---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

[X]   Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934

for the quarterly period ended August 31, 2007

[   ]   Transition Report Under Section 13
or 15(d) of the Securities Exchange Act of 1934

for the transition period from _____ to _____

Commission File Number: 000-52201

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

|NEVADA                                           | 26-0881302                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

Klimentska 10, 110 00 Praque 1, Czech Republic(Address of principal executive offices)

+420 296 578 180Issuer's telephone number

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X]No[   ]

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

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. 72,961,853
shares of common stock as of October 17, 2007.

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

---

ITONIS INC.

Quarterly Report On Form 10-QSB For The Quarterly Period
Ended August 31, 2007

INDEX

|PART I  FINANCIAL INFORMATION | 1          
|------------------------------ | -----------
|                               | Item 1.    
|                               | Item 2.    
|                               | Item 3.    
|                               | Item 3A(T).
|PART II  OTHER INFORMATION    | 14         
|                               | Item 1.    
|                               | Item 2.    
|                               | Item 3.    
|                               | Item 4.    
|                               | Item 5.    
|                               | Item 6.    

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-QSB contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements involve risks and uncertainties, including
statements regarding our capital needs, business plans and expectations. Such
forward-looking statements involve risks and uncertainties regarding our ability
to achieve commercial levels of sales of our ITonis video solution, our ability
to successfully market our ITonis video solution, our ability to continue
development and upgrades to the ITonis video solution, availability of funds,
government regulations, common share prices, operating costs, capital costs and
other factors. Forward-looking statements are made, without limitation, in
relation to our operating plans, our liquidity and financial condition,
availability of funds, operating costs and the market in which we compete. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as may, will, should,
expect, plan, intend, anticipate, believe, estimate, predict,
potential or continue, the negative of such terms or other comparable
terminology. Actual events or results may differ materially. In evaluating these
statements, you should consider various factors, including the risks outlined
below, and, from time to time, in other reports we file with the SEC. These
factors may cause our actual results to differ materially from any
forward-looking statement. We disclaim any obligation to publicly update these
statements, or disclose any difference between our actual results and those
reflected in these statements. The information constitutes forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.

(i)

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PART I  FINANCIAL INFORMATION

Item
1.                    
Financial Statements

The following unaudited condensed consolidated interim
financial statements of ITonis Inc. (the Company) are included in this
Quarterly Report on Form 10-QSB:

|                                                                                                                                                                                                       | Page
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                                                                                                                                                                       |     
|Interim Consolidated
      Balance Sheets as at August 31, 2007 (unaudited) and November 30, 2006
      (audited)                                                                                      | F-1 
|                                                                                                                                                                                                       |     
|Interim Consolidated
      Statements of Changes in Stockholders Equity (Deficiency) for the period
      from incorporation (July 5, 2005) to August 31, 2007 (Unaudited)                            | F-2 
|                                                                                                                                                                                                       |     
|Interim Consolidated
      Statements of Operations for the nine months ended August 31, 2007 and
      2006 and for the period from incorporation (July 5, 2005) to August 31,
      2007 (Unaudited) | F-3 
|                                                                                                                                                                                                       |     
|Interim Consolidated
      Statements of Cash Flows for the nine months ended August 31, 2007 and
      2006 and for the period from incorporation (July 5, 2005) to August 31,
      2007 (Unaudited) | F-4 
|                                                                                                                                                                                                       |     
|Notes to Interim
      Consolidated Financial Statements                                                                                                                                               | F-5 

- 1 -

---











ITONIS INC.

(Formerly Kenshou Inc.)

(A Development Stage Company)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2007

US FUNDS

(Unaudited)

---

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

|                                                      |   | As at       |   |   | As at        |  
|----------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                      |   | August 31,  |   |   | November 30, |  
|                                                      |   | 2007        |   |   | 2006         |  
|ASSETS                                                |   | (Unaudited) |   |   | (Audited)    |  
|Current                                               |   |             |   |   |              |  
|Cash                                                  | $ | 18,293      |   | $ | 1,571        |  
|Accounts receivable                                   |   | 24,746      |   |   | 4,934        |  
|Prepaid expenses                                      |   | 93,090      |   |   | 25,590       |  
|                                                      |   | 136,129     |   |   | 32,095       |  
|                                                      |   |             |   |   |              |  
|Equipment                                             |   | 59,796      |   |   | 47,859       |  
|                                                      | $ | 195,925     |   | $ | 79,954       |  
|                                                      |   |             |   |   |              |  
|                                                      |   |             |   |   |              |  
|LIABILITIES                                           |   |             |   |   |              |  
|Current                                               |   |             |   |   |              |  
|Accounts payable                                      | $ | 618,428     |   | $ | 228,463      |  
|Accrued liabilities                                   |   | 45,540      |   |   | 62,668       |  
|Due to related parties                                |   | 196,752     |   |   | 183,831      |  
|                                                      |   | 860,720     |   |   | 474,962      |  
|                                                      |   |             |   |   |              |  
|                                                      |   |             |   |   |              |  
|Going Concern                                         |   |             |   |   |              |  
|                                                      |   |             |   |   |              |  
|                                                      |   |             |   |   |              |  
|STOCKHOLDERS DEFICIENCY                              |   |             |   |   |              |  
|Capital Stock                                         |   |             |   |   |              |  
|Common stock                                          |   |             |   |   |              |  
|Authorized:                                           |   |             |   |   |              |  
|300,000,000
      common shares with $0.001 par value |   |             |   |   |              |  
|Issued,
      allotted and fully paid:                |   |             |   |   |              |  
|73,211,853
      common shares (68,781,981           |   |             |   |   |              |  
|November 30, 2006)                                    |   | 73,212      |   |   | 68,782       |  
|Additional paid-in capital                            |   | 2,954,571   |   |   | 2,414,386    |  
|Preferred stock                                       |   |             |   |   |              |  
|Authorized:                                           |   |             |   |   |              |  
|5,000,000 preferred shares with $0.001 par value      |   |             |   |   |              |  
|Issued and fully paid: Nil                            |   | -           |   |   | -            |  
|Accumulated Comprehensive Loss                        |   | (25,660     | ) |   | (9,420       | )
|Deficit Accumulated during the development stage     |   | (3,666,918  | ) |   | (2,868,756   | )
|                                                      |   | (664,795    | ) |   | (395,008     | )
|                                                      | $ | 195,925     |   | $ | 79,954       |  

- See Accompanying Notes -

F-1

---

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

DeficitAccumulated
      
      
      
      
      
      TotalCommon
        Stock
      
      
      Additional
      
      
      During the
      
      
      Accumulated
      
      
      Stockholders'Paid-in
      
      
      Development
      
      
      Comprehensive
      
      
      EquityShares
      
      
      Amount
      
      
      Capital
      
      
      Stage
      
      
      Loss
      
      
      (Deficiency)Founder shares issued for cash at$0.001 per share on July 8,
        2005
      750,000
      
      $
      750
      
      $
      (250
      )
      $
      -
      
      $
      -
      
      $
      500Shares issued for cash at $0.007 pershare on September 14, 2005
      12,000,000
      
      
      12,000
      
      
      68,000
      
      
      -
      
      
      -
      
      
      80,000Shares issued for cash at $0.033 pershare on November 16, 2005
      4,466,289
      
      
      4,466
      
      
      144,410
      
      
      -
      
      
      -
      
      
      148,876Shares issued for acquisition ofsoftware at $0.015 per
        share onNovember 16, 2005
      30,000,000
      
      
      30,000
      
      
      417,637
      
      
      -
      
      
      -
      
      
      447,637Loss for the period
      -
      
      
      -
      
      
      -
      
      
      (566,478
      )
      
      -
      
      
      (566,478
      )Balance - November 30, 2005
      47,216,289
      
      
      47,216
      
      
      629,797
      
      
      (566,478
      )
      
