revenues (32% in the Prior
Period) and (ii) domain name renewals increased 26% to represent approximately
69% of total revenues (59% in the Prior Period).  The balance of the
Company’s revenues come from fees charged to process changes in an existing
domain name record as maintained by VNNIC and other related support
services.





COST OF
REVENUES and GROSS PROFIT





For the
nine months ended January 31, 2009, cost of revenues increased 2.4% to $335,489
compared to $327,690 for the nine months ended January 31, 2008, an increase of
$7,799.  Gross profit was $459,847 or 57.8% (as a percentage of
revenues) for the nine months ended January 31, 2009 compared to $427,351 or
56.6% for the nine months ended January 31, 2008.  The increase in
gross profit (1.2%) is not significant.





GENERAL
AND ADMINISTRATIVE EXPENSES





For the
nine months ended January 31, 2009, general and administrative expenses, which
includes consulting and professional fees, marketing and promotion, option
bonus, bad debt expense, and other general and administrative, were $3,456,517
compared to $8,746,994 for the nine months ended January 31, 2008, a decrease of
$5,290,477 or 60.5%.  The decrease in total general and administrative
expenses was primarily attributable to the following offsetting
factors:





·
            Option
      Bonus expenses decreased to $1,571,456 for the nine months ended January
      31, 2009, from $5,784,549 for the nine months ended January 31, 2008, a
      decrease of $4,213,093 or 72.8%.  The decrease results from the
      Company’s application of the graded vesting attribute method, in
      accordance with SFAS 123R, to record compensation costs for stock
      options.  Under this method the Company records compensation
      costs for one third of the fair value at the first vesting date (generally
      the date of grant) and one third during the second vesting period
      (generally one year) and the remaining third during the final vesting
      period (generally two years).  In October 2006, the Company
      issued options for an aggregate of 7,650,000 shares with an estimated fair
      value of $19,886,786; during the Prior Period $5,248,167 was expensed
      compared to $1,381,144 during the Current Period, for a decrease of
      $3,867,023 in the Current Period.  During the nine months ending
      January 31, 2008 the Company issued options for an aggregate of 510,000
      shares with an estimated fair value of $952,025; during the Prior Period
      $536,382 was expensed compared to $135,601 during the Current Period, for
      a decrease of $400,781 in the Current Period.   During the
      period ending January 31, 2009 the Company issued options for an aggregate
      of 75,000 shares with an estimated fair value of $75,561resulting in the
      recording of $54,711 in compensation costs in the Current Period compared
      to no expense in the Prior Period.





·
            Consulting
      and professional fees decreased to $231,852 for the nine months ended
      January 31, 2009, from $811,482 for the nine months ended January 31,
      2008, a decrease of $579,630 or 71.4%.  The decreased expense is
      the result of both cash fees paid and the amortization of the fair value
      of stock warrants issued for business development and consulting services
      for the Company, the significant items
were:





o
            Legal
      and accounting fees decreased to $60,976 for the Current Period from
      $77,580 for the Prior Period a decrease of $16,604 or 21.4%.; the Prior
      Period included fees for the audit of two complete years compared to the
      Current Period fees to audit one year and review two
    quarters.


o
            Consulting
      services decreased to $79,105 for the Current Period from $211,612 for the
      Prior Period a decrease of $132,507 or 62.6%; in addition to general
      administrative support services the Prior Period included additional
      services in support of the audit of two years and general marketing
      services within Vietnam.


o
            Warrants
      for an aggregate of 240,000 shares exercisable at a per share price of
      $1.50, with an estimated fair value of $407,577 were expensed in the Prior
      Period as issued.  Also during the Prior Period warrants for
      200,000 shares exercisable at a per share price of $2.00, with an
      estimated fair value of $275,312 and a service period of twelve months
      were issued resulting in the amortization of $114,713 (five months) during
      the Prior Period compared to $91,771 (four months) in the Current
      Period.





