UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A


Amendment
No. 1





QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15 (d)


OF
THE SECURITIES AND EXCHANGE ACT OF 1934





For the
quarterly period ended: September 30, 2007





Commission
File Number: 333-106247





Remote
Knowledge, Inc.


(Exact
name of small business issuer as specified in its charter)





Delaware
              74-1664837(State
      or other jurisdiction of
              (I.R.S.
      Employerincorporation
      or organization)
              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
Amended Quarterly Report on Form 10-Q/A is being filed by the Registrant to
include unaudited financial statements that have been reviewed by the
Registrant’s auditor and to include additional disclosures and other relevant
additional information omitted from the Registrant’s original Quarterly Report
on Form 10-QSB for the period ended September 30, 2007, filed with the
Commission on November 14, 2008. Investors should review the Registrant’s latest
Form 10-Q, 10-KSB and Reports on Form 8-K for updated information regarding the
Registrant’s financial condition and results of operations.





Check
whether the issuer (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 R


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 [X](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 R





There
were 29,664,467 shares of common stock, $.001 par value per share, outstanding
as of November 1, 2008.





Transitional
Small Business Format (check one); Yes £ No R








Remote
Knowledge, Inc.





INDEX
TO QUARTERLY REPORT ON FORM 10-Q/A





PagePART
      IItem
      1. Financial Statements
            F-1
      - F-7Item
      2. Management’s Discussion and Analysis or Plan of
    Operation
            3Item
      3. Controls and Procedures
            8PART
      IIItem
      1. Legal Proceedings
            9Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            9Item
      3. Defaults Upon Senior Securities
            10Item
      4. Submission of Matters to a Vote of Security Holders
            10Item
      5. Other Information
            10Item
      6. Exhibits
            11





PART
I — FINANCIAL INFORMATION





Item
1. Financial Statements.











remote
knowledge, inc.


(a
development stage enterprise)


Condensed
Balance Sheet





September 30, 2007
              
              
              December 31,
      2006(unaudited)Current
      AssetsCash
              
              $
              372
              
              
              $
              519,583Accounts
      receivable
              
              
              4,055
              
              
              
              4,715Other
      receivables
              
              
              166,303
              
              
              
              729Prepaid
      and other current assets
              
              
              86,258
              
              
              
              85,617Total
      current assets
              
              
              256,988
              
              
              
              610,644Property
      and Equipment, net
              
              
              245,773
              
              
              
              387,487Other
      noncurrent assets, net
              
              
              49,878
              
              
              
              —Total
      assets
              
              $
              552,639
              
              
              $
              998,131LIABILITIES AND SHAREHOLDERS’
      DEFICITCurrent
      Liabilities:Accounts
      payable – trade
              
              $
              466,305
              
              
              $
              244,976Accrued
      expenses
              
              
              2,528,141
              
              
              
              2,182,418Deferred
      revenue
              
              
              53,322
              
              
              
              —Payable
      to shareholder
              
              
              127,926
              
              
              
              127,926Shareholder
      advances
              
              
              1,679,500
              
              
              
              1,775,000Notes
      payable - related party – net of discount of $52,844
              
              
              1,279,656
              
              
              
              355,110Notes
      payable – net of discount of $37,280
              
              
              1,955,812
              
              
              
              934,611Total
      current liabilities
              
              
              8,090,662
              
              
              
              5,620,041Notes
      payable – related party - long-term, net of discount of
      $1,232,970
              
              
              2,712,030
              
              
              
              1,842,357Total
      liabilities
              
              
              10,802,692
              
              
              
              7,462,398Shareholders’
      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; 6,254 shares
      issued and outstanding
              
              
              6
              
              
              
              7Common
      stock, $.001 par value; 150,000,000 shares authorized; 16,703,920 shares
      issued and outstanding
              
              
              16,704
              
              
              
              14,987Additional
      paid-in capital
              
              
              64,891,607
              
              
              
              63,937,036Deferred
      compensation
              
              
              —
              
              
              
              (43,192
              )Subscriptions
      receivable
              
              
              (45,000
              )
              
              
              (45,000
              )Accumulated
      deficit
              
              
              (10,234,380
              )
              
              
              (10,234,380
              )Deficit
      accumulated during development stage
              
              
              (64,878,994
              )
              
              
              (60,093,729
              )Total
      shareholders’ deficit
              
              
              (10,250,053
              )
              
              
              (6,464,267
              )Total
      liabilities and shareholders’ deficit
              
              $
              552,639
              
              
              $
              998,131





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


F-1


remote
knowledge, inc.


