|   | [ X]  | ANNUAL      REPORT UNDER TO SECTION 13 OR 15(d)OF      THE SECURITIES EXCHANGE ACT OF 1934FOR      THE FISCAL YEAR ENDED DECEMBER 31, 2007  |
|--------|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | [  ]  | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE      SECURITIES EXCHANGE ACT OF 1934.  FORTHE      TRANSITION PERIOD FROM _________ To _________ .  |
|--------|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| None                       |   | None                                            |
|----------------------------|--------|-------------------------------------------------|
| (Title      of Each Class) |   | (Name      of each Exchange on WhichRegistered) |

----

|                            |                                                                                                                                                  | Page   |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Forward-Looking      Statements | 3                                                                                                                                                     |
|                            |                                                                                                                                                  |   |
|                            |                                                                                                                                                  |   |
| Part      I.                    |                                                                                                                                                  |   |
| Item      1.                    | Description      of Business                                                                                                                          | 4      |
| Item      2.                    | Description      of Property                                                                                                                          | 22     |
| Item      3.                    | Legal      Proceedings                                                                                                                                | 22     |
| Item      4.                    | Submission      of Matters to a Vote of Security Holders                                                                                              | 22     |
|                            |                                                                                                                                                  |   |
|                            |                                                                                                                                                  |   |
| Part      II.                   |                                                                                                                                                  |   |
| Item      5.                    | Market      for Common Equity, Related Stockholders Matters and Small Business Issuer      Purchases of  Equity Securities                  | 23     |
| Item      6.                    | Management's      Discussion and Analysis or Plan of Operation                                                                                        | 24     |
| Item      7.                    | Financial      Statements                                                                                                                             | 35     |
| Item      8.                    | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure                                                        | 55     |
| Item      8A(T).                | Controls      and Procedures                                                                                                                          | 55     |
| Item      8B.                   | Other      Information                                                                                                                                | 55     |
|                            |                                                                                                                                                  |   |
|                            |                                                                                                                                                  |   |
| Part      II.                   |                                                                                                                                                  |   |
| Item      9.                    | Directors,      Executive Officers, Promoters and Control Persons and Corporate      Governance; Compliance with Section 16(a) of the Exchange    Act | 56     |
| Item      10.                   | Executive      Compensation                                                                                                                           | 58     |
| Item      11.                   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                                              | 60     |
| Item      12.                   | Certain      Relationships and Related Transactions and Director      Independence                                                                    | 62     |
| Item      13.                   | Exhibits                                                                                                                                              | 63     |
| Item      14.                   | Principal      Accountant Fees and Services                                                                                                           | 65     |
|                            |                                                                                                                                                  |   |
| Signatures                      |                                                                                                                                                  |   |

----

----

|   | • | all      but one of PerfectData’s directors and officers resigned and Sona’s      nominees were elected to our Board of Directors; and officers designated      by Sona were elected by our Board;and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | the      former shareholders of Sona received shares of our Series A Convertible      Preferred Stock representing approximately 76% of the then issued and      outstanding common stock on a fully diluted basis.  These      preferred shares were automatically converted into shares of our common      stock on November 17, 2005, upon approval by our shareholders of an      increase in total authorizedshares. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | We      market our software principally to two large vertical    markets: |
|--------|---------------------------------------------------------------------------|

|   | • | Gaming and      entertainment. We  propose to      (i) deliver casino games via our SGS, both wired and wirelessly in      designated areas on casino properties; (ii) offer real-time, multiplayer      games that accommodate an unlimited number of players; (iii) deliver games      on a play-for-free or wagering basis (where permitted by law) on mobile      telephone handsets over any carrier network; and (iv) deliver horse and      sports wagering applications, where legal, for race and sports books, as      well as on-track and off-track wagering, including live streaming video of      horse races and other sports events.  We also propose to deliver      content via channel partners and content partners, including live      streaming television, digital radio, specific theme downloads for mobile      phones, media downloads and gaming    applications. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Financial services and      enterprise software. Our products and services extend enterprise      applications to the wireless arena, such as customer relationship      management systems, sales force automation systems, information technology      (IT) service desk and business continuity protocols. One of our primary      focuses in this sales vertical is to develop software for the      data-intensive investment banking community and client-facing applications      for the retail bankingindustry. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | To      take advantage of the growth and the latest trends in the gaming and      entertainment market by leveraging our expertise in client-server software      applications. Table games, sports books, lotteries, horse racing, and      other types of gaming can all be made portable and are expected to be      increasingly offered in wireless format and other embedded client      formats.  We believe this technology will modernize the gaming      floor, reduce equipment, implementation and maintenance costs and improve      operator efficiencies, thereby adding direct value to our      customers. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | To      develop and market best-of-breed embedded software gaming and      entertainment applications that provide additional revenue sources and      content distribution channels to casino operators, horse race track      operators and other businesses in the gaming and entertainment      sector. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | To      partner with leading content providers in the gaming and entertainment      space, enabling delivery of comprehensive solutions combining advanced      embedded software technology with popular content to our      customers. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | To      form strong and lasting business relationships, directly and through our      strategic partners, with the leading casino operators in the world and      work closely with them in aligning our gaming solutions to the needs of      their end-users. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | To      leverage our technology across a wide range of end-markets. While our      primary focus will remain on gaming and entertainment markets, we will      continue pursuing select applications in the enterprise space capitalizing      on the increasingly mobile nature of the modern work force and the      necessity to expand PC-based corporate applications to a mobile      device. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Facilitates      seamless integration and customization, including fully branded      interfaces. |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | Allows      rapid presentation design with its powerful user interface tools that are      highly optimized for resource-constrained  devices. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Exists      as fully modular and decoupled components, making it both flexible and      easy to engage in incrementaldeployment. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | Supports      Elliptic Curve Cryptography (“ECC”) and 128-bit Security Sockets Layer for      true end-to-end secure encryption; never compromising sensitive data      through gateway decryption. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Is      device and cellular carrier agnostic: solutions can be deployed across all      prevalent PDA operating platforms, including Palm, Windows Mobile (Pocket      PC and Smartphone) and BlackBerry®, as well as Java™-enabled smart phones      through the use of Java™ 2 Micro Edition  (J2ME™). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Readily      incorporates partner technology to extend features, functions, and      performance. |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | Drastically      reduces development, testing, and deployment  time. |
|--------|--------|----------------------------------------------------------------------|

|   | · | Offers      server-side scalability, redundancy, and failover  support. |
|--------|--------|-------------------------------------------------------------------------|

|   | · | A      secure central server, referred to as the back-of-house server, runs the      random number generator. It also contains all gaming logic, runs the      gaming engine, provides content and determines the outcome of      games. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Play      is on a thin client device; the client will instantly download all content      which has the same look and feel as being at the  tables. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Accounting      server provides real-time monitoring and accounting for all games      including buy-in, coin-in and coin-out by type of wager, total hands by      table, as well as play details, P&L, gross and payout      percentage. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Accounting      server uses standard slot machine style interfaces for casino accounting      systems. |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | Sona      Gaming System™ mobilizes wagering of any casino game to any wired or      wireless enabled casino location. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Technology      driven. Many technology companies provide their clients with complex      technology products rather than solutions that meet their unique      requirements – ease-of-use, timely data and  reliability. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Single      technology delivery. Most technology companies offer only one common      technology to deliver such data, whereas varying types of data requires      different modes of delivery. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Narrow      products. Competitors offer narrow products rather than robust and      customer-driven products. These narrow products are designed to meet only      specific requirements, leaving the customer to cobble together an array of      products on varying platforms to replicate the workplace      environment. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | User      interface features such as pre-populated fields, check-boxes and      selectable menus reduce timerequirements; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------|

|   | • | Data      is captured once and transmitted to a central repository immediately via a      wireless data connection or through an end-of-day      synchronization; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Client      history or site information may be pre-loaded for reference for faster      response; and |
|--------|---------|-------------------------------------------------------------------------------------------------------|

|   | • | Custom      features are easily incorporated into any application, including      scheduling, route planning and employee  visibility. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Increases      the adoption of Help Desk features for better trouble      shooting; |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | Improves      productivity and effectiveness of field service      representatives; |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | Improves      the product data quality for forecasting, ordering, performance evaluation      and customer service requests; and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|

|   | • | Is      scalable and adaptable to customerrequirements. |
|--------|---------|---------------------------------------------------------|

|   | • | Providers      of gaming hardware and content; |
|--------|---------|------------------------------------------------|

|   | • | Cellular      telephone operators, who could take our products to their client bases,      satisfying both the needs of their enterprise clients in this vertical      space and their own need to increase revenues and usage of data      services; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | IT      systems integration and hosting companies – firms that can add our      products to their integration services in their geographic      regions; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Wireless      device marketing and distributioncompanies; |
|--------|---------|-----------------------------------------------------------|

|   | • | Hardware      and operating systems softwarevendors; |
|--------|---------|------------------------------------------------------|

|   | • | Resellers      and distributors which have significant client bases and brands in the      financial services vertical space;and |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------|

|   | • | Technology      providers. |
|--------|---------|----------------------------|