·
            Bad
      debt expense increased to $27,514 for the nine months ended January 31,
      2009 from $4,063 for the nine months ended January 31, 2008, an increase
      of $23,451 or 577%.  The increase in bad debt expense primarily
      results from the Company’s 100% bad debt reserve applied to an additional
      $25,000 in note receivable from Spot-On Networks, LLC (“Spot-On”) recorded
      in the Current Period.  The additional note receivable results
      from the assignment by one individual of the convertible debentures
      originally issued to him by Spot-On and assigned to the Company as his
      full consideration for an aggregate of 25,000 restricted shares of the
      Company’s Common Stock (the “Assigned Spot-On
      Debentures”).  Spot-On is a private company and does not furnish
      the Company with financial statements to evaluate their ability to pay the
      Assigned Spot-On Debentures principal and accrued interest on January 31,
      2009 at maturity.  The Company’s ability to collect the Assigned
      Spot-On Debentures is dependent on the cash reserves held by Spot-On
      and/or their ability to raise additional financing.  Due to the
      uncertainty of collection the Company has recorded a bad debt expense for
      the full amount of the Assigned Spot-On
  Debentures.


41





·
            Other
      general and administrative expenses decreased to $1,589,338 for the nine
      months ended January 31, 2009 from $2,128,840 for the nine months ended
      January 31, 2008, a decrease of $539,502 or 25.3%.  The
      decreased expense is the net result the following significant
      items:





o
            Employee
      wages and payroll taxes increased to $977,052 for the Current Period from
      $946,852 for the Prior Period, an increase of $30,200 or
    3.2%.


o
            Services
      outsourced in Vietnam to manage the domain name registry increased to
      $90,000 for the Current Period from $45,000 for the Prior Period, an
      increase of $45,000 or 100.0%.


o
            Travel
      and related expenses decreased to $60,896 for the Current Period from
      $162,374 for the Prior Period, a decrease of $101,478 or
      62.5%.


o
            New
      product testing (wireless virtual fiber) increased to $25,185 for the
      Current Period from zero for the Prior Period, an increase of
      100%.


o
            Employee
      wages and bonuses paid with shares of the Company’s restricted common
      stock decreased to $34,350 for the Current Period from $121,791 for the
      Prior Period, a decrease of $87,441 or
71.8%.


o
            Officer
      bonuses paid with shares of the Company’s restricted common stock
      decreased to zero for the Current Period from $508,752 for the Prior
      Period, a decrease of 100%.


o
            All
      other general and administrative expenses increased to $401,855 for the
      Current Period from $344,071 for the Prior Period, an increase of $57.784
      or 16.8%.





LOSS FROM
OPERATIONS





We
reported a loss from operations of $2,996,670 for the nine months ended January
31, 2009 as compared to a loss from operations of $8,319,643 for the nine months
ended January 31, 2008, a decrease of $5,322,973 or 64.0%.  The
decrease is primarily attributed to improved gross profit ($32,496) and
decreased option bonus expense ($4,213,093), consulting and professional fees
($579,630), and other general and administrative expenses ($539,502) offset by
increased bad debt expense ($23,451).





OTHER
INCOME AND EXPENSES





Total
other income and expense decreased to a net expense of $1,843,700 for nine
months ended January 31, 2009 as compared to a net expense of $2,688,413 for the
nine months ended January 31, 2008.  Included in this net expense
decrease of $844,713 or 31.4% are:





·
            Interest
      income was $2,644 for the nine months ended January 31, 2009 as compared
      to interest income of $12,053 for the nine months ended January 31, 2008;
      the decrease of $9,409 or 78.1% is attributable to a decrease in average
      cash balances.





·
            The
      finance expense was $414,157 for the nine months ended January 31, 2009 as
      compared to finance expense of $949,848 for the nine months ended January
      31, 2008, a decrease of $535,691 or 56.4%.  The net decreased
      expense is the result of the amortization of both cash fees paid and the
      fair value of stock warrants issued to obtain equity and/or debt financing
      for the Company, the significant items
were:





o
            Pursuant
      to its engagement of Pali, the Company’s placement agent in the February
      Debentures, the Company paid a cash fee equal to 10% of the proceeds from
      the February Debentures ($141,821) which was recorded as a deferred debt
      issuance cost (other noncurrent assets).  The fees will be
      amortized over the approximate two year term of the February Debentures
      with $43,058 amortized in both the Current Period and in the Prior
      Period.


