UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





(Mark
One)





T
            QUARTERLY REPORT UNDER SECTION 13
      OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the
quarterly period ended March 31, 2008





£
            TRANSITION REPORT UNDER SECTION
      13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
  1934





For the
transition period from __________ to ___________





Commission
File Number: 333-106247





Remote
Knowledge, Inc.


(Exact
name of registrant as specified in its charter)





Delaware
              
              74-1664837(State
      or other jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification
number)





3657
Briarpark Drive, Suite 100, Houston, Texas 77042


(Address
of Principal Executive offices)      (Zip
Code)





Issuer’s
telephone number: (281) 599-4800





This
Quarterly Report on Form 10-Q is being filed by the Registrant and includes
unaudited financial statements that have been reviewed by the Registrant’s
auditor.  Investors should review the Registrant’s latest Form 10-Q,
10-KSB and Current Reports on Form 8-K for updated information regarding the
Registrant’s financial condition and results of operations.





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





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





Large
      accelerated filer £
            Accelerated
      filer £Non-accelerated
      filer   £
            Smaller
      reporting company T(Do
      not check if a smaller reporting
company)





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





As of November 1, 2008, there were
29,664,467 shares of $.001 par value common stock.





Remote
Knowledge, Inc.





INDEX
TO QUARTERLY REPORT ON FORM 10-Q





PagePART
      IItem
      1. Financial Statements
                                        F-1
      - F-7Item
      2. Management’s Discussion and Analysis or Plan of
    Operation
                                        3Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                                        7Item
      4. Controls and Procedures
                                        7PART
      IIItem
      1. Legal Proceedings
                                        9Item
      1A. Risk Factors
                                        9Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                                        9Item
      3. Defaults Upon Senior Securities
                                        9Item
      4. Submission of Matters to a Vote of Security Holders
                                        9Item
      5. Other Information
                                        9Item
      6. Exhibits
                                        11





PART
I — FINANCIAL INFORMATION





Item
1. Financial Statements.








Remote
Knowledge, Inc.


(A
Development Stage Enterprise)


Condensed
Balance Sheet








December
      31, 2007
              
              
              March
      31, 2008(unaudited)ASSETSCurrent
      AssetsCash
      and cash equivalents
              
              $
              1,206
              
              
              $Other
      receivables
              
              
              166,303
              
              
              
              10,939Prepaid
      and other current assets
              
              
              42,836
              
              
              
              33,203Total
      current assets
              
              
              210,345
              
              
              
              44,142Property
      and equipment, net
              
              
              195,414
              
              
              
              158,554Other
      noncurrent assets, net
              
              
              11,703
              
              
              
              12,510Total
      assets
              
              $
              417,462
              
              
              $
              215,206LIABILITIES
      AND SHAREHOLDERS’ DEFICITCurrent
      Liabilities:Accounts
      payable — trade
              
              $
              482,142
              
              
              $
              493,265Accrued
      expenses
              
              
              3,316,383
              
              
              
              3,389,910Notes
      payable-related party, net of discount of $4,457 and $1,104,
      respectively
              
              
              3,258,802
              
              
              
              3,257,655Notes
      payable
              
              
              2,122,105
              
              
              
              2,271,210Total
      current liabilities
              
              
              9,179,432
              
              
              
              9,412,040Notes
      payable-related party-long-term, net of discount of $939,894 and $650,602,
      respectively
              
              
              3,005,106
              
              
              
              3,294,998Total
      liabilities
              
              
              12,184,538
              
              
              
              12,707,038Shareholders’
      Deficit:Preferred
      stock — series A, $.001 par value; 15,000 shares authorized; 4,274 shares
      issued and outstanding
              
              
              4
              
              
              
              4Preferred
      stock — series B, $.001 par value; 20,000 shares authorized; 6,229 shares
      issued and outstanding, respectively
              
              
              6
              
              
              
              6Common
      stock, $.001 par value; 150,000,000 shares authorized; 16,767,254 shares
      issued and outstanding, respectively
              
              
              16,767
              
              
              
              16,767Additional
      paid-in capital
              
              
              65,052,217
              
              
              
              65,609,101Subscriptions
      receivable
              
              
              (45,000
              )
              
              
              (45,000
              )Accumulated
      deficit
              
              
              (10,234,380
              )
              
              
              (10,234,380
              )Deficit
      accumulated during development stage
              
              
              (66,556,690
              )
              
              
              (67,838,330
              )Total
      shareholders’ deficit
              
              
              (11,767,076
              )
              
              
              (12,491,832
              )Total
      liabilities and shareholders’ deficit
              
              $
              417,462
              
              
              $
              215,206







The
accompanying notes are an integral part of these financial
statements.


F-1


Remote
Knowledge, Inc.


(A
Development Stage Enterprise)


Unaudited
Condensed Statements of Operations





Period
      From
                            January
      1, 2001
                            (Inception
      of
                            Development
      Stage) toThree-Month
      Periods Ended March 31,
                          
                          
                          March
      31,2007
                          
                          
                          2008
                          
                          
                          2008Revenues
                          
                          $
                          3,030
                          
                          
                          $
                          3,116
                          
                          
                          $
                          94,073Cost
      of Goods Sold
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          76,033Gross
      Profit (Loss)
                          
                          
                          3,030
                          
                          
                          
                          3,116
                          
                          
                          
                          18,040Operating Costs and
      Expenses:Advisory
      services
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          4,169,146Research
      and development
                          
                          
                          261,629
                          
                          
                          
                          204,426
                          
                          
                          
                          7,249,827Loss
      on impairment of assets
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          2,284,164Professional
      fees
                          
                          
                          125,009
                          
                          
                          
                          17,409
                          
                          
                          
                          3,173,784Advertising
      and promotion fees
                          
                          
                          2,130
                          
                          
                          
                          —
                          
                          
                          
                          1,660,464General
      and administrative expenses
                          
                          
                          761,738
                          
                          
                          
                          486,407
                          
                          
                          
                          22,160,933Total
      operating costs and expenses
                          
                          
                          1,150,506
                          
                          
                          
                          708,242
                          
                          
                          
                          40,698,318Loss
      from Operations
                          
                          
                          (1,147,476
                          )
                          
                          
                          (705,126
                          )
                          
                          
                          (40,680,278
                          )Other
      Expenses(Income):Interest
      expense
                          
                          
                          442,703
                          
                          
                          
                          576,462
                          
                          
                          
                          9,279,506Amortization
      of deferred financing costs
                          
                          
                          964
                          
                          
                          
                          —
                          
                          
                          
                          1,188,432Interest
      income
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (21,919
                          )Other
      income
                          
                          
                          —
                          
                          
                          
                          52
                          
                          
                          
                          12,750Other
      expense
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (27,420
                          )Debt
      forgiveness
                          
                          
                          —
                          
                          
                          
                          
                          
                          
                          
                          (1,718,167
                          )Total
      other expenses
                          
                          
                          443,667
                          
                          
                          
