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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: November 30, 2006

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

For the transition period from __________ to __________

Commission File Number: 000-52201

ITONIS INC.(Name of small
business issuer in its charter)

|NEVADA                                           | 20-3885298                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|Klimentska 10, 110 00 Prague 1, Czech Republic   | N/A                                 
|(Address of principal executive offices)         | (Zip Code)                          

Issuers telephone number: +420 296578180

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

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Not Applicable      | Not Applicable                           

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

Common Stock, $0.001 par value(Title of
class)

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 requirements for the past 90 days. Yes[X] 
   No[   ]

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. [   ]

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

State issuers revenues for its most recent fiscal year.
$24,351

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State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2 of the Exchange Act.) $10,149,185 as at April 5, 2007

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date. 70,587,345
  shares of common stock as of April 5, 2007.

Transitional Small Business Disclosure Format (check one):
Yes[   ] No[X]

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ITONIS INC.

Annual report On Form 10-KSB For The Year Ended
November 30, 2006

INDEX

|PART I   |          | 1                                                                                                                                                 
|-------- | -------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|         |          |                                                                                                                                                   
|         | Item 1.  | Description of Business                                                                                                                           
|         |          |                                                                                                                                                   
|         | Item 2.  | Description of Property                                                                                                                           
|         |          |                                                                                                                                                   
|         | Item 3.  | Legal Proceedings                                                                                                                                 
|         |          |                                                                                                                                                   
|         | Item 4.  | Submission of Matters to a Vote of Securities Holders                                                                                             
|         |          |                                                                                                                                                   
|PART II  |          | 20                                                                                                                                                
|         |          |                                                                                                                                                   
|         | Item 5.  | Market for Common Equity and Related Stockholder Matters                                                                                          
|         |          |                                                                                                                                                   
|         | Item 6.  | Managements Discussion and Analysis or Plan of Operation                                                                                         
|         |          |                                                                                                                                                   
|         | Item 7.  | Financial Statements                                                                                                                              
|         |          |                                                                                                                                                   
|         | Item 8.  | Changes In and Disagreements With Accountants on Accounting
      and Financial Disclosure                                                        
|         |          |                                                                                                                                                   
|         | Item 8A. | Controls and Procedures                                                                                                                           
|         |          |                                                                                                                                                   
|         | Item 8B. | Other Information                                                                                                                                 
|         |          |                                                                                                                                                   
|PART III |          | 35                                                                                                                                                
|         |          |                                                                                                                                                   
|         | Item 9.  | Directors, Executive Officers, Promoters, Control Persons
      and Corporate Governance; Compliance with Section 16(a) of the Exchange
      Act.
|         |          |                                                                                                                                                   
|         | Item 10. | Executive Compensation                                                                                                                            
|         |          |                                                                                                                                                   
|         | Item 11. | Securities Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters                                            
|         |          |                                                                                                                                                   
|         | Item 12. | Certain Relationships and Related Transactions                                                                                                    
|         |          |                                                                                                                                                   
|         | Item 13. | Exhibits                                                                                                                                          
|         |          |                                                                                                                                                   
|         | Item 14. | Principal Accountant Fees and Services                                                                                                            

i

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FORWARD-LOOKING STATEMENTS

This annual report on Form 10-KSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements involve risks and uncertainties, including
statements regarding our capital needs, business plans and expectations. Such
forward-looking statements involve risks and uncertainties regarding our ability
to successfully achieve commercialization of our ITonis video solution, our
ability to successfully market our ITonis video solution, our ability to
continue development and upgrades to the ITonis video solution technology,
competition from competitors, availability of funds, government regulations,
common share prices, operating costs, capital costs and other factors.
Forward-looking statements are made, without limitation, in relation to our
operating plans, our liquidity and financial condition, availability of funds,
operating costs and the market in which we compete. Any statements contained
herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as may, will, should, expect, plan,
intend, anticipate, believe, estimate, predict, potential or
continue, the negative of such terms or other comparable terminology. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined in our
registration statement on Form SB-2, filed originally with the Securities and
Exchange Commission (the SEC) on May 12, 2006, as amended, this annual report
on Form 10-KSB, and, from time to time, in other reports we file with the SEC.
These factors may cause our actual results to differ materially from any
forward-looking statement. Given these uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements.

ii

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PART I

Item
1.               
Description of Business

Overview

We are the owner of a suite of proprietary software
applications that we refer to as the ITonis video solution. The ITonis video
solution enables the on-demand delivery of video content, including television
channels and videos, to consumers via broadband Internet for viewing on the
consumers television.

Our business plan is to market and sell the ITonis video
solution as a technology solution that will enable the on-demand delivery of
video content via the Internet. The ITonis video solution is one of three
components that are essential to the on-demand delivery of video content via
broadband Internet, namely:

- the intellectual property rights to distribute the video content;
- a set top box located near the consumers television that is connected to
  broadband Internet; and
- a technology solution that enables the on-demand delivery of the video
  content to the consumers television via the set top box.

We do not have any plans to engage in the business of acquiring
intellectual property rights to distribute video content or manufacturing and
selling set top boxes for televisions. Our focus will be on the marketing and
sale of the ITonis video solution in circumstances where other parties will be
responsible for the provision of the intellectual property rights to distribute
the video content and the necessary set-top boxes.

The ITonis video solution is comprised of the following
components, each of which will be achieved by the installation of our software
applications on computer servers that are used to implement our video
solution:

- the ITonis media acquisition system allows the upload of video content onto
  media storage servers;
- ITonis media storage servers that provide for the storage of video and
  other media content;
- ITonis media streamers that provide for the streaming of video content in
  real time to the end consumer via the Internet;
- an ITonis Television portal application server that provides the interface
  between the computer system and the ultimate consumer; and
- an ITonis service server that performs automatic maintenance tasks on the
  solution.

The ITonis video solution is designed to enable consumers to
order on-demand video content from their provider in the following manner:

- the consumer will access their set-top box using a remote control;
- the set-top box will communicate with the ITonis video solution via the
  Internet;

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- the consumer will be presented with the interface screens generated by the
  ITonis Television portal application server that will give the consumer a
  range of options to select video content on demand;
- the consumer will select a television channel or video content and the
  selection will be transmitted to the ITonis Television portal application
  server;
- the ITonis Television portal application server will initiate the broadcast
  of the video content to the consumer and will record the transaction as a
  purchase by the consumer of the video content; and
- the ITonis media streamers will access the ITonis media storage servers on
  which the video content is resident and stream the video content in real time
  to the consumer.

We have developed the basic functionality of ITonis video
solution and have demonstrated the solution in a laboratory environment. We are
now securing pilot projects for the demonstration of the ITonis video solution
in real world operations. We are also planning to continue additional
development of the ITonis video solution in order to extend the functionality of
the solution.

We have configured set top boxes manufactured by Kreatel
Communications AB (a Motorola company) to work with our ITonis video solution.
This configuration has been achieved by the installation of software developed
by us onto Kreatel set top boxes that are to be used for delivery of video
content using our solution. We do not market or sell the Kreatel set top boxes
that may be used with our solution.

We believe that our ITonis video solution may be attractive to
the following participants engaged in the telecommunications and media
distribution industry:

- video content owners and distributors, including television broadcast and
  cable companies, that wish to enable their customers to purchase video content
  and other value added services via the Internet; and
- Internet service providers that wish to be able to offer their customers
  the ability to purchase on- demand video content for viewing on their
  televisions via the Internet.

We plan to commercialize our ITonis video solution using two
distinct business models:

- Our direct sales model involves selling the ITonis video solution as an
  end to end computer based platform to video content owners and distributors
  who will install the ITonis video solution on their computer servers and use
  the solution to deliver on-demand video content to their customers via the
  Internet. In this scenario, we would achieve revenues from sales of the ITonis
  video solution. We would also have the ability to earn further ongoing product
  support fees and consulting fees.
- Our Internet service provider model involves partnering with video content
  providers to provide a fully outsourced video on-demand and television
  solution to Internet service provider businesses. By partnering with content
  provides and set-top box manufactures, we will be able to offer a fully
  outsourced Video on Demand and Internet Protocol over television (IPTV)
  solution to Internet service providers that would like to provide their
  customers with this service but do not have the resources to successfully
  deploy a video on-demand solution. In this model, our plan is to earn revenues
  either on a revenue sharing basis with the Internet service provider or on a
  monthly fee basis.

Although sales and marketing activities have been initiated, we
have earned minimal revenues to date and, as such, we are presently a
development stage company. We have not as of yet deployed our ITonis

- 2 -

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video solution in any commercial operation. Accordingly, we
cannot provide any assurance to investors that any of the above business models
will be viable or that we will achieve significant revenues. Further, we cannot
provide investors with any assurance as to the type of revenue model that will
ultimately be acceptable to our customers.

Corporate Organization

Incorporation

We were incorporated on July 5, 2005 as Kenshou Inc. under the
laws of the state of Nevada. We changed our name to ITonis Inc. on December 2,
2005 to reflect our acquisition of certain intellectual property underlying the
ITonis video solution and our new business focus.

We commenced the process of incorporating a wholly owned Czech
subsidiary called ITonis CZ on November 25, 2005. The incorporation process
was formally completed under Czech law on January 4, 2006.

Principal Executive Offices

Our principal executive offices and the offices of Itoniz CZ
are located in leased premises at Klimentska 10, 110 00 Prague 1, Czech
Republic. We refer to this facility as our research and development facility as
this is where we carry out the research, development and testing of our ITonis
video solution.

Acquisition of the ITonis Software

We acquired the intellectual property underlying the ITonis
video solution in two separate transactions:

- We acquired the intellectual property rights owned by Onyx Trading relating
  to the TV Everywhere video platform and software components pursuant to an
  asset purchase agreement dated October 1, 2005 between us and Onyx Trading.
  Pursuant to this asset purchase agreement, we issued 30,000,000 of our shares
  of common stock to Onyx Trading. The TV Everywhere software components
  acquired included the ITonis media acquisition system, the ITonis media
  storage system and the ITonis media streamers which have since been
  incorporated into our ITonis television solution. This transaction was
  completed and the shares issued on November 16, 2005. Onyx Trading became one
  of our principal shareholders upon completion of this transaction.
- We acquired the intellectual property rights owned by Nordic IPTV relating
  its Internet television portal application software pursuant to an asset
  purchase agreement dated January 31, 2006 between us and Nordic IPTV. Pursuant
  to this asset purchase agreement, we issued 18,000,000 shares of our common
  stock to Nordic IPTV. The Internet television portal application software
  acquired from Nordic IPTV was originally owned by Dansk Broadband, a Danish
  telecommunications company and developed by Nordija A/S, a Danish software
  development company. The Internet television portal application software has
  since been incorporated into our ITonis television solution. Nordic IPTV
  became one of our principal shareholders upon completion of this transaction.

Three for One Forward Stock Split

With a record date of March 19, 2007 and a distribution date of
March 20, 2007, our board of directors unanimously resolved, in accordance with
Section 78.207 of the Nevada Revised Statutes: Chapter 78, as amended, to
complete an increase in the number of shares of our authorized share capital and
correspondingly increase the number of its issued and outstanding common shares,
in each case on a three (3) new shares for one (1) old share basis (the Forward
Stock Split). A copy of the Certificate of

- 3 -

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Change Pursuant to NRS 78.209 effective as of the Record Date,
as filed with the Secretary of State of Nevada, is attached to this annual
report as Exhibit 3.4.

The forward stock split was implemented taking into account our
authorized share capital and number of issued and outstanding shares of common
stock as of the Record Date. As such, our authorized common share capital
increased from 100,000,000 shares to 300,000,000 shares, and our issued and
outstanding common stock increased from 23,129,115 shares to 69,387,345 shares,
with a par value of $0.001 per share. There was no change to our authorized
preferred share capital of 5,000,000 shares, with a par value of $0.001 per
share. No shares of preferred stock of the Company are currently issued and
outstanding. All share numbers presented in this annual report are on a
post-split basis

Industry Background

Broadband Internet

Broadband Internet refers to the ability to access the Internet
at high speeds of data connection. These data speeds are measured in terms of
kilobits per second (Kbits) (ie. 1000 bits of data information per second) per
second and megabits per second (Mbits) (ie. 1,000,000 bits of data information
per second). Broadband Internet generally refers to data speeds in excess of 2
Mbits per second. At these data speeds, it becomes possible to stream video
content to consumers via the Internet from computer servers that have been
configured and programmed to deliver video streaming.

Broadband Internet connections are becoming increasingly
available to consumers as telecommunication companies throughout the world
expand their ability to deliver broadband Internet via cable, digital fibre and
ADSL connections. As the market penetration of broadband Internet increases, the
number of potential consumers for a technology solution that enables the
delivery of video content via the Internet increases. Accordingly, as rates of
broadband Internet access increase amongst consumers, a market opportunity is
generated to provide on-demand video content to these consumers via the
Internet.

Video Content

We believe that there is a demand among consumers for the
delivery of the following video content which could be satisfied by delivery of
on-demand video content via the Internet:

Movies And DVDs

There is a demand among consumers for the ability to watch
movies and other digital video discs (DVDs) on their televisions. This demand
is presently satisfied by a combination of DVD rental stores and on-demand
services available to some consumers through cable and satellite television
services. The ability to offer movies and DVDs to consumers via the Internet
presents a new opportunity for Internet service providers and others to offer
movies and DVDs on demand to their customers.

Internet Television

Delivery of television services has historically been a closed
market where delivery was completed by local television broadcast companies or
by a limited number of cable companies and satellite television companies. The
ability to deliver television via the Internet offers the ability for companies
engaged in the business of providing Internet services to offer television via
the Internet. In addition, new services can be added to conventional television
services due to the digital delivery format of television delivered via the
Internet.

Virtual Video Recorder

There is a demand among consumers for the ability to record
televisions shows that are broadcast when the consumer is not available in order
that the consumer can watch the program at a later, more

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convenient time. This demand is demonstrated by the recent
popularity of personal video recorders, such as TiVo, that enable consumers to
record programs to a computer hard disk and replay the programs at a later time.
We believe that there is potential demand for a virtual video recorder that
would enable consumers to record television programs via the Internet using a
television set-top box device, or other electronic device with Internet access,
such as a personal computer or a mobile telephone. A virtual video recorder
would remove the requirement that the consumer have purchased a device with a
computer hard disk as the data would be stored on the servers of the provider of
the Internet video services.

TV In The Past

TV In The Past is a service related to a virtual video recorder
that enables consumers to have the ability to access television programs that
have been broadcast during a recent period. The advantage of TV In The Past is
that a consumer would not have to pre-program the recording of the television
program, as with the virtual video recorder. The provider of the Internet video
services would provide the consumer with the ability to select and view recent
television programs that have been broadcast and stored on the servers of the
provider of the Internet video services.

Content Owners

The video content that consumers will demand and that may be
delivered via the Internet is owned by the creators of this video content and
their licensees. The ownership of the video content and the rights to distribute
the video content are the subject to intellectual property laws that will
prohibit the unauthorized transmission or copying of the video content.
Accordingly, any solution for the delivery of on-demand video content via the
Internet must be deployed by the owners of the intellectual property rights to
distribute the video content or under contractual agreement with the owners of
these intellectual property rights.

Digital Rights Management

The incorporation of digital rights management is a key
element of the success of any service that attempts to deliver video on demand
via the Internet. Digital rights management refers to encryption techniques that
are used in order to ensure that the video content that is delivered to
consumers via the Internet is not copied without authorization from the owner of
the intellectual property rights to the video content that has been delivered.
We anticipate that owners of video content who authorize the delivery of video
content via the Internet will insist on digital rights management features being
incorporated into any technology solution that is used to deliver licensed video
content via the Internet.

Our Market Opportunity

We believe that content owners and distributors will be looking
at working together to deliver video content to consumers through broadband
Internet. The ability of consumers to connect to broadband Internet presents a
market opportunity to deliver the following on-demand video content to consumers
via the Internet:

- Movies and DVDs
- Internet Television
- Virtual Video Recorder
- TV in the Past

Our market opportunity is to develop and deliver a technology
solution that enables the on-demand delivery of this video content to consumers
via the Internet that respects the ownership rights of the video

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content owners and incorporates digital rights management
features. We believe that the following are potential customers for such a
technology solution:

- existing cable and satellite television companies that want to increase the
  video on-demand services that they are able to offer to their customers;
- Internet service provides that want to be able to offer video on-demand
  services to their customers via the broadband Internet connection that they
  are providing to their customers; and
- video content owners that are seeking a new means of delivering their video
  content to consumers.

We have developed the ITonis video solution with the objective
of capitalizing on this market opportunity.

Our ITonis Video Solution

The ITonis video solution is one of three components that are
essential to the on-demand delivery of video content via broadband Internet,
namely:

- the intellectual property rights to distribute the video content;
- a set top box located near the consumers television that is connected to
  broadband Internet; and
- a technology solution that enables the on-demand delivery of the video
  content to the consumers television via the set top box.

The ITonis video solution is comprised of the following
components, each of which will be achieved by the installation of our software
applications on computer servers that are used to implement our video
solution:

- the ITonis media acquisition system that allows the upload of video content
  onto media storage servers;
- ITonis media storage servers that provide for the storage of video and
  other media content;
- ITonis media streamers that provide for the streaming video content in real
  time to the end consumer via the Internet;
- an ITonis Television portal application server that provides the interface
  between the computer system and the ultimate consumer; and
- an ITonis service server that performs automatic maintenance tasks on the
  solution.

