UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549










FORM
10-Q







x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
quarterly period ended June 30, 2008




or




 ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from _________ to _________.




Commission
File Number 333-133987









RedRoller
Holdings, Inc.


(Exact
name of Registrant as specified in its charter)







Delaware
            98-0539667(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)





Soundview
Plaza, 1266 East Main St., Stamford, CT 06902-3546


(Address
of principal executive offices, including zip code)




Registrant’s
telephone number, including area code: (203) 286-0200







Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 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 large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one)







Large
      accelerated filer   ̈
            Accelerated
      filer   ̈Non-accelerated filer   ̈
            Smaller
      reporting company x(Do not check if a smaller reporting company)




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




There
were 24,842,040 shares of the registrant’s common stock issued and outstanding
as of August 19, 2008 and no shares of the registrant’s preferred stock issued
and outstanding as of August 19, 2008.







RedRoller
Holdings, Inc.




Form
10-Q




Table
of Contents




PagePart
      I - Financial InformationItem
      1.
            Condensed
      Consolidated Financial Statements (unaudited)
            3Condensed
      Consolidated Balance Sheets
            3Condensed
      Consolidated Statements of Operations
            4Condensed
      Consolidated Statement of Stockholders’
      Equity
            5Condensed
      Consolidated Statements of Cash
      Flows
            6Item
      2.
            Management’s
      Discussion and Analysis of Financial Conditions and Results of
      Operations
            18Item
      4.
            Controls
      and Procedures
            24Part
      II - Other InformationItem
      1.
            Legal
      Proceedings
            26Item
      1A.
            Risk
      Factors
            26Item 6.
            Exhibits
            33SIGNATURE
            34






- 2
-


Part
I—Financial Information




Item 1.
            Condensed
      Consolidated Financial Statements




REDROLLER
HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED BALANCE SHEETS


June
      30, 2008
              (unaudited)
            
            
            December
      31,
              2007ASSETSCURRENT
      ASSETSCash
      and cash equivalents
            
            $
            484,112
            
            
            $
            3,489,116Accounts
      receivable
            
            
            82,697
            
            
            
            165,926Prepaid
      expenses and other current assets
            
            
            83,717
            
            
            
            131,406Total
      current assets
            
            
            650,526
            
            
            
            3,786,448Goodwill
            
            
            1,769,611
            
            
            
            1,769,611Property
      and equipment, net
            
            
            199,516
            
            
            
            262,565Website
      development costs, net
            
            
            1,464,651
            
            
            
            645,576Intangible
      asset, net
            
            
            42,585
            
            
            
            51,102Other
      assets
            
            
            64,412
            
            
            
            57,300TOTAL
      ASSETS
            
            $
            4,191,301
            
            
            $
            6,572,602LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      payable
            
            
            443,463
            
            
            
            391,444Accrued
      expenses and other current liabilities
            
            
            67,992
            
            
            
            55,066Deferred
      revenue
            
            
            169,397
            
            
            
            225,202Note
      payable (net of discount of $1,698 and $8,674 as of June 30, 2008 and
      December 31, 2007, respectively)
            
            
            198,302
            
            
            
            191,326Total
      current liabilities
            
            
            879,154
            
            
            
            863,038Deferred
      tax liability
            
            
            92,000
            
            
            
            92,000Deferred
      rent
            
            
            24,845
            
            
            
            17,447TOTAL
      LIABILITIES
            
            
            995,999
            
            
            
            972,485COMMITMENTS
      AND CONTINGENCIESSTOCKHOLDERS’
      EQUITYPreferred
      stock, $0.01 par value; 25,000,000 shares authorized; 0 shares issued and
      outstanding at June 30, 2008 and December 31, 2007
            
            
            —
            
            
            
            —Common
      stock, $0.01 par value; 200,000,000 shares authorized; 24,842,040 shares
      issued and outstanding at June 30, 2008 and December 31,
    2007
            
            
            24,842
            
            
            
            24,842Additional
      paid in capital
            
            
            25,745,009
            
            
            
            25,223,702Accumulated
      deficit
            
            
            (22,574,549
            )
            
            
            (19,648,427
            )TOTAL
      STOCKHOLDERS’ EQUITY
            
            
            3,195,302
            
            
            
            5,600,117TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            4,191,301
            
            
            $
            6,572,602





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




- 3
-


REDROLLER
HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (UNAUDITED)




Three
      Months Ended June 30,
            
            
            Six
      Months Ended June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Net
      sales
            
            $
            216,594
            
            
            $
            284,785
            
            
            $
            508,452
            
            
            $
            627,292Cost
      of sales
            
            
            124,749
            
            
            
            185,401
            
            
            
            317,613
            
            
            
            371,524GROSS
      PROFIT
            
            
            91,845
            
            
            
            99,384
            
            
            
            190,839
            
            
            
            255,768OPERATING
      EXPENSESSalaries
      and benefits
            
            
            960,854
            
            
            
            342,086
            
            
            
            1,629,913
            
            
            
            1,788,289Selling,
      general and administrative
            
            
            696,773
            
            
            
            286,526
            
            
            
            1,497,909
            
            
            
            1,097,777TOTAL
      OPERATING EXPENSES
            
            
            1,657,627
            
            
            
            628,612
            
            
            
            3,127,822
            
            
            
            2,886,066LOSS
      FROM OPERATIONS
            
            
            (1,565,782
            )
            
            
            (529,228
            )
            
            
            (2,936,983
            )
            
            
            (2,630,298
            )OTHER INCOME
      (EXPENSE)Interest
      expense
            
            
            (3,196
            )
            
            
            (5,450
            )
            
            
            (10,009
            )
            
            
            (4,395
            )Interest
      income
            
            
            5,373
            
            
            
            579
            
            
            
            20,870Gain
      on extinguishment of debt
            
            
            −
            
            
            
            8,674
            
            
            
            −
            
            
            
            8,674TOTAL
      OTHER INCOME (EXPENSE)
            
            
            2,177
            
            
            
            3,803
            
            
            
            10,861
            
            
            
            4,279NET
      LOSS
            
            
            (1,563,605
            )
            
            
            (525,425
            )
            
            
            (2,926,122
            )
            
            
            (2,626,019
            )Convertible
      preferred stock deemed dividends
            
            
            −
            
            
            
            (1,297,954
            )
            
            
            −
            
            
            
            (1,297,954
            )NET
      LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
            
            $
            (1,563,605
            )
            
            $
            (1,823,379
            )
            
            $
            (2,926,122
            )
            
            $
            (3,923,973
            )Net
      loss per share: basic and diluted
            
            $
            (0.13
            )
            
            $
            (0.80
            )
            
            $
            (0.12
            )
            
            $
            (0.86
            )Weighted
      average number of shares outstanding – basic and diluted
            
            
            24,842,040
            
            
            
            4,541,633
            
            
            
            24,842,040
            
            
            
            4,541,633




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






- 4
-


REDROLLER
HOLDINGS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
 FOR
THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)




Additional
            
            
            
            
            
            TotalCommon
      Stock
            
            
            Paid
      in
            
            
            Accumulated
            
            
            Stockholders’Shares
            
            
            Amount
            
            
            Capital
            
            
            Deficit
            
            
            EquityBalance
      – January 1, 2008
            
            
            24,842,040
            
            
            $
            24,842
            
            
            $
            25,223,702
            
            
            $
            (19,648,427
            )
            
            $
            5,600,117Consulting
      expense recorded in connection with warrants issued to corporate finance
      advisor
            
            
            −
            
            
            
            −
            
            
            
            19,366
            
            
            
            −
            
            
            
            19,366Stock-based
      compensation
            
            
            −
            
            
            
            −
            
            
            
            501,941
            
            
            
            −
            
            
            
            501,941Net
      loss
            
            
            −
            
            
            
            −
            
            
            
            −
            
            
            
            (2,926,122
            )
            
            
            (2,926,122
            )Balance
      – June 30, 2008
            
            
            24,842,040
            
            
            $
            24,842
            
            
            $
            25,745,009
            
            
            $
            (22,574,549
            )
            
            $
            3,195,302











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


- 5
-


REDROLLER
HOLDINGS, INC. AND SUBSIDIARIES
 CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
 (UNAUDITED)


For
      the Six Months Ended June 30,2008
            
            
            2007CASH FLOWS FROM
      OPERATING ACTIVITIESNet
      loss
            
            $
            (2,926,122
            )
            
            $
            (2,626,019
            )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
            
            
            192,977
            
            
            
            196,784Stock-based
      compensation
            
            
            501,941
            
            
            
            1,093,857Gain
      on extinguishment of debt
            
            
            
            
            
            
            (8,674
            )Warrant
      consulting expense
            
            
            19,366
            
            
            
            –Deferred
      rent amortization
            
            
            7,398
            
            
            
            –Non-cash
      interest
            
            
            6,976
            
            
            
            –Changes
      in operating assets and liabilities:Accounts
      receivable
            
            
            83,229
            
            
            
            37,244Prepaid
      expenses and other current assets
            
            
            47,689
            
            
            
            56,849Security
      deposits
            
            
            (7,112
            )
            
            
            –Accounts
      payable
            
            
            52,019
            
            
            
            20,276Accrued
      expenses and other current liabilities
            
            
            12,926
            
            
            
            (21,602
            )Deferred
      revenue
            
            
            (55,805
            )
            
            
            (68,715
            )NET
      CASH USED IN OPERATING ACTIVITIES
            
            
            (2,064,518
            )
            
            
            (1,320,000
            )CASH FLOWS FROM
      INVESTING ACTIVITIESPurchases
      of property and equipment
            
            
            (44,833
            )
            
            
            (13,250
            )Capitalization
      of website costs
            
            
            (895,653
            )
            
            
            –NET
      CASH USED IN INVESTING ACTIVITIES
            
            
            (940,486
            )
            
            
            (13,250
            )CASH FLOWS FROM
      FINANCING ACTIVITIESProceeds
      from the sale of Series B(1) convertible preferred stock, net of offering
      costs
            
            
            –
            
            
            
            596,379Proceeds
      from issuances of convertible notes
            
            
            –
            
            
            
            500,000Proceeds
      from issuances of notes
            
            
            –
            
            
            
            298,000Proceeds
      from investor deposits
            
            
            –
            
            
            
            750,000Payment
      of note
            
            
            –
            
            
            
            (98,000
            )Deferred
      financing costs
            
            
            –
            
            
            
            (157,116
            )NET
      CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            –
            
            
            
            1,889,263NET
      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
            
            
            (3,005,004
            )
            
            
            556,013CASH AND CASH
      EQUIVALENTS – BEGINNING OF PERIOD
            
            
            3,489,116
            
            
            
            289,483CASH AND CASH
      EQUIVALENTS – END OF PERIOD
            
            $
            484,112
            
            
            $
            845,496




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








- 6
-


NOTE
1 – THE COMPANY





Organization and Nature of
Business


RedRoller,
Inc. (“RedRoller”) is a
provider of a proprietary Internet-based, multi-carrier, integrated pricing
comparison and shipping services system (the “RedRoller System”)
that was previously provided at no charge to the end-user. During the second
quarter of 2008, RedRoller relaunched the RedRoller System as a
subscription-based service. Through RedRoller’s basic software platform,
customers can compare pricing established by RedRoller from multiple shipping
carriers and purchase shipping services, which are then performed directly by
the selected carrier following RedRoller’s transmittal of a shipping order to
the carrier.