                          576,514
                          
                          
                          
                          8,713,182Net
      Loss
                          
                          $
                          (1,591,143
                          )
                          
                          $
                          (1,281,640
                          )
                          
                          $
                          (49,393,460
                          )Effective
      Dividend from Series A Preferred Stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (5,554,000
                          )Warrants
      Issued Series A Preferred Stock
                          
                          
                          —
                          
                          
                          
                          —
                          
                          
                          
                          (1,291,912
                          )Effective
      Dividend from Series B Preferred Stock
                          
                          
                          (100,000
                          )
                          
                          
                          —
                          
                          
                          
                          (11,598,958
                          )Net
      Loss Attributable to Common Shares
                          
                          $
                          (1,691,143
                          )
                          
                          $
                          (1,281,640
                          )
                          
                          $
                          (67,838,330
                          )Net
      Loss Per Share:Basic
      and Diluted
                          
                          $
                          (.11
                          )
                          
                          $
                          (.08
                          )
                          
                          $
                          (7.69
                          )Number
      of Shares Used in Calculating Net Loss Per Share:Basic
      and Diluted
                          
                          
                          15,345,369
                          
                          
                          
                          16,767,254
                          
                          
                          
                          8,818,033





The
accompanying notes are an integral part of these financial
statements.


F-2


Remote
Knowledge, Inc.


(A
Development Stage Enterprise)


Condensed
Statements of Cash Flows


Unaudited





Three-Month
      Periods Ended March 31,
              
              
              Period
      From
                January
      1, 2001
                (Inception
      of
                Development
      Stage) to2007
              
              
              2008
              
              
              March
      31, 2008Cash Flows From Operating
      Activities:Net
      loss
              
              $
              (1,591,143
              )
              
              $
              (1,281,640
              )
              
              $
              (49,393,460
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Accretion
      of debt discount and discount related to beneficial conversion of
      convertible debt
              
              
              380,006
              
              
              
              293,245
              
              
              
              7,000,047Depreciation
              
              
              54,470
              
              
              
              42,941
              
              
              
              1,188,752Loss
      on impairment of fixed assets
              
              
              —
              
              
              
              —
              
              
              
              1,564,282Amortization
      of deferred financing costs
              
              
              964
              
              
              
              —
              
              
              
              1,188,432Equity
      issued for services and interest
              
              
              67,035
              
              
              
              354,384
              
              
              
              10,797,808Provision
      for loss on inventory
              
              
              —
              
              
              
              —
              
              
              
              758,918Debt
      forgiveness
              
              
              —
              
              
              
              —
              
              
              
              (1,708,391
              )Charge
      off of receivables
              
              
              —
              
              
              
              —
              
              
              
              446,414Changes
      in assets and liabilities:Accounts
      receivable
              
              
              660
              
              
              
              —
              
              
              
              —Inventory
              
              
              —
              
              
              
              —
              
              
              
              (836,393
              )Other
      receivables
              
              
              —
              
              
              
              155,364
              
              
              
              (10,939
              )Prepaid
      and other current assets
              
              
              17,954
              
              
              
              9,633
              
              
              
              (707
              )Other
      noncurrent assets
              
              
              (25,000
              )
              
              
              (807
              )
              
              
              (12,510
              )Accounts
      payable – trade
              
              
              157,984
              
              
              
              11,123
              
              
              
              1,374,801Accrued
      expenses and deferred revenue
              
              
              112,234
              
              
              
              276,027
              
              
              
              2,709,784Related
      party payable
              
              
              —
              
              
              
              —
              
              
              
              399,259Net
      cash used in operating activities
              
              
              (824,836
              )
              
              
              (139,730
              )
              
              
              (24,533,903
              )Cash Flows From Investing
      Activities:Additions
      of fixed assets
              
              
              (16,900
              )
              
              
              (6,081
              )
              
              
              (1,040,060
              )Related
      party receivable
              
              
              —
              
              
              
              —
              
              
              
              (300,000
              )Net
      cash used in investing activities
              
              
              (16,900
              )
              
              
              (6,081
              )
              
              
              (1,340,060
              )Cash Flows From Financing
      Activities:Payments
      of notes payable
              
              
              (30,594
              )
              
              
              (895
              )
              
              
              (3,456,194
              )Capital
      contributions
              
              
              —
              
              
              
              —
              
              
              
              27,900Proceeds
      from notes payable
              
              
              —
              
              
              
              —
              
              
              
              1,500,000Proceeds
      from short term notes payable
              
              
              450,000
              
              
              
              150,000
              
              
              
              4,785,000Proceeds
      from sale of common stock
              
              
              —
              
              
              
              —
              
              
              
              903,800Proceeds
      from other notes payable
              
              
              —
              
              
              
              —
              
              
              
              3,477,910Net
      proceeds from sale of mandatory redeemable preferred stock
              
              
              —
              
              
              
              —
              
              
              
              5,040,033Net
      proceeds from sale of series B preferred stock
              
              
              —
              
              
              
              —
              
              
              
              7,114,073Payment
      of advance from related party
              
              
              —
              
              
              
              (4,500
              )
              
              
              —Proceeds
      from related party notes payable
              
              
              —
              
              
              
              —
              
              
              
              6,448,333Net
      cash provided by financing activities
              
              
              419,406
              
              
              
              144,605
              
              
              
              25,840,855Net
      Change in Cash and Cash Equivalents
              
              
              (422,330
              )
              
              
              (1,206
              )
              
              
              (33,108
              )Cash and Cash
      Equivalents, beginning of period
              
              
              519,583
              
              
              
              1,206
              
              
              
              33,108Cash and Cash
      Equivalents, end of period
              
              $
              97,253
              
              
              $
              —
              
              
              $
              —





The
accompanying notes are an integral part of these financial
statements.


F-3


Remote
Knowledge, Inc.


(A
Development Stage Enterprise)


Condensed
Statements of Cash Flows (continued)


Unaudited





Three-Month
      Periods Ended March 31
              
              
              Period
      From
                January
      1, 2001
                (Inception
      of
                Development
      Stage) to2007
              
              
              2008
              
              
              March
      31, 2008Non-Cash
      Transactions:Issuance
      of common stock for related party debt
              
              $
              —
              
              
              $
              —
              
              
              $
              888,832Issuance
      of common stock for debt
              
              $
              —
              
              
              $
              —
              
              
              $
              1,157,114Issuance
      of common stock for assets
              
              $
              —
              
              
              $
              —
              
              
              $
              8,000Conversion
      of accounts payable to notes payable
              
              $
              —
              
              
              $
              —
              
              
              $
              766,484Conversion
      of notes payable and other debt to equity
              
              $
              100,000
              
              
              $
              —
              
              
              $
              4,301,000Contribution
      of capital by shareholders for financing costs
              