These key components enable us to offer technology solutions
that will enable the delivery to consumers of the following video content via
the Internet on an on-demand basis:

- Movies and DVDs
- Internet Television
- Virtual Video Recorder
- TV in the Past

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The Components of the ITonis Video Solution

Each component of the ITonis video solution is a computer
software application that is designed to be installed on computer servers that
will enable the delivery of on-demand video content via the Internet. The
functionality and operation of each component of the ITonis Video Solution is
described below:

The ITonis Media Acquisition System

The ITonis media acquisition system is used to upload video
content onto the ITonis media storage servers. As illustrated in the diagram
below, a video signal generated from a digital video disc (DVD) or from a
television signal is encoded using the ITonis media acquisition software and
then sent to the storage servers. The video data generated from DVDs is
generated by DVD rippers or grabbers which read the digital information on a
DVD and generate a digital signal that contains the video data.



ITonis Media Storage Server

The ITonis media storage software is used for storing all of
the video content generated by the ITonis media acquisition system on computer
servers in order that the video content can be accessed at a later date as
demanded. The software is designed to enable the access and retrieval of video
content for on-demand streaming by the ITonis media streamer software described
below. The ITonis media storage server enables the data representing the video
content to be stored on computer hard drives in arrangements known as a storage
clusters in order to optimize the retrieval of this data.

ITonis Media Streamer

The ITonis media streamer software is designed to access the
video content stored on the ITonis media storage server and to stream video
content to end users via the Internet. The ITonis streamer software operates on
computer servers known as streamers which retrieve video data from the storage
clusters and stream the data to the consumer via the Internet.

ITonis Television Portal Application Server

The ITonis television portal application server acts as the
interface between the consumer and the ITonis video solution. This application
server generates the screens on the users television through which the consumer
is presented with video on-demand options and is able to select video content
for viewing on their television. This application server communicates with the
Metadata database in order to retrieve information regarding video content and
with the ITonis media streamers in order to initiate streaming of video content.

- 7 -

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Metadata Database

The Metadata database is used to store information regarding
video content and subscribers in a database format. This information is accessed
by the ITonis Television portal application server when it generates information
regarding video content in response to consumer selections. The database also
includes accounting and billing information relating to the subscribers who are
authorized to access the ITonis video solution to obtain on-demand video
content.

Service Servers

The storage servers are used to perform maintenance tasks on
the ITonis video solution, to monitor performance of the solution and to compile
performance statistics.

The interaction of the individual components of the ITonis
video solution is illustrated below:



The ITonis video solution is designed to enable consumers to
order on-demand video content from their provider in the following manner:

- the consumer will access their set-top box using a remote control;
- the set-top box will communicate with the application servers incorporated
  into the ITonis video solution via the Internet;
- the consumer will be presented with the interface screens generated by the
  ITonis application server that will give the consumer a range of options to
  select video content on demand;
- the application server will display information regarding the video content
  options available to the consumer that is stored on and generated by the
  Metadata database servers;
- the consumer will select a television channel or video content and the
  selection will be transmitted to the ITonis application server;
- the consumer will enter a personal information number (a PIN) that will
  be sent to the ITonis application server and will be used as a key to access
  the video content selected by the consumer;

- 8 -

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- the ITonis application server will verify the consumers access
  authorization via the Metadata database server using the PIN number;
- the ITonis application server will record the transaction as a purchase by
  the consumer of the video content and the billing information on the Metadata
  database will be updated;
- the ITonis application server will initiate the broadcast of the video
  content to the consumer; and
- the ITonis media streamers will access the ITonis media storage servers on
  which the video content is resident and stream the video content in real time
  to the consumer.

Development of the ITonis Software

Development History

The ITonis video solution includes software that has been
developed from a suite of software products known as the TV Everywhere suite
of software products. The TV Everywhere software was developed by Xeris, a
wholly owned Czech subsidiary of Onyx Trading, and purchased by us from Onyx
Trading, as described above under Corporate Organization  Acquisition of the
ITonis Software. The TV Everywhere software included the software that forms the
basis of the following components of the ITonis video solution:

- the ITonis media acquisition system;
- the ITonis media storage server; and
- the ITonis media streamers.

Upon completion of the acquisition of the TV Everywhere
software, we outsourced additional development of the ITonis video solution to
Xeris. Development work was completed by Xeris with the objective of ensuring
the commercialisation of the software in line with market conditions, and to
increase the flexibility and scalability of the application. With the
incorporation of ITonis CZ in January 2006, we have continued the development of
the ITonis video solution in-house. In order to ensure a smooth transition
between the two development teams, we employed developers from Xeris during a
transition period in January 2006.

The ITonis video solution also incorporates the ITonis
television portal application server that provides the interface between the
computer system and the ultimate consumer. This interface is referred to as a
television portal as it provides the television screens that are presented to
the consumer from which the consumer can select video on-demand content. The
computer software that underlies this application server technology was acquired
by us from Nordic IPTV in January 2006.

We have undertaken the following development of the software
acquired from Onyx Trading and Nordic IPTV in order to develop the ITonis video
solution as an integrated solution:

- Development of the product line based on VoD components
- integration of the ITonis video solution with Kreatel set-top boxes;
- implementation of TCP protocol for streaming ability;
- enhancement of the DVD ripping and encoding capabilities of our media
  acquisition system;

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- implementation of Symulcript protocol for integration of a digital rights
  management solution owned by a third party;
- analysis and incorporation of the television portal application server
  software acquired from Nordic IPTV;
- development of a basic user interface;
- development of a basis administration interface; and
- fixing of computer software errors known as bugs.

Our ITonis video solution has been developed based on
open-source software, meaning software that is available without a license from
the creator. The use of open-source software allows us to take advantage of
available software and supporting resources without having to purchase license
rights.

Current Status Of Development

We have completed development of the ITonis video solution to
the state that its operation can be demonstrated in our research and development
centre in Prague. We have successfully demonstrated this operation both in a
laboratory environment, where all components are connected to a local area
network, and in an Internet environment, where the computer server and the
set-top box are each connected to the Internet. In order to achieve this
successful operation, an Internet connection with a bandwidth of 2 MBits per
second is required.

Our focus over the next six months is to further advance the
development of the ITonis video solution by adding the additional features and
functionality described below. During this period, we plan to deploy our ITonis
video solution in a pilot project environment in order that we are able to
assess the operation of the ITonis video solution in a commercial environment.
We believe that deployment in a pilot project will give us valuable feedback on
the work that we need to completed in order to have a fully functioning,
commercially deployable solution. During this period, we also plan to start our
marketing activities initiating contact with potential customers and industry
partners. We believe that the successful deployment of the ITonis video solution
in a pilot project environment will greatly assist our efforts to market and
achieve sales of the ITonis video solution.

We are able to demonstrate the successful operation of the
following features in our demonstrations, both when the system is configured in
a laboratory environment and when the server and the set-top box are
communicating via the Internet:

- the receipt and display of live video;
- the ability to search and receive movie listings;
- a parental control function which enables adult content to be filtered;
- the ability of the user to browse the Internet via the set-top box;
- the ability to purchase a video through the entering of a personal
  identification number;
- the streaming of purchased video content using MPEG 4 AVC over MPEG2 TS
  formats for video and MPEG 1 format for sound;
- the ability to display subtitles;

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- video fast forward and rewind for movies (multispeed);
- pause/ play feature for movies;
- the ability to display stream information such as buffer status and
  transmission rate of the stream;
- subtitles, display movie chapters (such as on a DVD player), handle
  multiple languages;
- incorporation of billing functionality into the ITonis video solution; and
- integration of a DVD robot into the media acquisition system.
- We have developed software for the integration of set-top boxes
  manufactured by Kreatel Communications AB, a subsidiary of Motorola Inc. As
  such, we currently rely on Kreatel Communications as the sole provider of
  set-top boxes for the ITonis video solution. We plan to expand the range of
  set-boxes that will integrate with our ITonis video solution in order to
  expand the number of available set-top box vendors that may provide customers
  with set-top boxes for the ITonis video solution.
- We plan to integrate a digital rights management solution into our ITonis
  video solution. We have deferred integrating a digital rights management
  solution developed by and available from a third party vender pending our
  assessment of the requirements of video content owners and their preferred
  solutions for digital rights management. Pending this decision, we have
  developed our own basic digital rights management solution that offers
  encryption of the video stream using a personal key.

Additional Development Work To Be Completed

We believe that the following additional development work is
required to be completed in order to have a fully commercial solution:

- completion of load tests for all components of the ITonis video solution
  and optimization of the configuration of each component based on the results
  of the load tests;
- completion of additional software programming in order that we are able to
  integrate the ITonis video solution with a range of set-top boxes in addition
  to the Kreatel set-top box with which the ITonis video solution is presently
  integrated;
- enhancement of a proprietary digital rights management solution for
  incorporation into the ITonis video solution;
- integration of a third party digital rights management solution into the
  ITonis video solution;
- integration of a provisioning tool into the ITonis video solution; and
- enhancement of the media acquisition system in order to be able to encode
  live television signals.

We plan to complete this development over the next six months.
We will complete this further development work at our research and development
centre located in Prague through our subsidiary, ITonis CZ.

Our Business Model

We plan to commercialise our ITonis video solution based on two
separate business models:

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- direct sales of computer platforms incorporating our ITonis video solution
  to service providers, such as cable and satellite television companies, and
  content owners; and
- partnering with content providers in order to provide a technology solution
  for video on-demand services for Internet service providers who wish to
  out-source the provision of video on-demand services.

Each of these business models represents a significant aspect
of our business plan and there will be a significantly higher risk that our
business will fail if either of these business models is unsuccessful. While we
plan to pursue each business model as part of our plan of operations, we are at
the early stages of the commercialization of our technology. Accordingly, there
is no assurance that either business model will be successful. Further, we may
elect not to pursue either of these business models or change our business model
in response to our success or lack of success in pursuing commercialization of
our technology.

We may also, from time to time, sell licenses to various
components of our ITonis video solution to businesses involved in the
telecommunications industry. These sales would be separate and distinct from
each of our business models described below. In the later part of fiscal 2006,
we completed the sale and delivery of our media acquisition system component to
a Czech based telecommunications company. In December 2006, we completed
delivery an upgrade of the solution.

Each of these separate business models is discussed below:

Direct Sales Model

We plan to contact potential customers directly using our
internal sales team. We plan to follow the following steps in soliciting sales:

- introductory presentation to client to identify client requirements;
- target presentation that describes the ITonis video solution that is
  required to meet the clients requirements;
- creation of specifications for client solution;
- proposal to client incorporating client specifications and price and
  implementation schedule; and
- negotiation and conclusion of sales contract.

We plan to target direct sales to the following companies:

- Internet service providers;
- Cable television providers;
- Satellite television providers;
- Television broadcasters; and
- Mobile telecommunications providers.

We plan to earn revenues under the direct sales model from the
following activities:

- Sales from the delivery, integration and deployment of our ITonis video
  solution to customers;

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- Support fees charged to customers for ongoing support of installed ITonis
  video solutions; and
- Consulting fees charged for providing business and technical consulting
  services to customers.

We plan to achieve revenues from the sales from the delivery,
integration and deployment of our ITonis video solution to customers who use our
ITonis video solution to deliver video on-demand services to their customers. We
plan to earn a monthly fees based on the number of subscribers to the service:
The monthly fee will include the license fee and the support fee. Typical
monthly fees are between 1USD and 5USD, depending on the services which are
provided and on the Service Level Agreement.

We anticipate that the fees that we charge will be based on
contracts that are negotiated with customers on a case by case basis. As we have
not entered into any commercial contracts to date, we cannot provide any
assurance that our customers will pay fees based upon this business model. We
may be forced to consider alternate payment schemes in order to secure contracts
with customers and be competitive within our market place.

We plan to provide business and technical consulting services
to customers as we achieve success with the commercial deployment of our ITonis
video solution. We believe that there are potential customers who would pay for
our expertise in the deployment of our ITonis video solution once our ability to
provide on-demand video solutions using our solution is established. We
anticipate that consulting fees would be based on hourly rates and that these
rates would vary depending on the country and the use of local workforce.

Internet Service Provider Model

We plan to target businesses that are engaged in the business
of providing Internet services as potential customers for an all-in-one
technology solution for the delivery of on-demand video content via the
Internet. We believe that the ability to offer on-demand video services via the
Internet offers Internet service providers an opportunity both to generate
additional revenues from their customers to whom they provide Internet access
services and to distinguish themselves from competitors who may not be able to
offer on-demand video services via the Internet.

To achieve this objective, we plan to partner with content
providers and set-box manufacturers in order to provide a fully-integrated
technology solution that we would jointly sell to Internet services providers.
We see this service as an out-sourcing model from the perspective of Internet
service providers as it would enable them to acquire the ability to deliver
on-demand video content services to their Internet access clients without having
to become engaged in the business of acquiring the rights to deliver video
content or to implement the technology solution required.

Under this business model, the all-in-one technology solution
would be comprised of the following components:

- the ITonis video solution;
- licensed video content provided by a partner that has acquired ownership or
  licensed rights to video content for distribution via the Internet; and
- a set-top box that would be purchased by the consumer or by the Internet
  service provider and that would reside in the consumers home near their
  television set.

Under this business model, we would deploy and operate the
ITonis video solution as a service for the Internet service provider. We would
supply the video storage, video streaming and Television portal application that
are part of the ITonis video solution and would provide customer support. We
would integrate the ITonis video solution with the billing system and network of
the Internet service provider.

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The content provider would provide the video on-demand content
and would deliver Metadata files in an electronic form that would be loaded onto
the Metadata database incorporated into the ITonis video solution in order that
this information could be accessed by customers. The Internet service provider
would be responsible for the purchase and distribution of the set-top boxes, the
acquisition and provision of subscribers for the on-demand video service,
marketing of the services to subscribers, billing of subscribers and collection
of fees from subscribers and the necessary interfaces between computer networks.

The successful implementation of this business model would
require that we enter into arrangements with partners who would provide the
licensed video content and the set-top boxes. With these arrangements in place,
we would provide joint proposals to Internet service providers for the delivery
of on-demand video services via the Internet to the customers of the Internet
service providers.

We envision that the revenues under this business model would
be based on either revenue sharing with the Internet service provider, based on
revenues generated by providing the service, or a fixed monthly fee that would
be charged to the Internet service provider. Revenues earned in connection with
the provision of the service would then be divided amongst ourselves and the
provider of the licensed video content. The set-top box manufacture would earn
revenues from sales of set-top boxes to the Internet service provider or their
customers. We would prefer that Internet service providers would purchase the
set-top boxes for their customers and recover the cost over time through monthly
charges in order to lower the up-front cost to the consumer. However, Internet
service providers may not wish to pay this up-front expense and may instead
require their customers to purchase the set-top boxes directly. We cannot
provide assurance that Internet service providers will accept either our revenue
model or our plan to have the Internet service providers acquire the set-top
boxes directly.

We have entered into discussions with both a provider of
licensed content and a set-top box manufacturer. The set-top box manufacturer is
Kreatel, as mentioned above under Status of Development. While we have entered
into discussions with these parties, we do not have any agreement in place for
the submission of proposals to Internet service providers.

We have entered into discussions with a Cisco distributor in
Czech Republic and Slovakia and are in the final phase of discussions to have a
distributorship agreement in place in the near future. To date, we have
submitted several joint proposals with this company in the Czech Republic and
Slovakia in answer to their Request For Information and Request For Proposal. If
successful, we would be in a position where we would be able to quickly deploy
our platform for a pilot or a full scale deployment. There is no assurance that
any of our proposals will be accepted or that a distributorship agreement will
be concluded.

We have delivered the ITonis media acquisition system to a
major telecommunications company in the Czech Republic in fiscal 2006. In
December 2006, we delivered an upgrade to the system and new features have been
deployed. The system is currently live and in operation.

We anticipate that we will be required to complete additional
technical work in connection with the provision of each solution for an Internet
service provider. The optimal configuration of each solution will depend on a
number of factors, including the network infrastructure that the solution will
operate on, the capability of the solution in terms of the number of
simultaneous video data streams that may be handled and any required
communications between multiple networks. These factors will need to be
discussed with the Internet service provider in the course of submitting
proposals and agreeing to contract prices.

We believe that this business model will be attractive to many
smaller Internet service providers who do not have the technical capabilities or
the financial resources to implement and deliver an on-demand Internet video
solution for their clients. We also believe that this business model offers us a
means of achieving an initial commercial deployment of our ITonis video solution
which we could then use to demonstrate to potential customers who may purchase
under our direct sales model.

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Product support

Once we achieve commercial deployment of our ITonis video
solution, we plan to support installed solutions by a support team. The support
team will have the necessary training and knowledge to perform:

- basic maintenance operations
- installation of upgrades to software as upgrades are developed
- application of software patches to solve operational problems
- basic troubleshooting of customer operations

Our support team will be based in our research and development
facility in Prague and will be supported by our research and development team.

Marketing and Sales Plan

Our marketing activities to date have been centered on
introducing and raising the profile of the ITonis software to potential
customers and partners. Due to the geographic position of our offices and
business relationships, we have mostly targeted our marketing efforts inside
Czech Republic and Scandinavia.