Through
its wholly-owned subsidiary, Taylor Systems Engineering Corporation (“TSE”),
RedRoller also installs shipping systems software that integrates customers
systems with shipping carriers’ software and also provides maintenance of such
software.





RedRoller
was originally formed on August 30, 2004 as a limited liability company under
the name nFront, LLC (“nFront”) in the State
of Delaware. On February 23, 2005, nFront was converted to a corporation in the
State of Delaware and concurrently changed its name to RedRoller,
Inc.





On
November 13, 2007, RedRoller entered into an Agreement and Plan of Merger (the
“Merger
Agreement”) with RedRoller Holdings, Inc. (formerly known as Aslahan
Enterprises Ltd.), a Delaware corporation (“Pubco”), pursuant to
which 15,527,419 issued and outstanding shares of capital stock of RedRoller
were exchanged at a rate of approximately 0.6589 per share for 10,230,940 shares
of common stock of Pubco, with RedRoller as the surviving entity. This share
exchange was accounted for as a reverse merger and recapitalization transaction
in which RedRoller is deemed to be the accounting acquirer. Accordingly, the
accompanying condensed consolidated financial statements of operations and cash
flows for the respective three and six month periods ended June 30, 2007 give
retroactive effect of the recapitalization of RedRoller.





The
condensed consolidated financial statements are those of RedRoller Holdings,
Inc. and its wholly-owned subsidiaries, RedRoller and
TSE.  Collectively, they are referred to as the
“Company.”






NOTE
2 – LIQUIDITY AND FINANCIAL CONDITION





The
Company incurred a net loss of $2,926,122 for the six months ended June 30,
2008, which includes an aggregate of $728,658 of non-cash charges. Non-cash
charges principally include $501,941 of stock-based compensation expense and
$192,977 of depreciation and amortization. At June 30, 2008, the Company’s
accumulated deficit amounted to $22,574,549. The Company had cash and cash
equivalents of $484,112 and a working capital deficit of $228,628 at June 30,
2008.





The
Company’s ability to continue its operations is dependent upon its ability to
raise additional capital in the short term and to generate revenue and operating
cash flow through the execution of its business plan.




Management
believes the Company’s current level of working capital will enable it to
sustain its operations for less than one month.  If the Company is
unable to raise additional capital, it will be required to take various measures
to conserve liquidity, which could include, but not necessarily be limited to,
curtailing its operations, suspending the pursuit of its business plan, reducing
its workforce and cutting overhead expenses.  Under these
circumstances, the Company may be required to cease operations entirely or seek
protection from its creditors, as applicable, under the bankruptcy code. The
Company cannot provide any assurance that it will raise additional capital as
necessary.  The Company has not received any commitments for new
financing at this time nor can it provide any assurance that new financing will
be available to it on acceptable terms, if at all. These matters raise
substantial doubt about the Company’s ability to continue as a going concern.
The accompanying condensed consolidated financial statements do not include any
adjustments that may be necessary in the event that the Company is unable to
continue as a going concern.
   NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Principles of
Consolidation


The
condensed consolidated financial statements include the accounts of RedRoller
Holdings, Inc. and its wholly-owned subsidiaries, RedRoller and
TSE.  All significant intercompany balances and transactions have been
eliminated in consolidation.





- 7
-


Use of
Estimates


The
preparation of the condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ materially from those
estimates.  These estimates and assumptions include revenue
recognition, reserves and write-downs related to accounts receivable, the
recoverability of long-term assets, deferred taxes and related valuation
allowances and the valuation of equity instruments.





Basis of Interim Financial
Statements


The
accompanying condensed consolidated balance sheet as of June 30, 2008, condensed
consolidated statement of stockholders’ equity for the six months ended June 30,
2008, and the condensed consolidated statements of operations and cash flows for
the three and six months ended June 30, 2008 and 2007 are unaudited. The
unaudited interim condensed consolidated financial statements have been prepared
on the same basis as the annual consolidated financial statements and, in the
opinion of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company’s financial
position and results of operations and cash flows for the three and six months
ended June 30, 2008 and 2007. The results for the six months ended June 30, 2008
are not necessarily indicative of the results to be expected for the year ending
December 31, 2008 or for any other interim period or for any future
year.





Concentration of Credit
Risk


Financial
instruments that potentially subject the Company to concentrations of credit
risk consist principally of cash and accounts receivable.  The Company
maintains its cash accounts at high-quality financial institutions with
balances, at times, in excess of federally insured limits. As of June 30, 2008
and December 31, 2007, the Company had cash balances in excess of federally
insured limits of $369,367 and $3,285,876, respectively. Management believes
that the financial institutions that hold the Company’s deposits are financially
sound and therefore pose minimal credit risk.





The
Company grants credit to some of its business customers, which are exclusively
located in the United States.  Collateral is generally not required
for trade receivables.  The Company maintains allowances for potential
credit losses.


Accounts
Receivable


Accounts
receivable are recorded net of allowances for doubtful accounts.  The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required
payments.  If the financial condition of the Company’s customers were
to deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required, which would increase the Company’s
expenses during the periods in which any such allowances are
made.  The amount recorded as an allowance for doubtful accounts in
each period is based upon an assessment of the likelihood that the Company will
be paid for outstanding accounts receivable, based on customer-specific as well
as general considerations.  To the extent that the Company’s estimates
prove to be too high, and the Company ultimately collects a receivable
previously determined to be impaired, the Company may record a reversal of the
provision in the period of such determination.  Substantially all of
the Company’s accounts receivable balances were collected subsequent to June 30,
2008 and December 31, 2007. Accordingly, the Company deemed it unnecessary to
establish an allowance for doubtful accounts at June 30, 2008 and December 31,
2007, based on its historical collection rates and low occurrence of credit
losses.





Revenue
Recognition


Prior to
May 26, 2008, when the Company switched to its subscription-based model,
customers paid for shipping services prior to the actual shipment of goods,
generally when the shipping services were booked.  Customers had
twenty-four hours from the point of reservation to cancel a
shipment.  Prior to May 26, 2008, revenues resulting from shipping
services were recognized at the time in which the transaction is no longer
cancelable.
 
 Revenues
from the Company’s subscription-based model, which commenced May 26, 2008,
through June 30, 2008, were not significant.  Future revenues derived
from RedRoller’s subscription-based website will be generated from customer
subscriptions, paid monthly primarily via credit cards.


Revenues
from installation of shipping systems software are recognized at the time in
which installation work is completed and the customer acknowledges its
acceptance of the work.





The
Company also provides maintenance contracts on behalf of the manufacturers of
the shipping systems software it sells. The Company offers these contracts as a
separately priced product. Revenues from maintenance contracts are recognized
ratably over the maintenance period in accordance with the provision of American
Institute of Certified Public Accountants “AICPA” Statement of Position SOP
97-2, “Software Revenue Recognition.”





Revenues
from the sales of shipping supplies are recognized upon delivery.





A summary
of the Company’s revenue by category is as follows:





- 8
-


Three
      Months Ended
              June
      30,
            
            
            Six
      Months Ended
              June
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007Shipping
      services
            
            $
            83,507
            
            
            $
            149,876
            
            
            $
            209,429
            
            
            $
            290,250Installation
            
            
            64,102
            
            
            
            48,036
            
            
            
            157,651
            
            
            
            170,314Maintenance
            
            
            67,815
            
            
            
            80,992
            
            
            
            137,141
            
            
            
            154,989Supplies
            
            
            71
            
            
            
            5,128
            
            
            
            2,355
            
            
            
            10,268Other
            
            
            1,099
            
            
            
            753
            
            
            
            1,876
            
            
            
            1,471Total
            
            $
            216,594
            
            
            $
            284,785
            
            
            $
            508,452
            
            
            $
            627,292





Until
June 2008, the Company provided substantially all shipping services to its
customers as an authorized reseller under a Domestic and International Shipping
Services Agreement with DHL Worldwide Express, Inc. (“DHL”).  The
Company, as part of its transition to a subscription-based business model,
executed a new, two-year renewable contract with DHL on August 1, 2008 pursuant
to which DHL authorizes the Company to use the DHL trademark and name, as well
as DHL’s technical information, on the Company’s website, thereby providing
customers of the Company with access to DHL’s shipping rates on the Company’s
website.


Net Loss Per
Share


The
Company computes net loss per share in accordance with SFAS No. 128 “Earnings
Per Share” and has applied the guidance enumerated in Staff Accounting Bulletin
No. 98 (“SAB Topic
4D”) with respect to evaluating its issuances of equity securities during
all periods presented.





Under
SFAS No. 128, basic net loss per share is computed by dividing net loss per
share available to common stockholders by the weighted average number of shares
outstanding for the period and excludes the effects of any potentially dilutive
securities.  Diluted earnings per share, if presented, would include
the dilution that would occur upon the exercise or conversion of all potentially
dilutive securities into common stock using the “treasury stock” and/or “if
converted” methods as applicable.  The computation of basic loss per
share for the three and six months ended June 30, 2008 and 2007 excludes
potentially dilutive securities because their inclusion would be anti-dilutive.
Anti-dilutive securities excluded from the computation of basic and diluted net
loss per share are as follows:





June
      30,2008
            
            
            2007Options
      to purchase common stock
            
            
            10,190,795
            
            
            
            3,702,288Warrants
      to purchase common stock
            
            
            2,729,882
            
            
            
            –Convertible
      preferred stock (as if converted)
            
            
            –
            
            
            
            3,430,89212,920,677
            
            
            
            7,133,180





Advertising
Costs


Costs
related to advertising, promotions of products and services and participation in
trade shows and other marketing events are expensed as incurred. Advertising
expense amounted to $151,714 and $27,183 for the three months ended June 30,
2008 and 2007, respectively, and $324,032 and $65,880 for the six months ended
June 30, 2008 and 2007, respectively. These expenses are included in selling,
general and administrative expenses in the accompanying condensed consolidated
statements of operations.