      -
      
      
      110,535Shares issued for acquisition ofintellectual property at $0.083
        pershare on February 7, 2006
      18,000,000
      
      
      18,000
      
      
      1,482,000
      
      
      -
      
      
      -
      
      
      1,500,000Shares issued for cash at $0.083 pershare on April 10, 2006
      2,215,692
      
      
      2,216
      
      
      182,425
      
      
      -
      
      
      -
      
      
      184,641Share issued for consulting services at$0.083 per share
      150,000
      
      
      150
      
      
      12,350
      
      
      -
      
      
      -
      
      
      12,500Shares issued for cash at $0.083 pershare
      1,200,000
      
      
      1,200
      
      
      98,800
      
      
      -
      
      
      -
      
      
      100,000Stock-based compensation
      -
      
      
      -
      
      
      9,014
      
      
      -
      
      
      -
      
      
      9,014Loss for the period
      -
      
      
      -
      
      
      -
      
      
      (2,302,278
      )
      
      -
      
      
      (2,302,278
      )Foreign currency translation adjustment
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (9,420
      )
      
      (9,420
      )Balance  November 30, 2006
      68,781,981
      
      
      68,782
      
      
      2,414,386
      
      
      (2,868,756
      )
      
      (9,420
      )
      
      (395,008
      )Shares issued for cash at $0.083 pershare
      1,355,364
      
      
      1,355
      
      
      111,592
      
      
      -
      
      
      -
      
      
      112,947Shares issued for consulting servicesat $0.083 per share
      600,000
      
      
      600
      
      
      49,400
      
      
      -
      
      
      -
      
      
      50,000Shares issued for cash at $0.075 pershare
      438,208
      
      
      438
      
      
      32,428
      
      
      -
      
      
      -
      
      
      32,866Shares issued for cash at $0.05 pershare
      936,300
      
      
      937
      
      
      45,878
      
      
      -
      
      
      -
      
      
      46,815Shares issued for cash at $0.25 pershare
      1,000,000
      
      
      1,000
      
      
      249,000
      
      
      -
      
      
      -
      
      
      250,000Shares issued for legal services at$0.25 per share
      100,000
      
      
      100
      
      
      24,900
      
      
      -
      
      
      -
      
      
      25,000Stock-based compensation
      -
      
      
      -
      
      
      26,987
      
      
      -
      
      
      -
      
      
      26,987Loss for the period
      -
      
      
      -
      
      
      -
      
      
      (798,162
      )
      
      -
      
      
      (798,162
      )Foreign currency translation adjustment
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (16,240
      )
      
      (16,240
      )Balance  August
        31, 2007 (Unaudited)
      73,211,853
      
      $
      73,212
      
      $
      2,954,571
      
      $
      (3,666,918
      )
      $
      (25,660
      )
      $
      (664,795
      )


- See Accompanying Notes -

F-2

---

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

FromFor the
      
      
      For the
      
      
      For the
      
      
      For the
      
      
      IncorporationThree Months
      
      
      Three Months
      
      
      Nine Months
      
      
      Nine Months
      
      
      July 5,Ended
      
      
      Ended
      
      
      Ended
      
      
      Ended
      
      
      2005 toAugust 31,
      
      
      August 31,
      
      
      August 31,
      
      
      August 31,
      
      
      August 31,2007
      
      
      2006
      
      
      2007
      
      
      2006
      
      
      2007Sales
      $
      27,845
      
      $
      24,351
      
      $
      199,415
      
      $
      24,351
      
      $
      223,766Cost of Sales
      
      17,573
      
      
      9,424
      
      
      167,463
      
      
      9,424
      
      
      176,887Gross Profit
      
      10,272
      
      
      14,927
      
      
      31,952
      
      
      14,927
      
      
      46,879General and AdministrativeExpensesSoftware development costs
      
      78,933
      
      
      -
      
      
      252,979
      
      
      13,814
      
      
      615,533Consulting
      
      72,134
      
      
      31,901
      
      
      178,092
      
      
      53,337
      
      
      213,428Salaries and wages
      
      17,926
      
      
      90,652
      
      
      136,302
      
      
      198,435
      
      
      211,897Auditing and accounting
      
      37,573
      
      
      19,371
      
      
      100,645
      
      
      39,995
      
      
      256,602Office
      
      23,436
      
      
      5,975
      
      
      61,068
      
      
      22,627
      
      
      116,015Legal
      
      16,880
      
      
      16,633
      
      
      31,066
      
      
      49,760
      
      
      102,334Depreciation
      
      3,706
      
      
      5,896
      
      
      22,773
      
      
      14,893
      
      
      43,463Rent
      
      8,345
      
      
      -
      
      
      21,829
      
      
      -
      
      
      53,848Filing fees
      
      9,871
      
      
      2,365
      
      
      15,324
      
      
      9,820
      
      
      22,611Investor relations
      
      -
      
      
      2,287
      
      
      6,235
      
      
      2,287
      
      
      24,915Foreign exchange loss
      
      (214
      )
      
      4,811
      
      
      3,801
      
      
      4.811
      
      
      9,651Intellectual property
      
      -
      
      
      -
      
      
      -
      
      
      1,500,000
      
      
      1,947,637Marketing and distribution
      
      -
      
      
      -
      
      
      -
      
      
      120,000
      
      
      120,000Bad debt
      
      -
      
      
      9,789
      
      
      -
      
      
      9,789
      
      
      9,789268,590
      
      
      189,680
      
      
      830,114
      
      
      2,039,568
      
      
      3,747,723Loss from Operations
      
      (258,318
      )
      
      (174,753
      )
      
      (798,162
      )
      
      (2,024,641
      )
      
      (3,700,844
      )Other IncomeOther income
      
      -
      
      
      4,974
      
      
      -
      
      
      26,724
      
      
      33,926Loss for the Period
      $
      (258,318
      )
      $
      (169,779
      )
      $
      (798,162
      )
      $
      (1,997,917
      )
      $
      (3,666,918
      )Loss per Share  Basic andDiluted
      $
      (0.004
      )
      $
      (0.003
      )
      $
      (0.011
      )
      $
      (0.034
      )Weighted Average SharesOutstanding
      
      72,087,003
      
      
      66,444,553
      
      
      71,278,655
      
      
      59,012,994Comprehensive LossLoss for the period
      $
      (258,318
      )
      $
      (169,779
      )
      $
      (798,162
      )
      $
      (1,997,917
      )
      $
      (3,666,918
      )Foreign currency translationadjustment
      
      (13,377
      )
      
      820
      
      
      (16,240
      )
      
      329
      
      
      (25,660
      )Total Comprehensive Lossfor the Period
      $
      (271,695
      )
      $
      (168,959
      )
      $
      (814,402
      )
      $
      (1,997,588
      )
      $
      (3,692,578
      )Comprehensive Loss perShare
      $
      (0.004
      )
      $
      (0.003
      )
      $
      (0.011
      )
      $
      (0.034
      )