o
            Additionally,
      pursuant to its engagement of Pali, the Company issued three series of
      warrants: (i) Pali Retainer Warrants totaling in the aggregate 250,000
      shares exercisable at a per share price of $0.001, with an estimated fair
      value of $712,404; (ii) Pali Placement Warrants A totaling in the
      aggregate 229,600 shares exercisable at a per share price of $1.00, with
      an estimated fair value of $563,640; and (iii) Pali Placement Warrants B
      totaling in the aggregate 68,880 shares exercisable at a per share price
      of $2.00, with an aggregate estimated fair value of $167,700 (collectively
      the “Pali Placement Agent Warrants”) recorded as a deferred debt issuance
      cost.  The Pali Placement Agent Warrants have a term of 5 years
      from the date of issuance.  The retainer warrants were expensed
      over the one year engagement term and the two placement warrants will be
      expensed over the approximate two year term of the February
      Debentures.  The Company had no expense for the retainer warrant
      during the nine months ended January 31, 2009 compared to $534,303
      expensed in the Prior Period.  During the nine months ended
      January 31, 2009 and 2008, the Company expensed $274,252 for the two
      placement warrants.


42





o
            Warrants
      for an aggregate of 344,465 shares exercisable at a per share price of
      $2.00, with an estimated fair value of $259,954, as allocated, were issued
      to the February Debentures investors which are amortized over the
      approximate two year term of the convertible debt or upon
      conversion.  During the nine months ended January 31, 2009, the
      Company expensed $96,847 compared to $97,483 expensed in the Prior
      Period.





·
            Interest
      expense decreased by $327,022 or 18.7% for the nine months ended January
      31, 2009 to $1,423,641 as compared to $1,750,663 for the nine months ended
      January 31, 2008 reflecting (i) interest expense on borrowings from
      related parties, short term debt, to include the February Debentures,
      increased 154,156, (ii) accretion of the debt discount associated with the
      February Debentures and other convertible notes decreased $432,933, and
      (iii) a credit of $48,245 for interest capitalized as part of the Internet
      data center construction in progress.  Interest expense on
      borrowings from related parties, and short term debt increased due to
      additional borrowing.





·
            Foreign
      exchange loss increased to $10,466 for the nine months ended January 31
      2009, from a foreign exchange gain of $87 for the nine months ended
      January 31, 2008, an increase of $10,553 or 12,130%.  The
      increase in foreign exchange expense was primarily attributable to the
      commencement of operations in Danang Vietnam with the initial 50%
      prepayment on the 35 year land
lease.





OVERALL





We
reported a net loss for the nine months ended January 31, 2009 of $4,840,370
compared to a net loss for the nine months ended January 31, 2008 of
$11,008,056.  This translates to an overall basic and diluted
per-share loss available to shareholders of $0.18 for the nine months ended
January 31, 2009, compared to basic and diluted per-share loss of $0.41 for the
nine months ended January 31, 2008 based on 27,262,555 and 26,597,694 weighted
average common shares outstanding, respectively.





LIQUIDITY
AND CAPITAL RESOURCES





The
Company has financed its operations primarily through the deferral of salary by
its two executive officers Thomas Johnson (CEO) and Lee Johnson (President, CTO,
and CFO), the sale of equity securities, to include convertible notes, other
private party loans, and the advance of funds by a former related party (Hi-Tek,
Inc. a California corporation (“Hi-Tek Private”)).  Overall, our
liquidity and access to capital is very limited; we have not received any
commitment for additional financing and given the size of our company we may be
limited to (i) continued deferral of salaries by our officers, (ii) the sale of
the Company’s common stock or the issuance of convertible notes, or (iii) other
debt instruments.  The Company does not have a written agreement with
Hi-Tek Private and no funds were advanced during the nine months ended January
31, 2009.