              $
              —
              
              
              $
              —
              
              
              $
              1,188,432Issuance
      of common stock (33,350 shares, 0 shares and 1,694,179 shares,
      respectively) upon conversion of Series A preferred stock
              
              $
              33
              
              
              $
              —
              
              
              $
              1,693Issuance
      of common stock ( 266,668 shares, 0 shares,  and 7,234,004
      shares, respectively) upon conversion of Series B preferred
      stock
              
              $
              267
              
              
              $
              —
              
              
              $
              7,234Issuance
      of common stock upon conversion of mandatory redeemable preferred stock
      classified as debt
              
              $
              —
              
              
              $
              —
              
              
              $
              20,000Reclassification
      of mandatorily redeemable preferred stock to equity
              
              $
              —
              
              
              $
              —
              
              
              $
              5,534,000Discount
      related to beneficial conversion of mandatory redeemable Series A
      preferred stock
              
              $
              —
              
              
              $
              —
              
              
              $
              5,554,000Warrants
      issued for release of redemption provision of Series A preferred
      stock
              
              $
              —
              
              
              $
              —
              
              
              $
              1,291,912Discount
      related to beneficial conversion of Series B preferred stock and
      warrants
              
              $
              100,000
              
              
              $
              
              
              
              $
              11,598,958Reclassification
      of demo units from inventory to property and equipment
              
              $
              —
              
              
              $
              —
              
              
              $
              77,475Discount
      related to notes payable
              
              $
              170,000
              
              
              $
              —
              
              
              $
              5,689,347Conversion
      of notes payable into convertible debt
              
              $
              —
              
              
              $
              —
              
              
              $
              375,000Conversion
      of accrued expenses into note payable
              
              $
              —
              
              
              $
              —
              
              
              $
              87,028Issuance
      of common stock (391,667 shares, 0 shares, and 893,336 shares,
      respectively) as interest on bridge loans
              
              $
              392
              
              
              $
              —
              
              
              $
              894Issuance
      of common stock (180,557 shares) as default interest on bridge
      loans
              
              $
              —
              
              
              $
              —
              
              
              $
              180Unissued
      Common Stock with bridge loans
              
              $
              —
              
              
              $
              —
              
              
              $
              101Unissued
      Common Stock as Interest on bridge loans
              
              $
              —
              
              
              $
              952
              
              
              $
              1,678Issuance
      of common stock (30,000 shares, 0 shares and 120,000 shares, respectively)
      associated with restricted stock grant
              
              $
              30
              
              
              $
              —
              
              
              $
              120Total
      noncash transactions
              
              $
              370,722
              
              
              $
              952
              
              
              $
              38,549,482Supplemental Disclosure of Cash
      Flow Information:Cash
      paid for interest
              
              $
              987
              
              
              $
              —
              
              
              $
              383,122







The
accompanying notes are an integral part of these financial
statements.


F-4


Remote
Knowledge, Inc.


(A
Development Stage Enterprise)


Notes
to the Financial Statements


March
31, 2008


(Unaudited)





Note 1 — Basis of
Presentation





The
unaudited condensed financial statements have been prepared by the Company
pursuant to the rules and regulations of the United States Securities and
Exchange Commission (the “SEC”). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been omitted
pursuant to such SEC rules and regulations; nevertheless, the Company believes
that the disclosures are adequate to make the information presented not
misleading. The condensed financial statements and notes should be read in
conjunction with financial statements and notes thereto included in the
Company’s Annual Report on Form 10-KSB for the year ended December 31, 2007. In
the opinion of the Company, all adjustments, including normal recurring
adjustments necessary to present fairly, in all material respects, the financial
position of the Company, as of March 31, 2008, and the results of its operations
and cash flows for the period then ended, have been included. The results of
operations for the interim period are not necessarily indicative of the results
for the full year.





Note 2 — Significant
Accounting Policies





Share-Based
Compensation – Effective January 1, 2006, the Company adopted the fair
value recognition provisions of Statement of Financial Accounting Standard No.
123(R) “Share-Based
Payment-Revised 2004”(“SFAS 123(R)”).  The stock compensation
expense for the three month period ended March 31, 2008 amounted to
$152,135.  For the quarter ended March 31, 2008 this expense increased
basic and diluted loss per share by $0.01, from $0.07 to the reported basic and
diluted loss per share of $0.08. The stock compensation expense for the quarter
ended March 31, 2007 amounted to $52,047.  For the quarter ended March
31, 2007 this expense increased basic and diluted loss per share by less than
$0.01. The Company did not recognize a tax benefit from the stock compensation
expense because the Company considers it more likely than not that the related
deferred tax assets, which have been reduced by a full valuation allowance, will
not be realized.





The
Black-Scholes option-pricing model was used to estimate the option fair values.
The option-pricing model requires a number of assumptions, of which the most
significant are, expected stock price volatility, the expected pre-vesting
forfeiture rate and the expected option term (the amount of time from the grant
date until the options are exercised or expire). Expected volatility was
calculated based upon actual historical stock price movements over the most
recent periods ending March 31, 2008 equal to the expected option term. Expected
pre-vesting forfeitures were estimated based on actual historical pre-vesting
forfeitures over the most recent periods ending March 31, 2008 for the expected
option term. The expected option term was calculated using the “simplified”
method permitted by SAB 107.





The
Company has never had any exercise of stock options. SFAS 123(R) requires tax
benefits resulting from tax deductions in excess of the compensation cost
recognized for those options (“excess tax benefits”) to be classified and
reported as both an operating cash outflow and a financing cash inflow upon
adoption of SFAS 123(R). As a result of the Company’s net operating losses, the
excess tax benefits that would otherwise be available to reduce income taxes
payable have the effect of increasing the Company’s net operating loss carry
forwards. Accordingly, because the Company is not able to realize these excess
tax benefits, such benefits will not be recognized in the condensed statement of
cash flow until such time as benefits can be used.





Note 3 — Notes
Payable





From
January 1, 2008 through March 31, 2008, the Company received $150,000 in cash
from non-affiliated parties.  These funds were part of the $800,000
funding closed on August 21, 2008.   See Note 5 – Subsequent
Event for more information.


F-5


Note 4 — Net Loss Per
Share





Loss per
share (LPS) is computed by dividing the net loss for the period attributable to
common shares by the weighted-average number of common shares outstanding for
the period. Diluted LPS is based on the weighted-average number of shares of
common stock and common stock equivalents outstanding for the
period.  For the three month periods ended March 31, 2007 and 2008,
respectively, common stock equivalents have been excluded from the calculation
of weighted-average shares for purposes of calculating diluted loss per share,
as such inclusion was anti-dilutive.