The level of our marketing activity has been restrained by our
limited financial resources. As such we have been unable to promote our ITonis
video solution in regional, national or international press through direct
advertising or through web based advertising. Our focus has been to raise our
profile through a combination of working with public relations specialists, web
site promotions, web forums, industry networking events and trade shows.

Our marketing tools presently include our web site at www.itonis.tv and product leaflets. We are also able to
provide product demonstrations of the ITonis video solution at our research and
development facility in Prague.

Our initial marketing efforts will consist of promoting
directly our solution to our key target groups while working to develop
relationships with potential partners to optimize the exposure of our ITonis
video solutions. To develop our network of potential partners and seek new
business opportunities, we have visited key trade shows and events associated
with our industry. We were also present at the IBC exhibition in Amsterdam and
IPTV World Forum in London as an exhibitor. Parallel to our direct sales
approach, we are also attempting to identify potential partners in order to
develop our Internet service provider model.

We also plan to enter into arrangements with key technology
distributors who offer the potential to act as distributors or resellers for our
ITonis video solution. Many technology distributors have established customer
relationships with Internet service providers, mobile telecommunications
operators and television cable companies to whom they sell computer hardware and
software. As many of these distributors will not have the ability to offer a
technology solution for the delivery of on-demand video via the Internet, we
believe that there is a business opportunity for us to enable them to deliver
this technology solution and in effect become a one-stop shop for their
customer needs. We also believe that establishing relationships with technology
distributors can lead to new business opportunities through customers that
approach technology distributors looking for a technology solution for the
delivery of on-demand video via the Internet.

We have recently been contacted by a number of resellers that
are interested in our technology. We may, subject to having sufficient funding,
deploy demonstration video on demand solutions with interested resellers in
order that the resellers can demonstrate our solutions to their clients.

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Employees

As of the date of this prospectus, we have eleven full-time
employees and 3 part time employees. All are employed by ITonis CZ and are based
in Prague.

Competition

Customer Approach

They are numerous companies that propose to deliver on-demand
video solutions over Internet with the goal of offering end users the choice of
what they watch and when. To achieve this goal, these companies use the
following different concepts, each of which we will compete against as we
attempt to commercialise our ITonis video solution:

Intelligent Set top boxes:

Many companies offer intelligent set top boxes with an
integrated hard disk for recording programs. Some of the most advanced companies
in this field are TiVo and Replay TV.

PC Client based solution:

In this case, the intelligence is located inside the PC. End
users must download and install a client on their home PC (connected to the home
TV).Using this software, users are able to record programs and stream to various
devices. One of the most advanced companies is Orb Networks, Inc.

Network based solution  Local deployment:

The intelligence and the key infrastructure are now located on
the network. The players in this category typically address the needs of hotels,
hospitals or residential complex. One of the players in this field is Eona.

Network based solution  Regional deployment:

The intelligence and the key infrastructure are again located
on the network. However, the solution is much more scalable and thousands of end
users can be served nationwide. ITonis belongs to this category. Other major
players in this category are Kasenna, Envivio and Orca.

The following table compares the different customer
approaches.

Intelligent Set top box
    PC client based solution
    Network based  small
      deployment
    Network based  large
      deploymentEnd userChoice
    Limited hard disk space. Need to
      program the set top box.
    Limited hard disk space. Need to
      program the PC in advance.
    Depends on what the service provider puts on
      the network and his ability to manage content. No limitation on
      the amount available.
    All programs the service providers have
      access to. No limitation on the amount available.


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Intelligent Set top box
    PC client based solution
    Network based  small
      deployment
    Network based  large
      deploymentAccess
      Requires user to transfer the program to the device
        in advance.  Ability to access from an Internet connected
        device. 
        PC must be on and 
        upstream capacity sufficient.
    Movies are available only locally.
    Possibility to access programs from any
      broadband Internet connected device.Cost
    Expensive device but usually sponsored by the
      service providers.
      Piece of software to download is inexpensive. PC needs to be on at all times.
    Usually, end device is not owned by the end
      users.
    Simple Set top box needed.Ease of use
    Easy click to record requires programming.
    Easy click to record requires programming.
    All the programs are available when you
      want them.
    All the programs are available when you
      want them.Service providerCost
    Data acquisition and Streaming plus set-top box
      sponsorship.
    Data acquisition and Streaming.
    Network infrastructure (Data acquisition plus
      storage plus streaming).
    Network infrastructure (Data acquisition plus
      storage plus streaming).Revenues
      Usually, simple monthly fee for TV access.  Usually, simple monthly fee for TV access.
    More options: pay per view and/or monthly fee.
    More options: pay per view and/or monthly fee.Maintenance
    Major upgrade needed.
    Easy software upgrades.
    Upgrades can be done easily on the network. No
      intervention at the customer level.
    Upgrades can be done easily on the network. No
      intervention at the customer level.Security
      Little control over how end users handle video
        content.
      Little control over how end users handle video
        content.
    Content is streamed to known devices.
    Streamed content allows better control
      (possibility to use DRM and watermarking).


ITonis Positioning

Most of the competitors that we are aware of have identified
video on demand as a key service within their business model. Their aim is to
provide to their existing customers and others a complete video on demand
solution. Most of these competitors did not develop their own solution and, as a
result, present themselves as systems integrator, although they may provide one
or several components. We believe that these competitors will market their
solutions to service providers who will then be able to choose the components
from the portfolio of technology vendors they support (such as streamers,
storage, set top boxes, and digital rights management) and integrate the
different components. We believe that their strategy is to play on flexibility
and to provide an extensive list of vendors that they are able to integrate.

We believe that the key differentiator between ITonis and our
competitors is that we are able to deliver a full end to end video on demand
solution developed in-house. By doing so, we intend to compete by offering the
potential to significantly cut the integration cost between vendors and limit
the interoperability risk between third party vendors. We believe this
integration issue is such a challenge that such companies such as Orca have
based their whole delivery model on integration. The main components are
delivered by third party vendors while they provide the glue by integrating
the application portal and other end user interfaces. Because of high
integration costs, these vendors may not be able to provide solution for small
deployments. We have identified small deployments as a market

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opportunity and intend to target these deployments in order to
enable us to achieve commercial deployments of our ITonis video solution and to
help us become recognized as a reliable provider of video on demand solutions.
In addition, we are able to offer key features on a simple 2Mb Internet line as
a result of using advanced technologies such as RTP/RTSP network protocols.

Key Competitors

There are several competitors that offer on-demand video
solutions via the Internet. Most of them specialize on specific components that
they integrate with other vendors. As a result, they are able to offer a
complete end to end solution. The list below presents the main competitors that
have been identified.

The potential competitors named below provide video on demand
solutions in their portfolio but, to our knowledge, most of them do not have any
solutions that are in operation with a major service provider. The market for
video on demand delivered over the Internet is very young and large deployments
are rare. Most of the service operators are now in the process of evaluating the
different technology offerings before making a significant commitment in the
field. As we are now able to deliver these video on demand solutions, we regard
ourselves as competitors to following companies. Our strategy to compete with
these competitors is to obtain as early as possible our first commercial
deployment of our ITonis video solution and from this point try to achieve as
many commercial deployments as we are able to deliver before competitors enter
into arrangements with Internet service providers.

The market for our technology is still emerging. We feel it is
appropriate to list the following companies as our competitors because we feel
they may have or develop technology that could affect our business opportunities
by targeting the same customer base for their services.

Kasenna

Kasenna is a California based company that focuses on storage
and streaming servers. The company was previously focusing on providing local
solutions for hotels and hospitals. With the growth of on-demand video and
Internet video services, Kasennas focus has turned towards the delivery of
complete solutions for service operators. Kasennas storage servers are used by
some major players such as CNN and Fastweb. In a press release dated June 26,
2006, Kasenna announced the deployment of a MPEG-4 IPTV. As a competitor
offering the same range of solutions, with the same industry focus, Kasenna may
win contracts over us based on their experience and references.

Envivio

Envivio is a former division of France Telecom that was spun
off in 2000. Envivio is now a United States company that conducts research and
development in France. We are not aware of any solution that has been brought to
market by Envivio. As a business focused on delivering video solution based on
MPEG-4, Envivio has extensive knowledge on the MPEG-4 format. Envivio is
considered an industry expert in MPEG-4 products and systems. If the industry
moves towards an MPEG-4 standard, Envivio will be a key competitor in this
market.

Orca Interactive

Orca Interactive is part of the Emblaze group which is traded
on the London Stock Exchange. Orca is a provider of middleware and applications
for Internet and video on-demand solutions. Orca works with multiple partners in
order to deliver end to end solutions. They provide integrated solutions using
the components chosen by their clients. Orca has signed many agreements with
different service providers as a system integrator but we are not aware of any
publicly announced live deployments. Orca focuses on large customers in this
market. If the market develops quickly and service providers require large
deployments without small pilot or trial, it will affect our ability to compete
against Orca Interactive.

Sentivision

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Sentivision is a Japanese company that conducts research and
development in Poland. We understand their objective is to provide a full end to
end solution to their clients, including set top boxes. Accordingly, their
approach is similar to our approach. We are not aware of any live deployment for
the Sentivision solution. Since Sentivisions development approach is very
similar to ours, Sentivision may be aiming at the same customer base.

Tandberg Television

Tandberg Television is listed on the Oslo stock market and has
operations in Asia, Australia, Europe and Americas. While the company was
originally focused on encoders and decoders, we understand they have added an
Internet television offering to their product range and are now able to offer
this type of solution. Tandberg Television with their partner, Broadbus
Technologies, Inc., claim to enable video-on-demand in more than 30 markets.
Tandberg Television is a recognised company, especially in the video encoding
industry. Their resources are significantly greater than ours.

Cisco

We believe Cisco is aiming at entering the television over
Internet market. They have recently purchased Scientific Atlanta to enhance
their offering of video services. Cisco has the resources to have a significant
impact on the market. Their strategy regarding on-demand video is not known.
There is a possibility that they will utilize IPTV and on-demand service as a
means to increase the need for their core products, being network
infrastructure. They may offer solutions at a very low cost as a means to
increase the need for network upgrades. This would affect the competitive
environment of the market.

Many of these competitors will have greater financial,
technical and personnel resources than we do. Accordingly, they may be able to
develop Internet video solutions faster than we can and bring these solutions to
the market faster than we would be able to given our limited resources. Further,
the brand name and industry recognition of these competitors may result in
businesses that are potential customers to us deciding to purchase and deploy
the Internet video solutions offered by our competitors.

Intellectual Property

General

We own intellectual property rights relating to the ITonis
suite of software applications that includes trade secrets and copyright. We
seek to protect our intellectual property by generally limiting access to it,
treating portions of it as trade secrets and obtaining confidentiality or
non-disclosure agreements from persons who are given access to it, including our
developers.

TradeMark Applications

We are presently planning to seek trademark protection of the
ITonis name and logo. We presently have not been granted any trademark
protection of the ITonis name and logo and there is no assurance that we will
achieve trademark protection.

Patents

We presently do not have any patents on the ITonis video
solution.

Trade Secrets and Copyright

We enter into non-disclosure agreements with our employees and
with arms length parties with whom we may be in business negotiations or with
whom we may have contracted with. Further, we provide in our agreements with our
employees that the intellectual property that they create during their
employment with us is our property. There is a risk that employees and third
parties with whom we have non-

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disclosure agreements may breach their agreements with us by
disclosing our trade secrets or copying works, such as our computer software, in
which we may be entitled to copyright protection. Further, employees or third
parties may attempt to use our trade secrets and copyrighted works for their own
purposes, including competing with us.

Government Regulation

The telecommunications industry is highly regulated, and both
we and our future customers and users may be affected by changes in regulation
of telecommunication services. As we will be providing the technology solution
to those businesses that provide telecommunications directly to consumers, we
anticipate that we will not be directly subject to government regulation of the
delivery of telecommunications services. However, regulations that restrict or
prohibit the delivery of video services via the Internet will have the effect of
reducing the potential market for our ITonis video solutions. Accordingly, the
indirect impact of changes in government regulation could affect our business
adversely even though the specific regulations do not apply directly to us or
our services. Modifying our ITonis video solution to enable our customers and
users to comply with government regulation may be costly and time-consuming and
our failure to do so could result in our inability to commercialize our video
solutions and carry out our plan of operations. Further, the existence of
government regulation in markets into which we may wish to enter may impose
prohibitive costs of operation which could result in our determination not to
offer our ITonis video solutions in these markets. In addition, laws that handle
those issues do not exist in some countries and need to be drafted.

Item
2.               
Description of Property

Our executive office is located at Klimentska 10, 110 00 Praha
1, Czech Republic. We occupy the premises under a contract with Achat Real a.s,
which provides us with approx. 1680 square feet of office space in consideration
of a monthly fee of €1,950.87 ($2,570.38 per month based on a foreign exchange
rate on November 30, 2006 of $1: € 0.75898) . We use this facility as our
research and development facility for out ITonis video solutions. These premises
are presently adequate for our current business purposes.

Item
3.               
Legal Proceedings

We currently are not a party to any material legal proceedings
and to our knowledge, no such proceedings are threatened or contemplated.

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

No matters were submitted to our security holders for a vote
during the three months ended November 30, 2006.

PART II

Item
5.               
Market for Common Equity and Related Stockholder Matters

Market Information

Shares of our common stock are quoted on the OTC Bulletin Board
under the symbol ITNS. Our common stock became eligible for trading on the OTC
Bulletin Board on February 20, 2007.

The following table indicates the high and low bid prices of
our common stock during the periods indicated:

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Quarter Ended
    High Bid
    Low BidFebruary 28, 2007
    $0.170
    $0.051


The source of the high and low bid information is the NASD OTC
Bulletin Board. The market quotations provided reflect inter-dealer prices,
without retail mark-up, markdown or commission and may not represent actual
transactions.

Holders of Our Common Stock

As at March 20, 2007, we had 150 registered holders of our
common stock.

Dividends

There are no restrictions in our articles of incorporation or
by-laws that prevent us from declaring dividends. The declaration of dividends
is at the discretion of our board. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:

- we would not be able to pay our debts as they become due in the usual
  course of business; or
- our total assets would be less than the sum of our total liabilities plus
  the amount that would be needed to satisfy the rights of stockholders who have
  preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to
declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

We issued the following shares of our common stock without registration
  under the Securities Act of 1933 (the Act) during our fiscal year
  ended November 30, 2006:

- We issued 18,000,000 shares of our common stock to Nordic IPTV Company
    ApS (formerly Makeitwork ApS) on February 7, 2006 pursuant to an asset purchase
    agreement between us and Nordic IPTV dated January 31, 2006. These shares
    were issued in consideration for the transfer to us by Nordic IPTV of acquisition
    of the intellectual property relating to its television portal application
    server technology. We completed this offering pursuant to Section 4(2) of
    the Securities Act and Rule 903 of Regulation S of the Securities Act. None
    of the securities were sold through an underwriter and accordingly, there
    were no underwriting discounts or commissions involved. No registration rights
    were granted to Nordic IPTV. These shares of common stock are restricted shares,
    as defined in the Securities Act, and have been endorsed with a legend confirming
    that the shares cannot be resold or transferred unless registered under the
    Securities Act or pursuant to an exemption from the registration requirements
    of the Securities Act. In addition, the issuance of shares to Nordic IPTV
    was completed as an offshore transaction, as defined in Rule 902(h)
    of Regulation S, in which we did not engage in any directed selling efforts,
    as defined in Regulation S. Nordic IPTV represented to us that it is not a
    U.S. person, as defined in Regulation S, was not acquiring the shares for
    the account or benefit of a U.S. Person and did not execute the asset purchase
    agreement in the United States.
- We issued 2,215,692 shares of our common stock at a price of $0.0833 per
    share to a total of nine purchasers on April 10, 2006 for total proceeds of
    $184,641. We completed this offering pursuant to Rule 903 of Regulation S
    of the Securities Act. Each sale of shares was completed as an offshore
    transaction, as defined in Rule 902(h) of Regulation S, on the basis
    that: (i) each investor was outside of the United States at the time the offer
    to purchase the shares was made;

- 21 -

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We have issued the following shares of our common stock without
  registration under the Act subsequent to our fiscal year ended November 30,
  2006:

- We issued 1,355,364 shares of our common stock at a price of $0.0833 per
  share to a total of two purchasers for total proceeds of $112,947. We
  completed this offering pursuant to Rule 903 of Regulation S of the Securities
  Act. Each sale of shares was completed as an offshore transaction, as
  defined in Rule 902(h) of Regulation S, on the basis that: (i) each investor
  was outside of the United States at the time the offer to purchase the shares
  was made; and (ii) at the time the subscription agreement for the shares was
  executed, the investor was outside of the United States or we had a reasonable
  belief that the investor was outside of the United States. We did not engage
  in any directed selling efforts, as defined in Regulation S, in the United
  States. Each investor represented to us that the investor was not a U.S.
  person, as defined in Regulation S, and was not acquiring the shares for the
  account or benefit of a U.S. Person. Each purchaser represented their
  intention to acquire the securities for investment only and not with a view
  toward distribution. Appropriate legends have been affixed to the stock
  certificate issued to each purchaser in accordance with Regulation S
  confirming that the shares cannot be resold or transferred other than pursuant
  to Regulation S, registration under the Securities Act or an exemption from
  the registration requirements of the Securities Act. None of the securities
  were sold through an underwriter and, accordingly, there were no underwriting
  discounts or commissions involved. No registration rights were granted to any
  of the purchasers.
- We issued 1,200,000 shares of our common stock at a price of $0.0833 per
  share to Spectrum Managers Ltd. for total proceeds of $100,000. We completed
  this offering pursuant to Rule 903 of Regulation S of the Securities Act. The
  sale of shares was completed as an offshore transaction, as defined in Rule
  902(h) of Regulation S, on the basis that: (i) the investor was outside of the
  United States at the time the offer to purchase the shares was made; and (ii)
  at the time the subscription agreement for the shares was executed, the
  investor was outside of the United States or we had a reasonable belief that
  the investor was outside of the United States. We did not engage in any
  directed selling efforts, as defined in Regulation S, in the United States.
  The investor represented to us that the investor was not a U.S. person, as
  defined in Regulation S, and was not acquiring the shares for the account or
  benefit of a U.S. Person. The investor represented its intention to acquire
  the securities for investment only and not with a view toward distribution.
  Appropriate legends have been affixed to the stock certificate issued to each
  purchaser in accordance with Regulation S confirming that the shares cannot be
  resold or transferred other than pursuant to Regulation S, registration under
  the Securities Act or an exemption from the registration requirements of the
  Securities Act. None of the securities were sold through an underwriter and,
  accordingly, there were no underwriting discounts or commissions involved. No
  registration rights were granted to the purchaser. Spectrum Managers did not
  complete on the purchase of the balance of 10,800,000 shares as originally
  contemplated by the subscription agreement between us and Spectrum Managers
  dated December 12, 2006. This subscription agreement has been terminated by
  us.

