| DELAWARE                                                                       | 98-0202855                                            |
|--------------------------------------------------------------------------------|-------------------------------------------------------|
| (STATE                  OR OTHER JURISDICTION OFINCORPORATION OR ORGANIZATION) | (I.R.S.                  EMPLOYER IDENTIFICATION NO.) |

----

| Item                    1. Financial Statements                                                                                                                                                                                                                             |   |     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|
| Interim                    Consolidated Balance Sheet as of June 30, 2005 and Balance Sheet                    as of                    December 31, 2004                                                                                                                   |   | 2        |   |
| Interim                    Consolidated Statements of Operations for the three and six months                    ended June 30, 2005 and 2004 and for the cumulative period from                    December                    22, 1998 (inception) through June 30, 2005  |   | 4        |   |
| Interim                    Consolidated Statements of Cash Flows for the six months endedJune                    30, 2005 and 2004 and for the cumulative period from December                    22, 1998                    (inception) through June 30, 2005             |   | 5        |   |
| Notes                    to the Interim Consolidated Financial Statements                                                                                                                                                                                                   |   | 7        |   |
| Item                    2. Management's Discussion and Analysis of Financial Condition                    or Plan of                    Operation                                                                                                                           |   | 14       |   |
| Item                    3. Controls and Procedures                                                                                                                                                                                                                          |   | 23  |   |
| PART                    II. OTHER INFORMATION                                                                                                                                                                                                                               |   |     |   |
| Item                    1. Legal Proceedings                                                                                                                                                                                                                                |   | 24  |   |
| Item                    2. Changes in Securities                                                                                                                                                                                                                            |   | 24  |   |
| Item                    3. Defaults Upon Senior Securities                                                                                                                                                                                                                  |   | 24  |   |
| Item                    4. Submission of Matters to a Vote of Security Holders                                                                                                                                                                                              |   | 24  |   |
| Item                    5. Other Information                                                                                                                                                                                                                                |   | 24  |   |
| Item                    6. Exhibits                                                                                                                                                                                                                                         |   | 24  |   |
| SIGNATURES                                                                                                                                                                                                                                                                       |   | 25       |   |

**Cautionary      Note regarding Forward-Looking Statements**

----

**Interim      Consolidated Financial Statements as of June 30, 2005**

----

**Contents**

|                                                                                                                                                  | Page   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                  |   |
| Interim                Consolidated Balance Sheet as of June 30, 2005 and Balance Sheet                as of                December 31, 2004         | 2      |
|                                                                                                                                                  |   |
| Interim                Consolidated Statements of Operations for the three and six months                ended                June 30, 2005 and 2004, |   |
| and                for the cumulative period from December                22, 1998 (inception)                through June 30, 2005                   | 4      |
|                                                                                                                                                  |   |
| Interim                Consolidated Statements of Cash Flows for the six months ended June                30,                2005 and 2004,           |   |
| and                for the cumulative period from December                22, 1998 (inception)                through June 30, 2005                   | 5      |
|                                                                                                                                                  |   |
| Notes                to the Interim Consolidated Financial Statements                                                                                 | 7      |

----

**Interim        Consolidated Balance Sheets **

----

|                                                                     |   | **June                30****2005** |           | **December                  31****2004** |   |
|--------------------------------------------------------------------------|--------|------------------------------------|----------------|------------------------------------------|--------|
|                                                                     |   | **$**                              |           | **$**                                    |   |
|                                                                     |   | **(Unaudited)**                    |           | **(Audited)**                            |   |
|                                                                     |   |                               |           |                                     |   |
| **Assets**                                                               |   |                               |           |                                     |   |
|                                                                     |   |                               |           |                                     |   |
|                                                                     |   |                               |           |                                     |   |
|                                                                     |   |                               |           |                                     |   |
| **Current                assets:**                                       |   |                               |           |                                     |   |
| Cash                and cash equivalents                                 |   |                               | **2,630,378**  |                                     |   | 1,565,415 |   |
| Investment                securities                                     |   |                               | **16,800,000** |                                     |   | 5,850,000 |   |
| Receivables                                                              |   |                               | **197,268**    |                                     |   | 18,145 |   |
| Prepaid                expenses                                          |   |                               | **387,342**    |                                     |   | 259,674 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Total                current assets**                                  |   |                               | **20,014,988** |                                     |   | 7,693,234 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Long-term                deposits (restricted)**                       |   |                               | **180,519**    |                                     |   | 167,304 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Deposits                in respect of employee severance obligations** |   |                               | **490,860**    |                                     |   | 462,735 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Property                and equipment, net**                           |   |                               | **366,468**    |                                     |   | 305,804 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Other                assets:**                                         |   |                               |           |                                     |   |   |   |
| Intangible                assets, net                                    |   |                               | **96,675**     |                                     |   | 111,289 |   |
| Prepaid                expenses, long-term                               |   |                               | **111,535**    |                                     |   | 147,000 |   |
| Deferred                tax asset, long-term                             |   |                               | **19,709**     |                                     |   | 19,817 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Total                other assets**                                    |   |                               | **227,919**    |                                     |   | 278,106 |   |
|                                                                     |   |                               |           |                                     |   |   |   |
|                                                                     |   |                               |           |                                     |   |   |   |
|                                                                     |   |                               |           |                                     |   |   |   |
|                                                                     |   |                               |           |                                     |   |   |   |
|                                                                     |   |                               |           |                                     |   |   |   |
| **Total                assets**                                          |   |                               | **21,280,754** |                                     |   | 8,907,183 |   |