Liquidity
is the ability of a company to generate funds to support its current and future
operations, satisfy its obligations and otherwise operate on an ongoing
basis.  During the nine months ended January 31, 2009 and 2008 cash
used in our operating activities was $928,811 and $756,900, and cash used in
investing activities was $19,199 and $590,895, respectively.  We
funded our operating activities and investing activities during the nine months
ended January 31, 2009 with cash reserves in addition to the following resources
and during the nine months ended January 31, 2009 and 2008 with the following
resources:





For the Nine Months Ended
                        January 31,2009
                      
                      
                      2008Funds
      advanced by Hi-Tek Private under revolvingcredit
      arrangement, net of $68,650 and$18,451
      repayments
                      
                      $
                      (68,650
                      )
                      
                      $
                      (10,221
                      )Six
      month term loan from Hi-Tek Private, dueNovember
      1, 2007, extended to June 30, 2009
                      
                      
                      -
                      
                      
                      
                      600,000Two  month
      term loan from Vina Mex Capital,due November 14, 2007, extended to June 30, 2009
                      
                      
                      -
                      
                      
                      
                      700,000





43





For the Nine Months Ended
                            January 31,2009
                          
                          
                          2008Twelve
      month term loan from John T. Butler, dueJune 1, 2009
                          
                          
                          70,000
                          
                          
                          
                          -Twelve
      month term loan from Tupou U. Kaho, dueJune 1, 2009
                          
                          
                          50,000
                          
                          
                          
                          -Six
      and one half  month term loan from Vina MexCapital,
      due March 31, 2009
                          
                          
                          200,000
                          
                          
                          
                          -Twelve
      month term loan from Vina Mex Capital,due September 17, 2009
                          
                          
                          100,000
                          
                          
                          
                          -Twelve
      month term loan from IDCG SA de CV, dueNovember 30, 2009
                          
                          
                          50,000
                          
                          
                          
                          -Eleven
      month term loan from IDCG SA de CV, dueNovember 30, 2009
                          
                          
                          100,000
                          
                          
                          
                          -Ten
      month term loan from IDCG SA de CV, dueNovember 30, 2009
                          
                          
                          100,000
                          
                          
                          
                          -Proceeds
      from stock issuances
                          
                          
                          53
                          
                          
                          
                          -Total
                          
                          $
                          601,403
                          
                          
                          $
                          1,289,779





At
January 31, 2009, we had a cash balance of $143,573 compared to $480,350 at
April 30, 2008, a decrease of $336,777.  At January 31, 2009, our
working capital deficit was $11,123,641 as compared to $8,251,260 at April 30,
2008.  Our current assets, other than cash, consist primarily of
$111,109 in accounts receivable, $8,280 in prepaid land lease, $9,421 in other
prepaid expenses, and $37,346 in miscellaneous receivable.





Our
current liabilities consisted primarily of $2,306,036 due to Hi-Tek Private
under three credit arrangements net of zero discount (for the beneficial
conversion feature of the convertible note), $2,243,019 due Thomas Johnson (our
CEO), $2,243,019 due Lee Johnson (our President, CTO, and CFO), $949,500 due the
February Investors net of zero discount, $1,368,101 due IDCG SA de CV under six
term notes, $763,969 in other short term debt, $1,323,428 in accrued officer
salaries, $91,941 in liquidated damages to the February Investors, $80,575 in
accounts payable, and $25,501 in customer deposits.





If we are
to implement our business plan, we will need to raise significant amounts of
additional capital during the period ending January 31, 2010.  We have
not received any commitment that any such additional financing would be
forthcoming.  Accordingly, there can be no assurance that the Company
will be successful in selling equity or securing debt financing, or that any
combination thereof will be sufficient to meet our capital needs or, if it could
be obtained, that it can be obtained on reasonable terms in light of our
circumstances at that time.  In addition, if any financing should be
obtained, existing shareholders will likely incur substantial, immediate, and
permanent dilution of their existing investment.  (See also "PLAN OF
OPERATION")





RECENT
ACCOUNTING PRONOUNCEMENTS





In
November 2008, the FASB ratified EITF No. 08-7 “Accounting for Defensive
Intangible Assets” (“EITF 08-7”).  EITF 08-7 clarifies the definition
and accounting for defensive intangible assets acquired in a business
combination or an asset acquisition and states that, upon acquisition, an
intangible asset must be recognized at fair value in accordance with SFAS No.
157, regardless of how the acquiring entity intends to use the
asset.  The intangible asset should be amortized over a useful life
approximated by the period over which it is expected to provide direct and
indirect cash flows benefits resulting from the limitation against others to use
the intangible asset.  EITF 08-7 is effective for financial statements
issued for fiscal years beginning on or after December 15, 2008