Note 5 — Subsequent
Events





On August
21, 2008, the Company entered into a credit agreement with SLW International,
LLC, a Delaware limited liability company (“SLWI”), pursuant to which
SLWI  agreed to lend to the Company $800,000 (the “Senior
Loan”), as first reported in the Company’s Form 8-K filed with the
Commission on August 28, 2008.  The Senior Loan was made in accordance
with, and secured by, a note (the “Senior Note”) and security agreement (the
“Senior Security Agreement”) between the Company and SLWI.  This
Senior Note was executed in renewal of a promissory note dated May 30, 2008,
executed by the Company and payable to the order of Muragai LLC, a Delaware
limited liability company and a wholly-owned subsidiary of SLWI
(“Muragai”).  The May 30, 2008 note was executed by the Company in
renewal of a promissory note dated February 25, 2008, payable to the order of
Muragai in the original principal amount of $250,000, which prior promissory
notes had been assigned to SLWI by Muragai pursuant to that certain Assignment
of Note and Liens dated as of July 30, 2008.  All principal
outstanding under the Senior Note pursuant to the renewal, extension and
conversion of the prior notes shall bear interest retroactive to the date of
initial funding and prior to maturity at a rate equal to the lesser of (i) the
maximum, nonusurious rate allowed by law and (ii) fifteen percent (15%) per
annum.





At any
time, SLWI may elect, upon not less than seventy-five (75) days notice to the
Company, at its sole discretion, by written notice to the Company, to convert or
exchange all or any part of the amounts outstanding under the Senior Note and
any accrued and unpaid interest thereon into the Company’s common
stock.  Each $0.04 of the outstanding balance of the Senior Note (the
“Conversion Price”) may be converted into or exchanged for one (1) share of the
Company’s common stock based on 62,500,000 outstanding shares of the Company’s
stock (the “Common Stock”) on a fully diluted basis.  The Conversion
Price shall be subject to adjustment from time to time as provided in the Senior
Note in order to prevent the dilution of SLWI’s right to acquire shares of the
Company’s common stock.





On August
21, 2008 (the “Closing Date”), the Company also entered into a Credit Agreement
(the “Credit Agreement”) made between it and a group of accredited investors
represented by Muragai (such group being collectively referred to herein as
“Lenders”, under which Lenders agreed to extend credit to the Company in the
form of a convertible advancing term loan (the “Junior Loan”) in the principal
amount of $4,000,000 (the “Loan Funds”). The Credit Agreement provides for the
Loan Funds to be advanced to the Company in increments following requests by the
Company, as may be made from time to time, up to the total committed Loan
Funds.  The Junior Loan is made in accordance with, and secured by a
note (the “Junior Note”) and security agreement (the “Junior Security
Agreement”) between the Company and Lenders.





A
mandatory prepayment of the advanced Loan Funds may be required by Lenders after
the Company has achieved a positive cash flow (as defined according to the terms
of the Credit Agreement) for any three consecutive fiscal
quarters.   The total principal advanced, and accrued interest
thereon, under the Credit Agreement is due and payable August 21,
2013.  Interest accrues on any advanced funds at the rate of twelve
percent (12%) per annum or the maximum, nonusurious rate allowed by law,
whichever is lesser.  Accrued and unpaid interest must be paid upon
the payment or prepayment of any advanced Loan Funds; upon a request by Lenders
made after the Company has achieved a positive cash flow for at least one fiscal
quarter, in an amount reasonably determined by Lenders; and on the maturity
date.





At any
time, the Lenders may elect, upon not less than seventy-five (75) days notice to
the Company, at its sole discretion, by written notice to the Company, to
convert or exchange all or any part of the amounts outstanding under the Junior
Loan and any accrued and unpaid interest thereon into the Company’s common
stock.  Each $0.04 of the outstanding balance of the Junior Loan (the
“Conversion Price”) may be converted into or exchanged for one (1) share of the
Company’s common stock based on 62,500,000 outstanding shares of the Company’s
stock (the “Common Stock”) on a fully diluted basis.  The Conversion
Price shall be subject to adjustment from time to time as provided in the Junior
Loan in order to prevent the dilution of the Lenders’ right to acquire shares of
Company’s common stock.


F-6


In
connection with the Credit Agreement, the Company issued to Lenders warrants
executable for shares of the Company’s common stock in the aggregate amount of
15,000,000 shares (the “Lender Warrants”).  The Lender Warrants bear
an exercise price of $0.04 per share, and are exercisable for a period of ten
(10) years from the Closing Date.





As a
condition of the Credit Agreement, the Company also entered into settlements
with several creditors, including current and former employees, under which
outstanding debts of the Company will be exchanged for the issuance of common
stock at a price of $0.75 per share.  The Company will issue
approximately 16,000,000 shares of common stock related to these
settlements.  The various settlements include approximately 5,700,000
shares of common stock related to the extinguishment of outstanding bridge loans
in the amount of $2,953,000; approximately 6,900,000 shares of common stock to
settle outstanding notes payable in the amount of $4,500,000 including accrued
interest of approximately $1,000,000; approximately 2,400,000 shares of common
stock to settle an additional four debt instruments in the amount of $180,000;
approximately 900,000 shares of common stock to resolve various other
settlements; approximately 400,000 shares of common stock to settle back pay
related to certain current and former employees; and approximately 23,000 shares
of common stock to settle outstanding balances owed to legacy expenses related
to accounts payable.





In
connection with the change of certain executives' positions within the Company
and significant changes in personnel, the Company agreed to cancel all
outstanding options.  In connection with the financing transaction, the
Company agreed to pay to Muragai, an arrangement fee in the amount of $50,000 on
the Closing Date.





Effective
December 5, 2008, the client auditor relationship between Remote Knowledge, Inc.
(the “Company”) and Hein & Associates LLP ("Hein") was terminated as Hein
resigned as the Company’s independent registered accounting
firm.  Effective December 5, 2008, the Company engaged Ham, Langston
& Brezina, LLP, as its principal independent public accountant for the
fiscal year ended December 31, 2008. The appointment of the new independent
public accountant was recommended, approved and ratified by the Company's Board
of Directors effective December 8, 2008.





On or
about December 22, 2008, the Company received shareholder approval to increase
the authorized shares of common stock of the Company from 150,000,000 to
500,000,000.


F-7


Item
2. Management’s Discussion and Analysis or Plan of Operations





The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and related notes, and the
other financial information included in this quarterly report, and in our Annual
Report on Form 10-KSB for the year ended December 31, 2007. In addition to
the discussion provided herein, further analysis of annual financial statements
can be found in, and investors should review, our Annual Report on Form 10-KSB
for the year ended December 31, 2007.  With respect to this
discussion, the terms “Remote Knowledge,” “Company,” “we,” “us,” and “our” refer
to Remote Knowledge, Inc.





Risk
Factors





For a
detailed discussion of the risk factors that should be understood by any
investor contemplating investment in our stock, please refer to the section
entitled, “Risk Factors” in our 2007 Form 10-KSB.