----

**Interim      Consolidated Balance Sheets (cont’d) **

----

|                                                                                                                                                                                                                                                                                                                           |   | **June                  30****2005** |            | **December                  31**2004 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|-----------------|--------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                           |   | **$**                                |            | **$**                                |   |
|                                                                                                                                                                                                                                                                                                                           |   | **(Unaudited)**                      |            | **(Audited)**                        |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |
| **Liabilities                and stockholders' equity**                                                                                                                                                                                                                                                                        |   |                                 |            |                                 |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |
| **Current                liabilities:**                                                                                                                                                                                                                                                                                        |   |                                 |            |                                 |   |
| Accounts                payable                                                                                                                                                                                                                                                                                                |   |                                 | **347,949**     |                                 |   | 172,029 |   |
| Accrued                expenses                                                                                                                                                                                                                                                                                                |   |                                 | **471,785**     |                                 |   | 422,465 |   |
| Accrued                compensation and benefits                                                                                                                                                                                                                                                                               |   |                                 | **671,154**     |                                 |   | 259,872 |   |
| Deferred                revenues, short-term                                                                                                                                                                                                                                                                                   |   |                                 | **75,909**      |                                 |   | 150,147 |   |
| **Total                current liabilities**                                                                                                                                                                                                                                                                                   |   |                                 | **1,566,797**   |                                 |   | 1,004,513 |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
| **Long-term                liabilities:**                                                                                                                                                                                                                                                                                      |   |                                 |            |                                 |   |   |   |
| Liability                in respect of employee severance obligations                                                                                                                                                                                                                                                          |   |                                 | **577,155**     |                                 |   | 531,224 |   |
| Deferred                tax liability, long-term                                                                                                                                                                                                                                                                               |   |                                 | **97,357**      |                                 |   | 94,965 |   |
| Deferred                revenues, long-term                                                                                                                                                                                                                                                                                    |   |                                 | **430,783**     |                                 |   | 452,359 |   |
| **Total                long-term liabilities**                                                                                                                                                                                                                                                                                 |   |                                 | **1,105,295**   |                                 |   | 1,078,548 |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
| **Commitments                and contingencies**                                                                                                                                                                                                                                                                               |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
| **Stockholders'                equity:**                                                                                                                                                                                                                                                                                       |   |                                 |            |                                 |   |   |   |
| Preferred                stock: $0.01 par value; 1,000,000 shares authorized and 0 shares                issued as                of June                30, 2005 and December 31, 2004                                                                                                                                        |   |                                 |            |                                 |   |   |   |
| Common                stock; $0.001 par value; 30,000,000 shares authorized as of June                30, 2005                and December                31, 2004; 7,027,171 and 4,920,551 shares issued and outstanding as                of                June                30, 2005 and December 31, 2004, respectively |   |                                 | **7,028**       |                                 |   | 4,921 |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                                                      |   |                                 | **62,369,098**  |                                 |   | 47,488,072 |   |
| Deferred                compensation                                                                                                                                                                                                                                                                                           |   |                                 | **(37,019**     | **)**                                |   | (45,146 | ) |
| Accumulated                other comprehensive loss                                                                                                                                                                                                                                                                            |   |                                 | **(27,418**     | **)**                                |   | (27,608 | ) |
| Deficit                accumulated during development stage                                                                                                                                                                                                                                                                    |   |                                 | **(43,703,027** | **)**                                |   | (40,596,117 | ) |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
| **Total                stockholders' equity**                                                                                                                                                                                                                                                                                  |   |                                 | **18,608,662**  |                                 |   | 6,824,122 |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |                                 |            |                                 |   |   |   |
| **Total                liabilities and stockholders' equity**                                                                                                                                                                                                                                                                  |   |                                 | **21,280,754**  |                                 |   | 8,907,183 |   |

