**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC** **20549**




**FORM
      10-KSB**





x
            Annual
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934For
                the fiscal year ended December 31,
                2007





o
            Transition
                report under Section 13 or 15(d) of the Securities Exchange Act of
                1934For
                the transition period from_______
                to_______




Commission
      file number 000-49971





**AskMeNow,
      Inc.**


(Name
      of
      small business issuer in its charter)





Delaware
            
            71-0876952(State
                or other jurisdiction of
            
            (IRS
                Employer Identification No.)incorporation
                or organization)





26
      Executive Park, Suite 250


Irvine,
      CA 92614


(Address
      of principal executive offices)




(949)
      861-2590


(Issuer’s
      telephone number)





Securities
      registered under Section 12(b) of the Exchange Act:





Name
                of each exchangeTitle
                of each class
            
            on
                which registeredNone
            
            None


Securities
      registered under Section 12(g) of the Exchange Act:





Common
      Stock, $0.01 par value per share


(Title
      of
      class)





Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. o




Check
      whether the issuer (1) 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 requirement for the past 90 days.     Yes
xNo
o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes oNo x.





The
      issuer’s revenues for its most recent fiscal year ended December 31, 2007 were
      $54,536.




The
      aggregate market value of the common stock held by non-affiliates computed
      by
      reference to the $0.14 closing price of such common stock on April **** 7,
      2008
      was $7,073,227.





The
      number of shares of the issuer’s common stock outstanding as of April
      7,  2008
      was: **** 58,915,400.





Documents
      Incorporated by Reference: None





Transitional
      Small Business Disclosure Format:      Yes oNo x









**TABLE
      OF CONTENTS**




PART
                I
            
            3Item
                1.
            Description
                of Business
            3Item
                2.
            Description
                of Property
            26Item
                3.
            Legal
                Proceedings
            26Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            28PART
                II
            
            28Item
                5.
            Market
                for Common Equity, Related Stockholder Matters and Small Business
                Issuer
                Purchases of Equity Securities
            28Item
                6.
            Management’s
                Discussion and Analysis or Plan of Operation.
            34Item
                7.
            Financial
                Statements.
            41Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure.
            41Item
                8A.
            Controls
                and Procedures.
            41Item
                8B.
            Other
                Information.
            42PART
                III
            
            43Item
                9.
            Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance With Section 16(a) of the Exchange Act
            43Item
                10.
            Executive
                Compensation.
            46Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            51Item
                12.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            55Item
                13.
            Exhibits
            58Item
                14.
            Principal
                Accountant Fees and Services
            62SIGNATURES
            64





INDEX
      TO
      CONSOLIDATED FINANCIAL STATEMENTS





Report
                of Independent Registered Public Accounting Firm
            F-1Consolidated
                Balance Sheets as of December 31, 2007 andDecember
                31, 2006
            F-2Consolidated
                Statements of Operations for the Years EndedDecember
                31, 2007 and December 31, 2006
            F-3Consolidated
                Statements of Cash Flows for the Years EndedDecember
                31, 2007 and December 31, 2006
            F-4Consolidated
                Statements of Changes in Stockholders' Deficitfor
                the Years Ended December 31, 2007 and December 31, 2006
            F-5Notes
                to Consolidated Financial Statements
            F-6







**PART
      I**




**Item
      1.** **Description
      of Business.**




**Overview
      and Organizational History**




AskMeNow,
      Inc. (the “Company”) is a communications technology company that provides users
      of mobile devices with access to information through its AskMeNowTM service,
      a mobile information content service that
      enables users of mobile devices to ask questions and receive answers on such
      devices regardless of location or time.





The
      Company was originally formed as a Delaware corporation on August 15, 2000
      under the name Ocean West Holding Corporation with negligible assets and
      liabilities. In March 2002, the Company acquired all of the issued and
      outstanding shares of Ocean West Enterprises, Inc. (“OWE”) in an exchange of
      shares. OWE was formed in California in 1988 and engaged in the business of
      mortgage banking/brokering, operating under the name of Ocean West Funding.





Pursuant
      to the terms and conditions of the Securities Exchange Agreement and Plan of
      Reorganization dated as of April 14, 2005 (the “Exchange Agreement”), the
      Company agreed, among other things, to spin-off or otherwise dispose of OWE.
      As
      of May 23, 2005, OWE assumed and Consumer Direct of America (“CDA”), then the
      Company’s principal shareholder, jointly indemnified and held harmless the
      Company from, all liabilities of the Company pursuant to an Assignment and
      Assumption of Liabilities Agreement. Notwithstanding the completion of the
      Exchange Agreement as described below, the Company was unable to spin-off the
      assets of OWE. Therefore, pursuant to a Stock Purchase Agreement dated as of
      December 30, 2005, Container/ITW, Inc. purchased 100% of the capital stock
      of
      OWE for $1.00 and acknowledged that pursuant to the Exchange Agreement, OWE
      had
      previously assumed all liabilities and obligations of the Company.





The
      closing of the Exchange Agreement occurred on June 6, 2005 (the “Closing”).
      Effective shortly thereafter, the Company also acquired InfoByPhone, Inc.
      (“InfoByPhone” or “IBP”), a Delaware corporation, in a reverse merger (the
“Reverse Merger”) pursuant to which InfoByPhone became a wholly-owned subsidiary
      of the Company. InfoByPhone was originally organized as an Ohio limited
      liability company in January 2004 and became a Delaware corporation via merger
      in June 2004 in a transaction treated for accounting purposes as a
      recapitalization by the accounting acquirer, InfoByPhone, LLC.





In
      connection with the Reverse Merger, (i) the Company acquired all of the issued
      and outstanding shares of IBP in exchange for an aggregate 5,586,004 shares
      of
      authorized but unissued shares of common stock, par value $0.01, of the Company
      that, together with 500,000 shares issued to Vertical Capital Partners, Inc.
      (n/k/a Arjent Ltd.) as a finder’s fee, constituted approximately 56% of the
      then-outstanding capital stock of the Company, (ii) the then-existing directors
      of the Company, Marshall Stewart and Daryl Meddings, agreed to resign and the
      two director designees of IBP joined the Company, (iii) the existing officers
      of
      the Company resigned and were replaced by the officers of IBP, (iv) neither
      IBP
      nor the Company had any debt or liability, and IBP had no less than $750,000
      cash or cash equivalents, and (v) the Company agreed to dispose of OWE. The
      transaction was treated for accounting purposes as a reverse merger by the
      accounting acquirer, InfoByPhone, Inc.


3





InfoByPhone
      is the sole operating business of the Company, and provides information services
      and content through the AskMeNow service. The Company also has a foreign
      subsidiary, AskMeNow, Inc. a Philippines corporation.





Unless
      the context requires otherwise or as otherwise indicated, references in this
      Annual Report to “we,” “us,” “our” and the “Company” refer to AskMeNow, Inc. and
      include our wholly-owned subsidiaries InfoByPhone, Inc. and AskMeNow, Inc.
      (Philippines).





**Recent
      Developments**




*Bridge
      I Default and Settlement Offer*





As
      of
      December 31, 2007, **** the
      Company was in default under each of the notes issued in its Bridge I offering.
      The Bridge I offering, which commenced in February 2007 and was closed to new
      investments in May 2007, consisted of an aggregate $3 million of 12% senior
      promissory notes issued to accredited investors. The notes were originally
      due
      and payable 90 days after issuance, but the Company elected to exercise its
      right to extend the maturity of such notes by an additional 90 days, the result
      of which increased the interest rate of the notes to 14% per annum from original
      maturity until repayment in full.





The
      Company’s failure to pay the Bridge I notes when due constitutes an event of
      default and, according to the terms of such notes, the Company is obligated
      to
      pay each note holder the default interest rate of two percent (2%) per month
      on
      all amounts due and owing under such notes for each month or part thereof beyond
      the extended maturity date that such amounts remain unpaid. In the event of
      a
      default, each note holder may proceed to protect such holder’s rights in equity
      or by action at law, or both, enforce payment of the notes, and/or enforce
      any
      other legal or equitable right such holder may have.





The
      Company is in continuing discussions with the holders of the Bridge I notes
      regarding a settlement offer and is working to secure a further extension of
      the
      notes’ maturity date.





*Series
      D Preferred Stock Offering*




Beginning
      in January 2008, the Company commenced an offering of its Series D convertible
      preferred stock, $0.01 par value per share, on a “best-efforts,” no minimum
      basis. The offering consisted of up to $2 million of Series D preferred stock,
      or 2 million shares at a purchase price of $1.00 per share. In connection with
      the offering, an investor is entitled to receive warrants to purchase two shares
      of the Company’s common stock, exercisable for a period of five years at $0.10
      per share, for every one share of Series D preferred stock purchased. Each
      warrant is redeemable by the Company at a price of $0.01 at any time subsequent
      to the earlier of the third anniversary of the date of the final purchase and
      sale of the Series D stock and the date the common stock trades at or above
      $1.00 per share for 20 consecutive trading days. Dividends are at a rate of
      12%
      per annum and are payable in preference to the holders of common stock and
      any
“junior securities” (as such term is defined in the designations for the Series
      D preferred stock) in shares of common stock upon conversion of the Series
      D
      preferred stock as discussed below.


4




The
      Series D preferred stock automatically converts into shares of common stock
      upon
      the earlier to occur of the six-month anniversary of the final closing date
      for
      the Series D offering, and the closing of a “change of control transaction”
(defined to include a merger or sale of all or substantially all of the
      Company’s assets). The number of shares of common stock issuable upon conversion
      is equal to the product obtained by multiplying the then-applicable Series
      D
      conversion rate by the number of shares of Series D stock being converted.
      The
      Series D applicable conversion rate is the quotient obtained by dividing the
      sum
      of the original issuance price and any accrued and unpaid dividends thereon,
      if
      any, by the Series D applicable conversion value. The Series D applicable
      conversion value shall be the greater of (i) the weighted average price of
      the
      common stock for the 10 consecutive trading days prior to the date of
      conversion, less a 40% discount, and (ii) $0.10, subject to adjustment in
      connection with the issuance of such preferred shares.




As
      of
      March 31, 2008, the Company had raised $485,000 from the sale of 485,000 shares
      of Series D convertible preferred stock, and issued warrants to purchase 970,000
      shares of common stock in connection with the issuance of such preferred
      shares.





*Bridge
      I Warrant Anti-dilution Adjustment*





In
      accordance with the terms and conditions of the Company’s $3 million Bridge I
      offering, note holders were issued warrants exercisable at $0.50 to purchase
      four shares of common stock for every $1.00 principal amount loaned. As
      discussed above, during the first quarter of 2008 the Company commenced a
      private placement of its Series D convertible preferred stock that includes
      warrants that are exercisable at $0.10 per share. The pricing of the warrants
      in
      the Series D preferred stock financing triggered the anti-dilution protection
      of
      the Bridge I senior promissory notes. Such anti-dilution protection resulted
      in
      the 15,600,000 warrants originally issued in the Bridge I financing to be
      increased five times to an aggregate 78,000,000 warrants, with an adjusted
      exercise price of $0.10 per share. The warrants also provided for a cashless
      option; as of April 7, 2008, holders of an aggregate 23,064,000 warrants had
      exercised such warrants on a cashless basis and had been issued an aggregate
      13,118,711 shares of AskMeNow common stock.




*Series
      A and Series B Preferred Stock Anti-Dilution Adjustments*





Also
      as a
      result of the Series D preferred stock offering, the Company agreed that the
      conversion price of the shares of its Series A and Series B preferred stock,
      as
      well as the exercise price of the warrants issued in connection with the Series
      A and Series B preferred stock offering, would be adjusted. The conversion
      price
      of the Series A and Series B preferred stock therefore will be the lower of
      $0.25 and the conversion price for the Series D preferred shares, such Series
      D
      conversion price to be set in the future pursuant to the terms of that offering
      as described above. As adjusted, the Series A and Series B preferred stock
      warrants are exercisable at $0.10 per share. Such provisions are applicable
      to
      any participant in the Series A and Series B preferred stock offering, even
      those who may have previously converted their preferred shares into the common
      stock of the Company, so long as such holders can demonstrate they have not
      yet
      sold such common shares. The Company also agreed to reduce the exercise price
      of
      the warrants issued to the placement agent for the Series A and Series B
      preferred stock offering. The Company is currently negotiating with the investor
      representative with respect to certain other adjustments in the number of
      warrants issuable to the Series A and Series B preferred stock holders and
      the
      conversion price for such shares.





*Issuance
      of Common Stock for Services*





Beginning
      in January 2008, the Company entered into an agreement for financial consulting
      services for a 12 month period and issued 3,000,000 shares of unregistered
      restricted common stock in consideration for such services.





*Series
      B Convertible Preferred Stock Conversions*





During
      the first quarter of 2008, holders of the Company’s Series B preferred stock,
      $0.01 par value, elected to convert an aggregate 31,652 shares and accrued
      and
      unpaid dividends thereon into an aggregate 661,802 shares of unregistered common
      stock.


5


*Short-term
      Liquidity Problems*





During
      the first quarter of fiscal 2008, the Company experienced severe liquidity
      problems and had insufficient cash on hand to effectively manage its business.
      During such period, the Company raised $485,000 from its Series D convertible
      preferred stock offering to accredited investors. The Company has continued
      to
      raise operating cash through additional debt and equity financings, and our
      management is in the process of negotiating additional financing, although
      no
      assurances can be given that such financing will be obtained on terms favorable
      to the Company or at all.





*Corporate
      Income Taxes*





The
      Company is delinquent in filing certain federal and state income tax returns
      for
      2006 and 2005 and is working to complete and file such returns. The Company
      does
      not anticipate any tax liability due to the losses incurred to date and the
      net
      operating loss carryforwards available to the Company.





**Our
      Company and Business**





AskMeNow
      is a communications technology company, dedicated to optimizing the use of
      mobile cellular devices to improve individual productivity and efficiency and
      providing users with easier access to information regardless of
      location.





The
      Company’s primary offering is the AskMeNowTM service,
      a mobile information content service that
      provides answers to questions a user may ask from virtually anywhere at
      virtually any time. AskMeNow enables users of
      any mobile
      device with text messaging/short message service (“SMS”) or email capability to
      text message or email questions, or to download an application and submit
      questions using the application. The
      answer can be text messaged, e-mailed, or delivered through the application
      back
      to the consumer’s mobile device, usually within a matter of minutes. We believe
      the AskMeNow service provides users a nearly effortless means of obtaining
      a
      concise answer to a wide variety of questions. We are currently working to
      develop delivery of answers through a process known as SMS to WAP. The Wireless
      Application Protocol or “WAP” is an open and non-proprietary specification that
      empowers mobile users with wireless devices to easily access and interact with
      information and services. We expect that the use of WAP will provide users
      with
      a richer experience, as answers can be shown on one screen, as opposed to
      multiple screens, and will take advantage of advertisers’ desire to offer more
      compelling advertisements that can be shown not only in text but in
      graphics.





We
      believe **** the
      AskMeNow service has the capability to answer a wide array of information-based
      questions, including current news and events, sports scores, weather,
      entertainment, real time stock quotes and market data, driving directions,
      travel schedules and availabilities, comparison shopping, restaurant information
      and reservations, directory assistance, and random trivia (literature, history,
      science, etc.), so long as the information is available on the Internet at
      no
      fee to access or we are already licensed to access the data. All information
      is
      researched on the Internet or from one of our licensed content providers. Once
      information is accessed, it is refined to a format suitable for easy reading
      on
      the screen of a user’s mobile device and sent back to the user. Our content
      partners include leading companies such as Cinema-source.com, Flytecomm.com,
      W3
      Data for 411information, Hotels.com, Reuters, Maps.com, Shopping.com,
      SportsNetwork, Astrology.com, StubHub.com, Custom Weather, Distributive
      Networks, Mobile Streams, and Baseball-Reference.com. In some cases, we pay
      a
      small monthly fee for access to information; in others, the access to the
      content is free. We also may have arrangements to share in advertising revenue
      generated from responses using content from one of our contract partners.


6





During
      2007, we operated two platforms for asking questions: SMS/text messaging and
      through a downloaded application. We are charging $0.25 per question answered
      or
      a basic monthly fee of between $1.99 and $4.99 for unlimited use. Users simply
      text a question to our SMS code (27563 or ASKME) and the service will provide
      answers to questions. Alternatively, users can go to our website or one of
      our
      partner websites to download our application.





Depending
      upon the country where our service is offered, charges may vary. **** Our
      current relationships with Rogers Wireless in Canada and Alltel in the United
      States are based upon distribution agreements with the carriers to distribute
      the AskMeNow products, both the SMS and downloadable applications. Both carriers
      charge fees for customer usage and split those fees with AskMeNow.





Currently,
      we are also integrated through a carrier billing aggregator that provides
      automated billing for the $0.25 per question charge for all tier-one carriers
      (Alltel, Verizon, Sprint, T-Mobile, Cingular/AT&T) and some tier-two
      carriers. This charge is automatically reflected on an end user’s monthly
      statement. We share the revenue with the aggregator, and generally are entitled
      to one-half of the fee.





As
      of
      April 5, 2008 we eliminated charges for asking questions. Further, our new
      product is only offered through SMS, WAP, and mobile Internet, and can be
      downloaded to most cell phones as an icon that provides an automatic link to
      our
      site. **** This
      will
      have a small impact on revenue as we will no longer be charging to answer
      questions; however, we anticipate a greater volume of questions due to the
      elimination of per query charges, enabling a greater revenue source through
      advertisements placed per answer. We do not expect that this change in revenue
      model in the short term will substantially impact our current operations, as
      the
      revenue from the current charges is not significant. Since we are eliminating
      the $0.25 charge, we also expect to be able to provide almost all cell phone
      users in the United States with access to our SMS product; the only limitations
      are for users that cannot SMS on their current phones because of the phones’
limitations or because they do not pay for access to text messaging.





During
      2007, we had on average over 20,000 individual users per month, most of whom
      are
      using our service for free. Although we have been charging to use our service
      through carrier and distributor relationships, we accumulated many users prior
      to launching these relationships that were provided access to our service for
      free.





In
      November 2006, the Company’s InfoByPhone subsidiary entered into an exclusive
      worldwide (exclusive of Italy) license agreement with Expert System S.p.A.,
      d/b/a Cogito Italia, a leading company in the market of semantic intelligence.
      The technology license is for the mobile communications industry, and enables
      us
      to access, through a natural language query, information that comes from
      structured and unstructured sources. Cogito leverages advanced linguistic
      analysis and semantics to facilitate the understanding of text, and its
      technology aims to provide an effective answer to problems encountered during
      research, filtering, classification, mining and discovery.


7





The
      contract with Expert System required the Company to pay an upfront license
      fee
      of $150,000 for the exclusive rights, and also requires preset integration
      fees
      for integrations into designated content, ongoing monthly maintenance fees
      for
      minimum amounts of technology integration, and license fees for server usage.
      The monthly minimum fees will range from $60,000 to as much as $500,000 as
      we
      generate advertising revenue and share in that revenue. After considerable
      integration work with Expert Systems in 2007, we intend to primarily use their
      technology to provide a natural language platform for questions seeking
      information from Wikipedia and for enterprise-related integrations. We
      anticipate either modifying or altogether changing our license agreement to
      accommodate this new relationship. We do not anticipate this will have an
      adverse affect on our products, and believe it will in fact reduce expenses
      as
      Expert Systems continues to provide technical assistance moving forward.





As
      indicated above, much of our licensed content requires minimum payments,
      although we anticipate that most of this content will be provided free after
      we
      generate advertising revenue once substantial volume has been reached. The
      text
      charges we pay for sending and receiving text messages varies per carrier and
      can be mitigated by volume; such charges also may be offset by advertising
      revenue.





**Our
      Industry**





The
      growth of new technologies in recent years has resulted in a shift in our
      rapidly changing society as the need and desire for accessibility to information
      expands. It is no longer acceptable to make an airline reservation during a
      typical 8-hour workday by calling a travel agent; nowadays we expect to have
      access at all times to multiple media that will provide us with all of the
      necessary information for booking a flight. This is a trend that is not limited
      to the travel industry. Sports fans do not wait for their local news to
      broadcast the score of their favorite team’s game; rather, they see it scrolling
      across the bottom of the television screen, or posted on their favorite
      websites, or have the score alerts sent to their mobile device. Investors do
      not
      wait for the morning paper to check stock quotes, but expect to see them
      streaming across a cable news service or showing up in real time on their
      computer screens.





Fueled
      by
      technology’s impact on the hunger for information, the Internet is now being
      surfed by millions of people at any given time. Millions of people perform
      searches each hour and millions more send emails each day, and these numbers
      continue to grow, as almost 70% of American households had Internet access
      at
      home in 2006. To be able to stay in constant contact, almost 250 million
      Americans now own cell phones, with 82% of Americans owning a cell phone as
      of
      November 2007. Wireless users were expected to send over 50 billion text
      messages in 2007, making mobile SMS an estimated $2 billion industry.


8


The
      move
      from the television screen to the computer screen is taking the obvious
      progression to the cell phone, sometimes referred to as the “third screen”, and
      AskMeNow seeks to be at the forefront of this shift. The competition among
      cellular carriers has resulted in a near saturation and a bottom line for
      offerings and pricing of mobile phone calling, which is highly evident in the
      heightened carrier concentration experienced recently. The newest trend for
      mobile device makers and distributors is data and content. Ring tones,
      wallpaper, email, and mobile web browsers have all seen great increases in
      users
      and monetary value in recent times as the market sees a shift from simple cell
      phones to fully portable multi-media mobile devices. Over half of mobile
      subscribers use their device for something other than making phone calls, with
      users utilizing their device to play games, take and share pictures, download
      ring-tones, and enter web browsers. A large percentage of users also are
      communicating through text messages - a March 2008 Pew Research report noted
      that 58% of cell phone users had sent or received a text message, up from 41%
      in
      2006.





As
      a
      cutting edge technology that has become common place, mobile phones reach an
      audience that crosses all demographics and age groups, although research shows
      that early adoption of new mobile applications and devices is heaviest amongst
      younger age groups that are highly sought after by marketers. U.S. Cellular
      has
      reported that 60% of all children in the United States own a cell phone, and
      54%
      of “tweens” (children between the ages of 10 and 15) will own a cell phone in
      the next three years. Moreover, two out of every five children in the 8 to
      14
      age group already own a cell phone. A majority of these younger users are
      interested in multifunction cell phones that offer greater access to different
      types of media, including cameras and MP3 players.





Marketers
      are already starting to see the potential for getting their message out in
      highly targeted ways through new emerging media. In 2008, total spending on
      emerging media is predicted to hit $14.7 billion. Emerging media includes
      search, digital billboards, social networking and mobile marketing and gaming.
      Total U.S. spending on Internet advertising was expected to reach $19.5 billion
      in 2007, a 19% increase over spending of $16.4 billion in 2006, and the
      predicted spending for 2008 is almost $24 billion. Marketers are beginning
      to
      realize the value of contextually supplying messages and furthering it with
      the
      ability to reach their highly targeted users anywhere and anytime via their
      mobile devices. More than a third of college students reported receiving a
      text
      message advertisement on their mobile device in 2007, up from 13% in 2005.
      Receiving text message ads is not confined to college students. According to
      a
      Nielsen Mobile Survey in March 2008, 23% of all U.S. mobile subscribers had
      viewed mobile advertising in the previous 30 days, and the number who recalled
      seeing an advertisement jumped 38% from 42 million to 58 million between the
      second and fourth quarters of 2007.





**Our
      Products & Services**





We
      believe that this societal paradigm shift and reliance on technology to make
      greater amounts of information more readily accessible opens the door for a
      mobile application like the AskMeNow service. We are a services-based company,
      focused on increasing the productivity of individuals by enhancing the
      functionality of mobile devices. In today’s world, we believe there is a direct
      correlation between access to information and productivity, and AskMeNow seeks
      to provide more information to the mobile user, with the goal of making them
      more productive than ever before.





We
      believe the AskMeNow service can be offered currently to mobile device users
      and
      enterprise clients in any country where English is the spoken language and,
      when
      available in other languages, to users and clients in other countries in which
      we have developed the service. Further, we believe our service will be suited
      to
      users in countries that have significant cellular penetration in the population
      and substantial enterprise usage.


9





As
      noted
      above, AskMeNow has to date provided two ways to access our service, text
      message/SMS or through a downloaded application. As of April 2008 we have
      expanded our product offering by including access to AskMeNow via the WAP or
      the
      Internet. We will continue to offer access through text messaging. However,
      we
      expect that our new downloadable applications will be “thin” client
      applications, meaning that the user will only download an icon to their phone,
      which will bring the user directly to the AskMeNow mobile site. Our new site
      will be designed to offer templates for asking many content questions and
      provides a search box for information inside Wikipedia. The templates create
      a
      framework for questions in the most commonly asked information verticals.
      Verticals are companies who are partners because they offer extensions of
      similar products, and include directory assistance, weather, stock quotes,
      directions, sports scores, movie times, dictionary, flight information,
      shopping, restaurants, horoscopes and news. Under each category the user is
      prompted to enter the exact information needed to give them an accurate
      response. For example, weather requires a zip code or city and state, stock
      quotes requires a ticker symbol and the trading market, and sports scores
      require the league and the team name. Once the correct information is entered
      into the template, the user simply pushes send and the answer is returned either
      by SMS or on the screen of our website. The answers to these questions will
      be
      culled from our content partner’s databases through the unique Extensible Markup
      Language or “XML” feeds we have established. The answers are correctly
      formatted, then paired with an appropriate contextually-based paid advertisement
      or marketing message and sent directly back to the end user’s device.





*AskMeNowTM
      Alerts*





We
      have
      also developed an information alert service that will enable users to receive
      content that they would like without having to submit a question to AskMeNow.
      This service is currently operating with a selection of our content partners
      and
      provides a daily push of automated content - for example, receiving a word
      of
      the day from Websters Dictionary. We anticipate releasing a more advanced
      version in 2008 whereby users will also be able to select from a range of
      information based on availability from our content partners, and have content
      sent directly to their device at pre-arranged times or simply receive
      a notification that information is available from the content source and
      can be accessed by clicking through to a designated landing site.




*AskMeNowTM
      Enterprise*





Utilizing
      licensed software from Expert System, we can offer an AskMeNowTM enterprise
      solution that enables telecommunications companies to automate access to
      customer service data using a natural language query system. In March 2008,
      we
      announced a service agreement with Research in Motion to provide the technology
      platform to provide Blackberry **TM** users
      access to customer service data.


10





*ConTEXTual* TM *Marketing / Ad Services*





AskMeNowTM Ad
      Services offer marketers and advertisers a platform for messaging potential
      customers. Taking advantage of our relationship with our customers, we are
      able
      to extend the reach of an advertiser directly to the end consumer. Our customers
      are mobile; our messages are targeted and reach our users while on the go.
      We
      have partnered with a variety of advertising platform providers, enabling an
      outsourced mechanism for selling and managing advertising
      campaigns.





One
      goal
      of advertisers is to provide their specific offering at the moment a potential
      user is ready to use a product or service. AskMeNow supports
      this goal by connecting advertisers with potential customers when those
      customers inquire about relevant products. Our customer base is developed with
      personal demographic information, interests and location depending upon the
      phone. This means an advertiser or marketer who places a ConTEXTual TM Marketing Message through our service is reaching a large audience of targeted
      potential customers when their message means the most. Advertisers therefore
      can
      limit or eliminate the need to pay for unnecessary impressions at inopportune
      times amongst individuals with a low chance of ever using their product or
      service.





Since
      every company and product/service is different, we offer **** advertisers
      and marketers a variety of ways to ConTEXTually market through the AskMeNowTM Ad
      Services:





·
            ***Brand
                Texting****-*Corporate
                or product brand names can be positioned for awareness on a cost
                per
                message basis and sent to targeted
                users.




·
            ***Vertical
                Texting***-
                Advertisers can bid on keywords and information categories or verticals
                so
                that their product or service can be marketed exclusively to users
                who ask
                questions that concern their desired vertical, use particular keywords,
                etc. Vertical texting is the third screen equivalent of paid search
                and
                allows marketers to relay their brand’s message directly to those
                interested in their vertical.




·
            ***Performance
                Texting*****-**The pay per performance or inquiry-based program consists of text
                messaging targeted to users with a message to contact the advertiser.
                For
                instance, a user might ask a question about flowers. We would answer
                the
                question with an advertisement attached to the answer that would
                require
                the user to click the ad and be taken to another web site to purchase
                flowers. We can generate revenue either at the time of the click
                or if an
                item is purchased.****Performance
                texting can be****based
                on cost per call to a unique 800 number, cost per click (not available
                on
                all consumer devices), cost per request for additional info, cost
                per use
                of coupon code at website, and other methods.




·
            ***Coupon
                Texting***-
                With coupon texting, electronic coupons can be text messaged to users
                and
                made redeemable at a given location. They can be sent to highly
                individualized users at the time of decision and point of
                purchase.




11


The
      richness of the media impression delivery differs depending upon the end user’s
      device. With a BlackBerryTM and other smart-phones that receive email, we have
      the ability to make marketers’ messages theoretically infinite in size, and to
      include graphics, text, pictures, click-through links, and more. On newer cell
      phones we also have the ability to send media impressions via MMS
      (meta-messages) or a WAP gateway (a mini website link). On older cell phones
      we
      have the ability to stay within the 160 text only character limit of the SMS
      format. As current and new mobile users adopt more modern, improved devices,
      we
      expect that AskMeNow ’s
      ability to deliver marketer’s media impressions in increasingly rich formats
      will continue to grow.





As
      technology progresses and greater numbers of new, more sophisticated devices
      are
      adopted by the cell phone using public, we also expect to be able to take
      advantage of our content partners’ existing
      relationships to allow for much greater targeting and local advertising. We
      anticipate that new avenues of potential advertisers and marketers will help
      us
      to expand our advertising services offerings and garner depth amongst users,
      making our service more valuable to marketers.





**Sales
      & Marketing**





Like
      the
      introduction of any new product or service, the success of our sales and
      marketing is critical to our success as a company. Our sales team is focused
      on
      establishing as many distribution points as possible while our marketing group
      is charged with creating innovative ways for AskMeNow and our distribution
      partners to acquire users.





*Sales*





We
      intend
      to continue our efforts to establish relationships with carriers, handset
      manufacturers, resellers and content providers in North America to gain access
      to their distribution networks. We currently do all sales directly using our
      own
      staff; however, we may at times contract with consultants to provide services
      for creating relationships that will benefit the company. Most of these
      relationships require long sales cycles that are difficult for small companies
      to execute. The growth of AskMeNow is dependent upon the distribution of our
      products and services; thus we have implemented a concentrated effort to
      partner with as many companies as possible that are interested in sharing
      revenue from the distribution of our products and services, including our mobile
      search platform and enterprise solution.





Mobile
      Carriers/ Handset Manufacturers





·
            Canadian
                Carriers - We are currentlyunder
                contract with the largest Canadian carrier, Rogers Wireless, and
                have
                recently finalized an agreement with Bell Canada.
                We are working with other Canadian carriers to maximize our distribution
                network and hope to close other agreements in 2008. All of our
                relationships will be based upon revenue share agreements for
                advertisements. Currently, Rogers is offering our service for a
                fee.




·
            U.S.
                Carriers - We are currently under contract with Alltel Wireless,
                a leading
                cellular carrier with over 10 million users. Currently, Alltel is
                offering
                our service for a fee. We are in discussions with other U.S. carriers
                and
                hope to close other agreements in
                2008.




12


·
            Research
                In Motion - In March 2008 we signed a services contract to provide
                technology for natural language search of a proprietary customer
                service
                database. This enterprise-focused product will be offered to other
                carriers and handset manufacturers as a means to generate revenue
                and
                enhance the AskMeNow brand.