(a
development stage enterprise)


Condensed
Statements of Operations


Unaudited





Three-Month Periods
      Ended
              
              
              Nine-Month
      Periods Ended
              
              
              Period
      From
                January
      1, 2001
                (inception
      of
                development
      stage)September
      30,
              
              
              September
      30,
              
              
              September 30,
              
              
              September 30,
              
              
              to
      September 30,2007
              
              
              2006
              
              
              2007
              
              
              2006
              
              
              2007Revenues
              
              $
              3,151
              
              
              $
              7,150
              
              
              $
              9,297
              
              
              $
              31,461
              
              
              $
              91,861Cost
      of Goods Sold
              
              
              —
              
              
              
              9,765
              
              
              
              —
              
              
              
              31,173
              
              
              
              76,033Gross
      Profit
              
              
              3,151
              
              
              
              (2,615
              )
              
              
              9,297
              
              
              
              288
              
              
              
              15,828Operating
      Costs and Expenses:
                Advisory
      services
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              4,169,146Research
      and development
              
              
              204,412
              
              
              
              148,761
              
              
              
              637,213
              
              
              
              429,261
              
              
              
              6,829,526Loss
      on impairment of assets
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              14,672
              
              
              
              2,284,164Professional
      fees
              
              
              25,747
              
              
              
              51,371
              
              
              
              229,696
              
              
              
              323,674
              
              
              
              3,109,704Advertising
      and promotion fees
              
              
              —
              
              
              
              38,200
              
              
              
              2,354
              
              
              
              168,076
              
              
              
              1,660,464General
      and administrative expenses
              
              
              729,880
              
              
              
              741,089
              
              
              
              2,150,655
              
              
              
              3,411,822
              
              
              
              20,958,041Total
      operating costs and expenses
              
              
              960,039
              
              
              
              979,421
              
              
              
              3,019,918
              
              
              
              4,347,505
              
              
              
              39,011,045Loss
      from Operations
              
              
              (956,888
              )
              
              
              (982,036
              )
              
              
              (3,010,621
              )
              
              
              (4,347,217
              )
              
              
              (38,995,217
              )Other
      Expense (Income):Interest
      expense
              
              
              709,035
              
              
              
              551,221
              
              
              
              1,675,838
              
              
              
              1,673,516
              
              
              
              7,996,134Amortization
      of deferred financing costs
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              1,188,432Interest
      income
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (27,420
              )Other
      income
              
              
              —
              
              
              
              (3,806
              )
              
              
              (567
              )
              
              
              (14,195
              )
              
              
              (21,919
              )Other
      expense
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              12,698Debt
      forgiveness
              
              
              (627
              )
              
              
              (6,766
              )
              
              
              (627
              )
              
              
              (317,573
              )
              
              
              (1,709,018
              )Total
      other expense
              
              
              708,408
              
              
              
              540,649
              
              
              
              1,674,644
              
              
              
              1,341,748
              
              
              
              7,438,907Net
      Loss
              
              
              (1,665,296
              )
              
              
              (1,522,685
              )
              
              
              (4,685,265
              )
              
              
              (5,688,965
              )
              
              
              (46,434,124
              )Dividend
      from Amortization of Discount Related to Beneficial Conversion of
      Redeemable Series A Preferred Stock
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (5,554,000
              )Warrants
      Issued for Release of Redemption Provision of Series A Preferred
      Stock
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (1,291,912
              )Dividend
      from Amortization of Discount Related to Beneficial Conversion of Series B
      Preferred Stock and Warrants
              
              
              —
              
              
              
              (25,730
              )
              
              
              (100,000
              )
              
              
              (37,422
              )
              
              
              (11,598,958
              )Net
      Loss Attributable to Common Shares
              
              $
              (1,665,296
              )
              
              $
              (1,584,415
              )
              
              $
              (4,785,265
              )
              
              $
              (5,726,387
              )
              
              $
              (64,878,994
              )Net
      Loss Per Share:Basic
      and Diluted
              
              $
              (.10
              )
              
              $
              (.11
              )
              
              $
              (.30
              )
              
              $
              (.41
              )
              
              $
              (7.88
              )Dividend
      from Amortization of Discount Related to Beneficial Conversion of
      Redeemable Series A Preferred Stock
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (5,554,000
              )Number
      of Shares Used in Calculating Net Loss Per Share:Basic
      and Diluted
              
              
              16,428,868
              
              
              