----

**Interim      Consolidated Statements of Operations **

----

|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|-------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|----------------------------------|--------|
|                                                                                                                       |   |   | **Three                months ended June 30** |   |   | **Six              months ended June 30** |   |   | **Cumulative                from****December                  22, 1998****(inception)                    through** |   |
|                                                                                                                       |   |   | **2005**                                      |   |   | **2004**                                  |   |   | **2005**                                                                                                           |   |   | **2004**        |   |   | **June                30, 2005** |   |
|                                                                                                                       |   |   | **$**                                         |   |   | **$**                                     |   |   | **$**                                                                                                              |   |   | **$**           |   |   | **$**                            |   |
|                                                                                                                       |   |   | **(Unaudited)**                               |   |   | **(Unaudited)**                           |   |   | **(Unaudited)**                                                                                                    |   |   | **(Unaudited)** |   |   | **(Unaudited)**                  |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Revenue**                                                                                                                |   |   | **424,552**                                   |   |   | 44,244                                    |   |   | **600,185**                                                                                                        |   |   | 63,875          |   |   | 2,021,982                        |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Costs                and expenses****(1)****:**                                                                          |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| Cost                of revenue                                                                                             |   |   | **231,416**                                   |   |   | 119,231                                   |   |   | **439,959**                                                                                                        |   |   | 275,758         |   |   | 3,991,727                        |   |
| Research                and development                                                                                    |   |   | **397,853**                                   |   |   | 254,685                                   |   |   | **728,322**                                                                                                        |   |   | 518,473         |   |   | 19,307,432                       |   |
| Sales                and marketing                                                                                         |   |   | **450,970**                                   |   |   | 221,556                                   |   |   | **812,430**                                                                                                        |   |   | 540,485         |   |   | 10,393,472                       |   |
| General                and administrative                                                                                  |   |   | **1,078,960**                                 |   |   | 202,123                                   |   |   | **1,930,575**                                                                                                      |   |   | 414,530         |   |   | 9,445,360                        |   |
| Loss                in connection with shut-down of operations                                                             |   |   | **-**                                         |   |   | -                                         |   |   | **-**                                                                                                              |   |   | -               |   |   | 1,048,446                        |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Total                costs and expenses**                                                                                |   |   | **2,159,199**                                 |   |   | 797,595                                   |   |   | **3,911,286**                                                                                                      |   |   | 1,749,246       |   |   | 44,186,437                       |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Operating                loss**                                                                                          |   |   | **(1,734,647**                                | **)**  |   | (753,351                                  | )      |   | **(3,311,101**                                                                                                     | **)**  |   | (1,685,371      | )      |   | (42,164,455                      | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| Interest                income (expense), net                                                                              |   |   | **144,687**                                   |   |   | (1,113,418                                | )      |   | **230,594**                                                                                                        |   |   | (1,850,452      | )      |   | (2,344,271                       | )      |
| Gain                on extinguishment of debt                                                                              |   |   | -                                             |   |   | -                                         |   |   | **-**                                                                                                              |   |   | -               |   |   | 1,493,445                        |   |
| Other                income (expense), net                                                                                 |   |   | **(21,010**                                   | **)**  |   | (8,347                                    | )      |   | **(20,728**                                                                                                        | **)**  |   | (4,025          | )      |   | (606,923                         | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Loss                before income taxes**                                                                                |   |   | **(1,610,970**                                | **)**  |   | (1,875,116                                | )      |   | **(3,101,235**                                                                                                     | **)**  |   | (3,539,848      | )      |   | (43,622,204                      | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| Income                tax benefits (expenses)                                                                              |   |   | **8,984**                                     |   |   | 967                                       |   |   | **(5,675**                                                                                                         | **)**  |   | (27,013         | )      |   | (80,823                          | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Net                loss**                                                                                                |   |   | **(1,601,986**                                | **)**  |   | (1,874,149                                | )      |   | **(3,106,910**                                                                                                     | **)**  |   | (3,566,861      | )      |   | (43,703,027                      | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Basic                and diluted net loss per common share**                                                             |   |   | **(0.23**                                     | **)**  |   | (1.08                                     | )      |   | **(0.48**                                                                                                          | **)**  |   | (2.38           | )      |   | (26.18                           | )      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **Weighted                average shares used in computing****basic                and diluted net loss per common share** |   |   | **6,986,768**                                 |   |   | 1,727,373                                 |   |   | **6,512,508**                                                                                                      |   |   | 1,498,698       |   |   | 1,669,260                        |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| **(1)                Includes stock based compensation and costs as                follows:**                              |   |   |                                          |   |   |                                      |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
| Research                and development                                                                                    |   |   | **29,319**                                    |   |   | 944                                       |   |   | **30,263**                                                                                                         |   |   | 1,888           |   |   |                             |   |
| Sales                and marketing                                                                                         |   |   | **106,701**                                   |   |   | 5,236                                     |   |   | **213,956**                                                                                                        |   |   | 10,472          |   |   |                             |   |
| General                and administrative                                                                                  |   |   | **408,208**                                   |   |   | 9,920                                     |   |   | **685,574**                                                                                                        |   |   | 21,442          |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |
|                                                                                                                       |   |   | **544,228**                                   |   |   | 16,100                                    |   |   | **929,793**                                                                                                        |   |   | 33,802          |   |   |                             |   |
|                                                                                                                       |   |   |                                          |   |   |                                      |   |   |                                                                                                               |   |   |            |   |   |                             |   |