Resellers




We
      have a
      distributor relationship with Handango, a large online reseller of applications
      for mobile devices. Handango began selling our application in the fourth quarter
      of 2004, and as of December 31, 2007 had sold to over 1,000 customers the AskMeNow downloadable application for a variety of phones at a price of $4.99 a
      month. We continue to utilize Handango and intend to increase the applications
      to be sold to include many popular brands of phones. We also intend to continue
      offering our new applications through Handango, although there will be no fee
      for downloading the applications; rather, Handango will share in advertising
      revenue with AskMeNow. We are pursuing other online resellers that are in a
      position to distribute our product to a large audience and share in advertising
      revenue.




Content
      Providers





We
      have
      developed a number of content and distribution relationships with a variety
      of
      online portals that utilize the AskMeNow service to distribute their content,
      via a mobile platform, while at the same time using their resources to promote
      the shared service and acquire new AskMeNow customers. We intend to focus
      significant effort to partner with leading content partners in a variety of
      information verticals, as their online distribution could be of significant
      value to AskMeNow.




*Marketing*




Retail
      Marketing - Direct to the End User





For AskMeNow to
      become a viable business and competitor in the mobile content and information
      world, our brand will need to be marketed to the hundreds of millions
      of North American cellular users. As we move to launch our new free
      AskMeNow portal with Canadian carriers, we intend to advertise our brand through
      local television spots, radio, and billboards in select locations throughout
      Canada. Complementing this outreach will be specific cross promotions with
      content partners, advertisers and relevant retail verticals. These
      advertisements will be supplemented with publicity and promotional support.
      All
      retail marketing, directed at the end user, will be intended to increase sign
      up
      at our www.askmenow.com site or
      through one of our partner relationships, and to strengthen brand awareness.
      This marketing strategy will be dependent upon our ability to raise significant
      capital.





Wholesale
      Marketing - Carriers, others





Mobile
      carriers and other distribution points such as resellers and content providers
      will be heavily focused to promote the AskMeNow brand. Working to position
      our
      product in prime placement on decks of carriers and on home pages of online
      content providers is an ongoing function of marketing. We believe it will take
      significant time to establish value to our partners and expect that prime
      placement will potentially come as we gain traction with our
      products.


13





**Development
      & Production**





During
      2005, we created AskMeNow, Inc. (Philippines), our wholly-owned foreign
      subsidiary with over 100 employees that provided our back-end research for
      queries, engineering to help develop and manage our software and hardware,
      and
      an accounting department to manage both our American and offshore operations.
      During the first quarter of fiscal year 2008, our operations in Manila ceased
      as
      we move forward with the development and implementation of a fully-automated
      response system to all queries.




We
      continue to enhance and improve our core product, either through internal
      development or through outsourced programming and development consultancy.





**Technology**




We
      have
      developed a website, http://www.askmenow.com, that offers users insight into
      the AskMeNow service
      and provides valuable information about the products we offer, how to use them,
      product benefits and features, answers to frequently asked questions, contact
      information, and the ability to sign up for the service.




We
      have
      developed a mobile website as well as the technology to allow for transmission
      of information through SMS. Our applications are designed to be “thin”
client applications and are used solely for connecting an end user directly
      to
      our mobile site. We own the www.AskWiki.com site and are developing, in
      cooperation with Expert Systems of Italy, a natural language search mechanism
      for the content of Wikipedia.




Our
      servers are hosted in an outsourced facility that is maintained 24 hours a
      day,
      7 days a week.




We
      have
      developed the software codes that are used in the AskMeNow service. To
      protect our proprietary rights, we currently rely on copyright, trademark and
      trade secret laws, confidentiality agreements with employees and third parties,
      and agreements with consultants, vendors and customers, although we have not
      signed such agreements in every case. Despite such protections, a third party
      could, without authorization, copy or otherwise obtain and use our intellectual
      property. We can give no assurance that our agreements with employees,
      consultants and others who participate in development activities will not be
      breached, or that we will have adequate remedies for any breach, or that our
      trade secrets will not otherwise become known or independently developed by
      competitors. We have filed for a provisional process patent for our software
      that covers our methodology for processing questions and answers through our
      Manila facility and a provisional patent for the delivery of advertisements
      on a
      mobile device, both of which are based upon using natural language. **** In
      general, there can be no assurance that our efforts to protect our intellectual
      property rights through copyright, trademark and trade secret laws will be
      effective to prevent misappropriation of our intellectual property. Our failure
      or inability to protect our proprietary rights could materially and adversely
      affect our business, financial condition and results of
      operations.


14





**Content**





We
      have
      established relationships with leading content providers in a variety of
      information verticals that our integral to AskMeNow ’s
      success. Currently
      we have the following strategic relationships:





·
            Custom
                Weather


·
            Sports
                Network


·
            Maps.com


·
            W3Data
                for 411 information


·
            Hotels.com


·
            StubHub.com


·
            FlyteComm.com


·
            Cinema-Source.com


·
            Shopping.com


·
            Astrology.com


·
            Distributive
                Networks


·
            Reuters


·
            Mobile
                Streams


·
            Baseball-Reference.com





AskMeNow ’s ability
      to access already existing, quality content in major information verticals
      is
      essential to our success, as it greatly reduces the time and costs associated
      with researching and answering users’ questions. The content strategy is to
      acquire the most widespread amount of data and information feeds from industry
      leaders, beginning in the verticals that are most frequently the subject of
      questions. The more content in different areas that we have to offer, we believe
      the more attractive we become as a service. Eventually we aim to have content
      on
      direct feeds that covers anyone who carries a mobile device, providing content
      specific to their interests, gender, age, location, and more. While content
      deals are not a necessity for answering all of our user’s questions, we feel
      that as we move forward and garner a larger customer base, our ability
      to quickly and effectively access a vast array of information will greatly
      enhance the service and make it far more
      desirable to the end user.





**Competition**





There
      are
      many companies that could be considered in ‘like’ businesses, including
      OnStar, telephone-carrier supported 411, Yahoo and Google. There
      are
      also a number of start-up companies offering automated content, some for a
      fee
      and some for free, such as 4INFO and Jump Tap. These companies all offer access
      to a wide array of content through multiple platforms, including voice and
      text.
      Voice offers the ability to understand all queries whereas text generally can
      only understand formatted queries or only provide links to answers when
      questions are posed in natural language, versus actual specific answers. We
      believe AskMeNow is different because it offers natural language query into
      Wikipedia, as well as formatted search tabs for access to many other categories
      of content. Descriptions of our competitors and their products
      follow.


15





*OnStar*





·
            4
                million subscriptions in 2006 with the target audience in-vehicle
                systems,
                and standard on all General Motors vehicles in the U.S. and Canada
                by the
                end of 2007.




·
            Single
                Button press on vehicle console connects driver to OnStar
                operator.




·
            Yearly
                fees range from $199 for minimum service to $399 for full service,
                which
                includes concierge service that provides driving directions, restaurant
                recommendations and hotel
                reservations.




·
            Of
                the top categories of inquiries, primarily related to the automobile
                and driving directions.




*Carrier
      Supported 411*





·
            Limited
                to simple directory assistance for phone number and address look-up,
                and
                simple directions, fees range from $0.50 to $2.00 per
                query.




·
            Some
                of the services are beginning to offer answers to wider content subjects,
                such as driving directions and closest business to a specified
                location.




*Google
      and Others*





·
            Google
                and Yahoo both have mobile sites and provide an SMS service that
                receives
                and responds to questions via text messaging. A distinct difference
                between their mobile sites and AskMeNow is that they allow for a
                user to
                leave their site and view information from other sites, hence losing
                the
                ability to continually monetize each page view with an advertisement.
                AskMeNow keeps all customers within our content silo, enabling
                monetization of every page.





·
            In
                2002, former executives of Symbian and Psion PLC, two U.K.
                telecommunications companies, formed Issue Bits, an Internet-based
                question-answer service that operates only in a text messaging format
                and
                is currently available only to selected U.K. mobile phone
                users.





·
            4INFO
                is a venture-funded startup company that offers an SMS messaging
                service
                with much of the same content as AskMeNow or Google SMS. Our research
                shows, however, that the company is only able to offer shallow amounts
                of
                information and does not have the capability to answer natural language
                questions that require accessing unstructured
                data.





·
            Jump
                Tap is a search engine dedicated to mobile phones that tries to provide
                relevant answers with popular key word requests. The service appears
                similar to Google and Yahoo mobile search and is being offered to
                carriers
                and mobile virtual network operators as a white label mobile search
                platform.


16





**Research
      and Development**





Research
      and development activities are undertaken by the Company on its own initiative
      to improve our existing products and to develop new products using the latest
      technologies that can satisfy customer requirements. During the years ended
      December 31, 2007 and December 31, 2006, the Company spent $72,693 and $222,005,
      respectively, on research and development activities.





**Employees**




As
      of
      December 31, 2007, we employed eight full-time employees in the United States,
      including four members of management. Our Philippines subsidiary employed
      approximately 25 persons as of December 31, 2007.




**RISK
      FACTORS** ****




***You
      should carefully consider the following risk factors in evaluating our business.
      There are a number of risk factors that could cause our actual results to differ
      materially from those that are indicated by forward-looking statements. Some
      of
      the risks described relate principally to our business and the industry in
      which
      we operate. Others relate principally to the securities market and ownership
      of
      our common stock. The risks and uncertainties described below are not the only
      ones we face. Additional risks and uncertainties that we are unaware of, or
      that
      we currently deem immaterial, also may become important factors that affect
      us.
      If any of the following risks occur, our business, financial condition or
      results of operations could be materially and adversely affected. You should
      also consider the other information included in this Annual Report on
      Form 10-KSB for the fiscal year ended December 31, 2007, including the
      financial statements and notes thereto included
      herewith.***





**RISKS
      RELATING TO THE COMPANY**





***The
      Company’s qualified financial statements question our ability to continue in
      business.***





The
      Company’s independent registered public accounting firm issued an unqualified
      report with an explanatory paragraph on the Company’s audited financial
      statements as of and for the year ended December 31, 2007. The report raised
      substantial doubt about the Company’s ability to continue as a going concern. In
      addition, Note 1 of our Notes to Consolidated Financial Statements for the
      year
      ended December 31, 2007 states that the Company’s continued existence is
      dependent upon its ability to raise capital and successfully market and sell
      its
      products. We have had an extensive history of losses and will continue to incur
      losses as we pursue our business model. See “Report of Independent Registered
      Public Accounting Firm” and Note 1 of the Notes to Consolidated Financial
      Statements.


17


***We
        have a limited operating history.***
 
 AskMeNow
        organized its first operating company in January 2004, completed our reverse
        merger and became a public reporting company in June 2005, and did not launch
        our AskMeNow service until November 2005. We therefore have a limited operating
        history upon which we can accurately forecast our future performance, including
        future sales. You should, therefore, consider us subject to all of the business
        risks associated with a new business. The likelihood of our success must
        be
        considered in light of the expenses, difficulties and delays frequently
        encountered in connection with the formation and initial operations of a
        new and
        unproven business.
 
 ***AskMeNow
        has only limited revenue to date and is dependent on a single
        product.***
 
 Although
        several other services are contemplated or under development, AskMeNow currently
        offers only one product, the AskMeNowTM service, and anticipates that this
        product will account for substantially all of the Company’s revenues, if any,
        for the foreseeable future. All of the proceeds of our Series A and Series
        B
        preferred stock offering were used to launch and commercialize our AskMeNow
        service and the proceeds of our 2007 bridge loan offerings were also used
        to
        commercialize our product. Proceeds from our Series D convertible preferred
        stock offerings were used to fund operations. Therefore, our prospects are
        currently entirely dependent upon the future performance of a single product
        and
        a single business. We do not have the resources to re-introduce our product
        or
        to diversify our business if our initial product launch is unsuccessful.
 
 ***If
        we cannot establish sufficient usage of the AskMeNow service among cell phone
        and hand-held device users, our business will fail.***
 
 We
        will
        be successful only if a significant number of cell phone and hand-held device
        users adopt our service as a method of making inquiries over their cell phones
        and hand-held devices. Cell phone and hand-held device users have a variety
        of
        other search techniques, including other search engines and subject-matter
        directories, available to them to obtain information. It is difficult to
        predict
        the rate at which users will sample our services and the extent to which
        they
        will adopt them as their search technology. Even in the case of repeat users,
        it
        is difficult to know whether they return to our service because they are
        satisfied with our offerings or because they are dissatisfied with the
        alternatives. At any time, users of our services might revert to prior search
        techniques or choose new search techniques altogether. It is possible that
        sufficient acceptance of our search technologies and services will not occur
        in
        order to maintain our viability, based upon the current options available
        to end users and the potential of such users not having any interest in the
        services we provide.


18


***Our
      growth will depend on our ability to attract and retain new users through
      effective promotional campaigns.***





We
      believe that favorable consumer and business community perceptions of the
      Company’s brands are essential to our future success. Accordingly, we intend to
      pursue brand-enhancement strategies, which may include mass market and
      multimedia advertising, promotional programs and public relations activities,
      which strategies will likely require significant expenditures. As with any
      public awareness campaign, we face the risk that such expenditures might not
      lead to the desired result; that is, we might not experience any net increase
      in
      our brand recognition, brand loyalty or number of new users. Furthermore, even
      if such increases occur, they might not be sufficiently large to justify the
      accompanying cost. If we are unable to promote brand awareness and loyalty
      in a
      cost-effective manner, it will be unlikely that we will attract new users and
      our existing user base might shrink through attrition. We intend to allocate
      approximately $100,000 in 2008 to promotions geared toward increasing customer
      usage. This assumes we will be able to raise sufficient capital to pay for
      these
      promotions through debt and equity financings, combined with revenue generated
      from advertising sales and enterprise licensing fees; however, we may be unable
      to support this level of promotion without the required capital, and we cannot
      be sure that such expenditures will be sufficient to increase sales and
      revenues.





***Our
      success is dependent on our ability to respond to technological changes and
      evolving customer requirements.***





Our
      success will depend not only on our ability to market and promote the AskMeNow
      service but also to develop and introduce new products and professional services
      that keep pace with competitive introductions and technological developments,
      satisfy diverse and evolving customer requirements, and otherwise achieve market
      acceptance. The market for the AskMeNow service is characterized by rapid
      technological developments and frequent new product introductions, enhancements
      and modifications. Any failure by us to anticipate or respond adequately to
      changes in technology, or any significant delays in our product development
      efforts, could make our services unmarketable or obsolete. In addition, we
      may
      not be able to offer future versions, enhancements or upgrades of our products
      that respond to technological advances or new market and customer requirements.
      We may need to make substantial capital expenditures and incur significant
      research and development costs to develop and introduce new products and
      enhancements. If we fail to timely develop and introduce new technologies,
      our
      business, financial condition and results of operations would be adversely
      affected.





***If
      we cannot obtain additional financing we may have to delay or suspend our
      operations.***





As
      of
      January 1, 2008, the Company did not have any cash available for operations.
      Since then, limited funds have been raised, although additional financing is
      needed to ensure our ability to continue our operations. During 2007, the
      Company issued bridge notes in the aggregate principal amount of $3,300,000,
      of
      which $3,000,000 are currently in default under the terms of the loan
      agreements. The Company also raised $725,000 during 2007 from the sale of its
      Series A and B preferred stock. The Company used all of such proceeds to
      implement its business plan and is in the business of seeking additional
      financing.





If
      we are
      to fully implement our business plan, we anticipate that our use of cash will
      be
      substantial for the foreseeable future, and will exceed our cash flow from
      operations during the next 12 months and thereafter, absent a significant
      increase in sales. To fully implement our business plan, we will require
      additional working capital for enhancing our infrastructure, salaries and wages,
      and increased marketing and advertising. Unless funds from operations
      significantly increase over the next 12 months, we will not have sufficient
      working capital to hire additional employees, implement marketing campaigns
      or
      otherwise pursue our business plan.


19


Any
      additional equity financing may be dilutive to stockholders, and any debt
      financing, if available, may involve restrictions on the Company’s ability to
      pay dividends on its capital stock or the manner in which the Company conducts
      its business. The inability to obtain sufficient funds may require the Company
      to delay or suspend its operations.





***The
      Company is dependent on third-party providers and
      consultants.***





The
      Company relies on a number of third-party providers to obtain information
      necessary to answer queries posed by users, deliver advertisements, and build
      applications for the AskMeNow service. The Company has obtained agreements
      from
      the parties whom the Company deems necessary; however, the Company does not
      have
      agreements with every such party, and the agreements it does have may be
      terminated and may therefore deny AskMeNow access to certain providers and
      content. Should the Company be unable to enter into satisfactory arrangements
      with these parties or in the event of the failure of any third-party supplier,
      consultant, or other provider to timely perform their obligations or
      commitments, the AskMeNow service would be unable to operate in an efficient
      manner, which could result in the loss of customers or a curtailment of its
      operations. Our content providers are either paid a small monthly fee for access
      to content, ranging from $1,000 - $2,000 per month, or are free with a revenue
      share based upon advertising revenue. We have signed contracts with advertising
      promoters that are primarily revenue sharing agreements based upon volume and
      other factors. We have had relationships with consultants that provide
      technology assistance; such consultants are paid by either a prearranged fee
      for
      specific work or are paid by the hour.





***The
      operating performance of computer systems and cell phone provider infrastructure
      is critical to our business and reputation.***





Any
      system failure, including network, software or hardware failure due to a
      computer virus or otherwise, that causes an interruption in our service or
      a
      decrease in our responsiveness could result in reduced cell phone and hand-held
      user traffic and reduced revenues for our business. In addition, any disruption
      to our customers’ use of our service due to problems with cell-phone or
      hand-held networks may result in a reduction in the use of our service, which
      would decrease our revenues.





***Our
      international operations expose us to additional risks and additional
      international expansion efforts might lose money.***





Our
      main
      facility for the AskMeNow service was located in the Philippines until March
      2008, at which we employed most of our full-time employees. Our foreign
      operations, although now closed, subject the Company to various risks associated
      with international operations, including the difficulties and costs of staffing
      and managing foreign operations, differing tax rules and regulations and
      unanticipated tax costs, foreign regulatory requirements, and fluctuations
      in
      currency exchange rates, foreign economies and business cycles.


20


***Existing
      or new competitors may develop competing or superior
      technologies.***





We
      have
      developed and are continuing to develop our AskMeNow service. The Company is
      aware of several similar products that currently or will in the future likely
      compete with the AskMeNow service. Larger companies such as Google have the
      capital, technology, personnel, and marketing strength to support their existing
      products and develop new products to compete with the AskMeNow service. It
      is
      possible that competing services will emerge that may be superior and/or less
      expensive than the Company’s AskMeNow service, or that similar technologies may
      render the AskMeNow service obsolete or uncompetitive and prevent the Company
      from achieving or sustaining profitable operations.





***If
      the protection of our intellectual property is inadequate, our competitors
      may
      gain access to our content and technology.***





We
      seek
      to develop and maintain the proprietary aspects of our products and technology.
      To protect our proprietary content and technology, we rely primarily on a
      combination of contractual provisions, confidentiality procedures, trade
      secrets, and patent, copyright, and trademark laws. Despite our efforts to
      protect our proprietary rights, unauthorized parties may attempt to copy aspects
      of our products and intellectual property or to obtain and use information
      that
      we regard as proprietary. We will seek to avoid disclosure of our trade secrets
      through a number of means including, but not limited to, requiring those persons
      with access to our proprietary information to execute work for hire and
      confidentiality and non-disclosure agreements and restricting access to our
      source codes. We seek to protect our software, documentation, and other written
      materials under trade secret and copyright laws, which afford only limited
      protection. We do not currently have any issued patents for proprietary products
      or technologies, and other parties may have dominating patent claims, although
      we have applied for patent protection for two different areas of our processes.
      There can be no assurances that such applications will result in issued patents,
      or that such patents will offer any meaningful protection or competitive
      advantage.





Other
      parties may have patent rights relating to the same subject matter covered
      by
      our products or technologies, enabling them to prevent us from operating without
      obtaining a license and paying royalties. The validity and enforceability of
      our
      proprietary technology, if any, may also be affected by future legislative
      actions or judicial decisions. We have applied for no trademark registrations,
      and may not file or receive any in the future. Potential trademarks may not
      provide us with any competitive advantages. None of our trademarks may be
      registrable, and other parties may have priority of use of such trademarks
      or
      variants thereof. Policing unauthorized use of our products is difficult and
      costly, and while we are unable to determine the extent to which piracy of
      our
      intellectual property exits, piracy can be expected to be a persistent problem.
      In addition, the laws and enforcement mechanisms of some foreign countries
      do
      not protect our proprietary rights as much as do the laws of the United States.
      Our means of protecting our proprietary rights may not be adequate here or
      abroad and our competitors may independently develop similar technology,
      duplicate our products or design around patents issued to us or our content
      or
      other intellectual property.





Any
      claims of infringement, misappropriation or similar conduct, with or without
      merit, would likely be time-consuming, result in costly litigation, cause delays
      in implementation of our services and/or require us to enter into license
      agreements. Licenses, if required, may not be available on terms acceptable
      to
      us, the absence of which could seriously harm our business.


21





***A
      breach of our security could damage our reputation and deter customers from
      using our services.*** ****





We
      attempt to protect our computer systems and network from physical break-ins,
      security breaches and other disruptive problems caused by the Internet or other
      users. Computer break-ins could jeopardize the security of information stored
      in
      and transmitted through our computer systems and network, which could reduce
      our
      ability to retain or attract customers, damage our reputation or subject us
      to
      litigation. We could be subject to denial of service, vandalism and other
      attacks on our systems by cell phone hackers. Although we intend to continue
      to
      implement security technology and establish operational procedures to prevent
      break-ins, damage and failures, these security measures might fail. Our
      insurance coverage might be insufficient to cover losses that result from such
      events.





***In
      order to obtain market acceptance, we will need to expand our operations and
      we
      may not effectively manage any future growth*** **.**





As
      of
      April 7, 2008, we employed five persons in the United States, including members
      of management, and no employees in the Philippines. In the event our products
      and services achieve market acceptance, we will need to increase staffing and
      effectively train, motivate and manage our employees. We will also need to
      scale
      up our operations in order to service our customers, and increase our sales
      and
      marketing, customer support and product development efforts. If we grow, we
      also
      will be required to improve our operational and financial systems, procedures
      and controls, and expand, train, retain, and manage our employee base. However,
      there are significant risks associated with such growth. If our systems,
      procedures, and controls are inadequate to support our operations, our expansion
      would be halted, and we could lose our opportunity to gain market share. Failure
      to manage growth effectively could harm the Company’s business, financial
      condition, or results of operations. Our future performance may also depend
      on
      the effective integration of acquired businesses. This integration, even if
      successful, may take a significant period of time and expense, and may place
      a
      significant strain on our resources.





***Government
      regulation and legal uncertainties could harm our
      business.*** ****





Any
      new
      law or regulation pertaining to cell phone usage and cell phone add-on services,
      or the application or interpretation of existing laws, could decrease the demand
      for our services, increase our cost of doing business or otherwise seriously
      harm our business. There is, and will likely continue to be, an increasing
      number of laws and regulations pertaining to the usage of cell phones and add-on
      services. These laws or regulations may relate to liability for information
      retrieved from or transmitted over cell phones, online content regulation,
      user
      privacy, taxation and the quality of products and services. Furthermore, the
      growth and development of electronic commerce may prompt calls for more
      stringent consumer protection laws that may impose additional burdens on
      electronic commerce companies as well as companies like us that provide
      electronic commerce-related services.


22


We
      file
      tax returns in such states as required by law based on principles applicable
      to
      traditional businesses. However, one or more states could seek to impose
      additional income tax obligations or sales tax collection obligations on
      out-of-state companies, such as ours, which engage in or facilitate electronic
      commerce. A number of proposals have been made at state and local levels that
      could impose such taxes on the sale of products and services through cell phones
      or the income derived from such sales. Such proposals, if adopted, could
      substantially impair the growth of electronic commerce and seriously harm our
      profitability.





Legislation
      limiting the ability of the states to impose taxes on cell phone-based
      transactions was enacted by Congress. Legislation imposing a three-year
      moratorium on certain state taxes on electronic commerce transactions, known
      as
      the Internet Tax Freedom Act, was enacted by Congress in 1998, and subsequently
      extended to November 1, 2014. The moratorium applies to multiple or
      discriminatory taxes on electronic commerce, except for those in effect on
      the
      date of legislative enactment in 1998. It is unclear what other action, if
      any,
      Congress might take with respect to state taxation of electronic commerce.
      The
      imposition of such taxes on services such as ours could impair the growth of
      the
      electronic commerce marketplace and impair our ability to remain
      profitable.





In
      addition, we are not certain how our business might be affected by the
      application to cell phone commerce of existing laws governing issues such as
      property ownership, copyrights, encryption and other intellectual property
      issues, taxation, libel, obscenity and export or import matters. The vast
      majority of such laws were adopted prior to the advent of the cell phone. As
      a
      result, they do not contemplate or address the unique issues of the cell phone
      and related technologies. Changes in laws intended to address such issues could
      create uncertainty in the cell phone market. Such uncertainty could reduce
      demand for our services or increase the cost of doing business as a result
      of
      litigation costs or increased service delivery costs.





Due
      to
      the nature of the cell phone, it is possible that the governments of other
      states and foreign countries might attempt to regulate cell phone transmissions
      or prosecute us for violations of their laws. We might unintentionally violate
      such laws, such laws might be modified and new laws might be enacted in the
      future. Any such developments (or developments stemming from enactment or
      modification of other laws) could increase the costs of regulatory compliance
      for us or force us to change our business practices.





***The
      loss of our CEO’s services or the departure of key personnel could have a
      detrimental effect on the Company.***





Our
      success depends on identifying, hiring, training, and retaining qualified
      professionals. If a significant number of our current employees or our Chief
      Executive Officer resigned, we may be unable to complete or retain existing
      projects or pursue new projects. The Company’s success is highly dependent on
      the retention of existing management and technical personnel, particularly
      Darryl Cohen, the Company’s Chief Executive Officer and current sole executive
      officer. **** Although
      the Company has entered into a three-year employment agreement with Mr. Cohen,
      at this stage in the Company’s history, the loss or unavailability of his
      services could seriously impede its ability to complete the development of
      the
      AskMeNow service. Moreover, his agreement expires in July 2008. Stockholders
      could lose a substantial portion of their investment, if not their entire
      investment, if the Company was to lose the services of Mr.
      Cohen.


23




We
      require work for hire agreements with substantially all of our technical and
      professional employees. The invention and confidentiality provisions contained
      in the work for hire agreements may not be enforced by a court if the Company
      were to seek to enforce its rights under these provisions. Even if we retain
      our
      current employees, our management must continually recruit talented
      professionals for our business to grow. These professionals must have skills
      in
      software development, business strategy, marketing, branding, technology, and
      creative design. We compete intensely for qualified personnel with other
      companies. If we cannot attract, motivate, and retain qualified professionals,
      our business and results of operations will be materially and adversely
      affected. The Company also risks being unable to timely attract the highly
      skilled, experienced and motivated employees necessary to execute its business
      strategy.





***We
      have discovered previously undisclosed liabilities associated with the Reverse
      Merger.***





As
      disclosed under “Item 3 - Legal Proceedings” below, there were significant
      undisclosed liabilities that were either misrepresented to us or that we were
      unable to discover prior to the Reverse Merger. The indemnities and warranties
      which InfoByPhone received are not expected to fully cover such liabilities
      due
      to, among other things, the financial condition of OWE and the unresponsiveness
      of its principals to our demands. While we intend to fully pursue all legal
      recourse against such persons, our operations may be adversely affected by
      our
      failure to recover any such claims.





**SECURITIES
      RISKS**




*Investors
      may find itdifficult
      to trade or obtain quotations for our common stock.*




Although
      our common stock is quoted on the OTCBB, trading of our common stock is limited.
      There can be no assurance a more active market for our common stock will
      develop. Accordingly, investors must bear the economic risk of an investment
      in
      our common stock for an indefinite period of time. Even if an active market
      develops, Rule 144 promulgated under the Securities Act, which provides for
      an
      exemption from the registration requirements under the Securities Act under
      certain conditions, requires, among other conditions, a holding period prior
      to
      the resale of securities acquired in a nonpublic offering. We may not be able
      to
      fulfill our reporting requirements in the future under the Securities
      Exchange Act of 1934, as amended (the “Exchange Act”) or
      disseminate to the public any current financial or other information concerning
      us, as is required by Rule 144 as part of the conditions of its
      availability.




**Our
      common s****tock
      is considered****“****a
      penny stock” and as a result may be difficult to
      sell.**




Our
      common stock is deemed to be a “ penny
      stock”, which is  an
      equity
      security that has a market price of less than $5.00 per share or an exercise
      price of less than $5.00 per share, subject to specific exemptions. This
      designation requires any broker or dealer selling these securities to disclose
      certain information concerning the transaction, obtain a written agreement
      from
      the purchaser and determine that the purchaser is reasonably suitable to
      purchase the securities. These rules may restrict the ability of brokers or
      dealers to sell our common stock and may affect the ability of investors to
      sell
      their shares. In addition, since our common stock is currently traded on the
      OTCBB, investors may find it difficult to obtain accurate quotations of our
      common stock and may experience a lack of buyers to purchase such stock or
      a
      lack of market makers to support the stock price.


24


***A
      significant number of our shares are eligible for sale, and their sale could
      depress the market price of our stock.***




Sales
      of
      a significant number of shares of our common stock in the public market could
      harm the market price of our common stock. As additional shares of our common
      stock become available for resale in the public market, the supply of our common
      stock will increase, which could decrease its price. The
      holders of certain of our convertible securities also have registration rights
      concerning the shares of underlying common stock. Some
      or
      all of the shares of our common stock may be offered from time to time in the
      open market pursuant to Rule 144, and these sales also may have a depressive
      effect on the market for the shares of our common stock. In general, a
      non-affiliated holder who has held restricted shares for six months may sell
      into the market our common stock in an amount equal to 1% of the outstanding
      shares. Such sales may be repeated once each three months, and any restricted
      shares of our common stock may be sold by a non-affiliate after they have been
      held for one year without regard to any volume limitations.




**Our****authorized
      share capital may be used as an anti-takeover device.**




The
      Company currently has authorized for issuance 300 million shares of its common
      stock and 10 million shares of its preferred stock. The preferred stock may
      be
      issued in one or more series from time to time with such designations, voting
      and other rights, preferences and limitations as the Board of Directors may
      determine. The Board of Directors will have the authority to issue a significant
      number of shares of both our common stock and preferred stock without further
      stockholder approval. This may have the effect of delaying or preventing a
      change of control. Although the preferred stock is not designed to prevent
      a
      change in control, it could be used to create voting impediments or to frustrate
      persons seeking to affect a takeover or otherwise gain control of the Company,
      and therefore protect the continuity of the Company’s management.




**We
      do not anticipate paying dividends in the foreseeable future, and the lack
      of
      dividends m****ay
      have a negative effect on our stock price.**




We
      have
      never declared or paid any cash dividends or distributions on our capital stock.
      We currently intend to retain our future earnings to support operations and
      to
      finance expansion and therefore we do not anticipate paying any cash dividends
      on our common stock in the foreseeable future.




**We****may
      interpret or implement critical accounting policies
      incorrectly.**




We
      follow
      generally accepted accounting principles for the United States in preparing
      our
      financial statements. As part of this work, we must make many estimates and
      judgments about future events. These estimates affect the value of the assets
      and liabilities, contingent assets and liabilities, and revenue and expenses
      that we report in our financial statements. We believe these estimates and
      judgments are reasonable, and we make them in accordance with our accounting
      policies based on information available at the time. However, actual results
      could differ from our estimates, and this could require us to record adjustments
      to expenses or revenues that could be material to our financial position and
      results of operations in future periods.