----

----

----

----

----

----

----

|   | • | quality      of infrastructure; |
|--------|---------|---------------------------------|

|   | • | security      concerns; |
|--------|---------|-------------------------|

|   | • | equipment,      software or other technologyfailures; |
|--------|---------|-------------------------------------------------------|

|   | • | government      regulation; |
|--------|---------|-----------------------------|

|   | • | inconsistent      quality of service; and |
|--------|---------|-------------------------------------------|

|   | • | lack      of availability of cost-effective, high-speed network      capacity. |
|--------|---------|--------------------------------------------------------------------------------|

----

|   | • | develop      and expand their products and services more  quickly; |
|--------|---------|--------------------------------------------------------------------|

|   | • | adapt      faster to new or emerging technologies and changing customer      needs; |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | take      advantage of acquisitions and other opportunities more      readily; |
|--------|---------|--------------------------------------------------------------------------------|

|   | • | address      customer service issues moreeffectively. |
|--------|---------|-------------------------------------------------------|

----

|   | • | hire      more employees with experience developing and providing advanced      communications products andservices; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | • | train      our current personnel to sell wireless data applications products and      services; and |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | • | train      personnel to service our products. |
|--------|---------|-----------------------------------------------|

|   | • | volume      and timing of orders received; |
|--------|---------|--------------------------------------------|

|   | • | the      availability and cost of products and components from our      suppliers; |
|--------|---------|------------------------------------------------------------------------------------|

|   | • | the      mix of products and services sold; |
|--------|---------|---------------------------------------------|

|   | • | patterns      of capital spending by enterprises for technology products and      services; |
|--------|---------|---------------------------------------------------------------------------------------------|

|   | • | the      timing of new product announcements and  releases; |
|--------|---------|-------------------------------------------------------------|

|   | • | pricing      pressures; and |
|--------|---------|-----------------------------|

|   | • | general      economic conditions. |
|--------|---------|-----------------------------------|

----

|   | • | Effectiveness      of the registration statement covering resale of shares underlying the      notes lapses, or a selling stockholder may not make sales thereunder, for      more than 20 consecutive trading days or 40 non-consecutive trading days      during any 12-month period (subject to certain      exceptions); |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A      material default or event of default occurs under the notes (eg. Failure      to pay interest amounts when due) or the related registration rights      agreement; or |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | A      material default or event of default occurs under any other material      agreement to which we areobligated. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

----

----

|   | • | Without      prior shareholder approval, the board of directors has the authority to      issue one or more classes of preferred stock with rights senior to those      of common stock and to determine the rights, privileges and inference of      that preferred stock. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | There      is no cumulative voting in the election of directors, which would      otherwise allow less than a majority of shareholders to elect director      candidates. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | approximately      3,100 square feet in Toronto, Canada for sales, research and development,      administrative and accounting functions under a lease expiring in February      2012, at an annual rental of approximately $115,000, subject to escalation      for our pro rata share of realty taxes and operating expenses of the      building. Under the lease agreement there is a gross free rent period for      the first 6 months of the lease; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | approximately      4,800 square feet of office space in Boulder, Colorado for research and      development under a lease expiring in September 2010, at annual rental of      approximately $120,000, subject to escalation for our pro rata share of      real estate taxes and operating expenses of the building;    and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | approximately      500 square feet in New York, New York, for our corporate headquarters and      sales and support functions which we are currently leasing on a short-term      basis under a renewable lease which runs to June 2008, at a monthly rent      of approximately $10,000. The Company intends to renew its lease on      substantially the same terms on a short-term basis when the current lease      agreement expires. In addition, in 2007 we leased approximately 1,000      square feet in Las Vegas, Nevada, for our corporate apartment which was      leased on an annual basis until February 2008, at a monthly rent of      approximately $2,300. Our frequent trips to Las Vegas made this lease a      cost effective way to house our employees during business trips      for meetings with our partner Shuffle Master and in connection with      GLI certification of our wireless gaming solution.  This lease      was not renewed when it expired at the end of February    2008. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

|   |   |                      |   | Bid      Prices |   |
|--------|--------|---------------------------|--------|-----------------|--------|
| Year   |   | Fiscal      Quarter Ended |   | High            |   |   | Low |   |
| 2006   |   |                      |   |            |   |   |   |   |
|   |   | March      31, 2006       |   |            | 2.99   |   |   |   | 1.75 |   |
|   |   | June      30, 2006        |   |            | 2.00   |   |   |   | 0.68 |   |
|   |   | September      30, 2006   |   |            | 0.80   |   |   |   | 0.45 |   |
|   |   | December      31, 2006    |   |            | 0.70   |   |   |   | 0.24 |   |
| 2007   |   |                      |   |            |   |   |   |   |   |   |
|   |   | March      31, 2007       |   |            | 0.59   |   |   |   | 0.33 |   |
|   |   | June      30, 2007        |   |            | 0.61   |   |   |   | 0.23 |   |
|   |   | September      30, 2007   |   |            | 0.49   |   |   |   | 0.34 |   |
|   |   | December      31, 2007    |   |            | 0.58   |   |   |   | 0.32 |   |

| Equity      Compensation Plan Information                           |   |
|---------------------------------------------------------------------|--------|
| Plan      category                                                  |   | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights(a) |   |   | Weighted-average      exercise price of outstanding options, warrants and rights(b) |   |   | Number      of securities remaining available for future issuance under equity      compensation plans (excluding securities reflected in column      (a))(c) |   |
| Equity      compensation plans approved by security holders         |   |   | 6,997,000 | (1) |   | $ | 0.706 |   |   |   | 1,997,500 | (2) |
| Equity      compensation plans not approved by security holders (3) |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Total                                                               |   |   | 6,997,000 |   |   | $ | 0.706 |   |   |   | 1,997,500 |   |

----

| (3) | On      July 19, 2005, our Board of Directors (“Board”) adopted a compensation      plan for directors, which was amended on August 3, 2006 and again on      September 29, 2006.  Under the plan, each non-employee director,      immediately upon his or her election or appointment to the Board, receives      40,000 shares of common stock, of which 20,000 shares will vest      immediately and 20,000 will vest on the first anniversary of his or her      election to the Board.  If the director leaves the Board for any      reason, voluntarily or involuntarily, before the first anniversary of his      or her election to the Board, he or she will forfeit any unvested shares.       In addition, any Chairman of the Audit Committee who is also      designated as an Audit Committee "financial expert" will receive an      additional 60,000 restricted shares upon his or her appointment as such,      30,000 of which will vest immediately and 30,000 of which will vest on the      first anniversary of his or her appointment. Further, each non-employee      director receives an annual option to purchase such number of shares of      common stock having a value equal to approximately $40,000, with the      number of shares determined based upon the trading price of the Company's      common stock on the date of grant, which option will vest in equal      quarterly installments. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Gaming and      entertainment.  We propose to (i) deliver casino games via our SGS,      both wired and wirelessly in designated areas on casino properties; (ii)      offer real-time, multiplayer games that accommodate an unlimited number of      players; (iii) deliver games on a play-for-free or wagering basis (where      permitted by law) on mobile telephone handsets over any carrier network;      and (iv) deliver horse and sports wagering applications, where legal, for      race and sports books, as well as on-track and off-track wagering,      including live streaming video of horse races and other sports      events.  We also propose to deliver content via channel partners and      content partners, including live streaming television, digital radio,      specific theme downloads for mobile phones, media downloads and gaming      applications. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • | Financial services and      enterprise software. Our products and services extend enterprise      applications to the wireless arena, such as customer relationship      management systems, sales force automation systems, information      technology (IT) service desk and business continuity protocols. One of our      primary focuses in this sales vertical is to develop software for the      data-intensive investment banking community and client-facing applications      for the retail banking industry. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

|                                         |   | Year Ended December 31, |       |
|----------------------------------------------|--------|-------------------------|------------|
|                                         |   | 2007                    |       |   | 2006 |   |
|                                         |   |                    |       |   |   |   |
| Net      Revenue                             |   | $                       | 980,649    |   |   | $ | 398,134 |   |
|                                         |   |                    |       |   |   |   |   |   |
| Operating      expenses                      |   |                    |       |   |   |   |   |   |
| Depreciation      and amortization           |   |                    | 73,616     |   |   |   | 37,403 |   |
| General      and administrative expenses     |   |                    | 2,489,777  |   |   |   | 2,770,251 |   |
| Professional      fees                       |   |                    | 1,042,887  |   |   |   | 1,075,011 |   |
| Development      expenses                    |   |                    | 2,075,870  |   |   |   | 2,002,121 |   |
| Selling      and marketing expenses          |   |                    | 1,004,130  |   |   |   | 3,179,401 |   |
| Total      operating expenses                |   |                    | 6,686,280  |   |   |   | 9,064,187 |   |
|                                         |   |                    |       |   |   |   |   |   |
| Operating      loss                          |   |                    | (5,705,631 | ) |   |   | (8,666,053 | ) |
|                                         |   |                    |       |   |   |   |   |   |
| Interest      income                         |   |                    | 131,790    |   |   |   | 215,234 |   |
| Interest      expense                        |   |                    | (43,424    | ) |   |   | (3,192 | ) |
| Other      income and expense                |   |                    | (47,310    | ) |   |   | (31,883 | ) |
|                                         |   |                    |       |   |   |   |   |   |
| Net      loss                                |   |                    | (5,664,575 | ) |   |   | (8,485,894 | ) |
| Foreign      currency translation adjustment |   |                    | (13,248    | ) |   |   | (44,797 | ) |
|                                         |   |                    |       |   |   |   |   |   |
| Comprehensive      loss                      |   | $                       | (5,677,823 | ) |   | $ | (8,441,097 | ) |