Recent Accounting
Pronouncements


In
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
No. 157, “Fair Value Measurements.” SFAS No. 157 establishes a single definition
of fair value and a framework for measuring fair value, sets out a fair value
hierarchy to be used to classify the source of information used in fair value
measurements, and requires new disclosures of assets and liabilities measured at
fair value based on their level in the hierarchy. This statement applies under
other accounting pronouncements that require or permit fair value measurements.
In February 2008, the FASB issued Staff Positions (“FSPs”) No. 157-1 and
No. 157-2, which, respectively, remove leasing transactions from the scope of
SFAS No. 157 and defer its effective date for one year relative to certain
non-financial assets and liabilities. As a result, the application of the
definition of fair value and related disclosures of SFAS No. 157 (as impacted by
these two FSPs) was effective for the Company beginning January 1, 2008 on a
prospective basis with respect to fair value measurements of (a) non-financial
assets and liabilities that are recognized or disclosed at fair value in the
Company’s financial statements on a recurring basis (at least annually) and (b)
all financial assets and liabilities. This adoption did not have a material
impact on the Company’s




- 9
-


condensed
consolidated results of operations or financial condition. The remaining aspects
of SFAS No. 157 for which the effective date was deferred under FSP No. 157-2
are currently being evaluated by the Company. Areas impacted by the deferral
relate to non-financial assets and liabilities that are measured at fair value,
but are recognized or disclosed at fair value on a nonrecurring basis. This
deferral applies to such items as non-financial assets and liabilities initially
measured at fair value in a business combination (but not measured at fair value
in subsequent periods) or non-financial long-lived asset groups measured at fair
value for an impairment assessment. The effects of these remaining aspects of
SFAS No. 157 are to be applied by the Company to fair value measurements
prospectively beginning January 1, 2009. The Company does not expect these
changes to have a material impact on the Company’s consolidated results of
operations or financial condition. Refer to Note 13 for disclosures required by
this new pronouncement.





On
February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS
159”).  The guidance in SFAS 159 “allows” reporting entities to
“choose” to measure many financial instruments and certain other items at fair
value.  The objective underlying the development of this literature is
to improve financial reporting by providing reporting entities with the
opportunity to reduce volatility in reported earnings that results from
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions, using the guidance in SFAS 133, as amended.
The Company adopted SFAS 159 on January 1, 2008. The adoption of SFAS 159 did
not have a material effect on the Company’s condensed consolidated financial
position, results of operations or cash flows.





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS
141R replaces SFAS No. 141, “Business Combinations” (“SFAS 141”). SFAS 141R
retains the fundamental requirements in SFAS 141 that the purchase method of
accounting be used for all business combinations and for an acquirer to be
identified for each business combination. SFAS 141R defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. SFAS 141R retains guidance of SFAS 141 for identifying and
recognizing intangible assets separately from goodwill. SFAS 141R requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree at the acquisition date, measured at
their fair values as of that date with limited exceptions specified in the
Statement. SFAS 141R also requires the acquirer in a business combination
achieved in stages to recognize the identifiable assets and liabilities, as well
as the non-controlling interest in the acquiree, at the full amounts of their
fair values. SFAS 141R applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. SFAS 141R would have an impact
on accounting for any business acquired after the effective date of this
pronouncement.


In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160
amends ARB 51 to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 is effective for fiscal years and interim periods within
those fiscal years beginning on or after December 15, 2008. Earlier adoption is
prohibited. SFAS 160 shall be applied prospectively as of the beginning of the
fiscal year in which this Statement is initially applied. The Company is
currently assessing the impact of SFAS 160 on its financial position and results
of operation.





In
December 2007, the SEC staff issued SAB No. 110 (“SAB 110”),
“Share-Based Payment,” which amends SAB 107, “Share-Based Payment,” to permit
public companies, under certain circumstances, to use the simplified method in
SAB 107 for employee option grants after December 31, 2007. Use of the
simplified method after December 2007 is permitted only for companies whose
historical data about their employees’ exercise behavior does not provide a
reasonable basis for estimating the expected term of the options. The adoption
of this pronouncement did not have a material effect on the Company’s condensed
consolidated financial statements.





In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161
gives financial statement users better information about the reporting entity’s
hedges by requiring qualitative disclosures about the objectives and strategies
for using derivatives, quantitative data about the fair value of and gains and
losses on derivative contracts, and details of credit-risk-related contingent
features in their hedged positions. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. The Company is currently assessing the impact of SFAS 161 on its
financial position and results of operation.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). SFAS 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles on the United States. SFAS 162 is effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity
with




- 10
-


Generally
Accepted Accounting Principles.” The Company does not expect the adoption of
this pronouncement to have a material impact on its financial position or
results of operation.





Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the Company’s condensed consolidated
financial statements upon adoption.







NOTE
4 – PREPAID EXPENSES





Prepaid
expenses consist of the following as of June 30, 2008 and December 31,
2007:





June
      30, 2008
            
            
            December
      31,
              2007(unaudited)Software
      and other licenses
            
            $
            46,195
            
            
            $
            92,445Maintenance
      agreements, insurance and other
            
            
            35,151
            
            
            
            29,934Prepaid
      rent
            
            
            2,371
            
            
            
            9,027$
            83,717
            
            
            $
            131,406







NOTE
5 – WEBSITE DEVELOPMENT COSTS





Website
development costs consist of the following as of June 30, 2008 and December 31,
2007:





June
      30,
              2008
            
            
            December
      31,
              2007(unaudited)Consulting
      fees
            
            $
            1,020,748
            
            
            $
            478,391Salaries
            
            
            711,927
            
            
            
            358,6311,732,675
            
            
            
            837,022Less:
      accumulated amortization
            
            
            (268,024
            )
            
            
            (191,446
            )Website
      development costs, net
            
            $
            1,464,651
            
            
            $
            645,576





The
Company has capitalized $895,653 of consulting fees and salaries during the six
months ended June 30, 2008 related to the cost of enhancing its existing
website. The Company launched the enhanced version of its website during the
second quarter of 2008. The Company estimates that the total dollar amount of
the expected upgrades and enhancements will amount to approximately $1,470,000
and that the enhanced version of the website will have a useful life of
approximately three years.





Amortization
expense amounted to $38,289 for the each of the three months ended June 30, 2008
and 2007, and $76,578 for each of the six months ended June 30, 2008 and 2007,
respectively.







NOTE 6 – GOODWILL AND AMORTIZABLE INTANGIBLE
ASSETS





At June
30, 2008 and December 31, 2007, goodwill and other intangible assets consist of
the following:





June
      30,
              2008
            
            
            December
      31,
              2007(unaudited)Goodwill
            
            $
            1,769,611
            
            
            $
            1,769,611Amortizable
      intangible assets:Customer
      relationships
            
            $
            80,000
            
            
            $
            80,000Trade name
            
            
            5,170
            
            
            
            5,170Less: accumulated
      amortization
            
            
            (42,585
            )
            
            
            (34,068
            )Intangible assets,
      net
            
            $
            42,585
            
            
            $
            51,102





- 11
-


Amortization
expense with respect to the customer relationships and trade name amounted to
$4,258 for both the three months ended June 30, 2008 and 2007, and $8,517 for
both the six months ended June 30, 2008 and 2007, respectively.







NOTE
7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES





Accrued expenses and other current
liabilities consist of the following as of June 30, 2008 and December 31,
2007:





June
      30,
              2008
            
            
            December
      31,
              2007(unaudited)Professional
      and consulting fees
            
            $
            61,494
            
            
            $
            –Payroll
      and payroll taxes
            
            
            –
            
            
            
            38,192Other
            
            
            6,498
            
            
            
            16,874$
            67,992
            
            
            $
            55,066







NOTE
8 – COMMITMENTS AND CONTINGENCIES





Registration
Rights


The
Company, pursuant to the terms of a registration rights agreement entered into
on November 13, 2007, has agreed to file and maintain the effectiveness of a
Registration Statement from the effective date until the earlier of (i) 24
months from the effective date of the Registration Statement or (ii) the date on
which all securities registered under the Registration Statement (a) have been
sold or (b) are otherwise able to be sold pursuant to Rule 144, at which time
exempt sales may be permitted for purchasers of the units, subject to the
Company’s right to suspend or defer the use of the Registration Statement in
certain events. The Company’s Registration Statement was declared effective by
the SEC on May 5, 2008.





Operating
Leases


On March
12, 2008, the Company entered into a lease agreement for 2,032 square feet of
office space in Maynard, Massachusetts. The office space is intended to be used
by the Company’s marketing department. The term of the lease is for
approximately 18 months, commencing on March 15, 2008 and terminates on August
31, 2009. The lease calls for monthly rental payments of $2,371, with such
amount being prorated for March 2008.





Rent
expense amounted to $53,381 and $43,861 for the three months ended June 30, 2008
and 2007, respectively, and $85,259 and $87,503 for the six months ended June
30, 2008 and 2007, respectively.  Rent expense includes $655 and $0
for the effects of recording expense on a straight line basis over the term of
the lease during the three months ended June 30, 2008 and 2007, respectively,
and $7,398 and $0 for the six months ended June 30, 2008 and 2007,
respectively.





Employment
Agreements


The
Company has employment agreements with six of its executives for initial terms
of three years, which will be renewed for an additional one to two years
thereafter, unless written notice is provided by the respective parties. The
agreements provide, among other things, for the payment of aggregate annual base
salaries of approximately $1,135,000, as well as such incentive compensation and
discretionary bonuses as the Board of Directors may determine and to which they
may become entitled to pursuant to a bonus program. In addition, the employment
agreements provide for up to thirty-nine months of severance compensation for
terminations under certain circumstances. Aggregate potential severance
compensation amounted to $2,105,000 at June 30, 2008.