- See Accompanying Notes -

F-3

---

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

|                                                   |   |              |   |   |              |   |   | From          |  
|-------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------- | -
|                                                   |   |              |   |   |              |   |   | Incorporation |  
|                                                   |   | For the Nine |   |   | For the Nine |   |   | July 5,       |  
|                                                   |   | Months Ended |   |   | Months Ended |   |   | 2005 to       |  
|                                                   |   | August 31,   |   |   | August 31,   |   |   | August 31,    |  
|                                                   |   | 2007         |   |   | 2006         |   |   | 2007          |  
|Operating                                          |   |              |   |   |              |   |   |               |  
|Loss for the period                                | $ | (798,162     | ) | $ | (1,997,917   | ) | $ | (3,666,918    | )
|Items not involving an
      outlay of cash:       |   |              |   |   |              |   |   |               |  
|Bad debts                                          |   | -            |   |   | 9,789        |   |   | 9,789         |  
|Depreciation                                       |   | 22,773       |   |   | 14,893       |   |   | 43,463        |  
|Stock-based compensation                           |   | 26,987       |   |   | 4,102        |   |   | 36,001        |  
|Shares issued
      and allotted for services      |   | 31,890       |   |   | 1,287        |   |   | 41,541        |  
|Intellectual property                              |   | -            |   |   | 1,500,000    |   |   | 1,947,637     |  
|Changes in non-cash working
      capital items:   |   |              |   |   |              |   |   |               |  
|Accounts receivable                                |   | (19,812      | ) |   | -            |   |   | (24,746       | )
|Prepaid expenses                                   |   | (24,390      | ) |   | (31,098      | ) |   | (47,131       | )
|Accounts payable                                   |   | 389,965      |   |   | 98,030       |   |   | 618,428       |  
|Accrued liabilities                                |   | (17,128      | ) |   | (1,636       | ) |   | 45,540        |  
|Due to related parties                             |   | 12,921       |   |   | 105,581      |   |   | 186,963       |  
|Net cash flows used in operations                  |   | (374,956     | ) |   | (296,969     | ) |   | (809,433      | )
|                                                   |   |              |   |   |              |   |   |               |  
|Investing                                          |   |              |   |   |              |   |   |               |  
|Purchase of equipment                              |   | (34,362      | ) |   | (36,925      | ) |   | (97,764       | )
|Net cash flows from investing activities           |   | (34,362      | ) |   | (36,925      | ) |   | (97,764       | )
|                                                   |   |              |   |   |              |   |   |               |  
|Financing                                          |   |              |   |   |              |   |   |               |  
|Share issuances for cash                           |   | 442,628      |   |   | 184,641      |   |   | 956,645       |  
|Net cash flows from financing activities           |   | 442,628      |   |   | 184,641      |   |   | 956,645       |  
|                                                   |   |              |   |   |              |   |   |               |  
|Effect of exchange rate translation adjustments    |   | (16,588      | ) |   | (3,497       | ) |   | (31,155       | )
|                                                   |   |              |   |   |              |   |   |               |  
|Net Increase (Decrease) in Cash                    |   | 16,722       |   |   | (152,750     | ) |   | 18,293        |  
|Cash - Beginning of period                         |   | 1,571        |   |   | 164,550      |   |   | -             |  
|Cash - End of Period                               | $ | 18,293       |   | $ | 11,800       |   | $ | 18,293        |  
|                                                   |   |              |   |   |              |   |   |               |  
|Income Taxes Paid                                  | $ | -            |   | $ | -            |   | $ | -             |  
|Interest Paid                                      | $ | -            |   | $ | -            |   | $ | -             |  
|                                                   |   |              |   |   |              |   |   |               |  
|Supplemental Schedule of Non-Cash                  |   |              |   |   |              |   |   |               |  
|Investing and Financing Transactions               |   |              |   |   |              |   |   |               |  
|Shares issued for intellectual property            | $ | -            |   | $ | 1,500,000    |   | $ | 1,947,637     |  
|Shares issued and allotted
      for services      | $ | 75,000       |   | $ | 12,500       |   | $ | 87,500        |  
|Effect
      of exchange rate changes on equipment | $ | 348          |   | $ | 3,826        |   | $ | 5,495         |  

- See Accompanying Notes -

F-4

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|1. | Organization and Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Organization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | ITonis Inc. (formerly Kenshou Inc.) (the "Company" or
        ITonis) was incorporated on July 5, 2005 as Kenshou Inc. under
        the laws of the State of Nevada. On December 2, 2005, the Company changed
        its name to ITonis Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As a full service video solution and backend platform
        service provider the Company will be making a shift in overall corporate
        strategy that will involve entry into the Chinese market that should occur
        over the next 120 days. The Company intends to offer a full range of IPTV
        services for television, film and sport entertainment programming including
        premium entertainment channels, video on demand movies, and television
        shows in foreign and Chinese languages. The future implementation of this
        proposed project based on current understanding and scope as defined in
        the MOU signed on the 16thof April, 2007 will allow for a
        full-scale deployment for millions of Chinese subscribers utilizing the
        Companys core technology.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Going Concern and Liquidity Considerations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The accompanying consolidated financial statements have
        been prepared assuming that the Company will continue as a going concern,
        which contemplates, among other things, the realization of assets and
        satisfaction of liabilities in the normal course of business. As at August
        31, 2007, the Company has a working capital deficiency of $724,591, an
        accumulated deficit of $3,666,918 and has incurred an accumulated operating
        cash flow deficit of $809,433 since incorporation. The Company intends
        to continue funding operations through sales, debt, and equity financing
        arrangements, which may be insufficient to fund its capital expenditures,
        working capital and other cash requirements for the next fiscal year.                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Thereafter, the Company will be required to seek additional
        funds, either through sales, debt, and/or equity financing, to finance
        its long-term operations. The successful outcome of future activities
        cannot be determined at this time, and there is no assurance that, if
        achieved, the Company will have sufficient funds to execute its intended
        business plan or generate positive operating results. In response to these
        conditions, management intends to raise additional funds through future
        debt agreement and private placement offerings.                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | These factors, among others, raise substantial doubt
        about the Company's ability to continue as a going concern. The accompanying
        consolidated financial statements do not include any adjustments that
        might result from the outcome of this uncertainty.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Basis of Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On November 25, 2005 the Company incorporated a wholly
        owned subsidiary in the Czech Republic named ITonis CZ s.r.o. (ITonis
        CZ) for the purposes of operating the Companys development
        offices. These unaudited interim consolidated financial statements include
        the accounts of both companies since their respective incorporation dates.
        All intercompany balances and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                            



F-5

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|2. | Significant Accounting Policies- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The accompanying unaudited interim consolidated financial
        statements have been prepared as at August 31, 2007 and for the nine month
        period then ended, in accordance with accounting principles generally
        accepted in the United States of America relating to the preparation of
        financial statements for interim periods. Accordingly, they do not include
        all the information and footnotes required by generally accepted accounting
        principles for complete financial statements. In the opinion of management,
        all adjustments (consisting of normal recurring accruals) considered necessary
        for a fair presentation have been included. Operating results for the
        nine month period ended August 31, 2007 are not necessarily indicative
        of the results that may be expected for the year ending November 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | These interim consolidated financial statements follow
        the same accounting policies and methods of their application as the most
        recent annual financial statements. These interim consolidated financial
        statements should be read in conjunction with the audited interim financial
        statements of the Company as at November 30, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Recently Adopted Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In February 2007, the Financial Accounting Standards
        Board (the FASB) issued SFAS No. 159, The Fair Value
        Option for Financial Assets and Financial Liabilities (SFAS 159).
        SFAS 159 allows the company to choose to measure many financial assets
        and financial liabilities at fair value. Unrealized gains and losses on
        items for which the fair value option has been elected are reported in
        earnings. SFAS 159 is effective for fiscal years beginning after November
        15, 2007. The Company is currently evaluating the requirements of SFAS
        159 and the potential impact on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In September 2006, the FASB issued SFAS No. 158, Employers
        Accounting for Defined Benefit Pension and Other Postretirement Plans
         an amendment of FASB Statements No. 87, 88, 106 and 132(R)
        (SFAS 158). SFAS 158 requires an employer that sponsors one or more
        single-employer defined benefit plans to (a) recognize the overfunded
        or underfunded status of a benefit plan in its statement of financial
        position, (b) recognize as a component of other comprehensive income,
        net of tax, the gains or losses and prior service costs or credits that
        arise during the year but are not recognized as components of net periodic
        benefit cost pursuant to SFAS 87, Employers Accounting for
        Pensions, or SFAS 106, Employers Accounting for Postretirement
        Benefits Other Than Pensions, (c) measure defined benefit plan assets
        and obligations as of the date of the employers fiscal year-end,
        and (d) disclose in the notes to financial statements additional information
        about certain effects on net periodic benefit cost for the next fiscal
        year that arise from delayed recognition of the gains or losses, prior
        service costs or credits, and transition asset or obligation. SFAS 158
        is effective for the Companys fiscal year ending September 30, 2007.
        The adoption of SFAS 158 is not expected to have a material impact on
        the Companys financial position, results of operation or cash flows.