Forward-Looking
Statements





Except
for historical information contained herein, this Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Statements that are not statements of historical fact may be deemed
to be forward-looking statements. Such statements reflect the current views and
assumptions of the Company and are not guarantees of future performance. These
statements are subject to various risks and uncertainties. The Company’s actual
results could differ materially from those anticipated in these forward-looking
statements as a result of the risk factors described in this Form 10-Q. The
Company expressly disclaims any obligation to release publicly any updates or
revisions to any forward-looking statement to reflect any changes in
expectations, or any change in events or circumstances on which those statements
are based, unless otherwise required by law.





Such
Forward-Looking statements are not guarantees of future performance and actual
results could differ materially from those expressed or implied in such
statements as a result of certain factors, including those set forth in the
“Plan of Operation,” and elsewhere in this report. All statements, other than
statements of historical facts, included in this report that address activities,
events or developments that we expect, believe, intend or anticipate may occur
in the future, including the following matters, are forward looking
statements:





•
            timing
      of products and new product
releases,


•
            research
      and development expenditures, including the timing, amount and nature
      thereof,


•
            estimates
      of additional capital requirements,


•
            sales
      projections,


•
            repayment
      of debt,


•
            business
      strategies,


•
            product
      pricing and demand, and


•
            expansion
      and growth of business operations.





These
statements are based on certain assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
in the circumstances. These forward-looking statements are subject to risks and
uncertainties, including those associated with:





•
            the
      availability of additional financing on favorable
    conditions,


•
            general
      economic, market and business
conditions,


•
            the
      success of our engineering efforts,


•
            our
      ability to protect our intellectual
property,


•
            business
      opportunities that may be presented to and pursued by
  us,


•
            changes
      in laws or regulations, and


•
            successful
      exploitation of our market
opportunities.





Significant
factors that could prevent us from achieving our stated goals
include:





•
            our
      inability to obtain financing for research and development, manufacturing,
      and marketing expenditures,


•
            our
      inability to compete against existing or future
    competitors,


•
            a
      substantial increase in the cost of our
  products,


•
            declines
      in the market prices for our products,
and


•
            adverse
      changes in our target markets.


-3-


The
cautionary statements contained or referred to in this report should be
considered in connection with any subsequent written or oral forward-looking
statements that may be issued by us or persons acting on our
behalf.





Description of Business and
Plan of Operation





Remote
Knowledge, Inc., a Houston, Texas based company, develops, delivers and supports
proprietary communications and data-management products.  Our platform
development strategy proposes combining our proprietary technologies (hardware
design, embedded firmware, software and ongoing software applications) with
off-the-shelf communications services to create a product platform with the
ability to provide high-speed internet, voice, e-mail, text messaging, and
entertainment and content applications. In addition, our solutions will allow
for two-way data transfer as well as customized remote monitoring and control of
vessels shipboard systems. The initial result of this strategy has been the
creation of our high speed communication platform which we call “GEO
Mobile”.





In the
near term, we plan to focus efforts on completing development of our product and
service offerings and preparing our GEO Mobile technology for market
introduction. We expect that our GEO Mobile platform will be available for
purchase by leisure boat consumers sometime in 2009, of which there can be no
assurances.





Recent
Financing





On August
21, 2008, the Company entered into a credit agreement with SLW International,
LLC, a Delaware limited liability company (“SLWI”), pursuant to which
SLWI  agreed to lend to the Company $800,000 (the “Senior Loan”), as
first reported in the Company’s Form 8-K filed with the Commission on August 28,
2008.  The Senior Loan was made in accordance with, and secured by, a
note (the “Senior Note”) and security agreement (the “Senior Security
Agreement”) between the Company and SLWI.  This Senior Note was
executed in renewal of a promissory note dated May 30, 2008, executed by the
Company and payable to the order of Muragai LLC, a Delaware limited liability
company and a wholly-owned subsidiary of SLWI (“Muragai”).  The May
30, 2008 note was executed by the Company in renewal of a promissory note dated
February 25, 2008, payable to the order of Muragai in the original principal
amount of $250,000, which prior promissory notes had been assigned to SLWI by
Muragai pursuant to that certain Assignment of Note and Liens dated as of July
30, 2008.  All principal outstanding under the Senior Note pursuant to
the renewal, extension and conversion of the prior notes shall bear interest
retroactive to the date of initial funding and prior to maturity at a rate equal
to the lesser of (i) the maximum, nonusurious rate allowed by law and (ii)
fifteen percent (15%) per annum.





At any
time, SLWI may elect, upon not less than seventy-five (75) days notice to the
Company, at its sole discretion, by written notice to the Company, to convert or
exchange all or any part of the amounts outstanding under the Senior Note and
any accrued and unpaid interest thereon into the Company’s common
stock.  Each $0.04 of the outstanding balance of the Senior Note (the
“Conversion Price”) may be converted into or exchanged for one (1) share of the
Company’s common stock based on 62,500,000 outstanding shares of the Company’s
stock (the “Common Stock”) on a fully diluted basis.  The Conversion
Price shall be subject to adjustment from time to time as provided in the Senior
Note in order to prevent the dilution of SLWI’s right to acquire shares of the
Company’s common stock.





On August
21, 2008 (the “Closing Date”), the Company also entered into a Credit Agreement
(the “Credit Agreement”) made between it and a group of accredited investors
represented by Muragai (such group being collectively referred to herein as
(“Lenders”), under which Lenders agreed to extend credit to the Company in the
form of a convertible advancing term loan (the “Junior Loan”) in the principal
amount of $4,000,000 (the “Loan Funds”). The Credit Agreement provides for the
Loan Funds to be advanced to the Company in increments following requests by the
Company, as may be made from time to time, up to the total committed Loan
Funds.  The Junior Loan is made in accordance with, and secured by a
note (the “Junior Note”) and security agreement (the “Junior Security
Agreement”) between the Company and Lenders.





A
mandatory prepayment of the advanced Loan Funds may be required by Lenders after
the Company has achieved a positive cash flow (as defined according to the terms
of the Credit Agreement) for any three consecutive fiscal
quarters.   The total principal advanced, and accrued interest
thereon, under the Credit Agreement is due and payable August 21,
2013.  Interest accrues on any advanced funds at the rate of twelve
percent (12%) per annum or the maximum, nonusurious rate allowed by law,
whichever is lesser.  Accrued and unpaid interest must be paid upon
the payment or prepayment of any advanced Loan Funds; upon a request by Lenders
made after the Company has achieved a positive cash flow for at least one fiscal
quarter, in an amount reasonably determined by Lenders; and on the maturity
date.


-4-


At any
time, the Lenders may elect, upon not less than seventy-five (75) days notice to
the Company, at its sole discretion, by written notice to the Company, to
convert or exchange all or any part of the amounts outstanding under the Junior
Loan and any accrued and unpaid interest thereon into the Company’s common
stock.  Each $0.04 of the outstanding balance of the Junior Loan (the
“Conversion Price”) may be converted into or exchanged for one (1) share of the
Company’s common stock based on 62,500,000 outstanding shares of the Company’s
stock (the “Common Stock”) on a fully diluted basis.  The Conversion
Price shall be subject to adjustment from time to time as provided in the Junior
Loan in order to prevent the dilution of the Lenders’ right to acquire shares of
Company’s common stock.