----

----

----

----

| Contractual      Obligations and Long-Term Liability(US$) |   |
|-----------------------------------------------------------|--------|
|                                                 |   | Total |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |   | 2011 |   |   |   | 2012 | + |
| Office      Space Leases:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     United      States                |   | $ | 563,554 |   |   | $ | 239,652 |   |   | $ | 183,100 |   |   | $ | 140,802 |   |   | $ | − |   |   | $ | − |   |
|      Canada                      |   |   | 517,570 |   |   |   | 115,988 |   |   |   | 119,570 |   |   |   | 123,212 |   |   |   | 126,916 |   |   |   | 31,884 |   |
| Total      Office Space                                   |   |   | 1,081,124 |   |   |   | 355,640 |   |   |   | 302,670 |   |   |   | 264,014 |   |   |   | 126,916 |   |   |   | 31,884 |   |
| Office      Equipment                                     |   |   | 208,418 |   |   |   | 146,298 |   |   |   | 61,426 |   |   |   | 694 |   |   |   | − |   |   |   | − |   |
| Convertible      Debt                                     |   |   | 3,000,000 |   |   |   | − |   |   |   | − |   |   |   | 3,000,000 |   |   |   | − |   |   |   | − |   |
| Interest      on Convertible Debt                         |   |   | 700,000 |   |   |   | 240,000 |   |   |   | 240,000 |   |   |   | 220,000 |   |   |   | − |   |   |   | − |   |
| Total                                                     |   | $ | 4,989,542 |   |   | $ | 741,938 |   |   | $ | 604,097 |   |   | $ | 3,484,708 |   |   | $ | 126,916 |   |   | $ | 31,884 |   |

----

| Financial      Statements                                         |   | Page   |
|-------------------------------------------------------------------|--------|--------|
| Report      of Independent Registered Public Accounting Firm      |   | 36     |
| Consolidated      Balance Sheets                                  |   | 37     |
| Consolidated      Statements of Operations and Comprehensive Loss |   | 38     |
| Consolidated      Statement of Stockholders’ Equity         |   | 39     |
| Consolidated      Statements of  Cash Flows             |   | 40     |
| Notes      to Consolidated Financial Statements                   |   | 41     |
|                                                              |   |   |

----

----

|                                                                                                                                                                                |   | AtDecember 31, 2007 |        |   | AtDecember 31, 2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|---------------------|--------|
| Assets                                                                                                                                                                              |   |                |        |   |                |   |
| Current:                                                                                                                                                                            |   |                |        |   |                |   |
| Cash      and cash equivalents                                                                                                                                                      |   | $                   | 2,367,026   |   |                | $      | 5,682,162 |   |
| Accounts      receivable (net of allowance for doubtful accounts of $52,175 and      $25,531)                                                                                       |   |                | 119,652     |   |                |   | 204,379 |   |
| Tax      credits receivable                                                                                                                                                         |   |                | 51,220      |   |                |   | 43,568 |   |
| Prepaid      expenses & deposits                                                                                                                                                |   |                | 98,415      |   |                |   | 95,967 |   |
| Total      current assets                                                                                                                                                           |   |                | 2,636,313   |   |                |   | 6,026,076 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Property      and equipment:                                                                                                                                                        |   |                |        |   |                |   |   |   |
| Computer      equipment                                                                                                                                                             |   |                | 192,248     |   |                |   | 101,168 |   |
| Furniture      and equipment                                                                                                                                                        |   |                | 85,603      |   |                |   | 37,211 |   |
| Less:      accumulated depreciation                                                                                                                                                 |   |                | (116,094    | )      |                |   | (55,581 | ) |
| Total      property and equipment                                                                                                                                                   |   |                | 161,757     |   |                |   | 82,798 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Software      development costs (Note 3(i))                                                                                                                                         |   |                | 471,988     |   |                |   | − |   |
| Debt      issuance costs, net (Note 11)                                                                                                                                             |   |                | 315,179     |   |                |   | − |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Total      Assets                                                                                                                                                                   |   | $                   | 3,585,237   |   |                | $      | 6,108,874 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Liabilities      and Stockholders' Equity                                                                                                                                           |   |                |        |   |                |   |   |   |
| Current:                                                                                                                                                                            |   |                |        |   |                |   |   |   |
| Accounts      payable                                                                                                                                                               |   | $                   | 316,473     |   |                | $      | 350,375 |   |
| Accrued      liabilities & payroll (Note 9)                                                                                                                                     |   |                | 510,921     |   |                |   | 412,796 |   |
| Deferred      revenue (Note 10)                                                                                                                                                     |   |                | 55,795      |   |                |   | 389,562 |   |
| Total      current liabilities                                                                                                                                                      |   |                | 883,189     |   |                |   | 1,152,733 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Long      term convertible debt, net (Note 11)                                                                                                                                      |   |                | 2,335,034   |   |                |   | − |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Total      Liabilities                                                                                                                                                              |   |                | 3,218,223   |   |                |   | 1,152,733 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Stockholders’      equity:                                                                                                                                                    |   |                |        |   |                |   |   |   |
| Preferred      Stock – 2,000,000 shares authorized, par value $.01 per share – no shares      issued and outstanding                                                    |   |                | −     |   |                |   | − |   |
| Common      Stock – 120,000,000 shares authorized, par value $.01 per share      –  57,832,857 and 57,809,523 shares issued and outstanding      respectively |   |                | 578,328     |   |                |   | 578,095 |   |
| Additional      paid-in capital                                                                                                                                                     |   |                | 17,570,902  |   |                |   | 15,706,398 |   |
| Common      Stock purchase warrants                                                                                                                                                 |   |                | 3,925,661   |   |                |   | 4,734,965 |   |
| Unamortized      stock based compensation                                                                                                                                           |   |                | (5,833      | )      |                |   | (39,096 | ) |
| Accumulated      other comprehensive (loss)                                                                                                                                         |   |                | (64,110     | )      |                |   | (50,862 | ) |
| Accumulated      deficit                                                                                                                                                            |   |                | (21,637,934 | )      |                |   | (15,973,359 | ) |
| Total      stockholders’ equity                                                                                                                                               |   |                | 367,014     |   |                |   | 4,956,141 |   |
|                                                                                                                                                                                |   |                |        |   |                |   |   |   |
| Total      Liabilities and Stockholders’ Equity                                                                                                                               |   | $                   | 3,585,237   |   |                | $      | 6,108,874 |   |

----

|                                                                                                            |   | Year      endedDecember      31,2007 |       |   | Year ended      December 31, 2006 |   |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|------------|--------|----------------------------------------|--------|
|                                                                                                            |   |                                 |       |   |                                   |   |
| Net      Revenue                                                                                                |   | $                                    | 980,649    |   |                                   | $      | 398,134 |   |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Operating      expenses                                                                                         |   |                                 |       |   |                                   |   |   |   |
| Depreciation      and amortization                                                                              |   |                                 | 73,616     |   |                                   |   | 37,403 |   |
| General      and administrative expenses                                                                        |   |                                 | 2,489,777  |   |                                   |   | 2,770,251 |   |
| Professional      fees                                                                                          |   |                                 | 1,042,887  |   |                                   |   | 1,075,011 |   |
| Development      expenses                                                                                       |   |                                 | 2,075,870  |   |                                   |   | 2,002,121 |   |
| Selling      and marketing expenses                                                                             |   |                                 | 1,004,130  |   |                                   |   | 3,179,401 |   |
| Total      operating expenses                                                                                   |   |                                 | 6,686,280  |   |                                   |   | 9,064,187 |   |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Operating      loss                                                                                             |   |                                 | (5,705,631 | )      |                                   |   | (8,666,053 | ) |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Interest      income                                                                                            |   |                                 | 131,790    |   |                                   |   | 215,234 |   |
| Interest      expense                                                                                           |   |                                 | (43,424    | )      |                                   |   | (3,192 | ) |
| Other      income and expense (Note 16)                                                                         |   |                                 | (47,310    | )      |                                   |   | (31,883 | ) |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Net      loss                                                                                                   |   | $                                    | (5,664,575 | )      |                                   | $      | (8,485,894 | ) |
| Foreign      currency translation adjustment                                                                    |   |                                 | (13,248    | )      |                                   |   | 44,797 |   |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Comprehensive      loss                                                                                         |   | $                                    | (5,677,823 | )      |                                   | $      | (8,441,097 | ) |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Net      loss per share of common stock –      basic and diluted                                     |   | $                                    | (0.10      | )      |                                   | $      | (0.17 | ) |
|                                                                                                            |   |                                 |       |   |                                   |   |   |   |
| Weighted      average number of shares of common stock outstanding –      basic and diluted (Note 6) |   |                                 | 57,813,250 |   |                                   |   | 48,841,115 |   |