----

**Interim        Consolidated Statements of Cash Flows **

----

|                                                                                                                                     |   | **Six                  months ended June 30** |            | **Cumulative                fromDecember 22, 1998****(inception)                  through****June                    30** |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                     |   | **2005**                                      |            | **2004**                                                                                                                  |   | **2005** |   |
|                                                                                                                                     |   | **$**                                         |            | **$**                                                                                                                     |   | **$** |   |
|                                                                                                                                     |   | **(Unaudited)**                               |            | **(Unaudited)**                                                                                                           |   | **(Unaudited)** |   |
| **Cash                flows from operating activities:**                                                                                 |   |                                          |            |                                                                                                                      |   |   |   |
| **Net                loss**                                                                                                              |   |                                          | **(3,106,910**  | **)**                                                                                                                     |   | (3,566,861 | ) |   | (43,703,027 | ) |
| **Adjustments                to reconcile net loss to net cash used in operating                activities:**                            |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Depreciation                and amortization                                                                                             |   |                                          | **114,941**     |                                                                                                                      |   | 69,028 |   |   | 2,326,996 |   |
| Loss                on sale and write off of property and equipment in connection with                shut-down of operations            |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 780,475 |   |
| Other                loss on sale and write off of property and equipment                                                                |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 549,802 |   |
| Settlement                of obligations for other than cash                                                                             |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 225,589 |   |
| Increase                in liability in respect of employee severance obligations,                net                                    |   |                                          | **17,806**      |                                                                                                                      |   | 3,603 |   |   | 86,295 |   |
| Deferred                income taxes, net                                                                                                |   |                                          | **2,500**       |                                                                                                                      |   | 27,013 |   |   | 77,648 |   |
| Stock                issued for domain name                                                                                              |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 1,500 |   |
| Issuance                of common stock, stock options and warrants to non-employees for                services                rendered |   |                                          | **809,248**     |                                                                                                                      |   | 16,570 |   |   | 1,031,852 |   |
| Revaluation                of options issued to non-employees for services rendered                                                      |   |                                          | **-**           |                                                                                                                      |   | - |   |   | (42,789 | ) |
| Amortization                of deferred compensation                                                                                     |   |                                          | **121,205**     |                                                                                                                      |   | 17,561 |   |   | 236,414 |   |
| Accrued                interest on promissory notes                                                                                      |   |                                          | **-**           |                                                                                                                      |   | 168,276 |   |   | - |   |
| Amortization                of deferred charges relating to convertible promissory                notes                                  |   |                                          | **-**           |                                                                                                                      |   | 317,395 |   |   | 889,983 |   |
| Amortization                of discounts on promissory notes                                                                             |   |                                          | **-**           |                                                                                                                      |   | 1,368,755 |   |   | 1,577,373 |   |
| Exchange                rate differences                                                                                                 |   |                                          | **12,385**      |                                                                                                                      |   | (1,975 | ) |   | 24,131 |   |
| **Changes                in operating assets and liabilities:**                                                                          |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Increase                in accounts receivable and other current assets                                                                  |   |                                          | **(174,265**    | **)**                                                                                                                     |   | (192,347 | ) |   | (450,528 | ) |
| Decrease                (increase) in long-term prepaid expenses                                                                         |   |                                          | **35,465**      |                                                                                                                      |   | - |   |   | (111,535 | ) |
| Increase                in accounts payable                                                                                              |   |                                          | **175,920**     |                                                                                                                      |   | 59,310 |   |   | 347,949 |   |
| (Decrease)                increase in accrued expenses and other current liabilities                                                     |   |                                          | **460,602**     |                                                                                                                      |   | (18,926 | ) |   | 1,154,623 |   |
| (Decrease)                increase in short-term deferred revenues                                                                       |   |                                          | **(95,814**     | **)**                                                                                                                     |   | 72,030 |   |   | 75,909 |   |
| (Decrease)                increase in long-term deferred revenues                                                                        |   |                                          | **-**           |                                                                                                                      |   | (36,873 | ) |   | 430,783 |   |
| **Net                cash used in operating activities**                                                                                 |   |                                          | **(1,626,917**  | **)**                                                                                                                     |   | (1,697,441 | ) |   | (34,490,557 | ) |
|                                                                                                                                     |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| **Cash                flows from investing activities:**                                                                                 |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Capital                expenditures                                                                                                      |   |                                          | **(160,991**    | **)**                                                                                                                     |   | (39,191 | ) |   | (4,273,892 | ) |
| Proceeds                from sale of property and equipment                                                                              |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 54,415 |   |
| Purchase                of intangible assets                                                                                             |   |                                          | **-**           |                                                                                                                      |   | (80,200 | ) |   | (119,936 | ) |
| Decrease                (increase) in long-term deposits                                                                                 |   |                                          | **(13,215**     | **)**                                                                                                                     |   | 8,381 |   |   | (173,652 | ) |
| Purchases                of investment securities                                                                                        |   |                                          | **(16,150,000** | **)**                                                                                                                     |   | - |   |   | (22,000,000 | ) |
| Proceeds                from sales of investment securities                                                                              |   |                                          | **5,200,000**   |                                                                                                                      |   | - |   |   | 5,200,000 |   |
| Other                                                                                                                                    |   |                                          | **190**         |                                                                                                                      |   | (10,000 | ) |   | - |   |
| **Net                cash used in investing activities**                                                                                 |   |                                          | **(11,124,016** | **)**                                                                                                                     |   | (121,010 | ) |   | (21,313,065 | ) |
|                                                                                                                                     |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| **Cash                flows from financing activities:**                                                                                 |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Repayment                of loan                                                                                                         |   |                                          | **-**           |                                                                                                                      |   | - |   |   | (20,000 | ) |
| Proceeds                from loan                                                                                                        |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 6,500 |   |
| Proceeds                from issuance of convertible preferred stock, net of $130,697 issuance                costs                      |   |                                          | **-**           |                                                                                                                      |   | - |   |   | 32,669,303 |   |
| Proceeds                from issuance of common stock, net of issuance costs                                                             |   |                                          | **-**           |                                                                                                                      |   | (632,970 | ) |   | 10,843,790 |   |
| Proceeds                from issuance of promissory notes, net of $521,511 issuance                costs                                 |   |                                          | **-**           |                                                                                                                      |   | 4,278,489 |   |   | 4,323,373 |   |
| Repayment                of convertible promissory notes                                                                                 |   |                                          | **-**           |                                                                                                                      |   | - |   |   | (3,160,000 | ) |
| Exercise                of common stock options and warrants, net of $338,162 issuance                costs                              |   |                                          | **13,828,281**  |                                                                                                                      |   | - |   |   | 13,829,281 |   |
| **Net                cash provided by financing activities**                                                                             |   |                                          | **13,828,281**  |                                                                                                                      |   | 3,645,519 |   |   | 58,492,247 |   |
|                                                                                                                                     |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Effect                of exchange rate changes on cash and cash equivalents                                                              |   |                                          | **(12,385**     | **)**                                                                                                                     |   | 1,975 |   |   | (58,247 | ) |
| **Net                increase in cash and cash equivalents**                                                                             |   |                                          | **1,064,963**   |                                                                                                                      |   | 1,829,043 |   |   | 2,630,378 |   |
|                                                                                                                                     |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| Cash                and cash equivalents at beginning of period                                                                          |   |                                          | **1,565,415**   |                                                                                                                      |   | 123,752 |   |   | - |   |
|                                                                                                                                     |   |                                          |            |                                                                                                                      |   |   |   |   |   |   |
| **Cash                and cash equivalents at end of period**                                                                            |   |                                          | **2,630,378**   |                                                                                                                      |   | 1,952,795 |   |   | 2,630,378 |   |