F-6

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|2. | Significant Accounting Policies- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Recently Adopted Accounting Standards- Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In September 2006, the FASB issued SFAS No. 157, "Fair
        Value Measurement" ("SFAS 157"). The Statement provides guidance for using
        fair value to measure assets and liabilities. The Statement also expands
        disclosures about the extent to which companies measure assets and liabilities
        at fair value, the information used to measure fair value, and the effect
        of fair value measurement on earnings. This Statement applies under other
        accounting pronouncements that require or permit fair value measurements.
        This Statement does not expand the use of fair value measurements in any
        new circumstances. Under this Statement, fair value refers to the price
        that would be received to sell an asset or paid to transfer a liability
        in an orderly transaction between market participants in the market in
        which the entity transacts. SFAS 157 is effective for the Company for
        fair value measurements and disclosures made by the Company in its fiscal
        year beginning on October 1, 2008. The adoption of SFAS 157 is not expected
        to have a material impact on the Companys financial position, results
        of operation or cash flows.                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | On July 2006, the FASB issued FIN. 48, Accounting
        for Uncertainty in Income Taxes (an interpretation of FASB Statement No.
        109) (FIN 48) which is effective for fiscal years beginning
        after December 15, 2006. This interpretation was issued to clarify the
        accounting for uncertainty in income taxes recognized in the financial
        statements by prescribing a recognition threshold and measurement attribute
        for the financial statement recognition and measurement of a tax position
        taken or expected to be taken in a tax return. The Company is currently
        evaluating the potential impact of FIN 48, but it is not expected to have
        a material impact on the Companys financial position, results of
        operations or cash flows.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In March 2006, the FASB issued Statement of Financial
        Accounting Standards No. 156, Accounting for Servicing of Financial Assets
        (SFAS No. 156), which amends FASB Statement No. 140 (SFAS
        No. 140). SFAS 156 may be adopted as early as January 1, 2006, for
        calendar year-end entities, provided that no interim financial statements
        have been issued. Those not choosing to early adopt are required to apply
        the provisions as of the beginning of the first fiscal year that begins
        after September 15, 2006 (e.g., January 1, 2007, for calendar year-end
        entities). The intention of the new statement is to simplify accounting
        for separately recognized servicing assets and liabilities, such as those
        common with mortgage securitization activities, as well as to simplify
        efforts to obtain hedge- like accounting. Specifically, the FASB said
        FAS No. 156 permits a servicer using derivative financial instruments
        to report both the derivative financial instrument and related servicing
        asset or liability by using a consistent measurement attribute, or fair
        value. The adoption of SFAS 156 is not expected to have a material impact
        on the Companys financial position, results of operations or cash
        flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-7

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|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|3. | Equipment              
|-- | -----------------------
|   |                        
|   | Details are as follows:

| |                                |   |         |  |   |              |   |   | Net Book   |  |   | Net Book     | 
| | ------------------------------ | - | ------- |  | - | ------------ | - | - | ---------- |  | - | ------------ | 
| |                                |   |         |  |   |              |   |   | Value      |  |   | Value        | 
| |                                |   |         |  |   | Accumulated  |   |   | August 31, |  |   | November 30, | 
| |                                |   | Cost    |  |   | Depreciation |   |   | 2007       |  |   | 2006         | 
| | Office equipment and furniture | $ | 94,673  |  | $ | (40,372      | ) | $ | 54,301     |  | $ | 42,712       | 
| | Effect of exchange rate        |   |         |  |   |              |   |   |            |  |   |              | 
| | changes on equipment           |   | 11,696  |  |   | (6,201       | ) |   | 5,495      |  |   | 5,147        | 
| |                                | $ | 106,369 |  | $ | (46,573      | ) | $ | 59,796     |  | $ | 47,859       | 

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

F-8

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|5. | Commitments -Continued
|-- | ----------------------

| |    | During the prior year, the Company executed a letter
        agreement with the Agent confirming that the provision of the agreement
        relating to the services of the Commercial Director has been terminated
        and the only obligation in respect of such services is the $120,000 previously
        accrued. No further payments are required under the agreement except for
        payment of the 40% commission based on sales as the agreement remains
        in effect until December 31, 2007.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | b) | By agreement dated August 17, 2006, the Company entered
        into a Supply Services Contract with an unrelated party for investor relations
        services ended December 31, 2006. Consideration for the services of $12,000
        was paid in cash and 150,000 in common stock of the Company. These 150,000
        shares were allotted as at November 30, 2006 at $0.083 per share and issued
        in fiscal 2007.                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | Upon agreement of both parties, the contract will continue
        on a month-to-month basis requiring a payment of $4,000 per month. Specific
        services that are outside the terms of the contract will be charged at
        $200 per hour or $1,500 per full workday. Termination of the contract
        will occur upon written notice to either party by the other party. To
        August 31, 2007, no further work has been required.                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

|6. | Segmented Information                                                      
|-- | ---------------------------------------------------------------------------
|   |                                                                            
|   | Details on a geographic basis as at August 31, 2007
        are as follows:

| |                   |   | Eastern  |   |   |          |   |   |          |  
| | ----------------- | - | -------- | - | - | -------- | - | - | -------- | -
| |                   |   | Europe   |   |   | U.S.A.   |   |   | Total    |  
| | Assets            | $ | 132,651  |   | $ | 63,274   |   | $ | 195,925  |  
| | Revenue           | $ | 199,415  |   | $ | -        |   | $ | 199,415  |  
| | Loss for the year | $ | (464,997 | ) | $ | (333,165 | ) | $ | (798,162 | )

Details on a geographic basis as at November
  30, 2006 are as follows:

| |                   |   | Eastern  |   |   |            |   |   |            |  
| | ----------------- | - | -------- | - | - | ---------- | - | - | ---------- | -
| |                   |   | Europe   |   |   | U.S.A.     |   |   | Total      |  
| | Assets            | $ | 73,623   |   | $ | 6,331      |   | $ | 79,954     |  
| | Revenue           | $ | 24,351   |   | $ | -          |   | $ | 24,351     |  
| | Loss for the year | $ | (437,093 | ) | $ | (1,865,185 | ) | $ | (2,302,278 | )

F-9

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|7. | Related Party Balances and Transactions                                                                 
|-- | --------------------------------------------------------------------------------------------------------
|   |                                                                                                         
|   | Related party transactions not disclosed elsewhere
        in these financial statements are as follows:
|   |                                                                                                         
|   | a)                                                                                                      
|   |                                                                                                         
|   | b)                                                                                                      
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   | c)                                                                                                      
|   |                                                                                                         
|   | d)                                                                                                      
|   |                                                                                                         
|   | e)                                                                                                      
|   |                                                                                                         
|   | f)                                                                                                      
|   |                                                                                                         
|   | g)                                                                                                      
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|   |                                                                                                         
|8. | Capital Stock                                                                                           
|   |                                                                                                         
|   | a)                                                                                                      
|   |                                                                                                         
|   | b)                                                                                                      
|   |                                                                                                         
|   | c)                                                                                                      

F-10

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|8. | Capital Stock -Continued
|-- | ------------------------
|   |                         
|   | d)                      
|   |                         
|   | e)                      
|   |                         
|   | f)                      
|   |                         
|   | g)                      
|   |                         
|   | h)                      
|   |                         
|   | i)                      
|   |                         
|   | j)                      
|   |                         
|   | k)                      
|   |                         
|   | l)                      
|   |                         
|   |                         
|   |                         
|   |                         

F-11

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|8. | Capital Stock -Continued
|-- | ------------------------
|   |                         
|   | l)                      
|   |                         
|   |                         
|   |                         
|   |                         

Expected dividend yield
      0.00%Expected stock price volatility
      83%Risk-free interest rate
      4.82%Expected life of
        options
      1.92
        years


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

The weighted average fair value of the
  options granted was $0.05.