----

|                                                                                               |   | Common      Stock |       |   | Series      A & Series B Convertible Preferred Stock |   |    | Warrants      on Common Stock |   |   | Additional  paid-in      Capital |   |   | Unamortized      Stock Based Compensation |   |   | Accumulated ComprehensiveIncome      Amount |    |       | Accumulated      Deficit |   |    | Total      Shareholder’s Equity |   |
|----------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|----------------------------------------------------------|--------|---------|-------------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------------------------------|--------|--------|--------------------------------------------------|---------|------------|--------------------------|--------|---------|---------------------------------------|--------|
|                                                                                               |   | Shares            |       |   | Amount                                                   |   |    | Shares                        |   |   | Amount                                     |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |
| Balance      at December 31, 2005                                                                  |   |              | 37,907,395 |   |                                                     | $      | 379,074 |                          |   |   | -                                          |   |   | $                                         | -      |   |                                             | $       | -          |                     |   | $       | 7,064,433                             |   |   | $ | (53,000 | ) |   | $ | (95,659 | ) |   | $ | (7,487,465 | ) |   | $ | (192,617 | ) |
|                                                                                               |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                                                          |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 332,988                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 332,988 |   |
| Stock      issued for acquired intangibles                                                         |   |              | 800,000    |   |                                                     |   | 8,000   |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 590,400                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 598,400 |   |
| Stock-based      compensation                                                                      |   |              | 457,778    |   |                                                     |   | 4,578   |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 333,538                               |   |   |   | 13,904 |   |   |   |   |   |   |   |   |   |   |   | 352,020 |   |
| Exercise      of employee stock options                                                            |   |              | 43,334     |   |                                                     |   | 434     |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 68,902                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 69,336 |   |
| Common      stock and warrants issued to Shuffle Master upon exercise of      options              |   |              | 2,307,693  |   |                                                     |   | 23,076  |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | 1,335,600  |                     |   |    | 1,641,324                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 3,000,000 |   |
| Reclassify      warrants from liability to equity as of registration statement effective      date |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | 281,777    |                     |   |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 281,777 |   |
| Issuance      of penalty warrants                                                                  |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | 2,993      |                     |   |    |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,993 |   |
| Common      stock and warrants issued under private placement, net of issuance      costs          |   |              | 16,943,323 |   |                                                     |   | 169,433 |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | 3,114,595  |                     |   |    | 5,968,313                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 9,252,341 |   |
| Repurchase      of treasury stock                                                                  |   |              | (650,000   | )      |                                                     |   | (6,500  | )                             |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | (293,500                              | )      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | (300,000 | ) |
| Other      comprehensive income                                                                    |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |   |   |   |   |   |   | 44,797 |   |   |   |   |   |   |   | 44,797 |   |
| Net      loss                                                                                      |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |   |   |   |   |   |   |   |   |   |   | (8,485,894 | ) |   |   | (8,485,894 | ) |
| Balance      at December 31, 2006                                                                  |   |              | 57,809,523 |   |                                                     | $      | 578,095 |                          |   |   | -                                          |   |   | $                                         | -      |   |                                             | $       | 4,734,965  |                     |   | $       | 15,706,398                            |   |   | $ | (39,095 | ) |   | $ | (50,862 | ) |   | $ | (15,973,359 | ) |   | $ | 4,956,143 |   |
| Stock      option expense                                                                          |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 356,500                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 356,500 |   |
| Stock-based      compensation                                                                      |   |              | 23,334     |   |                                                     |   | 233     |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    | 12,774                                |   |   |   | 33,262 |   |   |   |   |   |   |   |   |   |   |   | 46,269 |   |
| Expiration      of warrants issued to Shuffle Master                                               |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | (1,335,600 | )                        |   |    | 1,335,600                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | − |   |
| Issuance      of warrants with convertible debenture                                               |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    | 526,296    |                     |   |    | 159,629                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 685,925 |   |
| Other      comprehensive income                                                                    |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |   |   |   |   |   |   | (13,248 | ) |   |   |   |   |   |   | (13,248 | ) |
| Net      loss                                                                                      |   |              |       |   |                                                     |   |    |                          |   |   |                                       |   |   |                                      |   |   |                                             |    |       |                     |   |    |                                  |   |   |   |   |   |   |   |   |   |   |   | (5,664,575 | ) |   |   | (5,664,575 | ) |
| Balance      at December 31, 2007                                                                  |   |              | 57,832,857 |   |                                                     | $      | 578,328 |                          |   |   | -                                          |   |   | $                                         | -      |   |                                             |  $ | 3,925,661  |                     |   |  $ | 17,570,902                            |   |   |  $ | (5,833 | ) |   |        $ | (64,110 | ) |   |  $ | (21,637,934 | ) |   |  $ | 367,014 |   |

----

|                                                                                             |   | Year      ended December 31, |       |
|--------------------------------------------------------------------------------------------------|--------|------------------------------|------------|
|                                                                                             |   | 2007                         |       |   | 2006 |   |
| Cash      provided by (used in):                                                                 |   |                         |       |   |   |   |
|  Operating      activities                                                                  |   |                         |       |   |   |   |
| Net      loss                                                                                    |   | $                            | (5,664,575 | ) |   | $ | (8,485,894 | ) |
|                                                                                             |   |                         |       |   |   |   |   |   |
| Adjustments      for:                                                                            |   |                         |       |   |   |   |   |   |
| Depreciation      and amortization                                                               |   |                         | 73,616     |   |   |   | 37,403 |   |
| Amortization      of debt discount                                                               |   |                         | 20,959     |   |   |   | − |   |
| Loss      on write off of fixed assets                                                           |   |                         | 5,171      |   |   |   | − |   |
| Write-off      of in-process purchased technology                                                |   |                         | −    |   |   |   | 597,652 |   |
| Amortization      of  restricted stock-based compensation                              |   |                         | 46,269     |   |   |   | 352,020 |   |
| Stock-based      compensation                                                                    |   |                         | 356,500    |   |   |   | 332,988 |   |
| Gain      on revaluation of common stock purchase warrants                                       |   |                         | −    |   |   |   | (468,326 | ) |
| Issuance      of penalty warrants                                                                |   |                         | −    |   |   |   | 2,993 |   |
| Changes      in non-cash working capital assets and liabilities:                                 |   |                         |       |   |   |   |   |   |
| Accounts      receivable, net                                                                    |   |                         | 84,727     |   |   |   | 208,743 |   |
| Tax      credits receivable                                                                      |   |                         | (7,652     | ) |   |   | (12,639 | ) |
| Prepaid      expenses & deposits                                                             |   |                         | (2,448     | ) |   |   | 18,723 |   |
| Accounts      payable                                                                            |   |                         | (33,902    | ) |   |   | (175,299 | ) |
| Accrued      liabilities & payroll                                                           |   |                         | 98,125     |   |   |   | (288,410 | ) |
| Deferred      revenue                                                                            |   |                         | (333,767   | ) |   |   | 259,275 |   |
| Net      cash used in operating activities                                                       |   |                         | (5,356,977 | ) |   |   | (7,620,771 | ) |
|                                                                                             |   |                         |       |   |   |   |   |   |
| Investing      activities                                                                        |   |                         |       |   |   |   |   |   |
| Software      development costs                                                                  |   |                         | (471,988   | ) |   |   | − |   |
| Acquisition      of property & equipment                                                     |   |                         | (144,125   | ) |   |   | (50,209 | ) |
| Net      cash used in investing activities                                                       |   |                         | (616,113   | ) |   |   | (50,209 | ) |
|                                                                                             |   |                         |       |   |   |   |   |   |
| Financing      activities                                                                        |   |                         |       |   |   |   |   |   |
| Proceeds      from the issuance of convertible debt, net of debt issuance costs of      $324,184 |   |                         | 2,675,816  |   |   |   | − |   |
| Proceeds      from the sale of common stock                                                      |   |                         | −    |   |   |   | 7,802,148 |   |
| Proceeds      from exercise of stock options                                                     |   |                         | −    |   |   |   | 69,334 |   |
| Proceeds      from the issuance of common stock purchase warrants                                |   |                         | −    |   |   |   | 4,450,195 |   |
| Repurchase      of common stock from shareholder                                                 |   |                         | −    |   |   |   | (300,000 | ) |
| Net      cash provided by financing activities                                                   |   |                         | 2,675,816  |   |   |   | 12,021,677 |   |
|                                                                                             |   |                         |       |   |   |   |   |   |
| Effect      of exchange rate changes on cash & cash equivalents                              |   |                         | (17,862    | ) |   |   | 44,553 |   |
|                                                                                             |   |                         |       |   |   |   |   |   |
| Change      in cash  & cash equivalents during theperiod                           |   |                         | (3,315,136 | ) |   |   | 4,395,250 |   |
| Cash      & cash equivalents, beginning of period                                            |   |                         | 5,682,162  |   |   |   | 1,286,912 |   |
| Cash      & cash equivalents, end of period                                                  |   | $                            | 2,367,026  |   |   | $ | 5,682,162 |   |

----

----

|      | • | Gaming and      entertainment. We  propose to      (i) deliver casino games via our SGS, both wired and wirelessly in      designated areas on casino properties; (ii) offer real-time, multiplayer      games that accommodate an unlimited number of players; (iii) deliver games      on a play-for-free or wagering basis (where permitted by law) on mobile      telephone handsets over any carrier network; and (iv) deliver horse and      sports wagering applications, where legal, for race and sports books, as      well as on-track and off-track wagering, including live streaming video of      horse races and other sports events.  We also propose to deliver      content via channel partners and content partners, including live      streaming television, digital radio, specific theme downloads for mobile      phones, media downloads and gamingapplications. |
|--------------------------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | Financial services and      enterprise software. The Company’s products and services extend      enterprise applications to the wireless arena, such as customer      relationship management systems, sales force automation systems,      information technology (IT) service desk and business continuity      protocols.  One of the Company’s primary focuses in this sales      vertical is to develop software for the data-intensive investment banking      community and client-facing applications for the retail banking      industry. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | (i) | Research      and software development costs |
|--------|-----|----------------------------------------------|

