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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2007
 Commission File Number: 333-106247
 Remote Knowledge, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    74-1664837
(I.R.S. Employer
Identification number)
 
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  o þ
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Remote Knowledge, Inc.
 INDEX TO ANNUAL REPORT ON FORM 10-QSB
 PagePART IItem 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis or Plan of Operation
    
    
    9Item 3. Controls and Procedures
    
    
    11PART IIItem 1. Legal Proceedings
    
    
    13Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    13Item 6. Exhibits
    
    
    13Exhibit 10.1Exhibit 10.2Exhibit 10.3Ehxibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 31.1Exhibit 31.2Exhibit 32
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
  Remote Knowledge, Inc.
(a development stage enterprise)
Condensed Balance Sheet
unaudited
 March 31, 2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    97,253Accounts receivable
    
    
    4,055Prepaid and other current assets
    
    
    68,392Total current assets
    
    
    169,700Property and equipment, net
    
    
    349,917Other noncurrent assets, net
    
    
    24,036Total assets
    
    $
    543,653LIABILITIES AND SHAREHOLDERS DEFICITCurrent Liabilities:Accounts payable  trade
    
    $
    402,960Accrued expenses
    
    
    2,235,063Deferred revenue
    
    
    59,589Payable to shareholder
    
    
    127,926Shareholder advances
    
    
    1,675,000Notes payable-related party, net of discount of $34,066
    
    
    393,434Notes payable, net of discount of $143,053
    
    
    1,238,994Total current liabilities
    
    
    6,132,966Notes payable-related party-long-term, net of discount of $1,815,938
    
    
    2,129,062Total liabilities
    
    
    8,262,028Shareholders Deficit:Preferred stock  series A, $.001 par value; 15,000 shares
authorized; 4,314 shares issued and outstanding
    
    
    4Preferred stock  series B, $.001 par value; 20,000 shares
authorized; 6,404 shares issued and outstanding
    
    
    7Common stock, $.001 par value; 150,000,000 shares authorized;
15,708,332 shares issued and outstanding
    
    
    15,708Additional paid-in capital
    
    
    64,358,362Deferred compensation
    
    
    (28,204
    )Subscriptions receivable
    
    
    (45,000
    )Accumulated deficit
    
    
    (10,234,380
    )Deficit accumulated during development stage
    
    
    (61,784,872
    )Total shareholders deficit
    
    
    (7,718,375
    )Total liabilities and shareholders deficit
    
    $
    543,653
 The accompanying notes are an integral part of these financial statements.
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Remote Knowledge, Inc.
(a development stage enterprise)
unaudited
Condensed Statements of Operations
 Period FromJanuary 1, 2001(inception ofdevelopmentThree-month periods ended
    
    
    stage) toMarch 31,
    
    
    March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007Revenues
    
    $
    3,030
    
    
    $
    13,421
    
    
    $
    85,594Cost of Goods Sold
    
    
    
    
    
    
    11,494
    
    
    
    76,033Gross Profit
    
    
    3,030
    
    
    
    1,927
    
    
    
    9,561Operating Costs and Expenses:Advisory services
    
    
    
    
    
    
    
    
    
    
    4,169,146Research and development
    
    
    261,629
    
    
    
    122,561
    
    
    
    6,453,942Loss on impairment of assets
    
    
    
    
    
    
    
    
    
    
    2,284,164Professional fees
    
    
    125,009
    
    
    
    185,886
    
    
    
    3,005,017Advertising and promotion fees
    
    
    2,130
    
    
    
    71,044
    
    
    
    1,660,240General and administrative expenses
    
    
    761,738
    
    
    
    2,046,675
    
    
    
    19,569,124Total operating costs and expenses
    
    
    1,150,506
    
    
    
    2,426,166
    
    
    
    37,141,633Other Expense (Income):Interest expense
    
    
    442,703
    
    
    
    567,427
    
    
    
    6,762,999Amortization of deferred financing costs
    
    
    964
    
    
    
    
    
    
    
    1,189,396Other income
    
    
    
    
    
    
    (4,946
    )
    
    
    (21,352
    )Other expense
    
    
    
    
    
    
    9,376
    
    
    
    12,698Interest income
    
    
    
    
    
    
    
    
    
    
    (27,420
    )Debt forgiveness
    
    
    
    
    
    
    
    
    
    
    (1,708,391
    )Total other expense (income)
    
    
    443,667
    
    
    
    571,857
    
    
    
    6,207,930Net Loss
    
    
    (1,591,143
    )
    
    
    (2,996,096
    )
    
    
    (43,340,002
    )Effective Dividend from Amortization of
Discount Related to Beneficial Conversion of
Mandatorily Redeemable Series A Preferred
Stock
    
    
    
    
    
    
    
    
    
    
    (5,554,000
    )Warrants Issued for Release of Redemption
Provision of Series A Preferred stock
    
    
    
    
    
    
    
    
    
    
    (1,291,912
    )Effective Dividend from Amortization of
Discount Related to Beneficial Conversion of
Series B Preferred Stock and Warrants
    
    
    (100,000
    )
    
    
    
    
    