              14,596,120
              
              
              
              15,887,773
              
              
              
              14,054,317
              
              
              
              8,228,454








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





NINE-MONTH
      PERIODS ENDED
              
              
              Period
      From
                  January
      1, 2001
                  (inception
      of
                  development
                  stage)
      toSeptember 30,
              
              
              September 30,
              
              
              September30,2007
              
              
              2006
              
              
              2007Cash
      Flows From Operating Activities:Net
      loss
              
              $
              (4,685,265
              )
              
              $
              (5,688,965
              )
              
              $
              (46,434,124
              )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
              
              
              1,351,053
              
              
              
              1,360,594
              
              
              
              6,294,303Depreciation
              
              
              163,970
              
              
              
              184,390
              
              
              
              1,095,452Loss
      on impairment of fixed assets
              
              
              —
              
              
              
              —
              
              
              
              1,564,282Amortization
      of deferred financing costs
              
              
              2,070
              
              
              
              —
              
              
              
              1,190,502Equity
      issued for services and interest
              
              
              328,394
              
              
              
              1,636,343
              
              
              
              10,114,006Provision
      for loss on inventory
              
              
              —
              
              
              
              14,672
              
              
              
              758,918Debt
      forgiveness
              
              
              —
              
              
              
              (317,573
              )
              
              
              (1,708,391
              )Charge
      off of receivables
              
              
              —
              
              
              
              —
              
              
              
              446,414Changes
      in assets and liabilities:Accounts
      receivable
              
              
              660
              
              
              
              (925
              )
              
              
              (4,055
              )Inventory
              
              
              —
              
              
              
              48,903
              
              
              
              (836,393
              )Other
      receivables
              
              
              (166,303
              )
              
              
              —
              
              
              
              (166,303
              )Prepaid
      and other current assets
              
              
              88
              
              
              
              (3,909
              )
              
              
              (53,762
              )Other
      noncurrent assets
              
              
              (51,948
              )
              
              
              —
              
              
              
              (51,948
              )Accounts
      payable – trade
              
              
              221,329
              
              
              
              (300,602
              )
              
              
              1,347,841Accrued
      expenses
              
              
              345,723
              
              
              
              (189,415
              )
              
              
              1,848,015Deferred
      revenue
              
              
              53,322
              
              
              
              —
              
              
              
              53,322Related
      party payable
              
              
              —
              
              
              
              —
              
              
              
              399,259Net
      cash used in operating activities
              
              
              (2,436,907
              )
              
              
              (3,256,487
              )
              
              
              (24,142,662
              )Cash
      Flows From Investing Activities:Additions
      of fixed assets
              
              
              (22,256
              )
              
              
              (72,178
              )
              
              
              (1,033,979
              )Related
      party receivable
              
              
              —
              
              
              
              —
              
              
              
              (300,000
              )Net
      cash used in investing activities
              
              
              (22,256
              )
              
              
              (72,178
              )
              
              
              (1,333,979
              )Cash
      Flows From Financing Activities:Payments
      of notes payable
              
              
              (36,935
              )
              
              
              (1,096,580
              )
              
              
              (3,432,529
              )Capital
      contributions
              
              
              —
              
              
              
              —
              
              
              
              27,900Proceeds
      from SMH note payable
              
              
              —
              
              
              
              —
              
              
              
              1,500,000Proceeds
      from short term note payable
              
              
              950,000
              
              
              
              2,950,000
              
              
              
              4,485,000Proceeds
      from sale of common stock
              
              
              —
              
              
              
              —
              
              
              
              903,800Proceeds
      from other notes payable
              
              
              117,387
              
              
              
              62,710
              
              
              
              3,476,128Proceeds
      from advance from related party
              
              
              4,500
              
              
              
              —
              
              
              
              4,500Net
      proceeds from sale of mandatory redeemable preferred stock
              
              
              —
              
              
              
              —
              
              
              
              5,040,033Net
      proceeds from sale of series B preferred stock with
    warrants
              
              
              —
              
              
              
              145,000
              
              
              
              7,114,073Net
      proceeds from related party note payable
              
              
              905,000
              
              
              
              1,270,000
              
              
              
              6,325,000Net
      cash provided by financing activities
              
              
              1,939,952
              
              
              
              3,331,130
              
              
              
              25,443,905Net
      Change in Cash and Cash Equivalents
              
              
              (519,211
              )
              
              
              2,465
              
              
              
              (32,736
              )Cash
      and Cash Equivalents, beginning of period
              
              
              519,583
              
              
              