----

|   | (j) | Stock-based      compensation |
|--------|-----|-------------------------------|

|   | (k) | Reclassifications |
|--------|-----|-------------------|

|   | (l) | Derivatives |
|--------|-----|-------------|

----

| Outstanding      at December 31,                    |   | 2007   |       |   | 2006   |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Stock      options                                  |   |   | 6,997,000  |   |   |   | 5,869,277 |   |
| Common      stock warrants                          |   |   | 12,775,718 |   |   |   | 10,642,385 |   |
| Common      shares underlining convertible notes    |   |   | 6,666,667  |   |   |   | − |   |
| Total      options, warrants, and convertible notes |   |   | 26,439,385 |   |   |   | 16,511,662 |   |

----

| Contractual      Obligations and Long-Term Liability(US$) |   |
|-----------------------------------------------------------|--------|
|                                                 |   | Total |   |   | 2008 |   |   | 2009 |   |   | 2010 |   |   | 2011 |   |   |   | 2012 | + |
| Office      Space Leases:                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     United      States                |   | $ | 563,554 |   |   | $ | 239,652 |   |   | $ | 183,100 |   |   | $ | 140,802 |   |   | $ | − |   |   | $ | − |   |
|      Canada                      |   |   | 517,570 |   |   |   | 115,988 |   |   |   | 119,570 |   |   |   | 123,212 |   |   |   | 126,916 |   |   |   | 31,884 |   |
| Total      Office Space                                   |   |   | 1,081,124 |   |   |   | 355,640 |   |   |   | 302,670 |   |   |   | 264,014 |   |   |   | 126,916 |   |   |   | 31,884 |   |
| Office      Equipment                                     |   |   | 208,418 |   |   |   | 146,298 |   |   |   | 61,426 |   |   |   | 694 |   |   |   | − |   |   |   | − |   |
| Convertible      Debt                                     |   |   | 3,000,000 |   |   |   | − |   |   |   | − |   |   |   | 3,000,000 |   |   |   | − |   |   |   | − |   |
| Interest      on Convertible Debt                         |   |   | 700,000 |   |   |   | 240,000 |   |   |   | 240,000 |   |   |   | 220,000 |   |   |   | − |   |   |   | − |   |
| Total                                                     |   | $ | 4,989,542 |   |   | $ | 741,938 |   |   | $ | 604,097 |   |   | $ | 3,484,708 |   |   | $ | 126,916 |   |   | $ | 31,884 |   |

----

|                                      |   |  2007        |    |   | 2006   |   |
|-------------------------------------------|--------|------------------------|---------|--------|--------|--------|
| Accrued      payroll and related expenses |   | $                      | 233,557 |   |   | $      | 211,020 |   |
| Accrued      professional fees            |   |                   | 148,638 |   |   |   | 157,943 |   |
| Accrued      vendor obligations           |   |                   | 88,863  |   |   |   | 32,334 |   |
| Accrued      interest payable             |   |                   | 22,000  |   |   |   | − |   |
| Other      taxes payable                  |   |                   | 17,863  |   |   |   | 11,499 |   |
| Total                                     |   | $                      | 510,921 |   |   | $      | 412,796 |   |

|   | · | during      any period after the Issue Date, (i) the daily volume weighted average      price per share of common stock of the Company for at least 20 out of any      30 consecutive trading days, which period shall have commenced only after      the Issue Date (the “Threshold Period”), exceeds $0.90 (subject to      adjustment for reverse and forward stock splits, stock dividends, stock      combinations and other similar transactions of the common stock of the      Company that occurs after the Issue Date), (ii) for at least 20 trading      days during the applicable Threshold Period, the daily trading volume for      the common stock of the Company on the trading market of the Company      exceeds $100,000 per trading day and (iii) all of the Equity Conditions      (as defined in the 2007 Notes) are met (unless waived by a holder) for the      applicable time period set forth in the 2007 Notes  ; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | any      time after the Issue Date in whole or part, at the option of the holder,      at any time and from time to time until such 2007 Note is no longer      outstanding. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                              |   | 2007   |   |   | 2006   |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Estimated      tax rate (U.S, State, and foreign) |   |   | 38     | %      |   |   | 37 | % |
| Adjustments:                                      |   |   |   |   |   |   |   |   |
| Non-deductible      expenses                      |   |   | (0     | )%     |   |   | (3 | )% |
| Change      in valuation allowance                |   |   | (38    | )%     |   |   | (34 | )% |
| Total      benefit (provision)                    |   |   | 0      | %      |   |   | 0 | % |

|                                           |   | 2007   |       |   | 2006   |   |
|------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Deferred      tax assets                       |   |   | 5,352,770  |   |   |   | 2,449,693 |   |
| Change      in net operating loss carryforward |   |   | 2,449,723  |   |   |   | 3,132,323 |   |
| Impact      of non-deductable expenses         |   |   | -          |   |   |   | (229,246 | ) |
| Total      Deferred tax assets                 |   |   | 7,802,493  |   |   |   | 5,352,770 |   |
| Less      valuation allowance                  |   |   | (7,802,493 | )      |   |   | (5,352,770 | ) |
| Net      deferred tax asset                    |   |   | -          |   |   |   | - |   |

----

|                         |   | 2007           |         |   | 2006           |   |
|------------------------------|--------|----------------|--------------|--------|----------------|--------|
| Expected      term (years)   |   | 2.9      years |    |   | 3.1      years |   |
| Risk-free      interest rate |   |           | 4.84         | %      |           |   | 4.73 | % |
| Volatility                   |   |           | 55.0         | %      |           |   | 65.0 | % |
| Expected      forfeiture     |   |           | 33.3         | %      |           |   | 33.3 | % |
| Dividend      yield          |   |           | 0.0          | %      |           |   | 0.0 | % |

----

|                                                  |   | Numberof Options |      |   | Weighted      Average ExercisePrice |   |    | Weighted      average Remaining Contractual      Term |   |
|-------------------------------------------------------|--------|------------------|-----------|--------|-------------------------------------|--------|---------|-------------------------------------------------------|--------|
| Outstanding,      January 1, 2007                     |   |             | 5,869,277 |   |                                |   | 0.807   |                                                  |   |   | 8.459 |   |
|                                                  |   |             |      |   |                                |   |    |                                                  |   |   |   |   |
| Granted                                               |   |             | 1,840,000 |   |                                |   | 0.446   |                                                  |   |   | 8.658 |   |
| Exercised                                             |   |             | −   |   |                                |   | − |                                                  |   |   | − |   |
| Cancelled                                             |   |             | (712,277  | )      |                                |   | 1.001   |                                                  |   |   | 7.336 |   |
| Outstanding,      December 31, 2007                   |   |             | 6,997,000 |   |                                |   | 0.706   |                                                  |   |   | 8.006 |   |
| Vested      and expected to vest at December 31, 2007 |   |             | 5,301,499 |   |                                |   | 0.729   |                                                  |   |   | 8.080 |   |
| Exercisable      at December 31, 2007                 |   |             | 2,644,376 |   |                                |   | 0.926   |                                                  |   |   | 6.398 |   |

| Non-vested      Options              |   | Number      of Options |       |   | Weighted      average Grant-Date Fair Value |   |
|--------------------------------------|--------|------------------------|------------|--------|---------------------------------------------|--------|
| Non-vested      at January 1, 2007   |   |                   | 4,918,909  |   |                                        |   | 0.2993 |   |
| Granted                              |   |                   | 1,840,000  |   |                                        |   | 0.2036 |   |
| Vested                               |   |                   | (1,802,453 | )      |                                        |   | 0.2987 |   |
| Cancelled                            |   |                   | (603,832   | )      |                                        |   | 0.3270 |   |
| Non-vested      at December 31, 2007 |   |                   | 4,352,624  |   |                                        |   | 0.2322 |   |

----

|               |   | Twelve months ended December      31, |    |
|--------------------|--------|---------------------------------------|---------|
| Revenue            |   | 2007                                  |    |   | 2006 |   |
|               |   |                                  |    |   |   |   |
| North      America |   | $                                     | 926,622 |   |   | $ | 310,958 |   |
| South      America |   |                                  | − |   |   |   | 8,783 |   |
| Europe             |   |                                  | 54,027  |   |   |   | 78,393 |   |
|               |   |                                  |    |   |   |   |   |   |
| Total              |   | $                                     | 980,649 |   |   | $ | 398,134 |   |

| Property and Equipment |   | 2007   |    |   | 2006   |   |
|------------------------|--------|--------|---------|--------|--------|--------|
| United      States     |   | $      | 101,247 |   |   | $      | 49,804 |   |
| Canada                 |   |   | 60,510  |   |   |   | 32,994 |   |
| Total                  |   | $      | 161,757 |   |   | $      | 82,798 |   |