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

|   |                  
|-- | -----------------
|9. | Subsequent Events
|   |                  
|   | a)               
|   |                  
|   | b)               
|   |                  
|   | c)               

F-12

---

|ITonis Inc.                                       
|--------------------------------------------------
|(Formerly Kenshou Inc.)                           
|(A Development Stage Company)                     
|Notes to Interim Consolidated Financial Statements
|August 31, 2007                                   
|(Unaudited)                                       
|US Funds                                          
|                                                  
|                                                  

|9. | Subsequent Events -Continued
|-- | ----------------------------

The Share Purchase Agreement provides
  that the Company acquire all of the issued and outstanding shares of Aquos in
  consideration for the issuance to iOcean of a number of shares of our common
  stock such that iOcean will own 49% of the Companys issued and outstanding
  shares immediately following the completion of the acquisition. In addition,
  the Company is to issue additional shares to iOcean equal to 25% of the original
  number of shares issued on the date upon which the gaming portion of the license
  and permits held by Aquos is live and selling lottery tickets. iOcean has agreed
  to enter into a voting agreement that will govern the voting of its shares for
  a period of one year following the date of closing. All shares issued to iOcean
  will be restricted securities under the Securities Act of 1933.

Following execution of this Agreement,
  iOcean will use its best efforts to ensure that the licenses and permits required
  for the conduct of the planned television over the Internet business, as specified
  in the Share Purchase Agreement, are secured by Aquos by no later than October
  31, 2007. In the event that the acquisition is completed prior to these licenses
  and permits being secured and Aquos has not secured these licenses and permits
  by October 31, 2007, then the Company has the right under an option agreement
  to be executed on closing to re-purchase the shares issued to iOcean on closing
  by delivering notice of exercise of the option together with an assignment of
  the shares of Aquos acquired to iOcean. Upon exercise this option, all shares
  issued to iOcean will be deemed to be cancelled and the Company will have no
  further interest in Aquos.

---

F-13

---

Item 2. Managements Discussion and Analysis or Plan of
Operation

The following discussion of our financial condition, changes in
financial condition and results of operations for the nine months ended August
31, 2007 should be read in conjunction with our unaudited consolidated interim
financial statements and related notes for the nine months ended August 31, 2007
included in this Quarterly Report.

Overview of our Business

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

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

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

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

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

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

We have developed the basic functionality of ITonis video
solution and have demonstrated the solution in a laboratory environment. During
the third quarter we have launched ITonis solution with a Czech

- 2 -

---

customer in a Live environment. The commercial operation uses
ITonis solution as a whole and provides standard functionality to subscribers.
We are also planning to continue additional development of the ITonis video
solution in order to extend the functionality of the solution.

Although sales and marketing activities have been initiated, we
have earned minimal revenues to date and, as such, we are presently a
development stage company. We presently have limited funds with which to pursue
our plan of operations. While we have completed private placement financings as
part of our corporate organization, we will require additional funding in order
to pursue our plan of operations over the next twelve months. We currently have
no arrangements for any additional financing and there is no assurance that any
additional financing will be obtained.

Corporate Organization

Incorporation

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

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

Principal Executive Offices

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

Three for One Forward Stock Split

On March 20, 2007 (the Record Date), we completed an increase
in the number of shares of our authorized share capital and correspondingly
increase in the number of our issued and outstanding shares of common stock, in
each case on a three (3) new shares for one (1) old share basis (the Forward
Stock Split) in accordance with Section 78.207 of the Nevada Revised Statutes:
Chapter 78, as amended.

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

Recent Developments

Appointment of Directors and Officers

On July 2, 2007, by a written consent resolution of our board
of directors, Mr. Thomas Neal Roberts was appointed as our director, president,
chief executive officer, chief financial officer and secretary. Concurrent with
the appointments of Mr. Roberts, Mr. Nicolas Lavaud resigned as our director,
president,

- 3 -

---

chief executive officer, chief financial officer and secretary.
As a result, Mr. Lavaud is no longer a director or officer of the Company. We
entered into an employment agreement with Mr. Roberts on September 6, 2007
pursuant to which we agreed, among other things, to pay Mr. Roberts an annual
salary of $150,000 and to issue to him an aggregate of 14,000,000 shares of our
common stock in a combination of option grants and share grants.

On August 27, 2007, by a written consent resolution of our
board of directors, Mr. Lawrence Haber was appointed as our secretary in place
of Mr. Roberts and, on September 6, 2007, Mr. Haber was appointed as our senior
vice-president, general counsel and chief administrative officer. We entered
into an employment agreement with Mr. Haber on September 6, 2007 pursuant to
which we agreed, among other things, to pay Mr. Haber an annual salary of
$100,000 and to issue to him an aggregate of 7,000,000 shares of our common
stock in a combination of option grants and share grants.

The employment agreements between the Company and each of Mr.
Roberts and Mr. Haber are attached as exhibits to our current report on Form 8-K
filed with the SEC on September 11, 2007.

Our new management has determined to shift our efforts for
commercialization of our ITonis video solution from the European market to the
Chinese market. As a result of this determination, the Company plans to reduce
its operations in the Czech Republic during this fiscal year.

Proposed Acquisition of Aquos Media Limited

On September 8, 2007, we entered into a share purchase
agreement (the Share Purchase Agreement) among the Company, iOcean Media
Limited (iOcean) and Aquos Media Limited (Aquos), a wholly owned subsidiary
of iOcean. The following summary of the Share Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the
Share Purchase Agreement, a copy of which is attached as Exhibit 10.1 to our
current report on Form 8-K filed with the SEC on September 13, 2007.

The Share Purchase Agreement provides that we will acquire all
of the issued and outstanding shares of Aquos in consideration for the issuance
to iOcean of a number of shares of our common stock such that iOcean will own
49% of our issued and outstanding shares immediately following the completion of
the acquisition. In addition, we will agree to issue additional shares to iOcean
equal to 25% of the original number of shares issued on the date upon which the
gaming portion of the license and permits held by Aquos is live and selling
lottery tickets. iOcean has agreed to enter into a voting agreement that will
govern the voting of its shares for a period of one year following the date of
closing. All shares issued to iOcean will be restricted securities under the
Securities Act of 1933.

iOcean has been engaged in the business of assembling licenses
and permits for Internet television broadcasting in China and the resale of
authorized Chinese lottery gaming products. As part of its business efforts,
iOcean has entered into an agreement with Pilot Media Limited, a corporation
incorporated under the laws of China. The agreement contemplates the formation
of a joint venture in China for the establishment of an online television
network platform in China. Under the agreement, Pilot would be responsible for
providing the television network platform and operational management of the
joint venture and iOcean would be responsible for financing, business
development and intellectual property. The internet television platform will be
used for internet television broadcasting and for the delivery of Chinese
lottery gaming products. iOcean will retain rights to deliver Chinese lottery
gaming products on the internet itself, and through other means of distribution,
such as mobile phones.

iOcean has agreed upon execution of the Share Purchase
Agreement to assign and transfer all of its right, title and interest in and to
the Pilot agreement to Aquos and to use its best efforts to obtain the written

- 4 -

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consent of Pilot to this assignment and transfer. Following
completion of the acquisition, iOcean will cause all future agreements with
Pilot that are contemplated in the Pilot agreement to be negotiated and executed
by Aquos as a subsidiary of the Company. Further, iOcean has agreed to use its
best efforts to assist in these negotiations in good faith to ensure that the
definitive agreements contemplated in the Pilot agreement are achieved.