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- We issued 600,000 shares of our common stock to a consultant pursuant to a
  consultant agreement in consideration for services provided by the consultant.
  We completed this offering pursuant to Rule 506 of Regulation D of the
  Securities Act on the basis that the consultant is an accredited investor,
  as defined in Rule 501(a) of the Securities Act. The investor represented its
  intention to acquire the securities for investment only and not with a view
  toward distribution. Appropriate legends have been affixed to the stock
  certificate issued to the purchaser in accordance with Regulation D confirming
  that the shares cannot be resold or transferred other than pursuant
  registration under the Securities Act or an exemption from the registration
  requirements of the Securities Act. None of the securities were sold through
  an underwriter and, accordingly, there were no underwriting discounts or
  commissions involved. No registration rights were granted to the consultant.

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

The following discussion of our financial condition, changes in
financial condition and results of operations for the year ended November 30,
2006 should be read in conjunction with our audited consolidated financial
statements and related notes for the year ended November 30, 2006.

Our Plan of Operations

Our plan of operations for the next twelve months is to
complete the following objectives within the time periods and within the budgets
specified, subject to our achieving the requisite financing:

|1. | We plan to carry on the development of the ITonis video
      solution from our research and development facility in Prague. Our general
      administrative overhead cost for our Prague office is approximately
      $40,000 per month. This amount includes salaries, computer hardware, rent
      and other general expenses associated with our Prague office. If we are
      successful in securing initial commercial sales of our ITonis video
      solutions, then we anticipate that these expenses may increase to $80,000
      per month by the end of the second quarter of fiscal 2007, subject to
      financing. This increase in cost would be attributable to adding
      additional personnel to our development team and to put in place a team of
      employees to provide customer support services.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | We plan to carry out sales and marketing of our ITonis
      video solution over the next twelve months with the objective of securing
      sales to several clients. Our direct marketing activities will be carried
      out by our employees from our Prague office. As such, the expense for
      these marketing activities will be within our general and administrative
      expenses for the Prague office, as outlined above. In addition, ITonis
      distributors (Nordic IPTV Company ApS and Sofia Digital) undertake those
      activities for which we pay a percentage of the sales.                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|3. | We plan to launch an operation pilot scale solution for
      an Internet service provider ISP. The purpose of the pilot project would
      be to allow us to complete the testing of our ITonis video solution in a
      live environment and to enable us to have an operating solution that we
      can use for demonstration purposes in connection with our marketing
      activities. We anticipate that it would cost approximately $10,000 in
      additional expenses to launch this operation.                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | We plan to deploy a small scale commercial solution for
      an Internet service provider in China that will offer the basic
      functionality of the ITonis video solution. We anticipate that this
      installation would cost approximately $50,000. This cost would cover the
      hardware and software for the solution. Implementation will be performed
      by ITonis CZ. This component of our plan of operations is contingent upon
      us securing a joint venture with a local partner.                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|5. | We anticipate spending approximately $4,000 in ongoing
      general, legal and administrative expenses per month for the next twelve
      months, for a total anticipated expenditure of $48,000 over the next
      twelve months. These general, legal and administrative expenses are
      external                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

- 23 -

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|   | expenses that we anticipate incurring and are in addition
      to the general and administrative expense of the Prague office discussed
      above.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | We anticipate spending approximately $53,000 in complying
      with our obligations as a reporting company under the Securities
      Exchange Act of1934. These expenses will consist primarily of
      professional fees relating to the preparation of our financial statements
      and completing our annual report, quarterly report, current report and
      proxy statement filings with the SEC.                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | We anticipate spending $120,000 to pay the accrued
      liability in connection with the services provided to us by John Marienhof
      pursuant to our reseller and consulting agreement with Nordic IPTV as
      further described in the sections entitled Organization Since
      Incorporation and Certain Relationships and Related Transactions and
      $17,948 to repay the loan made to us by our chief executive officer
      described below under the heading Liquidity and Capital Resources and in
      the section entitled Certain Relationships and Related
    Transactions.

As at November 30, 2005, we had cash reserves of $164,550 and
working capital of $81,093. As at November 30, 2006, our cash reserves had
declined to $1,571 and we had a working capital deficit of $442,867. Our planned
expenditures over the next twelve months are $1,000,000. Accordingly, we
anticipate that we will require financing in the amount of approximately
$1,500,000 in order to carry out our plan of operations for the next
twelve months.

During the twelve month period following the date hereof, we
anticipate that we will not generate revenues that exceed our operating costs.
We anticipate based on our current cash and working capital and our planned
expenses that we will be able to continue our plan of operations over the next
one month without additional financing. This projection does not account for any
revenues that we may earn from licensing sales of components to our ITonis video
solution. We believe that we will require additional financing in order to
commercialize our ITonis video solution in order to earn revenues that exceed
our operating expenses.

We have reduced our operating costs to a minimum in order to
preserve our available cash and working capital so that we can continue to
sustain our operations. We anticipate that additional funding will be in the
form of equity financing from the sale of our common stock. We may also seek to
obtain additional financing from our principal shareholders, although none of
our shareholders have committed to advance any shareholder loans to us. We
presently have no arrangements in place for additional financing beyond the
completed offering of units. In the absence of such additional financing, we may
not be able to continue our plan of operations beyond the next month and our
business plan may fail. If we do not obtain the required additional financing,
we will initially scale back our business operations and may ultimately be
forced to abandon our plan of operations and our business activities.

Critical Accounting Policies

Development Stage Company

We are a development stage company as defined by Financial
Accounting Standards No. 7. We are presently devoting all of our present efforts
to establishing a new business. All losses accumulated since inception have been
considered as part of our development stage activities.

Revenue Recognition

We recognize revenue when all of the following criteria have
  been met: persuasive evidence for an arrangement exists; delivery has occurred;
  the fee is fixed or determinable; and collection is reasonably assured. Upfront
  contract payments received from the sale of services not yet earned are initially
  recorded as deferred revenue on the balance sheet.

- 24 -

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Revenue from time and material service contracts is recognized
as the services are provided. Revenue from fixed price, long-term service or
development contracts is recognized over the contract term based on the
percentage of services that are provided during the period compared with the
total estimated services to be provided over the entire contract. Losses on
fixed price contracts are recognized during the period in which the loss first
becomes apparent. Payment terms vary by contract.

Foreign Currency Translations

Our functional currency is the Czech Koruna (CZK), and our
reporting currency is the U.S. dollar. All transactions initiated in other
currencies are re-measured into the functional currency as follows:

| | i)   | Monetary assets and liabilities at the rate of exchange
      in effect at the balance sheet date,
| | ---- | --------------------------------------------------------------------------------------------------
| |      |                                                                                                   
| | ii)  | Non-monetary assets and liabilities, and equity at
      historical rates, and                    
| |      |                                                                                                   
| | iii) | Revenue and expense items at the average rate of exchange
      prevailing during the period.     

Gains and losses on re-measurement are included in determining
net income for the period

Translation of balances from the functional currency into the
reporting currency is conducted as follows:

| | i)   | Assets and liabilities at the rate of exchange in effect
      at the balance sheet date,    
| | ---- | ---------------------------------------------------------------------------------------------
| |      |                                                                                              
| | ii)  | Equity at historical rates, and                                                              
| |      |                                                                                              
| | iii) | Revenue and expense items at the average rate of exchange
      prevailing during the period.

Translation adjustments resulting from translation of balances
from functional to reporting currency are accumulated as a separate component of
shareholders equity as a component of comprehensive income or loss. Upon sale
or liquidation of the net investment in the foreign entity the amount deferred
will be recognized in income.

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts and timing of revenues and expenses, the reported amounts and
classification of assets and liabilities, and disclosure of contingent assets
and liabilities. These estimates and assumptions are based on the Company's
historical results as well as management's future expectations. The Company's
actual results could vary materially from management's estimates and
assumptions.

Software Costs

Effective March 1, 2006, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based
Payment (SFAS 123(R)), which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of SFAS 123(R),
stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees requisite service period (generally the vesting period of the equity
grant). Before March 1, 2006, the Company accounted for stock-based compensation
to employees in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and complied with the disclosure
requirements of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS
123). The Company adopted SFAS 123(R) using the modified prospective method,
which requires the Company to record compensation expense over the vesting
period for all awards granted after the date of adoption, and for the unvested
portion of previously granted awards that remain outstanding at the date of
adoption. Accordingly,

- 25 -

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financial statements for the periods prior to March 1, 2006
have not been restated to reflect the fair value method of expensing share-based
compensation. Adoption of SFAS 123(R) does not change the way the Company
accounts for share-based payments to non-employees, with guidance provided by
SFAS 123 (as originally issued) and Emerging Issues Task Force Issue No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services.

Results Of Operations  Years ended November 30, 2006 and
2005

References to the discussion below to fiscal 2006 are to our
most recently completed fiscal year ended November 30, 2006. References to
fiscal 2005 is to our fiscal year ended November 30, 2005.References to
the fiscal 2007 are to our current fiscal year that will end November 30, 2007.

- 26 -

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|                                    |   |                |   |   | From              |   |   | From              |  
|----------------------------------- | - | -------------- | - | - | ----------------- | - | - | ----------------- | -
|                                    |   | For the Year   |   |   | Incorporation     |   |   | Incorporation     |  
|                                    |   | Ended November |   |   | (July 5, 2005) to |   |   | (July 5, 2005) to |  
|                                    |   | 30, 2006       |   |   | November 30, 2005 |   |   | November 30, 2006 |  
|                                    |   | (Audited)      |   |   | (Audited)         |   |   | (Audited)         |  
|Revenue from sales                  | $ | 24,351         |   | $ | -                 |   | $ | 24,351            |  
|Cost of sales                       | $ | 9,424          |   | $ | -                 |   | $ | 9,424             |  
|Gross profit                        | $ | 14,927         |   | $ | -                 |   | $ | 14,927            |  
|General and Administrative Expenses |   |                |   |   |                   |   |   |                   |  
|Intellectual
      property         |   | 1,500,000      |   |   | 447,637           |   |   | 1,947,637         |  
|Software development costs          |   | 321,433        |   |   | 41,121            |   |   | 362,554           |  
|Marketing and
      distribution    |   | 120,000        |   |   | -                 |   |   | 120,000           |  
|Audit and accounting                |   | 91,493         |   |   | 64,464            |   |   | 155,957           |  
|Salaries &
      wages              |   | 66,581         |   |   | -                 |   |   | 66,581            |  
|Legal                               |   | 59,476         |   |   | 11,792            |   |   | 71,268            |  
|Office                              |   | 54,324         |   |   | 623               |   |   | 54,947            |  
|Consulting                          |   | 35,336         |   |   | -                 |   |   | 35,336            |  
|Rent                                |   | 32,019         |   |   |                   |   |   | 32,019            |  
|Depreciation                        |   | 19,849         |   |   | 841               |   |   | 20,690            |  
|Investor
      Relations            |   | 18,680         |   |   | -                 |   |   | 18,680            |  
|Bad debts                           |   | 9,789          |   |   | -                 |   |   | 9,789             |  
|Stock-based
      compensation      |   | 9,014          |   |   | -                 |   |   | 9,014             |  
|Filing fees                         |   | 7,287          |   |   | -                 |   |   | 7,287             |  
|Foreign Exchange
      Loss         |   | 5,850          |   |   | -                 |   |   | 5,850             |  
|                                    | $ | 2,351,131      |   | $ | 566,478           |   | $ | 2,917,609         |  
|Loss from Operations                |   | ($2,336,204    | ) |   | ($566,478         | ) |   | ($2,902,682       | )
|Other Income (Expense):             |   |                |   |   |                   |   |   |                   |  
|Other
      Income                  | $ | 33,926         |   |   | -                 |   | $ | 33,926            |  
|Loss for the Period                 |   | ($2,302,278    | ) |   | ($566,478         | ) |   | ($2,868,756       | )

- 27 -

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Revenue

We generated our initial revenues during fiscal 2006. We
delivered our encoding platform to a customer for encoding content from DVD
disks onto the customers video demand platform. The encoding platform is one of
the components of the ITonis video solution.

These initial revenues are not significant in relation to our
overall expenses. We anticipate that we will not earn any significant revenues
until such time as we have achieved commercial deployment of our ITonis video
solution.

Intellectual Property

We acquired the TV Everywhere software technology from Onyx
Trading on November 16, 2005 by issuing 30,000,000 common shares. This resulted
in Onyx Trading holding approximately 64% of our shares. The value assigned to
the 10,000,000 common shares was $447,637, being the historical cost of the
technology to Onyx Trading. This is in accordance with SAB Topic 5G as Onyx
Trading has retained a substantial indirect interest in the technology that was
transferred. This amount was expensed during fiscal 2005 as it did not meet the
criteria for capitalization as set out in SFAS No. 86.

We valued the TV portal application software technology that we
acquired from Nordic IPTV at $1,500,000 based on a value of $0.08333 per share
being assigned to the 18,000,000 shares that we issued to Nordic IPTV to acquire
this technology. This amount was expensed during fiscal 2006 as it did not meet
the criteria for capitalization as set out in SFAS No. 86.

Software Development Costs

Software development costs represent amounts attributable to
the development of our proprietary software.

Software development costs during fiscal 2006 included:

- amounts paid to Xeris in respect of development work on our ITonis video
  solution completed by Xeris prior to our taking over software development
  activities from Xeris in January 2006;
- software development work that we completed in-house.

Marketing And Distribution

Our marketing and distribution expenses include amounts that we
pay under our reseller and consulting services agreement with Nordic IPTV. As
this agreement was entered into in February 2006, no expenses under this
agreement were recorded in fiscal 2005.

We recorded $120,000 in expenses under the Nordic IPTV agreement
  in fiscal 2006 in respect of four months of service provided by John Marienhof
  as commercial director of ITonis. In accordance with our agreement with Nordic
  IPTV, this amount has not been paid but has been accrued.

Audit and Accounting

Our accounting and auditing expenses include professional fees
for accounting and auditing expenses incurred in connection with the preparation
and audit of our financial statements.

We incurred significant accounting and auditing expenses during
fiscal 2005 in connection with our corporate organization and the preparation of
our initial financial statements. Accounting and auditing expenses during fiscal
2006 were in connection with the preparation and audit of our financial
statements for fiscal 2005 prepared in connection with the filing of a
registration statement with the SEC. We will

- 28 -

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continue to incur auditing and accounting expenses on an
ongoing basis in connection with our continuous disclosure obligations as a
reporting company under the United States Securities Exchange Act of 1934.

Salaries And Wages

Salaries and wages are primarily comprised of salaries paid to
employees of ITonis CZ who are employed at our research and development facility
in Prague.

Salaries and wages were $nil in fiscal 2005 as we only
completed the acquisition of the our initial software technology from Onyx
Trading on November 16, 2005. Salaries and wages increased in fiscal 2006 as we
hired our initial employees and took over development of the ITonis video
solution from Xeris.

Legal

Our legal expenses include professional fees that we pay to our
legal counsel.

Our legal expenses in fiscal 2005 represent amounts paid to
legal counsel in connection with our corporate organization. Our legal expenses
in fiscal 2006 represent amounts paid to legal counsel in connection with our
corporate organization and the preparation of a registration statement that we
filed with the SEC. We will continue to incur legal expenses on an ongoing basis
in connection with our continuous disclosure obligations as a reporting company
under the United States Securities Exchange Act of 1934.

Office

Our office expenses include the rent that we pay for our
research and development facility in Prague and general office expenses.

Our office expenses increased significantly in fiscal 2006 as
the result of ITonis CZ entering into a lease for our research and development
facility in Prague. This lease expense will be ongoing through fiscal 2007.