In
October, 2008, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-3,
“Determining the Fair Value of a Financial Asset When the Market for That Asset
Is Not Active” (“FSP FAS 157-3”).  FSP FAS 157-3 clarifies the
application of SFAS No. 157 in a market that is not active and addresses
application issues such as the use of internal assumptions when relevant
observable data does not exist, the use of observable market information when
the market is not active, and the use of market quotes when assessing the
relevance of observable and unobservable data.  FSP 157-3 is effective
for all periods presented in accordance with SFAS No. 157.  The
adoption of FSP 157-3 did not have any material effect on the Company’s
financial statements.


44





In June
2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP
EITF 03-6-1”).  FSP EITF 03-6-1 provides that unvested share-based
payment awards that contain nonforfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and shall be
included in the computation of earnings per share pursuant to the two-class
method.  FSP EITF 03-6-1 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those years.  Upon adoption, a company is required to retrospectively
adjust its earnings per share data (including any amounts related to interim
periods, summaries of earnings and selected financial data) to conform with the
provisions of FSP EITF 03-6-1.  The Company is currently evaluating
the impact adoption of this statement could have on its financial
statements.





In June
2008, the FASB ratified EITF No. 08-4, “Transition Guidance for Conforming
changes to Issue No. 98-5” (“EITF 08-4”).  EITF 08-4 specifically
identifies the portions of EITF No. 98-5 that were nullified by EITF No. 00-27
and clarifies that instruments within the scope of SFAS No. 150 are no longer
within the scope of EITF No. 98-5.  EITF 08-4 is effective for
financial statements issued for fiscal years ending after December 15, 2008,
earlier application is permitted.  The effect, if any, of applying the
conforming changes shall be presented retrospectively with the cumulative-effect
of the change being reported in retained earnings in the statement of financial
position as of the beginning of the first period presented.  The
adoption of EITF 08-4 did not have any material effect on the Company’s
financial statements.





In June
2008, the FASB ratified EITF No. 07-5, “Determining Whether an Instrument (or an
Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF
07-5”).  EITF 07-5 provides that an entity should use a two step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument’s
contingent exercise and settlement provisions.  It also clarifies the
impact that foreign currency denominated strike prices and market-based employee
stock option valuation instruments have on the evaluation.  EITF 07-5
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those years.  The
Company is currently evaluating the impact adoption of this statement could have
on its financial statements.





In May
2008, the FASB issued FSP No. APB 14-1, “Accounting for Convertible Debt
Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash
Settlement)” (“FSP APB 14-1”).  FSP APB 14-1 requires that the
liability and equity components of convertible debt instruments that may be
settled in cash (or other assets) upon conversion (including partial cash
settlement) be separately accounted for in a manner that reflects an issuer's
nonconvertible debt borrowing rate.  The resulting debt discount is
amortized over the period the convertible debt is expected to be outstanding as
additional non-cash interest expense.  FSP APB 14-1 is effective for
fiscal years beginning after December 15, 2008 and early adoption is not
permitted.  Retrospective application to all periods presented is
required except for instruments that were not outstanding during any of the
periods that will be presented in the annual financial statements for the period
of adoption but were outstanding during an earlier period.  The
Company is currently evaluating the impact adoption of this statement could have
on its financial statements.





In April
2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP FAS 142-3”).  FSP FAS 142-3 amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under SFAS
No. 142, “Goodwill and Other Intangible Assets.” FSP FAS 142-3 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years.  Early adoption is
prohibited.  The Company is currently evaluating the impact adoption
of this statement could have on its financial statements.





Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the financial statements upon
adoption.





PLAN
OF OPERATION FOR THE NEXT 12 MONTHS





We
anticipate three major operational events will occur in the next 12
months.  They are:





1)           the
completion of an Application Programming Interface;





2)           the
construction and commissioning of two Internet Data Centers, and





3)           the
development of wireless Internet connectivity and infrastructure in
Vietnam.