On March
17, 2008, Michael Tribolet was appointed as the Chief Executive Officer by the
Board of Directors of the Company. Mr. Tribolet’s employment agreement is
effective as of March 17, 2008 and, unless earlier terminated, will expire on
March 17, 2011. The agreement provides for an initial base salary of $275,000
per year, which may be increased from time to time by the Board of Directors, in
its sole discretion. Mr. Tribolet is also eligible to receive an annual bonus of
up to $140,000, based upon meeting certain performance goals determined by the
Board and is eligible to participate in all Company employee benefit
plans.





In
connection with Mr. Tribolet’s appointment as the Chief Executive Officer of the
Company, the Board approved the grant of (i) a stock option (the “First Option”) to Mr.
Tribolet to purchase 175,000 shares of the Company’s common stock, par value
$0.01 per share (the “Common Stock”), under
the Company’s 2007 Stock Option and Stock Incentive Plan (“2007 Plan”),
effective March 17, 2008 (the “Grant Date”), and
(ii) a stock option (the “Second Option” and,
together with the First Option, the “Options”) to Mr.
Tribolet to purchase 1,500,000 shares of Common Stock, under the 2007 Plan,
effective on the




- 12
-


Grant
Date. The Options will have an exercise price equal to the closing price of the
Common Stock on the OTC Bulletin Board on the Grant Date. The First Option will
vest in full 90 days after the Grant Date with accelerated vesting upon certain
events as set forth in the underlying stock option agreement, assuming continued
employment with the Company on the applicable vesting dates. The Second Option
will vest in equal 1/3 increments annually until fully vested with accelerated
vesting upon certain events as set forth in the underlying stock option
agreement, assuming continued employment with the Company on the applicable
vesting dates.





Upon the
one year anniversary (the “Second Grant Date”) of Mr. Tribolet’s employment
agreement, and subject to (a) the approval by the Board of Directors and (b) the
prior affirmative vote of the requisite number of stockholders of the Company to
increase the total number of shares of Common Stock eligible for issuance under
the 2007 Plan by at least 3,500,000 shares, Mr. Tribolet will be granted a stock
option (the “Third Option”) to purchase 1,500,000 shares of the Company’s under
the 2007 Plan. The Third Option will have an exercise price equal to the closing
price of the Common Stock on the OTC Bulletin Board on the Second Grant Date.
The Third Option will vest one-third upon the one year anniversary of the Second
Grant Date and quarterly thereafter in equal increments over one year until
fully vested, with accelerated vesting upon certain events as set forth in the
underlying stock option agreement, assuming continued employment with the
Company on the applicable vesting dates.





If Mr.
Tribolet is terminated without “cause” during the term of his employment with
the Company, the Company will pay Mr. Tribolet a separation payment equal to (i)
his base salary and accrued and unused vacation earned through the effective
date of his termination and continuing for a period of up to six months after
the termination date; and (ii) any earned but unpaid bonuses. In addition, up to
500,000 stock options granted to Mr. Tribolet (or up to 325,000 options during
the third year of his employment agreement) that are not then exercisable shall
become fully vested, and, for a period of one year after the date of
termination, Mr. Tribolet will be entitled to receive health benefits coverage
under the same plan(s) or arrangement(s) in effect at the time of his
termination.





If Mr. Tribolet is terminated for “good reason,” the
Company will pay Mr. Tribolet a separation payment equal to his base salary and
accrued and unused vacation earned through the effective date of his termination
and continuing for a period of six months after the termination date. In
addition, the Company shall grant Mr. Tribolet a fully-vested stock option to
purchase 500,000 shares of Common Stock. “Good reason” is defined in the
employment agreement as occurring if (i) the Board of Directors does not
authorize the issuance of the Third Option to Mr. Tribolet upon the one-year
anniversary of this agreement or (ii) the Board of Directors changes Mr.
Tribolet’s title from Chief Executive Officer without his written
permission.





Investor Relations
Agreement


On
January 14, 2008, the Company entered into a twelve-month investor relations
service agreement with an investor relations firm (“IRF”) whereby the IRF
will manage and communicate the Company’s profile within the investment
community.





The
Company will pay the IRF an aggregate consideration of $84,000 payable in cash
and non-qualified options to purchase 32,500 shares of Common Stock, at an
exercise price of $0.76 per share. The options vest at a rate of 6,500 shares
per month from January 14, 2008 through May 14, 2008.





Provided
that the Company is current in all of its obligations, the Company may terminate
the agreement by providing written notice and remitting a payment to the IRF of
an amount equal to the next two months’ compensation.


On June
26, 2008, the Company cancelled the options granted to the IRF and replaced them
with warrants to purchase 32,500 shares of the Common Stock, at an exercise
price of $0.76 per share. The warrants have a five-year term, are exercisable
through a cashless exercise provision and are non-redeemable. The cancellation
of the options and the issuance of the warrants were accounted for as a
modification of awards under SFAS 123R. The fair market value of Common Stock on
the date of modification was $0.72 per share. The weighted-average grant date
fair value of the cancelled options on the date of modification was $0.61 per
share. The weighted-average grant date fair value of the replacement warrants
was $0.49 per share. Assumptions relating to the estimated fair value of the
stock options on the date of modification, which the Company estimated using the
Black-Scholes option pricing model, are as follows: risk-free interest rate of
4.07%; expected dividend yield of zero percent; remaining contractual option
life of ten years; and volatility of 84.45%. Assumptions relating to the
estimated fair value of the warrants on the date of modification are as follows:
risk-free interest rate of 3.44%; expected dividend yield of zero percent;
contractual life of five years; and volatility of 84.45%.  The Company
recorded $21,233 as consulting expense in the accompanying statement of
operations during the six months ended June 30, 2008 related to the stock
options. The Company did not record any incremental consulting expense with
respect to the modification because the fair value of the replacement warrants
was less than the fair value of the cancelled award.


- 13
-


The
Company recorded $27,837 and $61,436 of consulting expense in the accompanying
statement of operations for the three and six months ended June 30, 2008,
respectively.  Such amount includes $3,750 and $15,000 for the effect
of recording the aggregate payments on a straight-line basis over the term of
the agreement during the three and six months ended June 30, 2008,
respectively.


Unasserted
Claim


An
investor has verbally asserted that the Company owes him an amount equal to
$60,000 associated with the Company’s November 2007 share exchange
transaction.  The Company disputes this verbal assertion and believes
it is without merit.  While the Company believes that this assertion
is unlikely to result in any payments being made to the investor, the Company
cannot predict the outcome of this matter at this time.







NOTE
9 – SIGNIFICANT CUSTOMERS AND VENDORS





The
Company had one customer which comprised 18% of accounts receivable at June 30,
2008 and no vendors which comprised more than 10% of accounts payable at June
30, 2008. The Company had two customers who comprised 17% and 11%, respectively,
of accounts receivable at December 31, 2007 and two vendors which comprised 12%
and 11%, respectively, of accounts payable at December 31, 2007.







NOTE
10 – SHARE-BASED PAYMENTS





A summary
of employee and non-employee stock based compensation expense is as
follows:





Three
      Months Ended
              June
      30,
            
            
            Six
      Months Ended June 30,2008
            
            
            2007
            
            
            2008
            
            
            2007Employee
            
            $
            327,324
            
            
            $
            125,401
            
            
            $
            458,973
            
            
            $
            746,799Non-employee
            
            
            24,604
            
            
            
            38,058
            
            
            
            42,968
            
            
            
            347,058Total
            
            $
            351,928
            
            
            $
            163,459
            
            
            $
            501,941
            
            
            $
            1,093,857





Non-Employees


On
January 14, 2008, the Company granted options to purchase 32,500 shares of
Common Stock with an exercise price of $0.76 per share to the IFR described in
Note 8. The fair value of the underlying Common Stock at the date of grant was
$0.76 per share based upon the Company’s share price on the date of grant. The
options vested over a period of five months. Assumptions relating to the
estimated fair value of these stock options on their date of grant, which the
Company estimated using the Black-Scholes option pricing model, are as follows:
risk-free interest rate of 3.81%; expected dividend yield of zero percent;
option life of ten years; and volatility of 86.68%.  The aggregate
grant date fair value of the award amounted to $21,233.  The Company
recorded $21,233 of consulting expense during the six months ended June 30, 2008
with respect to this award. As described in Note 8, such options were cancelled
and a replacement award was issued on June 26, 2008.





The
Company accounts for its issuances of stock-based compensation to non-employees
for services using the measurement date guidelines enumerated in SFAS 123R and
EITF 96-18. Accordingly, the non-vested portion of awards that are subject to
the future performance of the counterparty are adjusted at each reporting date
to their fair values based upon the then current market value of the Company’s
stock and other assumptions that management believes are reasonable. The Company
believes that the fair value of the stock options issued to non-employees is
more reliably measurable than the fair value of the services
rendered.





The term
of the stock options represents the contractual period of the stock options. The
expected stock price volatility for the Company’s stock options was determined
by examining the historical volatilities for industry peers and using an average
of the historical volatilities of the Company’s industry peers as the Company
has only a limited trading history for its common stock. The Company will
continue to analyze the historical stock price volatility as more historical
data for the Company’s common stock becomes available. The risk-free interest
rate assumption is based on the U.S. Treasury instruments whose term was
consistent with the expected term of the Company’s stock options. The expected
dividend assumption is based on the Company’s history and expectation of
dividend payouts.





A summary
of non-employee stock option activity for the six months ended June 30, 2008 is
as follows:





- 14
-


Number
      of
              Options
            
            
            Weighted
              Average
              Exercise
              Price
            
            
            Weighted
              Average
              Remaining
              Contractual
              Term
            
            
            Aggregate
              Intrinsic
              ValueBalance
      at January 1, 2008
            
            
            3,295,441
            
            
            $
            0.23Granted
            
            
            32,500
            
            
            
            0.76Cancelled
            
            
            (32,500
            )
            
            
            (0.76
            )Balance
      at June 30, 2008
            
            
            3,295,441
            
            
            $
            0.23
            
            
            
            7.97
            
            
            $
            1,622,499Exercisable
      at June 30, 2008
            
            
            3,259,205
            
            
            $
            0.23
            
            
            
            7.94
            
            
            $
            1,604,656





The
aggregate intrinsic value is calculated as the difference between the exercise
price of the underlying stock options and the fair value of the Common Stock
($0.72) as of June 30, 2008 for stock options that are in-the-money as of June
30, 2008.