25


**Item
      2.** **Description
      of Property.**




The
      Company’s principal operating offices are located at 26 Executive Park, Suite
      250, Irvine, California 92614. The lease is for approximately 2,641 square
      feet
      under a three year lease ending in 2008, at a current monthly rental rate of
      $5,779. We also leased approximately 1,100 square feet of office space under
      a
      month-to-month lease in Deerfield Township, Ohio at a monthly rent of $2,523
      and
      approximately 300 square feet of office space in Long Island, New York at a
      monthly rent of $1,455. The leases in New York and Ohio were terminated in
      December 2007.




We
      also
      leased approximately 1,100 square meters of office space under a one-year lease
      in Makati City, Manila, Philippines at a monthly rent of $6,130, which lease
      term expired in September, 2007 and was continued thereafter on a month-to-month
      basis. In the first quarter of 2008, the Company vacated the Manila property
      and
      terminated the associated lease.




The
      Company evaluates on a continuing basis the suitability and adequacy of all
      of
      its office locations. The Company believes its present facilities are adequate
      for its operating purposes, in good operating condition and well
      maintained.




**Item
      3.** **Legal
      Proceedings.**




*Pending
      Litigation Matters*




The
      Company has been advised that there are 448,420 outstanding warrants to purchase
      common stock of the Company, a portion of which may still be exercisable despite
      former management’s representation and warranty that there were no outstanding
      warrants at the time of the Reverse Merger. Included in these warrants are
      300,000 claimed to be exercisable at $0.25 per share through August 15, 2007.
      The alleged holder of these warrants, Remsen Funding Corporation (a former
      consultant of the Company), filed a lawsuit in the United States District Court
      for the Southern District of New York (06 CV 609) **** on
      February 1, 2006 **** seeking
      specific performance of an agreement which provided for “piggyback” registration
      rights and seeking to have the Company include the 300,000 shares underlying
      the
      warrants in its then-pending registration statement on Form SB-2.
      Notwithstanding the fact that the subject matter of the lawsuit is still in
      dispute, the Company has agreed to register the shares. On July 16, 2007, the
      plaintiff filed an amended complaint. The amended complaint alleged damages
      of
      not less than $525,000, which the Company believes is without merit. The Company
      has answered the complaint, denied the claims and asserted various affirmative
      defenses. Discovery has commenced, and the matter is scheduled for trial in
      or
      about July 2008. As of December 31, 2007, the Company has not accrued any
      liability regarding this claim.


26


**** In
      December 2005, the Company received a claim from an attorney for Marshall
      Stewart, the former CEO of the Company. Mr. Stewart was employed by the Company
      under an employment agreement dated September 1, 2004. Mr. Stewart was to be
      compensated $180,000 per year in base salary plus bonuses through August 31,
      2007. Mr. Stewart’s claim is for a breach of contract alleged to have occurred
      in late 2004 when the Company was under the control of Consumer Direct of
      America, the Company’s then-principal shareholder (“CDA”), and for CDA’s failure
      to advise the Company’s stockholders of the sale of the company until after the
      Reverse Merger. As of December 31, 2007, the Company has not accrued any
      liability related to the claim and no further developments have occurred
      regarding this claim.





On
      May 5,
      2006, a judgment by default in the amount of $604,391 was entered in favor
      of
      Indymac Bank, F.S.B., in the Los Angeles Superior Court against the Company
      (then known as Ocean West Holding Corporation), former subsidiary Ocean West
      Enterprises, Inc. (“OWE”), CDA, and Does 1 through 100, inclusive. **** The
      underlying complaint brought by the federal bank alleged a default by OWE under
      settlement agreements with the bank, which had purchased certain loans from
      OWE.
      The complaint did not state a cause of action against the Company. Pursuant
      to
      Section 13.3 of the Securities Exchange Agreement and Plan of Reorganization
      dated as of April 14, 2005 (the “Exchange Agreement”), the Company gave CDA
      notice of a breach of the representations and warranties set forth in, among
      other things, Section 5.5 of the Exchange Agreement. In addition, CDA assumed
      and agreed to indemnify the Company from any and all liabilities as of May
      23,
      2005, whether known or unknown, pursuant to the Assignment and Assumption of
      Liabilities Agreement of the same date entered into in connection with the
      Reverse Merger (the “Assumption Agreement”). Personal service upon the Company’s
      registered agent was claimed, but the Company was never served and sought to
      remove the judgment. On August 8, 2007, the default judgment against the Company
      was vacated in the Los Angeles Superior Court on the basis that the Company
      had
      not been properly served. During the quarter ended September 30, 2007, OWE
      and
      the Company were named as defendants in the legal matter of Indymac Bank, F.S.B.
      vs. Ocean West Enterprises, Inc. (Case No. GC036470). The Company served a
      cross-complaint against the plaintiffs and they have not responded. As of
      December 31, 2007, the Company has not accrued any liability related to the
      claim.





The
      Company has been advised by Pioneer Credit Recovery, Inc. that the U.S.
      Department of Treasury has placed with Pioneer an account owed to it by the
      Company’s former subsidiary, OWE. The former principals of OWE did not disclose
      that they and OWE had guaranteed three HUD loans in the aggregate amount of
      $151,980. In the event a claim is made against the Company by Pioneer, the
      U.S.
      government or any agency or instrumentality thereof, or any other party, the
      Company will seek indemnification from the former principals of OWE, **** CDA,
      and
      their respective affiliates under both the Exchange Agreement and the Assumption
      Agreement. As of December 31, 2007, the Company has not accrued any liability
      for this guarantee.





The
      Company may also be subject to routine litigation in the ordinary course of
      business.


27


*Defaults
      Upon Senior Securities*





As
      of
      December 31, 2007, the Company was in default under the $3,000,000 principal
      amount of senior promissory notes issued in its Bridge I note offering. The
      Company’s failure to pay such notes when due constitutes an event of default
      and, according to the terms thereof, the Company is obligated to pay each note
      holder the default interest rate of two percent (2%) per month on all amounts
      due and owing under such notes for each month or part thereof beyond the
      extended maturity date that such amounts remain unpaid. In the event of a
      default, each note holder may proceed to protect such holder’s rights in equity
      or by action at law, or both, enforce payment of the notes, and/or enforce
      any
      other legal or equitable right such holder may have.





The
      Company is in continuing discussions with the holders of the Bridge I notes
      regarding a settlement offer and is working to secure an extension of the note
      payment terms.





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




Not
      applicable.




**PART
      II**




**Item
      5. Market for Common Equity, Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities.**




The
      Company’s common
      stock is traded
      on
      the Over-The-Counter Bulletin Board under the symbol “ AKMN.OB.”  The
      following table sets forth the high and low bid information for the Company’s
      common stock for each quarter during the last two fiscal years, as reported
      by
      OTCBB. The
      quotations listed below reflect inter-dealer prices, without retail mark-up,
      mark-down or commission and may not represent actual transactions.




Common StockHigh
            
            LowYear Ended December 31, 2007:Quarter
                Ended March 31, 2007
            
            $
            0.68
            
            $
            0.56Quarter
                Ended June 30, 2007
            
            $
            0.68
            
            $
            0.60Quarter
                Ended September 30, 2007
            
            $
            0.70
            
            $
            0.65Quarter
                Ended December 31, 2007
            
            $
            0.13
            
            $
            0.12Year
                Ended December 31, 2006:Quarter
                Ended March 31, 2006
            
            $
            2.28
            
            $
            0.96Quarter
                Ended June 30, 2006
            
            $
            1.39
            
            $
            0.77Quarter
                Ended September 30, 2006
            
            $
            0.97
            
            $
            0.23Quarter
                Ended December 31, 2006
            
            $
            0.87
            
            $
            0.25





On
      April
      7, 2008, the closing price of our common stock as reported on the OTCBB was
      $0.14 per share.


28


**Stockholders**




As
      of
      April 7, 2008, there were approximately 1,018 holders of record of our common
      stock.




**Dividends**




In
      the
      fiscal year ended December 31, 2007, we did not pay any cash dividends on any
      shares of our common stock. We do not anticipate paying any dividends on our
      common stock in the foreseeable future. The
      decision to pay dividends on our common stock will depend on our situation
      with
      regard to profitability and cash availability.




If
      any
      dividends on the Company’s Series A and Series B preferred stock shall not have
      been paid or set apart in full for the holders of such series of preferred
      stock
      when payable, dividends or distributions with respect to the common stock cannot
      be paid or made unless and until the preferred stock dividends have been paid
      or
      set apart for payment. The
      holders of the Company’s Series D convertible preferred stock are entitled to
      receive, and the Company is bound to pay, in preference to the holders of the
      common Stock and any “junior securities”, mandatory annual
      dividends.




**Securities
      Authorized for Issuance under Equity Compensation Plans**




The
      following table sets forth, as of December 31, 2007, certain information
      regarding the securities authorized for issuance under the Company’s equity
      compensation plans and programs. For more information on these plans, please
      see
      Note 9 to the Consolidated Financial Statements included
      herewith.


29


**Equity
      Compensation Plan Information Table**





**Plan Category**
            
            **Number of**
              **securities to be**
              **issued upon**
              **exercise of**
              **outstanding**
              **options,**
              **warrants and**
              **rights**
            
            **Weighted-**
              **average exercise**
              **price of**
              **outstanding**
              **options,**
              **warrants and**
              **rights**
            
            **Number of securities**
              **remaining available**
              **for future issuance**
              **under equity**
              **compensation plans**Equity
                compensation plans approved by security holders*2005
                Management and Director Equity Incentive and Compensation
                Plan*
            
            
            1,924,000
            
            $
            0.82
            
            
            76,000*2006
                Employee Stock Incentive Plan (1)*
            
            
            1,981,000
            
            $
            0.52
            
            
            8,019,000Equity
                compensation plans not approved by security holders*Options
                issued to officers and directors (2)*
            
            
            4,700,000
            
            $
            0.54*Options
                issued to employees and consultants (3)*
            
            
            5,950,000
            
            $
            0.70*Warrants
                issued with Preferred Stock (4)*
            
            
            19,920,000
            
            $
            0.50*Warrants
                issued to Director for financing (5)*
            
            
            452,164
            
            $
            0.50*Warrants
                issued for services (6)*
            
            
            1,598,420
            
            $
            0.46*Warrants
                issued for financial services (7)*
            
            
            4,600,000
            
            $
            0.50*Warrants
                issued for IR services (8)*
            
            
            200,000
            
            $
            0.50*Warrants
                issued in settlement of debt (9)*
            
            
            52,500
            
            $
            2.00*Warrants
                issued with debt (10)*
            
            
            12,900,000
            
            $
            0.50**Total**
            
            
            54,278,084
            
            
            
            
            
            8,095,000




(1)
            The
                2006 Employee Stock Incentive Plan, as amended, was approved and
                adopted
                by the Board of Directors on August 4, 2006, and became effective
                upon the
                approval of the Company’s stockholders at the annual meeting held on
                August 1, 2007. The plan provides for the issuance of up to 10,000,000
                shares of common stock.


(2)
            The
                Company has and will likely continue to provide stock options outside
                of
                its current equity plans to officers and directors as part of their
                annual
                compensation. (See Item 10. Executive
                Compensation)


(3)
            The
                Company has and will likely continue to provide stock options outside
                of
                its current equity plans to employees and consultants as part of
                their
                annual compensation.


(4)
            The
                Company has and will most likely continue to attach warrants to issuances
                of preferred stock as additional consideration to preferred holders
                in
                order to attract equity investment. These warrants are necessary
                based on
                the significant level of risk involved in such an investment and
                the
                financial condition of the Company.


(5)
            The
                Company has and will likely to continue to issue warrants to providers
                of
                debt funding in exchange for such providers’ agreement to extend the
                maturity date of such debt. These warrants are necessary based on
                the
                significant level of risk involved in such an investment and the
                financial
                condition of the Company.


(6)
            From
                time to time, the Company has issued warrants to providers of legal
                and
                consulting services in lieu of cash payments for those
                services.


(7)
            The
                Company has and will most likely continue to issue warrants to financial
                advisors who assist with the placement of the Company’s debt or equity
                instruments. The issuance of warrants to these advisors reduces the
                cash
                costs that would otherwise be associated with raising
                capital.


(8)
            The
                Company has generally included warrants in compensation agreements
                for
                providers of investor relations and/or public relations services.
                This
                practice significantly reduces the cash costs to the Company in order
                to
                obtain these services.


(9)
            During
                2006, the Company issued warrants as part of the final payment of
                an
                outstanding note payable.


(10)
            The
                Company has and will likely continue to attach warrants to issuances
                of
                debt as additional consideration to the promissory note holders in
                order
                to attract debt investment. These warrants are necessary based on
                the
                significant level of risk involved in such an investment and the
                financial
                condition of the Company.




30


**Recent
      Sales of Unregistered Securities**





*Preferred
      Stock*





Commencing
      April 25, 2006, the Company began an offering to accredited and foreign
      investors of Series A preferred stock in the form of a Unit, with each Unit
      consisting of (i) 5,000 shares of Series A preferred stock, and (ii) warrants
      to
      purchase 50,000 shares of the Company’s common stock, exercisable for a period
      of three years at a price of $0.50 per share. On July 20, 2006, a supplement
      to
      the private placement memorandum used in connection with the offering of such
      Units was approved, which supplement re-priced the offering and modified the
      preferred stock offered. All investors that had invested in the Series A private
      placement were offered an opportunity to exchange their shares of Series A
      preferred stock for shares of Series B preferred stock that were identical
      in
      all respects to the Series A shares except for the conversion price, which
      was
      reduced to $0.50 per share. In addition, the number of warrants issued per
      Unit
      was increased from 50,000 to 100,000 warrants while the exercise price remained
      at $0.50 per share. **** The
      number of warrants issuable to the placement agent also increased from 1,000,000
      to 2,000,000 (or such proportionately smaller number if less than the maximum
      offering amount was raised), exercisable at $0.50 per share of common stock
      rather than $1.00 per share.





The
      Company completed the sale of an additional 14.5 Units for gross proceeds of
      $725,000 in the first quarter of 2007 until the offering was closed to new
      investment on February 28, 2007. The offering closed with a total of 134.1
      Units
      of the Series A and B preferred stock issued for aggregate gross proceeds of
      $6,705,000 ($2,375,000 from the sale of 237,500 shares of Series A preferred
      stock, and $4,330,000 from the sale of 433,000 shares of Series B preferred
      stock). The placement agent in connection with such offering received warrants
      to purchase, with a cashless exercise feature, 1,000,000 shares of common stock
      of the Company, exercisable at $0.50 per share for a term of five years, as
      well
      as (1) an aggregate of $707,000 sales commissions, (2) $162,000 in
      non-accountable expenses, and (3) 1,200,000 shares of common stock. During
      the
      year ended December 31, 2007, Series A holders exchanged 342,500 Series A shares
      for 342,500 Series B shares. As of December 31, 2007, there were 22,458 and
      295,933 shares of Series A and Series B preferred stock issued and outstanding,
      respectively. As of December 31, 2007, Series A and Series B accrued dividends
      from the record date to the year then-ended were $9,906 and $143,654,
      respectively.





*Common
      Stock*





In
      January 2007, the Company sold the placement agent 140,000 shares of unregistered
      restricted common
      stock at a price of $0.01 per share in connection with the agent’s placement of
      shares of preferred stock in the Company’s Series
      A
      and B stock offering. The Company recorded the amount as a subscription
      receivable of $1,400 during the first fiscal quarter of 2007. The subscription
      receivable was offset by an administrative expense due to reimbursable costs
      incurred by the placement agent as of December 31, 2007.





Between
      January and March 2007, the Company issued an aggregate 165,000 shares of unregistered
      restricted common
      stock to a professional services firm for investor relations services. The
      Company determined a value for the shares of $74,400 based on the fair market
      value of the stock at the time the services were performed. The Company recorded
      the entire amount as an administrative expense as of December 31, 2007.





In
      June
      2007, the Company issued 5,000 shares of unregistered
      restricted common
      stock to a vendor for the purchase of a website domain name. The Company
      determined a value for the shares of $4,000 based on the fair market value
      of
      the stock at the time of the purchase. The Company recorded the entire amount
      as
      an asset on the balance sheet in the second fiscal quarter of 2007.





In
      October 2007, the Company issued 225,000 shares of common stock to non-employee
      consultants in lieu of payment for services provided. The Company calculated
      a
      fair value of $180,000 for these shares based on the value of the shares on
      the
      date of issuance and recorded the amount as an administrative expense as of
      December 31, 2007.


31





In
      October 2007, the Company issued 300,000 shares of common stock to a
      professional services firm for financial consulting services. The Company
      calculated a fair value of $210,000 for these shares based on the value of
      the
      shares on the date of issuance and recorded the amount as an administrative
      expense as of December 31, 2007.





*Warrants*





In
      August
      2006, the Company issued warrants to purchase 200,000 shares of common stock
      to
      a vendor with an exercise price of $0.50 per share in partial consideration
      for
      the vendor’s agreement to act as the Company’s public/investor relations
      representative for a term of one year. The warrant agreement provided for
      vesting of 100,000 shares three months after the date of grant and
      the remaining 100,000 shares six months after the date of grant and a term
      of five years. During the first fiscal quarter of 2007, the Company recorded
      the
      fair market value of the remaining 16,667 warrants, which vested during the
      quarter, based on the fair value of each warrant estimated on the date of grant
      using the Black-Scholes option pricing model with the following weighted average
      assumptions used for grants in 2006: dividend yield of zero, expected volatility
      of 219%, risk-free interest rate of 4.84%, and expected lives of five years.
      The
      Company recorded $5,265 in administrative expense in the first fiscal quarter
      of
      2007 in connection with such warrants.





In
      May
      2007, the Company issued warrants to purchase 452,164 shares of common stock
      to
      a director with an exercise price of $0.50 per share and a term of five years
      in
      exchange for his agreement to extend the maturity date of his promissory note
      with the Company. The Company recorded the fair market value of the warrants
      based on the fair value of each warrant estimated on the date of grant using
      the
      Black-Scholes option pricing model with the following weighted average
      assumptions used for grants in 2007: dividend yield of zero, expected volatility
      of 242%, risk-free interest rate of 5.07%, and expected lives of five years.
      The
      Company recorded $337,465 in additional interest expense in the second fiscal
      quarter of 2007 in connection with these warrants.





In
      July
      2007, the Company issued warrants to purchase 100,000 shares of common stock
      to
      an attorney with an exercise price of $0.57 per share and a term of three years
      for his agreement to reduce legal fees. The Company recorded the fair market
      value of the warrants based on the fair value of each warrant estimated on
      the
      date of grant using the Black-Scholes option pricing model with the following
      weighted average assumptions used for grants in 2007: dividend yield of zero,
      expected volatility of 245%, risk-free interest rate of 4.55%, and expected
      lives of three years. The Company recorded $55,205 in additional professional
      fees for the year ended December 31, 2007.





In
      September 2007, the Company issued warrants to purchase 50,000 shares of common
      stock to a law firm with an exercise price of $0.50 per share and a term of
      three years for its agreement to reduce outstanding legal fees. The Company
      recorded the fair market value of the warrants based on the fair value of each
      warrant estimated on the date of grant using the Black-Scholes option pricing
      model with the following weighted average assumptions used for grants in 2007:
      dividend yield of zero, expected volatility of 245%, risk-free interest rate
      of
      3.97%, and expected lives of three years. The Company recorded $23,714 in
      additional professional fees for the year ended December 31,
      2007.


32





In
      October 2007, the Company issued warrants to purchase 600,000 shares of common
      stock to a financial consultant with an exercise price of $0.50 per share in
      partial consideration for an agreement to provide financial consulting services
      for a term of nine months. The warrants were immediately exercisable and have
      a
      term of five years. The Company recorded the fair value of each warrant
      estimated on the date of grant using the Black-Scholes option pricing model
      with
      the following weighted average assumptions used for grants in 2007: dividend
      yield of zero, expected volatility of 257%, risk-free interest rate of 4.38%,
      and expected lives of five years. The Company recorded $418,711 in
      administrative expense at December 31, 2007.





In
      October 2007, the Company issued warrants to purchase 6,710,000 shares of common
      stock at an exercise price of $0.50 per share to certain holders of the
      Company’s Series A and Series B preferred stock in consideration for such
      holders’ acceptance of a settlement offer and execution of a waiver, as
      discussed previously herein. The warrants were immediately exercisable and
      have
      a term of five years. The Company recorded the fair value of each warrant
      estimated on the date of grant using the Black-Scholes option pricing model
      with
      the following weighted average assumptions used for grants in 2007: dividend
      yield of zero, expected volatility of 257%, risk-free interest rate of 4.38%,
      and expected lives of five years. The Company recorded $5,017,598 in financing
      costs at December 31, 2007.





As
      discussed elsewhere in this Annual Report on Form 10-KSB and the notes to the
      consolidated financial statements included herewith, during the year ended
      December 31, 2007, the Company also issued warrants to
      purchase (a) 4,875,000 shares of common stock in connection with new issuances
      of Series B preferred stock and the modification of the preferred stock Unit
      offering and conversion of Series A to Series B preferred shares, (b) 12,000,000
      shares of common stock in connection with the $3,000,000 raised in its Bridge
      I
      note offering, (c) 3,600,000 shares of common stock issued to the placement
      agent in the Bridge I note offering, and (d) 900,000 shares of common stock
      in
      connection with $300,000 raised in the Bridge II junior convertible promissory
      note offering.





The
      securities described above were offered without registration under the
      Securities Act of 1933, as amended (the “Securities Act”), or state securities
      laws, in reliance on the exemptions provided by Sections 4(2) and 4(6) of the
      Securities Act, Rule 506 of Regulation D promulgated thereunder and Regulation
      S
      promulgated thereunder and in reliance on similar exemptions under applicable
      state laws. The facts relied upon to make the exemption available in certain
      cases were those provided to the Company by the investors in their subscription
      agreements. Except as otherwise indicated, there was no underwriter or placement
      agent compensation in these transactions.


33


**Purchases
      of Equity Securities by the Issuer and Affiliated
      Purchasers**





There
      were no purchases made by or on behalf of the Company or any affiliated
      purchaser of any shares of common stock of the Company during the fourth quarter
      of fiscal year 2007.




**Item
      6. Management’s Discussion and Analysis or Plan of Operation.**




The
      following discussion of the Company’s financial condition and results of
      operations should be read in conjunction with the Company’s audited consolidated
      financial statements and notes thereto contained in this Annual Report on Form
      10-KSB.




**Forward-Looking
      Statements**




Certain
      statements contained in this discussion and analysis that are not related to
      historical facts are “forward-looking statements” within the meaning of the
      Private Securities Litigation Reform Act of 1995. Statements that are predictive
      or that depend upon or refer to future events or conditions, or that include
      words such as “believes,” “anticipates,” “expects,” “intends,” “estimates,”
“plans, ” “hopes,” or similar expressions, consitute forward-looking statements.
      In addition, any statements concerning future financial performance (including
      future revenues, earnings or growth rates), ongoing business strategies or
      prospects, or possible future actions by us are also forward-looking
      statements.




These
      forward-looking statements are based on beliefs of our management as well as
      information currently available to the Company and are subject to certain risks
      and uncertainties that could cause actual results to differ materially from
      historical results or those anticipated or implied by such forward-looking
      statements. These risks are described more fully under the caption “Risk
      Factors” herein and include: our ability to raise capital; our ability to settle
      litigation; our ability to attract and retain key employees; economic
      conditions; technology advances in the moble search field; demand and market
      acceptance risks for new and existing technologies and mobile information
      content services; the impact of competitive services and pricing; U.S. and
      international regulatory, trade, and tax policies; product development risks,
      including technological difficulties; and foresseable and unforseeable foreign
      regulatory and commercialization factors.




Should
      one or more of such risks or uncertainties materialize or should underlying
      expectations, projections or assumptions prove incorrect, actual results may
      vary materially from those described. Those events and uncertainties are
      difficult to predict accurately and many are beyond our control. We believe
      that
      our expectations with regard to forward-looking statements are based upon
      reasonable assumptions within the bounds of our current business and operational
      knowledge, but we cannot be sure that our actual results or performance will
      conform to any future results or performance expressed or implied by any
      forward-looking statements. We assume no obligation to update these
      forward-looking statements to reflect events or circumstances that occur after
      the date of these statements except as specifically requried by law.
      Accordingly, past results and trends should not be used to anticipate future
      results or trends.


34


**General**





AskMeNow,
      Inc., formerly Ocean West Holding Corporation, is a holding company and parent
      of InfoByPhone, Inc., a Delaware corporation. InfoByPhone is a communications
      technology company that provides users of handheld cellular devices with access
      to information regardless of location through its AskMeNowTM Service. The service
      is a mobile information content service that enables users of any mobile device,
      with text messaging/SMS or email capability, to text message or email questions.
      An answer is then text messaged or emailed back to the consumer’s mobile device,
      usually within a matter of minutes. The Company is also developing an automated
      enterprise solution in conjunction with Expert System S.p.A., a developer of
      knowledge management tools. The automated enterprise solution is being designed
      to enable users of a mobile device to text message customer service-related
      questions and receive an answer through text. The Company announced its first
      agreement for its enterprise-solution product in March 2008.





The
      AskMeNow service is accessible virtually anytime and anywhere, through virtually
      every current way that wireless technology allows people to communicate via
      a
      mobile device. Using proprietary software and proprietary methods, the service
      has the research capability to answer information-based questions, including
      questions regarding current news and events, sports scores, weather,
      entertainment, stock quotes and market data, driving directions, travel
      schedules and availabilities, comparison shopping, restaurant information and
      reservations, directory assistance, and random trivia (literature, history,
      science, etc.), so long as the
      information is available on the Internet at no fee to access or we are already
      licensed to access the data .
      Once
      information is accessed, it is refined to a format suitable for easy reading
      on
      the screen of a user’s mobile device and emailed or text messaged back to the
      user.





The
      AskMeNow service was launched from beta in November 2005. The release has been
      directed primarily to cell phone users in the United States and Canada. We
      currently generate fees from user inquiries. In the future, we also expect
      to
      generate revenues through monthly or quarterly service fees generated from
      enterprise customers and revenues from advertisers utilizing our ad space to
      promote products. As noted above, the Company announced its first agreement
      for
      its enterprise-solution product in March 2008 and expects to generate revenues
      from advertising in late 2008.





**Reverse
      Merger**





Effective
      June 6, 2005, pursuant to a Securities Exchange Agreement and Plan of
      Reorganization dated as of April 14, 2005 by and among the Company, InfoByPhone,
      Inc. and the shareholders of InfoByPhone, the Company acquired InfoByPhone
      in a
      reverse merger (the “Reverse Merger”). In connection with the transaction,
      InfoByPhone became a wholly-owned subsidiary of the Company, as the Company
      acquired all of the issued and outstanding shares of common stock of InfoByPhone
      and issued an aggregate 5,586,004 shares of common stock, par value $0.01,
      of
      the Company, that together with 500,000 shares issued to Vertical Capital
      Partners, Inc. (n/k/a Arjent Ltd.) as a finder’s fee, constituted approximately
      56% of the then-outstanding capital stock of the Company.


35


**Critical
      Accounting Policies**




We
      have
      identified the policies outlined below as critical to our business operations
      and an understanding of our results of operations. The list is not intended
      to
      be a comprehensive list of all of our accounting policies, many of which are
      described in greater detail in the notes to the consolidated financial
      statements included herewith. In many cases, the accounting treatment of a
      particular transaction is specifically dictated by accounting principles
      generally accepted in the United States, with no need for management’s judgment
      in their application. The impact and any associated risks related to these
      policies on our business operations is discussed throughout this Management’s
      Discussion and Analysis section where such policies affect our reported and
      expected financial results. Note that our preparation of the financial
      statements in conformity with accounting principles generally accepted in the
      United States requires us to make estimates and assumptions that affect the
      reported amount of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of our financial statements, and the reported
      amounts of revenue and expenses during the reporting period. Actual results
      could differ from those estimates.




*Revenue
      Recognition.* We
      currently provide two platforms for asking questions: SMS/text messaging and
      through a downloaded application. Users are charged on a monthly or per question
      basis but are not charged for the downloaded application. The
      Company recognizes revenue for all submitted questions at the time of the
      inquiry, regardless of the method used to submit the question. For advertising
      space sold, the Company will recognize revenue over the period the advertisement
      is displayed. The
      Company recognizes revenue when persuasive evidence of an arrangement exists,
      delivery has occurred, the sales price is fixed or determinable, and
      collectability is probable.





*Research
      and Development.* Research
      and development expenses include payroll, employee benefits, and costs
      associated with product development. The Company has determined that
      technological feasibility for its software products is reached shortly before
      the products are released. Costs incurred after technological feasibility is
      established are not material and, accordingly, all research and development
      costs are expensed when incurred.





*Stock
      Based Compensation.*  Effective
      January 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised),
      “Share-Based Payment”, which replaces SFAS No. 123, “Accounting for Stock-Based
      Compensation”, and supersedes APB Opinion No. 25, “Accounting for Stock Issued
      to Employees”, and related interpretations. SFAS No. 123(R) requires
      compensation costs related to share-based payment transactions, including
      employee stock options, to be recognized in the financial statements. In
      addition, the Company adheres to the guidance set forth within SEC Staff
      Accounting Bulletin No. 107, which provides the views of the staff of the SEC
      regarding the interaction between SFAS No. 123(R) and certain SEC rules and
      regulations and provides interpretations with respect to the valuation of
      share-based payments for public companies.




In
      adopting SFAS No. 123(R), the Company applied the modified prospective approach
      to transition. Under the modified prospective approach, the provisions of SFAS
      No. 123(R) are applied to new awards and to awards modified, repurchased, or
      cancelled after the effective date. Additionally, compensation cost for the
      portion of awards for which the requisite service has not been rendered that
      are
      outstanding as of the effective date are recognized as the requisite service
      is
      rendered on or after such date. The compensation costs for that portion of
      awards are based on the grant-date fair value of those awards as calculated
      for
      either recognition or pro-forma disclosures under SFAS No. 123.





For
      a
      more detailed discussion, see Note 2 - Summary of Significant Accounting
      Policies in the Notes to our Consolidated Financial Statements included
      herewith.




36




**Results
      of Operations**




**Fiscal
      Year Ended December 31, 2007 as compared to Fiscal Year Ended December 31,
      2006**




**Revenue**





Revenues
      for the fiscal year ended December 31, 2007 were $54,536, an increase of
      $26,690, or 96%, over revenues of $27,846 for the year ended December 31, 2006.





The
      increase in our sales during 2007 was due to the Company continuing to roll
      out
      its AskMeNow service on a per use basis to new subscribers of SMS service during
      the 2007 fiscal year. The Company expects sales to increase in 2008 as it has
      entered into a hosting service and data supply agreement with Research in Motion
      Limited, pursuant to which AskMeNow will provide the means for end-users of
      BlackBerry® products to ask questions and receive answers about such
      offerings.  In
      addition, in February 2008 the Company entered into a wireless content
      distribution agreement with Bell Mobility Inc. to distribute AskMeNow's new
      mobile web site on a non-exclusive basis to the telecommunication carrier’s
      customers.  The
      Company plans to make available its new AskMeNow search platform to all mobile
      phones during 2008 and intends to increase its revenue through advertising
      as
      the Company increases distribution. In addition, the Company plans to distribute
      its enterprise product into the telecommunications industry.