45




The
Company intends to implement a three-phase plan that includes (i) the
development of an API; (ii) the construction of two data centers located in
Hanoi and Danang, Vietnam; and (iii) the creation of a wireless network
infrastructure.  The plan provides revenue-generating opportunities to
the Company throughout the development process, and leads to a complete
operational demonstration of the technology.





The plan
includes:





PHASE I:
Q4 CY 2008 through Q2 CY 2009:  This phase is in
process.  During this period, the Company, with its partners has
completed the infrastructure design of the Hanoi IDC site and is initiating
design of the Danang IDC building.  Further, the Company is in the
process of identifying service providers and contractors in anticipation of the
construction of the data center.  Concurrent with the design of the
data center, Dot VN will collaborate with VNNIC to design and test an API which
will allow the Company to substantially increase its reseller
network.





PHASE II:
Q2/Q3 CY 2009:  During this phase the Company will begin construction
of the data center located in Hanoi and begin deployment of the API to reseller
network.  Dot VN will also begin to design the second data center
located in Danang, Vietnam.





PHASE
III: Q2/Q3 CY 2009 – Begin construction of data center located in Danang,
Vietnam.  Conduct test of wireless broadband network in urban and
rural areas.





Subsequent
to the successful demonstration of the facility, the Company may elect to
solicit standard bank financing and/or other financing methods to secure funding
to drive the growth of the Vietnamese ccTLD, construct additional data centers
or to expand its wireless network.  In conjunction with this, the
Company may also elect to enter into joint ventures, licensing, and/or
production sharing agreements with other companies to maximize the value of the
technologies to the Company’s shareholders.  The management’s analysis
suggests that following this direction provides the highest potential, lowest
risk path to high profits from our new technologies.





SUBSEQUENT
EVENTS





On
January 31, 2009 the February Debentures matured.  Currently, $949,500
is due the February Investors and the Company is negotiating an extension of the
due date with the February Investors.  On March 10, March 13, and
March 16, 2009, three February Investors agreed to modify the terms of their
February Debentures aggregating $50,000 as follows: (i) the February Debenture
plus the unpaid liquidated damages ($3,375) are combined into a single amortized
term note, (ii) interest accrues from February 1, 2009 at 12% per annum, (iii) a
one-time 15% principal payment will be made in March, and (iv) commencing April
1, 2009, the unpaid balance will be amortized over thirty-five (35) equal
monthly payments.  In addition, warrants equal to 5,338 shares will be
issued with a $2 exercise price expiring on January 31, 2012.





On
February 3, 2009 Vina Mex Capital assigned, without recourse, the Vina Mex
1st
Loan, Vina Mex 2nd Loan,
and Vina Mex 3rd Loan to
IDCG SA de CV, a corporation formed under the laws of Mexico (see Note
9).





On
February 15, 2009, the TJ New Note and the LJ New Note were amended to extend
the due date thirty days to March 17, 2009 with no other change to the terms of
the notes.





On
February 17, 2009, pursuant to the terms of a Pali Placement Agent Warrants, the
Company issued to Hilary Bergman 10,250 restricted shares of the Company’s
Common Stock exempt from registration pursuant to Rule 506 of Regulation D, as
amended, upon the exercise of 10,250 $0.001 Pali Retainer Warrants for
$10.25.





On
February 28, 2009, the Company executed a promissory note with IDCG SA de CV for
$100,000 due November 30, 2009.  Interest accrues monthly at a rate of
10% per annum.  Proceeds were used to fund general
operations.





On March
4, 2009, the Company and Ms. Manuhu modified the terms of the Aussy Note to (i)
extend the due date to September 30, 2009 and (ii) allow the Company, at its
option, to make partial payments of accrued interest and/or principal during the
term of the Note with limitation or penalty.


On March
12, 2009, the Company and Quang Trung Software City Development Company, a 100%
State-owned (Vietnamese government) enterprise, (“QTSC”) mutually agreed to
terminate, without penalty, that certain agreement dated January 23, 2008 by and
between QTSC and the Company’s wholly owned subsidiary, Dot VN Limited, a Ho Chi
Minh City Company, to develop an IDC in Ho Chi Minh City, Vietnam located in the
QTSC telecommunications building.