Forthwith following execution of this Agreement, iOcean will
use its best efforts to ensure that the licenses and permits required for the
conduct of the planned television over the Internet business, as specified in
the Share Purchase Agreement, are secured by Aquos by no later than October 31,
2007. In the event that the acquisition is completed prior to these licenses and
permits being secured and Aquos has not secured these licenses and permits by
October 31, 2007, then we will have the right under an option agreement to be
executed on closing to re-purchase the shares issued to iOcean on closing by
delivering notice of exercise of the option together with an assignment of the
shares of Aquos acquired to iOcean. If we exercise this option, all shares
issued to iOcean will be deemed to be cancelled and we will have no further
interest in Aquos.

Upon closing, iOcean will have the right to appoint one nominee
to our board of directors who will be appointed on closing of the acquisition.
We anticipate that our board of directors will consist of three directors for at
least one year after the closing, including the one nominee of iOcean.

Closing of the acquisition is subject to the following
conditions, as well as customary conditions of closing:

- assignment of the Pilot agreement by iOcean to Aquos; and
- delivery of audited and interim financial statements of Aquos, audited in
  accordance with U.S. GAAP as required, for those periods necessary to enable
  us to comply with our reporting obligations under the Securities Exchange Act
  of 1934 as a consequence of completion of the acquisition of Aquos.

We anticipate that the closing of the acquisition of Aquos will
take place on or about October 15, 2007. There is no assurance the acquisition
will be completed or that Aquos will obtain the required licenses and permits.

Our Plan of Operations

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

|1. | We plan to carry on the development of the ITonis video
      solution from our research and development facility in Prague. Our general
      administrative overhead cost for our Prague office is approximately
      $50,000 per month. This amount includes salaries, computer hardware, rent
      and other general expenses associated with our Prague office. If we are
      successful in securing initial commercial sales of our ITonis video
      solutions, then we anticipate that these expenses may increase to $80,000
      per month by the end of the third quarter of fiscal 2007, subject to
      financing. This increase in cost would be attributable to adding
      additional personnel to our development team and to put in place a team of
      employees to provide customer support services.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | We plan to carry out sales and marketing of our ITonis
      video solution over the next twelve months with the objective of securing
      sales to several clients. Our direct marketing activities will be carried
      out by our employees from our Prague office. As such, the expense for
      these                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

- 5 -

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|   | marketing activities will be within our general and
      administrative expenses for the Prague office, as outlined above. In
      addition, ITonis distributors (Nordic IPTV Company ApS and Sofia Digital)
      undertake those activities for which we pay a percentage of the
    sales.                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3. | We plan to launch an operation pilot scale solution for
      an Internet service provider ISP. The purpose of the pilot project would
      be to allow us to complete the testing of our ITonis video solution in a
      live environment and to enable us to have an operating solution that we
      can use for demonstration purposes in connection with our marketing
      activities. We anticipate that it would cost approximately $10,000 in
      additional expenses to launch this operation.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4. | We anticipate spending approximately $4,000 in ongoing
      general, legal and administrative expenses per month for the next twelve
      months, for a total anticipated expenditure of $48,000 over the next
      twelve months. These general, legal and administrative expenses are
      external expenses that we anticipate incurring and are in addition to the
      general and administrative expense of the Prague office discussed
      above.                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5. | We anticipate spending approximately $53,000 in complying
      with our obligations as a reporting company under the Securities Exchange
      Act of 1934. These expenses will consist primarily of professional fees
      relating to the preparation of our financial statements and completing our
      annual report, quarterly report, current report and proxy statement
      filings with the SEC.                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|6. | We anticipate spending $120,000 to pay the accrued
      liability in connection with the services provided to us by John Marienhof
      pursuant to our reseller and consulting agreement with Nordic IPTV and
      $39,830 to repay the loan made to us by our former chief executive officer
      described below under the heading Liquidity and Capital
  Resources.                                                                                                                               

As at November 30, 2006, we had cash reserves of $1,571 and a
working capital deficit of $442,867. As at August 31, 2007, our cash reserves
had increased to $18,293 and our working capital deficit had increased to
$724,591. Our planned expenditures over the next twelve months are approximately
$1,000,000. Accordingly, we anticipate that we will require financing in the
amount of approximately $1,730,000 in order to carry out our plan of operations
for the next twelve months.

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

We anticipate that additional funding will be in the form of
equity financing from the sale of our common stock. We presently have no
arrangements in place for any additional equity financings. In the absence of
such additional financing, we may not be able to continue our plan of operations
beyond the next month and our business plan may fail. If we do not obtain the
required additional financing, we will initially scale back our business
operations and may ultimately be forced to abandon our plan of operations and
our business activities.

If we are successful in completing the acquisition of Aquos, we
will require additional financing with which to pursue the plan of operations
for Aquos. We are in the process of defining this plan of operations and the
funds required to fund this plan of operations will be in addition to the funds
required for the current plan of operations described above.

- 6 -

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Critical Accounting Policies

Development Stage Company

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

Revenue Recognition

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

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

Foreign Currency Translations

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

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

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

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

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

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

Use of Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts and timing of revenues and expenses, the reported amounts and
classification of assets

- 7 -

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and liabilities, and disclosure of contingent assets and
liabilities. These estimates and assumptions are based on the Company's
historical results as well as management's future expectations. The Company's
actual results could vary materially from management's estimates and
assumptions.

Software Costs

Effective March 1, 2006, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based
Payment (SFAS 123(R)), which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of SFAS 123(R),
stock-based compensation cost is measured at the grant date, based on the
calculated fair value of the award, and is recognized as an expense over the
employees requisite service period (generally the vesting period of the equity
grant). Before March 1, 2006, the Company accounted for stock-based compensation
to employees in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees, and complied with the disclosure
requirements of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS
123). The Company adopted SFAS 123(R) using the modified prospective method,
which requires the Company to record compensation expense over the vesting
period for all awards granted after the date of adoption, and for the unvested
portion of previously granted awards that remain outstanding at the date of
adoption. Accordingly, financial statements for the periods prior to March 1,
2006 have not been restated to reflect the fair value method of expensing
share-based compensation. Adoption of SFAS 123(R) does not change the way the
Company accounts for share-based payments to non-employees, with guidance
provided by SFAS 123 (as originally issued) and Emerging Issues Task Force Issue
No. 96-18, Accounting for Equity Instruments That Are Issued to Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.

Results of Operations  Nine months ended August 31, 2007
and 2006

References in the discussion below to fiscal 2007 are to our
current fiscal year which will end on November 30, 2007. References to fiscal
2006 are to our fiscal year ended November 30, 2006.References to the
first nine months of fiscal 2006 are to the nine month period ended August 31,
2006 and references to the first nine months of fiscal 2007 are to the nine
month period ended August 31, 2007.