----

----

| Name                    |   | Age    |   | Position |
|-------------------------|--------|--------|--------|----------|
| Shawn      Kreloff      |   |   | 45     |     | Chief      Executive Officer, Chairman of the Board and Director |
| Stephen      Fellows    |   |   | 42     |     | Chief      Financial Officer and Corporate Secretary |
| Lance      Yu           |   |   | 38     |     | Senior      Vice President and Chief Technology Officer |
| Robert      P. Levy     |   |   | 76     |     | Director |
| M.      Jeffrey Branman |   |   | 52     |     | Director |

----

----

| Name      and Principal Position                               |   | Year |   | Salary($) |    | Bonus($) |   | StockAwards(6)($) |   | OptionsAwards(7) ($) |    | All      OtherCompensation($) |   |    | Total($) |   |
|----------------------------------------------------------------|--------|------|--------|-----------|---------|----------|--------|-------------------|--------|---------------------------|---------|-------------------------------|--------|---------|----------|--------|
| Shawn      Kreloff                                             |   | 2007 |   |      | 170,000 |     |   | 50,000            |   |                      | — |                          |   | 290,833 |     |   | — |   |   |   | 510,833 |   |
| President      and Chief Executive Officer(1),(2)              |   | 2006 |   |      | 159,769 |     |   | —           |   |                      | — |                          |   | 83,304  |     |   | — |   |   |   | 243,073 |   |
| Stephen      Fellows                                           |   | 2007 |   |      | 163,678 |     |   | 28,059            |   |                      | — |                          |   | 31,067  |     |   | — |   |   |   | 222,803 |   |
| Chief      Financial Officer(3)                                |   | 2006 |   |      | 138,948 |     |   | —           |   |                      | 37,333  |                          |   | 12,235  |     |   | — |   |   |   | 188,516 |   |
| Lance      Yu                                                  |   | 2007 |   |      | 187,060 |     |   | —           |   |                      | — |                          |   | — |     |   | 9,540 | (5) |   |   | 196,600 |   |
| Senior      Vice President – Chief Technology Officer(4) |   | 2006 |   |      | 176,420 |     |   | —           |   |                      | — |                          |   | — |     |   | 8,997 | (5) |   |   | 185,417 |   |

| (1) | On August 28, 2006, the Company      entered into an Employment Agreement with Shawn Kreloff for his services      as President and Chief Executive Officer of the Company, which agreement      expires on December 31, 2009.  The Employment Agreement provides      for an annual salary of $170,000, or such higher amount as the Board may      determine, and an annual bonus based upon the achievement of targets      established by the Board.  Pursuant to the Employment Agreement,      following the Company’s 2006 Annual Meeting of Stockholders, Mr. Kreloff      was granted an option to purchase 3,000,000 shares of Common      Stock.  In the event his employment terminates involuntarily      without Cause (as defined in the Employment Agreement), Mr. Kreloff will      receive a severance payment equal to one year’s salary and      benefits.  In addition, the Employment Agreement includes a      one-year post-employment, non-competition  provision. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr. Kreloff was appointed      Chairman in September 2004, and President and Chief Executive Officer in      May 2006. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr. Fellows served as our Vice      President-Finance & Corporate Controller from August 2005, until May      2006, when he was appointed as our Chief Financial      Officer. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Mr. Yu has served as our Senior      Vice President and Chief Technology Officer since our inception in      November 2003. |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

| (5) | Represents payment of a vehicle      expense allowance. |
|-----|---------------------------------------------------------|

| (6) | The amount of the restricted      stock awards is calculated based on the closing market price on the date      the restricted stock wasgranted. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | The option awards amount is      calculated using the Black-Scholes valuation method using the variables      used by the Company to determine the gross option value for financial      statement reporting purposes pursuant to FAS 123(R).  The      executive compensation for options is recognized over the service period      which has been determined to be the vesting period of the option      grants.  In 2007, 200,000 options were granted to Mr. Fellows on      June 22, 2007 at an exercise price of $0.44 per share, with vesting over      four years which expire ten years after the grant date.  In      2006, 500,000 and 250,000 options were granted to Mr. Kreloff and Mr.      Fellows on July 13, 2006 at an exercise price of $0.70 per share, with      vesting over three years which expire ten years after the grant      date.  Also in 2006, 3,000,000 options were granted to Mr.      Kreloff on October 2, 2006 at an exercise price of $0.63 per share, with      vesting over three years which expire ten years after the grant      date. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                 |   | Option      Awards                                                          |      | Stock      Awards |                                                                          |
|----------------------|--------|-----------------------------------------------------------------------------|-----------|-------------------|-------------------------------------------------------------------------------|
| Name                 |   | 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 ($) |   |
| Shawn      Kreloff   |   |                                                                        | 250,000   |              |                                                                          |   | - | (1) |   |   | n/a |   |   |   | 1.60 |   | 10/12/2010 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Stephen      Fellows |   |                                                                        | 50,000    |              |                                                                          |   | - | (1) |   |   | n/a |   |   |   | 1.60 |   | 10/12/2010 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Lance      Yu        |   |                                                                        | 150,000   |              |                                                                          |   | - | (1) |   |   | n/a |   |   |   | 1.60 |   | 10/12/2010 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Shawn      Kreloff   |   |                                                                        | 166,667   |              |                                                                          |   | 333,333 | (2) |   |   | n/a |   |   |   | 0.70 |   | 7/13/2016 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Shawn      Kreloff   |   |                                                                        | 1,000,000 |              |                                                                          |   | 2,000,000 | (3) |   |   | n/a |   |   |   | 0.63 |   | 10/2/2016 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Stephen      Fellows |   |                                                                        | 166,667   |              |                                                                          |   | 83,333 | (4) |   |   | n/a |   |   |   | 0.70 |   | 7/13/2016 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |
| Stephen      Fellows |   |                                                                        | -         |              |                                                                          |   | 200,000 | (5) |   |   | n/a |   |   |   | 0.44 |   | 6/22/2017 |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |   |   | n/a |   |

| (1) | Options      granted on October 13, 2005.  One-third of these options vested      immediately on the date of grant, one third vested on September 30, 2006,      and the remaining one third of these options vested on September 30,      2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Options      granted on July 13, 2006.  These options vest in three equal      annual installments over a three year period on each anniversary date of      the grant with vesting commencing July 13, 2007 and ending on July 13,      2009. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Options      granted on October 2, 2006.  These options vest in three equal      annual installments over a three year period on each anniversary date of      the grant with vesting commencing on July 13, 2007 and ending on July 13,      2009. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Options      granted on July 13, 2006.  One-third of these options vested on      the date of grant.  Two-third of these options vest in two equal      annual installments over a two year period on the anniversary date      commencing July 13, 2007 and ending July 13,  2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Options      granted on June 22, 2007.  These options will vest in four equal      annual installments over a four year period on each anniversary date of      the grant with vesting commencing on June 22, 2008, and ending on June 22,      2011. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name                    |   | Fees      Earned or paid inCash(1)($) |   |   | Stock      Awards(2)($) |   |   | Options Awards(3)($) |   |   | All      Other Compensation($) |   |   | Total($) |   |
|-------------------------|--------|---------------------------------------|--------|--------|-------------------------|--------|--------|----------------------|--------|--------|--------------------------------|--------|--------|----------|--------|
| M.      Jeffrey Branman |   |                                  | 8,900  |   |                    |   | -      |                 |   |   | 14,530                         |   |   |     | -      |   |   |   | 23,430 |   |
| Robert      P. Levy     |   |                                  | 5,028  |   |                    |   | 20,000 |                 |   |   | 15,008                         |   |   |     | -      |   |   |   | 40,036 |   |
| Michael      Fields(4)  |   |                                  | 3,650  |   |                    |   | -      |                 |   |   | -                              |   |   |     | -      |   |   |   | 3,650 |   |
| Paul      C. Meyer(4)   |   |                                  | 3,778  |   |                    |   | -      |                 |   |   | -                              |   |   |     | -      |   |   |   | 3,778 |   |

| (1)       | Consists      of fees earned as director fees, including annual board member and      committee chairmen fees plus fees paid for board meetings and committee      meeting attendance as per the compensation plan for    directors. |
|-----------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | Restricted      shares granted to director vest 50% on the date of grant and 50% on the      first anniversary of his or her appointment to the Board and are valued      above or at the market price on the date of the  grant. |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | M.      Jeffery Branman and Robert P. Levy were granted stock options, during      fiscal 2007, 100,000 and 75,000, respectively under the Compensation      Plan for Directors for an aggregate of 175,000 stock options of which all      where outstanding as at the end of fiscal 2007.  The option      awards amount above is calculated using the Black-Scholes valuation method      using the variables used by the Company to determine the gross option      value for financial statement reporting purposes pursuant to FAS      123(R).  These options will vest in equal quarterly installments      over a one year period on the three, six, nine and twelve month      anniversaries of the grant date. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Michael      Fields and Paul C. Meyer resigned as directors on August 8, 2007 and June      12, 2007, respectively. |
|-----|---------------------------------------------------------------------------------------------------------------------|

|   | • | each      person, or group of affiliated persons, known by us to be the beneficial      owner of more than 5% of our outstanding Common  Stock; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | • | each      of our directors; |
|--------|---------|-----------------------------|

|   | • | each      executive officer named in the Summary Compensation Table above;      and |
|--------|---------|-------------------------------------------------------------------------------------|

|   | • | all      of our current directors and executive officers as a  group. |
|--------|---------|-----------------------------------------------------------------------|