In
connection with the Credit Agreement, the Company issued to Lenders warrants
executable for shares of the Company’s common stock in the aggregate amount of
15,000,000 shares (the “Lender Warrants”).  The Lender Warrants bear
an exercise price of $0.04 per share, and are exercisable for a period of ten
(10) years from the Closing Date.





As a
condition of the Credit Agreement, the Company also entered into settlements
with several creditors, including current and former employees, under which
outstanding debts of the Company will be exchanged for the issuance of common
stock at a price of $0.75 per share.  The Company will issue
approximately 16,000,000 shares of common stock related to these
settlements.  The various settlements include approximately 5,700,000
shares of common stock related to the extinguishment of outstanding bridge loans
in the amount of $2,953,000; approximately 6,900,000 shares of common stock to
settle outstanding note payables in the amount of $4,500,000 including accrued
interest of approximately $1,000,000; approximately 2,400,000 shares of common
stock to settle an additional four debt instruments in the amount of $180,000;
approximately 900,000 shares of common stock to resolve various other
settlements; approximately 400,000 shares of common stock to settle back pay
related to certain current and former employees; and approximately 23,000 shares
of common stock to settle outstanding balances owed to legacy expenses related
to accounts payable.





In
connection with the financing transaction, the Company agreed to pay to Muragai,
an arrangement fee in the amount of $50,000 on the Closing Date.





This
financing enables the Company to fund its operations and product development
through early 2009.  It will also enable the Company to continue its
fund raising efforts.  The Company’s ability to raise additional
capital will be dependent upon the success of the Company’s development efforts,
the potential acceptance of its products and services in the market and the
ability of management to execute a marketing and business development plan.The following
table provides the anticipated capitalization of the Company subsequent to
completion of all of the transactions described above under “Recent
Financing”:





Description
              Common
      Stock
              
              Series
      A Preferred (1)
              
              Series
      B Preferred (1)
              
              Warrants
              
              Convertible
      Debt (1)
              
              Restricted
      Stock and OptionsOutstanding
      prior to recent financing
              
              16,800,588
              
              
              5,698,667
              
              
              8,272,000
              
              
              48,315,817
              
              
              3,970,000
              
              
              9,165,000Execution
      of Senior Loan of $800,000
              
              -
              
              
              -
              
              
              -
              
              
              15,000,000
              
              
              20,000,000
              
              
              -Execution
      of Junior Loan of $4,000,000
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              100,000,000
              
              
              -Settlement
      with creditors (2)
              
              15,560,649
              
              
              -
              
              
              -
              
              
              -
              
              
              (3,970,000
              )
              
              -Cancellation
      of warrants and option grants
              
              -
              
              
              -
              
              
              -
              
              
              (32,569,520
              )
              
              -
              
              
              (9,165,000
              )Issuance
      of options to management
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              2,500,000Issuance
      of warrants to directors
              
              -
              
              
              -
              
              
              -
              
              
              1,550,000
              
              
              -
              
              
              -Outstanding
      post transaction (3)
              
              32,361,237
              
              
              5,698,667
              
              
              8,272,000
              
              
              32,296,297
              
              
              120,000,000
              
              
              2,500,000


-5-


(1)
              Amount as converted into common
      stock.


(2)
              Settlement transactions have not
      been completed and shares have not been issued by the transfer
      agent.  The data included in this table reflects current
      agreements and obligations entered into in connection with this
      financing.  Final amounts may change upon final
      negotiation.


(3)
            Total shares of common stock on
      an as converted basis is 201,128,202.  Data regarding
      capitalization reflect anticipated totals subsequent to satisfaction of
      agreements calling for issuance of securities.  These amounts
      are subject to adjustments made in connection with final
      distribution.  Terms of such settlements and other issuances are
      described in greater depth in the section entitled“Recent
      Financing,”above.





Results of
Operations





We have
had minimal revenues to date, and our expenses have consisted primarily of
research and development, sales and marketing and general and administrative
expenses, resulting in a deficit accumulated as a development stage company
through March 31, 2008 of $67,838,330.





We had
total revenues of $3,116 for the three months ended March 31, 2008, an increase
in total revenue of $86 from total revenues of $3,030 for the three months ended
March 31, 2007.





Research
and development costs have been expensed as incurred. We had research and
development costs for the three month period ended March 31, 2008 of $204,426,
as compared with $261,629 for the same period in 2007, a decrease of $57,203
from the prior period, which decrease is due to the of reduction of personnel as
result of lack of capital resources.  In the last half of 2007 and
early 2008 we had a reduction of 3 employees in the research and development
department.





Professional
fees decreased significantly for the three months ended March 31, 2008 compared
to the same period in 2007.  Professional fees were $17,409 for
the three month period ended March 31, 2008 as compared to $125,009 for the same
period in 2007, a decrease of $107,600. This reduction is primarily the result
of a decrease in expenses associated with public company reporting, as we did
not complete the 2007 audit and quarterly filings until the fourth quarter of
2008.





General
and administrative expenses for the three months ended March 31, 2008 as
compared to the same period in 2007, decreased from $761,738 to $486,407, a
decrease of $275,331 from the prior period. The decrease is mainly attributable
to a decrease in personnel and public company costs.





We had
interest expense for the three months ended March 31, 2008 of $576,462, compared
to interest expense of $442,703 for the three months ended March 31, 2007, an
increase of $133,759 from the prior period.  The increase was mainly
due to an increase in interest expense associated with additional debt,
partially offset by a decrease in the debt discount.





We had
net loss of $1,281,640 for the three months ended March 31, 2008, compared to
net loss of $1,591,143 for the three months ended March 31, 2007, a decrease of
$309,503 from the prior period.





Liquidity and Capital
Resources





We had
negative working capital of $9,367,898 and a deficit accumulated during
development stage of $67,838,330 as of March 31, 2008.





We had
net cash used in operating activities of $824,836 for the three months ended
March 31, 2008, which was mainly due to $1,591,143 of net loss and $25,000 of
change in other non-current assets, partially offset by $380,006 of accretion of
debt discount and discount related to beneficial conversion of convertible debt,
$54,470 of depreciation, $67,035 equity issued for services and interest,
$17,954 of change in prepaid and other current assets, $157,984 of change in
accounts payable-trade and $112,234 of change in accrued
expenses.





We had
$16,900 of net cash used in investing activities for the three months ended
March 31, 2008, which was entirely due to $16,900 of additions of fixed
assets.





We had
$419,406 of net cash provided by financing activities during the three months
ended March 31, 2008, which represented $450,000 proceeds from short term notes
payable, partially offset by $30,594 of payments of notes
payable.


-6-


From
January 1, 2008 through March 31, 2008, the Company received $150,000 in cash
from non-affiliated parties.  These funds were part of the $800,000
funding closed on August 21, 2008, as described in more detail above under
“Recent Financing.”