**Costs
      and Operating Expenses**





*Cost
      of Revenue*





Cost
      of
      revenue for the year ended December 31, 2007 amounted to $1,154,945, a decrease
      of $524,362, or 31%, over cost of revenue of $1,679,307 for the year ended
      December 31, 2006. The decrease relates primarily to a decrease in payroll
      costs
      and other associated call center costs as the Company focuses its marketing
      and
      development efforts on its automated enterprise solution and consumer product
      mobile service offerings. The Company expects to continue to incur significant
      costs as it continues to expand its services offering. Most of the costs during
      2007 were derived from the call center in the Philippines and fixed amounts
      paid
      to third-party content providers. As of the end of the first quarter of fiscal
      2008, the Philippines call center was closed and all related operations
      ceased.





*Research
      and Development*





For
      the
      year ended December 31, 2007, our research and development expenditures were
      $72,693, a decrease of $149,312, or 67%, over research and development expenses
      of $222,005 for the year ended December 31, 2006. This decrease was the result
      of a reduction in research and development payroll expenses incurred by the
      Company, reflecting the Company’s constrained financial condition during the
      2007 fiscal year. Our research and development costs primarily relate to product
      development as the Company adds new features and upgrades to its mobile services
      technology. The Company expects to incur additional research and development
      expenses as it enhances its services and features.


37





*General
      and Administrative*





General
      and administrative expenses for the year ended December 31, 2007 amounted to
      $2,193,107, a decrease of $713,736, or 25%, over general and administrative
      expenses of $2,906,843 for the year ended December 31, 2006. Lock-up
      compensation expense of $371,000, which related to shares issued by the Company
      in exchange for the execution by certain stockholders of a lock-up agreement
      and
      which was a significant expense during the year ended December 31, 2006, was
      not
      incurred during the 2007 fiscal year and was the primary reason for the
      decrease. The decrease was also in part the result of a decrease in investor
      relations and travel and entertainment costs during the 2007 fiscal year as
      management worked to reduce the Company’s overhead costs. The Company’s primary
      general and administrative costs are consulting fees, insurance premiums,
      facilities and office expenses, public and/or investor relations service fees,
      marketing-related costs, travel costs and amortization/depreciation
      charges.




*Professional
      Fees*




Professional
      fees for the year ended December 31, 2007 were $1,467,418, a decrease of
      $1,155,172, or 44%, over professional fees of $2,622,590 for the year ended
      December 31, 2006. The decrease is the result of a reduction in the one-time
      financial advisory fees related to the Expert System S.p.A. license agreement
      entered into during 2006 and an overall reduction in legal and accounting fees
      during the 2007 fiscal year. Professional fees consist of legal and accounting
      fees associated with the Company’s SEC reporting obligations and attorney fees
      associated with various contracts and agreements negotiated and prepared on
      behalf of the Company, as well as litigation matters.




*Salaries
      and Compensation*





Salaries
      and compensation expense for the year ended December 31, 2007 increased by
      $647,788 to $4,595,005, or 16%, over expenses of $3,947,217 for the year ended
      December 31, 2006. This increase is primarily related to the $3,394,636 of
      compensation expense recorded pursuant to SFAS No. 123(R) for employee stock
      option plan and other officer and director compensation during fiscal 2007,
      as
      compared to the $2,453,523 of compensation expenses under SFAS No. 123(R) taken
      during the 2006 fiscal year.


38





**Other
      Income / Expense**




*Financing
        Costs*
 
 Financing
        costs for the year ended December 31, 2007 were $5,017,598, compared to $0
        for
        the year ended December 31, 2006. This expense is the result of 6,710,000
        additional warrants being issued to those holders of the Company’s Series A and
        Series B preferred stock who elected to execute a waiver and settlement
        agreement with the Company waiving certain breaches by the Company and agreeing
        to certain terms favorable to the Company and who, in consideration for their
        waiver and settlement, were issued additional warrants to purchase shares
        of the
        Company’s common stock.





*Derivative
      Warrant Expense*





The
      derivative warrant expense for the year ended December 31, 2007 was $0, compared
      to $1,004,571 for the year ended December 31, 2006. This expense incurred during
      2006 was the result of the Company having available an insufficient number
      of
      authorized shares for issuance under then-existing shares of preferred stock,
      warrants and stock options that were convertible or exercisable during the
      year
      ended December 31, 2006. The Company’s Amended and Restated Certificate of
      Incorporation became effective on December 18, 2006, which provided for an
      increase in the number of authorized shares of common stock from 30,000,000
      to
      100,000,000 shares. The increase in authorized shares provided the Company
      with
      sufficient authorized and unissued shares to settle any outstanding contracts
      for common shares and therefore a net loss of $1,004,571 was recorded on the
      re-calculation of the conversion features at December 18, 2006.





*Interest
      Expense*





Interest
      expense for the year ended December 31, 2007 was $5,989,434, an increase of
      $5,782,951 over interest expense of $206,483 for the year ended December 31,
      2006. The
      increase was comprised of $3,130,000 in debt discounts amortized during the
      period relating to the warrants given to the debt holders as part of the
      Company’s Bridge I and Bridge II promissory note offerings, $2,159,000 in
      amortization of debt offering costs relating to warrants given to the selling
      agent of the Company’s Bridge I offering, and $493,000 in additional financing
      costs related to the Bridge I and Bridge II promissory note financings.





**Income
      Taxes**





The
      income tax expense for the year ended December 31, 2007 was $0, compared to
      $12,832 for the year ended December 31, 2006. The 2006 expense is the result
      of
      a deferred foreign tax accrued on behalf of the Company’s Philippines
      subsidiary.





**Net
      Loss**





The
      net
      loss for the year ended December 31, 2007 before taxes totaled $20,435,664,
      compared with $12,561,170 for the same period in 2006, an increase of $7,874,494
      or 63%. The increase resulted primarily from the non-cash charges for financing
      costs as well as other non-cash interest expense incurred during the 2007 fiscal
      year. In addition, cumulative dividends on the outstanding shares of Series
      A
      and Series B convertible preferred stock totaled $525,895 for the year ended
      December 31, 2007, compared with $322,314 for the year ended December 31, 2006.





The
      net
      loss applicable to common shareholders for the year ended December 31, 2007
      was
      $20,961,559, or $0.58 per share, on 36,180,380 weighted average common shares
      outstanding. This compared with the net loss applicable to common shareholders
      for the year ended December 31, 2006 of $12,896,316, or $0.47 per share, on
      27,228,935 weighted average common shares outstanding.


39





**Liquidity
      and Capital Resources**





Product
      development, sales and marketing, financial advisors, expansion of service
      offerings, and administrative and executive personnel are and will continue
      to
      be the principal basis for our cash requirements. We have provided operating
      funds for the business since its inception through private offerings of debt
      and
      equity securities to U.S. accredited and foreign investors. We will be required
      to make additional offerings in the future to support the operations of the
      business until our products and services reach profitability and are fully
      introduced into the market. In an effort to reduce our operating costs during
      2007 and in the future, we have reduced the number of personnel and closed
      the
      Philippines call center. We used $3,955,725 and $5,241,050 for the years ended
      December 31, 2007 and 2006, respectively, in operating activities.





The
      Company was able to raise $3,300,000 from its Bridge I and Bridge II note
      offerings during 2007. In addition, the Company raised $626,000 in net proceeds
      from the sale of convertible preferred stock during the year ended December
      31,
      2007, compared to $5,209,796 during 2006. The proceeds of the bridge loan and
      preferred stock offerings were used to continue product development, introduce
      the product into the market, and pay current operational expenses.





The
      Company’s plans for raising additional capital include the possibility of
      offering convertible equity or debt in order to continue the funding of
      operations until such operations provide a positive cash flow. Specifically,
      beginning in January 2008, the Company commenced an offering of up to $2 million
      of its Series D convertible preferred stock at a purchase price of $1.00 per
      share. The Company will issue redeemable warrants to purchase two shares of
      common stock for every $1.00 invested in the Series D preferred stock offering.
      During the first quarter of 2008, the Company had raised $485,000 from the
      issuance of 485,000 shares of its Series D preferred stock and issued warrants
      to purchase an aggregate 970,000 shares of common stock for a period of five
      years at $0.10 per share.





At
      December 31, 2007, the Company had $0 cash on hand, compared to $61,279 as
      of
      December 31, 2006. This cash position results from our loss from operations
      and
      our inability to raise sufficient new capital, due in part to unfavorable
      financial market conditions for small mobile content search companies such
      as
      ours. We were unable to raise sufficient funds during the 2007 and 2006 fiscal
      years to maintain adequate cash reserves and to meet the ongoing operational
      needs of the business.





We
      incurred approximately $29,013 and $20,036 in capital expenditures for the
      years
      ended December 31, 2007 and 2006, respectively. Capital expenditures are defined
      as disbursements for computer equipment, office furniture and leasehold
      improvements with a purchase price in excess of $1,000 per item and a useful
      life in excess of one year. The increase in expenditures during 2007 was due
      to
      the purchase of additional computer equipment during the year. To the extent
      available, in fiscal 2008 we intend to use approximately $100,000 of any
      financing proceeds for additional computer equipment, servers and office
      furnishings as our market expansion continues and additional staffing is
      required. There are no other capital expenditures currently anticipated by
      the
      Company for the 2008 fiscal year.




40





Our
      operations have been, and will continue to be, dependent upon management’s
      ability to raise operating capital from the sale of equity or debt securities.
      We have incurred significant operating losses totaling $42,624,231 since
      inception of the business and the Company estimates that it may require up
      to
      $200,000 per month to launch its products and services through
      2008. **** In
      an
      effort to reduce our operating costs we have reduced staff and closed our
      Philippines operations in 2008. We expect that on-going operating expenditures
      will be necessary to successfully implement our business plan and develop,
      manufacture and market our products and services. Specifically, we anticipate
      that our total operating expenses will continue to increase in future periods
      as
      our sales increase. Included in these anticipated increases are salaries and
      benefits for additional employees, and increased marketing and advertising
      expenses. We also anticipate that our professional fees will continue to
      increase as we seek to raise additional capital. We cannot, however, at this
      time predict the amount of any of these increases. Our revenues are not expected
      to be sufficient to fund our operations for the next 12 months and we anticipate
      that we will incur losses for the foreseeable future until such time as we
      can
      significantly increase our revenues. Because of the highly competitive nature
      of
      our industry and our lack of sufficient working capital, it is unlikely that
      we
      will be able to increase our revenues in the near future to a level which will
      sustain our operations and enable us to report a profit. There can be no
      assurance that we will be able to obtain additional capital to meet our current
      operating needs. If we are unable to raise sufficient adequate additional
      capital or generate profitable sales revenues, we may be forced to substantially
      curtail product development and other activities, and may be forced to cease
      operations. These factors as well as our net loss to date and net cash used
      in
      operations raise substantial doubt about our ability to continue as a going
      concern. The report of our independent registered public accounting firm on
      our
      consolidated financial statements as of December 31, 2007 contains an
      explanatory paragraph expressing uncertainty with respect to our ability to
      continue as a going concern as a result of our net losses, working capital
      deficiency, and cash used in operations.




**Off-Balance
      Sheet Arrangements**





The
      Company does not have any off-balance sheet arrangements.





**Item
      7.**  **Financial
      Statements.**




Our
      financial statements and notes thereto and the related report of our independent
      registered public accounting firm following Item 14 of this Annual Report on
      Form 10-KSB are filed as part of this report and are incorporated herein by
      reference.





**Item
      8.**  **Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**




Not
      applicable.




**Item
      8A.****Controls
      and Procedures.**




**Evaluation
      of disclosure controls and procedures**





The
      Company’s chief executive officer, who is also the Company’s principal financial
      officer, has reviewed and evaluated the effectiveness of the Company’s
      disclosure controls and procedures (as defined in Rules 13a-15(e) and
      15d-15(e) under the Exchange Act) as of the end of the period covered by this
      annual report. Based on that review and evaluation, our chief executive
      officer has concluded that the Company’s current disclosure controls and
      procedures, as designed and implemented, are effective to ensure that such
      officer is provided with information relating to the Company required to be
      disclosed in the reports the Company files or submits under the Exchange Act
      and
      that such information is recorded, processed, summarized and reported within
      the
      time periods specified.


41





**Management’s
      report on internal control over financial reporting**





The
      Company’s management is responsible for establishing and maintaining adequate
      internal controls over financial reporting and disclosure controls and
      procedures. Internal controls over financial reporting are designed to provide
      reasonable assurance that the books and records reflect the transactions of
      the
      Company and that established policies and procedures are carefully followed.
      Disclosure controls and procedures are designed to ensure that information
      required to be disclosed in reports filed under the Exchange Act is
      appropriately recorded, processed, summarized and reported within the specified
      time periods. An important feature of the Company’s system of internal controls
      and disclosure controls is that both are continually reviewed for effectiveness
      and are augmented by written policies and guidelines.




Management
      has conducted an evaluation of the Company’s internal control over financial
      reporting using the Internal Control-Integrated Framework issued by the
      Committee of Sponsoring Organizations of the Treadway Commission as a basis
      to
      evaluate effectiveness and determined that internal control over financial
      reporting was effective as of the end of the fiscal year ended December 31,
      2007.




This
      annual report does not include an attestation report of the company’s registered
      public accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by the company’s registered
      public accounting firm pursuant to temporary rules of the Securities and
      Exchange Commission that permit the company to provide only management’s report
      in this annual report.





**Changes
      in internal control over financial reporting**




There
      were no changes in the Company’s internal control over financial reporting that
      occurred during the fourth fiscal quarter ended December 31, 2007 that have
      materially affected, or are reasonably likely to materially affect, the
      Company’s internal control over financial reporting.




**Item
      8B.**  **Other
      Information** .




There
      have not been any material changes or events during the fourth quarter ended
      December 31, 2007 that have not been described in a report on Form 8-K.


42


**PART
      III**




**Item
              9.**
            **Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance With Section 16(a) of the Exchange Act**.




**Executive
      Officers and Directors**




The
      following sets forth the Company’s executive officers and directors and their
      respective ages and positions as of December 31, 2007:




**Names**
            
            **Ages**
            
            **Positions**
            
            **Director
                Since**Darryl
                Cohen
            
            55
            
            Chief
                Executive Officer and Chairman of the Board of Directors
            
            2005Alan
                Smith
            
            54
            
            Director
                *
            
            2005Sandro
                Sordi
            
            47
            
            Director
            
            2005


*
      Resigned on February 9, 2008.




**Darryl
      Cohen** has been
      Chief Executive Officer and Chairman of the Board of Directors of the Company
      since June 2005 and of InfoByPhone since September 2004. From September 2002
      through April 2004, Mr. Cohen served as Chairman and Chief Executive Officer
      of
      Ramp Corporation, a company that provided Internet-based communication, data
      integration, and transaction processing technologies. On June 2, 2005, Ramp
      Corporation filed a voluntary petition under Chapter 11 of the Bankruptcy Code
      in the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy
      Petition #: 05-14006-alg). Ramp Corporation subsequently was
      liquidated.




Prior
      to
      becoming Ramp’s Chairman and Chief Executive Officer, Mr. Cohen invested in
      public and private companies, frequently working with management in the areas
      of
      marketing strategy and financing. Mr. Cohen also served as President of DCNL
      Incorporated, a privately-held beauty supply manufacturer and distributor he
      founded in 1988 and sold to Helen of Troy in 1998. During his tenure as
      President of DCNL, Mr. Cohen was also co-owner and President of Basics Beauty
      Supply Stores, a chain of retail stores in California, from 1985 to 1999. He
      has
      also owned businesses in the food-services and gift industries, and holds a
      B.A.
      in Political Science from the University of California at Berkeley.




**Alan
      Smith** was a
      director of the Company from June 2005 until his resignation in February 2008,
      and was a director of InfoByPhone from April 2005 to February 2008. For the
      past
      five years, Mr. Smith has been involved in personal investments and new
      investment opportunities. From 1990 to 2003, he was the owner and President
      of
      Aaron Kamhi Inc., an apparel manufacturing company specializing in private
      label
      products for chain and department stores. Mr. Smith has been actively
      involved in community programs working with youth for the past
      20 years.




43




**Sandro
      Sordi** became
      a
      director of the Company in July 2005. He currently serves as the General Counsel
      for the RS Group of Companies, Inc., a holding company for a group of insurance
      and finance-related businesses and affinity program managers. Mr. Sordi
      joined the RS Group in 2003 where, as its General Counsel and a Director, he
      has
      taken a leading role in developing the company’s growth strategy and engaging in
      negotiations of all types. From 1990 to 2003, Mr. Sordi was engaged in the
      private practice of law as a sole practitioner in addition to being involved
      in
      certain investment projects. Mr. Sordi has been a member of the Florida Bar
      since 1990, having earned his Juris Doctor from the University of Miami, Florida
      and his B.A. (Honors) from York University in Toronto, Canada.





There
      are
      no family relationships among the Company’s directors or executive officers and
      other than as disclosed above there are no events or legal proceedings material
      to an evaluation of the ability or integrity of any director or executive
      officer of the Company.





**Board
      of Directors Independence and Communications; Committees**




Our
      Board
      of Directors is currently composed of two directors. The Board has determined
      that Mr. Sordi is “independent” as that term is defined in Rule 4200(a)(15) of
      the listing standards for the Nasdaq Stock Market and Rule 10A-3 of the Exchange
      Act. Mr. Cohen, who is currently employed by the Company, is not considered
      independent.





The
      Board
      welcomes communications from stockholders, which may be sent to the entire
      Board
      or individual directors at the principal business address of the Company,
      AskMeNow, Inc., 26 Executive Park, Suite 250, Irvine, CA 92614, Attn: Sandro
      Sordi. Security holder communications are initially screened by the Company’s
      Nominating and Corporate Governance Committee to determine whether they will
      be
      relayed to Board members. Once the decision has been made to relay such
      communications to Board members, the Committee will release the communication
      to
      the Board on the next business day. Communications that are clearly of a
      marketing nature, or which are unduly hostile, threatening, illegal or similarly
      inappropriate will be discarded and, if warranted, subject to appropriate legal
      action.





The
      Board
      currently has three standing committees: the Nominating and Corporate Governance
      Committee, the Compensation Committee and the Audit Committee.





*Nominating
      and Corporate Governance Committee*




The
      Nominating and Corporate Governance Committee of the Board (the “Nominating
      Committee”) currently consists of Sandro Sordi. The Nominating Committee, which
      acts pursuant to a written charter, evaluates the appropriate size of the Board,
      recommends any changes in the structure and composition of members of the Board,
      considers criteria for Board membership, identifies and evaluates prospective
      candidates, makes recommendations to the Board as to the nominees for directors,
      and proposes the slate of directors to be elected at each annual meeting of
      stockholders. The Nominating Committee also assists the Board by developing
      and
      recommending corporate governance policies and practices applicable to the
      Company, monitoring compliance with the Company’s Code of Ethics, and handling
      such other matters as the Board or Nominating Committee deems appropriate.




44




The
      Nominating Committee will consider all director candidates properly recommended
      by stockholders; acceptance of a recommendation for consideration does not
      imply
      the Board will nominate the proposed candidate. Any stockholder who desires
      to
      recommend a director candidate may do so in writing, giving each recommended
      candidate’s name, biographical data, and qualifications, by mail addressed to
      the Chairman of the Nominating Committee, in care of AskMeNow, Inc., Attention:
      Sandro Sordi. A written statement from the candidate consenting to being named
      as a candidate and, if nominated and elected, to serve as director, must
      accompany any stockholder recommendation. Members of the Nominating Committee
      will assess potential candidates on a regular basis.





*Compensation
      Committee*




The
      Compensation Committee of the Board currently consists of Sandro Sordi. The
      Compensation Committee’s role is to assist the Board with its responsibilities
      relating to compensation of the Company’s officers and directors and the
      development and administration of the Company’s compensation plans. The
      Compensation Committee has overall responsibility for evaluating and providing
      recommendations with respect to the compensation plans, policies and benefit
      programs for the Company, as well as the individual salary and benefits of
      the
      chief executive officer and other officers and senior executives of the Company.
      The Compensation Committee acts pursuant to a written charter as adopted during
      the 2007 fiscal year.





*Audit
      Committee*




The
      Audit
      Committee of the Board currently consists of Sandro Sordi. The Board of
      Directors has determined that Mr. Sordi is not an “audit committee financial
      expert,” as that term is defined under the rules and regulations of the
      Securities Act. **** The
      Company recognizes the benefit of having an individual who qualifies as such
      an
      expert serve on the Audit Committee but, given the financial condition of the
      Company, its size and limited operating history, has determined that the
      benefits are outweighed by the costs of retaining such a person. The Board
      is
      hopeful, however, that it will be able to identify and attract a financial
      expert for the Audit Committee in the future.





The
      Audit
      Committee acts pursuant to a written charter, which charter authorizes the
      committee’s oversight of the financial operations and management of the Company,
      including a required review process for all quarterly, annual, and special
      filings with the SEC, and meetings with the Company’s independent registered
      public accounting firm and management.





**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Exchange Act requires the Company’s executive officers, directors
      and persons who own more than ten percent of a registered class of the Company’s
      equity securities to file reports of ownership and changes in ownership with
      the
      Securities and Exchange Commission. Executive officers, directors, and
      greater-than-ten percent stockholders are required by SEC regulations to furnish
      the Company with copies of all Section 16(a) forms they file. Based solely
      on
      the Company’s review of the copies of such forms furnished to it (and all
      amendments thereto, if any) and written representations from the Company’s
      reporting persons, the Company believes that all of the Company’s reporting
      persons have filed their respective Section 16(a) forms for the year ended
      December 31, 2007, except for each of Messrs. Cohen, Sordi and Smith who did
      not
      file a Form 4/A to reflect the amendment to options granted in September 2006,
      which options were amended in July 2007 to increase the exercise price from
      $0.50 to $0.59 per share.


45




**Code
      of Ethics**




The
      Company has adopted a Code of Ethics that applies to its principal executive
      officer, principal financial officer, principal accounting officer or
      controller, or persons performing similar functions. A copy of the Company’s
      Code of Ethics is available at the Company’s website at www.askmenow.com .
      A copy
      of the Company's Code of Ethics will also be furnished, without charge, in
      print
      to any person who requests such copy by writing to the Corporate Secretary,
      AskMeNow, Inc., 26 Executive Park, Suite 250, Irvine, CA 92614.




**Item
      10.**  **Executive
      Compensation** **.**




The
      following table shows information concerning all plan and non-plan compensation
      awarded to, earned by or paid to the Chief Executive Officer of the Company,
      who
      was the only named executive officer of the Company during the 2007 and 2006
      fiscal years, for all services rendered by such officer to the Company and
      its
      subsidiaries in all capacities during the periods presented.




**Summary
      Compensation Table**




Name
                and Principal
              Position
            
            Year
            
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock Awards
              ($)
            
            Option
                Awards ($)
            
            Other
            
            Total
              ($)Darryl
                Cohen
              Chief
                Executive Officer, Principal Financial Officer, and Chairman of the
                Board
            
            
            2007
            
            
            $
            231,201
            (1)
            
            —
            
            
            —
            
            
            —
            
            $
            6,840
            (2)
            $
            238,0412006
            
            
            $
            238,548
            (3)
            $
            200,000
            (4)
            $
            208,000
            (5)
            $
            1,719,000
            (6)
            $
            6,840
            (2)
            $
            2,372,388


(1)
            Includes
                $72,917 of accrued but unpaid salary due the officer at December
                31,
                2007.


(2)
            Represents
                auto allowance.


(3)
            Includes
                $46,154 of accrued but unpaid salary due the officer at December
                31,
                2006.


(4)
            The
                entire cash bonus amount of $200,000 was accrued but unpaid at December
                31, 2006 and will be paid upon the completion of a significant financing.


(5)
            The
                stock award represents 200,000 shares of common stock of the Company
                awarded in recognition of the Company entering into an agreement
                with
                Rogers Wireless. The dollar amount presented represents the fair
                value of
                such award on the date of grant, which share price was $1.04 on April
                28,
                2006.


(6)
            The
                option award represents the award of an aggregate 3,500,000 non-qualified
                stock options, of which 1,500,000 were not vested at December 31,
                2006.
                The dollar amount presented represents the aggregate fair value of
                such
                awards on the date of grant. Thefair
                value of each option was estimated on the date of grant using the
                Black-Scholes option pricing model with the following weighted average
                assumptions used for grants in 2006: dividend yield of zero, expected
                volatility of 219% to 229%, risk-free interest rates of 4.73% to
                4.84%,
                and expected lives of ten years.





**Employment
      Agreements**




On
      July
      19, 2005, InfoByPhone, our wholly-owned subsidiary, entered into a three-year
      employment contract with Darryl Cohen as President and Chief Executive Officer.
      Mr. Cohen became CEO and Chairman of the Company in June 2005. Pursuant to
      the
      terms of his employment agreement, Mr. Cohen was compensated at the rate of
      $110,000 until April 28, 2006, when his salary was increased to $250,000 per
      annum. In addition, Mr. Cohen was granted options in July 2005 to purchase
      200,000 shares of common stock at $.070 per share in accordance with the terms
      of his employment agreement. Pursuant to the agreement, Mr. Cohen also is
      entitled to an annual incentive bonus at each anniversary date of such agreement
      in an amount as determined by the Board.


46





Mr.
      Cohen’s salary was increased by the Board of Directors during the 2006 fiscal
      year to more appropriately reflect his responsibilities and performance. In
      addition, the Board of Directors granted Mr. Cohen options and an award of
      restricted shares, each as discussed below, in recognition of the achievement
      by
      Mr. Cohen of significant milestones during the 2006 fiscal year. Mr. Cohen
      also was awarded a $200,000 cash bonus in 2006. This bonus was fully
      accrued but unpaid as of December 31, 2007, and will be paid to Mr. Cohen upon
      the closing of a significant financing.





The
      Board
      of Directors determined, based on the Company’s financial condition during the
      2007 fiscal year, not to increase Mr. Cohen’s salary further, and did not make
      any option or other equity grants to Mr. Cohen during that period. In July
      2007,
      the Board of Directors did amend the exercise price of certain options granted
      to Mr. Cohen in September 2006; such amendment increased the exercise price
      from
      $0.50 to $0.59 per share and affected options to purchase an aggregate 2,000,000
      shares of common stock.





For
      information on equity incentive awards granted to Mr. Cohen, including re-priced
      options, see the disclosure below.




**Outstanding
      Equity Awards at Fiscal Year-End**




The
      following table sets forth information concerning unexercised options
      outstanding as of December 31, 2007 for our Chief Executive Officer. There
      were
      no unvested stock awards or other equity incentive plan awards granted during,
      or outstanding at the end of, the 2007 fiscal year.




**Option
                Awards****Name**
            
            Number of
                Securities Underlying Unexercised Option
              (#)
              Exercisable
            
            Number of
                Securities Underlying Unexercised Options
              (#)
              Unexercisable
            
            Equity Incentive Plan
              Awards: Number of
                Securities Underlying Unexercised Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              DateDarryl
                Cohen
            
            
            1,500,000
            (1)
            
            —
            
            
            —
            
            $
            0.50
            
            
            12/22/162,000,000
            (2)
            
            —
            
            
            —
            
            $
            0.59
            
            
            9/20/16200,000
            (3)
            
            —
            
            
            —
            
            $
            0.70
            
            
            7/20/15


47


(1)
            The
                option award represents the award of 1,500,000 non-qualified stock
                options, all of which were vested at December 31, 2007. The options
                are
                exercisable for 10 years commencing December 22, 2006 with an exercise
                price of $0.50 per share.


(2)
            The
                option award represents the award of 2,000,000 non-qualified stock
                options, all of which were vested at December 31, 2007. The options
                are
                exercisable for 10 years commencing September 20, 2006 with an exercise
                price of $0.59 per share. Such options were originally granted with
                an
                exercise price of $0.50 per share, which price was amended in July
                2007.


(3)
            The
                option award represents the award of an aggregate 200,000 non-qualified
                stock options, all of which were vested at December 31, 2007. The
                options are exercisable for 10 years commencing July 20, 2005, the
                date of
                the grant, at $0.70 per share.





**2006
      Employee Stock Incentive Plan**





In
      August
      2006, the 2006 Employee Stock Incentive Plan was approved and adopted by the
      Board of Directors, and subsequently amended in June 2007 (as amended, the
“2006
      Plan”). The 2006 Plan became effective upon the approval of the holders of the
      Company’s common stock at the Company’s annual stockholders meeting held on
      August 1, 2007. **** The
      2006
      Plan, which is administered by the Board, authorizes the issuance of a maximum
      of 10,000,000 shares of common stock. Awards under the plan may be in the form
      of stock options, stock appreciation rights or restricted stock, and may be
      granted to employees, officers and other key persons employed or retained by
      the
      Company and any non-employee director, consultant, vendor or other individual
      having a business relationship with the Company. Options
      are granted at various times and vest over various periods. Stock
      options granted shall be either incentive stock options, within the meaning
      of
      Section 422 of the Internal Revenue Code, or non-qualified stock options. Both
      incentive stock options and non-qualified stock options must be granted at
      an
      exercise price of not less than the fair market value of shares of common stock
      at the time the option is granted, and incentive stock options granted to 10%
      or
      greater stockholders must be granted at an exercise price of not less than
      110%
      of the fair market value of the shares on the date of grant. If any award under
      the 2006 Plan is forfeited, terminates, expires unexercised, or lapses for
      any
      reason, the shares of common stock that would otherwise have been issuable
      pursuant thereto will be available for issuance pursuant to the grant of new
      awards. Options to purchase an aggregate 1,981,000 shares of common stock had
      been granted under the 2006 Plan as of December 31, 2007.





**2005
      Management and Director Equity Incentive and Compensation
      Plan**




Under
      the
      2005 Management and Director Equity Incentive and Compensation Plan (the “2005
      Plan”), the Company may grant incentive and non-qualified stock options,
      performance shares and restricted stock to its officers, directors, other key
      employees and consultants to purchase up to 2,000,000 shares of common stock.
      Under the 2005 Plan, the exercise price of each option must equal or exceed
      the
      market price of the Company’s stock on the date of grant, and an option’s
      maximum term is ten years. Options are granted at various times and vest over
      various periods, and may be either incentive stock options or non-qualified
      stock options. If any award under the 2005 Plan terminates, expires unexercised,
      or is cancelled, the shares of common stock that would otherwise have been
      issuable pursuant thereto will be available for issuance pursuant to the grant
      of new awards. The 2005 Plan will terminate on June 6, 2015. Options to purchase
      an aggregate 1,924,000 shares of common stock had been granted under the 2005
      Plan as of December 31, 2007.


48





**2007
      Grants to Executive Officers and Directors**





On
      May
      17, 2007, the Board of Directors granted to each of Alan Smith and Sandro Sordi
      non-plan options to purchase 300,000 shares of common stock. These non-qualified
      stock options are exercisable for 10 years commencing on May 17, 2007 at $0.78
      per share and vested immediately. The options were granted in consideration
      for
      the recipients’ services as members of the Board of Directors.





In
      July
      2007, the Board of Directors amended options granted to Mr. Cohen to purchase
      2,000,000 shares, Mr. Sordi to purchase 100,000 shares, and Mr. Smith to
      purchase 100,000 shares of common stock. The amendment provided for an increase
      in the exercise price of such options from $.50 to $.59 per share, the closing
      price of the common stock on the date of the grant. The options were originally
      granted in September 2006 with a term of ten years. All other terms of such
      options, as described below, remained the same.