The
Company issues new shares of Common Stock upon exercise of stock
options.





Total
compensation expense recognized for the three months ended June 30, 2008 and
2007 amounted to $24,604 and $38,058, respectively, and $42,968 and $347,058 for
the six months ended June 30, 2008 and 2007, respectively.  The
weighted-average grant date fair value of options granted during the six months
ended June 30, 2008 amounted to $0.65. There were no options granted during the
six months ended June 30, 2007.  Total unamortized compensation
expense related to unvested stock options at June 30, 2008 amounted to $3,436
and is expected to be recognized over a weighted average period of 1.5
years.





Employees


On
February 19, 2008, the Company granted options to purchase 277,500 shares of
Common Stock at an exercise price of $0.60 per share to multiple employees. The
fair value of the underlying Common Stock at the date of grant was $0.60 per
share based upon the Company’s share price on the date of grant. The options
have a ten year contractual term and vest over a period of six months to four
years. Assumptions relating to the estimated fair value of these stock options
on their date of grant, which the Company estimated using the Black-Scholes
option pricing model, are as follows: risk-free interest rate of 3.89%; expected
dividend yield of zero percent; expected option life of six years; and
volatility of 86.17%. The aggregate grant date fair value of the award amounted
to $123,440.  The Company recorded $29,006 of compensation expense
during the six months ended June 30, 2008 with respect to these
awards.





On March
17, 2008, the Company granted options to purchase 1,675,000 shares of Common
Stock at an exercise price of $0.60 per share to its Chief Executive Officer.
The fair value of the underlying Common Stock at the date of grant was $0.60 per
share based upon the Company’s share price on the date of grant. The options
have a ten year contractual term and vest over a period of three months to three
years. Assumptions relating to the estimated fair value of these stock options
on their date of grant, which the Company estimated using the Black-Scholes
option pricing model, are as follows: risk-free interest rate of 3.34%; expected
dividend yield of zero percent; expected option life of six years; and
volatility of 85.68%. The aggregate grant date fair value of the award amounted
to $738,096.  The Company recorded $178,098 of compensation expense
during the six months ended June 30, 2008 with respect to this
award.





During
the six months ended June 30, 2008, 115,307 stock options were forfeited due to
employee terminations.





The
Company accounts for stock-based compensation in accordance with the provisions
of SFAS 123R. SFAS 123R requires companies to estimate the fair value of
share-based payment awards on the date of grant.  The value of stock
options granted to employees and directors is estimated using an option-pricing
model.  The value of the portion of the award that is ultimately
expected to vest is recognized as expense over the requisite service
periods.  The Company has selected the Black-Scholes option pricing
model as its method of valuing share-based payments under SFAS
123R.





The
Company recognizes compensation expense for stock option awards on a
straight-line basis over the requisite service period of the
award.  As stock-based compensation expense recognized in the six
months ended June 30, 2008 and 2007 is based upon awards ultimately expected to
vest, it has been reduced for estimated forfeitures.  SFAS 123R
requires forfeitures to be estimated at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from those
estimates.





- 15
-


A
substantial majority of the stock options still subject to vesting as of June
30, 2008 have been granted to certain officers and key employees that are
expected to fully vest. The remaining stock options granted to employees are
expected to vest at approximately 90%. However, the compensation expense with
respect to these options is insignificant to the Company’s consolidated
financial statements.





The
expected term of stock options represents the average period the stock options
are expected to remain outstanding and is based on the expected term calculated
using the approach prescribed by SAB 107 for “plain vanilla” options. The
Company used this approach as it did not have sufficient historical information
to develop reasonable expectations about future exercise patterns and
post-vesting employment termination behavior. The expected stock price
volatility for the Company’s stock options for the six months ended June 30,
2008 and 2007 was determined by examining the historical volatilities for
industry peers for periods that meet or exceed the expected term of the options,
using an average of the historical volatilities of the Company’s industry peers
as the Company did not have any trading history for the Common Stock. The
Company will continue to analyze the historical stock price volatility and
expected term assumption as more historical data for the Common Stock becomes
available. The risk-free interest rate assumption is based on the U.S. Treasury
instruments whose term was consistent with the expected term of the Company’s
stock options. The expected dividend assumption is based on the Company’s
history and expectation of dividend payouts.





A summary
of employee stock option activity for the six months ended June 30, 2008 is as
follows:





Number
      of
              Options
            
            
            Weighted
              Average
              Exercise
              Price
            
            
            Weighted
              Average
              Contractual
              Term
            
            
            Aggregate
              Intrinsic
              ValueBalance
      at January 1, 2008
            
            
            5,058,161
            
            
            $
            0.37Granted
            
            
            1,952,500
            
            
            
            0.60Forfeited
            
            
            (115,307
            )
            
            
            (0.76
            )Balance
      at June 30, 2008
            
            
            6,895,354
            
            
            $
            0.43
            
            
            
            8.94
            
            
            $
            2,136,109Exercisable
      at June 30, 2008
            
            
            2,113,774
            
            
            $
            0.26
            
            
            
            7.97
            
            
            $
            975,548





The
aggregate intrinsic value is calculated as the difference between the exercise
price of the underlying stock options and the fair value of the Common Stock at
the time ($0.72) as of June 30, 2008 for stock options that are in-the-money as
of June 30, 2008.





The
weighted-average grant date fair value of options granted during the six months
ended June 30, 2008 amounted to $0.44. There were no options granted during the
six months ended June 30, 2007. Compensation expense recognized during the six
months ended June 30, 2007 represents the amortization of awards granted during
the year ended December 31, 2006. The weighted-average contractual term gives
effect to employee terminations which, under the provisions of the Plan, reduces
the remaining life of such options to a period of 180 days following the
respective dates of such terminations. Total compensation cost recognized for
stock options granted to employees for the three months ended June 30, 2008 and
2007 amounted to $327,324 and $125,401, respectively, and $458,973 and $746,799
for the six months ended June 30, 2008 and 2007, resspectively. Total
unamortized compensation expense related to unvested stock options at June 30,
2008 amounted to $996,041 and is expected to be recognized over a weighted
average period of 1.3 years.





The
Company did not capitalize the cost associated with stock-based compensation
awards, nor have employees exercised any options during the six months ended
June 30, 2008 and 2007.







NOTE
11 – INCOME TAXES





The
Company adopted FIN 48 effective January 1, 2007. FIN 48 requires companies to
recognize in their financial statements, the impact of a tax position, if that
position is more likely than not of being sustained on audit, based on the
technical merits of the position. FIN 48 prescribes 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. FIN 48 also
provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, and disclosure. The Company’s policy is to
classify penalties and interest associated with uncertain tax positions, if
required as a component of its income tax provision. Other than described below,
management does not believe that the Company has any material uncertain tax
position requiring recognition or measurement in accordance with the provisions
of FIN 48. As of June 30, 2008, the Company had not recorded any tax penalties
or interest in its condensed consolidated financial statements. All tax




- 16
-


years
since the Company’s inception remain subject to future examination by the major
tax jurisdictions in which it is subject to tax.





As of
December 31, 2007, the Company had net operating loss carryforwards of
approximately $11,000,000 for tax purposes that will expire beginning 2025. The
utilization of NOL carryforwards is subject to annual limitations when ownership
changes occur as defined in general in Section 382 of the Internal Revenue Code
of 1986, as well as similar state and foreign provisions. These types of
ownership changes could limit the amount of NOL carryforwards that can be
utilized annually to offset future taxable income and tax, respectively. In
general, an ownership change, as defined by Section 382, results from
transactions increasing the ownership of certain shareholders or public groups
in the stock of a corporation by more than fifty percentage points over a
three-year period. This annual limitation is determined by multiplying the value
of the Company’s stock at the time of the ownership change by the applicable
long-term tax-exempt rate and could then be subject to additional adjustments,
as required. Any limitation may result in expiration of a portion of the NOL
carryforwards before utilization. Since its formation, the Company has raised
capital through a series of issuances of convertible debt, preferred stock and
capital stock. The Company performed a preliminary assessment of changes in
control and determined that its NOL carryforwards are not subject to any
limitations under Section 382 based on the historical values of its stock at the
time of the previous ownership changes.  If the Company experiences a
change in control in future periods, utilization of NOL carryforwards could be
subject to an annual limitation under Section 382.






NOTE
13 – FAIR VALUE MEASUREMENTS





As
discussed in Note 3, the Company adopted SFAS No. 157, “Fair Value Measurements”
(as impacted by FSP Nos. 157-1 and 157-2) effective January 1, 2008, with
respect to fair value measurements of (a) non-financial assets and liabilities
that are recognized or disclosed at fair value in the Company’s financial
statements on a recurring basis (at least annually) and (b) all financial assets
and liabilities.





Under
SFAS No. 157, fair value is defined as the exit price, or the amount that would
be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants as of the measurement date. SFAS No. 157
also establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable
inputs by requiring that the most observable inputs be used when available.
Observable inputs are inputs market participants would use in valuing the asset
or liability developed based on market data obtained from sources independent of
the Company. Unobservable inputs are inputs that reflect the Company’s
assumptions about the factors market participants would use in valuing the asset
or liability developed based upon the best information available in the
circumstances. The hierarchy is broken down into three levels. Level 1 inputs
are quoted prices (unadjusted) in active markets for identical assets or
liabilities. Level 2 inputs include quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, and inputs (other than quoted
prices) that are observable for the asset or liability, either directly or
indirectly. Level 3 inputs are unobservable inputs for the asset or
liability.





Categorization
within the valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement.





Assets
and Liabilities that are Measured at Fair Value on a Recurring
Basis:





Effective
January 1, 2008, the Company did not have any financial assets or liabilities,
and therefore the application of SFAS 157 at this time will have no effect
upon the condensed consolidated financial statements.








- 17
-


Item 2.    Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





THE
FOLLOWING DISCUSSION AND ANALYSIS PROVIDES INFORMATION OUR MANAGEMENT BELIEVES
IS RELEVANT TO AN ASSESSMENT AND UNDERSTANDING OF OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION. THIS DISCUSSION SHOULD BE READ TOGETHER WITH OUR
CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES TO OUR CONSOLIDATED FINANCIAL
STATEMENTS, WHICH ARE INCLUDED IN THIS REPORT, AND WITH OUR ANNUAL REPORT ON
FORM 10-K FILED ON MARCH 31, 2008, AS AMENDED BY FORM 10-K/A FILED ON APRIL 29,
2008.