----

| Name      and Address of Beneficial Owner                                                                                                                                                                                                                                               |   | Number      of Sharesof      Common Stock BeneficiallyOwned(1)(2) |      |   | Percentage      ofCommon      StockBeneficiallyOwned(2) |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|-----------|--------|---------------------------------------------------------|--------|
| Shawn      Kreloff c/o      Sona Mobile Holdings Corp.245      Park Avenue, 39th      Floor New      York, NY      10167....................................................................................................................................................  |   |                                                                   | 4,221,577 | (3)    |                                                    |   | 7.1 | % |
| Robert      P. Levy 200      W. Montgomery AvenueArdmore,      PA      19003.......................................................................................................................................................                                                |   |                                                                   | 121,250   | (4)(5) |                                                    |   | * |   |
| M.      Jeffrey Branman 935      First AvenueKing      of Prussia, PA      19406...........................................................................................................................................                                                        |   |                                                                   | 375,000   | (5)(6) |                                                    |   | * |   |
| Lance      Yu c/o      Sona Mobile Holdings Corp.366      Bay Street, Suite 600Toronto,      Ontario M5H      4B2.........................................................................................................................................                         |   |                                                                   | 1,328,734 | (7)    |                                                    |   | 2.3 | % |
| Stephen      Fellows c/o      Sona Mobile Holdings Corp.366      Bay Street, Suite 600 Toronto,      Ontario M5H      4B2........................................................................................................................................             |   |                                                                   | 274,999   | (8)    |                                                    |   | * |   |
| All      directors and officers as a group (Five)..............................................................................................................................................................................                                                    |   |                                                                   | 6,321,560 | (9)    |                                                    |   | 10.5 | % |
| Shuffle Master,      Inc. 1106      Palms Airport DriveLas      Vegas, NV      89119....................................................................................................................................................                                      |   |                                                                   | 4,807,692 | (10)   |                                                    |   | 8.2 | % |
| Steven      L. Martin c/o      Slater Asset Management, LLC825      Third Avenue, 33rd      FloorNew      York, NY      10022..................................................................................................................................................... |   |                                                                   | 4,879,675 | (11)   |                                                    |   | 8.3 | % |
| John      Bush 19      Farmcrest CourtNobleton,      ONL0G      1N0,      Canada...........................................................................................................................................................                                        |   |                                                                   | 5,583,577 | (12)   |                                                    |   | 9.7 | % |

| * | Less than    1%. |
|---|------------------|

| (1) | Shares of Common Stock that an      individual or group has a right to acquire within 60 days after February      29, 2008 pursuant to the exercise of options, warrants or other rights are      deemed to be outstanding for the purpose of computing the percentage      ownership of such individual or group, but are not deemed to be      outstanding for computing the percentage ownership of any other person or      group shown in the table. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | As of February 29, 2008, there      were 57,832,857 shares of our Common Stock    outstanding. |
|-----|------------------------------------------------------------------------------------------------|

| (3) | Includes 1,416,666 shares      issuable upon the exercise of stock options and 41,666 shares issuable      upon the exercise of five-yearwarrants. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes 40,000 shares issued to      Mr. Levy upon his appointment to the Board on May 29, 2007, of which      20,000 shares vested immediately and 20,000 shares will vest one year from      the date of grant. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Includes 81,250 and 155,000      shares issuable upon the exercise of stock options to Mr. Levy and Mr.      Branman, respectively. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Includes 100,000 shares issued to      Mr. Branman on July 6, 2006 upon his appointments to the Board and as      chairman of the Audit Committee, of which 50,000 shares vested immediately      and 50,000 shares which vested one year from the date of grant, as well as      30,000 shares issuable upon the exercise of five-year      warrants. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | Includes 150,000 shares issuable      upon the exercise of stockoptions. |
|-----|--------------------------------------------------------------------------|

| (8) | Includes      216,666 shares issuable upon the exercise of stock options and 53,333      shares of restricted stock, all of which are  vested. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (9) | Includes 2,019,582 shares      issuable upon the exercise of stock options granted to these directors and      officers and 71,666 shares issuable upon the exercise of five-year      warrants. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | Based on information contained in      a Schedule 13G filed by Shuffle Master Inc. on February 5, 2008.      Includes 833,333      shares issuable upon the exercise of warrants. Dr. Mark L. Yoseloff and      Messrs. Garry W. Saunders, Louis Castle and Phillip Peckman are all      members of Shuffle Master, Inc.’s Board of Directors and, as such, have      shared voting and investment control over these securities. The named      individuals disclaim beneficial ownership of these      securities. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Based on information contained in      a Schedule 13G/A filed by Slater Capital management LLC on February 15,      2008.  Includes shares owned directly by      Mr. Martin (333,333) as well as shares he is deemed to beneficially own      through his wife (8,000), through his two sons (278,085), through his IRA      (152,400) and through his wife’s IRA (76,200).  The total also      includes 1,051,057 shares underlying warrants held by Mr. Martin, certain      of the entities mentioned in this footnote and his wife’s      IRA.  Mr. Martin also has voting and investment control over      shares owned by Slater Equity Partners, L.P. (1,495,700), Slater Equity      Partner’s Offshore Fund Ltd. (832,500) and Slater Capital Partners LP      (652,400) by virtue of the fact that he is the Manager and controlling      owner of Slater Asset Management, L.L.C. (SAM) and Slater Capital      Management, L.L.C. (SCM).  SAM is the general partner of      investment limited partnerships of which SCM is the investment advisor,      including Slater Equity Partners, L.P.  SCM is also the      investment advisor to Slater Equity Partners Offshore Fund      Ltd. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Exhibit      Number |   | Description |
|---------------------|--------|-------------|
|                | 2.1    |        | Agreement      and Plan of Merger, dated as of March 7, 2005 among Sona Mobile Holdings      Corp., PerfectData Acquisition Corporation and Sona Mobile, Inc.      (incorporated by reference to Exhibit 10.1 of the Company’s Current Report      on Form 8-K, filed March 11, 2005).  |
|                | 3.1    |        | Certificate      of Incorporation, as amended (incorporated by reference to the following      documents (i) the Company’s Consent Solicitation dated October 26, 2004 as      filed on November 1, 2004; (ii) Certificate of Designations for Series A      Preferred Stock filed as Exhibit 4.2 to the Company’s Annual Report on      Form 10-KSB for its fiscal year ended March 31, 2005; (iii) Certificate of      Designations for Series B Preferred Stock filed as Exhibit 3.1 to the      Company’s Current Report on Form 8-K filed on June 22,      2005;  (iv) Appendix IV to the Company’s Definitive Proxy      Statement dated October 27, 2005 and filed on the same date; and (v)      Appendix I to the Company’s Definitive Proxy Statement dated August 22,      2007 and filed on the same date).  |
|                | 3.2    |        | By-laws      of the Company, as amended July 20, 2007 (incorporated by reference to      Exhibit 3.2 of the Company’s Quarterly Report on Form 10-QSB, filed August      14, 2007).  |
|                | 4.1    |        | Form      of Common Stock Certificate (incorporated by reference to Exhibit 4.1 of      Amendment No. 1 to the Company’s Form SB-2 (file number 333-130461), filed      February 2, 2006).  |
|                | 4.2    |        | Form      of 8% Senior Unsecured Convertible Debenture due November 28, 2010      (incorporated by reference to Exhibit 4.1 of the Company’s Form 8-K, filed      November 27, 2007).  |
|                | 10.1   |        | Amended      and Restated Stock Option Plan of 2000 (incorporated by reference to      Appendix III of the Company’s Definitive Proxy Statement, filed October      27, 2005).  |
|                | 10.2   |        | Licensing      and Distribution Agreement, dated January 13, 2006, between the Company      and Shuffle Master, Inc. (incorporated by reference to Exhibit 10.2 of the      Company’s Form SB-2 (file number 333-130461), filed April 7,      2006). |
|                | 10.3   |        | Form      of Securities Purchase Agreement, dated June 30, 2006 (incorporated by      reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K,      filed July 7, 2006).  |
|                | 10.4   |        | Form      of Registration Rights Agreement, dated June 30, 2006 (incorporated by      reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K,      filed July 7, 2006).  |
|                | 10.5   |        | Form      of Warrant, dated July 7, 2006 (incorporated by reference to Exhibit 10.1      of the Company’s Current Report on Form 8-K, filed July 7,      2006).  |
|                | 10.6   |        | Letter      Agreement, dated June 30, 2006, between the Company and Shuffle Master,      Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Current      Report on Form 8-K, filed July 7, 2006).  |