**2006
      Grants to Executive Officers and Directors**





On
      April
      28, 2006, the Board of Directors granted to each of Alan Smith and Sandro Sordi
      non-plan, non-qualified options to purchase 100,000 shares of common stock.
      These non-qualified stock options, which were exercisable at $1.01 per share,
      were cancelled and replaced in September 2006. The replacement options are
      exercisable for 10 years commencing on September 20, 2006 at $.59 per share
      (as
      amended), with 50,000 shares vested immediately for prior services and an
      additional 50,000 shares vested as of March 20, 2007.





On
      April
      28, 2006, the Board of Directors granted Darryl Cohen non-plan options to
      purchase an aggregate of 2,000,000 shares of common stock. He was also awarded
      200,000 restricted shares of common stock in recognition of the Company entering
      into an agreement with Rogers Wireless. The 2,000,000 options, which were
      exercisable at $1.04 per share, were cancelled and replaced in September 2006.
      The replacement options are exercisable for 10 years commencing on September
      20,
      2006 at $.59 per share (as amended). One million shares subject to the options
      were fully vested upon grant, as they were granted in connection with the
      Company’s initial closing of its private placement with Arjent Ltd (f/k/a
      Vertical Capital Partners, Inc.). The second one million shares subject to
      the
      option, which were originally issued in connection with the proposed acquisition
      of Intelligate Ltd. and, upon the termination of the Intelligate transaction,
      were re-granted in consideration of the Company entering into a letter of intent
      to acquire an exclusive license from Expert System S.p.A, vested upon the
      execution of a definitive license with Expert System in November 2006.





On
      December 22, 2006, the Board of Directors also granted to each of Darryl Cohen,
      Alan Smith and Sandro Sordi non-plan options to purchase 1,500,000, 200,000
      and
      200,000 shares of common stock, respectively. These non-qualified options are
      exercisable for 10 years at $.50 per share, with 25% of each option vesting
      every three months starting March 31, 2007 until fully vested 12 months
      following the date of grant.


49




**Retirement
      and Change of Control**




Pursuant
      to the terms of his employment agreement, in the event Mr. Cohen’s employment is
      terminated for disability, death or without cause following a change of control,
      or in the event Mr. Cohen terminates his employment for good reason (as such
      terms are defined in the agreement), Mr. Cohen or his estate shall be entitled
      to severance of (a) 50% of his base salary for the previous calendar year,
      and
      (b) bonuses for such year. During the term of his employment agreement and
      for a
      period of 12 months following termination of his employment under the agreement
      or any renewal or extension thereof, Mr. Cohen has agreed not to engage in
      any
      business that is competitive with the Company’s current business or its business
      as conducted at any time during the term. During the term or, if he is
      terminated for cause, then for the balance of the term, and for the 24 month
      period thereafter, Mr. Cohen also has agreed not to directly or indirectly
      recruit, solicit or induce any diversion of employees or sales representatives
      from their relationships with the Company or retain or employ any such persons,
      or solicit clients or others with a business relationship with the Company
      to
      discontinue or reduce the extent of such relationships.




In
      May
      2007, the Board of Directors determined that in the event of a change of control
      as defined in Mr. Cohen’s employment agreement, which definition was revised to
      include the issuance of 25% or more of the issued and outstanding shares of
      the
      Company to one or more persons acting together as a group (with certain
      exceptions), all options, warrants and restricted shares outstanding and not
      then vested held by Mr. Cohen would accelerate and become fully vested. In
      addition, Mr. Cohen would be granted a non-qualified option or warrant granting
      him the right to purchase that number of shares equal to the number of shares
      subject to all of his options and warrants outstanding as of May 17, 2007,
      such
      change of control options and warrants to be exercisable at the fair market
      value of the common stock at the time of the change of control. The Board of
      Directors also made available the change of control acceleration and grant
      provisions to Sandro Sordi, Alan Smith and a financial consultant to the
      Company. Each such individual is therefore entitled to the same benefits as
      described for Mr. Cohen in the event of a change of control
      transaction.





**Director
      Compensation**




The
      following table sets forth all compensation of the Company’s directors for the
      year ended December 31, 2007. Mr. Cohen, our CEO and Chairman of the Board
      of
      Directors, did not receive any compensation for his services as a director
      during the 2007 fiscal year.




Name
            
            Fees
                Earned or Paid in Cash
            
            Stock
                Awards
              ($)
            
            Option Awards
              ($)
            
            Non-Equity
                Incentive Plan Compensation
              ($)
            
            Nonqualified
                Deferred Compensation Earnings
              ($)
            
            All Other
                Compensation
              ($)
            
            Total
              ($)Alan
                Smith
            
            
            —
            
            
            —
            
            
            $232,500
            (1)
            
            —
            
            
            —
            
            
            —
            
            $
            232,500Sandro
                Sordi
            
            
            —
            
            
            —
            
            
            $232,500
            (1)
            
            —
            
            
            —
            
            
            —
            
            $
            232,500


(1)
            The
                amount represents the award of 300,000 non-qualified stock options,
                all of
                which were vested at December 31, 2007. The dollar amount presented
                represents the aggregate fair value of such awards on the date of
                grant.
                Thefair
                value of each option was estimated on the date of grant using the
                Black-Scholes option pricing model with the following weighted average
                assumptions used for grants in 2007: dividend yield of zero, expected
                volatility of 242%, risk-free interest rates of 4.68%, and expected
                lives
                of ten years.


50





During
      2006, each director was granted an aggregate 300,000 non-qualified stock
      options, all of which were vested at December 31, 2007. These options were
      valued at $101,490, the aggregate fair value of such awards on the date of
      grant. The fair
      value of each option was estimated on the date of grant using the Black-Scholes
      option pricing model with the following weighted average assumptions used for
      grants in 2006: dividend yield of zero, expected volatility of 219% to 229%,
      risk-free interest rates of 4.73% to 4.84%, and expected lives of ten
      years .  For
      more
      information regarding the option grants made during 2006, see “2006 Grants to
      Executive Officers and Directors” above.





Each
      director was also granted 40,000 non-qualified stock options during the 2005
      fiscal year, all of which were vested at December 31, 2007.





The
      Board
      of Directors received compensation commensurate with their responsibilities
      to
      the Company and the various board responsibilities of an early stage
      organization. Members of the Board of Directors do not receive fees or a
      retainer for their service on the Board, and do not receive fees for meetings
      attended or committee service.





**Item
      11.**  **Security
      Ownership of Certain Beneficial Owners and Management and Related Stockholder
      Matters**




For
      information regarding securities authorized for issuance under the Company’s
      equity plans, please see Item 5 “Market for Common Equity, Related Stockholder
      Matters and Small Business Issuer Purchases of Equity Securities”
herein.




Persons
      and groups owning in excess of five percent of our common stock are required
      to
      file certain reports with the SEC disclosing such ownership pursuant to the
      Exchange Act. Based upon such reports or other information available to the
      Company, as of April 7, 2008 management knows of no persons other than those
      identified below who were beneficial owners of more than five percent of the
      outstanding shares of our common stock.




The
      following table sets forth, as of April 7, 2008, certain information with
      respect to any person, including any group, who is known to the Company to
      be
      the beneficial owner of more than 5% of our common stock, and certain
      information concerning the ownership of common stock (including directors’
qualifying shares) of each director, the Chief Executive Officer of the Company,
      and all executive officers and directors as a group. There were 58,915,400
      shares of the Company’s common stock outstanding as of April 7, 2008.




**Name
                of Beneficial Owner****(1)**
            
            **Amount and Nature of Beneficial
                Ownership**
            
            **Percent of
                Class****(1)**Darryl
                Cohen
            
            
            8,025,667
            (2)
            
            12.1
            %Alan
                Smith
            
            
            690,000
            (3)
            
            1.2
            %Sandro
                Sordi
            
            
            2,602,164
            (4)
            
            4.2
            %Enable
                Group Partners, L.P.
            
            
            20,000,000
            (5)
            
            25.3
            %Dolphin
                Offshore Partners, L.P.
            
            
            10,000,000
            (6)
            
            14.5
            %Baruch
                Halpern Revocable Trust
            
            
            8,522,621
            (7)
            
            13.3
            %ClearView
                Investment Fund
            
            
            6,863,965
            (8)
            
            10.7
            %McMahan
                Securities Corp.
            
            
            4,500,000
            (9)
            
            7.1
            %Blue
                Sky Consultants, Ltd.
            
            
            3,670,000
            (10)
            
            6.2
            %Total
                number of shares owned by directors and executive officers as a group
                (3
                persons)
            
            
            11,317,831
            
            
            16.4
            %


51





(1)
            Except
                as otherwise noted in the footnotes to this table, each of the persons
                named in the table owns the shares listed as beneficially owned by
                such
                person directly and exercises sole voting and investment power over
                such
                shares. With respect to each such person or group, percentages are
                calculated based on the number of shares beneficially owned, including
                any
                securities that such person has the right to acquire within 60 days
                pursuant to the exercise of options, warrants, conversion privileges
                or
                other rights, but not the exercise of such options, warrants, conversion
                privileges or other rights by any other person. The mailing address
                of
                each director and executive officer is c/o AskMeNow, Inc., 26 Executive
                Park, Suite 250, Irvine, California
                92614.




(2)
            Of
                this amount, 825,667 shares are held in the name of “Darryl Cohen &
                Nini Cohen, TTEE, The Cohen Family Trust.” Also includes 7,200,000 shares
                of common stock issuable under currently exercisable options.




(3)
            Includes
                640,000 shares of common stock issuable under currently exercisable
                options.




(4)
            Includes
                2,140,000 shares of common stock issuable under currently exercisable
                options and 462,154 shares of common stock issuable under currently
                exercisable warrants. Mr. Sordi disclaims beneficial ownership of
                733,334
                shares of common stock beneficially owned by his wife.




(5)
            Represents
                20,000,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is One Ferry Building, Suite
                225, San
                Francisco, CA 94111.




(6)
            Represents
                10,000,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is 129 E. 17thStreet, New York, NY 10003.




(7)
            Includes
                5,072,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is 9601 Collins Ave., Bal Harbour,
                FL
                33154.




(8)
            Includes
                5,500,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is 300 Barr Harbor Drive, Suite
                220,
                Conshohecken, PA 19428.




(9)
            Represents
                4,500,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is 500 West Putnam Ave., Greenwich,
                CT
                00830.




(10)
            Includes
                670,000 shares of common stock issuable under currently exercisable
                warrants. The address of this owner is 76 Dean Street, PO Box 1117,
                Belize
                City, Belize.




**Series
      A Preferred Stock**





The
      following table sets forth, as of April 7, 2008, certain information with
      respect to any person, including any group, who is known to the Company to
      be
      the beneficial owner of more than 5% of our Series A preferred stock. No
      director or executive officer owns any shares of such stock. As
      of
      April 7, 2008, the Company had outstanding 22,458 shares of Series A preferred
      stock.




**Name
                of Beneficial Owner****(1)**
            
            **Amount and Nature of Beneficial
                Ownership**
            
            **Percent of**
              **Class****(1)**Trevor
                Hanness
            
            
            11,244
            (2)
            
            50.1
            %Stephen
                Pycroft
            
            
            5,622
            (3)
            
            25.0
            %Andrew
                Dewar
            
            
            5,592
            (4)
            
            24.9
            %Total
                number of shares owned by directors and executive officers as a group
                (3
                persons)
            
            
            0
            
            
            0
            %


52





(1)
            Except
                as otherwise noted in the footnotes to this table, each of the persons
                named in the table above owns directly and has sole voting and investment
                power with respect to the shares set forth opposite each such person’s
                name. With respect to each person or group, percentages are calculated
                based on the number of shares beneficially owned, including any securities
                that such person or group has the right to acquire within 60 days
                pursuant
                to the exercise of options, warrants, conversion privileges or other
                rights, but not the exercise of options, warrants, conversion privileges
                or other rights by any other person or group.





(2)
            Does
                not include warrants to purchase 100,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 495.96 shares of Series A preferred stock. The address of
                this
                beneficial owner is 179 Elmbridge Avenue, Surbiton, Surry, KT5 9HG,
                United
                Kingdom.





(3)
            Does
                not include warrants to purchase 50,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 247.98 shares of Series A preferred stock. The address of
                this
                beneficial owner is Coppers, 80 Ledborough Lane, Beaconsfield, Bucks,
                HP9
                2DG, United Kingdom.





(4)
            Does
                not include warrants to purchase 500,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 246.65 shares of Series A preferred stock. The address of
                this
                beneficial owner is c/o Dewar Brothers Ltd, Cleucch Mill, Lower Mill
                Street, Tillicoultry, FK13 6BP, United
                Kingdom.





**Series
      B Preferred Stock**





The
      following table sets forth, as of April 7, 2008, certain information with
      respect to any person, including any group, who is known to the Company to
      be
      the beneficial owner of more than 5% of our Series B preferred stock. No
      director or executive officer owns any shares of such stock. As
      of
      April 7, 2008, the Company had outstanding 264,279 shares of Series B preferred
      stock.




**Name
                of Beneficial Owner****(1)**
            
            **Amount and Nature of Beneficial
                Ownership**
            
            **Percent of**
              **Class****(1)**M.J.
                Jordan Ltd.
            
            
            26,623
            (2)
            
            10.1
            %Ian
                Taylor
            
            
            22,258
            (3)
            
            8.4
            %Fidecs
                Trust Company Limited
            
            
            22,258
            (4)
            
            8.4
            %Andrew
                Stewart
            
            
            16,161
            (5)
            
            6.1
            %Cantraviento
                Capital Inversion SA
            
            
            15,908
            (6)
            
            6.0
            %Total
                number of shares owned by directors and executive officers as a group
                (3
                persons)
            
            
            0
            
            
            0
            %


53





(1)
            Except
                as otherwise noted in the footnotes to this table, each of the persons
                named in the table above owns directly and has sole voting and investment
                power with respect to the shares set forth opposite each such person’s
                name. With respect to each person or group, percentages are calculated
                based on the number of shares beneficially owned, including any securities
                that such person or group has the right to acquire within 60 days
                pursuant
                to the exercise of options, warrants, conversion privileges or other
                rights, but not the exercise of options, warrants, conversion privileges
                or other rights by any other person or group.





(2)
            Does
                not include warrants to purchase 500,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 1,174.34 shares of Series B preferred stock.





(3)
            Does
                not include warrants to purchase 400,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 981.77 shares of Series B preferred stock. The address of
                this
                owner is No. 9 The Coppice, Bexley, DA5 2EA, United
                Kingdom.




(4)
            Does
                not include warrants to purchase 400,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 981.77 shares of Series B preferred stock. The address of
                this
                owner is P.O. Box 575, Montague Pavilion, 8-10 Queensway,
                Gibraltar.





(5)
            Does
                not include warrants to purchase 300,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 713.31 shares of Series B preferred stock. The address of
                this
                owner is Hertfordshire Lodge, Coleshill Lane, Near Amersham, Bucks,
                HP7
                0PD, United Kingdom.





(6)
            Does
                not include warrants to purchase 300,000 shares of common stock or
                accumulated but unpaid dividends accrued and payable as of December
                31,
                2007 of 701.71 shares of Series B preferred stock. The address of
                this
                owner is Vanterpool Plaza 2nd Floor, Wickens Cay Road Town, Tortola,
                British Virgin Islands.  54





**Changes
      in Control**




As
      a
      result of the Company’s offering of Series D preferred stock, certain
      anti-dilution provisions were triggered under the warrants issued by the Company
      in its Bridge I senior promissory note financing. Specifically, because the
      Company issued warrants in the Series D preferred stock financing with an
      exercise price that was lower than the Bridge I financing pricing, participants
      in the Bridge I financing were entitled to receive five times the number of
      warrants originally issued at an adjusted price of $0.10 per share.




In
      the
      event certain recipients of such warrants were to exercise such warrants and
      purchase the underlying shares of common stock of the Company, a change of
      control could occur. Speficially, as noted in the table above, Enable Group
      Partners, L.P. could purchase up to 20 million shares of common stock and as
      a
      result own over 25% of the outstanding shares of common stock as of April 7,
      2008. Dolphin Offshore Partners, L.P., the Baruch Halpern Revocable Trust and
      ClearView Investment Fund could each also purchase over 10% of the issued and
      outstanding shares.




**Item
      12.**  **Certain
      Relationships and Related Transactions, and Director
      Independence**




Except
      as
      set forth under Item 10 “Executive Compensation” above, which includes
      information regarding compensation of our executive officers and directors
      (including equity incentive compensation), and as set forth in this Item 12,
      since January 1, 2007 there were no transactions or proposed transactions
      involving or between the Company and its directors, executive officers, five
      percent or greater stockholders, or any immediate family member of any of the
      foregoing, nor did any such related person have any direct or indirect material
      interest in any such transaction or proposed transaction.


55




**Related
      Person Transactions**





*Darryl
      Cohen*





On
      March
      1, 2006, Darryl Cohen, our CEO and Chairman, loaned $105,000 to the Company
      in
      the form of a bridge loan. Such loan was completed on March 8, 2006 and was
      evidenced by a 16% secured promissory note due on the earliest to occur of
      a
      financing of $1 million in debt, equity or other infusion of capital or June
      30,
      2006. During the 2006 fiscal year, the Company repaid principal and interest
      of
      $102,376 and $7,624, respectively. The principal balance outstanding at December
      31, 2006 was $2,624, which was paid along with all accrued and unpaid interest
      in full in May 2007.





*Sandro
      Sordi*





In
      January 2006, Sandro Sordi, a director of the Company, loaned $100,000 to the
      Company. The loan is evidenced by a 10% subordinated promissory note originally
      due 60 days from the date of issuance. In connection with the loan, the Company
      issued to Mr. Sordi warrants to purchase 10,000 shares of common stock at $2.00
      per share through January 31, 2011. As of December 31, 2006, the entire amount
      of the note remained outstanding and the note was in default. **** On
      June
      11, 2007, the Company issued Mr. Sordi warrants to purchase 452,164 shares
      of
      common stock exercisable for five years at $0.50 per share in consideration
      of
      his agreement to extend the maturity date of his bridge loan (including payment
      of accrued and unpaid interest) until the Company closes its next round of
      permanent equity funding.





*Family
      Members of Executive Officers and Directors*





The
      Company has granted to Grant Cohen, who is employed as Director of Interactive
      Media and who is the son of Darryl Cohen, the Company’s CEO and Chairman,
      options to purchase an aggregate 1,350,000 shares of common stock as follows:
      (a) 300,000 were granted pursuant to the terms of Mr. Cohen’s employment
      agreement with the Company on October 16, 2006, at $0.50 per share, vesting
      150,000 immediately and 50,000 at the end of each subsequent 90-day period
      of
      employment (excluding the 90-day period that coincided with Mr. Cohen’s one-year
      renewable employment term), (b) 350,000 were granted on January 16, 2007, at
      $0.61 per share, vesting 175,000 on the date that is 90 days after the date
      of
      grant and 175,000 on the date that is 180 days after the date of grant, and
      (c)
      700,000 were granted in connection with an amendment to Mr. Cohen’s employment
      agreement, 500,000 of which were granted at $0.80 per share and vested when
      the
      Company entered into an agreement with the Wikimedia Foundation on May 25,
      2007,
      and 200,000 of which were granted on May 17, 2007, at $.75 per share, of which
      50,000 vest in the sole discretion of the CEO each time (up to four times)
      (1) a
      material contract is executed between the Company and a licensed third-party
      content provider, or (2) an “Enterprise Contract” (as defined in the employment
      agreement, as amended) is executed. These are in addition to options granted
      to
      Mr. Cohen on June 7, 2005 to purchase 175,000 shares of common stock at $0.69
      per share. Of the shares subject to the option, 25,000 vested immediately upon
      grant and 50,000 vested at the end of each subsequent 90-day period of
      employment.





The
      Company has granted to Daniel Smith, who was employed as Director of Revenue
      and
      Content and who is the son of Alan Smith, a former director of the Company,
      options to purchase an aggregate 1,350,000 shares of common stock as follows:
      (a) 300,000 were granted pursuant to the terms of Mr. Smith’s employment
      agreement with the Company on October 16, 2006, at $0.50 per share, vesting
      150,000 immediately and 50,000 at the end of each subsequent 90-day period
      of
      employment (excluding the 90-day period that coincided with Mr. Smith’s one-year
      renewable employment term), (b) 350,000 were granted on January 16, 2007, at
      $0.61 per share, vesting 175,000 on the date that is 90 days after the date
      of
      grant and 175,000 on the date that is 180 days after the date of grant, and
      (c)
      700,000 were granted in connection with an amendment to Mr. Smith’s employment
      agreement, 500,000 of which were granted at $0.80 per share and vested when
      the
      Company entered into an agreement with the Wikimedia Foundation on May 25,
      2007,
      and 200,000 of which were granted on May 17, 2007, at $0.75 per share, of which
      50,000 vest in the sole discretion of the CEO each time (up to four times)
      (1) a
      material contract is executed between the Company and a licensed third-party
      content provider, or (2) an “Enterprise Contract” (as defined in the employment
      agreement, as amended) is executed. These are in addition to options granted
      to
      Mr. Smith on June 7, 2005 to purchase 200,000 shares of common stock at $0.69
      per share. Of the shares subject to the option, 50,000 vested immediately upon
      grant and 50,000 vested at the end of each subsequent 90-day period of
      employment. Daniel Smith resigned from his position with the Company in
      January 2008.


56





The
      Company also has granted to Mark Cohen, who is employed as Vice President of
      Operations **** and
      who
      is the brother of Darryl Cohen, the Company’s CEO and Chairman, options to
      purchase an aggregate 550,000 shares of common stock as follows: (a) 300,000
      were granted pursuant to the terms of Mr. Cohen’s employment agreement with the
      Company on October 16, 2006, at $0.50 per share, vesting 150,000 immediately
      and
      50,000 at the end of each subsequent 90-day period of employment (excluding
      the
      90-day period that coincided with Mr. Cohen’s one-year renewable employment
      term), and (b) 250,000 were granted on January 16, 2007, at $0.61 per share,
      vesting 125,000 on the date that is 90 days after the date of grant and 125,000
      on the date that is 180 days after the date of grant. These are in addition
      to
      options granted to Mr. Cohen on June 7, 2005 to purchase 200,000 shares of
      common stock at $0.69 per share. Of the shares subject to the option, 50,000
      vested immediately upon grant and 50,000 vested at the end of each subsequent
      90-day period of employment.





*Halpern
      Capital, Inc. and Related Entities*





Halpern
      Capital, Inc. assisted the Company with its Bridge I financing.  As
      consideration for acting as the placement agent in such financing, the Company
      issued warrants to purchase an aggregate 3,600,000 shares of common stock,
      of
      which 1,814,400 were issued to the Baruch Halpern Revocable Trust.  Baruch
      Halpern is a principal of Halpern Capital and trustee of the trust.  An
      additional 7,257,600 warrants were issued to the Baruch Halpern Revocable Trust
      (for a total of 9,072,000 warrants) as a result of the triggering of the
      anti-dilution provisions in the Bridge I financing warrants following the
      Company’s Series D preferred stock financing.  The Baruch Halpern Revocable
      Trust also participated in the Bridge I financing.  It was originally
      issued 400,000 warrants in connection with its $100,000 investment and received
      an additional 1,600,000 warrants as a result of the anti-dilution adjustment.
       The trust exercised an aggregate 6,000,000 warrants on a cashless basis
      and was issued an aggregate 3,385,621 shares by the Company in 2008; the trust
      is now a greater-than-five percent holder of the Company’s common
      stock.


57





In
      February 2007, the Company entered into a financial advisory agreement for
      12
      months with Halpern Capital. In the event that Halpern Capital successfully
      completed a securities offering with at least $25 million in gross proceeds,
      the
      Company agreed to purchase additional financial services from Halpern for a
      minimum of 12 months at a rate of $20,000 per month. This agreement expired
      in
      February 2008.  During the 2007 fiscal year, the Company paid Halpern
      Capital $40,000 under the financial advisory agreement.





*Arjent
      Ltd. (formerly Vertical Capital Partners, Inc.)*





Beginning
      April 2006 and ending February 2007, the Company engaged Arjent Ltd. (formerly
      Vertical Capital Partners, Inc.) as financial advisor to assist with its
      offering of the Series A and Series B preferred stock. In consideration for
      its
      services, the Company paid Arjent sales commissions totaling $707,000 and
      reimbursed $162,000 for expenses, and issued to Arjent an aggregate 1,200,000
      shares of common stock and warrants to purchase another 1,000,000 shares. Arjent
      also assisted the Company with the Reverse Merger with InfoByPhone in June
      2005,
      for which it was issued 500,000 shares of common stock, and a $3.2 million
      private placement of the Company’s common stock immediately following the
      Reverse Merger, for which the Company paid Arjent sales commissions totaling
      $320,000, expenses totaling $102,000 and issued the advisor 1,066,710 shares
      of
      common stock. Arjent also participated in a bridge financing for the Company
      in
      the first quarter of 2006 and loaned the Company $100,000 in such financing
      on
      the same terms noted above for Mr. Cohen. Arjent was a greater-than-five-percent
      stockholder of the Company.





*Director
      Independence*





For
      information on the compensation received by our directors of the Company during
      the 2007 fiscal year, and the beneficial ownership of equity securities of
      the
      Company of such individuals, see Items 10 and 11 above. For information on
      our
      Board of Directors and director independence, please see Item 9 above.





**Item
      13.**  **Exhibits** ****





**Exhibit
                No.**
            
            **Description**
            
            **Location**3.1
            
            Second
                Amended and Restated Certificate of Incorporation of AskMeNow,
                Inc.
            
            Exhibit
                3.1 to the Current Report on Form 8-K as filed on September 12, 2007.3.2
            
            Certificate
                of Designations, Preferences, Privileges, Powers and Rights of Series
                D
                Convertible Preferred Stock.
            
            Filed
                herewith.3.3
            
            By-laws.
            
            Exhibit
                3(ii) to the Registration Statement on Form S-1 (File No. 333-95927),
                as
                originally filed on February 1,
                2000.


58





4.1
            
            Subscription
                Documents for common stock offering in maximum amount of
                $2,000,000.
            
            Exhibit
                99.1 to Current Report on Form 8-K/A, as filed on July 11,
                2005.4.2
            
            Form
                of 10% Subordinated Promissory Note, dated January 17, 2006 (one
                of two
                identical notes each in the principal amount of $250,000).
            
            Exhibit
                4.1 to Current Report on Form 8-K, as filed on January 31,
                2006.4.3
            
            Form
                of Common Stock Purchase Warrant, with issue date of January 17,
                2006 (one
                of two identical warrants each to purchase 25,000 shares).
            
            Exhibit
                4.2 to Current Report on Form 8-K, as filed on January 31,
                2006.4.4
            
            Form
                of Secured Promissory Note, dated March 1, 2006 (one of two identical
                notes except for names each in the amount of $100,000).
            
            Exhibit
                4.1 to Current Report on Form 8-K, as filed on March 8,
                2006.4.5
            
            Form
                of Affidavit for Judgment by Confession, dated March 1, 2006 (one
                of two
                identical affidavits, except for names).
            
            Exhibit
                4.2 to Current Report on Form 8-K, as filed on March 8,
                2006.4.6
            
            Note
                Purchase and Warrant Agreement for Bridge I 12% Senior Promissory
                Note
                Offering.
            
            Exhibit
                4.1 to the Current Report on Form 8-K as filed on April 30,
                2007.4.7
            
            Form
                of Bridge I 12% Senior Promissory Note.
            
            Exhibit
                4.2 to the Current Report on Form 8-K as filed on April 30,
                2007.4.8
            
            Form
                of Common Stock Purchase Warrant issued in Bridge I 12% Senior Promissory
                Note Offering.
            
            Exhibit
                4.3 to the Current Report on Form 8-K as filed on April 30,
                2007.4.9
            
            Form
                of Registration Rights Agreement for Bridge I 12% Senior Promissory
                Note
                Offering.
            
            Exhibit
                4.4 to the Current Report on Form 8-K as filed on April 30,
                2007.4.10
            
            Form
                of Bridge II 12% Junior Promissory Note and Warrant.
            
            Exhibit
                10.2 to the Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2007 as filed on November 16, 2007.4.11
            
            Bridge
                II 12% Junior Convertible Promissory Note.
            
            Exhibit
                10.1 to the Current Report on Form 8-K as filed on September 12,
                2007.4.12
            
            Form
                of Common Stock Purchase Warrant issued in Bridge II Junior Convertible
                Promissory Note Offering.
            
            Exhibit
                10.2 to the Current Report on Form 8-K as filed on September 12,
                2007.


59





4.13
            
            Form
                of Series D Convertible Preferred Stock subscription
                agreement.
            
            Filed
                herewith.4.14
            
            Form
                of Common Stock Purchase Warrant issuable in Series D Convertible
                Preferred Stock offering.
            
            Filed
                herewith.10.1
            
            Securities
                Exchange Agreement and Plan of Reorganization, dated as of April
                14, 2005,
                by and among the Company, InfoByPhone, Inc. and certain stockholders
                of
                InfoByPhone, Inc.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on June 9,
                2005.10.2
            
            Assignment
                and Assumption of Liabilities Agreement dated as of May 23, 2005,
                by and
                among Ocean West Enterprises, Inc., the Company, and Consumer Direct
                of
                America.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on August 11,
                2005.10.3
            
            InfoByPhone,
                LLC Ohio Lease.
            
            Exhibit
                10.2 to Registration Statement on Form SB-2, as filed on September
                14,
                2005 (File No. 333-128314).10.4
            
            Lease
                Agreement, dated on or around August 30, 2005, by and between AskMeNow,
                Inc. and Eastern Telecommunications Phils., Inc.
            
            Exhibit
                10.3 to Registration Statement on Form SB-2, as filed on September
                14,
                2005 (File No. 333-128314).10.5
            
            Web
                Linking Agreement - BlackBerry MDS Studio, made as of September 22,
                2005,
                between Research In Motion Limited and InfoByPhone, Inc.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on October 7,
                2005.10.6
            
            Office
                Space Lease Between The Irvine Company and the Company for Irvine,
                CA
                office space.
            
            Exhibit
                10.6 to the Annual Report on Form 10-KSB/A for the 2006 fiscal year,
                as
                originally filed on April 17, 2007 (the “2006 Annual
                Report”).10.7+
            
            Amended
                and Restated Employment Agreement, dated as of July 19, 2005, by
                and
                between Darryl Cohen and InfoByPhone, Inc.
            
            Exhibit
                10.7 to the 2006 Annual Report.10.8
            
            Stock
                Purchase Agreement, entered into as of December 30, 2005, between
                the
                Company and Container/ITW, Inc.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on January 3,
                2006.





60





10.9
            
            Wireless
                Application Distribution Agreement, entered into as of March 31,
                2006, by
                and between InfoByPhone, Inc. and Rogers Wireless Partnership.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on April 7,
                2006.10.10
            
            Services
                Agreement, dated June 1, 2006, between the Company and Mobile ESPN
                LLC.
            
            Exhibit
                10.1 to the Current Report on Form 8-K, as filed on June 20,
                2006.10.11
            
            Letter
                Agreement, dated August 1, 2006, between the Company, BK Financial
                Services, LLC and Meyer Capital Corporation.
            
            Exhibit
                10.1 to the Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2006, as filed on November 20, 2006 (the “Q3 2006
                10-QSB”).10.12
            
            Consulting
                Agreement, made as of August 4, 2006, by and between the Company
                and CJB
                Group, Inc.
            
            Exhibit
                10.2 to the Q3 2006 10-QSB.10.13
            
            Warrant
                Agreement to purchase 200,000 shares, dated July 26, 2006, by and
                between
                the Company and Phillips Nizer LLP.
            
            Exhibit
                10.3 to the Q3 2006 10-QSB.10.14*
            
            Software
                License and Services Agreement, dated November 2, 2006, between Expert
                System S.p.A. and InfoByPhone, Inc.
            