In addition to historical
information, this discussion and analysis contains forward-looking statements
that relate to future events and expectations and, as such, constitute
forward-looking statements. Forward-looking statements include those containing
such words as “intends,” “anticipates,” “believes,” “estimates,” “expects,”
“hopes,” “targets,” “should,” “will,” “will likely result,” “forecast,”
“outlook,” “projects” or similar expressions. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
our actual results, performance or achievements to be materially different from
those expressed or implied in the forward-looking
statements.





As used in this report, the terms
“we,” “us,” and “our,” mean RedRoller Holdings, Inc. and our subsidiaries,
unless otherwise indicated.




Historical
Overview


We took
our current form on November 13, 2007, when our wholly owned subsidiary,
RedRoller Acquisition Corp. (“Acquisition Sub”),
and RedRoller, Inc. (“RedRoller”) executed
an Agreement and Plan of Merger Agreement and Reorganization (the “Merger Agreement”)
pursuant to which Acquisition Sub merged with and into RedRoller, with RedRoller
remaining as the surviving corporation and as our wholly owned subsidiary (the
“Merger”).
Contemporaneously with the closing of the Merger, we split-off another wholly
owned subsidiary, Aslahan Web Services, Inc., a Nevada corporation (“AWS”), through the
sale of all of the outstanding capital stock of AWS (the “Split-Off”). As a
consequence of the sale of AWS, we discontinued all of our business operations
which we conducted prior to the closing of the Merger and spun off all material
liabilities existing prior to that date in any way related to our pre-closing
business operations. Our primary operations are now those operated by
RedRoller.
 
 The
Merger was treated as a recapitalization of our company for accounting purposes.
Our historical financial statements before the Merger were replaced with the
historical financial statements of RedRoller in all filings with the SEC
subsequent to November 13, 2007.  As a result of the Merger, the
Split-Off and the change in our business and operations from a provider of
Internet-based gambling advice and information associated with horse racing to
an Internet-based comparison pricing service for shipping packages, a discussion
of the pre-Merger financial results of RedRoller Holdings, Inc. is not
pertinent, and our financial results as consolidated with RedRoller, the
accounting acquirer in the Merger, are presented here.
 
 RedRoller
is a corporation which has designed an on-demand software platform that is
accessed via the Internet and designed to allow customers to compare various
parcel carriers’ rates and select the best available value which meets their
shipping needs, thereby saving money when shipping packages (the “RedRoller System”).
The RedRoller System evaluates numerous shipping parameters and carrier service
attributes and displays dynamic pricing, options for pickup, insurance costs and
the availability (based on geography, time and other factors) of selected
carriers’ shipping services. The RedRoller System then allows customers to
select a shipping carrier based on cost, balanced with the customer’s required
delivery day and time, arrange for package pickup or drop-off (with an optional
location map available), and print authorized bar-coded shipping labels for each
listed carrier, including legal postage for the United States Postal
Service.  The RedRoller System also provides various value-added functions
for customers, including insurance options, package tracking and shipping
reports.  The RedRoller System was released in ‘beta’ format in June
2006.  Based on feedback from beta users and associated research and
experience, we redesigned the RedRoller System, relaunching the RedRoller System
as a subscription-based service in the second quarter of 2008.  For a
monthly subscription fee, the subscription model version of the RedRoller System
provides customers unlimited access to the RedRoller System using individual
customers’ contract rates with carriers while also providing various value add
functionality.


Plan
of Operations
 
 The
Company intends to become the leader in remotely hosted, multi-carrier service
level comparison systems for shipping parcels.  The Company expects to
generate revenue from multiple lines of business: (i) the use of the RedRoller
System by users who pay a monthly subscription fee; (ii) leveraging the
RedRoller System’s technology to third party vendors through which other
companies, including regional package shipping carriers, can access and use
the


- 18
-
 
 RedRoller
System to provide similar package shipping comparison services to their
customers as subscribers or through the payment of other fees; and (iii)
licensing the RedRoller System’s technology to online resellers of products to
enable them to offer their customers the ability to select from multiple package
carriers directly during the online product ‘checkout’ process, thereby allowing
the customers to select the carrier that offers the best value by balancing the
cost of delivery with the desired delivery date and time.  The
transition to the recently launched, subscription-based RedRoller System
includes significant enhancements which are ongoing, including providing
international shipping capabilities to allow customers to ship from the United
States to selected countries with broader international capabilities to
follow.
 
 The
Company intends to continue to augment its management team as business activity
and circumstances warrant.
 
 The
Company is actively pursuing financing from investors to support our operations
in the near and longer term.  There can be no assurance that such
financing will become available to us on acceptable terms, if at
all.  If we do not raise additional capital, we believe that we can
satisfy our cash requirements for less than one month and will consider reducing
our operating expenditures through employee headcount and salary reductions
and/or a scale back in corporate operating expenditures.  Under these
circumstances, we may be required to cease operations entirely or seek
protection from our creditors, as applicable, under the bankruptcy
code.


Results
of Operations





The
following table sets forth items of operating results for the three and six
months ended June 30, 2008 and 2007:





THREE
      MONTHS ENDED
              JUNE
      30,
            
            
            SIX
      MONTHS ENDED
              JUNE
      30,2008
            
            
            2007
            
            
            2008
            
            
            2007NET
      SALES
            
            $
            216,594
            
            
            $
            284,785
            
            
            $
            508,452
            
            
            $
            627,292Gross
      Profit
            
            
            91,845
            
            
            
            99,384
            
            
            
            190,839
            
            
            
            255,768Salaries
      and Benefits Expense (including stock-based compensation expense of
      $327,324 and $125,401 for the three months ended June 30, 2008 and 2007,
      respectively, and $458,973 and $746,799 for the six months ended June 30,
      2008 and 2007, respectively)
            
            
            960,854
            
            
            
            342,086
            
            
            
            1,629,913
            
            
            
            1,788,289Selling;
      General and Administrative Expenses (including stock-based compensation
      expense of $24,604 and $38,058 for the three months ended June 30, 2008
      and 2007, respectively, and $42,968 and $347,058 for the six months ended
      June 30, 2008 and 2007, respectively)
            
            
            696,773
            
            
            
            286,526
            
            
            
            1,497,909
            
            
            
            1,097,777Loss
      from Operations
            
            
            (1,565,782
            )
            
            
            (529,228
            )
            
            
            (2,936,983
            )
            
            
            (2,630,298
            )Other
      Income (Expense)
            
            
            2,177
            
            
            
            3,803
            
            
            
            10,861
            
            
            
            4,279NET
      LOSS
            
            
            (1,563,605
            )
            
            
            (525,425
            )
            
            
            (2,926,122
            )
            
            
            (2,626,019
            )Convertible
      Preferred Stock Deemed Dividends
            
            
            —
            
            
            
            (1,297,954
            )
            
            
            —
            
            
            
            (1,297,954
            )NET
      LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS
            
            $
            (1,563,605
            )
            
            $
            (1,823,379
            )
            
            $
            (2,926,122
            )
            
            $
            (3,923,973
            )Net
      loss per share: basic and diluted
            
            $
            (0.13
            )
            
            $
            (0.80
            )
            
            $
            (0.12
            )
            
            $
            (0.86
            )Weighted
      average number of shares outstanding – basic and diluted
            
            
            24,842,040
            
            
            
            4,541,633
            
            
            
            24,842,040
            
            
            
            4,541,633





Comparison
of Three Months Ended June 30, 2008 and 2007





Net
Sales.


Three
      Months Ended
              June
      30,2008
            
            
            2007Shipping
      services
            
            $
            83,507
            
            
            $
            149,876Installation
            
            
            64,102
            
            
            
            48,036Maintenance
            
            
            67,815
            
            
            
            80,992Supplies
            
            
            71
            
            
            
            5,128Other
            
            
            1,099
            
            
            
            753Total
            
            $
            216,594
            
            
            $
            284,785




- 19
-
 
 Net sales
for the three months ended June 30, 2008 decreased to $216,594 from $284,785 for
the three months ended June 30, 2007, a decrease of $68,191, or 24%, primarily
resulting from lower shipping services as we focused our efforts on enhancing
and modifying our existing website in order to support our new
subscription-based platform.
 
 Gross
Profit. Gross profit for the three months ended June 30, 2008 decreased
to $91,845 from $99,384 for the three months ended June 30, 2007, a decrease of
$7,539, or 8%. Our gross profit percentage increased to 42% for the three months
ended


June 30,
2008 from 35% for the three months ended June 30, 2007. The change in our gross
profit is primarily due to the decrease in lower-margin revenues generated by
our shipping services, offset by the increase in our higher margin installation
revenues. Our cost of sales is mainly a function of the pricing to ship packages
and varies depending on service levels. Each carrier can exhibit significant
cost differentials as each carrier typically has a specific niche service in
which it is more competitive. Depending on the specific size, weight, delivery
region and desired service, any shipping carrier might have the best price. As
such, the weighted mix of our cost of sales and the mark-up related to these
cost components may vary significantly from service to service based on the type
and scope of the service being provided.




Salaries and
Benefits. Salaries and benefits increased from $342,086 for the three
months ended June 30, 2007 to $960,854 for the three months ended June 30, 2008,
an increase of $618,768 or 181%, primarily due to an increase in stock-based
compensation expense attributable to employee stock options and the hiring of
additional personnel to support the enhancement of existing software and
development of the Company’s new subscription-based model. Employee stock-based
compensation expense increased to $327,324 for the three months ended June 30,
2008 from $125,401 for the three months ended June 30, 2007, an increase of
$201,923, or 161%. The increase is primarily due to the change in the fair
market value of the shares of our common stock underlying the stock options
granted.




Selling, General
and Administrative. Selling, general and administrative expenses for the
three months ended June 30, 2008 increased to $696,773 from $286,526 for the
three months ended June 30, 2007, an increase of $410,247, or 143%, primarily
due to higher marketing and professional fees.





Marketing
expenses increased approximately $180,000 for the three months ended June 30,
2008 compared to the three months ended June 30, 2007 in connection with our
current and anticipated increase in the level of operations to service our
business due to the launch of the new subscription model in June
2008.