FromFor the
    
    
    For the
    
    
    For the
    
    
    For the
    
    
    IncorporationThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine Months
    
    
    July 5,Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    2005 toAugust 31,
    
    
    August 31,
    
    
    August 31,
    
    
    August 31,
    
    
    August 31,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007Sales
    $
    27,845
    
    $
    24,351
    
    $
    199,415
    
    $
    24,351
    
    $
    223,766Cost of Sales
    
    17,573
    
    
    9,424
    
    
    167,463
    
    
    9,424
    
    
    176,887Gross Profit
    
    10,272
    
    
    14,927
    
    
    31,952
    
    
    14,927
    
    
    46,879General and AdministrativeExpensesSoftware development
      costs
    
    78,933
    
    
    -
    
    
    252,979
    
    
    13,814
    
    
    615,533Consulting
    
    72,134
    
    
    31,901
    
    
    178,092
    
    
    53,337
    
    
    213,428Salaries and wages
    
    17,926
    
    
    90,652
    
    
    136,302
    
    
    198,435
    
    
    211,897Auditing
      and accounting
    
    37,573
    
    
    19,371
    
    
    100,645
    
    
    39,995
    
    
    256,602Office
    
    23,436
    
    
    5,975
    
    
    61,068
    
    
    22,627
    
    
    116,015Legal
    
    16,880
    
    
    16,633
    
    
    31,066
    
    
    49,760
    
    
    102,334Depreciation
    
    3,706
    
    
    5,896
    
    
    22,773
    
    
    14,893
    
    
    43,463Rent
    
    8,345
    
    
    -
    
    
    21,829
    
    
    -
    
    
    53,848Filing fees
    
    9,871
    
    
    2,365
    
    
    15,324
    
    
    9,820
    
    
    22,611


- 8 -

---

FromFor the
    
    
    For the
    
    
    For the
    
    
    For the
    
    
    IncorporationThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine Months
    
    
    July 5,Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    2005 toAugust 31,
    
    
    August 31,
    
    
    August 31,
    
    
    August 31,
    
    
    August 31,2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007Investor
      relations
    
    -
    
    
    2,287
    
    
    6,235
    
    
    2,287
    
    
    24,915Foreign exchange loss
    
    (214
    )
    
    4,811
    
    
    3,801
    
    
    4.811
    
    
    9,651Intellectual property
    
    -
    
    
    -
    
    
    -
    
    
    1,500,000
    
    
    1,947,637Marketing and
      distribution
    
    -
    
    
    -
    
    
    -
    
    
    120,000
    
    
    120,000Bad debt
    
    -
    
    
    9,789
    
    
    -
    
    
    9,789
    
    
    9,789268,590
    
    
    189,680
    
    
    830,114
    
    
    2,039,568
    
    
    3,747,723Loss from Operations
    
    (258,318
    )
    
    (174,753
    )
    
    (798,162
    )
    
    (2,024,641
    )
    
    (3,700,844
    )Other IncomeOther income
    
    -
    
    
    4,974
    
    
    -
    
    
    26,724
    
    
    33,926Loss
      for the Period
    $
    (258,318
    )
    $
    (169,779
    )
    $
    (798,162
    )
    $
    (1,997,917
    )
    $
    (3,666,918
    )


Revenue

We generated our initial revenues during the first quarter of
fiscal 2007. During the first quarter of fiscal 2007, we delivered our encoding
platform to a customer for encoding content from DVD disks onto the customers
video demand platform. The encoding platform is one of the components of the
ITonis video solution. Our revenues increased to $199,415 for the first nine
months of fiscal 2007 from $24,351 for the first nine months of fiscal 2006.

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

Software Development Costs

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

Our software development costs increased significantly to
$252,979 during the first nine months of fiscal 2007 from $13,814 during the
first nine months of fiscal 2006 as we continued development of our ITonis video
solution. Software development costs during fiscal 2006 included:

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

Consulting

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

Consulting expenses increased significantly to $178,092 for the
first nine months of fiscal 2007 compared to $53,337 for the first nine months
of fiscal 2006. Consulting expenses have increased in part due to marketing
campaigns that were undertaken based on the previous strategy for the firm.
Outside consultants were required to facilitate these campaigns because of lack
of in-house expertise. We

- 9 -

---

anticipate that management and consulting expenses will
increase during fiscal 2007 because of our determination to focus on China.

Salaries And Wages

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

Salaries and wages were $136,302 during the first nine months
of fiscal 2007 compared to $198,435 during the first nine months of fiscal 2006
due to fewer employees.

Audit and Accounting

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

Accounting and auditing expenses increased during the first
nine months of fiscal 2007 to $100,645 compared to $39,995 in the first nine
months of fiscal 2006 as a result of the review of potential acquisitions.

Depreciation

Depreciation expense represents depreciation of our computer
hardware and equipment.

Depreciation expense in the first nine months of fiscal 2006
and fiscal 2007 represented depreciation of computer hardware and equipment that
we acquired in connection with the development and testing of our ITonis video
solution.

Legal

Legal expenses are attributable to legal fees paid to our legal
counsel in connection with the completion of our corporate reorganization and
our filing a registration statement with the SEC and becoming a reporting
company under the Securities Exchange Act of 1934.

Legal expenses during the first nine months of fiscal 2007
declined compared to the first nine months of fiscal 2006 as a result of our
completing our corporate reorganization and preparing and filing of a
registration statement with the SEC during fiscal 2006. Legal expenses during
the first nine months of fiscal 2007 have related to our ongoing continuous
reporting obligations under the Securities Exchange Act of 1934.

Rent

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

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

- 10 -

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Intellectual Property

We did not incur any expenses on any intellectual property
during the first nine months of fiscal 2007. In fiscal 2006, we determined that
the cost of the intellectual property purchased during our fiscal 2006 does not
meet the criteria for capitalization as set out in SFAS No. 86.

Marketing And Distribution

Our marketing and distribution expenses include amounts that we
pay under our reseller and consulting services agreement with Nordic IPTV. We
recorded $120,000 in expenses under the Nordic IPTV agreement in fiscal 2006 in
respect of four months of service provided by John Marienhof as commercial
director of ITonis. In accordance with our agreement with Nordic IPTV, this
amount has not been paid but has been accrued. We did not record any marketing
and distribution expenses during the first nine months of fiscal 2007.

Other Income

We did not generate any other income during the first nine
months of fiscal 2007. Our other income during fiscal 2006 was comprised of:

- Sub-letting part of our ITonis CZ office to iPLATO s.r.o., a company with
  whom ITonis CZ has one director in common;
- Outsourcing the services of our former director and officer, Nicolas
  Lavaud, to Xeris., a company with whom ITonis CZ has one director in common,
  as managing director; and
- Outsourcing the services of Libor Bucinsky to Devoteam, an arms length
  party, for the installation of Telefonica Video on Demand platform at Czech
  Telecom.

Liquidity And Capital Resources

Cash and Working Capital

As at August 31, 2007, we had cash of $18,293 and a working
capital deficit of $724,591, compared to cash of $1,571 and a working capital
deficit of $442,867 as at November 30, 2006.

Related Party Loan

During fiscal 2006 Mr. Nicolas Lavaud, our former director and
chief executive officer, granted us a loan which was outstanding in the amount
of $40,621 as of August 31, 2007. The loan is evidenced by a promissory note, is
unsecured and does not bear any interest. The promissory note is payable on
demand.

Plan of Operations

Our planned expenditures over the next twelve months are
approximately $1,000,000. As described above under Our Plan of Operations, we
anticipate that we will require financing in the amount of approximately
$1,730,000 in order to carry out our plan of operations for the next twelve
months. While this amount may be offset by any gross profits that we earn from
sales of our ITonis video solutions, we anticipate that we do not have
sufficient funds to enable us to undertake our plan of operations past the next
month. Accordingly, we anticipate that we will require additional financing in
order to enable us to sustain our operations for the next twelve months, as
outlined above under Our Plan of Operations.

- 11 -

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We anticipate that additional funding will be in the form of
equity financing from the sale of our common stock. We presently have no
arrangements in place for any additional equity financings. In the absence of
such additional financing, we may not be able to continue our plan of operations
beyond the next month and our business plan may fail. If we do not obtain the
required additional financing, we will initially scale back our business
operations and may ultimately be forced to abandon our plan of operations and
our business activities.

Cash Used In Operating Activities

We used cash of $374,956 in operating activities during the
first nine months of fiscal 2007 compared to cash used of $296,969 in operating
activities during the first nine months of fiscal 2006.

Cash From Investing Activities

We used cash of $34,362 in investing activities during the
first nine months of fiscal 2007 which consisted of upgrades and enhancements to
technology and purchases of equipment. We used cash in investing activities in
the amount of $36,925 during the first nine months of fiscal 2006. Cash used in
investing activities in fiscal 2006 was attributable primarily to the purchase
of computer hardware and equipment that we have acquired in connection with the
development and testing of our ITonis video solution.