            Exhibit
                10.1 to Current Report on Form 8-K, as filed on November 8,
                2006.10.15
            
            Service
                Agreement, dated January 10, 2007, by and between Material Events
                LLC and
                the Company.
            
            Exhibit
                10.1 to the Quarterly Report on Form 10-QSB/A for the quarter ended
                March
                31, 2007 as filed on May 15, 2007.10.16
            
            Consulting
                Agreement, dated January 29, 2007, by and between the Company and
                Dennis
                Bergquist.
            
            Exhibit
                10.1 to the Current Report on Form 8-K as filed on February 2,
                2007.10.17
            
            Agreement,
                made May 25, 2007, by and between the Company and Wikimedia Foundation,
                Inc.
            
            Exhibit
                10.1 to the Quarterly Report on Form 10-QSB/A for the quarter ended
                June
                30, 2007 as filed on August 15, 2007.10.18
            
            Agreement
                of Investor Representative effective October 8, 2007.
            
            Exhibit
                10.1 to the Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2007 as filed on November 16, 2007.10.19
            
            Common
                Stock Purchase Warrant to purchase 100,000 shares of common stock
                issued
                to Michael Brown, dated July 31, 2007.
            
            Exhibit
                10.3 to the Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2007 as filed on November 16,
                2007.


61





10.20
            
            Common
                Stock Purchase Warrant to purchase 50,000 shares of common stock
                issued to
                Phillips Nizer LLP, dated September 11, 2007.
            
            Exhibit
                10.4 to the Quarterly Report on Form 10-QSB for the quarter ended
                September 30, 2007 as filed on November 16, 2007.10.21
            
            Services
                Agreement, dated October 18, 2007, by and between Ask Frank Limited
                and
                the Company.
            
            Filed
                herewith.10.22
            
            Financial
                Consulting Agreement, made as of January 9, 2008, by and between
                the
                Company and Blue Sky Consultants, Ltd.
            
            Filed
                herewith.10.23
            
            Wireless
                Content Distribution Agreement, dated February 4, 2008, by and between
                InfoByPhone, Inc. and Bell Mobility, Inc.
            
            Filed
                herewith.10.24+
            
            2006
                Employee Stock Incentive Plan, as amended.
            
            Appendix
                E to Definitive Proxy Statement, as filed on July 6,
                2007.10.25+
            
            2005Management
                and Director Equity Incentive and Compensation Plan.
            
            Filed
                herewith.21
            
            Subsidiaries.
            
            Filed
                herewith.31.1
            
            Certificate
                of Chief Executive Officer and Principal Financial Officer pursuant
                to
                Section 302 of the Sarbanes-Oxley Act of 2002.
            
            Filed
                herewith.32.1
            
            Certificate
                of the Chief Executive Officer and Principal Financial Officer pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002.
            
            Filed
                herewith.




*
      Confidential treatment has been requested for certain portions of this document.


+
      Denotes
      management contract or compensatory plan, contract or arrangement.




**ITEM
      14.**  **Principal
      Accountant Fees and Services**




Webb
      & Company, P.A. was the Company's independent auditor and examined the
      financial statements of the Company for the fiscal years ending December 31,
      2007 and 2006.


62




**Audit
      Fees**




The
      aggregate fees billed by Webb & Company for professional services rendered
      for the audit of the Company's annual financial statements and review of the
      financial statements included in the Company’s quarterly reports or services
      that are normally provided by the firm in connection with statutory and
      regulatory filings or engagements during fiscal 2007 and 2006 were $48,694
      and
      $60,712, respectively.




**Audit
      Related Fees**




No
      fees
      were billed by Webb & Company for either of the fiscal years ended December
      31, 2007 or 2006 for assurance and related services reasonably related to the
      performance of the audit or review of the Company's financial statements.




**Tax
      Fees**




No
      fees
      were billed by Webb & Company for professional services rendered for tax
      compliance, tax advice and tax planning during the fiscal years ended December
      31, 2007 and 2006.




**All
      Other Fees**




No
      fees
      were billed by Webb & Company for products or services during the fiscal
      years ended December 31, 2007 and 2006 other than as disclosed above.




**Pre-Approval
      Policies**




It
      is the
      policy of the Audit Committee to pre-approve the audit and permissible non-audit
      services performed by the Company’s registered independent public accountants in
      order to ensure that the provision of such services does not impair the firm’s
      independence, in appearance or fact. In fiscal 2007, the Audit Committee did
      not
      pre-approve any audit of permissible non-audit services due to an administrative
      oversight; the Audit Committee intends to properly approve all such services
      in
      the future.


63


**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.




AskMeNow,
                Inc.By:
            /s/
                Darryl Cohen
            
            April 15, 2008Darryl
                  Cohen, Chief Executive Officer, Chairman of the Board and
                  Director(Principal
                  Executive Officer and Principal Financial
                  Officer)





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant and in the capacities and on
      the
      dates indicated.





By:
            /s/
                Darryl Cohen
            
            April 15, 2008Darryl
                  Cohen, Chief Executive Officer, Chairman of the Board and
                  Director(Principal
                Executive Officer and Principal Financial)By:
            /s/
                Sandro Sordi
            
            April 15, 2008Sandro
                Sordi, Director




64







REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors of:


AskMeNow,
      Inc. and Subsidiaries





We
      have
      audited the accompanying consolidated balance sheets of AskMeNow, Inc. and
      subsidiaries (formerly Ocean West Holding Corporation and subsidiaries) as
      of
      December 31, 2007 and December 31, 2006, and the related consolidated statements
      of operations, changes in stockholders’ equity and cash flows for the years
      ended December 31, 2007 and 2006. These consolidated financial statements are
      the responsibility of the Company’s management. Our responsibility is to express
      an opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of AskMeNow, Inc. and
      subsidiaries as of December 31, 2007 and 2006 and the consolidated results
      of
      its operations and its cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United States of
      America.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company has a net loss of $20,435,664,
      a
      working capital deficiency of $5,060,396, net cash used in operations of
      $3,955,725 as of December 31, 2007, and was in default on $3,000,000 in
      notes payable. These factors raise substantial doubt about the Company’s ability
      to continue as a going concern. Management’s plans concerning these matters are
      also described in Note 1. The financial statements do not include any
      adjustments that might result from the outcome of this uncertainty.







WEBB
      & COMPANY, P.A.








Boynton
      Beach, Florida


April
      14,
      2008




F-1




**PART
      I. - FINANCIAL INFORMATION**


*Item
          1. Financial*
  **ASKMENOW,
                  INC. AND SUBSIDIARIES****Condensed
                  Consolidated Balance Sheets**
  **December
                  31,****2007**
              
              **2006****ASSETS****CURRENT
                  ASSETS**Cash
              
              $
              -
              
              $
              61,279Accounts
                  receivable, net
              
              
              16,314
              
              
              13,860Prepaid
                  expenses and other current assets
              
              
              448,484
              
              
              79,151Total
                  Currents Assets
              
              
              464,798
              
              
              154,290Property
                  and Equipment, net
              
              
              129,994
              
              
              188,974**OTHER
                  ASSETS**License,
                  net of $150,000 provision at December 31, 2007
              
              
              -
              
              
              150,000Other
                  assets
              
              
              50,318
              
              
              47,496**TOTAL
                  ASSETS**
              
              $
              645,110
              
              $
              540,760**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT****CURRENT
                  LIABILITIES**Bank
                  overdraft
              
              $
              1,873
              
              $
              -Accounts
                  payable
              
              
              1,340,074
              
              
              1,099,937Accrued
                  expenses
              
              
              933,247
              
              
              326,797Deferred
                  revenue
              
              
              20,000
              
              
              -Notes
                  payable
              
              
              3,130,000
              
              
              -Notes
                  payable - related party
              
              
              100,000
              
              
              102,624Deferred
                  Tax Liability
              
              
              14,673
              
              
              16,786Total
                  Current Liabilities
              
              
              5,539,867
              
              
              1,546,144**STOCKHOLDERS'
                  EQUITY (DEFICIT)**Preferred
                  stock, $0.01 par value, 10,000,000 shares authorized at December
                  31,
                  2007and
                  December 31, 2006Series
                  A Preferred Stock, $0.01 par value, 1,500,000 shares
                  authorized,$10
                  face value, 22,458 and 362,500 shares issued and
                  outstanding
              
              
              200,000
              
              
              3,625,000at
                  December 31, 2007 and 2006, respectivelySeries
                  B Preferred Stock, $0.01 par value, 1,600,000 shares
                  authorized,$10
                  face value, 295,933 and 235,500 shares issued and
                  outstanding
              
              
              2,289,261
              
              
              2,355,000at
                  December 31, 2007 and 2006, respectivelySeries
                  C Preferred Stock, $0.01 par value, 400,000 shares
                  authorized,zero
                  and 400,000 shares issued and outstanding
              
              
              -
              
              
              4,000at
                  December 31, 2007 and 2006, respectivelyCommon
                  stock, $0.01 par value, 300,000,000 shares authorized, 42,134,887
                  and
                  28,994,887shares
                  issued and outstanding at December 31, 2007 and 2006,
                  respectively
              
              
              421,350
              
              
              289,950Additional
                  paid-in-capital
              
              
              34,808,728
              
              
              14,907,308Foreign
                  currency translation
              
              
              10,135
              
              
              1,925Accumulated
                  deficit
              
              
              (42,624,231
              )
              
              (22,188,567
              )Total
                  Stockholders' Equity (Deficit)
              
              
              (4,894,757
              )
              
              (1,005,384
              )**TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIT**
              
              $
              645,110
              
              $
              540,760
  The
          accompanying notes are an integral part of these consolidated financial
          statements.
  F-2
  **ASKMENOW,
                      INC. AND SUBSIDIARIES****Condensed
                      Consolidated Statements of Operations**
  **Year
                      Ended December 31,****2007**
                  
                  **2006****REVENUE**Revenue
                      from mobile services
                  
                  $
                  54,536
                  
                  $
                  27,84654,536
                  
                  
                  27,846**COSTS
                      AND OPERATING EXPENSES**Cost
                      of revenue
                  
                  
                  1,154,945
                  
                  
                  1,679,307Research
                      and development
                  
                  
                  72,693
                  
                  
                  222,005General
                      and administrative
                  
                  
                  2,193,107
                  
                  
                  2,906,843Professional
                      fees
                  
                  
                  1,467,418
                  
                  
                  2,622,590Salaries
                      and compensation
                  
                  
                  4,595,005
                  
                  
                  3,947,217Total
                      Operating Expenses
                  
                  
                  9,483,168
                  
                  
                  11,377,962Net
                      Loss from Operations
                  
                  
                  (9,428,632
                  )
                  
                  (11,350,116
                  )**OTHER
                      INCOME (EXPENSE)**Financing
                      costs
                  
                  
                  (5,017,598
                  )
                  
                  -Derivative
                      expense
                  
                  
                  -
                  
                  
                  (1,004,571
                  )Interest
                      expense
                  
                  
                  (5,989,434
                  )
                  
                  (206,483
                  )Total
                      other expense
                  
                  
                  (11,007,032
                  )
                  
                  (1,211,054
                  )Net
                      loss before income taxes
                  
                  
                  (20,435,664
                  )
                  
                  (12,561,170
                  )Income
                      taxes
                  
                  
                  -
                  
                  
                  (12,832
                  )Net
                      loss
                  
                  
                  (20,435,664
                  )
                  
                  (12,574,002
                  )Preferred
                      stock dividends
                  
                  
                  (525,895
                  )
                  
                  (322,314
                  )Net
                      loss applicable to common shareholders
                  
                  
                  (20,961,559
                  )
                  
                  (12,896,316
                  )Basis
                      and diluted net loss per common share
                  
                  $
                  (0.58
                  )
                  $
                  (0.47
                  )Basic
                      and diluted weighted average number ofcommon
                      shares outstanding
                  
                  
                  36,180,380
                  
                  
                  27,228,935
  The
            accompanying notes are an integral part of these consolidated financial
            statements.
 F-3
 **ASKMENOW,
                      INC. AND SUBSIDIARIES****Condensed
                      Consolidated Statements of Cash Flows**
  **Year
                      Ended December 31,****2007**
                  
                  **2006****OPERATING
                      ACTIVITIES**Net
                      loss from continuing operations
                  
                  $
                  (20,435,664
                  )
                  $
                  (12,574,002
                  ).Adjustments
                      to reconcile net loss to net cash used inoperating
                      activities:Depreciation
                      and
                      amortization
                  
                  
                  88,771
                  
                  
                  76,539Amortization
                      of deferred compensation
                  
                  
                  -
                  
                  
                  235,473Amortization
                      of note payable discount
                  
                  
                  3,130,000
                  
                  
                  68,400Amortization
                      of debt offering costs
                  
                  
                  2,202,972
                  
                  
                  -Subscription
                      receivable
                  
                  
                  1,400
                  
                  
                  6,488Impairment
                      of license fee
                  
                  
                  150,000
                  
                  
                  -Increase
                      in fair value derivative liability
                  
                  
                  -
                  
                  
                  1,004,571Stock,
                      warrants and options issued for services
                  
                  
                  4,629,504
                  
                  
                  4,521,800Stock
                      issued to officer for services
                  
                  
                  -
                  
                  
                  208,000Warrants
                      issued for financing fees
                  
                  
                  337,465
                  
                  
                  108,622Warrants
                      issued for preferred shareholder's wavier
                  
                  
                  5,017,598
                  
                  
                  -Changes
                      in assets and liabilitiesAccounts
                      receivable
                  
                  
                  (2,454
                  )
                  
                  (13,860
                  )Prepaid
                      expenses
                  
                  
                  49,809
                  
                  
                  (31,560
                  )Deposits
                  
                  
                  10,400
                  
                  
                  (13,596
                  )Accounts
                      payable
                  
                  
                  240,137
                  
                  
                  902,569Accrued
                      expenses
                  
                  
                  606,450
                  
                  
                  242,719Deferred
                      revenue
                  
                  
                  20,000
                  
                  
                  -Deferred
                      taxes
                  
                  
                  (2,113
                  )
                  
                  16,787Net
                      Cash Used In Operating Activities
                  
                  
                  (3,955,725
                  )
                  
                  (5,241,050
                  )**INVESTING
                      ACTIVITIES**Purchase
                      of intangibles
                  
                  
                  (10,000
                  )
                  
                  (150,000
                  )Purchase
                      of equipment
                  
                  
                  (29,013
                  )
                  
                  (20,036
                  )Net
                      Cash Used In Investing Activities
                  
                  
                  (39,013
                  )
                  
                  (170,036
                  )**FINANCING
                      ACTIVITIES**Cash
                      overdraft
                  
                  
                  1,873
                  
                  
                  -Proceeds
                      from notes payable
                  
                  
                  3,300,000
                  
                  
                  721,500Proceeds
                      from notes payable - related party
                  
                  
                  -
                  
                  
                  205,000Net
                      proceeds from issuance of common stock
                  
                  
                  -
                  
                  
                  -Net
                      proceeds from issuance of preferred stock
                  
                  
                  626,000
                  
                  
                  5,209,796Repayment
                      of notes payable
                  
                  
                  (2,624
                  )
                  
                  (823,876
                  )Net
                      Cash Provided By Financing Activities
                  
                  
                  3,925,249
                  
                  
                  5,312,420**EXCHANGE
                      RATE GAIN**
                  
                  
                  8,210
                  
                  
                  323**NET
                      DECREASE IN CASH AND CASH EQUIVALENTS**
                  
                  
                  (61,279
                  )
                  
                  (98,343
                  )**CASH
                      AND CASH EQUIVALENTS, BEGINNING OF PERIOD**
                  
                  
                  61,279
                  
                  
                  159,622**CASH
                      AND CASH EQUIVALENTS, END OF PERIOD**
                  
                  $
                  -
                  
                  $
                  61,279**SUPPLEMENTAL
                      DISCLOSURES OF CASH FLOWS INFORMATION:****CASH
                      PAID DURING THE PERIOD FOR:**Interest
                  
                  $
                  243
                  
                  $
                  84,246**NON-CASH
                      TRANSACTIONS DURING THE PERIOD FOR:**Financing
                      costs
                  
                  $
                  8,267,246
                  
                  $
                  692,375Reclassification
                      of contracts from equity to liability
                  
                  $
                  -
                  
                  $
                  2,581,817
 The
            accompanying notes are an integral part of these consolidated financial
            statements.
  F-4
  **ASKMENOW,
                    INC. AND SUBSIDIARIES****Condensed
                    Consolidated Statement of Changes in Stockholders'
                    Deficit**
  Additional
                
                
                
                OtherPreferred
                    Stock
                
                Common
                    Stock
                
                Paid-in
                
                Deferred
                
                Comprehensive
                
                AccumulatedShares
                
                Amount
                
                Shares
                
                Amount
                
                Capitial
                
                Compensation
                
                Income
                
                Deficit
                
                TotalJanuary
                    1, 2006
                
                
                -
                
                $
                -
                
                
                25,966,612
                
                $
                259,667
                
                $
                9,793,915
                
                $
                (235,473
                )
                $
                1,602
                
                $
                (9,614,565
                )
                $
                205,146Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (12,574,002
                )
                
                (12,574,002
                )Other
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                323
                
                
                
                
                
                323Total
                    comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (12,573,679
                )Amortization
                    of warrants
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                235,473
                
                
                
                
                
                
                
                
                235,4732005
                    equity incentive stock option plan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,902,440
                
                
                
                
                
                
                
                
                
                
                
                1,902,4402006
                    employee stock incentive plan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                551,083
                
                
                
                
                
                
                
                
                
                
                
                551,083Series
                    A preferred stock issued
                
                
                362,500
                
                
                3,625,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,625,000Series
                    B preferred stock issued for cash
                
                
                235,500
                
                
                2,355,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,355,000Series
                    C preferred stock issued for services
                
                
                400,000
                
                
                4,000
                
                
                
                
                
                
                
                
                1,196,000
                
                
                
                
                
                
                
                
                
                
                
                1,200,000Shares
                    issued for services
                
                
                
                
                
                
                
                
                297,900
                
                
                2,979
                
                
                185,296
                
                
                
                
                
                
                
                
                
                
                
                188,275Shares
                    issued to officer for services
                
                
                
                
                
                
                
                
                200,000
                
                
                2,000
                
                
                206,000
                
                
                
                
                
                
                
                
                
                
                
                208,000Shares
                    issued to placement agent for fees
                
                
                
                
                
                
                
                
                1,060,000
                
                
                10,600
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,600Shares
                    issued for financial advisory fees
                
                
                
                
                
                
                
                
                1,000,000
                
                
                10,000
                
                
                290,000
                
                
                
                
                
                
                
                
                
                
                
                300,000Shares
                    issued to common holders for lockup
                
                
                
                
                
                
                
                
                470,375
                
                
                4,704
                
                
                366,892
                
                
                
                
                
                
                
                
                
                
                
                371,596Placement
                    agent fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (770,204
                )
                
                
                
                
                
                
                
                
                
                
                (770,204
                )Fair
                    market derivative liability adjustment
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,004,571
                
                
                
                
                
                
                
                
                
                
                
                1,004,571Placement
                    agent shares value correction
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (54,112
                )
                
                
                
                
                
                
                
                
                
                
                (54,112
                )Warrants
                    issued for financing fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                108,622
                
                
                
                
                
                
                
                
                
                
                
                108,622Warrants
                    issued for consulting fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                126,805
                
                
                
                
                
                
                
                
                
                
                
                126,805December
                    31, 2006
                
                
                998,000
                
                $
                5,984,000
                
                
                28,994,887
                
                $
                289,950
                
                $
                14,907,308
                
                $
                -
                
                $
                1,925
                
                $
                (22,188,567
                )
                $
                (1,005,384
                )Net
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (20,435,664
                )
                
                (20,435,664
                )Other
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                8,210
                
                
                
                
                
                8,210Total
                    comprehensive loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (20,427,454
                )Non-qualified
                    stock options issued
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,680,838
                
                
                
                
                
                
                
                
                
                
                
                3,680,8382005
                    equity incentive stock option plan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                24,410
                
                
                
                
                
                
                
                
                
                
                
                24,4102006
                    employee stock incentive plan
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                376,103
                
                
                
                
                
                
                
                
                
                
                
                376,103Conversion
                    of Series C preferred to common
                
                
                (400,000
                )
                
                (4,000
                )
                
                4,000,000
                
                
                40,000
                
                
                (36,000
                )
                
                
                
                
                
                
                
                
                
                
                -Series
                    B preferred stock issued for cash
                
                
                72,500
                
                
                725,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                725,000Series
                    A & B preferred stock dividend declaration
                
                
                69,465
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                -Conversion
                    of Series B preferred to common
                
                
                (415,250
                )
                
                (4,152,500
                )
                
                8,305,000
                
                
                83,050
                
                
                4,069,450
                
                
                
                
                
                
                
                
                
                
                
                -Series
                    A & B preferred stock dividend abandonment
                
                
                (6,324
                )
                
                (63,239
                )
                
                
                
                
                
                
                
                63,239
                
                
                
                
                
                
                
                
                
                
                
                -Shares
                    issued for services
                
                
                
                
                
                
                
                
                695,000
                
                
                6,950
                
                
                461,450
                
                
                
                
                
                
                
                
                
                
                
                468,400Shares
                    issued to placement agent for fees
                
                
                
                
                
                
                
                
                140,000
                
                
                1,400
                
                
                (1,400
                )
                
                
                
                
                
                
                
                
                
                
                -Warrants
                    issued to placement agent for fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,202,972
                
                
                
                
                
                
                
                
                
                
                
                2,202,972Warrants
                    issued for services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                502,895
                
                
                
                
                
                
                
                
                
                
                
                502,895Placement
                    agent fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (99,000
                )
                
                
                
                
                
                
                
                
                
                
                (99,000
                )Warrants
                    issued to related party note holder for note extension
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                337,465
                
                
                
                
                
                
                
                
                
                
                
                337,465Placement
                    agent shares value correction
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,400
                
                
                
                
                
                
                
                
                
                
                
                1,400Amortization
                    of debt discount on Bridge notes payable
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                3,300,000
                
                
                
                
                
                
                
                
                
                
                
                3,300,000Warrants
                    issued to Series A & B preferredholders
                    for a wavier related to financings
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,017,598
                
                
                
                
                
                
                
                
                
                
                
                5,017,598December
                    31, 2007
                
                
                318,391
                
                $
                2,489,261
                
                
                42,134,887
                
                $
                421,350
                
                $
                34,808,728
                
                $
                -
                
                $
                10,135
                
                $
                (42,624,231
                )
                $
                (4,894,757
                )
 The
          accompanying notes are an integral part of these consolidated financial
          statements.
  F-5




ASKMENOW,
      INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS





**NOTE
      1. ORGANIZATION AND BASIS OF PRESENTATION**





*(A)
      Basis of Presentation and Organization*





AskMeNow,
      Inc., formerly Ocean West Holding Corporation (the “Company”), was incorporated
      in Delaware in August 2000, and is a holding company and the parent company
      of
      InfoByPhone, Inc. (“InfoByPhone”). InfoByPhone provides information services and
      content through its AskMeNowTM service to mobile devices. This service allows
      mobile users to ask questions and receive answers through text messaging/SMS
      and
      email. InfoByPhone was formed as a Delaware corporation in June 2004 and was
      acquired by the Company pursuant to the reverse merger transaction discussed
      below. The Company also has a foreign wholly-owned subsidiary, AskMeNow, Inc.,
      a
      Philippines corporation formed in August 2005.





On
      June
      6, 2005, pursuant to a Securities Exchange Agreement and Plan of Reorganization,
      dated as of April 14, 2005, by and among the Company, InfoByPhone and the
      shareholders of InfoByPhone (the “Exchange Agreement”), the Company acquired
      InfoByPhone in a reverse merger (the “Reverse Merger”), pursuant to which
      InfoByPhone became a wholly-owned subsidiary of the Company. In connection
      with
      the Reverse Merger, the Company acquired all of the issued and outstanding
      shares of common stock of InfoByPhone and issued an aggregate 5,586,004 shares
      of authorized but unissued shares of common stock, par value $0.01, of the
      Company that, together with 500,000 shares issued to Vertical Capital Partners,
      Inc. (n/k/a Arjent Ltd.) as a finder’s fee, constituted approximately 56% of the
      then-outstanding capital stock of the Company. The transaction was treated
      for
      accounting purposes as a recapitalization by the accounting acquirer,
      InfoByPhone, Inc.





The
      Company has incurred significant operating losses since its inception. As
      reflected in the accompanying financial statements, the Company had a net loss
      of $20,435,664, a working capital deficiency of $5,060,396, and net cash used
      in
      operations of $3,955,725 as of December 31, 2007 and was in default on
      $3,000,000 in notes payable. Management expects that significant on-going
      operating expenditures will be necessary to successfully implement the Company’s
      business plan and develop and market its products and services; the Company
      estimates that it may require up to $200,000 per month through 2008 to market
      such products and services. These circumstances raise substantial doubt about
      the Company’s ability to continue as a going concern. Implementation of the
      Company’s plans and its ability to continue as a going concern depend upon the
      Company securing substantial additional financing. Management’s plans include
      efforts to obtain additional capital, although no assurances can be given about
      the Company’s ability to obtain such capital. If the Company is unable to obtain
      adequate additional financing or generate profitable sales revenues, it may
      be
      unable to continue product development and other activities and may be forced
      to
      cease operations.





During
      2007, the Company received net proceeds of $626,000 through the private sale
      of
      unregistered, convertible preferred stock. In addition, the Company raised
      $3,300,000 through the issuance of notes payable to investors, $3,000,000 of
      which is currently due and payable. Due to the Company’s current cash position,
      the Company is unable to pay any of the principal or accrued and unpaid interest
      on such notes and is in default pursuant to the terms of such notes. Management
      continues its effort to secure additional funding. The Company’s continued
      existence is dependent upon its ability to raise capital and to successfully
      market and sell its products. The consolidated financial statements presented
      herein do not include any adjustments that might result from the outcome of
      this
      uncertainty.




F-6




**NOTE
      2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





*(A)
      Principles of Consolidation*





The
      consolidated financial statements for the years ended December 31, 2007 and
      2006
      include the Company and its wholly-owned subsidiaries InfoByPhone, Inc. and
      AskMeNow, Inc., a Philippines corporation. All significant inter-company
      accounts and transactions have been eliminated in consolidation.





*(B)
      Revenue Recognition*





The
      Company currently provides two platforms for asking questions: SMS/text
      messaging and through a downloaded application. Users are charged on a monthly
      or per question basis but are not charged for the downloaded application. The
      Company recognizes revenue for all submitted questions at the time of the
      inquiry, regardless of the method used to submit the question. For advertising
      space sold, the Company will recognize revenue over the period the advertisement
      is displayed. The Company recognizes revenue when persuasive evidence of an
      arrangement exists, delivery has occurred, the sales price is fixed or
      determinable, and collectibility is probable.




**** *(C)
      Cash and Cash Equivalents*





The
      Company considers all highly liquid temporary cash investments with an original
      maturity of three months or less to be cash equivalents. As of December 31,
      2007
      and 2006, there were no cash equivalents.





*(D)
      Fair Value of Financial Instruments*





The
      carrying amounts of the Company’s financial instruments, which include accounts
      receivable, accounts payable and loans payable, approximate fair value due
      to
      the relatively short period to maturity for these instruments.





*(E)
      Concentrations of Risk*





During
      fiscal 2005, the Company formed its AskMeNow, Inc. subsidiary in the
      Philippines. As of December 31, 2007 and 2006, 16% and 39% of the Company’s
      assets were located in the Philippines, respectively.





*(F)
      Concentration of Credit Risk*





The
      Company at times has cash in banks in excess of FDIC insurance limits. At
      December 31, 2007 and 2006, the Company had no amounts in excess of FDIC
      insurance limits. At December 31, 2007 and 2006, the Company had total cash
      of
      $2,662 and $18,262, respectively, in banks located in the
      Philippines.





During
      2007 and 2006, one customer accounted for 63% and 49%, respectively, of the
      Company’s sales.




F-7




*(G)
      Use of Accounting Estimates*





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





*(H)
      Property and Equipment*





Property
      and equipment are stated at cost, less accumulated depreciation. Depreciation
      is
      provided using the straight-line method over the estimated useful lives of
      the
      individual assets. The estimated useful life of computer equipment is five
      years, the estimated useful life of office furniture is seven years and the
      estimated useful life of leasehold improvements is the term of the lease or
      the
      useful life of the improvement, whichever is shorter.





*(I)
      Advertising Costs*





Advertising
      costs are expensed as incurred. Total advertising costs charged to operations
      for the years ended December 31, 2007 and 2006 were $3,700 and $42,700,
      respectively.





*(J)
      Income Taxes*





The
      Company accounts for income taxes under SFAS No. 109, “Accounting for Income
      Taxes”. Under SFAS No. 109, deferred tax assets and liabilities are recognized
      for the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities and
      their respective tax bases. Deferred tax assets and liabilities are measured
      using enacted tax rates expected to apply to taxable income in the years in
      which those temporary differences are expected to be recovered or settled.
      Under
      SFAS No. 109, the effect on deferred tax assets and liabilities of a change
      in
      tax rates is recognized in income in the period that includes the enactment
      date.





*(K)
      Other Comprehensive Income*





The
      Company uses SFAS No. 130, “Reporting Comprehensive Income”, which establishes
      standards for the reporting and display of comprehensive income, its components
      and accumulated balances. The Company is disclosing this information in its
      consolidated statements of changes in stockholders’ equity (deficit).
      Comprehensive income is comprised of a gain on foreign currency translation
      of
      the Company’s Philippines subsidiary.




F-8




*(L)
      Foreign Currency Translation*





The
      functional currency of the Company is the United States Dollar. The financial
      statements of the Company’s Philippines subsidiary are translated to U.S.
      dollars using the period exchange rates as to assets and liabilities and average
      exchange rates as to revenues and expenses. Capital accounts are translated
      at
      their historical exchange rates when the capital transaction occurs. Net gains
      and losses resulting from foreign exchange translations are included in the
      statements of operations and changes in stockholders’ equity (deficit) as other
      comprehensive income (loss). As of December 31, 2007 and 2006, the translation
      adjustments were $10,135 and $1,925, respectively.





*(M)
      Loss Per Share*





The
      Company applies SFAS No. 128, “Earnings per Share” in calculating basic and
      diluted loss per share. Basic loss per common share is computed by dividing
      the
      net loss available to common shareholders by the weighted average number of
      common shares outstanding during the period. In computing diluted loss per
      share, stock options and similar instruments that are dilutive are included
      in
      the calculation. Stock options and warrants were not included in the computation
      of diluted loss per share for the periods presented because their inclusion
      is
      anti-dilutive. The total potential dilutive number of common shares issuable
      upon conversion or exercise of outstanding convertible preferred stock, warrants
      and stock options at December 31, 2007 and 2006 was  61,562,788  and
      35,229,013 shares, respectively.





*(N)
      Business Segments*





The
      Company operates in one segment, mobile devices.





*(O)
      Stock-Based Compensation*





Effective
      January 1, 2006, the Company adopted the provisions of SFAS No. 123 (revised),
      “Share-Based Payment”, which replaces SFAS No. 123, “Accounting for Stock-Based
      Compensation”, and supersedes APB Opinion No. 25, “Accounting for Stock Issued
      to Employees”, and related interpretations. SFAS No. 123(R) requires
      compensation costs related to share-based payment transactions, including
      employee stock options, to be recognized in the financial statements. In
      addition, the Company adheres to the guidance set forth within SEC Staff
      Accounting Bulletin No. 107, which provides the views of the staff of the SEC
      regarding the interaction between SFAS No. 123(R) and certain SEC rules and
      regulations and provides interpretations with respect to the valuation of
      share-based payments for public companies.