Professional
fees increased by approximately $196,000 for the three months ended June 30,
2008 compared to the three months ended June 30, 2007. The increase was
primarily attributable to legal and accounting expenses related to the cost of
being a publicly traded company, including the costs of our audits and
reviews.





Loss from
Operations. As a result of the above-noted changes, loss from operations
for the three months ended June 30, 2008 increased to $1,565,782 from $529,228
for the three months ended June 30, 2007, an increase of $1,056,554, or
200%.




Other (Expense)
Income. Other income for the three months ended June 30, 2008 amounted to
$2,177 compared to $3,803 for the three months ended June 30, 2007.




Convertible
Preferred Stock Deemed Dividends. Convertible preferred stock deemed
dividends for the three months ended June 30, 2007 of $1,297,954 represents the
effect of a change in the conversion option prices embedded in our previously
outstanding shares of Series A Convertible Preferred Stock and Series B(1)
Convertible Preferred Stock that were triggered under contractual anti-dilution
provisions.





Net Loss
Attributable to Common Stockholders. As a result of the above, net loss
attributable to common stockholders for the three months ended June 30, 2008
decreased to $1,563,605, or $0.13 per share, from $1,823,379, or $0.80 per
share, for the three months ended June 30, 2007, a decrease of $259,774, or
14%.





Comparison
of Six Months Ended June 30, 2008 and 2007





Net
Sales.





Six
      Months Ended
              June
      30,2008
            
            
            2007Shipping
      services
            
            $
            209,429
            
            
            $
            290,250Installation
            
            
            157,651
            
            
            
            170,314Maintenance
            
            
            137,141
            
            
            
            154,989Supplies
            
            
            2,355
            
            
            
            10,268Other
            
            
            1,876
            
            
            
            1,471Total
            
            $
            508,452
            
            
            $
            627,292




- 20
-


Net sales
for the six months ended June 30, 2008 decreased to $508,452 from $627,292 for
the six months ended June 30, 2007, a decrease of $118,840, or 19%, primarily
resulting from lower shipping services as we focused our efforts on enhancing
and modifying our existing website in order to support our new
subscription-based platform.





Gross
Profit. Gross profit for the six months ended June 30, 2008 decreased to
$190,839 from $255,768 for the six months ended June 30, 2007, a decrease of
$64,929, or 25%. Our gross profit percentage decreased to 38% for the six months
ended June 30, 2008 from 41% for the six months ended June 30, 2007. The change
in our gross profit is primarily due to the decrease in our higher margin
installation revenues, as well as lower-margin revenues generated by our
shipping services. Our cost of sales is mainly a function of the pricing to ship
packages and varies depending on service levels. Each carrier can exhibit
significant cost differentials as each carrier typically has a specific niche
service in which it is more competitive. Depending on the specific size, weight,
delivery region and desired service, any shipping carrier might have the best
price. As such, the weighted mix of our cost of sales and the mark-up related to
these cost components may vary significantly from service to service based on
the type and scope of the service being provided.




Salaries and
Benefits. Salaries and benefits decreased from $1,788,289 for the six
months ended June 30, 2007 to $1,629,913 for the six months ended June 30, 2008,
a decrease of $158,376 or 9%, primarily due to a decrease in stock-based
compensation expense attributable to employee stock options and the
capitalization of salaries related to work performed on our new subscription
based website.  Employee stock-based compensation expense decreased to
$458,973 for the six months ended June 30, 2008 from $746,799 for the six months
ended June 30, 2007, a decrease of $287,826, or 39%. The decrease is primarily
due to the change in the fair market value of the shares of our common stock
underlying the stock options granted, despite having more options outstanding
during the six months ended June 30, 2008 over which we recognized compensation
expense compared to June 30, 2007. In addition, the six months ended June 30,
2007 includes approximately $125,000 of incremental compensation expense
recognized due to the modification of the exercise price and vesting dates of
options outstanding in April 2007.





Offsetting
such decreases were higher marketing salaries due to the hiring of additional
personnel in anticipation of the launch of our new subscription-based
website.





Selling, General
and Administrative. Selling, general and administrative expenses for the
six months ended June 30, 2008 increased to $1,497,909 from $1,097,777 for the
six months ended June 30, 2007, an increase of $400,132, or 36%, primarily due
to higher marketing and professional fees.





Professional
fees increased by approximately $524,000 for the six months ended June 30, 2008
compared to the six months ended June 30, 2007. The increase was primarily
attributable to financial, legal and accounting expenses related to the cost of
being a publicly traded company, including the costs of our reverse merger, and
our audits and reviews.





Marketing
expenses increased approximately $253,000 for the six months ended June 30, 2008
compared to the six months ended June 30, 2007 in connection with our current
and anticipated increase in the level of operations to service our business due
to the launch of the new subscription model in June 2008.





Offsetting
such increases was a decrease in non-employee stock-based compensation expense
of approximately $304,000 for the six months ended June 30, 2008 compared to the
six months ended June 30, 2007. The decrease is primarily due to the change in
the fair market value of the shares of our common stock underlying the stock
options granted, as well as the lower number of options outstanding during the
six months ended June 30, 2008 over which we recognized compensation expense
compared to June 30, 2007.





Loss from
Operations. As a result of the above-noted changes, loss from operations
for the six months ended June 30, 2008 increased to $2,936,983 from $2,630,298
for the six months ended June 30, 2007, an increase of $306,685, or
12%.




Other (Expense)
Income. Other income for the six months ended June 30, 2008 amounted to
$10,861 compared to $4,279 for the six months ended June 30, 2007.




Convertible
Preferred Stock Deemed Dividends. Convertible preferred stock deemed
dividends for the six months ended June 30, 2007 of $1,297,954 represents the
effect of a change in the conversion option prices embedded in our previously
outstanding shares of Series A Convertible Preferred Stock and Series B(1)
Convertible Preferred Stock that were triggered under contractual anti-dilution
provisions.





- 21
-


Net Loss
Attributable to Common Stockholders. As a result of the above, net loss
attributable to common stockholders for the six months ended June 30, 2008
decreased to $2,926,122, or $0.12 per share, from $3,923,973, or $0.86 per
share, for the six months ended June 30, 2007, a decrease of $997,851, or
25%.





Liquidity
and Capital Resources





We
incurred a net loss of $2,926,122 for the six months ended June 30, 2008, which
includes an aggregate of $728,658 of non-cash charges. Non-cash charges
principally include $501,941 of stock-based compensation expense and $192,977 of
depreciation and amortization. At June 30, 2008, we had cash and cash
equivalents of $484,112, a working capital deficit of $228,628 and an
accumulated deficit of $22,574,549.





Future
cash flow and working capital is highly dependent on our ability to acquire and
retain customers through our subscription-based software which became
operational on May 26, 2008.
 
 The
realization of our business plan is dependent upon our ability to raise
additional short-term capital and generate revenue and operating cash flow. In
June 2008, we launched the subscription version of the RedRoller System whereby
users are charged a monthly subscription fee, which gives customers unlimited
access to the RedRoller System and automatically uses each business’s contract
rates with each carrier.
 
 Management
believes our current level of working capital will enable us to sustain our
business for less than one month and we will need to secure additional funding
in order to meet our cash flow needs. There can be no assurance that funding
will be available to us at the time it is needed or in the amount necessary to
satisfy our needs or, if funds are made available, that they will be available
on terms that are favorable to us. If we are unable to secure financing when
needed, our business may be materially and adversely affected, and we may be
required to curtail our operations, suspend the pursuit of our business plan,
reduce our workforce and/or cut overhead expenses. Under these circumstances, we
may be required to cease operations entirely or seek protection from our
creditors, as applicable, under the bankruptcy code. We cannot provide any
assurance that we will raise additional capital through an alternative funding
source. We have not secured any commitments for new financing at this time, nor
can we provide any assurance that new financing will be available to us on
acceptable terms, if at all. These matters raise substantial doubt about our
ability to continue as a going concern. Our condensed consolidated financial
statements do not include any adjustments that may be necessary in the event
that we are unable to continue as a going concern.


Net cash
flows used in operating activities for the six months ended June 30, 2008 were
$2,064,518. For the six months ended June 30, 2008, our net loss amounted to
$2,926,122, which mainly included non-cash adjustments due to stock-based
compensation expense of $521,307 and depreciation and amortization of $192,977.
Changes in assets and liabilities provided $132,946 in cash.





Net cash
flows used in investing activities for the six months ended June 30, 2008 were
$940,486. We invested $895,653 in the capitalization of website costs and
$44,833 in the purchase of property and equipment.





Summary
of Critical Accounting Policies





The
preparation of our condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to exercise its judgment. We exercise considerable judgment
with respect to establishing sound accounting policies and in making estimates
and assumptions that affect the reported amounts of our assets and liabilities,
our recognition of revenues and expenses, and disclosure of commitments and
contingencies at the date of the financial statements.





On an
ongoing basis, we evaluate our estimates and judgments. Areas in which we
exercise significant judgment include, but are not necessarily limited to, our
valuation of accounts receivable, recoverability of long-lived assets, income
taxes, equity transactions (compensatory and financing) and contingencies. We
have also adopted certain policies with respect to our recognition of revenue
that we believe are consistent with the guidance provided under SEC Staff
Accounting Bulletin No. 104.




We base
our estimates and judgments on a variety of factors including our historical
experience, knowledge of our business and industry, current and expected
economic conditions, the attributes of our services and products, the regulatory
environment, and in certain cases, the results of outside appraisals. We
periodically re-evaluate our estimates and assumptions with respect to these
judgments and modify our approach when circumstances indicate that modifications
are necessary.




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While we
believe that the factors we evaluate provide us with a meaningful basis for
establishing and applying sound accounting policies, we cannot guarantee that
the results will always be accurate. Since the determination of these estimates
requires the exercise of judgment, actual results could differ from such
estimates.





Please
refer to our 2007 Annual Report on Form 10-K, as amended, for a discussion of
our critical accounting policies. During the six months ended June 30, 2008,
there were no material changes to these policies.





Formulating
estimates in any of the above areas requires us to exercise significant
judgment. It is at least reasonably possible that the estimates of the effect on
the financial statements of a condition, situation, or set of circumstances that
existed at the date of the financial statements that we considered in
formulating our estimates could change in the near term due to one or more
future confirming events. Accordingly, the actual results regarding estimates of
any of the above items as they are presented in the financial statements could
differ materially from our estimates.