46




ITEM
      3.
              QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





As a
“smaller reporting company” as defined by Item 10 of Regulation SK, the Company
is not required to provide information required by this Item.





ITEM
      4T.
              CONTROLS
      AND PROCEDURES.





EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES





We
maintain disclosure controls and procedures, which are designed to ensure that
information required to be disclosed in the reports we file or submit under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer, and our President and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.





Under the
supervision and with the participation of our management, including our Chief
Executive Officer, and our President and Chief Financial Officer, an evaluation
was performed on the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this quarterly
report.  Based on that evaluation, our Chief Executive Officer, and
our President and Chief Financial Officer, concluded that our disclosure
controls and procedures were effective as of the end of the period covered by
this report for the purpose of gathering, analyzing and disclosing of
information that the Company is required to disclose in the reports it files
under the Exchange Act, within the time periods specified in the SEC’s rules and
forms.





CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING





There
were no changes in the Company’s internal controls over financial reporting
during the most recently completed fiscal quarter that have materially affected
or are reasonably likely to materially affect the Company’s internal control
over financial reporting.


47





PART
II.  OTHER INFORMATION





ITEM
      1.
              LEGAL
      PROCEEDINGS.





The
Company is not currently subject to any legal proceedings.  From time
to time, the Company may become subject to litigation or proceedings in
connection with its business, as either a plaintiff or
defendant.  There are no such pending legal proceedings to which the
Company is a party that, in the opinion of management, is likely to have a
material adverse effect on the Company’s business, financial condition or
results of operations.





ITEM
      2.
              UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.





On
December 17, 2008, the Company issued to Louis Huynh, an officer, and ten
employees, each a sophisticated purchaser, for yearend bonuses 5,000 and an
aggregate of 15,000 restricted shares of the Company’s Common Stock valued at
the market close and recorded as a $2,000 and $6,000 bonuses,
respectively.  The offer and sale was made to eight persons, in a
non-public offering, where the offeree had access to the kind of information
that registration would disclose, in reliance on the exemption from registration
afforded by Section (4)(2), promulgated pursuant to the Securities Act and three
persons exempt from registration pursuant to Rule 903(b)(3) of Regulation S,
promulgated pursuant to the Securities Act, on the basis that the securities
were sold outside of the US, to a non-US person, and with no directed selling
efforts in the US.





On
January 6, 2009, pursuant to the terms of a consulting agreement, the Company
issued to Mai Liem Truc, a sophisticated purchaser, 5,000 restricted shares of
the Company’s Common Stock for services valued at the market closing price and
recorded as $5,050 in consulting fees exempt from registration pursuant to Rule
903(b)(3) of Regulation S, promulgated pursuant to the Securities Act, on the
basis that the securities were sold outside of the US, to a non-US person, and
with no directed selling efforts in the US.





Also on
January 6, 2009, the Company issued to one employee, a sophisticated purchaser,
in consideration for the execution of Non-Disclosure and Invention Assignment
Agreements 3,000 restricted shares of the Company’s Common Stock valued at the
market close and recorded as a $3,750 bonus exempt from registration pursuant to
Rule 903(b)(3) of Regulation S, promulgated pursuant to the Securities Act, on
the basis that the securities were sold outside of the US, to a non-US person,
and with no directed selling efforts in the US.





Additional
on January 6, 2009, pursuant to the terms of a consulting agreement, the Company
issued to Kenneth Le, a sophisticated purchaser, 5,000 restricted shares of the
Company’s Common Stock for services valued at the market closing price and
recorded as $3,750 in consulting fees. .  The offer and sale was made
to one person, in a non-public offering, where the offeree had access to the
kind of information that registration would disclose, in reliance on the
exemption from registration afforded by Section (4)(2), promulgated pursuant to
the Securities Act.