Consulting

Consulting fees represent amounts that we pay to consultants
that are engaged by us.

We did not incur any consulting fees during fiscal 2005 as we
were inactive for most of this fiscal year. We incurred consulting fees during
fiscal 2006 as our business activities increased.

Depreciation

Depreciation expenses represents depreciation of our computer
hardware and equipment.

Depreciation expenses in fiscal 2005 and in fiscal 2006
represent depreciation of computer hardware and equipment that we acquired in
connection with the development and testing of our ITonis video solution.

Other Income

Our other income during fiscal 2006 was comprised of:

- Sub-letting part of our ITonis CZ office to iPLATO s.r.o., a company with
  whom ITonis CZ has one director in common;

- 29 -

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- Outsourcing the services of Nicolas Lavaud to Xeris., a company with whom
  ITonis CZ has one director in common, as managing director; and
- Outsourcing the services of Libor Bucinsky to Devoteam, an arms length
  party, for the installation of Telefonica Video on Demand platform at Czech
  Telecom.

We did not generate any significant revenues from the sales or
deployment of our ITonis video solutions during fiscal 2005 or fiscal 2006.

Liquidity And Capital Resources

Cash and Working Capital

As at November 30, 2006, we had cash of $1,571 and a working
capital deficit of $442,867, compared to cash of $164,550 and working capital of
$81,093 as at November 30, 2005.

Related Party Loan

During fiscal 2006 Mr. Lavaud granted us loans totaling
$35,882. The loan is evidenced by a promissory note, is unsecured and does not
bear any interest. The promissory note is payable on demand.

Plan Of Operations

Our planned expenditures over the next twelve months are
approximately $1,000,000. As described above under Our Plan of Operations, we
anticipate that we will require financing in the amount of approximately
$1,500,000 in order to carry out our plan of operations for the next twelve
months. While this amount may be offset by any gross profits that we earn from
sales of our ITonis video solutions, we anticipate that our cash and working
capital will not be sufficient to enable us to undertake our plan of operations
over the next twelve months without our obtaining additional financing.
Accordingly, we anticipate that we will require additional financing in order to
enable us to sustain our operations for the next twelve months, as outlined
above under Our Plan of Operations. We have completed the private placement of
units, as outlined above under Our Plan of Operations, in furtherance of
achieving the required financing, although there is no assurance that the share
purchase warrants issued in connection with this financing will be exercised.

Cash Used In Operating Activities

We used cash in operating activities in the amount of $399,934
during fiscal 2006 compared to $34,543 in fiscal 2005. Cash used in operating
activities was funded by cash from financing activities.

Cash From Investing Activities

We used cash in investing activities in the amount of $33,119
during fiscal 2006 and compared to $30,283 in fiscal 2005. Cash used in
investing activities was attributable primarily to the purchase of computer
hardware and equipment that we have acquired in connection with the development
and testing of our ITonis video solution.

Cash from Financing Activities

We generated cash from financing activities in the amount of
$284,641 during fiscal 2006 compared to $229,376 in fiscal 2005. Cash generated
by financing activities is attributable to the private placement financings of
our common stock that we have completed since our incorporation.

- 30 -

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Going Concern

We have not attained profitable operations and are dependent
upon obtaining financing to pursue any extensive business activities. For these
reasons our auditors stated in their report that they have substantial doubt we
will be able to continue as a going concern.

Future Financings

We anticipate continuing to rely on equity sales of our common
shares in order to continue to fund our business operations. Issuances of
additional shares will result in dilution to our existing stockholders. There is
no assurance that we will achieve any additional sales of our equity securities
or arrange for debt or other financing to fund our planned activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

- 31 -

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Item
7.               
Financial Statements

The following audited consolidated financial statements of
Itonis Inc. (the Company) are included in this Annual report on Form 10-KSB:

|                                                                                                                                                                           | Page
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                           |     
|Report
      of Danziger Hochman Partners LLP, Chartered Accountants                                                                                                       | F-1 
|                                                                                                                                                                           |     
|Report
      of Staley Okada & Partners, Chartered Accountants                                                                                                             | F-2 
|                                                                                                                                                                           |     
|Consolidated
      Balance Sheets as at November 30, 2006 and 2005                                                                                                         | F-3 
|                                                                                                                                                                           |     
|Consolidated
      Statements of Changes in Stockholders Equity for the period from
      incorporation (July 5, 2005) to November 30, 2006                               | F-4 
|                                                                                                                                                                           |     
|Consolidated
      Statements of Operations for the year ended November 30, 2006 and for the
      periods from incorporation (July 5, 2005) to November 30, 2006 and 2005 | F-5 
|                                                                                                                                                                           |     
|Consolidated
      Statements of Cash Flows for the year ended November 30, 2006 and for the
      periods from incorporation (July 5, 2005) to November 30, 2006 and 2005 | F-6 
|                                                                                                                                                                           |     
|Notes
      to Consolidated Financial Statements                                                                                                                           | F-7 

- 32 -

---

ITONIS INC.

(Formerly Kenshou Inc.)

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2006 and 2005

US FUNDS

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
  Stockholders of Itonis Inc.

We have audited the accompanying consolidated balance sheet
  of Itonis Inc. (the Company) (formerly Kenshou Inc.) as of November
  30, 2006, and the related consolidated statements of changes in stockholders
  equity (deficiency), operations, and cash flows for the year ended November
  30, 2006. These financial statements are the responsibility of the companys
  management. Our responsibility is to express an opinion on these financial statements
  based on our audit.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The company
  is not required to have, nor were we engaged to perform, an audit of its internal
  control over financial reporting. Our audit included consideration of internal
  control over financial reporting as a basis for designing audit procedures that
  are appropriate in the circumstances, but not for the purpose of expressing
  an opinion on the effectiveness of the companys internal control over
  financial reporting. Accordingly, we express no such opinion. An audit also
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements, 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 the Company.
  as of November 30, 2006, and the results of its operations and its cash flows
  for the year ended November 30, 2006 in conformity with accounting principles
  generally accepted in the United States of America.

The accompanying consolidated financial statement has 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 suffered
  a working capital deficiency, an accumulated deficit and operating cash flow
  deficit and that raise substantial doubt about its ability to continue as a
  going concern. Managements plans in regard to these matters are also described
  in Note 1. These financial statements do not include any adjustments that might
  result from the outcome of this uncertainty.

/s/ Danziger Hochman Partners LLP



Danziger Hochman Partners LLP
  Toronto, Canada
  April 2, 2007

---

| | 
| | 

Report of Independent Registered Public Accounting Firm

To the Stockholders of ITonis Inc.:

We have audited the accompanying consolidated balance sheet
  of ITonis Inc. (the Company) (formerly Kenshou Inc.) as at November
  30, 2005 and the related consolidated statements of changes in stockholders
  equity, operations, and cash flows for the period ended November 30, 2005. These
  financial statements are the responsibility of the Company's management. Our
  responsibility is to express an opinion on these financial statements based
  on our audit.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The Company
  is not required to have, nor were we engaged to perform an audit of its internal
  control over financial reporting. Our audit included consideration of internal
  control over financial reporting as a basis for designing audit procedures that
  are appropriate in the circumstances, but not for the purpose of expressing
  an opinion on the effectiveness of the Companys internal control over
  financial reporting. Accordingly, we express no such opinion. An audit also
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements, assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audit provide a reasonable basis for our opinion.

As discussed in Note 9 of the November 30, 2005 consolidated
  financial statements, these financial statements have been restated to properly
  reflect the value assigned to the 20,000,000 shares issued for the acquisition
  of an intellectual property (Note 4 of the November 30, 2005 financial statements)
  in accordance with SAB Topic 5G. The restatement indicated above resulted to
  a change in the net loss for the period ended November 30, 2005 and in the accumulated
  deficit during the development stage.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as at November 30, 2005, and the results of its operations and its
  cash flows for the period ended November 30, 2005, in conformity with United
  States generally accepted accounting principles.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 1 of the November 30, 2005 financial statements, the Company is dependent
  upon financing to continue operations, and had suffered losses from operation.
  These matters raise substantial doubt about the Company's ability to continue
  as a going concern. Management's plans in regards to these matters are discussed
  in Note 1 of the November 30, 2005 financial statements. The financial statements
  do not include any adjustments that might result from the outcome of this uncertainty.

Staley, Okada & Partners

|Vancouver, BC, Canada                                              | STALEY, OKADA & PARTNERS
|------------------------------------------------------------------ | ------------------------
|February 17, 2006 (except as to Note 9 of the
      November       | CHARTERED ACCOUNTANTS   
|30, 2005 financial statements, which is as
      of June 16, 2006) |                         



---

|ITonis Inc.                   | Statement 1
|----------------------------- | -----------
|(Formerly Kenshou Inc.)       |            
|(A Development Stage Company) |            
|                              |            
|Consolidated Balance Sheets   |            
|US Funds                      |            

|                                                        |   |              |   |   | As at        |  
|------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                        |   |              |   |   | November 30, |  
|                                                        |   | As at        |   |   | 2005         |  
|                                                        |   | November 30, |   |   | (Restated   |  
|ASSETS                                                  |   | 2006         |   |   | Note 10)     |  
|Current                                                 |   |              |   |   |              |  
|Cash                                                    | $ | 1,571        |   | $ | 164,550      |  
|Accounts receivable                                     |   | 4,934        |   |   | -            |  
|Prepaid expenses                                        |   | 25,590       |   |   | -            |  
|                                                        |   | 32,095       |   |   | 164,550      |  
|                                                        |   |              |   |   |              |  
|Equipment                                               |   | 47,859       |   |   | 29,442       |  
|                                                        | $ | 79,954       |   | $ | 193,992      |  
|                                                        |   |              |   |   |              |  
|                                                        |   |              |   |   |              |  
|LIABILITIES                                             |   |              |   |   |              |  
|Current                                                 |   |              |   |   |              |  
|Accounts payable                                        | $ | 228,463      |   | $ | 36,324       |  
|Accrued liabilities                                     |   | 62,668       |   |   | 15,801       |  
|Due to related parties                                  |   | 183,831      |   |   | 31,332       |  
|                                                        |   | 474,962      |   |   | 83,457       |  
|                                                        |   |              |   |   |              |  
|                                                        |   |              |   |   |              |  
|Going Concern                                           |   |              |   |   |              |  
|                                                        |   |              |   |   |              |  
|                                                        |   |              |   |   |              |  
|STOCKHOLDERS EQUITY (DEFICIENCY)                       |   |              |   |   |              |  
|Capital Stock                                           |   |              |   |   |              |  
|Common stock                                            |   |              |   |   |              |  
|Authorized:                                             |   |              |   |   |              |  
|300,000,000
      common shares with $0.001 par value   |   |              |   |   |              |  
|Issued, allotted and fully
      paid:                  |   |              |   |   |              |  
|68,781,981 common shares (47,216,289                   |   |              |   |   |              |  
|November
      30, 2005)                                |   | 68,782       |   |   | 47,216       |  
|Additional
      paid-in capital                        |   | 2,414,386    |   |   | 629,797      |  
|Preferred stock                                         |   |              |   |   |              |  
|Authorized:                                             |   |              |   |   |              |  
|5,000,000 preferred shares with $0.001 par value        |   |              |   |   |              |  
|Issued and
      fully paid: Nil                        |   | -            |   |   | -            |  
|Accumulated Comprehensive Gain                          |   | (9,420       | ) |   | -            |  
|Deficit Accumulated during the
      development stage |   | (2,868,756   | ) |   | (566,478     | )
|                                                        |   | (395,008     | ) |   | 110,535      |  
|                                                        | $ | 79,954       |   | $ | 193,992      |  

- See Accompanying Notes -

---

|ITonis Inc.                                                                       | Statement 2
|--------------------------------------------------------------------------------- | -----------
|(Formerly Kenshou Inc.)                                                           |            
|(A Development Stage Company)                                                     |            
|                                                                                  |            
|Consolidated Statements of Changes in Stockholders
      **Equity (Deficiency)**
|US Funds                                                                          |            

|                                           |  |              |  |   |            |  |   |            |   |   | Deficit     |   |   |               |   |   |              |  
|------------------------------------------ |  | ------------ |  | - | ---------- |  | - | ---------- | - | - | ----------- | - | - | ------------- | - | - | ------------ | -
|                                           |  |              |  |   |            |  |   |            |   |   | Accumulated |   |   |               |   |   | Total        |  
|                                           |  | Common Stock |  |   | Additional |  |   | During the |   |   | Accumulated |   |   | Stockholders' |  
|                                           |  |              |  |   |            |  |   | Paid-in    |   |   | Development |   |   | Comprehensive |   |   | Equity       |  
|                                           |  | Shares       |  |   | Amount     |  |   | Capital    |   |   | Stage       |   |   | Gain          |   |   | (Deficiency) |  
|                                           |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|Founder shares issued for cash at          |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|$0.001 per share on July 8, 2005           |  | 750,000      |  | $ | 750        |  | $ | (250       | ) | $ | -           |   | $ | -             |   | $ | 500          |  
|Shares issued for cash at $0.007 per       |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|share on September 14, 2005                |  | 12,000,000   |  |   | 12,000     |  |   | 68,000     |   |   | -           |   |   | -             |   |   | 80,000       |  
|Shares issued for cash at $0.033 per       |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|share on November 16, 2005                 |  | 4,466,289    |  |   | 4,466      |  |   | 144,410    |   |   | -           |   |   | -             |   |   | 148,876      |  
|Shares issued for acquisition of           |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|software at $0.015 per
      share on      |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|November 16, 2005 .                        |  | 30,000,000   |  |   | 30,000     |  |   | 417,637    |   |   | -           |   |   | -             |   |   | 447,637      |  
|Loss for the period                        |  | -            |  |   | -          |  |   | -          |   |   | (566,478    | ) |   | -             |   |   | (566,478     | )
|Balance - November 30, 2005                |  | 47,216,289   |  |   | 47,216     |  |   | 629,797    |   |   | (566,478    | ) |   | -             |   |   | 110,535      |  
|Shares issued for acquisition of           |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|intellectual property at $0.083 per        |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|share on February 7, 2006                  |  | 18,000,000   |  |   | 18,000     |  |   | 1,482,000  |   |   | -           |   |   | -             |   |   | 1,500,000    |  
|Shares issued for cash at $0.083 per       |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|share on April 10, 2006                    |  | 2,215,692    |  |   | 2,216      |  |   | 182,425    |   |   | -           |   |   | -             |   |   | 184,641      |  
|Shares allotted for consulting services at |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|$0.083 per share                           |  | 150,000      |  |   | 150        |  |   | 12,350     |   |   | -           |   |   | -             |   |   | 12,500       |  
|Shares allotted for cash at $0.083 per     |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|share                                      |  | 1,200,000    |  |   | 1,200      |  |   | 98,800     |   |   | -           |   |   | -             |   |   | 100,000      |  
|Stock-based compensation                   |  | -            |  |   | -          |  |   | 9,014      |   |   | -           |   |   | -             |   |   | 9,014        |  
|Loss for the period                        |  | -            |  |   | -          |  |   | -          |   |   | (2,302,278  | ) |   | -             |   |   | (2,302,278   | )
|Foreign currency translation adjustment    |  | -            |  |   | -          |  |   | -          |   |   | -           |   |   | (9,420        | ) |   | (9,420       | )
|                                           |  |              |  |   |            |  |   |            |   |   |             |   |   |               |   |   |              |  
|Balance  November
      30, 2006          |  | 68,781,981   |  | $ | 68,782     |  | $ | 2,414,386  |   | $ | (2,868,756  | ) | $ | (9,420        | ) | $ | (395,008     | )