              4,991
              
              
              
              33,108Cash
      and Cash Equivalents, end of period
              
              $
              372
              
              
              $
              7,456
              
              
              $
              372





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








NINE-MONTH
      PERIODS ENDED
              
              
              Period
      From
                    January
      1, 2001
                    (inception
      of
                    development
                    stage)
      toSeptember 30,
              
              
              September 30,
              
              
              September 30,2007
              
              
              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 and other debt to equity
              
              $
              100,000
              
              
              $
              —
              
              
              $
              4,301,000Contribution
      of capital by shareholders for financing costs
              
              $
              —
              
              
              $
              —
              
              
              $
              1,188,432Issuance
      of common stock (86,710 shares; 0 shares; and 1,694,179 shares,
      respectively) upon conversion of Series A preferred stock
              
              $
              86
              
              
              $
              —
              
              
              $
              1,694Issuance
      of common stock (466,670 shares; 1,473,332 shares; and 7,200,670 shares,
      respectively) upon conversion of Series B preferred stock
              
              $
              467
              
              
              $
              1,473
              
              
              $
              7,201Issuance
      of common stock upon conversion of mandatorily redeemable preferred stock
      classified as debt
              
              $
              —
              
              
              $
              —
              
              
              $
              20,000Reclassification
      of mandatory 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
              
              
              $
              37,422
              
              
              $
              11,598,958Reclassification
      of demo units from inventory to property and equipment
              
              $
              —
              
              
              $
              —
              
              
              $
              77,475Discount
      related to notes payable
              
              $
              471,085
              
              
              $
              2,070,000
              
              
              $
              5,655,592Conversion
      of notes payable into convertible debt
              
              $
              —
              
              
              $
              —
              
              
              $
              375,000Conversion
      of accrued expenses into notes payable
              
              $
              —
              
              
              $
              —
              
              
              $
              87,028Issuance
      of common stock (1,073,893 shares; 0 shares; and 1,073,893 shares,
      respectively) with bridge loans
              
              $
              1,074
              
              
              $
              —
              
              
              $
              1,074Issuance
      of common stock (90,000 shares; 0 shares; and 90,000 shares, respectively)
      with restricted stock grant
              
              $
              90
              
              
              $
              —
              
              
              $
              90Supplemental Disclosure of Cash
      Flow Information:Cash
      paid for interest
              
              $
              26,903
              
              
              $
              190,323
              
              
              $
              410,025





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


September
30, 2007


(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, 2006. In
the opinion of the Company, all adjustments, consisting of normal recurring
adjustments necessary to present fairly, in all material respects, the financial
position of the Company, as of September 30, 2007, and the results of its
operations and cash flows for the three and nine-month periods then ended and
for the three and nine-month periods ended September 30, 2007, have been
included. The results of operations for the interim periods are not necessarily
indicative of the results for the full year. Remote Knowledge, Inc. (A
Development Stage Enterprise) Notes to the Financial Statements September 30,
2007 (Unaudited)





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 quarter and nine month period ended September 30, 2007 amounted
to $103,706 and $194,924, respectively.  For the quarter and nine
month period ended September 30, 2007 this expense reduced basic and diluted
loss per share by less than $0.01 and $0.01, respectively, compared to reported
basic and diluted loss per share of $0.10 and $0.30, respectively. 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 September 30, 2007 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 September 30, 2007
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 2007 through September 2007, the Company received $950,000 in cash from
non-affiliated parties and $905,000 from affiliated parties and executed
promissory notes.  The notes accrue no interest on the outstanding
principal balance; however, the Company issued 618,336 shares of common stock,
valued at $391,085, to the note holders in lieu of interest, per the terms of
the notes.  The principal is due on October 31, 2007 and $1,490,000 of
the notes are guaranteed by affiliated shareholders.  If the Company
defaults, it must issue an additional 206,111 shares of common stock, per month,
until the principal is repaid.  The Company also issued 150,000 shares
of common stock, valued at $80,000, to extend for six months two loans that were
due in the first quarter of 2007 and the Company issued 83,334 shares of common
stock, valued at $47,917, as default interest on a loan issued in 2006 that was
due in June 2007 and has not been repaid; the default interest is being
recognized as interest expense as the default shares are issued.  The
total debt discount of $471,085, related to the issuance and extension of the
loans, is being amortized using the straight line method over the life of the
note.  The amount of discount amortization under the straight line
method does not materially differ from the effective interest
method.