On
January 31, 2009, pursuant to the terms of a February Debentures, the Company
issued to Kevin Fisher 12,500 shares of the Company’s Common Stock exempt from
registration pursuant to Rule 506 of Regulation D, promulgated under the
Securities Act, in exchange for the cancellation of Fisher’s $12,500 February
Debentures upon conversion.  The 12,500 shares were issued without
restriction pursuant to the Company’s S-1 registration statement declared
effective August 4, 2008.





Also on
January 31, 2009, pursuant to the terms of the August 10, 2007 investor’s
registration rights agreement amendment, the Company issued an aggregate 13,500
restricted shares of the Company’s Common Stock to certain parties to the
investor registration rights agreement who elected to receive shares pursuant to
such agreement.  The shares were valued at the market closing price
($13,617) and recorded as an $11,500 payment of an accrued liability and as a
$2,117 general and administrative expense.  The offer and sale was
made pursuant to the exemption from registration afforded by Section 4(2) of the
Securities Act and Rule 506 of Regulation D, promulgated
thereunder.  The parties to the investor registration rights agreement
who received shares are “accredited investors” within the meaning of SEC Rule
501(a).





ITEM
      3.
              DEFAULTS
      UPON SENIOR SECURITIES.





On
January 31 and February 7 2007, the Company executed a series of convertible
debentures for $949,500, net of conversions, due January 31,
2009.  The convertible debentures bear no interest until July 2007 at
which point they accrue 10% per annum with interest payable
monthly.  The debentures convert at the option of each individual
noteholder (the “February Investors”) into restricted shares of the Company’s
Common Stock at $1.00 per share; representing a beneficial conversion
feature.  The Company has not repaid the $949,500 due the February
Investors and is negotiating an extension of the due date with the February
Investors.  On March 10, March 13, and March 16, 2009, three February
Investors agreed to modify the terms of their February Debentures aggregating
$50,000 as follows: (i) the February Debenture plus the unpaid liquidated
damages ($3,375) are combined into a single amortized term note, (ii) interest
accrues from February 1, 2009 at 12% per annum, (iii) a one-time 15% principal
payment will be made in March, and (iv) commencing April 1, 2009, the unpaid
balance will be amortized over thirty-five (35) equal monthly
payments.  In addition, warrants equal to 5,338 shares will be issued
with a $2 exercise price expiring on January 31, 2012.


48








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





None.





ITEM
      5.
              OTHER
      INFORMATION.





On March
12, 2009, the Company and Quang Trung Software City Development Company, a 100%
State-owned (Vietnamese government) enterprise, (“QTSC”) mutually agreed to
terminate, without penalty, that certain agreement dated January 23, 2008 by and
between QTSC and the Company’s wholly owned subsidiary, Dot VN Limited, a Ho Chi
Minh City Company, to develop an IDC in Ho Chi Minh City, Vietnam located in the
QTSC telecommunications building.





ITEM
      6.
              EXHIBITS.





(a)  Exhibits
required by Item 601 of Regulation SK.





Number
              
              Description3.1
              
              Amended
      and Restated Articles of Incorporation*3.2
              
              Bylaws*23.1
              
              Auditor’s
      Consent31.1
              
              Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
              
              Certification
      of Principal Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Certification
      of Principal Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.





*
            Filed
      as an Exhibit to the Company’s Registration Statement on Form SB-2 (File
      No. 333-146129), as amended on Form
      S-1, as filed with the Securities and Exchange Commission on September 17,
      2007.





49





SIGNATURES





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





DOT
      VN, INC.(Name
      of Registrant)Date:  March
      17, 2009
                    By:
                    /s/ Thomas M. JohnsonName:
                    Thomas M. JohnsonTitle:
                    Chief
      Executive
Officer


50





EXHIBIT
INDEX





Number
              
              Description3.1
              
              Amended
      and Restated Articles of Incorporation*3.2
              
              Bylaws*23.1
              
              Auditor’s
      Consent31.1
              
              Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.31.2
              
              Certification
      of Principal Financial Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.32.1
              
              Certification
      of Principal Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Certification
      of Principal Financial Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.





*
            Filed
      as an Exhibit to the Company’s Registration Statement on Form SB-2 (File
      No. 333-146129), as amended on Form
      S-1, as filed with the Securities and Exchange Commission on September 17,
      2007.





51