----

**Interim      Consolidated Statements of Cash Flows (cont’d) **

----

|        |   | **Six                  months ended June 30** |   |  **Cumulative                fromDecember 22, 1998****(inception)**** through** |   |
|--------|--------|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------|--------|
|   |   | **2005**                                      |   | **2004**                                                                                  |   | June                  30 2005 |   |
|   |   | **$**                                         |   | **$**                                                                                     |   | **$** |   |
|   |   | **(Unaudited)**                               |   | **(Unaudited)**                                                                           |   | **(Unaudited)** |   |

| **Supplemental                disclosures of cash flow information:**                              |   |   |      |   |   |        |   |
|----------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-------------|--------|
| Income                taxes paid                                                                   |   |   | **3,175** |   |   | **39,127**  |   |   | 94,766 |   |
|                                                                                               |   |   |      |   |   |        |   |   |   |   |
| **Non-cash                investing and financing activities:**                                    |   |   |      |   |   |        |   |   |   |   |
| Stock                issued for domain name                                                        |   |   | **-**     |   |   | -           |   |   | 1,500 |   |
| Issuance                of common stock in lieu of loan repayments                                 |   |   | **-**     |   |   | -           |   |   | 6,500 |   |
| Common                stock issued in exchange for notes receivable                                |   |   | **-**     |   |   | -           |   |   | 1,842,900 |   |
| Repurchase                of stockholders’ common stock and cancellation of notes receivable |   |   | **-**     |   |   | -           |   |   | (1,842,900 | ) |
| Amortization                of deferred charges relating to warrants                               |   |   | **-**     |   |   | **147,080** |   |   | 147,080 |   |
| Discount                on convertible promissory notes                                            |   |   | **-**     |   |   | -           |   |   | 1,577.373 |   |
| Conversion                of convertible promissory notes into common stock                        |   |   | **-**     |   |   | **13,720**  |   |   | 1,840,000 |   |
| Issuance                costs related to the converted promissory notes                            |   |   | **-**     |   |   | **232,202** |   |   | 134,255 |   |

----

**Notes        to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      1**
**- Business**

*“Accounting      and Reporting by Development Stage Enterprises”*

**Note      2 - Revenue Recognition**

----

**Notes        to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      3 - Accounting for Stock-Based Compensation**

*“Accounting      for Stock-based Compensation”*
*“Accounting      for Stock Issued to Employees”*

*“*
*Accounting      for Stock-Based Compensation - Transition and Disclosure -*
*      an      amendment of FASB Statement No. 123*
*”*