In
September 2007, the Company executed a release of a promissory note with
Lockheed Martin Services, Inc. d/b/a Lockheed Martin Space Operations
(“Lockheed”).  The note was issued on December 31, 2006 in the
principal amount of $385,000 with a maturity date of June 30,
2007.  On September 14, 2007, the Company executed a new promissory
note with Lockheed in the amount of $380,068 with interest accruing at the
annual rate of 10%.  The new note will mature and become payable on
April 30, 2008.  The note is collateralized by the vendor’s work
product and the equipment in the Company’s data center.


F-5


In
September 2007, the Company executed a promissory note with Andrews Kurth
LLP.  The note was issued on September 26, 2007 in the principal
amount of $70,411 with a maturity date of April 30, 2008.  The note
bears interest at the annual rate of 10%.





Note
4 — Net Loss Per Common Share





Loss per
common share (LPS) is computed by dividing the net loss attributable to common
stockholders for the period 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 outstanding for the period and common stock
equivalents, warrants and options, outstanding at the end of the period. Common
stock equivalents of 80,258,884 and 74,383,950 for the quarters and nine-month
periods ended September 30, 2007, and 2006, respectively, have been excluded
from the calculation of weighted-average shares for purposes of calculating
diluted loss per share, as such inclusion is anti-dilutive.





Note
5 — Subsequent EventS





In
October 2007, the Company received $150,000 in cash from non-affiliated parties
and $50,000 from affiliated parties and executed promissory
notes.  The notes accrue no interest on the outstanding principal
balance; however, the Company issued 73,334 shares of common stock, valued at
$28,200, to the note holders in lieu of interest.  The principal is
due on October 31, 2007 and $150,000 of the notes are guaranteed by an
affiliated shareholder.  If the Company defaults it must issue an
additional 19,445 shares of common stock, per month, until the principal is
repaid.





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”).  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
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 agree 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.


F-6


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 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 Operation.





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, 2006. 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, 2006.  With respect to this
discussion, the terms “Remote Knowledge,” “Company,” “we,” “us,” and “our” refer
to Remote Knowledge, Inc.




Forward-Looking
Statements





Except
for historical information contained herein, this Form 10-Q/A 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/A. 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”).  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 agree 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 associated with
these recent developments:





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





(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 September 30, 2007 of $64,878,994.


-5-


Gross
profit for the third quarter and nine months ended September 30, 2007 increased
$5,766 and $9,009, respectively, as compared to the same periods in
2007.  The increase mainly relates to the straight line recognition of
the franchise fee paid by our client, Raymarine plc (“Raymarine”) upon execution
of the Development Agreement between the Company and Raymarine, dated
January 5, 2007 (the “Raymarine Agreement,” which agreement is described in
more detail in the Company’s 10-KSB filed with the Commission on March 30,
2007).





Research
and development costs have been expensed as they were incurred. Research and
development costs for the third quarter of 2007 and the first nine months of
2007, as compared with those same periods in 2006, increased $55,651 and
$207,952, respectively, as a result of increased personnel needed to develop the
product for the Raymarine Agreement.   The increase for the nine
months ended September 30, 2007 in personnel costs is somewhat offset by a
decrease of approximately $30,000 in parts, related to the RK-3000 (a similar
but different unit than the Product in the Raymarine Agreement), expensed in
2006.





Loss on
impairment of assets decreased $14,672 for the nine months ended September 30,
2007 as the Company wrote off some parts inventory associated with the marine
after-market, which we are not currently pursuing.





Professional
fees for the third quarter and nine months ended September 30, 2007 decreased
$25,624 and $93,978, respectively, as compared to the same periods in 2006. For
the third quarter period, this decrease primarily reflects costs associated with
a special shareholder meeting in 2006, not incurred in 2007.  For the
nine month period ended September 30, 2007, in addition to the decrease in costs
associated with the shareholder meeting, the decrease reflects a reduction of
approximately $90,000 related to a legal judgment; a decrease of approximately
$10,000 related to loan transaction costs; a decrease of approximately $10,000
related to audit fees; a decrease of approximately $10,000 related to patents;
somewhat offset by an approximately $40,000 increase related to legal fees and
retainer fees paid to a firm to help locate funding for the
Company.





Advertising
and promotional fees for the third quarter and nine months ended September 30,
2007 decreased $38,200 and $165,722, respectively, as compared to the same
periods in 2006. In 2006, the Company contracted with an outside party to assist
in the development of a marketing strategy for the marine market.  The
contract expired in 2006, and as such, the fees incurred from this contract were
not present in the third quarter of the nine months ended September 30,
2007.