Recent
turmoil in the financial markets may cause significant disruptions in our
ability to raise additional capital to fund the Company’s operations in the near
term.  In addition, an anticipated downturn in the global economy may
cause less demand for our products and services.  As a result of the
recent financing (see “Recent Financing” above in the footnotes to the financial
statements), the Company believes it has sufficient capital to fund its
operations through early 2009.  The Company believes it will have a
product in the later stages of development at that point.  Assuming
the product is deemed successful and marketable, the Company will seek
additional capital to fund efforts in preparation for market introduction and
revenue stage in 2009.  The Company believes it will need an
additional $7 million to fund remaining development and market introduction and
provide necessary working capital.  While the Company may experience
short periods of positive cash flow, sustainable positive cash flow is not
anticipated until 2011.  The Company may seek additional funds through
equity financing, debt financing or other sources, which may result in
substantial dilution of the equity ownership of our shares.  There can
be no assurance that additional financing will be available to us when needed
or, if available, that it can be obtained on commercially reasonable
terms.





Our
auditors included an explanatory paragraph in their opinion on our financial
statements for the year ended December 31, 2007 to state that our losses,
working capital deficit and shareholders’ deficit at December 31, 2007 raised
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is dependent upon receiving the additional
capital and achieving profitable operations through the manufacture and sale of
our product. We cannot assure you that we will be able to obtain additional
capital or that sales of our product will generate significant
profits.





As of
March 31, 2008, we had a cash balance of $-0- and negative working capital of
$9,367,898.  We maintained minimal operations during the first three
months of 2008, until we received the additional funds discussed in “Recent
Financing” above.  Our projected cash “burn rate” is approximately
$250,000 per month. Before we experience significant revenue, if at all, we
expect to need about $7 million of additional cash.  From January 1,
2008 through March 31, 2008, we expended approximately $140,000.





Contractual
Commitments





There
have been no material changes to the Company’s contractual commitments during
the first quarter. Please see Note 5 to the accompanying financial
statements for more information concerning the Company’s new financing
arrangement completed in August 2008. Refer to the Company’s Annual Report on
Form 10-KSB for December 31, 2007 for a complete discussion of its lease
obligations. Except for the commitments arising from its operating leases
arrangements, as of March 31, 2008, the Company did not have any off-balance
sheet arrangements that are reasonably likely to have a material effect on our
financial statements.





Item
3. Quantitative and Qualitative Disclosures About Market Risk





Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to
provide the information required by this Item as it is a “smaller reporting
company,” as defined by Rule 229.10(f)(1).





Item
4T. Controls and Procedures.





Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act is accumulated and
communicated to the issuer’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. As noted
below, we concluded that our disclosure controls and procedures were not
effective, as of the end of the period covered by this report, in ensuring that
material information that we are required to disclose in reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the SEC rules and forms. We believe that we
will have effective internal controls to meet this requirement prior to the
filing of our annual report for the year ended December 31,
2008.


-7-


Management’s
Annual Report on Internal Control over Financial Reporting





(a)
Evaluation of disclosure controls and procedures. Our management is responsible
for establishing and maintaining adequate internal control over financial
reporting. Internal control over financial reporting is defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a
process designed by, or under the supervision of, a company’s principal
executive and principal financial officers and effected by a company’s board of
directors, management and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that: (i) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of consolidated financial
statements in accordance with generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on the
consolidated financial statements.





We are
committed to maintaining disclosure controls and procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit to the Securities and Exchange Commission under the Exchange Act,
is recorded, processed, summarized and reported within the time periods
specified by the Securities and Exchange Commission’s rules and forms, and that
information is accumulated and communicated to our management, including our
Chief Executive Officer and principal accounting officer, as appropriate, to
allow timely decisions regarding required disclosure.




Management
concluded that its internal controls over financial reporting were not effective
in 2007 due to a lack of qualified accounting and financial reporting personnel.
This material weakness continued to exist to the date of this filing and as
such our internal controls over financial reporting were not effective as of the
end of the period covered by this report. The Company has engaged outside
consultants to address this material weakness and to further enhance and
improve its internal control environment. The Company expects to have
effective controls in place by the end of 2008, of which there can be no
assurances.




(b)
Changes in internal control over financial reporting. There were no changes in
our internal control over financial reporting during the three months ended
March 31, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting. On March 31,
2008, our Chief Financial Officer resigned from the Company.  Because
of significant capital constraints, we have not hired a
replacement.


-8-


PART
II — OTHER INFORMATION





Item
1. Legal Proceedings





On
October 22, 2003, we settled litigation with our former chief executive officer,
Dan Goodhall. The settlement resulted in all litigation being dismissed with
prejudice relating to the Harris County, Texas Judicial District Case No.
202-09577. The settlement required that commencing on December 15, 2003; we must
repurchase the 125,000 shares of stock issued to Mr. Goodhall during the term of
his employment, including payments for estimated tax liability for a combined
total of $498,500, which payments were to be made periodically until September
15, 2004. We were unable to meet payment obligations and on several occasions
the settlement terms were revised, which permitted Mr. Goodhall to retain his
common shares.  As of December 31, 2007, the unpaid amount was $95,731
in the form of a note due and payable in March 2007.  This liability
was settled as part of the August 2008 funding agreement, described above under
“Recent Financing.”





On
October 27, 2003, Lockheed Martin, Inc. filed suit in the 55th Judicial District
in Harris County, Texas to collect on a promissory note issued by us to Lockheed
Martin in the principal amount of $480,484 plus interest for a total due through
August 31, 2003 of $502,542. This promissory note is secured by a lien against
all of the computer equipment purchased from Lockheed under our Engineering and
Development Agreement with Lockheed Martin. Lockheed Martin owns all of the
technology developed by them until this note is paid in full. On June 30, 2004,
the parties agreed to settle the litigation with us paying $12,500 of the
accrued interest, and Lockheed Martin agreeing to extend the note with 6%
interest until June 30, 2005. At that date, the note was extended with a monthly
payment schedule which was not always met. Subsequently, the note has been
extended several times and due June 30, 2007. The balance on the note at
December 31, 2007 was $380,068. The lien on the computer equipment has been
released as this liability was settled as part of the August 2008 funding
agreement.





On
October 12, 2004, Oracle Corporation filed suit in Superior Court of California,
County of Santa Clara, seeking $270,475 for payment of software allegedly
delivered to us in August of 2002. We filed a defense stating we had never
received the software. The litigation was settled on March 21, 2005 by our
agreeing to make 24 monthly payments of $9,000 each. We have not always made
these payments timely and are currently in arrears. The balance outstanding
under the settlement at December 31, 2007 was $117,475.  This
liability was settled as part of the August 2008 funding agreement.





Item 1A.  Risk
Factors.