- See Accompanying Notes -

---

|ITonis Inc.                           | Statement 3
|------------------------------------- | -----------
|(Formerly Kenshou Inc.)               |            
|(A Development Stage Company)         |            
|                                      |            
|Consolidated Statements of Operations |            
|US Funds                              |            

|                                              |   |              |   |   | From           |   |   | From           |  
|--------------------------------------------- | - | ------------ | - | - | -------------- | - | - | -------------- | -
|                                              |   | For the      |   |   | Incorporation  |   |   | Incorporation  |  
|                                              |   | Year         |   |   | (July 5, 2005) |   |   | (July 5, 2005) |  
|                                              |   | Ended        |   |   | to             |   |   | to             |  
|                                              |   | November 30, |   |   | November 30,   |   |   | November 30,   |  
|                                              |   | 2006         |   |   | 2005           |   |   | 2006           |  
|Sales                                         | $ | 24,351       |   | $ | -              |   | $ | 24,351         |  
|Cost of Sales                                 |   | 9,424        |   |   | -              |   |   | 9,424          |  
|Gross Profit                                  |   | 14,927       |   |   | -              |   |   | 14,927         |  
|General and Administrative Expenses           |   |              |   |   |                |   |   |                |  
|Intellectual property                         |   | 1,500,000    |   |   | 447,637        |   |   | 1,947,637      |  
|Software development costs                    |   | 321,433      |   |   | 41,121         |   |   | 362,554        |  
|Marketing and distribution                    |   | 120,000      |   |   | -              |   |   | 120,000        |  
|Audit and accounting                          |   | 91,493       |   |   | 64,464         |   |   | 155,957        |  
|Salaries & wages                              |   | 66,581       |   |   | -              |   |   | 66,581         |  
|Legal                                         |   | 59,476       |   |   | 11,792         |   |   | 71,268         |  
|Office                                        |   | 54,324       |   |   | 623            |   |   | 54,947         |  
|Consulting                                    |   | 35,336       |   |   | -              |   |   | 35,336         |  
|Rent                                          |   | 32,019       |   |   |                |   |   | 32,019         |  
|Depreciation                                  |   | 19,849       |   |   | 841            |   |   | 20,690         |  
|Investor relations                            |   | 18,680       |   |   | -              |   |   | 18,680         |  
|Bad debts                                     |   | 9,789        |   |   | -              |   |   | 9,789          |  
|Stock-based compensation                      |   | 9,014        |   |   | -              |   |   | 9,014          |  
|Filing fees                                   |   | 7,287        |   |   | -              |   |   | 7,287          |  
|Foreign exchange loss                         |   | 5,850        |   |   | -              |   |   | 5,850          |  
|                                              |   | 2,351,131    |   |   | 566,478        |   |   | 2,917,609      |  
|                                              |   |              |   |   |                |   |   |                |  
|Loss from Operations                          |   | (2,336,204   | ) |   | (566,478       | ) |   | (2,902,682     | )
|                                              |   |              |   |   |                |   |   |                |  
|Income                                        |   |              |   |   |                |   |   |                |  
|Other income                                  |   | 33,926       |   |   | -              |   |   | 33,926         |  
|                                              |   |              |   |   |                |   |   |                |  
|Loss for the Period                           | $ | (2,302,278   | ) | $ | (566,478       | ) | $ | (2,868,756     | )
|                                              |   |              |   |   |                |   |   |                |  
|Loss per Share
      - Basic and Diluted      | $ | (0.04        | ) | $ | (0.06          | ) |   |                |  
|                                              |   |              |   |   |                |   |   |                |  
|Weighted Average
      Shares Outstanding     |   | 63,271,418   |   |   | 10,238,365     |   |   |                |  
|                                              |   |              |   |   |                |   |   |                |  
|                                              |   |              |   |   |                |   |   |                |  
|Comprehensive Loss                            |   |              |   |   |                |   |   |                |  
|Loss for the period                           | $ | (2,302,278   | ) | $ | (566,478       | ) | $ | (2,868,756     | )
|Foreign currency
      translation adjustment |   | (9,420       | ) |   | -              |   |   | (9,420         | )
|                                              |   |              |   |   |                |   |   |                |  
|Total Comprehensive Loss for the Period       | $ | (2,311,698   | ) | $ | (566,478       | ) | $ | (2,878,176     | )
|                                              |   |              |   |   |                |   |   |                |  
|Comprehensive Loss per Share                  | $ | (0.04        | ) | $ | (0.06          | ) |   |                |  

- See Accompanying Notes -

---

|ITonis Inc.                           | Statement 4
|------------------------------------- | -----------
|(Formerly Kenshou Inc.)               |            
|(A Development Stage Company)         |            
|                                      |            
|Consolidated Statements of Cash Flows |            
|US Funds                              |            

|                                                |   |              |   |   | From          |      |   | From          |     
|----------------------------------------------- | - | ------------ | - | - | ------------- | ---- | - | ------------- | ----
|                                                |   | For the Year |   |   | Incorporation |      |   | Incorporation |     
|                                                |   | Ended        |   |   | (July 5, 2005 | ) to |   | (July 5, 2005 | ) to
|                                                |   | November 30, |   |   | November 30,  |      |   | November 30,  |     
|                                                |   | 2006         |   |   | 2005          |      |   | 2006          |     
|Operating                                       |   |              |   |   |               |      |   |               |     
|Loss for the period                             | $ | (2,302,278   | ) | $ | (566,478      | )    | $ | (2,868,756    | )   
|Items not involving an outlay of cash:          |   |              |   |   |               |      |   |               |     
|Bad debts                                       |   | 9,789        |   |   | -             |      |   | 9,789         |     
|Depreciation                                    |   | 19,849       |   |   | 841           |      |   | 20,690        |     
|Stock-based
      compensation included in      |   |              |   |   |               |      |   |               |     
|wages                                           |   | 9,014        |   |   | -             |      |   | 9,014         |     
|Shares allotted
      for services included in  |   |              |   |   |               |      |   |               |     
|investor
      relations                        |   | 9,651        |   |   | -             |      |   | 9,651         |     
|Intellectual
      property                     |   | 1,500,000    |   |   | 447,637       |      |   | 1,947,637     |     
|Changes in non-cash working capital items:      |   |              |   |   |               |      |   |               |     
|Due from
      related party                    |   | (14,723      | ) |   | -             |      |   | (14,723       | )   
|Prepaid expenses                                |   | (22,741      | ) |   | -             |      |   | (22,741       | )   
|Accounts
      payable                          |   | 192,139      |   |   | 36,324        |      |   | 228,463       |     
|Accrued liabilities                             |   | 46,867       |   |   | 15,801        |      |   | 62,668        |     
|Due to related
      parties                    |   | 152,499      |   |   | 31,332        |      |   | 183,831       |     
|                                                |   | (399,934     | ) |   | (34,543       | )    |   | (434,477      | )   
|                                                |   |              |   |   |               |      |   |               |     
|Investing                                       |   |              |   |   |               |      |   |               |     
|Purchase of equipment                           |   | (33,119      | ) |   | (30,283       | )    |   | (63,402       | )   
|                                                |   | (33,119      | ) |   | (30,283       | )    |   | (63,402       | )   
|                                                |   |              |   |   |               |      |   |               |     
|Financing                                       |   |              |   |   |               |      |   |               |     
|Share issuances for cash                        |   | 284,641      |   |   | 229,376       |      |   | 514,017       |     
|                                                |   | 284,641      |   |   | 229,376       |      |   | 514,017       |     
|                                                |   |              |   |   |               |      |   |               |     
|Effect of exchange rate translation adjustments |   | (14,567      | ) |   | -             |      |   | (14,567       | )   
|                                                |   |              |   |   |               |      |   |               |     
|Net Increase (Decrease) in Cash                 |   | (162,979     | ) |   | 164,550       |      |   | 1,571         |     
|Cash - Beginning
      of period                |   | 164,550      |   |   | -             |      |   | -             |     
|Cash - End of Period                            | $ | 1,571        |   | $ | 164,550       |      | $ | 1,571         |     
|                                                |   |              |   |   |               |      |   |               |     
|Income Taxes Paid                               | $ | -            |   | $ | -             |      | $ | -             |     
|Interest Paid                                   | $ | -            |   | $ | -             |      | $ | -             |     
|                                                |   |              |   |   |               |      |   |               |     
|Supplemental Schedule of Non-Cash               |   |              |   |   |               |      |   |               |     
|Investing and Financing Transactions            |   |              |   |   |               |      |   |               |     
|Shares issued for intellectual
      property   | $ | 1,500,000    |   | $ | 447,637       |      | $ | 1,947,637     |     
|Shares allotted for services                    | $ | 12,500       |   | $ | -             |      | $ | 12,500        |     
|Effect of exchange rate changes on equipment    | $ | 5,147        |   | $ | -             |      | $ | 5,147         |     

- See Accompanying Notes -

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|1. | Organization and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | ITonis Inc. (formerly Kenshou Inc.) (the
        "Company" or ITonis) was incorporated on July 5, 2005 as Kenshou
        Inc. under the laws of the State of Nevada. On December 2, 2005, the Company
        changed its name to ITonis Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company intends to be a provider of
        video solution and services for video content owners and distributors.
        The Companys goal is to facilitate the distribution of video content
        by providing an electronic channel for distribution based on on-demand
        services. The Company intends to position itself as a service/platform
        provider for the delivery of such content.                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As a platform provider, the Company will
        offer video content distributors (ISP, Mobile operators, Cable operator)
        a modular platform with Value Added Services such as IPTV, Video on Demand,
        and TV in the Past. The platform varies in size and the business model
        can be adapted to the customer needs. Outsourced services include content
        for small ISPs to full-scale deployment for millions of subscribers.                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | As a Service provider, the Company will
        deploy video services on the customers network. It will be able
        to integrate any video solutions into any network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Going Concern and Liquidity Considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The accompanying consolidated financial
        statements have been prepared assuming that the Company will continue
        as a going concern, which contemplates, among other things, the realization
        of assets and satisfaction of liabilities in the normal course of business.
        As at November 30, 2006, the Company has a working capital deficiency
        of $442,867, an accumulated deficit of $2,868,756 and has incurred
        an accumulated operating cash flow deficit of $434,477 since incorporation.
        The Company intends to continue funding operations through sales, debt,
        and equity financing arrangements, which may be insufficient to fund its
        capital expenditures, working capital and other cash requirements for
        the next fiscal year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Thereafter, the Company will be required
        to seek additional funds, either through sales, debt, and/or equity financing,
        to finance its long-term operations. The successful outcome of future
        activities cannot be determined at this time, and there is no assurance
        that, if achieved, the Company will have sufficient funds to execute its
        intended business plan or generate positive operating results. In response
        to these conditions, management intends to raise additional funds through
        future debt agreement and private placement offerings.                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These factors, among others, raise substantial
        doubt about the Company's ability to continue as a going concern. The
        accompanying consolidated financial statements do not include any adjustments
        that might result from the outcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|2. | Significant Accounting Policies- Continued
|-- | ------------------------------------------
|   |                                           
|   | b)                                        
|   |                                           
|   |                                           
|   |                                           
|   | c)                                        
|   |                                           
|   |                                           
|   |                                           
|   | d)                                        
|   |                                           
|   |                                           
|   |                                           
|   | e)                                        
|   |                                           
|   |                                           
|   |                                           
|   | f)                                        
|   |                                           
|   |                                           
|   |                                           
|   | g)                                        
|   |                                           
|   |                                           

| |                               |  | Estimated useful      | 
| | ----------------------------- |  | --------------------- | 
| |                               |  | life
      (in years) | 
| | Office and computer equipment |  | 3                     | 

Maintenance, repairs and minor renewals
  are charged directly to the statement of operations as incurred. When assets
  are disposed of, the related cost and accumulated depreciation thereon are removed
  from the financial statements and any resulting gain or loss is included in
  the statement of operations.

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|2. | Significant Accounting Policies-
        Continued
|-- | --------------------------------------------------
|   |                                                   
|   | h)                                                
|   |                                                   
|   |                                                   
|   |                                                   
|   | i)                                                
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   | j)                                                
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   
|   |                                                   

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|2. | Significant Accounting Policies 
      Continued
|-- | -------------------------------------------------
|   |                                                  
|   | k)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | l)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | m)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   | n)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | o)                                               
|   |                                                  
|   |                                                  

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|2. | Significant Accounting Policies 
      Continued
|-- | -------------------------------------------------
|   |                                                  
|   | p)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | q)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | r)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | s)                                               
|   |                                                  
|   |                                                  

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|2. | Significant Accounting Policies 
      Continued
|-- | -------------------------------------------------
|   |                                                  
|   | t)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   | u)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   | v)                                               
|   |                                                  
|   |                                                  

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|2. | Significant Accounting Policies 
      Continued
|-- | -------------------------------------------------
|   |                                                  
|   | v)                                               
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  
|   |                                                  

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|3. | Equipment                      |  
|-- | ------------------------------ | -
|   |                                |  
|   | Details are as follows:        |  
|   |                                |  
|   |                                |  
|   |                                |  
|   |                                |  
|   | Office equipment and furniture | $
|   | Effect of exchange rate        |  
|   | changes on equipment           |  
|   |                                | $

|4. | Software Costs               
|-- | -----------------------------
|   |                              
|   | a)                           
|   |                              
|   | b)                           
|   |                              
|5. | Commitments and contingencies
|   |                              
|   | a)                           

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|5. | Commitments and contingencies -Continued                                   
|-- | ---------------------------------------------------------------------------
|   |                                                                            
|   |                                                                            
|   |                                                                            
|   | b)                                                                         
|   |                                                                            
|   |                                                                            
|   |                                                                            
|   | c)                                                                         
|   |                                                                            
|6. | Segmented Information                                                      
|   |                                                                            
|   | Details on a geographic basis as at November 30,
      2006 are as follows:

| |                                                                             |   | Eastern  |   |   |            |   |   |            |  
| | --------------------------------------------------------------------------- | - | -------- | - | - | ---------- | - | - | ---------- | -
| |                                                                             |   | Europe   |   |   | U.S.A.     |   |   | Total      |  
| | Assets                                                                      | $ | 73,623   |   | $ | 6,331      |   | $ | 79,954     |  
| | Revenue                                                                     | $ | 24,351   |   | $ | -          |   | $ | 24,351     |  
| | Loss for the year                                                           | $ | (437,093 | ) | $ | (1,865,185 | ) | $ | (2,302,278 | )
| |                                                                             |   |          |   |   |            |   |   |            |  
| | Details on a geographic basis as
      at November 30, 2005 are as follows: |   |          |   |  
| |                                                                             |   | Eastern  |   |   |            |   |   |            |  
| |                                                                             |   | Europe   |   |   | U.S.A.     |   |   | Total      |  
| | Assets                                                                      | $ | 39,812   |   | $ | 154,180    |   | $ | 193,992    |  
| | Loss for the period                                                         | $ | (1,798   | ) | $ | (564,680   | ) | $ | (566,478   | )

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005 US Funds

|7. | Related Party Balances and Transactions                                                                 
|-- | --------------------------------------------------------------------------------------------------------
|   |                                                                                                         
|   | Related party transactions not disclosed
        elsewhere in these financial statements are as follows:
|   |                                                                                                         
|   | a)                                                                                                      
|   |                                                                                                         
|   | b)                                                                                                      
|   |                                                                                                         
|   | c)                                                                                                      
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   | d)                                                                                                      
|   |                                                                                                         
|   | e)                                                                                                      
|   |                                                                                                         
|   | f)                                                                                                      
|   |                                                                                                         
|   | g)                                                                                                      
|   |                                                                                                         
|   | h)                                                                                                      
|   |                                                                                                         
|   |                                                                                                         

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|8. | Income Taxes
      The Company has accumulated net operating losses for U.S.
        federal income tax purposes of approximately $582,657, which may be carried
        forward until 2025 and used to reduce taxable income of future years and
        net operating losses for Czech income tax purposes of approximately $436,015,
        which may be carried forward until 2011 and used to reduce taxable income
        of future years. In addition, the Company has $1,947,637 of intellectual
        property costs deductible for tax purposes at $130,000 per year. Details
        of deferred income tax assets:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                      |   | November 30, |   |   | November 30, |  
| | ---------------------------------------------------- | - | ------------ | - | - | ------------ | -
| | Deferred income tax assets:                          |   | 2006         |   |   | 2005         |  
| | Non-capital losses                                   | $ | 1,018,672    |   | $ | 123,815      |  
| | Intellectual
      property costs deductible for tax |   | 1,829,487    |   |   | 442,663      |  
| | purposes                                             |   |              |   |   |              |  
| |                                                      |   | 2,848,159    |   |   | 566,478      |  
| | Effective US and CZ corporate
      tax rates        |   | 30%          |   |   | 34%          |  
| | Deferred income
      tax asset                      |   | 854,451      |   |   | 192,603      |  
| | Valuation allowance                                  |   | (854,451     | ) |   | (192,603     | )
| |                                                      | $ | -            |   | $ | -            |  

|   | The potential future tax benefits of these
        losses have not been recognized by the Company in these financial statements
        due to uncertainty of their realization. When the future utilization of
        some portion of the carryforwards is determined not to be more likely
        than not, a valuation allowance is provided to reduce the recorded
        tax benefits from such assets.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|9. | Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                               

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|9. | Capital Stock -Continued
|-- | ------------------------
|   |                         
|   | d)                      
|   |                         
|   | e)                      
|   |                         
|   |                         
|   |                         
|   |                         
|   |                         
|   |                         

| | Expected dividend yield         | 0.00%  
| | ------------------------------- | -------
| | Expected stock price volatility | 77%    
| | Risk-free interest rate         | 4.88%  
| | Expected life of options        | 3 years

Because the shares of the Company have
  not begun trading on any recognized stock exchange, there is no trading history
  to establish the expected volatility. The Company has used the average volatility
  for three companies in the same industry or considered to be comparable.

The weighted average fair value of the
  options granted was $0.02.

Option pricing models require the input
  of highly subjective assumptions including the estimate of the share price volatility.
  Changes in the subjective input assumptions can materially affect the fair value
  estimate, and therefore, the existing models do not necessarily provide a reliable
  single measure of the fair value of the Companys stock options.

---

ITonis Inc.(Formerly Kenshou Inc.)(A Development Stage Company)Notes to Consolidated Financial Statements November 30, 2006 and 2005US Funds

|10. | Restatement
|--- | -----------

The consolidated financial statements
  for the period ended November 30, 2005 have been restated to properly reflect
  the value assigned to the intellectual property acquired by the Company on October
  1, 2005 (Note 4a) from $1,000,000 to $447,637.

The 30,000,000 shares issued to acquire
  the intellectual property were re-valued from $0.033 to $0.015 per share to
  reflect Onyxs historical cost of $447,637 in relation to developing the
  intellectual property.