General
and administrative expenses for the third quarter and nine months ended
September 30, 2007 decreased $11,209 and $1,261,167, respectively, as compared
to the same periods in 2006.  The decrease for the third quarter
reflects a decrease in recruiting fees of approximately $50,000; a decrease in
investor relations of approximately $32,000; and a decrease of approximately
$20,000 related to getting new employees set up in Houston; offset by an
increase of approximately $50,000 related to stock-based compensation; and an
increase of approximately $40,000 in personnel and related
expenses.  For the nine months ended September 30, 2007, the decrease
reflects an approximately $1,400,000 decrease related to stock-based
compensation; a decrease in recruiting fees of $28,000; and a decrease in
investor relations of approximately $31,000; offset by increase of approximately
$200,000 in personnel and related costs.





Interest
expense for the third quarter of 2007 and the first nine months of 2007
increased $157,814 and $2,322, respectively, as compared to 2006.  The
increase in the third quarter and the nine months ended September 30, 2007
primarily reflects the debt discount associated with common stock issued with
short term funding.





Other
income decreased $3,806 for the third quarter and decreased $13,628 for the nine
months ended September 30, 2007 as the Company sold some non-inventory items in
2006.





Debt
forgiveness decreased $6,139 for the third quarter and decreased $316,946 for
the nine months ended September 30, 2007 as the Company wrote off more old
accounts payable and settled various outstanding amounts in 2006.





Liquidity and Capital
Resources





We had
negative working capital of $7,833,674 and a deficit accumulated during
development stage of $64,878,994 as of September 30, 2007.





We had
net cash used in operating activities of $2,436,907 for the nine months ended
September 30, 2007, which was mainly due to $4,685,265 of net loss, $166,303 of
change in other receivables and $51,948 of change in other non-current assets,
partially offset by $1,351,053 of accretion of debt discount and discount
related to beneficial conversion of convertible debt, $163,970 of depreciation,
$2,070 of amortization of deferred financing costs, $328,394 equity issued for
services and interest, $221,329 of change in accounts payable-trade, $345,723 of
change in accrued expenses and $53,322 of change in deferred
revenue.


-6-


We had
$22,256 of net cash used in investing activities for the nine months ended
September 30, 2007, which was entirely due to $22,256 of additions of fixed
assets.





We had
$1,939,952 of net cash provided by financing activities during the nine months
ended September 30, 2007, which represented $950,000 of proceeds from short term
note payable, $117,387 of proceeds from other notes payable, $4,500 of proceeds
from advance from related party and $905,000 of net proceeds from related party
note payable, partially offset by $36,935 of payments of note
payable.





From
January 2007 through September 2007, the Company received $950,000 in cash from
non-affiliated parties and $905,000 from affiliated parties, and the Company
executed promissory notes in connection with these amounts
received.  Included in these amounts, the Company received an
aggregate of $540,000 during the three months ended September 30,
2007.  The notes accrue no interest on the outstanding principal
balance; however, the Company issued 618,336 shares of common stock, valued at
$391,085, to the note holders in lieu of interest.  The principal was
due on October 31, 2007 and $1,490,000 of the notes was guaranteed by affiliated
shareholders.  If the Company defaulted, it was required to issue an
additional 206,111 shares of common stock, per month, until the principal was
repaid.  The Company also issued 150,000 shares of common stock,
valued at $80,000, to extend for six months two loans that were due in the first
quarter of 2007 and the Company issued 83,334 shares of common stock, valued at
$47,917, as default interest on a loan issued in 2006 that was due in June 2007
and has not been repaid; the default interest is being recognized as interest
expense as the default shares are issued.  The total debt discount of
$471,085, related to the issuance and extension of the loans, is being amortized
using the straight line method over the life of the note.  The amount
of discount amortization under the straight line method does not materially
differ from the effective interest method.





In
September 2007, the Company executed a release of a promissory note with
Lockheed Martin Services, Inc. d/b/a Lockheed Martin Space Operations
(“Lockheed”).  The note was issued on December 31, 2006 in the
principal amount of $385,000 with a maturity date of June 30,
2007.  On September 14, 2007, the Company executed a new promissory
note with Lockheed in the amount of $380,068.37 with interest accruing at the
annual rate of 10%.  The new note will mature and become payable on
April 30, 2008.  The note is collateralized by the vendor’s work
product and the equipment in the Company’s data center.  See “Recent
Financing” for resolution of this note.