In
      adopting SFAS No. 123(R), the Company applied the modified prospective approach
      to transition. Under the modified prospective approach, the provisions of SFAS
      No. 123(R) are applied to new awards and to awards modified, repurchased, or
      cancelled after the effective date. Additionally, compensation cost for the
      portion of awards for which the requisite service has not been rendered that
      are
      outstanding as of the effective date are recognized as the requisite service
      is
      rendered on or after such effective date. The compensation costs for that
      portion of awards are based on the grant-date fair value of those awards as
      calculated for either recognition or pro-forma disclosures under SFAS No. 123.




Equity
      instruments ("instruments") issued to other than employees are recorded on
      the
      basis of the fair value of the instruments, as required by SFAS No. 123(R).
      EITF
      Issue 96-18, "*Accounting for Equity Instruments That Are Issued to Other
      Than Employees for Acquiring, or in Conjunction with Selling, Goods or
      Services.*" defines the measurement date and recognition period for such
      instruments. In general, the measurement date is when either a (a) performance
      commitment, as defined, is reached or (b) earlier of (i) the non-employee
      performance is complete or (ii) the instruments are vested. The measured value
      related to the instruments is recognized over a period based on the facts and
      circumstances of each particular grant as defined in the EITF.




F-9




*(P)
      Research and Development*





Research
      and development expenses include payroll, employee benefits and costs associated
      with product development. The Company has determined that technological
      feasibility for its software products is reached shortly before the products
      are
      released. Costs incurred after technological feasibility is established are
      not
      material and, accordingly, all research and development costs are expensed
      when
      incurred.





*(Q)
      Derivative Liabilities*





The
      Company accounts for its embedded conversion features and freestanding warrants
      pursuant to SFAS No. 133, “Accounting for Derivative Instruments and Hedging
      Activities”, which requires a periodic valuation of the fair value of derivative
      instruments and a corresponding recognition of liabilities associated with
      such
      derivatives. The recognition of derivative liabilities related to the issuance
      of shares of common stock is applied first to the proceeds of such issuance,
      at
      the date of issuance, and the excess of derivative liabilities over the proceeds
      is recognized as other expense in the accompanying consolidated financial
      statements. The recognition of derivative liabilities related to the issuance
      of
      convertible debt is applied first to the proceeds of such issuance as a debt
      discount, at the date of issuance, and the excess of derivative liabilities
      over
      the proceeds is recognized as other expense in the accompanying consolidated
      financial statements. Any subsequent increase or decrease in the fair value
      of
      the derivative liabilities is recognized as other expense or other income,
      as
      applicable. The reclassification of a contract is reassessed at each balance
      sheet date. If a contract is reclassified from permanent equity to an asset
      or a
      liability, the change in the fair value of the contract during the period the
      contract was classified as equity is accounted for as an adjustment to equity.
      If a contract is reclassified from an asset or liability to equity, gains or
      losses recorded to account for the contract at fair value during the period
      that
      such contract was classified as an asset or a liability are not reversed but
      instead are accounted for as an adjustment to equity.





*(R)
      Recent Accounting Pronouncements*





In
      September 2006, the FASB issued SFAS No. 157, “ Fair
      Value Measurements ”.
      The
      objective of SFAS No. 157 is to increase consistency and comparability in fair
      value measurements and to expand disclosures about fair value measurements.
      SFAS
      No. 157 defines fair value, establishes a framework for measuring fair value
      in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS No. 157 applies under other accounting pronouncements
      that require or permit fair value measurements and does not require any new
      fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement is not expected to have a material effect on the
      Company's future reported financial position or results of
      operations.




F-10




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of FASB
      Statement No. 115”. This statement permits entities to choose to measure many
      financial instruments and certain other items at fair value. Most of the
      provisions of SFAS No. 159 apply only to entities that elect the fair value
      option. However, the amendment to SFAS No. 115, “Accounting for Certain
      Investments in Debt and Equity Securities” applies to all entities with
      available-for-sale and trading securities. SFAS No. 159 is effective as of
      the
      beginning of an entity’s first fiscal year that begins after November 15, 2007.
      The adoption of this statement is not expected to have a material effect on
      the
      Company's financial statements.





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - an amendment of ARB No. 51”. This statement
      improves the relevance, comparability, and transparency of the financial
      information that a reporting entity provides in its consolidated financial
      statements by establishing accounting and reporting standards that require;
      the
      ownership interests in subsidiaries held by parties other than the parent and
      the amount of consolidated net income attributable to the parent and to the
      noncontrolling interest be clearly identified and presented on the face of the
      consolidated statement of income, changes in a parent’s ownership interest while
      the parent retains its controlling financial interest in its subsidiary be
      accounted for consistently, when a subsidiary is deconsolidated, any retained
      noncontrolling equity investment in the former subsidiary be initially measured
      at fair value, entities provide sufficient disclosures that clearly identify
      and
      distinguish between the interests of the parent and the interests of the
      noncontrolling owners. SFAS No. 160 affects those entities that have an
      outstanding noncontrolling interest in one or more subsidiaries or that
      deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and
      interim periods within those fiscal years, beginning on or after December 15,
      2008. Early adoption is prohibited. The adoption of this statement is not
      expected to have a material effect on the Company's financial statements.




F-11


**NOTE
      3. PROPERTY AND EQUIPMENT**





Property
      and equipment consist of the following at December 31:




December
                31,
              2007
            
            December
                31,
              2006Computer
                equipment
            
            $
            171,809
            
            $
            157,343Office
                furniture and equipment
            
            
            96,705
            
            
            87,224Leasehold
                improvements
            
            
            10,423
            
            
            26,184Less
                accumulated depreciation
            
            
            (148,943
            )
            
            (81,777
            )$
            129,994
            
            $
            188,974




Depreciation
      expense for the years ended December 31, 2007 and 2006 was $87,993 and $76,539,
      respectively.




**NOTE
      4. LICENSE**




On
      November 2, 2006, the Company’s subsidiary, InfoByPhone, entered into a software
      license and services agreement with Expert System S.p.A. that grants InfoByPhone
      an exclusive worldwide perpetual license (exclusive of Italy) for the mobile
      communications industry to use the Cogito® Contact Mobile Product and the Expert
      System Technology of Text Mining for structured and unstructured databases,
      natural language query and answer capability.




The
      Company had previously signed a letter of intent on August 22, 2006 with Expert
      System that summarized the scope of the proposed agreement with regard to
      license, service and payment provisions. At the signing of the letter of intent,
      the Company paid Expert System $150,000 as a start-up phase initial payment.
      Additional payments required include payment upon integration of each content
      database with a commitment of at least ten databases in the first 150 days
      after
      signing the agreement. A license fee per single computer server is due in 12
      monthly installments each commencing the month following the installation of
      the
      software. The on-going technical support commences upon integration of the
      tenth
      database and requires a per month fee for 12 months. Subsequent to completion
      of
      the 12 month start-up phase, Expert System will receive a percentage of the
      net
      revenue through the seventh anniversary date of the conclusion of the start-up
      phase. The term of the agreement starts upon the commencement date for
      installation and continues until the seventh anniversary date of the conclusion
      of the start-up phase. The database integration fees paid as of December 31,
      2007 and 2006 were $124,500 and $39,000, respectively, and the fees were
      recorded as cost of revenue expense. As of December 31, 2007, the Company has
      recorded a loss provision for the entire $150,000 payment as the installation
      of
      the first database required remained incomplete. The Company and Expert System
      are currently in discussions regarding the completion of the database
      installation and revisions to the current license agreement.




F-12




**NOTE
      5. DERIVATIVE LIABILITY**




On
      August
      10, 2006, the Company had issued 522,500 shares of common stock which caused
      an
      insufficient number of authorized shares to be available for existing contract
      commitments. Accordingly, on August 10, 2006, the Company was not able to assert
      that it had a sufficient number of authorized but unissued shares available
      to
      satisfy its obligations under outstanding options and warrant agreements.
      Therefore, the Company accounted for all of its outstanding options and warrants
      as derivative contracts and recorded a corresponding liability based on the
      fair
      value of such derivatives at the measurement dates.





On
      December 18, 2006, the Company’s Amended and Restated Certificate of
      Incorporation was filed with the Delaware Secretary of State and became
      effective, thereby increasing the number of authorized shares of common stock
      of
      the Company from 30,000,000 to 100,000,000 shares. The increase in authorized
      shares provided the Company sufficient authorized and unissued shares to settle
      any outstanding agreements for common shares. A net loss of $1,004,571 was
      recorded upon the re-calculation of the fair value of the outstanding warrants
      and embedded conversion features on December 18, 2006 when the Company was
      able
      to assert that it had adequate authorized shares. The derivative liability
      was
      zero at December 31, 2006 and December 31, 2007.




The
      Company computed the fair value of the outstanding freestanding warrants and
      embedded conversion features at their measurement date using the Black Scholes
      valuation model with the following assumptions:




At
              
              At
                  September
              
              At
                  Decemberissuance
              
              30,
                  2006
              
              18,
                  2006Market
                  price:
              
              $
              0.31
              
              $
              0.07
              
              $
              0.42Exercise
                  price:
              
              $
              0.25
                  - $2.00
              
              $
              0.25
                  - $2.00
              
              $
              0.25
                  - $2.00Term:
              
              
              1
                  - 5 years
              
              
              1
                  - 5 years
              
              
              1
                  - 5 yearsVolatility:
              
              
              219
              %
              
              219
              %
              
              229
              %Risk-free
                  interest rate:
              
              
              4.89
              %
              
              4.59
              %
              
              4.62
              %Number
                  of warrants:
              
              
              9,225,710
              
              
              9,225,710
              
              
              9,225,710


The
      Company used the following methodology to value the embedded conversion features
      and liquidated damages:





The
      aggregate fair value of the warrants and options reclassified during the
      nine-month period ended September 30, 2006 amounted to approximately $2,582,000
      at the date of their issuance or reclassification.





**NOTE
      6. PROMISSORY NOTES**





Notes
      payable at December 31, 2007 consist of the following:




December
                31,
              2007
            
            December
                31,
              2006Bridge
                I 12% senior promissory notes
            
            $
            3,000,000
            
            $
            —Bridge
                II 12% junior promissory notes, net of $170,000 discount
            
            
            130,000
            
            
            —Total
            
            $
            3,130,000
            
            $
            —





F-13





**Bridge
      I 12% Senior Promissory Notes**     ****





Beginning
      in February 2007, the Company began an offering of up to $3,000,000 in senior
      promissory notes to accredited investors (the “Bridge I” offering), which Bridge
      I offering was fully subscribed and closed on May 10, 2007. The notes bear
      interest at 12% per annum and are payable 90 days after the date of issuance
      unless extended by the Company for up to an additional 90 days. The Company
      elected to extend the maturity date for the additional 90 days in accordance
      with the extension option, and as a result the notes’ interest rate increased to
      14% per annum from original maturity until payment in full. As part of the
      Bridge I offering, the Company was obligated to issue warrants to purchase
      four
      shares of common stock for every $1.00 principal amount of notes issued. An
      aggregate 12,000,000 warrants to purchase common stock at $0.50 per share with
      a
      term of five years were issued by the Company in accordance with the fully
      subscribed $3,000,000 offering. The Company calculated a debt discount for
      the
      value of the warrants issued as part of the transaction in the amount of
      $3,000,000, which was amortized in full during 2007. The Company recorded
      additional interest expense of $3,000,000 to reflect the amortization of the
      discount during the year ended December 31, 2007.





As
      part
      of the Bridge I offering the Company offered the selling agent warrants to
      purchase 3,600,000 shares of common stock of the Company if the entire
      $3,000,000 was subscribed, or a proportionately smaller number of warrants
      if
      less money was loaned. Upon closing of the fully subscribed offering, the entire
      3,600,000 warrants to purchase common stock at $0.50 per share with a term
      of
      five years had been issued. The Company calculated a debt offering cost asset
      amount for the value of the warrants issued amounting to $2,202,972, which
      was
      fully amortized over the life of the notes at December 31, 2007.





As
      of
      December 31, 2007, all the Bridge I senior promissory notes in the aggregate
      principal amount of $3,000,000 had matured and remained unpaid by the Company.
      The Company’s failure to pay when due such notes constitutes an event of default
      under the notes and, according to the terms thereof, the Company is obligated
      to
      pay each note holder the default interest rate of two percent (2%) per month
      on
      all amounts due and owing under such notes for each month or part thereof beyond
      the extended maturity date that such amounts remain unpaid. In the event of
      a
      default, each note holder may proceed to protect such holder’s rights in equity
      or by action at law, or both, enforce payment of the notes, and/or enforce
      any
      other legal or equitable right such holder may have.





**Bridge
      II 12% Junior Convertible Promissory Notes**





Beginning
      in August 2007, the Company commenced an offering of up to $1,000,000 in junior
      convertible promissory notes to accredited investors (the “Bridge II” offering)
      on a “best-efforts”, no minimum basis. The notes bear interest at 12% per annum
      and are payable 270 days after the date of issuance unless extended by the
      Company for up to an additional 90 days. The promissory notes are convertible,
      at the option of the holder, into shares of the Company’s common stock at a per
      share price equal to $0.50 per share. Additionally, the holder has the option
      to
      convert the note balance, upon consummation by the Company of a qualified equity
      securities offering with aggregate consideration valued at $5,000,000 or more,
      into the securities purchased in such offering at a per share price equal to
      the
      per share sale price paid by the investor(s) in such offering. As of December
      31, 2007, the Company had closed the Bridge II offering and issued a total
      of
      $300,000 in Bridge II promissory notes.




F-14




As
      part
      of the Bridge II offering, the Company was obligated to issue warrants to
      purchase three shares of common stock for every $1.00 principal amount of notes
      issued. As of December 31, 2007, the Company had issued a total of 900,000
      warrants in conjunction with the $300,000 in Bridge II promissory notes issued
      during the year. The Company calculated a debt discount for the value of the
      warrants issued as part of the transaction in an amount of $300,000, which
      will
      be amortized over the life of the notes. The Company recorded additional
      interest expense of $130,000 to reflect the amortization of the discount during
      the year ended December 31, 2007.




**NOTE
      7. PROMISSORY NOTES - RELATED PARTIES**





On
      March
      1, 2006, Darryl Cohen, the Company’s Chief Executive Officer, loaned the Company
      $105,000. The bridge loan was completed on March 8, 2006 and was evidenced
      by a
      16% secured promissory note due on the earliest of the closing of a financing
      of
      $1,000,000 in debt, equity or other infusion of capital, or June 30, 2006.
      During the year ended December 31, 2006, the Company repaid principal and
      interest of $102,376 and $7,624, respectively. On May 15, 2007, the Company
      repaid the remaining outstanding principal balance of $2,624 and $243 in accrued
      interest in full.





In
      January 2006, Sandro Sordi, a director of the Company, loaned the Company
      $100,000. The loan is evidenced by a 10% subordinated promissory note due 60
      days from the date of issuance. On May 17, 2007, the Company and the note holder
      agreed to extend the due date for repayment of the principal balance and accrued
      interest due thereon until completion of the next round of equity financing.
      As
      compensation for the note payable extension, the note holder was granted four
      warrants for every $1.00 of principal and accrued interest outstanding on May
      17, 2007, which totaled $113,041. The Company issued 452,164 warrants to Mr.
      Sordi, exercisable for five years at $0.50 per share, with the same registration
      and other rights granted to the Bridge I promissory note holders.





**NOTE
      8. STOCKHOLDERS’ DEFICIT**





**** *Summary
      of Preferred Stock Terms*





The
      Company’s Second Amended and Restated Certificate of Incorporation authorizes
      the issuance of 10,000,000 shares of preferred stock, $0.01 par value. The
      Board
      of Directors has the power to designate the rights and preferences of the
      preferred stock and issue the preferred stock in one or more
      series.




F-15




*Series
      A*





On
      April
      25, 2006, the Company designated 1,500,000 shares of Series A preferred stock,
      $0.01 par value. Each share has a face value of $10.00 and a 10% dividend rate,
      or $1.00 per share, payable in-kind. The Series A preferred stock ranks senior
      to the Company’s common stock and each share has a $10 per share liquidation
      preference. The Series A preferred stock has no voting rights except as provided
      by the Delaware General Corporation Law and as set forth in the Company’s
      charter. Effective August 2, 2007, the Company declared a 10% dividend of one
      tenth of one share, or $1.00 per $10 face value per share, on each share of
      Series A preferred stock outstanding as of July 23, 2007, the record date for
      the dividend. Cumulative dividends amounted to $24,580 as of the record date
      and
      were converted into 2,458 shares of Series A preferred stock. As of December
      31,
      2007, accrued dividends from the record date to the year then-ended were $9,906.





During
      the year ended December 31, 2007, holders of an aggregate 342,500 shares of
      Series A preferred stock elected to exchange such shares for 342,500 shares
      of
      Series B preferred stock. In connection with such conversions, the Company
      issued warrants to purchase an aggregate 3,425,000 shares of common stock at
      $0.50 per share. As of December 31, 2007, there were 22,458 shares of Series
      A
      preferred stock issued and outstanding.




*Series
      B*




On
      July
      20, 2006, the Company designated 1,600,000 shares of Series B preferred stock,
      $0.01 par value. Each share has a face value of $10.00 and a 10% dividend rate,
      or $1.00 per share, payable in-kind. The Series B preferred stock ranks senior
      to the common stock and
      on
      parity with the Series A preferred stock, and each
      share has a $10 per share liquidation preference. The Series B preferred stock
      is convertible into common stock at a price of $0.50 per share and is redeemable
      by the Company as set forth in the Second Amended and Restated Certificate
      of
      Incorporation. The Series B preferred stock has no voting rights except as
      provided by the Delaware General Corporation Law and
      as
      set forth in the Company’s charter.  Effective
      August 2, 2007, the Company declared a 10% dividend of one tenth of one share,
      or $1.00 per $10 face value per share, on each share of Series B preferred
      stock
      outstanding as of July 23, 2007, the record date for the dividend. Cumulative
      dividends amounted to $670,070 as of the record date and were converted into
      67,007 shares of Series B preferred stock. As of December 31, 2007, accrued
      dividends from the record date to the year then-ended were $143,654.




During
      the year ended December 31, 2007, holders of an aggregate 421,574 shares of
      Series B preferred stock elected to convert their shares and accrued and unpaid
      dividends thereon into an aggregate 8,305,000 shares of unregistered restricted
      common stock. As
      of
      December 31,
      2007, there were 295,933 shares of Series B preferred stock issued and
      outstanding.




*Series
      C*




On
      September 7, 2006, the Company designated 400,000 shares of Series C preferred
      stock, $0.01 par value. The Series C preferred stock is not entitled to receive
      dividends, ranks senior to the common stock, and each share has a $0.01 per
      share liquidation preference. The terms of the Series C preferred stock provided
      that such shares would automatically be converted on a one-for-ten basis into
      ten shares of common stock of the Company at such time as the Company’s
      Certificate of Incorporation was amended to increase the number of authorized
      shares of common stock, which occurred on December 18, 2006. On January 10,
      2007, the Series C preferred stock was converted into 4,000,000 shares of
      unregistered, restricted common stock. As
      of
      December 31, 2007, no shares of Series C preferred stock were issued or
      outstanding.




F-16




*Preferred
      Stock Offerings*





Commencing
      April 25, 2006, the Company began an offering of Series A preferred stock in
      the
      form of a Unit, with each Unit consisting of (i) 5,000 shares of Series A
      preferred stock, and (ii) warrants to purchase 50,000 shares of the Company’s
      common stock, exercisable for a period of three years at a price of $0.50 per
      share. On July 20, 2006, a supplement to the private placement memorandum used
      in connection with the offering of such Units was approved, which supplement
      re-priced the offering and modified the preferred stock offered. All investors
      that had invested in the Series A private placement were offered an opportunity
      to exchange their shares of Series A preferred stock for shares of Series B
      preferred stock that were identical in all respects to the Series A shares
      except for the conversion price, which was reduced to $0.50 per share. In
      addition, the number of warrants issued per Unit was increased from 50,000
      to
      100,000 while the exercise price remained at $0.50 per share. **** The
      number of warrants issuable to the placement agent also increased from 1,000,000
      to 2,000,000 (or such proportionately smaller number if less than the maximum
      offering amount was raised), exercisable at $0.50 per share of common stock
      rather than $1.00 per share.





The
      Company completed the sale of an additional 14.5 Units for gross proceeds of
      $725,000 in the first quarter of 2007 until the offering was closed to new
      investment on February 28, 2007. The number of shares of Series B stock sold
      in
      the first quarter of 2007 was 72,500 shares and the Company issued 1,450,000
      warrants at an exercise price of $0.50 per share in connection with such
      issuances. The offering closed with a total of 134.1 Units of the Series A
      and B
      preferred stock issued for aggregate gross proceeds of $6,705,000 ($2,375,000
      from the sale of 237,500 shares of Series A preferred stock, and $4,330,000
      from
      the sale of 433,000 shares of Series B preferred stock). The placement agent
      in
      connection with such offering received warrants to purchase, with a cashless
      exercise feature, 1,000,000 shares of common stock of the Company, exercisable
      at $0.50 per share for a term of five years, as well as (1) an aggregate of
      $707,000 sales commissions, (2) $162,000 in non-accountable expenses, and (3)
      1,200,000 shares of common stock.




F-17




*Preferred
      Stock Waiver and Settlement*




In
      May
      2007, the Board of Directors of the Company approved an offer to holders of
      the
      Series A and Series B preferred stock in settlement of claims such holders
      may
      have had against the Company in connection with the Company’s Bridge I offering
      that closed in the second quarter of 2007. Specifically, for an 18 month period
      following completion of the preferred stock offering, the Company was prohibited
      from offering securities (including derivative securities) at less than $1.25
      per share without the consent of the investor representative appointed by the
      investors in the preferred stock offering. The Company provided participants
      in
      the Bridge I note financing with warrants to purchase shares of common stock
      at
      $0.50 per share and did not obtain the investor representative’s
      approval.




As
      consideration for the waiver of any breach and as consideration for the
      termination of the $1.25 floor going forward, and with the approval of the
      investor representative, the Board approved the issuance to holders of the
      Series A and Series B preferred stock of additional warrants to purchase two
      shares of common stock for each $1.00 in principal at $0.50 per share for a
      term
      of five years. Any such holder was entitled to receive the additional warrants
      upon such holder’s acceptance of the settlement offer and execution of a waiver
      of any breach or other claims. In the event the settlement offer was accepted
      by
      the holders of at least 50% of the then-outstanding Series A and Series B
      preferred stock, the Company would no longer be prohibited from offering
      securities (including derivative securities) at less than $1.25 per share, provided that any
      new securities were offered at a price at or above $0.50 per share.




As
      of
      September 30, 2007, holders of 5,000 shares of Series A preferred stock and
      holders of 330,500 shares of Series B preferred stock had accepted the
      settlement offer, which aggregate 335,500 shares represented 50.04% of the
      shares of preferred stock then-outstanding. Having received the required
      consent, the Company thereafter submitted the signed waiver documents to, and
      received the written consent of, the investor representative on October 8,
      2007.
      In accordance with the wavier agreement, the electing investors were issued
      a
      total of 6,710,000 warrants as consideration for their execution of the
      settlement offer and wavier. Preferred stockholders who did not execute the
      waiver were not entitled to any additional warrants, although the waiver and
      settlement is applicable to and binding on all holders of the Series A and
      Series B preferred stock.




*Issuance
      of Common Stock for Services*





2006





Between
      January and July 2006, the Company issued 87,900 shares of common stock to
      a
      professional services firm for investor relations services. The Company
      calculated a fair value of $71,875 for these shares based on the value of the
      shares on the date of issuance and recorded the amount as an administrative
      expense as of December 31, 2006.





Between
      April and December 2006, the Company sold the placement agent 537,500 shares
      of
      unregistered restricted common stock at a price of $0.01 per share in connection
      with the agent’s placement of shares of Series A and Series B preferred stock.
      The shares issued to the placement agent were in accordance with the offering
      agreement. The Company recorded $5,375 as a direct offering cost.




F-18




In
      April
      2006, the Company issued 60,000 shares of common stock to a note holder, with
      a
      fair market value of $68,400 on the date of issuance. The value was recorded
      as
      debt discount and amortized over the life of the debt. As of December 31, 2006
      the discount was fully amortized.





In
      April
      2006, the Company issued 200,000 shares of common stock to the Company’s Chief
      Executive Officer as a bonus valued at $208,000, the fair market value on the
      date of issuance. The Company recorded the entire amount as employee
      compensation in the second quarter of fiscal 2006.





In
      August
      2006, the Company sold the placement agent 522,500 shares of unregistered
      restricted common stock at a price of $0.01 per share in connection with the
      agent’s placement of shares of Series A preferred stock. On July 20, 2006 a
      supplement to the private placement memorandum for the preferred stock offering
      provided for, among other things, a re-pricing of the offering and the
      compensation in shares to the placement agent. The additional shares issued
      to
      the placement agent were in accordance with the restructured offering. The
      Company recorded $5,225 as a direct offering cost.





In
      August
      2006, the Company issued 150,000 shares of unregistered restricted common stock
      to a vendor in lieu of payment for services provided. The Company determined
      a
      value for the shares of $48,000 based on the fair market value of the stock
      at
      the time the services were performed. The Company recorded the entire amount
      as
      general and administrative expense in the third quarter of fiscal 2006.





In
      August
      2006, the Company sold to various financial advisors an aggregate 1,000,000
      shares of unregistered restricted common stock at a price of $0.01 per share
      as
      compensation for services rendered in connection with negotiations with Expert
      System. **** The
      Company determined a value of $300,000 for such shares, with $299,000 recorded
      as a professional fee expense and $1,000 recorded as a subscription receivable
      in the third quarter of fiscal 2006. The subscription receivable was offset
      by
      an administrative expense due to reimbursable costs incurred by the placement
      agent as of December 31, 2006.




In
      September 2006, the Company issued an aggregate 470,375 shares of unregistered
      restricted common stock to certain stockholders in accordance with a lock-up
      agreement entered into by such stockholders and the Company. Holders of shares
      of common stock of the Company who agreed not to sell their common shares until
      three months after the effective date of the registration statement covering
      the
      underlying shares of the July 20, 2006 amended preferred stock offering were
      given a 5% stock fee as compensation. The Company determined a value for the
      shares of $371,596 based on the fair market value of the stock upon issuance
      of
      the stock fee. The Company recorded the entire amount as general and
      administrative expense in the third quarter of fiscal 2006.




F-19




2007





In
      January 2007, the Company sold the placement agent 140,000 shares of unregistered
      restricted common
      stock at a price of $0.01 per share in connection with the agent’s placement of
      shares of Series B preferred stock. The Company recorded the amount as a
      subscription receivable of $1,400 during the first fiscal quarter of 2007.
      The
      subscription receivable was offset by an administrative expense due to
      reimbursable costs incurred by the placement agent as of the December 31,
      2007.





Between
      January and March 2007, the Company issued an aggregate 165,000 shares of unregistered
      restricted common
      stock to a professional services firm for investor relations services. The
      Company determined a value for the shares of $74,400 based on the fair market
      value of the stock at the time the services were performed. The Company recorded
      the entire amount as an administrative expense as of December 31, 2007.





In
      June
      2007, the Company issued 5,000 shares of unregistered
      restricted common
      stock to a vendor for the purchase of a website domain name. The Company
      determined a value for the shares of $4,000 based on the fair market value
      of
      the stock at the time of the purchase. The Company recorded the entire amount
      as
      an asset on the balance sheet in the second fiscal quarter of 2007.





In
      October 2007, the Company issued 225,000 shares of common stock to non-employee
      consultants in lieu of payment for services provided. The Company calculated
      a
      fair value of $180,000 for these shares based on the value of the shares on
      the
      date of issuance and recorded the amount as an administrative expense as of
      December 31, 2007.





In
      October 2007, the Company issued 300,000 shares of common stock to a
      professional services firm for financial consulting services. The Company
      calculated a fair value of $210,000 for these shares based on the value of
      the
      shares on the date of issuance and recorded the amount as an administrative
      expense as of December 31, 2007.




*Issuance
      of Warrants*





2006





Between
      April and December 2006, the Company issued warrants in accordance with the
      Series A and Series B preferred stock offering. The Series A holders received
      3,625,000 warrants to purchase the Company’s common stock, exercisable for a
      period of three years at a price of $0.50 per share. The Series B holders
      received 4,710,000 warrants to purchase the Company’s common stock, exercisable
      for a period of three years at a price of $0.50 per share. The placement agent
      in connection with such offering received warrants to purchase, with a cashless
      exercise feature, 1,000,000 shares of common stock of the Company, exercisable
      at $0.50 per share.





In
      March
      2006, the Company issued 52,500 common stock warrants to a note holder with
      an
      exercise price of $2.00 per share for financing fees on $350,000 of notes
      expiring in five years. The Company recorded the fair market value of the
      warrants based on the fair value of each warrant estimated on the date of grant
      using the Black-Scholes option pricing model with the following weighted average
      assumptions used for grants in 2006: dividend yield of zero, expected volatility
      of 172%, risk-free interest rates of 4.50%, and expected lives of five years.
      The Company recorded $108,622 in financing fees in the first quarter of fiscal
      2006.




F-20




In
      July
      2006, the Company issued 200,000 common stock warrants to a vendor with an
      exercise price of $0.50 per share for past services rendered. The Company
      recorded the fair market value of the warrants based on the fair value of each
      warrant estimated on the date of grant using the Black-Scholes option pricing
      model with the following weighted average assumptions used for grants in 2006:
      dividend yield of zero, expected volatility of 219%, risk-free interest rates
      of
      4.84%, and expected lives of five years. The Company recorded a $69,000
      professional fee expense in the third quarter of fiscal 2006.





In
      August
      2006, the Company issued warrants to purchase 200,000 shares of common stock
      to
      a vendor with an exercise price of $0.50 per share in
      partial consideration for the vendor’s agreement to act as the Company’s public/investor
      relations representative for a term of one year. The warrants vested with
      respect to 100,000 shares three months after the date of grant and with respect
      to the second 100,000 shares six months after the date of grant. The Company
      recorded the fair market value of the 183,333 **** warrants
      that vested during 2006 based on the fair value of each warrant estimated on
      the
      date of grant using the Black-Scholes option pricing model with the following
      weighted average assumptions used for grants in 2006: dividend yield of zero,
      expected volatility of 219%, risk-free interest rates of 4.84%, and expected
      lives of five years. The Company recorded $21,000 and $37,000 in general and
      administrative expense for the fiscal 2006 third and fourth quarters,
      respectively.





2007





In
      August
      2006, the Company issued warrants to purchase 200,000 shares of common stock
      to
      a vendor with an exercise price of $0.50 per share in partial consideration
      for
      the vendor’s agreement to act as the Company’s public/investor relations
      representative for a term of one year. The warrant agreement provided for
      vesting of 100,000 shares three months after the date of grant and with respect
      to the second 100,000 shares six months after the date of grant. During the
      first fiscal quarter of 2007, the Company recorded the fair market value of
      the
      remaining 16,667 warrants, which vested during the period, based on the fair
      value of each warrant estimated on the date of grant using the Black-Scholes
      option pricing model with the following weighted average assumptions used for
      grants in 2006: dividend yield of zero, expected volatility of 219%, risk-free
      interest rate of 4.84%, and expected lives of five years. The Company recorded
      $5,265 in administrative expense in the first fiscal quarter of 2007.