The effects of the restatement on the
  financial statements are as follows:

| |                                                          |   | From          |   |   |               |  
| | -------------------------------------------------------- | - | ------------- | - | - | ------------- | -
| |                                                          |   | Incorporation |   |   | From          |  
| |                                                          |   | (July 5,      |   |   | Incorporation |  
| |                                                          |   | 2005          | ) |   | (July 5,      |  
| |                                                          |   | to            |   |   | 2005          | )
| |                                                          |   | November 30,  |   |   | to            |  
| |                                                          |   | 2005          |   |   | November 30,  |  
| |                                                          |   | (Prior to     |   |   | 2005          |  
| |                                                          |   | restatement)  |   |   | (Restated)    |  
| | Loss for the period                                      | $ | (1,118,841    | ) | $ | (566,478      | )
| | Loss per share  Basic and diluted                       | $ | (0.11         | ) | $ | (0.06         | )
| | Deficit  Accumulated during the development
      stage | $ | (1,118,841    | ) | $ | (566,478      | )
| | Shares issued for acquisition of intellectual property   | $ | 1,000,000     |   | $ | 447,637       |  

|11. | Subsequent Events
|--- | -----------------
|    |                  
|    | a)               
|    |                  
|    | b)               
|    |                  
|    | c)               
|    |                  
|    | d)               

---

Item
8.               
Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure

Resignation of Staley, Okada & Partners, Chartered
Accountants

We received notice on December 5, 2006 of the immediate
resignation of Staley, Okada & Partners, Chartered Accountants (Staley,
Okada) as our principal independent accountant. The resignation followed a
transaction whereby certain assets of Staley, Okada were sold to
PricewaterhouseCoopers and a number of the professional staff and partners of
Staley, Okada joined PricewaterhouseCoopers. Our board of directors accepted the
resignation of Staley, Okada as principal independent accountant.

The report of Staley, Okada dated February 17, 2006 (except as
to Note 9, which is as of June 16, 2006) on our balance sheet at November 30,
2005 and the related consolidated statements of changes in stockholders equity,
operations, and cash flows for the period from incorporation (July 5, 2005) to
November 30, 2005 did not contain an adverse opinion or disclaimer of opinion,
nor was it modified as to uncertainty, audit scope, or accounting principles,
other than to state that there is substantial doubt as to our ability to
continue as a going concern.

In connection with the audit of the period from incorporation
(July 5, 2005) to November 30, 2005 and during the subsequent interim period
through to the date of their resignation, there were no disagreements between us
and Staley, Okada on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements if
not resolved to the satisfaction of Staley, Okada would have caused them to make
reference thereto in their reports on our audited financial statements.

We provided Staley, Okada with a copy of the foregoing
disclosures and requested in writing that Staley, Okada furnish us with a letter
addressed to the Securities and Exchange Commission (the SEC) stating whether
or not they agree with such disclosures. We received the requested letter from
Staley, Okada wherein they have confirmed their agreement to our disclosures. A
copy of Staley, Okadas letter has been filed as an exhibit to our current
report on Form 8-K filed with the SEC on December 11, 2006.

Engagement of Moores Rowland Audit s.r.o.

On January 22, 2007, we engaged Moores Rowland Audit s.r.o.
(Moores Rowland) as our principal independent accountants for the purpose of
auditing our financial statements for the fiscal year ended November 30,
2006.

Engagement of Danziger Hochman Partners LLP, Chartered
Accountants

Following the engagement of Moores Rowland as our principal
independent accountants, we subsequently determined to engage Danziger Hochman
Partners LLP (DHP) as our principal independent accountant. We have continued
the engagement of Moores Rowland for the purpose of auditing the financial
statements of our subsidiary, ITonis CZ s.r.o., a Czech Republic corporation
(ITonis CZ). On February 9, 2007, we entered into an engagement letter with
DHP with respect to the engagement of DHP as our principal independent
accountants for the purpose of auditing our financial statements for fiscal year
ended November 30, 2006. Moores Rowland resigned as independent auditor
concurrently on February 9, 2007. The decision to engage DHP as principal
independent accountant was approved by our board of directors.

Moores Rowland has not issued any audit report on the financial
statements of the Company. During the period from the engagement of Moores
Rowland as principal independent auditor on January 22, 2007 to February 9,
2007, there were no disagreements between us and Moores Rowland on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedures, which

- 33 -

---

disagreements if not resolved to the satisfaction of Moores
Rowland would have caused them to make reference thereto in their reports on our
audited financial statements.

We provided Moores Rowland with a copy of the foregoing
disclosures and has requested in writing that Moores Rowland furnish us with a
letter addressed to the SEC stating whether or not they agree with such
disclosures. We received the requested letter from Moores Rowland which was
filed with the SEC on February 23, 2007 by way of an amendment to our current
report on Form 8-K.

Item
8A.              Controls
and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of
1934 (the Exchange Act), we carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of
November 30, 2006, being the date of our most recently completed fiscal year.
This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and Chief Financial Officer, Nicolas Lavaud.
Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified by the rules and forms of the
Securities and Exchange Commission (the SEC) .

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and our Chief
Financial Officer, to allow timely decisions regarding required disclosure.

During the fiscal year ended November 30, 2006, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to affect, our internal control over
financial reporting during the fiscal year ended November 30, 2006.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the registrants
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrants board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:

|(a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrants assets that could have a material effect on the financial
      statements.                                                                                                                                              

Item
8B.              Other
Information

Not applicable.

- 34 -

---

PART III

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

Our executive officers and directors and their respective ages
as of April 3, 2007 are as follows:

|Directors:                |     |                                                                                
|------------------------- | --- | -------------------------------------------------------------------------------
|                          |     |                                                                                
|Name of Director          | Age |                                                                                
|                          |     |                                                                                
|Nicolas Lavaud            | 34  |                                                                                
|                          |     |                                                                                
|Antonin Kral              | 27  |                                                                                
|                          |     |                                                                                
|Executive Officers:       |     |                                                                                
|                          |     |                                                                                
|Name of Executive Officer | Age | Office                                                                         
|                          |     |                                                                                
|Nicolas Lavaud            | 34  | President, Chief
      Executive Officer, Chief Financial Officer and Secretary
|                          |     |                                                                                
|Antonin Kral              | 27  | Chief Technical
      Officer                                                  

The following describes the business experience of our
directors and executive officers. Mr. Lavaud and Mr. Kral are not and have not
in the past been directors of any reporting company under the Exchange Act or
any other publicly traded company.

Nicolas Lavaud has been President, Chief
Executive Officer, Chief Financial Officer and Secretary since November 16,
2005. He is also managing director of ITonis CZ. Mr. Lavaud holds a Master of
Telecommunications degree from Monash University in Melbourne and Ecole
Nationale Supérieure des Télécommunications de Paris. Mr. Lavaud worked with
Telstra Research Labs (an Australian telecommunications company) in Melbourne
from November 1996 to December 1997, contributing to the development of the
national data network and providing insight on different leading edge technology
projects such as Voice over Internet. From June 1998 to September 1999, Mr.
Lavaud was responsible for all technical matters for Delta Partners (network
planning software developers) in the United Kingdom where he also provided
technical consultancy for software evolution and supported the business
development. From October 1999 to August 2004, he held the position of Value
Added Services Development manager at Czech Telecom in Prague where he was also
responsible for new services and contributed to various projects such as Unified
Messaging, fixed SMS and Voice over IP. From August 2000 to August 2003, he
developed the Electronic channel Solution Centre in Prague for iPLATO, and
managed the Centre while developing business and providing consultancy in
Eastern Europe. In August 2004, Mr. Lavaud set up and ran Xeris s.r.o.
("Xeris"), a fully operational research and development centre capable of
delivering short terms solutions but also very complex projects until January
2006, where he was responsible for day to day management, business development,
partnership management and recruitment.

Mr. Lavaud presently devotes approximately 40 hours per week of
his business time to our business, representing substantially all of his
business time. During the first quarter of fiscal 2006, Mr. Lavaud provided
approximately 36 hours per month performing administrative tasks for Xeris, with
the balance of his time being devoted to our business. This outsourcing work was
completed in the first quarter of fiscal 2006 and is not continuing.
Accordingly, Mr. Lavaud does not devote any of his current business time to the
business of Xeris.

- 35 -

---

Antonin Kral has been a director and our Chief
Technical Officer since February 7, 2006. He is responsible for the complete
analysis of ITonis video solution, including the design of network topology. He
holds a Masters degree from the Czech Technical University and currently works
on his Phd in the Department of Mathematics, Faculty of Nuclear Sciences and
Physical Engineering. He has been involved in many projects including the
Deployment of IPv6 at Pragonet and the design team when developing the network
for DHL computing center. At the University he deployed IPv6 for the whole Czech
Technical University (CTU) and managed and administrated the whole CTU campus
network (Novel Netware, UNIX servers and 2500 workstations connected to the
university backbone and Internet) as well as computer clusters of CTU computer
science department. Mr. Kral is a lector at CTU (Computer science) on Computer
networks and Textual information Systems. He has also been a Member of the board
of experts at the Ministry of Informatics  Czech Republic since October 2004.
Mr. Kral has also been involved in research projects, including research on
end-to-end performance and QoS at Cesnet (Czech National Research and Education
Network operator) and continues to be involved in the COMPASS project as part of
CERN (European Organization for Nuclear Research).

Mr. Kral presently devotes approximately 40 hours per week of
his business time to our business, representing substantially all of his
business time.

Term of Office

Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.

Significant Employees

We have 9 other full-time employees other than the officers and
directors described above, most of whom are developers/programmers. Of these
employees, we believe that the following are significant employees:

Libor Bucinsky is responsible for project
delivery at ITonis. Mr. Bucinsky developed his technical knowledge in Expert and
Partner Engineering, a Czech based company, where he designed and built networks
based on X25 and Frame relay protocols. Also, at Barum Continental, Mr. Bucinsky
developed his knowledge in terms of server administration. He was able to
design, build and manage the computer network that was connecting the different
point of sales of the company.

Mr. Bucinsky joined Datasys support (a start up company) as a
director in November 1996 until June 1997. He was managing the technical team
and was responsible for the development and support of the Microsoft products.
In September 1997, he joined Czech Telecom and became a technical manager for
VoIP and VAS. He was managing a team of technical people and was responsible for
the implementation of key projects in the VAS and VoIP area. Those projects
included long term projects such as migration of Voicemail services in a given
timeframe as well as shorter projects such as implementation of VoIP services at
a given customers. He joined Xeris in October 2004 where he was fully
responsible for the delivery of all projects. He designed and implemented
effective project management schemes and is responsible for quality control,
timeframe and resource management.

Mr. Bucinsky presently devotes approximately 40 hours per week
of his business time to our business, representing substantially all of his
business time.

Michal Benes is ITonis expert in new
technologies. He also leads the team of C/C++ programmers. He holds a PhD from
the Czech Technical University in the Department of Mathematics, Faculty of
Mathematics and Physics. He lead several research and development projects and
has contributed to development of computer software that has been programmed in
C++ and Java software languages and incorporated into our ITonis video solution.
Mr. Benes designed and developed some key software components relating to the
ITonis media streamers while with Xeris. Since joining ITonis, Mr. Benes has

- 36 -

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been involved in continued software development work in
connection with the enhancement of the features and performance of the media
streamers and with the development a digital rights management solution for
ITonis.

Mr. Benes presently devotes approximately 40 hours per week of
his business time to our business, representing substantially all of his
business time.

Martin Cizek is ITonis Java software development
team leader. He holds a Masters degree in Computer Sciences from the Czech
Technical University. He has lead several key customer projects and contributed
to development of our software using the Java software programming language. Mr.
Cizek has been involved in Java software development work for our application
server software, which work has included analyzing the software acquired from
Nordic IPTV and integrating this software into our ITonis video solution. His
other achievements include running IT training on Linux, Java, HTML code and
scripts, PHP technology as well as contributing to research in end-to-end
performance at Cesnet (Czech National Research and Education Network operator).
In addition to his development skills, he has extensive network knowledge and
provides key insights into ITonis video solution analysis.

Mr. Cizek presently devotes approximately 40 hours per week of
his business time to our business, representing substantially all of his
business time.

Committees of the Board Of Directors

At present, we do not have an audit committee, compensation
committee, nominating committee, an executive committee of our board of
directors, stock plan committee or any other committee. However, we plan to seek
suitable candidates for election as directors, and establish various committees,
during the current fiscal year.

Audit Committee

Our board of directors currently acts as our audit
committee.

Audit Committee Financial Expert

Our board of directors, acting as our audit committee, has
determined that there is currently no director who meets the SECs definition of
an audit committee financial expert.

Code of Ethics

Our board of directors has adopted a code of ethics applicable
to its principal executive officer, its principal financial officer, its
principal accounting officer or controller. A copy of the code of ethics is
attached as an exhibit to this annual report on Form 10-KSB.

Family Relationships

We do not currently anticipate electing or appointing as
directors or officers of our company any persons who are related to each other
or to our existing officers and directors.

Involvement in Certain Legal Proceedings

None of our directors, executive officers and control persons
have been involved in any of the following events during the past five years:

|1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 37 -

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|2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                
|3. | being subject to any order, judgment, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
|   |                                                                                                                                                                                                                                                                                                                                
|4. | being found by a court of competent jurisdiction (in a
      civil action), the Commission or the Commodity Futures Trading Commission
      to have violated a federal or state securities or commodities law, and the
      judgment or decision has not been reversed, suspended, or
  vacated.                             

Term of Office

Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.

Compliance with Section 16(a) of the Securities Exchange Act
of 1934

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than ten percent
of the our equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
us with copies of all Section 16(a) forms they file. Based on our review of the
copies of such forms received by us, we believe that during the fiscal year
ended November 30, 2006 all such filing requirements applicable to our officers
and directors were complied with except as noted below:

Name and Principal Position
    Number of Late Reports
    Transactions Not Timely
      Reported
    Known Failures to File a
      FormNicolas Lavaud, President, CEO, CFO and Director
    One
    Nil
    NilAntonin Kral Director and Chief Technical Officer
    One
    Nil
    NilOnyx Trading Inc.
    One
    Nil
    NilNordic IPTV Company ApS
    One
    Nil
    Nil


Item
10.              
Executive Compensation

Summary Compensation Table

The following table sets forth certain compensation information
for:

- Mr. Nicolas Lavaud, our chief executive officer, chief financial officer
  and a director, and
- Mr. Antonin Kral, our chief technical officer and a director.

None of our executive officers earned total annual salary and
bonus exceeding $100,000 during the fiscal year ended November 30, 2006.

- 38 -

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Name and Principal
      Position
    Year
    Salary
      ($)
    Bonus
      ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non- Equity
      Incentive Plan Compen- sation
      ($)
    Non- qualified
      Deferred Compen- sation
      Earnings ($)
    All Other
      Compen- sation ($)
    Total
      ($)Nicolas Lavaud, Director and Chief Executive Officer
      (1)
    2006
    30,527
    Nil
    Nil
    Nil
    Nil
    Nil
    Nil
    30,527Antonin Kral, Director and Chief Technical Officer
      (2)
    2006
    30,339
    Nil
    Nil
    2,162(3)
    Nil
    Nil
    Nil
    32,501


|(1) | Mr. Lavaud has been our chief executive officer since
      November 16, 2005.                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                       
|(2) | Mr. Kral has been an officer of our chief technical
      officer since November 16, 2005.                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                       
|(3) | Represents the dollar amount recognized for financial
      statement reporting purposes with respect to the 2006 fiscal year for the
      fair value of stock options granted to the executive officer, in 2006 and
      prior years, in accordance with SFAS 123R.

Employment Agreements

Mr. Lavaud provides his services as chief executive officer to
us under a contract between Mr. Lavaud and ITonis CZ dated February 1, 2006. Mr.
Lavaud is obligated to devote his full business time to our business. We have
agreed to pay to Mr. Lavaud a salary of $84,798 (1,800,000 CZK per year based on
a foreign exchange rate on November 30, 2005 of $1:21.227CZK) per annum. No
shares are issuable to Mr. Lavaud pursuant to his employment contract. Mr.
Lavaud has agreed to reduce his salary to 8,000 CZK per month (approximately
$377) during the period of February 1, 2006 until July 31, 2006. Mr. Lavaud has
been granted options to purchase 450,000 shares of our common stock, as
described below under Grants of Stock Options.

Mr. Kral provides his services as chief technical officer to us
under a contract between Mr. Kral and ITonis CZ dated January 1, 2006. Mr. Kral
is obligated to devote his full business time to our business. We have agreed to
pay to Mr. Kral a salary of $45,225 (960,000 CZK per year based on a foreign
exchange rate on November 30, 2005 of $1:21.227) per annum. No shares are
issuable to Mr. Kral pursuant to his employment contract. Mr. Kral has been
granted options to purchase 360,000 shares of our common stock, as described
below under Grants of Stock Options.

- 39 -

---

2006 Stock Option Plan

Our board of directors has approved the Companys 2006 Stock
Option Plan as of June 16, 2006. The 2006 Stock Option Plan provides for the
grant of options to purchase up to 3,000,000 shares of common stock of the
Company to our directors, officers, employees and eligible consultants.

Grants of Stock Options

During the year ended November 30, 2006, we granted options to
purchase an aggregate of 1,500,000 shares of common stock to certain employees
on June 16, 2006, including 360,000 options to Antonin Kral, a director and our
chief technical officer, as detailed below. On December 29, 2006, we granted
options to purchase 450,000 shares of our common stock to Nicolas Lavaud, our
chief executive officer and a director. All options are exercisable at a price
of $0.2667 per share for a term expiring June 16, 2009 and are subject to the
vesting provisions set forth below. All options have been granted pursuant to
and are subject to our 2006 Stock Option Plan.