In
September 2007, the Company executed a promissory note with Andrews Kurth
LLP.  The note was issued on September 26, 2007 in the principal
amount of $70,410.83 with a maturity date of April 30, 2008.  The note
bears interest at the annual rate of 10%.  See “Recent Financing” for
resolution of this note.





In
October 2007, the Company received $150,000 in cash from non-affiliated parties
and $50,000 from affiliated parties and executed promissory
notes.  The notes accrue no interest on the outstanding principal
balance; however, the Company issued 73,334 shares of common stock, valued at
$28,200, to the note holders in lieu of interest.  The principal was
due on October 31, 2007 and $150,000 of the notes are guaranteed by an
affiliated shareholder.  If the Company defaults it must issue an
additional 19,445 shares of common stock, per month, until the principal is
repaid. See “Recent Financing” for resolution of this note.





Our
auditors included an explanatory paragraph in their opinion on our financial
statements for the year ended December 31, 2006 to state that our losses,
working capital deficit and shareholders’ deficit at December 31, 2006 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
September 30, 2007, we had a cash balance of $372 and negative working capital
of $7,833,674.  We maintained minimal operations during the first nine
months of 2007, 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,
2007 through September 30, 2007, we expended approximately
$2,437,000.





Contractual
Commitments





There
were 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 the year ended December 31, 2006 for a complete discussion of its lease
obligations. Except for the commitments arising from its operating leases
arrangements, as of September 30, 2007, the Company did not have any off-balance
sheet arrangements that are reasonably likely to have a material effect on our
financial statements.


-7-


Item 4.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.





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
September 30, 2007 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 payable due March, 2007.  This liability was settled as
part of the August 2008 funding agreement.





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 is currently 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


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.




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





On July
11, 2007, the Company received $100,000 from Robert K. McDonald, an affiliated
party, as consideration for the issuance of a bridge loan promissory
note.  The Company issued 33,333 shares of common stock, in lieu of
interest, per the terms of the note.




On July
11, 2007, the Company received $25,000 from Don Weir, an affiliated party, as
consideration for the issuance of a bridge loan promissory note.  The
Company issued 8,334 shares of common stock, in lieu of interest, per the terms
of the note.




On July
11, 2007, the Company received $25,000 from Ben Morris, an affiliated party, as
consideration for the issuance of a bridge loan promissory note.  The
Company issued 8,334 shares of common stock, in lieu of interest, per the terms
of the note.




On July
11, 2007, the Company received $50,000 from Don Sanders, an affiliated party, as
consideration for the issuance of a bridge loan promissory note.  The
Company issued 16,667 shares of common stock, in lieu of interest, per the terms
of the note.




On July
16, 2007, the Company received $40,000 from Scott Vacek, an affiliated party, as
consideration for the issuance of a bridge loan promissory note.  The
Company issued 13,334 shares of common stock, in lieu of interest, per the terms
of the note.




On August
13, 2007, the Company received $50,000 from Mark Sullivan, an affiliated party,
as consideration for the issuance of a bridge loan promissory
note.  The Company issued 16,667 shares of common stock, in lieu of
interest, per the terms of the note.




On August
31, 2007, the Company received $200,000 from 2003 Sanders Children Trust, an
affiliated party, as consideration for the issuance of a bridge loan promissory
note.  The Company issued 66,667 shares of common stock, in lieu of
interest, per the terms of the note.




On
September 7, 2007, the Company received $50,000 from Neil Granader, an
affiliated party, as consideration for the issuance of a bridge loan promissory
note.  The Company issued 16,667 shares of common stock, in lieu of
interest, per the terms of the note.




On
October 2, 2007, the Company received $150,000 from David Cain, a non-affiliated
party, as consideration for the issuance of a bridge loan promissory
note.  The Company issued 60,000 shares of common stock, in lieu of
interest, per the terms of the note.


-9-


On
October 16, 2007, the Company received $40,000 from Sylvia Granader, an
affiliated party, as consideration for the issuance of a bridge loan promissory
note.  The Company issued 13,334 shares of common stock, in lieu of
interest, per the terms of the note.




All above
sales were made pursuant to exemption provided by Section 4(2) of the Securities
Act of 1933 and Regulation D Rule 506 promulgated thereunder.