|                                                                                                                                                                                         |   |   | **Three                months ended June 30** |   |   | **Six                months ended June 30** |   |   | **Cumulative                from inception throughJune 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------------------------------------|--------|
|                                                                                                                                                                                         |   |   | **2005**                                      |   |   | **2004**                                    |   |   | **2005**                                                     |   |   | **2004** |   |   | **2005** |   |
|                                                                                                                                                                                         |   |   | **$**                                         |   |   | **$**                                       |   |   | **$**                                                        |   |   | **$** |   |   | **$** |   |
|                                                                                                                                                                                         |   |   | **(Unaudited)**                               |   |   | **(Unaudited)**                             |   |   | **(Unaudited)**                                              |   |   | **(Unaudited)** |   |   | **(Unaudited)** |   |
|                                                                                                                                                                                         |   |   |                                               |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| Net                loss, as reported                                                                                                                                                         |   |   | **(1,601,986**                                | **)**  |   | (1,874,149                                  | )      |   | **(3,106,910**                                               | **)**  |   | (3,566,861 | ) |   | (43,703,027 | ) |
| Add:                                                                                                                                                                                         |   |   |                                          |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| Stock-based                compensation expense to employees and                directors included in reported net loss, net of related                tax effects                           |   |   | **111,287**                                   |   |   | 8,781                                       |   |   | **121,205**                                                  |   |   | 17,561 |   |   | 161,964 |   |
| Deduct:                                                                                                                                                                                      |   |   |                                          |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| Stock-based                compensation expense to employees and                directors determined under fair value based method                for all awards, net of related tax effects |   |   | **(262,131**                                  | **)**  |   | (10,661                                     | )      |   | **(335,017**                                                 | **)**  |   | (23,516 | ) |   | (560,734 | ) |
|                                                                                                                                                                                         |   |   |                                          |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| Pro-forma                net loss                                                                                                                                                            |   |   | **(1,752,830**                                | **)**  |   | (1,876,029                                  | )      |   | **(3,320,722**                                               | **)**  |   | (3,572,816 | ) |   | (44,101,797 | ) |
|                                                                                                                                                                                         |   |   |                                          |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| Net                loss per common share, basic and diluted:                                                                                                                                 |   |   |                                          |   |   |                                        |   |   |                                                         |   |   |   |   |   |   |   |
| As                reported                                                                                                                                                                   |   |   | **(0.23**                                     | )      |   | (1.08                                       | )      |   | **(0.48**                                                    | )      |   | (2.38 | ) |   | (26.18 | ) |
| Pro-forma                                                                                                                                                                                    |   |   | **(0.25**                                     | **)**  |   | (1.09                                       | )      |   | **(0.51**                                                    | **)**  |   | (2.38 | ) |   | (26.42 | ) |

----

**Notes        to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      3 - Accounting for Stock-Based Compensation (cont’d)**

*“Share-Based      Payment”*
*“Accounting      for Stock-Based Compensation”*

----

**Notes        to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      4 - Stockholders’ Equity **

**(a)    **
**Common      Stock**

**(b)    **
**Stock      Warrants**

----

**Notes      to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      4 - Stockholders’ Equity (cont’d)**

**(c)    **
**Stock      Options**

**(d)    **
**Other      Comprehensive Income (Loss)**

----

**Notes        to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      5 - Commitments and Contingencies**

|   | (a) | Future                  minimum lease payments under non-cancelable operating leases for                  office                  space and cars, as of June 30, 2005 are as                  follows: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | **Year                ending December 31** |   | **$**   |    |
|--------|--------------------------------------------|--------|---------|---------|
|   |                                       |   |    |    |
|   | 2005                                       |   | 148,842 |    |
|   | 2006                                       |   | 143,379 |    |
|   | 2007                                       |   | 106,211 |    |
|   | 2008                                       |   | 85,446  |    |
|   | 2009                                       |   | 82,212  |    |
|   | 2010                                       |   | 41,400  |    |
|   |                                       |   |    |    |   |
|   |                                       |   |    | 607,490 |   |

|   |   | Rental                  expense under operating leases for the six months ended June 30,                  2005 and                  2004 was approximately $123,000 and $108,000, respectively. See                  Note 6                  regarding commitments entered into subsequent to the balance sheet                  date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (b)    | In                  April 2005, the Company entered into an operating lease for office                  space                  in New York City. The lease commenced on May 1, 2005 and ends on                  June 30,                  2010. Under the terms of the lease, the Company shall have the                  right to                  cancel the lease commencing May 1, 2008, upon 90 days prior written                  notice                  to the Landlord. The monthly rental due under the lease begins                  at $5,500,                  with a two-month free period, and steps up at various stages throughout                  the lease, up to $6,223. The Company will recognize the rent expense                  for                  this lease on a straight-line basis over the minimum lease term.                  In                  addition to the base rent, the Company will be responsible for                  certain                  costs and charges specified in the lease, including real estate                  taxes and                  utility charges. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (c)    | As                  security for future rental commitments the Subsidiary provided                  a bank                  guarantee in the amount of approximately $115,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (d)    | All                  of the Subsidiary’s obligations to its bank, including the bank guarantee                  that such bank made to the Subsidiary’s landlord, are secured by a lien on                  all of the Subsidiary’s deposits at such bank. As of June 30, 2005,                  deposits at such bank amounted to $824,209, including a long-term                  deposit                  of $115,156.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (e)    | In                  the ordinary course of business, the Company enters into various                  arrangements with vendors and other business partners, principally                  for                  content, web-hosting, marketing and investor relations arrangements.                  During                  the six months ended June 30, 2005,                  the Company entered into agreements with three consulting firms                  for the                  provision of services in the areas of public relations, strategic                  planning                  and investment banking. The agreements, which are for periods between                  six                  months and one year, are for an aggregate cash amount of $210,000.                  In                  connection with the aforesaid agreements, the Company also granted                  warrants                  to acquire 100,000 shares of Common Stock                  and 15,556 stock options (see Note                  4).                                                                 |