    
    (11,598,958
    )Net Loss Attributable to Common Shares
    
    $
    (1,691,143
    )
    
    $
    (2,996,096
    )
    
    $
    (61,784,872
    )Net Loss Per Share:Basic and Diluted
    
    $
    (.11
    )
    
    $
    (.22
    )
    
    $
    (8.14
    )Number of Shares Used in Calculating Net Loss
Per Share:Basic and Diluted
    
    
    15,345,369
    
    
    
    13,323,301
    
    
    
    7,592,902
 The accompanying notes are an integral part of these financial statements.
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Remote Knowledge, Inc.
(a development stage enterprise)
Condensed Statements of Cash Flows
unaudited
 Period FromJanuary 1,2001(inception ofdevelopmentThree-month periods ended
    
    
    stage) toMarch 31,
    
    
    March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007Cash Flows From Operating Activities:Net loss
    
    $
    (1,591,143
    )
    
    $
    (2,996,096
    )
    
    $
    (43,340,002
    )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
    
    
    
    371,969
    
    
    
    5,323,256Depreciation
    
    
    54,470
    
    
    
    58,611
    
    
    
    985,952Loss on impairment of fixed assets
    
    
    
    
    
    
    9,376
    
    
    
    1,564,282Amortization of deferred financing costs
    
    
    964
    
    
    
    
    
    
    
    1,189,396Equity issued for services and interest
    
    
    67,035
    
    
    
    1,502,904
    
    
    
    9,852,647Provision for loss on inventory
    
    
    
    
    
    
    
    
    
    
    758,918Debt forgiveness
    
    
    
    
    
    
    
    
    
    
    (1,708,391
    )Charge off of receivables
    
    
    
    
    
    
    
    
    
    
    446,414Changes in assets and liabilities:Accounts receivable
    
    
    660
    
    
    
    (12,305
    )
    
    
    (4,055
    )Inventory
    
    
    
    
    
    
    (2,067
    )
    
    
    (836,393
    )Prepaid and other current assets
    
    
    17,954
    
    
    
    19,315
    
    
    
    (35,896
    )Other noncurrent assets
    
    
    (25,000
    )
    
    
    
    
    
    
    (25,000
    )Accounts payable  trade
    
    
    157,984
    
    
    
    (166,400
    )
    
    
    1,284,496Accrued expenses
    
    
    52,645
    
    
    
    63,676
    
    
    
    1,554,937Deferred revenue
    
    
    59,589
    
    
    
    
    
    
    
    59,589Related party payable
    
    
    
    
    
    
    
    
    
    
    399,259Net cash used in operating activities
    
    
    (824,836
    )
    
    
    (1,151,017
    )
    
    
    (22,530,591
    )Cash Flows From Investing Activities:Additions of fixed assets
    
    
    (16,900
    )
    
    
    208
    
    
    
    (1,028,623
    )Related party receivable
    
    
    
    
    
    
    
    
    
    
    (300,000
    )Net cash provided by (used in) investing
activities
    
    
    (16,900
    )
    
    
    208
    
    
    
    (1,328,623
    )Cash Flows From Financing Activities:Payments of notes payable
    
    
    (30,594
    )
    
    
    (22,500
    )
    
    
    (3,426,188
    )Capital contributions
    
    
    
    
    
    
    
    
    
    
    27,900Proceeds from SMH note payable
    
    
    
    
    
    
    
    
    
    
    1,500,000Proceeds from short term note payable
    
    
    450,000
    
    
    
    800,000
    
    
    
    3,985,000Proceeds from sale of common stock
    
    
    
    
    
    
    
    
    
    
    903,800Proceeds from other notes payable
    
    
    
    
    
    
    
    
    
    
    3,358,741Proceeds from advance from related party
    
    
    
    
    
    
    
    
    
    
    90,000Payment of advance from related party
    
    
    
    
    
    
    
    
    
    
    (90,000
    )Net proceeds from sale of mandatorily redeemable
preferred stock
    
    
    
    
    
    
    
    
    
    
    5,040,033Net proceeds from sale of Series B preferred stock
    
    
    
    
    
    
    
    
    
    
    7,114,073Proceeds from related party note payable
    
    
    
    
    
    
    595,000
    
    
    
    5,420,000Net cash provided by financing activities
    
    
    419,406
    
    
    
    1,372,500
    
    
    
    23,923,359Net Change in Cash and Cash Equivalents
    
    
    (422,330
    )
    
    
    221,691
    
    
    
    64,145Cash and Cash Equivalents, beginning of period
    
    
    519,583
    
    
    
    4,991
    
    
    
    33,108Cash and Cash Equivalents, end of period
    
    $
    97,253
    
    
    $
    226,682
    
    
    $
    97,253
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Period FromJanuary 1,2001(inception ofdevelopmentThree-month periods ended
    
    
    stage) toMarch 31,
    
    
    March 31,
    
    
    March 31,2007
    
    
    2006
    
    
    2007Non-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 to equity
    
    $
    100,000
    
    
    $
    
    
    
    $
    4,301,000Contribution of capital by shareholders for financing
costs
    
    $
    
    
    