----

|   | 10.7  |   | Mutual      Separation Agreement, dated as of July 17, 2006, between the Company and      John Bush (incorporated by reference to Exhibit 10.1 of the Company’s      Current Report on Form 8-K, filed July 21, 2006).                                                                         |
|--------|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.8  |   | Consulting      Agreement, dated as of July 17, 2006, between the Company and John Bush      (incorporated by reference to Exhibit 10.2 of the Company’s Current Report      on Form 8-K, filed July 21, 2006).                                                                                |
|   | 10.9  |   | Compensation      Plan for Directors, as amended (incorporated by reference to Exhibit 10.1      to the Company’s Quarterly Report on Form 10-QSB, filed November 14,      2006).                                                                                                              |
|   | 10.10 |   | Form      of Non-Employee Stock Option Agreement (incorporated by reference to      Exhibit 10.2 to the Company’s Quarterly Report on Form 10-QSB, filed      August 14, 2006).                                                                                                                |
|   | 10.11 |   | Form      of Non-Employee Restricted Stock Agreement (incorporated by reference to      Exhibit 10.3 to the Company’s Quarterly Report on Form 10-QSB, filed      August 14, 2006).                                                                                                            |
|   | 10.12 |   | Form      of Indemnity Agreement (incorporated by reference to Exhibit 10.4 to the      Company’s Quarterly Report on Form 10-QSB, filed August 14,      2006).                                                                                                                                |
|   | 10.13 |   | Private      Label Partner Agreement, dated as of September 1, 2006, between the      Company and Motorola, Inc., formerly Symbol Technologies, Inc.      (incorporated by reference to Exhibit 10.1 of the Company’s Current Report      on Form 8-K/A, filed November 1, 2006).+             |
|   | 10.14 |   | 2006      Incentive Plan (incorporated by reference to Appendix A of the Company's      Definitive Proxy Statement, filed August 30, 2006).                                                                                                                                                          |
|   | 10.15 |   | Employment      Agreement, dated as of August 28, 2006 between the Company and Shawn      Kreloff (incorporated by reference to Exhibit 10.2 to the Company      Quarterly Report on 10-QSB, filed August 14, 2006).                                                                                 |
|   | 10.16 |   | Amended      and Restated Licensing And Distribution Agreement, effective as of      February 28, 2007, among the Company, Sona Mobile, Inc. and Shuffle      Master, Inc. (incorporated by reference to Exhibit 10.1 of the Company’s      Current Report on Form 8-K, filed March 2, 2007).  |
|   | 10.17 |   | Amended      and Restated Master Services Agreement, effective as of February 28, 2007,      between the Company and Shuffle Master, Inc. (incorporated by reference to      Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed March 2,      2007).+                             |
|   | 10.18 |   | Form      of Securities Purchase Agreement dated November 26, 2007 (incorporated by      reference to Exhibit 10.1 of the Company’s Form 8-K, filed November 27,      2007).                                                                                                                   |
|   | 10.19 |   | Form      of Registration Rights Agreement dated November 26, 2007 (incorporated by      reference to Exhibit 10.2 of the Company’s Form 8-K, filed November 27,      2007).                                                                                                                   |
|   | 10.20 |   | Form      of Common Stock Purchase Warrant dated November 28, 2007 (incorporated by      reference to Exhibit 10.3 of the Company’s Form 8-K, filed November 27,      2007).                                                                                                                   |
|   | 14.1  |   | Code      of Ethics (incorporated by reference to Exhibit 14.1 of the Company’s      Annual Report on Form 10-KSB, filed March 31, 2006).                                                                                                                                                      |
|   | 21.1  |   | Subsidiaries      of the Company (incorporated by reference to Exhibit 21.1 of the Company’s      Registration Statement on Form SB-2 (file no. 333-148254), filed on      December 21, 2007).                                                                                                 |

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|   | 31.1 |   | Certification      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.*                              |
|--------|------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 31.2 |   | Certification      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley      Act of 2002.*                              |
|   | 32.1 |   | Certification      of Chief Executive Officer and Chief Financial Officer pursuant to Section      906 of the Sarbanes-Oxley Act of 2002.*  |

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|                                       |  Sona Mobile Holdings      Corp. (Registrant)               |
|--------------------------------------------|-----------------------------------------------------------------------|
|                                       |                                                                  |
| Date:   March      31, 2008 | /s/  SHAWN KRELOFF                                          |
|                                       | Name:      Shawn Kreloff                                              |
|                                       | Title:      Chief Executive Officer                                   |
|                                       |                                                                  |
| Date:   March      31, 2008 | /s/  STEPHEN FELLOWS                                        |
|                                       | Name:      Stephen Fellows                                            |
|                                       | Title:      Chief Financial Officer(Principal      Financial Officer) |

| Signature                                          |   | Title                                                                                            |   | Date                |
|----------------------------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|---------------------|
|  /s/  SHAWN      KRELOFF            |   | President      and Chief Executive Officer, and Director (principal executive      officer)      |   | March      31, 2008 |
| Shawn      Kreloff                                 |   |                                                                                             |   |                |
|  /s/  STEPHEN      FELLOWS          |   | Chief      Financial Officer (principal financial officer and principal accounting      officer) |   | March      31, 2008 |
| Stephen      Fellows                               |   |                                                                                             |   |                |
|  /s/  ROBERT P.      LEVY           |   | Director                                                                                         |   | March      31, 2008 |
| Robert      P. Levy                                |   |                                                                                             |   |                |
|   /s/  M. JEFFREY      BRANMAN |   | Director                                                                                         |   | March      31, 2008 |
| M.      Jeffrey Branman                            |   |                                                                                             |   |                |

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| 1. | I      have reviewed this annual report on Form 10-KSB of Sona Mobile Holdings      Corp; |
|----|-------------------------------------------------------------------------------------------|

| 2. | Based      on my knowledge, this report does not contain any untrue statement of a      material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the period covered by this      report; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Based      on my knowledge, the financial statements, and other financial information      included in this report, fairly present in all material respects the      financial condition, results of operations and cash flows of the small      business issuer as of, and for, the periods presented in this      report; |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | The      small business issuer's other certifying officer(s) and I are responsible      for establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal      control over financial reporting (as defined in Exchange Act Rules      13a-15(f) and 15d-15(f)) for the small business issuer and      have: |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | Designed      such disclosure controls and procedures, or caused such disclosure      controls and procedures to be designed under our supervision, to ensure      that material information relating to the small business issuer, including      its consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this report is being      prepared; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Designed      such internal control over financial reporting, or caused such internal      control over financial reporting to be designed under our supervision, 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; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Evaluated      the effectiveness of the small business issuer's disclosure controls and      procedures and presented in this report our conclusions about the      effectiveness of the disclosure controls and procedures, as of the end of      the period covered by this report based on such evaluation;      and |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | Disclosed      in this report any change in the small business issuer's internal control      over financial reporting that occurred during the small business issuer's      most recent fiscal quarter (the small business issuer's fourth fiscal      quarter in the case of an annual report) that has materially affected, or      is reasonably likely to materially affect, the small business issuer's      internal control over financial reporting;and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | The      small business issuer's other certifying officer(s) and I have disclosed,      based on our most recent evaluation of internal control over financial      reporting, to the small business issuer's auditors and the audit committee      of the small business issuer's board of directors (or persons performing      the equivalent functions): |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | All significant deficiencies and      material weaknesses in the design or operation of internal control over      financial reporting which are reasonably likely to adversely affect the      small business issuer's ability to record, process, summarize and report      financial information; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Any fraud, whether or not      material, that involves management or other employees who have a      significant role in the small business issuer's internal control over      financial reporting. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 1. | I      have reviewed this annual report on Form 10-KSB of Sona Mobile Holdings      Corp; |
|----|-------------------------------------------------------------------------------------------|

| 2. | Based      on my knowledge, this report does not contain any untrue statement of a      material fact or omit to state a material fact necessary to make the      statements made, in light of the circumstances under which such statements      were made, not misleading with respect to the period covered by this      report; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Based      on my knowledge, the financial statements, and other financial information      included in this report, fairly present in all material respects the      financial condition, results of operations and cash flows of the small      business issuer as of, and for, the periods presented in this      report; |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | The      small business issuer's other certifying officer(s) and I are responsible      for establishing and maintaining disclosure controls and procedures (as      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal      control over financial reporting (as defined in Exchange Act Rules      13a-15(f) and 15d-15(f)) for the small business issuer and      have: |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | Designed      such disclosure controls and procedures, or caused such disclosure      controls and procedures to be designed under our supervision, to ensure      that material information relating to the small business issuer, including      its consolidated subsidiaries, is made known to us by others within those      entities, particularly during the period in which this report is being      prepared; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Designed      such internal control over financial reporting, or caused such internal      control over financial reporting to be designed under our supervision, 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; |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | Evaluated      the effectiveness of the small business issuer's disclosure controls and      procedures and presented in this report our conclusions about the      effectiveness of the disclosure controls and procedures, as of the end of      the period covered by this report based on such evaluation;      and |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | d) | Disclosed      in this report any change in the small business issuer's internal control      over financial reporting that occurred during the small business issuer's      most recent fiscal quarter (the small business issuer's fourth fiscal      quarter in the case of an annual report) that has materially affected, or      is reasonably likely to materially affect, the small business issuer's      internal control over financial reporting;and |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | The      small business issuer's other certifying officer(s) and I have disclosed,      based on our most recent evaluation of internal control over financial      reporting, to the small business issuer's auditors and the audit committee      of the small business issuer's board of directors (or persons performing      the equivalent functions): |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | a) | All significant deficiencies and      material weaknesses in the design or operation of internal control over      financial reporting which are reasonably likely to adversely affect the      small business issuer's ability to record, process, summarize and report      financial information; and |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Any fraud, whether or not      material, that involves management or other employees who have a      significant role in the small business issuer's internal control over      financialreporting. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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