----

**Notes      to the Interim Consolidated Financial Statements as of June 30, 2005**

----

**Note      5 - Commitments and Contingencies (cont’d)**

|   | (f) | In                  December 2002, the Company implemented a reorganization (the "December                  2002 Reorganization") which substantially reduced the Company’s                  expenditures. The December 2002 Reorganization included staff                  reductions of fifteen persons, or approximately 52% of the Company's                  work                  force, including senior management, professional services, sales                  and                  marketing, research and development and administrative staff. The                  December                  2002 Reorganization also included the shutdown of the Company’s California                  office and resulted in a loss on the disposal of fixed assets.                  In total,                  the Company incurred a loss of approximately $1,048,000 in connection                  with                  the December 2002 Reorganization, of which $780,000 related to                  the                  disposal of fixed assets, and $265,000 related to an accrual for                  salaries,                  benefits and office and equipment lease obligations that the Company                  recorded as                  of December 31, 2002. Of the amount accrued, $218,000 was paid                  during                  2003, $22,000 was paid during 2004, $8,000 was paid during the                  first half                  of 2005 and $17,000, which relates to a lease obligation for equipment                  no                  longer in use, was outstanding as of June 30,                  2005. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note      6 - Subsequent Events**

|   | (a)  | In                  July, 2005, following the earlier adoption by the Company’s board of                  directors, the Company’s stockholders approved the 2005                  Incentive Compensation Plan (the “2005 Compensation Plan”), under which                  the Company may grant stock options, stock appreciation rights,                  restricted                  stock, deferred stock, other stock-related awards and performance                  awards                  to officers, directors, employees, consultants and other persons                  who                  provide services to the Company. The total number of Company shares                  of                  common stock reserved and available for grant under the 2005 Plan                  was set                  at 850,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (b)  | In                  July 2005, each                  non-employee director of the Company was granted a stock option,                  under the                  Company’s 2004 Stock Plan, to acquire up to 7,175 shares of the Company’s                  Common Stock. The options vest 25% upon                  the first anniversary date of the option grant, and the remainder                  vest in                  equal monthly installments over the 36 months thereafter. All options                  have                  a maximum term of 10 years measured from the date of grant, subject                  to                  earlier termination, if the director’s service with the Company is                  terminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (c)       | In                  July 2005, the Subsidiary entered into a supplemental agreement                  to its                  operating lease (the “Supplement”) in connection with its relocation to                  new office space. The term of the original lease was extended by                  55                  additional months beyond its original date of expiration, December                  31,                  2005. According to the Supplement, the Subsidiary will occupy the                  new                  office space commencing September 15, 2005, through July 31, 2010.                  The                  monthly rental due under the lease will be 50,802 New Israeli Shekels                  (“NIS”) ($11,185 based on the exchange rate on July 15, 2005) for the                  first year, and NIS 69,483 ($15,298 based on the exchange rate                  on July 15,                  2005) for the remaining four years. The Company will recognize                  the rent                  expense for this lease on a straight-line basis over the minimum                  lease                  term. The rent payments will be linked to the Israeli Consumer                  Price                  Index. In addition to the base rent, the Company will be responsible                  for                  certain costs and charges specified in the lease, including maintenance                  and utility charges. |
|   |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | (d)       | On                  July 19, 2005, the Company announced that its application for listing                  its                  common stock on NASDAQ's National Market System was approved. The                  Company                  further announced its intention to change its corporate name to                  Answers                  Corporation, subject to stockholder approval. On August 2, 2005,                  the                  Company's common stock began trading on NASDAQ under the                  symbol                  ANSW.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

*The      following discussion of our financial condition and results of operations should      be read in conjunction with the financial statements and the notes to those      statements included elsewhere in this filing. This discussion includes      forward-looking statements that involve risks and uncertainties. Our actual      results may differ materially from those anticipated in these forward-looking      statements.*

**General**

| §   | Product                branding: Answers.com, instead of                GuruNet. |
|--------------------|----------------------------------------------------------------------------------|

| §   | Business                model: free ad-supported, instead of                subscription-based |
|--------------------|------------------------------------------------------------------------------------------------|

| §   | Relative                emphasis on the Website version, not the downloadable 1-click software                version |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| §   | Look                and feel: use of a single page format, instead of the previous tabbed                interface |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| §   | Expanded                content, including, Wikipedia, an open-source                encyclopedia |
|--------------------|---------------------------------------------------------------------------------------------------|

**Our      Business Model **

----

***Recent      Events***

| ·   | On                July 19, 2005, we announced that our application for listing our                common                stock on NASDAQ’s National Market System (NMS) was approved. Our                common stock began trading on NASDAQ under the symbol ANSW                on August                2nd,                2005. Additionally, we plan to change our corporate name to Answers                Corporation, subject to stockholder                approval. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2005 we began the implementation of our agreement with Shopping.com                to integrate their extensive online product catalog into Answers.com.                Whether site visitors are seeking information on clothing, electronics,                jewelry, tools, books, or items in many other consumer product categories,                the new arrangement enables them to identify, research, compare,                and                purchase products as part of their quest for answers. This partnership                will help our users combine research with the purchase process, and                we                will receive a portion of revenues generated when consumers click                through                to merchants' sites. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2005, we launched a citations tool as part of Answers.com. This                new                feature enables students and researchers to very simply cite the                information that they find at Answers.com, by automatically producing                bibliography entries for the site's collection of over a million                topics.                We expect this new feature will help us further penetrate the education                market in the fall, the start of the new school year. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                June 2005, we established our U.S. headquarters, located in New York                City.                Our marketing and business development activities will be centered                in the                New York office. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results      of Operations**
** **