Name of Optionee
    Number of
      OptionsAntonin Kral, Director and Chief Technical Officer
    360,000Nicolas Lavaud, Director and Chief Executive Officer
    450,000


Each option will vest on the following dates (each a Vesting
Date):

Date of Vesting
    Percentage of Options
      VestedJune 1, 2007
    10%August 1, 2007
    10%October 1, 2007
    10%December 1, 2007
    10%February 1, 2008
    10%April 1, 2008
    10%June 1, 2008
    10%August 1, 2008
    10%October 1, 2008
    10%December 1, 2008
    10%


- 40 -

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Outstanding Equity Awards as of November 30, 2006

The following table summarizes the outstanding equity awards as
of November 30, 2006 for each of our named executive officers:

Option Awards
      Stock AwardsName
      Number
        of Securities Underlying Unexercised
        Options (#) Exercisable
      Number
        of Securities Underlying Unexercised
        Options (#) Unexercisable
      Equity Incentive
        Plan Awards: Number of Securities
        Underlying Unexercised Unearned Options (#)
      Option Exercise Price ($)
      Option Expiration Date
      Number of
        Shares or Units of Stock That
        Have Not Vested (#)
      Market
        Value of Shares or Units of Stock That Have
        Not Vested ($)
      Equity Incentive
        Plan Awards: Number of
        Unearned Shares, Units or Other
        Rights That Have Not Vested
        (#)
      Equity Incentive
        Plan Awards: Market or Payout
        Value of Unearned Shares, Units
        or Other Rights That Have
        Not Vested ($)Nicolas Lavaud, Director and Chief Executive Officer
      Nil
      Nil
      Nil
      N/A
      N/A
      N/A
      N/A
      N/A
      N/AAntonin Kral, Director and Chief Technical Officer
      Nil
      360,000
      Nil
      $0.2667
      June 16, 2009
      N/A
      N/A
      N/A
      N/A


Compensation of Directors

We do not currently pay our directors any fees or other
compensation for acting as directors. We have not paid any fees or other
compensation to any of our directors for acting as directors to date.

Long-term Incentive Plans

We do not have any long-term incentive plans in place.

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

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of April 3, 2007
by: (i) each person (including any group) known to us to own more than five
percent (5%) of any class of our voting securities, (ii) each of our directors,
(iii) each of our officers and certain key employees, and (iv) our officers and
directors and certain key employees as a group. Each shareholder listed below
possesses sole voting and investment power with respect to the shares shown.

- 41 -

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Name and address
    Number of Shares
    Percentage of Classof beneficial owner
    Beneficially Owned (1)
    (2)Directors and Officers:Nicolas Lavaud
      6,150,000 (3), (5)
      8.7%Director and CEOAntonin Kral
      5,550,000 (4), (5)
      7.9%Director and CTODirectors and Officers as a
      11,700,000
      16.6%groupMajor Shareholders:Libor Bucinsky
      5,550,000 (5)
      7.9%Project ManagerNordic IPTV Company ApS,
      18,000,000
      25.5%Asgaardsvej 10, Frederiksberg C.,G7, DenmarkOnyx Trading Inc., 306 Victoria
      12,750,000 (5) (6)
      18.1%House, Mahe, SeychellesMamoth Ltd, Kappelergasse 14,
      6,375,000 (6) (7)
      9.0%Zurich 8022, Switzerland


Notes:

|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | The percentage of class is based on 70,587,345 shares of
      common stock issued and outstanding as of April 5, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | Comprised of 6,150,000 shares held by Nicolas Lavaud.
      None of the options held by Mr. Lavaud are exercisable within 60 days of
      the date of this annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(4) | Comprised of 5,550,000 shares held by Antonin Kral. None
      of the options held by Mr. Kral are exercisable within 60 days of the date
      of this annual report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- 42 -

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|(5) | Onyx Trading completed the following transfers of shares
      to Mr. Lavaud, Mr. Kral and Mr. Bucinsky, each of whom is one of our
      employees, with the objective of providing them with an ownership interest
      in ITonis and a corresponding performance incentive:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | •                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Under the terms of their agreements with Onyx Trading,
      Mr. Lavaud, Mr. Kral and Mr. Bucinsky retain the rights to their shares
      only when they remain employees of ITonis for a duration of at least 2
      years. In accordance with Rule 13d-3, Onyx Trading has not included any
      portion of these 17,250,000 shares in reporting the number of shares
      beneficially owned by Onyx Trading as Onyx Trading does not have the right
      to acquire any of these shares within 60 days of the date hereof. However,
      in the event that any of Mr. Lavaud, Mr. Kral and Mr. Bucinsky cease their
      employment with us and Onyx Trading becomes entitled to a return to any of
      these shares, Onyx Trading will become the beneficial owner of such
      shares. Mr. Lavaud, Mr. Kral and Mr. Bucinsky have voting power over their
      respective shares.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(6) | Laura Mouck exercises investment and voting control over
      the shares held by Onyx Trading Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(7) | Victor Gallus exercises investment and voting control
      over the shares held by Mamoth Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Changes in Control

We are unaware of any contract, or other arrangement or
provision of our Articles or by-laws, the operation of which may at a subsequent
date result in a change of control of our company.

Item
12.              
Certain Relationships and Related Transactions

Except as described below, none of the following parties has,
since our date of incorporation, had any material interest, direct or indirect,
in any transaction with us or in any presently proposed transaction that has or
will materially affect us:

- Any of our directors or officers;
- Any person proposed as a nominee for election as a director;
- Any person who beneficially owns, directly or indirectly, shares carrying
  more than 5% of the voting rights attached to our outstanding shares of common
  stock;
- Any member of the immediate family (including spouse, parents, children,
  siblings and in-laws) of any of the above persons.

Purchase of Founders Shares

Robert Poncini, our initial director and officer, acquired
750,000 shares of our common stock effective July 8, 2005 for a total purchase
price of $500.

Onyx Trading Inc.

We entered into an asset purchase agreement dated October 1,
2005 with Onyx Trading. Pursuant to this asset purchase agreement, we issued
30,000,000 of our shares of common stock to Onyx Trading in consideration for
the acquisition of certain intellectual property owned by Onyx Trading relating
to the

- 43 -

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TV Everywhere video platform and software components. This
transaction was completed and the shares issued on November 16, 2005.

Onyx Trading completed the following transfers of shares to
certain of our employees with the objective of providing them with an ownership
interest ITonis and a corresponding performance incentive:

- 6,150,000 shares were transferred to Nicolas Lavaud
- 5,550,000 shares were transferred to Antonin Kral
- 5,550,000 shares were transferred to Libor Bucinsky

Under the terms of their agreements with Onyx Trading, Mr.
Lavaud, Mr. Kral and Mr. Bucinsky retain the rights to their shares only when
they remain employees of ITonis for a duration of at least 2 years. Mr. Lavaud,
Mr. Kral and Mr. Bucinsky have voting power over their respective shares. Onyx
Trading transferred these shares to Mr. Lavaud, Mr. Kral and Mr. Bucinsky in
reliance of Rule 903 of Regulation S of the Securities Act of 1933. Each of Mr.
Lavaud, Mr. Kral and Mr. Bucinsky has provided us with an investment agreement
confirming representations, warranties and agreements necessary to establish the
transfer in accordance with Rule 903 of Regulation S.

Xeris s.r.o.

Xeris is a wholly owned subsidiary of Onyx Trading. ITonis and
Xeris have a director in common, namely Nicolas Lavaud.

During fiscal 2005, we purchased $30,283 worth of office
furniture and equipment from Xeris. The office furniture and equipment were
valued at the estimated fair market value at the date of purchase. The original
cost to Xeris was approximately $33,000.

Before ITonis set up its fully own subsidiary in Czech
Republic, ITonis used the services of Xeris to continue the development of the
intellectual property it acquired from Onyx Trading. These software development
costs amounted to $41,121 during the period ended November 30, 2005 and $13,814
during the year ended November 30, 2006.

During the first half of fiscal 2006, ITonis outsourced its
director Nicolas Lavaud to Xeris, as managing director. The fee was paid for Mr.
Lavaud's time to perform all the necessary administrative tasks at Xeris. Fees
were equal to $18,577 for the year ended November 30, 2006, which amount is
reported as other income on our financial statements.

Nordic IPTV Company ApS (formerly Makeitwork ApS)

We entered into an asset purchase agreement dated January 31,
2006 with Nordic IPTV. Nordic IPTV is controlled by Mr. John Marienhoff.
Pursuant to this asset purchase agreement, we issued 18,000,000 of our shares of
common stock to Nordic IPTV in consideration for the acquisition of certain
intellectual property owned by Nordic IPTV relating to the television portal/
web application server technology that had originally been developed by Nordija
A/S for Danske Broadband. This intellectual property related to the FTH
Broadband technology known as the NVE Fiber Middleware Administration
Architecture This transaction was completed and the shares issued on February
7, 2006.

Concurrent with the completion of the asset purchase
transaction, we entered into a reseller and consulting service agreement with
Nordic IPTV dated February 7, 2006. Under this agreement, Nordic IPTV has been
appointed as an agent of ITonis to promote and resell our products and services
in Europe. These rights are not exclusive other than in Denmark, where Nordic
IPTV has been granted exclusive rights. We have agreed to pay a commission to
Nordic IPTV based on sales generated by Nordic IPTV at the rate of 40% of the
net profits resulting from the sale of the products and services. Nordic IPTV
also

- 44 -

---

agreed to provide to ITonis the services of its employee, John
Marienhof, to act as commercial director of ITonis for consideration of $30,000
per month. This amount was payable as a non-refundable advance against the
commission payable to Nordic IPTV under the agreement. In the event that, in any
monthly period, the commissions earned under the agreement were less than
$30,000, then the amount of $30,000 was payable. If the commissions earned were
in excess of $30,000, then the amount payable was equal to the amount of the
commissions earned. In the event that we did not have sufficient cash flow to
make payments, the advance accrued as a liability owed to Nordic IPTV in the
form of a non-interest bearing account payable. As at May 31, 2006, $120,000 had
been accrued for fees payable under this agreement in connection with the
services provided to us by John Marienhof from January to April of 2006.
Notwithstanding this agreement, we elected not to engage Mr. Marienhof as a
commercial director of ITonis subsequent to April of 2006 and we have executed a
letter agreement with Nordic IPTV confirming that the provision of the reseller
and consulting agreement relating to the services of John Marienhof has been
terminated, that our only obligation in respect of such services is the $120,000
previously accrued and that no further payments are required under the reseller
and consulting service agreement except for payment of the 40% commission. We
have the right to terminate this agreement at any time by giving three months
advance written notice to Nordic IPTV of our intention to terminate the
agreement.

Nicolas Lavaud

We have entered into an employment agreement with Mr. Lavaud
dated February 1, 2006. The terms and conditions of this employment agreement
are described in detail below under the section of this prospectus entitled
Executive Compensation.

On July 3, 2006, Mr. Lavaud granted us a loan in the amount of
$17,948. This loan had increased to $35,882 as of November 30, 2006. The loan is
evidenced by a promissory note, is unsecured and does not bear any interest. The
promissory note is payable on demand.

Antonin Kral

We have entered into an employment agreement with Mr. Kral
dated January 1, 2006. The terms and conditions of this employment agreement are
described in detail below under the section of this prospectus entitled
Executive Compensation.

- 45 -

---

Item
13.              
Exhibits

The following exhibits are included with this Annual Report on
  Form 10-KSB:

|Exhibit |                                                                                                                                                                                                                                                 
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                 
|3.1     | Articles of
        Incorporation (1)                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                 
|3.2     | Certificate
        of Amendment to Articles of Incorporation (1)                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                 
|3.3     | By-Laws (1)                                                                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                 
|3.4     | Certificate
        of Change pursuant to NRS 78.209 effective March 19, 2007 (6)                                                                                                                                                               
|        |                                                                                                                                                                                                                                                 
|10.1    | Asset Purchase
        Agreement dated October 1, 2005 between ITonis Inc. and Onyx Trading Inc.
        (1)                                                                                                                                    
|        |                                                                                                                                                                                                                                                 
|10.2    | Employment Agreement
        between ITonis Inc. and Antonin Kral dated January 1, 2006. (1)                                                                                                                                                    
|        |                                                                                                                                                                                                                                                 
|10.3    | Employment Agreement
        between ITonis Inc. and Nicolas Lavaud dated February 1, 2006. (1)                                                                                                                                                 
|        |                                                                                                                                                                                                                                                 
|10.4    | Asset Purchase
        Agreement between ITonis Inc. and Nordic IPTV Company ApS (formerly Makeitwork
        ApS) dated January 31, 2006 (1)                                                                                                 
|        |                                                                                                                                                                                                                                                 
|10.5    | Reseller Agreement
        dated February 7, 2006 between ITonis Inc. and Makeitwork ApS (1)                                                                                                                                                    
|        |                                                                                                                                                                                                                                                 
|10.6    | Lease Agreement
        dated December 23, 2005 between Achat Real a.s. and ITonis CZ s.r.o. (1)                                                                                                                                                
|        |                                                                                                                                                                                                                                                 
|10.7    | 2006 Stock Option
        Plan (2)                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                 
|10.8    | Amendment dated
        February 15, 2006 to Employment Agreement between ITonis Inc. and Nicolas
        Lavaud dated February 1, 2006 (3)                                                                                                     
|        |                                                                                                                                                                                                                                                 
|10.9    | Amendment dated
        August 9, 2006 to Reseller Agreement dated February 7, 2006 between ITonis
        Inc. and Nordic IPTV Company ApS (formerly, Makeitwork ApS") (3)                                                                     
|        |                                                                                                                                                                                                                                                 
|10.10   | Promissory Note
        issued by ITonis Inc. to Nicolas Lavaud in the amount of CZ 400,000Kc
        dated July 3, 2006 (3)                                                                                                                    
|        |                                                                                                                                                                                                                                                 
|10.11   | Subscription
        Agreement between ITonis Inc. and Spectrum Managers Ltd. dated December
        12, 2006 (4)                                                                                                                               
|        |                                                                                                                                                                                                                                                 
|14.1    | Code
        of Ethics (7)                                                                                                                                                                                                                      
|        |                                                                                                                                                                                                                                                 
|16.1    | Letter of Moores
        Rowland dated February 15, 2007 (5)                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                 
|31.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Rule
        13a-14(a) of the Exchange Act (7)                                                                                                         
|        |                                                                                                                                                                                                                                                 
|32.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Rule
        13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 (7)

|(1) | Filed as an exhibit to the registration statement on Form
      SB-2 filed with the SEC on May 12, 2006.                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                     
|(2) | Filed as an exhibit to Amendment No. 1 to the
      registration statement on Form SB-2 filed with the SEC on June 27,
      2006.  
|    |                                                                                                                                     
|(3) | Filed as an exhibit to Amendment No. 2 to the
      registration statement on Form SB-2 filed with the SEC on August 11,
      2006.

- 46 -

---

|(4) | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on December 15, 2006.
|--- | ----------------------------------------------------------------------------------------------------
|    |                                                                                                     
|(5) | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on February 23, 2007.
|    |                                                                                                     
|(6) | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on March 20, 2007.   
|    |                                                                                                     
|(7) | Filed as an exhibit to this Annual report on Form
      10-KSB.                                     

Item
14.              
Principal Accountant Fees and Services

The following table sets forth information regarding amounts
billed to us by our independent auditors for each of our last two fiscal
years:

|                   | Year Ended November
      30,
|------------------ | -----------------------------
|                   |                              
|                   | 2006                         
|                   |                              
|Audit Fees(1)      | $44,793                      
|                   |                              
|Audit Related Fees | $Nil                         
|                   |                              
|Tax Fees           | $Nil                         
|                   |                              
|All Other Fees     | $Nil                         
|                   |                              
|Total              | $44,793                      

(1)      Calculated based on an
exchange rate of CDN$1.1856 per US$1.00.

Audit Fees

Audit fees are the aggregate fees billed by our independent
auditor for the audit of our annual consolidated financial statements, reviews
of our interim consolidated financial statements and attestation services that
are provided in connection with statutory and regulatory filings or
engagements.

- 47 -

---

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.

| | ITONIS INC.                                              
| | ---------------------------------------------------------
| |                                                          
| |                                                          
| |                                                          
| | By:             
       /s/ Nicolas Lavaud               
| | Nicolas Lavaud                                           
| | Chief Executive Officer and Chief Financial
      Officer
| | Date: April 23, 2007                                     

In accordance with the Securities 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.

|Signature          |  | Title                                       | Date          
|------------------ |  | ------------------------------------------- | --------------
|                   |  |                                             |               
|                   |  | President, Chief Executive Officer, Chief   |               
|/s/ Nicolas Lavaud |  | Financial Officer, Principal Accounting and |               
|                   |  | Director                                    | April 23, 2007
|Nicolas Lavaud     |  |                                             |               
|                   |  |                                             |               
|/s/ Antonin Kral   |  |                                             |               
|                   |  | Chief Technical Officer and Director        | April 23, 2007
|Antonin Kral       |  |                                             |               

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