Cash from Financing Activities

We generated cash of $442,628 from financing activities during
the first nine months of fiscal 2007 compared to cash of $184,641 generated from
financing activities during the first nine months of fiscal 2006.

Cash generated from financing activities during the first nine
months of fiscal 2007 and 2006 was attributable to shares issued for cash.

Going Concern

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

Future Financings

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

Off-Balance Sheet Arrangements

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

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Item
3.                    
Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of
1934 (the Exchange Act), we carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of August
31, 2007, being the date of our most recently completed quarter. This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, Mr. Thomas Neal Roberts. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified by the rules and forms of the Securities and
Exchange Commission (the SEC).

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

During the fiscal quarter ended August 31, 2007, there were no
changes in our internal control over financial reporting that have materially
affected, or are reasonably likely to affect, our internal control over
financial reporting during the quarter ended August 31, 2007.

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

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

Item
3A(T).           Controls and
Procedures

Not Applicable.

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PART II  OTHER INFORMATION

Item
1.                    
Legal Proceedings

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

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

Sales of securities without registration under the Securities
Act of 1933 during the quarter ended August 31, 2007 have been previously
disclosed.

Item
3.                    
Defaults Upon Senior Securities

None.

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

No matters were submitted to our security holders for a vote
during the quarter ended August 31, 2007.

Item
5.                    
Other Information

None.

Item
6.                    
Exhibits

The following exhibits are included with this Quarterly Report
on Form 10-QSB:

|Exhibit |                                                                                                                                    
|------- | -----------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                             
|        |                                                                                                                                    
|3.1     | Articles of
      Incorporation (1)                                                                                                
|        |                                                                                                                                    
|3.2     | Certificate of
      Amendment to Articles of Incorporation (1)                                                                    
|        |                                                                                                                                    
|3.3     | By-Laws (1)                                                                                                                        
|        |                                                                                                                                    
|3.4     | Certificate of
      Change pursuant to NRS 78.209 effective March 19, 2007 (6)                                                    
|        |                                                                                                                                    
|10.1    | Asset Purchase
      Agreement dated October 1, 2005 between ITonis Inc. and Onyx Trading Inc.
      (1)                           
|        |                                                                                                                                    
|10.2    | Employment
      Agreement between ITonis Inc. and Antonin Kral dated January 1, 2006 (1)                                          
|        |                                                                                                                                    
|10.3    | Employment
      Agreement between ITonis Inc. and Nicolas Lavaud dated February 1, 2006
      (1)                                 
|        |                                                                                                                                    
|10.4    | Employment
      Agreement between ITonis Inc. and Thomas Neal Roberts dated September 1,
      2007 (10)                          
|        |                                                                                                                                    
|10.5    | Employment
      Agreement between ITonis Inc. and Lawrence Haber dated September 1, 2007
      (10)                               
|        |                                                                                                                                    
|10.6    | Share Purchase
      Agreement dated September 8, 2007 between ITonis Inc., iOcean Media
      Limited and Aquos Media Limited (11)

- 14 -

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|Exhibit |                                                                                                                                                                                                                                                  
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                  
|10.7    | Asset Purchase
        Agreement between ITonis Inc. and Nordic IPTV Company ApS (formerly Makeitwork
        ApS) dated January 31, 2006 (1)                                                                                                  
|        |                                                                                                                                                                                                                                                  
|10.8    | Reseller Agreement
        dated February 7, 2006 between ITonis Inc. and Makeitwork ApS (1)                                                                                                                                                     
|        |                                                                                                                                                                                                                                                  
|10.9    | Lease Agreement
        dated December 23, 2005 between Achat Real a.s. and ITonis CZ s.r.o. (1)                                                                                                                                                 
|        |                                                                                                                                                                                                                                                  
|10.10   | 2006 Stock Option
        Plan (2)                                                                                                                                                                                                               
|        |                                                                                                                                                                                                                                                  
|10.11   | Amendment dated
        February 15, 2006 to Employment Agreement between ITonis Inc. and Nicolas
        Lavaud dated February 1, 2006 (3)                                                                                                      
|        |                                                                                                                                                                                                                                                  
|10.12   | Amendment dated
        August 9, 2006 to Reseller Agreement dated February 7, 2006 between ITonis
        Inc. and Nordic IPTV Company ApS (formerly, Makeitwork ApS") (3)                                                                      
|        |                                                                                                                                                                                                                                                  
|10.13   | Promissory Note
        issued by ITonis Inc. to Nicolas Lavaud in the amount of CZ 400,000Kc
        dated July 3, 2006 (3)                                                                                                                     
|        |                                                                                                                                                                                                                                                  
|10.14   | Subscription
        Agreement between ITonis Inc. and Spectrum Managers Ltd. dated December
        12, 2006 (4)                                                                                                                                
|        |                                                                                                                                                                                                                                                  
|10.15   | Memorandum of
        Understanding between the Company and iOcean Media Limited dated April
        16, 2007 (7)                                                                                                                                
|        |                                                                                                                                                                                                                                                  
|10.16   | Employment Agreement
        between the Company and Thomas Neal Roberts dated September 1, 2007 (9)                                                                                                                                             
|        |                                                                                                                                                                                                                                                  
|10.17   | Employment Agreement
        between the Company and Lawrence Haber dated September 1, 2007 (9)                                                                                                                                                  
|        |                                                                                                                                                                                                                                                  
|10.18   | Share Purchase
        Agreement between the Company, iOcean Media Limited and Aquos Media Limited
        dated September 8, 2007 (10)                                                                                                          
|        |                                                                                                                                                                                                                                                  
|14.1    | Code of Ethics
        (8)                                                                                                                                                                                                                       
|        |                                                                                                                                                                                                                                                  
|16.1    | Letter of Moores
        Rowland dated February 15, 2007 (5)                                                                                                                                                                                     
|        |                                                                                                                                                                                                                                                  
|31.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Rule
        13a-14(a) of the Exchange Act (11)                                                                                                         
|        |                                                                                                                                                                                                                                                  
|32.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Rule
        13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 (11)

|(1) | Filed as an exhibit to the registration statement on Form
      SB-2 filed with the SEC on May 12, 2006.                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                     
|(2) | Filed as an exhibit to Amendment No. 1 to the
      registration statement on Form SB-2 filed with the SEC on June 27,
      2006.  
|    |                                                                                                                                     
|(3) | Filed as an exhibit to Amendment No. 2 to the
      registration statement on Form SB-2 filed with the SEC on August 11,
      2006.
|    |                                                                                                                                     
|(4) | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on December 15, 2006.                                

- 15 -

---

|(5)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on February 23, 2007. 
|---- | -----------------------------------------------------------------------------------------------------
|     |                                                                                                      
|(6)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on March 20, 2007.    
|     |                                                                                                      
|(7)  | Filed as an exhibit to our Current Report on Form 8-K
      filed with the SEC on April 24, 2007.    
|     |                                                                                                      
|(8)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      filed with the SEC on April 27, 2007.  
|     |                                                                                                      
|(9)  | Filed as an exhibit to our current report on Form 8-K
      filed with the SEC on September 11, 2007.
|     |                                                                                                      
|(10) | Filed as an exhibit to our current report on Form 8-K
      filed with the SEC on September 13, 2007.
|     |                                                                                                      
|(11) | Filed as an exhibit to this Quarterly Report on Form
      10-QSB.                                   

- 16 -

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

ITONIS INC.

By:             
   /s/ Thomas N. Robert 
                      
  ________________________________
                      
  Thomas N. Roberts 
                      
  Chief Executive Officer and Chief Financial Officer

Date: October 18, 2007

- 17 -

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