***Revenues***

----

***Cost      of Revenues***

***Research      and Development Expenses***

***Sales      and Marketing Expenses***

----

***General      and Administrative Expenses***

----

***Interest      Income (Expense), Net***

***Other      Income (Expense), Net***

***Income      Tax Expense***

----

***Net      Loss***

**Critical      Accounting Estimates**

***Revenue      Recognition***

----

***Accounting      for Stock-based Compensation***
* *

*“Accounting      for Stock-Based Compensation - Transition and Disclosure - an amendment of      FASB      Statement No. 123”*
*“Accounting      for Stock-based Compensation”*

----

*"Share-Based      Payment" *
*“Accounting      for Stock-Based Compensation"*

***Accounting      For Income Taxes***
* *

***Foreign      Currency Translation***
* *

**Recently      Issued Accounting Pronouncements**

*The      Meaning of Other-Than-Temporary Impairment and its Application to Certain      Investments*
*Accounting      for Certain Investments in Debt and Equity Securities*

----

*."*

**Liquidity      and Capital Resources**

***General***

|                                                       | **June                  30, 2005** |             | **June                  30, 2004** |   |
|------------------------------------------------------------|------------------------------------|------------------|------------------------------------|--------|
|                                                       |                               |             |                               |   |
| Net                  cash used in operating activities     | $                                  | (1,626,917)      |                               | $      | (1,697,441) |   |
| Net                  cash used in investing activities     | $                                  | (11,124,016)     |                               | $      | (121,010) |   |
| Net                  cash provided by financing activities | $                                  | 13,828,281  |                               | $      | 3,645,519  |   |

----

***Current      and Future Financing Needs***

**Off-Balance      Sheet Arrangements**

----

**PART      II. OTHER INFORMATION**

** **

|   |              |                                                                                                                                                                                                                                         |
|--------|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31.1              | Certification                  of Principal Executive Officer required under Rule 13a-14(a) or                  Rule                  15d-14(a) of the Securities and Exchange Act of 1934, as                  amended.                     |
|   |              |                                                                                                                                                                                                                                         |
|   | 31.2              | Certification                  of Principal Financial Officer required under Rule 13a-14(a) or                  Rule                  15d-14(a) of the Securities and Exchange Act of 1934, as                  amended.                     |
|   |              |                                                                                                                                                                                                                                         |
|   | 32.1*   | Certification                of Principal Executive Officer required under Rule 13a-14(a) or Rule                15d-14(a) of the Securities and Exchange Act of 1934, as amended,                and 18                U.S.C. Section 1350. |
|   |              |                                                                                                                                                                                                                                         |
|   |                   |
|   |              |                                                                                                                                                                                                                                         |

----

| 32.2* | Certification                  of Principal Financial Officer required under Rule 13a-14(a) or                  Rule                  15d-14(a) of the Securities and Exchange Act of 1934, as amended,                  and 18                  U.S.C. Section 1350. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | The                certifications attached as Exhibits 32.1 and 32.2 accompany                this                Quarterly Report on Form 10-QSB pursuant to Section 906                of the                Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by GuruNet                Corporation for purposes of Section 18 of the Securities Exchange                Act                of 1934, as amended. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                      |                                                                                   |                                          |
|-----------------------------------------------------------|----------------------------------------------------------------------------------------|-----------------------------------------------|
|                                                      | GURUNET                CORPORATION                                                     |
|                                                 |                                                                              |                                     |
| Date: August                4th,                2005 | By:                                                                          | /s/ Robert                S. Rosenschein |
|                                                      | Robert                S. Rosenschein                                                   |
|                                                      | Chief                  Executive Officer(Principal                  Executive Officer) |

|   |                                                        |                                     |
|--------|-------------------------------------------------------------|------------------------------------------|
|   | By:                                               | /s/ Steven                Steinberg |
|   | Steven                Steinberg                             |
|   | (Principal                Financial and Accounting Officer) |

----

|   | 31.1   | Certification                of Principal Executive Officer required under Rule 13a-14(a) or Rule                15d-14(a) of the Securities and Exchange Act of 1934, as                amended.                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                         |
|   | 31.2   | Certification                of Principal Financial Officer required under Rule 13a-14(a) or Rule                15d-14(a) of the Securities and Exchange Act of 1934, as                amended.                                            |
|   |   |                                                                                                                                                                                                                                         |
|   | 32.1*  | Certification                of Principal Executive Officer required under Rule 13a-14(a) or Rule                15d-14(a) of the Securities and Exchange Act of 1934, as amended,                and 18                U.S.C. Section 1350. |
|   |   |                                                                                                                                                                                                                                         |
|   | 32.2*  | Certification                of Principal Financial Officer required under Rule 13a-14(a) or Rule                15d-14(a) of the Securities and Exchange Act of 1934, as amended,                and 18                U.S.C. Section 1350. |

| * | The                certifications attached as Exhibits 32.1 and 32.2 accompany                this                Quarterly Report on Form 10-QSB pursuant to Section 906                of the                Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by GuruNet                Corporation for purposes of Section 18 of the Securities Exchange                Act                of 1934, as amended. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----