In
connection with all of the offerings and sales made pursuant to Rule 506 of
Regulation D promulgated under the Securities Act of 1933, as amended: (i) no
advertising or general solicitation was employed in offering the securities;
(ii) the offerings and sales were made to a limited number of persons, all of
whom were accredited investors, or business associates of the Company; and (iii)
transfer was restricted by the Company in accordance with the requirements of
the Securities Act of 1933, as amended. In addition, the investors made
representations, and we have made independent determinations, that all of the
investors were accredited or sophisticated investors, and that they were capable
of analyzing the merits and risks of their investment, and that they understood
the speculative nature of their investment. All of the individuals and/or
entities that purchased the unregistered securities were known to the Company
and its management through pre-existing business or personal relationships, as
long standing business associates, friends, employees, relatives or members of
the immediate family of management or other shareholders. All purchasers were
provided access to the material information, which they requested, and all
information necessary to verify such information, and were afforded access to
management of the Company in connection with their purchases. All purchasers of
the unregistered securities acquired such securities for investment and not with
a view toward distribution, acknowledging such intent to the
Company.





On or
about August 13, 2008, pursuant to its Omnibus Stock and Incentive Compensation
Plan 2006 the Company granted an aggregate of 180,000 options to purchase shares
of the Company’s common stock to William H. Moody, a then Director of the
Company.  We claim an exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, for the above issuance, since
the issuance did not involve a public offering, the recipient took the
securities for investment and not resale and the Company took appropriate
measures to restrict transfer. No underwriters or agents were involved in the
issuance and no underwriting discounts or commissions were paid by the
Company.





On or
about August 13, 2008, pursuant to its Omnibus Stock and Incentive Compensation
Plan 2006 the Company granted an aggregate of 180,000 options to purchase shares
of the Company’s common stock to Steve Phelps, a then Director of the
Company.  We claim an exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended, for the above issuance, since
the issuance did not involve a public offering, the recipient took the
securities for investment and not resale and the Company took appropriate
measures to restrict transfer. No underwriters or agents were involved in the
issuance and no underwriting discounts or commissions were paid by the
Company.





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.





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.


-10-


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.








Item
6. Exhibits.





The
following exhibits are furnished as part of this report:





Exhibit
      10.1 (1)
            Bridge
      Loan Promissory Note in the amount of $100,000 payable to Robert K.
      McDonaldExhibit
      10.2 (1)
            Bridge
      Loan Promissory Note in the amount of $25,000 payable to Don
      WeirExhibit
      10.3 (1)
            Bridge
      Loan Promissory Note in the amount of $25,000 payable to Ben
      MorrisExhibit
      10.4 (1)
            Bridge
      Loan Promissory Note in the amount of $50,000 payable to Don
      SandersExhibit
      10.5 (1)
            Bridge
      Loan Promissory Note in the amount of $40,000 payable to Scott
      VacekExhibit
      10.6 (2)
            Bridge
      Loan Promissory Note in the amount of $50,000 payable to Mark
      SullivanExhibit
      10.7 (2)
            Bridge
      Loan Promissory Note in the amount of $200,000 payable to 2003 Sanders
      Children TrustExhibit
      10.8 (2)
            Bridge
      Loan Promissory Note in the amount of $50,000 payable to Neil
      GranaderExhibit
      10.9 (2)
            Bridge
      Loan Promissory Note in the amount of $150,000 payable to David
      CainExhibit
      10.10 (2)
            Bridge
      Loan Promissory Note in the amount of $40,000 payable to Sylvia
      GranaderExhibit
      10.11 (2)
            Stock
      Option Grant Notice William H. MoodyExhibit
      10.12 (2)
            Stock
      Option Grant Notice Steve PhelpsExhibit
      10.13 *
            Note
      Holder Settlement Agreement with Lockhead Martin Services,
      Inc.Exhibit
      10.14 *
            Note
      Holder Settlement Agreement with Andrews Kurth LLPExhibit
      31.1*
            Certification
      required by Section 302 of the Sarbanes-Oxley Act of
  2002Exhibit
      31.2*
            Certification
      required by Section 302 of the Sarbanes-Oxley Act of
  2002Exhibit
      32.1 *
            Certification
      required by Section 906 of the Sarbanes-Oxley Act of
  2002Exhibit
      32.2 *
            Certification
      required by Section 906 of the Sarbanes-Oxley Act of
  2002*Filed
      herein.(1)
      Filed as an exhibit to our Form 10-QSB, filed with the Commission on
      August 14, 2007, and incorporated herein by reference.(2)
      Filed as an exhibit to our initial Form 10-QSB, filed with the Commission
      on November 14, 2007, and incorporated herein by
reference.


-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-