    $
    
    
    
    $
    1,188,432Issuance of common stock (33,350 shares and 1,640,819
shares, respectively) upon conversion of Series A
preferred stock
    
    $
    33
    
    
    $
    
    
    
    $
    1,641Issuance of common stock (266,668 shares, 946,667; and
7,000,668 shares, respectively) upon conversion of
Series B preferred stock
    
    $
    267
    
    
    $
    947
    
    
    $
    7,000Issuance of common stock upon conversion of
mandatorily redeemable preferred stock classified as
debt
    
    $
    
    
    
    $
    
    
    
    $
    20,000Reclassification of mandatorily redeemable preferred
stock to equity
    
    $
    
    
    
    $
    
    
    
    $
    5,534,000Discount related to beneficial conversion of
mandatorily 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
    
    
    $
    
    
    
    $
    5,354,507Conversion of notes payable into convertible debt
    
    $
    
    
    
    $
    
    
    
    $
    375,000Conversion of accrued expenses into note payable
    
    $
    
    
    
    $
    
    
    
    $
    87,028Issuance of common stock (391,667 shares and 391,667
shares, respectively) with bridge loans
    
    $
    392
    
    
    $
    
    
    
    $
    392Issuance of common stock (30,000 shares and 30,000
shares, respectively) with restricted stock grant
    
    $
    30
    
    
    $
    
    
    
    $
    30Supplemental Disclosure of Cash Flow Information:Cash paid for interest
    
    $
    987
    
    
    $
    
    
    
    $
    384,109
 The accompanying notes are an integral part of these financial statements.
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Remote Knowledge, Inc.
Notes To Condensed Financial Statements
 Note 1  Basis of Presentation
  Note 2  Significant Accounting Policies
 Share-Based Compensation Share-Based
Payment-Revised 2004
   Note 3  Notes Payable
  Note 4  Net Loss Per Share
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Remote Knowledge, Inc.
Notes To Condensed Financial Statements
 Note 5  Subsequent Events
 
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Item 2. Managements Discussion and Analysis or Plan of Operation.
 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.
  
    
    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,
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
    
    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.
  OVERVIEW AND COMPANY STATUS
  Twelve Month Plan of Operation
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Financial Position
    Results of Operations
       
 Item 3. Controls and Procedures.
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
        
 Item 6. Exhibits.
  1.
    
    
    Exhibit 10.1
    
    Summary of Director Compensation2.
    
    
    Exhibit 10.2
    
    Bridge Loan Promissory Note in the amount of $50,000 payable to Fielding L. Cocke3.
    
    
    Exhibit 10.3
    
    Bridge Loan Promissory Note in the amount of $300,000 payable to Jeffrey J. Bell4.
    
    
    Exhibit 10.4
    
    Bridge Loan Promissory Note in the amount of $100,000 payable to John Madden5.
    
    
    Exhibit 10.5
    
    Bridge Loan Promissory Note in the amount of $200,000 payable to Robert D. Duncan6.
    
    
    Exhibit 10.6
    
    Bridge Loan Promissory Note in the amount of $100,000 payable to Steve Phelps7.
    
    
    Exhibit 10.7
    
    Engagement Letter with Sanders Morris Harris Inc.8.
    
    
    Exhibit 31.1
    
    Certification required by Section 302 of the Sarbanes-Oxley Act of 2002.9.
    
    
    Exhibit 31.2
    
    Certification required by Section 302 of the Sarbanes-Oxley Act of 2002.10.
    
    
    Exhibit 32
    
    Certification required by Section 906 of the Sarbanes-Oxley Act of 2002.
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Remote Knowledge, Inc.By:
    
    /s/ Randy S. BayneRandy S. BayneChief Executive OfficerDate: May 11, 2007
    
    By:
    
    /s/ D. Henry HoustonD. Henry HoustonChief Financial and Accounting Officer
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Index to Exhibits
 1.
    
    Exhibit 10.1
    
    Summary of Director Compensation2.
    
    Exhibit 10.2
    
    Bridge Loan Promissory Note in the amount of $50,000 payable to Fielding L. Cocke3.
    
    Exhibit 10.3
    
    Bridge Loan Promissory Note in the amount of $300,000 payable to Jeffrey J. Bell4.
    
    Exhibit 10.4
    
    Bridge Loan Promissory Note in the amount of $100,000 payable to John Madden5.
    
    Exhibit 10.5
    
    Bridge Loan Promissory Note in the amount of $200,000 payable to Robert D. Duncan6.
    
    Exhibit 10.6
    
    Bridge Loan Promissory Note in the amount of $100,000 payable to Steve Phelps7.
    
    Exhibit 10.7
    
    Engagement Letter with Sanders Morris Harris Inc.8.
    
    Exhibit 31.1
    
    Certification required by Section 302 of the Sarbanes-Oxley Act of 2002.9.
    
    Exhibit 31.2
    
    Certification required by Section 302 of the Sarbanes-Oxley Act of 2002.10.
    
    Exhibit 32
    
    Certification required by Section 906 of the Sarbanes-Oxley Act of 2002.
  15