There are
no material changes to the risk factors discussed in our Annual Report on Form
10-KSB for the year ended December 31, 2007, during the first three months of
2008 and investors are encouraged to review those risk factors in detail before
making any investment in the Company’s securities.





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





No sales
of equity securities were completed during the three months ended March 31,
2008.  Please see Note 5 – Subsequent Event for details of the recent
financing and related securities sold in connection with the same.





Item
3.  Defaults Upon Senior Securities.





None.





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





None





Item
5. Other Information





On August
21, 2008, the following Company Directors tendered their resignation: D. Henry
Houston and William H. Moody.  Mr. Houston had previously resigned as
the Company’s Chief Financial Officer on March 31, 2008. On August 21, 2008, Mr.
Farid Nagji, Mr. Ricardo A. Gijon, and Mr. L. Byron Way were elected to the
board of directors, filling existing vacancies.  Subsequently, the
following Company directors tendered their resignation: Randy Bayne; Richard C.
Webb; and Steve Phelps.


-9-


In
connection with the change of certain executives’ positions within the Company,
the Company agreed to grant restricted shares of the Company’s common stock
under the Company’s Omnibus Stock Incentive Compensation Plan 2006 to the
persons, and in the amounts, as follows:





C. Gregory Peters -
1,000,000 shares of common stock with a value of $0.04 per share.




Randy Bayne - 1,000,000
shares of common stock with a value of $0.04 per share.




Mark Van Eman -
500,000 shares of common stock with a value of $0.04 per share.





The
aforementioned grants vest contingent and upon the Company reaching certain
product development and sales benchmarks, and subject to certain terms and
conditions to be deemed appropriate by the chairman of the board.





The
Company agreed to grant warrants to purchase restricted shares of the Company’s
common stock to its directors as follows:





Farid Nagji - 500,000
shares of common stock at the purchase price of $0.04 per share.




Ricardo A. Gijon -
350,000 shares of common stock at the purchase price of $0.04 per
share.




L. Byron Way -
350,000 shares of common stock at the purchase price of $0.04 per
share.




Dan Granader - 350,000
shares of common stock at the purchase price $0.04 per share.





Amendments
to Bylaws





On August
21, 2008, the Company’s Board of Directors voted to amend the Company’s Bylaws
to change the number of directors of the Company from nine (9) to five
(5).





Change
in Independent Public Accountants





Effective
December 5, 2008, the client auditor relationship between Remote Knowledge, Inc.
(the “Company”) and Hein & Associates LLP ("Hein") was terminated as Hein
resigned as the Company’s independent registered accounting
firm.  Effective December 5, 2008, the Company engaged Ham, Langston
& Brezina, LLP, as its principal independent public accountant for the
fiscal year ended December 31, 2008. The appointment of the new independent
public accountant was recommended, approved and ratified by the Company's Board
of Directors effective December 8, 2008.





Increase
in Authorized shares of Common Stock





On or
about December 22, 2008, the Company received shareholder approval to increase
the authorized shares of common stock of the Company from 150,000,000 to
500,000,000.


-10-


Item
6. Exhibits.





The
following exhibits are described and furnished as part of this
report:





Exhibit
      No.
                                            
                                            Description3.1
                                            
                                            Amended
      and Restated Certificate of Incorporation (incorporated by reference to
      Exhibit 3 to the Company’s quarterly report on Form 10-QSB filed with the
      Commission on November 13, 2006 (File No. 333-106247))3.2
                                            
                                            Remote
      Knowledge, Inc. Bylaws (Incorporated by reference to Exhibit 3.4 to the
      Company’s Registration Statement on Form SB-2/A filed with the Commission
      on October 27, 2003 (File No. 333-106247))3.3
                                            
                                            Certificate
      of Merger of Varitek Industries, Inc. and Remote Knowledge, Inc.
      (Incorporated by reference to Exhibit 3.5 to the Company’s Registration
      Statement on Form SB-2/A filed with the Commission on October 27, 2003
      (File No. 333-106247))4.1
                                            
                                            Warrant
      to purchase 22,500 shares issued to Orrin H. Swayze on March 21, 2002
      (Incorporated by reference to Exhibit 4.1 to the Company’s Registration
      Statement on Form SB-2 filed with the Commission on June 18, 2003 (File
      No. 333-106247))4.2
                                            
                                            Amended
      and Restated Warrant to purchase 553,400 shares issued to Sanders Morris
      Harris, Inc. on December 5, 2002 (Incorporated by reference to Exhibit 4.2
      to the Company’s Registration Statement on Form SB-2 filed with the
      Commission on June 18, 2003 (File No. 333-106247))4.3
                                            
                                            Warrant
      to purchase 1,500,000 shares issued to SMH Varitek LLC on November 27,
      2002 (Incorporated by reference to Exhibit 4.3 to the Company’s
      Registration Statement on Form SB-2 filed with the Commission on June 18,
      2003 (File No. 333-106247))4.4
                                            
                                            Form
      of warrant issued to noteholders on January 31, 2003 (Incorporated by
      reference to Exhibit 4.4 to the Company’s Registration Statement on Form
      SB-2 filed with the Commission on June 18, 2003 (File No.
      333-106247))4.5
                                            
                                            Form
      of warrant issued to noteholders on April 16, 2003 (Incorporated by
      reference to Exhibit 4.5 to the Company’s Registration Statement on Form
      SB-2 filed with the Commission on June 18, 2003 (File No.
      333-106247))4.6
                                            
                                            Series
      B Preferred Stock Designation (Incorporated by reference to Exhibit 10.1
      to the Company’s Current Report on Form 8-K filed with the Commission on
      April 5, 2004 (File No. 333-106247))4.7
                                            
                                            Form
      of Warrant issued in connection with Issuance of Series B Preferred Stock
      on March 30, 2004 Designation (Incorporated by reference to Exhibit 10.2
      to the Company’s Current Report on Form 8-K filed with the Commission on
      April 5, 2004 (File No. 333-106247))10.2
                                            
                                            Senior
      Convertible Note Dated August 21, 2008 between the Company and
      SLW International, LLC (Incorporated by reference to the Company's Current
      Report on Form 8-K filed with the Commission on August 27, 2008 (File No.
      333-106427))31.1
                                            
                                            Certification
      required by Section 302 of the Sarbanes-Oxley Act of 2002
  *31.2
                                            
                                            Certification
      required by Section 302 of the Sarbanes-Oxley Act of 2002
  *32.1
                                            
                                            Certification
      required by Section 906 of the Sarbanes-Oxley Act of 2002
  *32.2
                                            
                                            Certification
      required by Section 906 of the Sarbanes-Oxley Act of 2002
  *





* Filed
herewith.


-11-








SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Remote
      Knowledge, Inc.By:
                /s/
      Ricardo A. GijonRicardo
      A. GijonActing
      Chief Accounting OfficerDate:
      January 21, 2009
                
                By:
                /s/
      C. Gregory PetersC.
      Gregory PetersChief
      Executive Officer


-12-