In
      May
      2007, the Company issued warrants to purchase 452,164 shares of common stock
      to
      a director with an exercise price of $0.50 per share in exchange for his
      agreement to extend the maturity date of his promissory note with the Company.
      The Company recorded the fair market value of the warrants based on the fair
      value of each warrant estimated on the date of grant using the Black-Scholes
      option pricing model with the following weighted average assumptions used for
      grants in 2007: dividend yield of zero, expected volatility of 242%, risk-free
      interest rate of 5.07%, and expected lives of five years. The Company recorded
      $337,465 in additional interest expense in the second fiscal quarter of 2007
      in
      connection with these warrants.




F-21




In
      July
      2007, the Company issued warrants to purchase 100,000 shares of common stock
      to
      an attorney with an exercise price of $0.57 per share in exchange for his
      agreement to reduce legal fees. The Company recorded the fair market value
      of
      the warrants based on the fair value of each warrant estimated on the date
      of
      grant using the Black-Scholes option pricing model with the following weighted
      average assumptions used for grants in 2007: dividend yield of zero, expected
      volatility of 245%, risk-free interest rate of 4.55%, and expected lives of
      three years. The Company recorded $55,205 in additional professional fees for
      the year ended December 31, 2007.





In
      September 2007, the Company issued warrants to purchase 50,000 shares of common
      stock to a law firm with an exercise price of $0.50 per share for its agreement
      to reduce outstanding legal fees. The Company recorded the fair market value
      of
      the warrants based on the fair value of each warrant estimated on the date
      of
      grant using the Black-Scholes option pricing model with the following weighted
      average assumptions used for grants in 2007: dividend yield of zero, expected
      volatility of 245%, risk-free interest rate of 3.97%, and expected lives of
      three years. The Company recorded $23,714 in additional professional fees for
      the year ended December 31, 2007.





In
      October 2007, the Company issued warrants to purchase 600,000 shares of common
      stock to a financial consultant with an exercise price of $0.50 per share in
      partial consideration for an agreement to provide financial consulting
      services for a term of nine months. The Company recorded the fair value of
      each
      warrant estimated on the date of grant using the Black-Scholes option pricing
      model with the following weighted average assumptions used for grants in 2007:
      dividend yield of zero, expected volatility of 257%, risk-free interest rate
      of
      4.38%, and expected lives of five years. The Company recorded $418,711 in
      administrative expense at December 31, 2007.





In
      October 2007, the Company issued warrants to purchase 6,710,000 shares of common
      stock with an exercise price of $0.50 per share to certain Series A and Series
      B
      preferred holders in consideration for such holders’ acceptance of a settlement
      offer and execution of a waiver, as discussed previously herein. The Company
      recorded the fair value of each warrant estimated on the date of grant using
      the
      Black-Scholes option pricing model with the following weighted average
      assumptions used for grants in 2007: dividend yield of zero, expected volatility
      of 257%, risk-free interest rate of 4.38%, and expected lives of five years.
      The
      Company recorded $5,017,598 in financing costs at December 31,
      2007.





As
      discussed elsewhere herein, during the year ended December 31, 2007, the Company
      also issued warrants to purchase (a) 4,875,000 shares of common stock in
      connection with new issuances of Series B preferred stock and the modification
      of the preferred stock Unit offering and conversion of Series A to Series B
      preferred stock shares, (b) 12,000,000 shares of common stock in connection
      with
      the $3,000,000 raised in its Bridge I note offering, (c) 3,600,000 shares of
      common stock issued to the placement agent in the Bridge I note offering, and
      (d) 900,000 shares of common stock in connection with $300,000 raised in the
      Bridge II junior convertible promissory note offering.




F-22




Warrants
      outstanding at December 31, 2007 were as follows:





Warrants
                SummaryOutstanding
                at beginning of year
            
            
            10,919,043Granted
            
            
            29,287,164Expired
            
            
            (483,123
            )Exercised
            
            
            —Warrants
                at December 31, 2007
            
            
            39,723,084





*Second
      Amended and Restated Certificate of Incorporation*





On
      September 10, 2007, the Company filed with the State of Delaware its Second
      Amended and Restated Certificate of Incorporation which (a) increased the number
      of authorized shares of common stock, $.01 par value, of the Company from
      100,000,000 shares to 300,000,000 shares, (b) eliminated the Class B and Class
      D
      common stock of the Company and all related provisions, and (c) eliminated
      the
      Series E, Series F, Series G, Series I and Series L preferred stock of the
      Company and all related provisions. The Company had proposed also eliminating
      the voting provisions relating to the Company’s Series A and Series B preferred
      stock from the charter but could not do so because of the failure to obtain
      a
      quorum of the Series A and Series B stock at the Company’s annual meeting of
      stockholders held on August 1, 2007.





**NOTE
      9. STOCK OPTION PLANS**





Effective
      January 1, 2006, transactions under the Company’s 2005 Plan and 2006 Plan (as
      such terms are defined below) were accounted for in accordance with the
      recognition and measurement provisions of SFAS No. 123 (revised), “Share-Based
      Payment”, which replaces SFAS No. 123, “Accounting for Stock-Based
      Compensation”, and supersedes APB Opinion No. 25, “Accounting for Stock Issued
      to Employees”, and related interpretations. SFAS No. 123(R) requires
      compensation costs related to share-based payment transactions, including
      employee stock options, to be recognized in the financial statements. In
      addition, the Company adheres to the guidance set forth within SEC Staff
      Accounting Bulletin No. 107, which provides the views of the staff of the SEC
      regarding the interaction between SFAS No. 123(R) and certain SEC rules and
      regulations and provides interpretations with respect to the valuation of
      share-based payments for public companies.





In
      adopting SFAS No. 123(R), the Company applied the modified prospective approach
      to transition. Under the modified prospective approach, the provisions of SFAS
      No. 123(R) are applied to new awards and to awards modified, repurchased, or
      cancelled after the effective date. Additionally, compensation cost for the
      portion of awards for which the requisite service has not been rendered that
      are
      outstanding as of the effective date are recognized as the requisite service
      is
      rendered on or after such date. The compensation costs for that portion of
      awards are based on the grant-date fair value of those awards as calculated
      for
      either recognition or pro-forma disclosures under SFAS No. 123.





As
      a
      result of the adoption of SFAS No. 123(R), the Company’s results for the years
      ended December 31, 2007 and 2006 include share-based compensation expense
      totaling $3,584,136 and $2,453,523, respectively, which amounts have been
      included in salaries and compensation expense. No income tax benefit has been
      recognized in the income statements for share-based compensation arrangements
      as
      the Company has provided a 100% valuation allowance on its net deferred tax
      asset.




F-23




Stock
      option compensation expense in fiscal years 2007 and 2006 is the estimated
      fair
      value of options granted, amortized on a straight-line basis over the requisite
      service period for the entire portion of the award.





*Accounting
      for Non-Employee Awards*





The
      Company previously accounted for options granted to its non-employee consultants
      using the fair value cost in accordance with SFAS No. 123. The adoption of
      SFAS
      No. 123(R) as of January 1, 2006 had no material impact on the accounting for
      non-employee awards.





*Black-Scholes
      Valuation*





The
      fair
      value of options at the date of grant is estimated using the Black-Scholes
      option pricing model. The assumptions made in calculating the fair values of
      options are as follows:




For
                the year ended
              December
                31, 2007
            
            For
                the year ended
              December
                31, 2006Expected
                term (in years)
            
            
            5
                to 10
            
            
            5
                to 10Expected
                volatility
            
            
            240%
                to 257
            %
            
            219%
                to 229
            %Expected
                dividend yield
            
            
            0
            %
            
            0
            %Risk-free
                interest rate
            
            
            4.01%
                to 4.85
            %
            
            4.73%
                to 4.76
            %




There
      were 4,043,000 and 600,000 non-employee (including non-employee director) stock
      option awards granted during the years ended December 31, 2007 and 2006,
      respectively. There were 3,033,000 and 5,472,000 employee stock options granted
      in the years ended December 31, 2007 and 2006, respectively. There were 279,000
      and 1,702,000 options granted to employees under the Company’s 2006 Plan during
      the years ended December 31, 2007 and 2006, respectively. There were 247,000
      and
      270,000 options granted under the Company’s 2005 Plan during the years ended
      December 31, 2007 and 2006, respectively.





In
      July
      2007, the Board of Directors amended options granted to Darryl Cohen to purchase
      2,000,000 shares, Sandro Sordi to purchase 100,000 shares, and Alan Smith to
      purchase 100,000 shares of common stock, $.01 par value of the Company. The
      amendment provided for an increase in the exercise price of such options from
      $.50 to $.59 per share, the closing price of the common stock on the date of
      the
      grant. All other terms of such options remained the same. In addition, the
      Board
      approved the extension of the exercise periods by one year of options granted
      to
      two former employees of the Company to purchase an aggregate 243,000 shares.
      All
      other terms of such options remained the same.




F-24




*Plan
      Information*





In
      August
      2006, the 2006 Employee Stock Incentive Plan was approved and adopted by the
      Board of Directors, and subsequently amended in June 2007 (as amended, the
“2006
      Plan”). The 2006 Plan became effective upon the approval of the holders of the
      Company’s common stock at the Company’s annual stockholders meeting held on
      August 1, 2007. Under the 2006 Plan, the Company may grant stock options, stock
      appreciation rights or restricted stock to its employees, officers and other
      key
      persons employed or retained by the Company and any non-employee director,
      consultant, vendor or other individual having a business relationship with
      the
      Company, to purchase up to 10,000,000 shares of common stock. Options
      are granted at various times and vest over various periods. As of December
      31,
      2007 and 2006, the Company had issued total options pursuant to the 2006 Plan
      of
      1,981,000 and 1,702,000, respectively.




Under
      the
      2005 Management and Director Equity Incentive and Compensation Plan (the “2005
      Plan”), the Company may grant incentive and non-qualified stock options,
      performance shares and restricted stock to its officers, directors, other key
      employees and consultants to purchase up to 2,000,000 shares of common stock.
      Under the 2005 Plan, the exercise price of each option must equal or exceed
      the
      market price of the Company’s stock on the date of grant, and an option’s
      maximum term is ten years. Options are granted at various times and vest over
      various periods. As of December 31, 2007 and 2006, the Company had issued total
      options pursuant to the 2005 Plan of 1,924,000 and 1,920,000,
      respectively.





On
      September 20, 2006, the Company cancelled a total of 2,000,000 common stock
      options previously granted to the Company’s Chief Executive Officer at a per
      share exercise price of $1.01, and issued in replacement thereof 2,000,000
      common stock options at a price of $0.50 per share expiring 10 years from the
      date of issuance. The Company recorded an expense of $1,179,600 for the year
      ended December 31, 2006 in connection therewith. In July 2007, the exercise
      price of such 2,000,000 options was increased to $0.59 per share.





In
      addition, the Company cancelled a total of 200,000 common stock options
      previously granted to non-employee directors of the Company at a per share
      exercise price of $1.01, and issued in replacement thereof 200,000 common stock
      options at a price of $0.50 per share expiring 10 years from the date of
      issuance. The Company recorded an expense of $58,980 for the year ended December
      31, 2006 in connection therewith. In July 2007, the exercise price of such
      200,000 options was increased to $0.59 per share.




F-25




A
      summary
      of the status of the Company’s stock options as of December 31, 2007 and the
      changes during the period ended is presented below:





Fixed
                Options
            
            Shares
            
            Weighted
                AverageExercise PriceOutstanding
                at January 1, 2006
            
            
            1,920,000
            
            $
            .70Issued
            
            
            8,272,000
            
            
            .68Cancelled
            
            
            (2,470,000
            )
            
            .98Outstanding
                at December 31, 2006
            
            
            7,722,000
            
            
            .58Issued
            
            
            7,076,000
            
            
            .71Expired
            
            
            (243,000
            )
            
            (.72
            )Outstanding
                at December 31, 2007
            
            
            14,555,000
            
            $
            .65Exercisable
                at December 31, 2007
            
            
            12,194,286Weighted
                average exercise price of options granted to employees at December
                31,
                2007
            
            $
            .63




ExercisePrice
            
            Number
                Outstanding at
              December
                31, 2006
            
            Weighted
                Average RemainingContractual
                Life
            
            Weighted
                AverageExercise
                Price
            
            Number
                Exercisable at
              December
                31, 2006
            
            Weighted
                AverageExercise
                Price$0.50-$0.85
            
            
            7,452,000
            
            
            7.5
            
            $
            0.54
            
            
            4,583,000
            
            $
            0.56$1.59-$2.00
            
            
            270,000
            
            
            5.0
            
            $
            1.73
            
            
            270,000
            
            $
            1.73




ExercisePrice
            
            Number
                Outstanding at
              December
                31, 2007
            
            Weighted
                Average RemainingContractual
                Life
            
            Weighted
                AverageExercise
                Price
            
            Number
                Exercisable at
              December
                31, 2007
            
            Weighted
                AverageExercise
                Price$0.50-$0.85
            
            
            14,285,000
            
            
            7.5
            
            $
            0.63
            
            
            11,924,286
            
            $
            0.61$1.59-$2.00
            
            
            270,000
            
            
            5.0
            
            $
            1.73
            
            
            270,000
            
            $
            1.73





**NOTE
      12. COMMITMENTS AND CONTINGENCIES**





*Content
      Contracts*





The
      Company has entered into various service and content agreements. The agreements
      are usually effective for a period of one year and require the Company to pay
      a
      monthly fee and/or transaction fees based on usage. The costs associated with
      these contracts are included in costs of revenues.





Future
      minimum payments are expected to be approximately as follows:




Year
                  Ended December 31,2008
              
              $
              98,9952009
              
              
              8,475Total
              
              $
              107,470




F-26




*Lease
      Commitments*





The
      Company’s principal operating offices are located at 26 Executive Park, Suite
      250, Irvine, California 92614. The lease is for approximately 2,641 square
      feet
      under a 3-year lease ending in 2008, at a current monthly rental rate of $5,779.
      In December 2007, the Company cancelled its month-to-month lease for
      approximately 1,100 square feet of office space in Deerfield Township, Ohio
      and
      vacated such space. The monthly rent for the Ohio office space was $2,523.
      In
      December 2007, the Company also cancelled its lease for approximately 300 square
      feet of office space in Long Island, New York and vacated such space. The
      monthly rent for the Long Island office space was $1,455.




We
      also
      leased approximately 1,100 square meters of office space under a one-year lease
      in Makati City, Manila, Philippines at a monthly rent of $6,130, which lease
      term expired September, 2007. The Company remained in such space following
      expiration on a month-to-month basis. These premises were vacated and the lease
      was cancelled in March 2008.





Rent
      expense for the years ended December 31, 2007 and 2006 was $199,809 and
      $188,363, respectively.





Future
      minimum lease payments are expected to be approximately as follows:




Year
                  Ended December 31,2008
              
              $
              59,1602009
              
              
              —Total
              
              $
              59,160




*Employment
      Contracts*





In
      July
      2005, InfoByPhone Inc. entered into an employment agreement with Darryl Cohen
      for a term of three years at an annual minimum salary of $110,000, with
      additional bonuses and fringe benefits as determined by the Board of Directors.
      In April 2006 the Company increased Mr. Cohen’s base salary to $250,000 per year
      and provided for an automobile allowance of $6,840 per year.




F-27




In
      May
      2007, the Board of Directors of the Company determined that in the event of
      a
      change of control as defined in Mr. Cohen’s employment agreement, which
      definition was revised to include the issuance of 25% or more of the issued
      and
      outstanding shares of the Company to one or more persons acting together as
      a
      group (with certain exceptions), all options, warrants and restricted shares
      outstanding and not then vested held by Messrs. Cohen, Sordi and Smith, as
      well
      as a financial consultant to the Company, would accelerate and become fully
      vested. In addition, each of such four individuals would be granted a
      non-qualified option or warrant granting each the right to purchase that number
      of shares equal to the number of shares subject to all of each such individual’s
      options and warrants outstanding as of May 17, 2007, such change of control
      options and warrants to be exercisable at the fair market value of the common
      stock at the time of the change of control.




On
      October 10, 2006, the Company entered into employment agreements with eight
      executives, each for a term of one year at an annual average salary of $74,450,
      with additional bonuses and fringe benefits as determined by the Board of
      Directors. In May 2007, the Board of Directors amended the employment agreements
      of two of these officers to provide for the issuance of (a) 700,000 options
      to
      the Company’s Director of Interactive Media, and (b) 700,000 options to the
      Company’s Director of Revenue and Content. In both cases, 500,000 options were
      granted at $.80 per share and vested when the Company entered into an agreement
      with the Wikimedia Foundation on May 25, 2007, and 200,000 of which were granted
      on May 17, 2007, at $.75 per share, of which 50,000 vest in the sole discretion
      of the CEO each time (up to four times) a material contract is executed between
      the Company and a licensed third-party content provider, or an “Enterprise
      Contract” (as defined in the employment agreements, as amended) is executed. As
      of December 31, 2007, all eight of such employment agreements had expired and
      the Company had elected not to renew.





*Financial
      Advisory Agreements*




In
      July
      2006, the Company entered into a financial advisory agreement with Arjent Ltd.
      for 24 months at a rate of $5,000 per month. Pursuant to an underwriting
      agreement with the financial advisor, the Company was obligated to use Arjent
      as
      its financial advisor on an exclusive basis for a period of 24 months commencing
      on March 1, 2007. Management believes that the financial advisor has not
      performed in accordance with the agreement, and the financial advisor has ceased
      to provide services to the Company. Due to these breaches of the agreement,
      management believes that the Company has no further obligation to, or
      exclusivity with, Arjent.





In
      February 2007, the Company entered into a financial advisory agreement for
      12
      months with Halpern Capital, Inc. In the event that Halpern Capital successfully
      completed a securities offering with at least $25 million in gross proceeds,
      the
      Company agreed to purchase additional financial services from Halpern for a
      minimum of 12 months at a rate of $20,000 per month. This agreement expired
      in
      February 2008.





In
      October 2007, the Company entered into a financial advisory agreement with
      Boston Financial Partners, pursuant to which the advisory firm agreed to provide
      the Company investor relations and financial consulting services. In connection
      with the agreement, the Company issued warrants to Boston Financial Partners
      to
      purchase 600,000 shares of common stock at $0.50 per share for a term of five
      years, and issued 300,000 shares of restricted, unregistered common
      stock.




F-28




*Financial
      Consulting Agreement*





In
      January 2007, the Company entered into a financial consulting agreement with
      an
      individual who agreed to provide financial consulting and services similar
      to
      those performed by a chief financial officer for 12 months at a rate of $14,600
      per month. The agreement also provided for the grant to the consultant of
      non-qualified stock options to purchase an aggregate 1 million shares of common
      stock at $0.55 per share, the closing price of the common stock on the date
      of
      grant, vesting as to 600,000 shares immediately and 100,000 shares each 90
      days
      thereafter. This agreement expired in January 2008.




*Litigation*




The
      Company has been advised that there are 448,420 outstanding warrants to purchase
      common stock of the Company, a portion of which may still be exercisable despite
      former management’s representation and warranty that there were no outstanding
      warrants at the time of the Reverse Merger. Included in these warrants are
      300,000 claimed to be exercisable at $0.25 per share through August 15, 2007.
      The alleged holder of these warrants, Remsen Funding Corporation (a former
      consultant of the Company), filed a lawsuit in the United States District Court
      for the Southern District of New York (06 CV 609) **** on
      February 1, 2006 **** seeking
      specific performance of an agreement which provided for “piggyback” registration
      rights and seeking to have the Company include the 300,000 shares underlying
      the
      warrants in its then-pending registration statement on Form SB-2.
      Notwithstanding the fact that the subject matter of the lawsuit is still in
      dispute, the Company has agreed to register the shares. On July 16, 2007, the
      plaintiff filed an amended complaint. The amended complaint alleged damages
      of
      not less than $525,000, which the Company believes is without merit. The Company
      has answered the complaint, denied the claims and asserted various affirmative
      defenses. Discovery has commenced, and the matter is scheduled for trial in
      or
      about July 2008. As of December 31, 2007, the Company has not accrued any
      liability regarding this claim.




In
      December 2005, the Company received a claim from an attorney for Marshall
      Stewart, the former CEO of the Company. Mr. Stewart was employed by the Company
      under an employment agreement dated September 1, 2004. Mr. Stewart was to be
      compensated $180,000 per year in base salary plus bonuses through August 31,
      2007. Mr. Stewart’s claim is for a breach of contract alleged to have occurred
      in late 2004 when the Company was under the control of Consumer Direct of
      America, the Company’s then-principal shareholder (“CDA”), and for CDA’s failure
      to advise the Company’s stockholders of the sale of the company until after the
      Reverse Merger. As of December 31, 2007, the Company has not accrued any
      liability related to the claim and no further developments have occurred
      regarding this claim.




On
      May 5,
      2006, a judgment by default in the amount of $604,391 was entered in favor
      of
      Indymac Bank, F.S.B., in the Los Angeles Superior Court against the Company
      (then known as Ocean West Holding Corporation), former subsidiary Ocean West
      Enterprises, Inc. (“OWE”), CDA, and Does 1 through 100, inclusive. **** The
      underlying complaint brought by the federal bank alleged a default by OWE under
      settlement agreements with the bank, which had purchased certain loans from
      OWE.
      The complaint did not state a cause of action against the Company. Pursuant
      to
      Section 13.3 of the Securities Exchange Agreement and Plan of Reorganization
      dated as of April 14, 2005 (the “Exchange Agreement”), the Company gave CDA
      notice of a breach of the representations and warranties set forth in, among
      other things, Section 5.5 of the Exchange Agreement. In addition, CDA assumed
      and agreed to indemnify the Company from any and all liabilities as of May
      23,
      2005, whether known or unknown, pursuant to the Assignment and Assumption of
      Liabilities Agreement of the same date entered into in connection with the
      Reverse Merger (the “Assumption Agreement”). Personal service upon the Company’s
      registered agent was claimed, but the Company was never served and sought to
      remove the judgment. On August 8, 2007, the default judgment against the Company
      was vacated in the Los Angeles Superior Court on the basis that the Company
      had
      not been properly served. During the quarter ended September 30, 2007, OWE
      and
      the Company were named as defendants in the legal matter of Indymac Bank, F.S.B.
      vs. Ocean West Enterprises, Inc. (Case No. GC036470). The Company served a
      cross-complaint against the plaintiffs and has not received a legal response.
      As
      of December 31, 2007, the Company has not accrued any liability related to
      the
      claim.




F-29




The
      Company has been advised by Pioneer Credit Recovery, Inc. that the U.S.
      Department of Treasury has placed with Pioneer an account owed to it by the
      Company’s former subsidiary, OWE. The former principals of OWE did not disclose
      that they and OWE had guaranteed three HUD loans in the aggregate amount of
      $151,980. In the event a claim is made against the Company by Pioneer, the
      U.S.
      government or any agency or instrumentality thereof, or any other party, the
      Company will seek indemnification from the former principals of OWE, **** CDA,
      and
      their respective affiliates under both the Exchange Agreement and the Assumption
      Agreement. As of December 31, 2007, the Company has not accrued any liability
      for this guarantee.




**Note
      13. INCOME TAXES**





The
      Company utilizes the liability method of accounting for income taxes as set
      forth in SFAS No. 109, “Accounting for Income Taxes.” Under the liability
      method, deferred taxes are determined based on the difference between the
      financial statement and tax basis of assets and liabilities using enacted tax
      rates in effect in the years in which the differences are expected to reverse. **** Income
      tax expense for the years ended December 31, 2007 and 2006 is summarized as
      follows:




2007
            
            Current
            
            Deferred
            
            TotalFederal
            
            $
            —
            
            $
            —
            
            $
            —State
            
            
            800
            
            
            —
            
            
            800Foreign
            
            
            —
            
            
            —
            
            
            —Total
            
            $
            800
            
            $
            —
            
            $
            800




2006
            
            Current
            
            Deferred
            
            TotalFederal
            
            $
            —
            
            $
            —
            
            $
            —State
            
            
            800
            
            
            —
            
            
            800Foreign
            
            
            —
            
            
            12,032
            
            
            12,032Total
            
            $
            800
            
            $
            12,032
            
            $
            12,832




F-30




Income
      tax expense for the years ended December 31, 2007 and 2006 differed from amounts
      computed by applying the statutory U.S. federal corporate income tax rate of
      34%
      to income before income tax benefit as a result of the following:




Expected
                income tax expense (benefit) from operations at:
            
            2007
            
            2006Federal
                tax expense
            
            $
            (6,948,126
            )
            $
            (4,270,798
            )State
                tax expense
            
            
            (1,191,498
            )
            
            (732,069
            )Stock
                compensation
            
            
            —
            
            
            74,889Foreign
                rate differential
            
            
            56,098
            
            
            41,460Amortization
                of debt discount for Bridge I notes payable
            
            
            1,195,032
            
            
            —Amortization
                of debt discount for Bridge II notes payable
            
            
            51,785
            
            
            —Permanent
                differences
            
            
            15,985
            
            
            11,878Foreign
                tax
            
            
            —
            
            
            12,032Valuation
                allowance
            
            
            6,821,524
            
            
            4,875,440Total
            
            $
            800
            
            $
            12,832




The
      effects of the temporary differences that gave rise to significant portions
      of
      deferred tax assets and liabilities at December 31, 2007 and 2006 are as
      follows:





Deferred
                tax assets:
            
            2007
            
            2006Net
                operating loss carryforward (benefit)
            
            $
            (13,721,326
            )
            $
            (6,899,802
            )Less:
                valuation allowance
            
            
            13,721,326
            
            
            6,899,802Net
                deferred tax assets
            
            $
            —
            
            $
            —




The
      Company has a net operating loss carryforward of approximately $17,437,000
      available to offset future taxable income through 2027. The valuation allowance
      at December 31, 2007 was $13,721,326 and the net change in the valuation
      allowance was an increase of $6,821,524.





The
      Company is also delinquent in filing certain federal and state income tax
      returns for 2005 and 2006 and is working to complete and file the returns.
      The
      Company does not anticipate any tax liability due to the losses incurred to
      date
      and the net operating loss carryforwards available to the Company.




F-31




**NOTE
      14. SUBSEQUENT EVENTS**





***Bridge
      I Settlement Offer and Default***





As
      of
      December 31, 2007, the Company was in default under each of the notes issued
      in
      its Bridge I offering. The Company’s failure to pay such notes when due
      constitutes an event of default and, according to the terms thereof, the Company
      is obligated to pay each note holder the default interest rate of two percent
      (2%) per month on all amounts due and owing under such notes for each month
      or
      part thereof beyond the extended maturity date that such amounts remain unpaid.
      In the event of a default, each note holder may proceed to protect such holder’s
      rights in equity or by action at law, or both, enforce payment of the notes,
      and/or enforce any other legal or equitable right such holder may have.





The
      Company is in continuing discussions with the holders of the Bridge I notes
      regarding a settlement offer and is working to secure an extension of the note
      payment terms.





***Series
      D Preferred Stock Offering***




Beginning
      in January 2008, the Company commenced an offering of Series D convertible
      preferred stock, $.01 par value, on a “best-efforts”, no minimum basis, of up to
      $2 million with a purchase price of $1.00 per share. In connection with the
      offering, an investor will be issued warrants to purchase two shares of the
      Company’s common stock, exercisable for a period of five years at $0.10 per
      share. Each warrant is redeemable by the Company at a price of $0.01 at any
      time
      subsequent to the earlier of the third anniversary of the date of the final
      purchase and sale of the Series D preferred stock, which will not be later
      than
      January 31, 2008 (the “Closing Date”) and the date the common stock trades at or
      above $1.00 per share for 20 consecutive trading days. Dividends are at a rate
      of 12% per annum and are payable in preference to the holders of common stock
      and any junior securities, in shares of common stock upon conversion of the
      Series D preferred stock as discussed below.




The
      Series D preferred stock automatically converts into shares of common stock
      upon
      the earlier to occur of the six-month anniversary of the Closing Date, and
      the
      closing of a “change of control transaction” (including a merger or sale of all
      or substantially all of the Company’s assets). The number of shares of common
      stock issuable upon conversion shall be the product obtained by multiplying
      the
      then-applicable Series D conversion rate by the number of shares of Series
      D
      preferred stock being converted. The Series D applicable conversion rate is
      the
      quotient obtained by dividing the sum of the original issuance price and any
      accrued and unpaid dividends thereon, if any, by the Series D applicable
      conversion value. The Series D applicable conversion value is the greater of
      (i)
      the weighted average price of the common stock for the 10 consecutive trading
      days prior to the date of conversion, less a 40% discount, and (ii) $0.10,
      subject to adjustment.




During
      the first quarter of 2008, the Company had raised $485,000 in connection with
      the Series D preferred stock offering and had issued 485,000 shares of Series
      D
      preferred stock and warrants to purchase an aggregate 970,000 shares of common
      stock.





***Bridge
      I Warrant Anti-dilution Adjustment***





In
      accordance with the terms and conditions of the $3 million Bridge I financing
      that commenced in February 2007, the holders were issued warrants exercisable
      at
      $0.50 per share to purchase four shares of common stock for every $1.00
      principal amount loaned. As discussed above, the Company is currently conducting
      a private placement of Series D preferred stock that includes warrants
      exercisable at $0.10 per share. The result of this warrant offering triggers
      the
      anti-dilution provision of the $3 million Bridge I notes and causes the
      15,600,000 warrants issued under the original financing to be increased five
      times to an aggregate 78,000,000 warrants with an adjusted exercise price of
      $0.10 per share. The warrants also provided for a cashless option and as of
      April 7, 2008, 23,064,000 warrants had been exercised on a cashless basis and
      13,118,711 shares of common stock had been issued as a result of such
      exercises.




F-32


***Series
        A and Series B Preferred Stock Anti-Dilution
        Adjustments***
 
 Also
        as a
        result of the Series D preferred stock offering, the Company agreed that
        the
        conversion price of the shares of its Series A and Series B preferred stock,
        as
        well as the exercise price of the warrants issued in connection with the
        Series
        A and Series B preferred stock offering, would be adjusted. The conversion
        price
        of the Series A and Series B preferred stock therefore will be the lower
        of
        $0.25 and the conversion price for the Series D preferred shares, such Series
        D
        conversion price to be set in the future pursuant to the terms of that offering
        as described above. As adjusted, the Series A and Series B preferred stock
        warrants are exercisable at $0.10 per share. Such provisions are applicable
        to
        any participant in the Series A and Series B preferred stock offering, even
        those who may have previously converted their preferred shares into the common
        stock of the Company, so long as such holders can demonstrate they have not
        yet
        sold such common shares. The Company also agreed to reduce the exercise price
        of
        the warrants issued to the placement agent for the Series A and Series B
        preferred stock offering. The Company is currently negotiating with the investor
        representative with respect to certain other adjustments in the number of
        warrants issuable to the Series A and Series B preferred stock holders and
        the
        conversion price for such shares.




***Issuance
      of Common Stock for Services***





Beginning
      in January 2008, the Company entered into an agreement for financial consulting
      services for a twelve month period and issued 3,000,000 shares of unregistered
      restricted common stock as consideration for such services.




***Series
      B Convertible Preferred Stock Conversions***




During
      the first quarter of 2008, holders of the Company’s Series B preferred stock,
      $0.01 par value, elected to convert an aggregate 31,652 shares and accrued
      and
      unpaid dividends thereon into an aggregate 661,802 shares of unregistered common
      stock.




***Short-term
      Liquidity Problems***





During
      the first quarter of fiscal 2008, the Company continued to experience severe
      liquidity problems and had insufficient cash on hand to effectively manage
      its
      business. During such period, the Company raised $485,000 through a Series
      D
      convertible preferred stock offering to accredited investors. The Company has
      continued to raise operating cash through additional debt and equity financing,
      and our management is in the process of negotiating additional
      financing.




F-33