Recently
Issued Accounting Pronouncements





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
157”).  SFAS 157 defines fair value, establishes a framework
for measuring fair value and expands disclosure of fair value
measurements.  SFAS 157 applies under other accounting pronouncements
that require or permit fair value measurements and accordingly does not require
any new fair value measurements.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15,
2007.  The adoption of SFAS 157 is not expected to have a material
effect on our consolidated financial position, results of operations or cash
flows.





On
February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS
159”).  The guidance in SFAS 159 “allows” reporting entities to
“choose” to measure many financial instruments and certain other items at fair
value.  The objective underlying the development of this literature is
to improve financial reporting by providing reporting entities with the
opportunity to reduce volatility in reported earnings that results from
measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions using the guidance in SFAS 133, as amended.
The provisions of SFAS 159 are applicable to all reporting entities and are
effective as of the beginning of the first fiscal year that begins subsequent to
November 15, 2007.  The adoption of SFAS 159 is not expected to have a
material effect on our consolidated financial position, results of operations or
cash flows.





In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS
141R replaces SFAS No. 141, “Business Combinations” (“SFAS 141”). SFAS 141R
retains the fundamental requirements in SFAS 141 that the purchase method of
accounting be used for all business combinations and for an acquirer to be
identified for each business combination. SFAS 141R defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. SFAS 141R retains guidance of SFAS 141 for identifying and
recognizing intangible assets separately from goodwill. SFAS 141R requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
non-controlling interest in the acquiree at the acquisition date, measured at
their fair values as of that date, with limited exceptions specified in the
Statement. SFAS 141R also requires the acquirer in a business combination
achieved in stages to recognize the identifiable assets and liabilities, as well
as the non-controlling interest in the acquiree, at the full amounts of their
fair values. SFAS 141R applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. SFAS 141R would have an impact
on accounting for any businesses acquired after the effective date of this
pronouncement.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160
amends ARB 51 to establish accounting and reporting standards for the
non-controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. Earlier adoption is
prohibited. SFAS 160 shall be applied prospectively as of the beginning of the
fiscal year in which this Statement is initially applied.





In
December 2007, the SEC staff issued SAB No. 110 (“SAB 110”),
“Share-Based Payment,” which amends SAB 107, “Share-Based Payment,” to permit
public companies, under certain circumstances, to use the simplified method in
SAB 107 for employee option grants after December 31, 2007. Use of the
simplified method after December 2007 is permitted only for companies whose
historical data about their employees’ exercise behavior does not provide a
reasonable basis for estimating the expected term of the options. The adoption
of this pronouncement is not expected to have a material effect on our
consolidated financial statements.





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In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities—an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161
gives financial statement users better information about the reporting entity’s
hedges by requiring qualitative disclosures about the objectives and strategies
for using derivatives, quantitative data about the fair value of and gains and
losses on derivative contracts, and details of credit-risk-related contingent
features in their hedged positions. SFAS 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. We are currently assessing the impact of SFAS 161 on our financial
position and results of operation.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”). SFAS 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles on the United States. SFAS 162 is effective 60
days following the SEC’s approval of the Public Company Accounting Oversight
Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity
with Generally Accepted Accounting Principles.” We do not expect the adoption of
this pronouncement to have a material impact on our financial position or
results of operation.





Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on our consolidated financial statements
upon adoption.





Item 4.
            Controls
      and Procedures




Evaluation
of Disclosure Controls and Procedures




We have
carried out an evaluation, under the supervision and with the participation of
our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of our “disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) as of December 31, 2007. Based on this evaluation,
our Chief Executive Officer and our Principal Financial Officer have concluded
that, as of the date of the evaluation, our disclosure controls and procedures
were not effective to ensure that the information required to be disclosed in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC.





Disclosure
controls and procedures are controls and other procedures that are designed with
the objective of ensuring that information required to be disclosed in our
reports filed under the Exchange Act, such as this Quarterly Report, is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures are also
designed with the objective of ensuring that such information is accumulated and
communicated to our management, including our Chief Executive Officer and
Principal Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. Internal controls are procedures that are designed with the
objective of providing reasonable assurance that our transactions are properly
authorized, recorded and reported and our assets are safeguarded against
unauthorized or improper use to permit the preparation of our financial
statements in conformity with generally accepted accounting
principles.





The
weaknesses that we identified related to the fact that there was a lack of
segregation of duties at the Company due to the small number of employees
dealing with general, administrative and financial matters, our overall
financial reporting structure and current staffing levels were not sufficient to
support our financial reporting requirements, and we lacked the internal
expertise required to apply complex accounting principles relating to
specialized accounting issues.





To
mitigate these risks, the Chairman of our Board of Directors, along with our
Chief Executive Officer, President, and Principal Financial Officer, were
assigned to perform duties related to our financial reporting obligations,
specifically in relation to reviewing and approving all material contracts,
transactions and complex accounting issues. These individuals are also
responsible for reviewing and approving periodic financials and the information
required to be disclosed by the Company in all reports we have and will file
under the Exchange Act. Furthermore, during the third quarter of 2007, under the
direction of our Board of Directors and our Chief Executive Officer, we engaged
the services of a consulting firm to address the need to support the complexity
of our financial reporting requirements and application of complex accounting
principles.





Although
the improvements we have made in our financial reporting processes have enabled
us to (a) record, process and summarize transactions within the timeframes
required to file our reports in a timely manner under the SEC's rules, and (b)
better plan transactions that involve the application of complex accounting
principles, additional time is still required to test and document our internal
and disclosure control processes to ensure their operating
effectiveness.


- 24
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We
believe that the changes we have made in our financial reporting procedures have
enabled us to substantially reduce previous financial reporting risks that
existed as a result of our limited resources. We are continuing to evaluate our
risks and resources. We intend to make additional changes in our financial
reporting systems and procedures wherever necessary and appropriate to ensure
their effectiveness and will make appropriate disclosures regarding any
observations and changes as required in future periods.





Our
management, including our Chief Executive Officer and Principal Financial
Officer, do not expect that our disclosure controls or our internal controls
over financial reporting will prevent or detect all errors and all fraud. A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be
met. The design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Further, because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that
misstatements due to error or fraud will not occur or that all control issues
and instances of fraud, if any, within the company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty and that breakdowns can occur because of simple error or mistake.
Controls can also be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management override of the controls. The
design of any system of controls is based in part on certain assumptions about
the likelihood of future events, and there can be no assurance that any design
will succeed in achieving its stated goals under all potential future
conditions. Projections of any evaluation of controls effectiveness to future
periods are subject to risks.




Attestation
Report of the Registered Public Accounting Firm/Management’s Report on Internal
Control Over Financial Reporting




This
Quarterly Report does not include a report of management’s assessment regarding
internal controls over financial reporting or an attestation report of the
Company’s independent registered public accounting firm with respect to our
internal controls due to a transition period established by rules of the SEC for
newly public companies. The Company completed a merger with RedRoller, Inc., a
privately held company, on November 13, 2007 in a transaction accounted for as a
reverse merger with RedRoller, Inc. deemed to be the company’s “acquirer” for
accounting and financial reporting purposes. For the purposes of applying the
requirements of Item 308 of Regulation S-K, RedRoller, Inc. as the Company’s
“acquirer,” will provide these reports beginning with the year ending December
31, 2008.














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Part
II—Other Information




Item 1.
            Legal
      Proceedings




We are
not a party to any material legal proceedings. From time to time, however, we
may be subject to legal proceedings and claims in the ordinary course of
business, including claims of alleged infringement of intellectual property
rights and a variety of claims arising in connection with our
services.






Item 1A.
              Risk
      Factors


We have
updated the risk factors previously disclosed in Part 1, Item 1A. under the
caption “Risk factors” of our annual report on Form 10K/A for the year ended
December 31, 2007, which was filed with the SEC on April 29, 2008.
  An
investment in our common stock involves various risks, including those mentioned
below and those that are discussed from time to time in our other periodic
filings with the SEC. Investors should carefully consider these risks, along
with the other information contained in this report, before making an investment
decision regarding our stock. There may be additional risks of which we are
currently unaware or which we currently consider immaterial. All of these risks
could have a material adverse effect on our financial condition, our results of
operations, and the value of our stock.  The Company’s ability to
continue its operations is dependent upon its ability to raise additional
working capital in the near term and subsequently to generate revenue and
operating cash flow through the execution of its business
plan.
  Risks
Relating to Liquidity
 
 Our
ability to continue as a going concern is dependent upon our ability to raise
additional working capital in the near term.
 
 Our
consolidated financial statements as of June 30, 2008 have been prepared under
the assumption that we will continue as a going concern for 2008. Our
independent registered public accounting firm, Marcum & Kliegman LLC, have
issued a report dated March 28, 2008  that includes an explanatory
paragraph referring to our operating losses and conveys substantial doubt in our
ability to continue as a going concern without additional working capital
becoming available. Our ability to continue as a going concern is dependent upon
our ability to raise additional working capital. There is no assurance that
additional financing will be available to us on favorable terms or at all. If
funds are not available when required for working capital needs, our ability to
carry out our business plan could be adversely affected, and we may be required
to scale back our operations to reflect the extent of available
funding.
 
 Our
current level of working capital, as well as the funds we expects to generate
from operations, will enable us to sustain our business for less than one
month.  If we are unable to raise additional capital in the near term,
we will be required to take various measures to conserve liquidity, which could
include, but not necessarily be limited to, curtailing our operations,
suspending the pursuit of our business plan, reducing our workforce, lowering
overhead expenses, and other measures as appropriate under the
circumstances.  We have not obtained any commitments for additional
financing, nor can we provide any assurance that additional  financing
will be available to us on acceptable terms, if at all. These matters raise
substantial doubt about our ability to continue as a going concern. The
accompanying condensed consolidated financial statements do not include any
adjustments that may be necessary in the event that we are unable to continue as
a going concern.  If we are unable to obtain additional financing, we
may be forced to seek protection under the bankruptcy laws.
 Risks
Relating to Our Company and Business
 
 We
have a limited operating history.
 
 We were
founded in August of 2004; to date, we have recognized minimal revenue from our
operations.  Our business plan is subject to various and multiple
risks associated with and inherent in the establishment of a new business
enterprise, potential unexpected requirements for additional capital, and our
limited operating history.  The results of earlier business
enterprises or companies that we have acquired, or in which the members of our
management team have previously participated, are not indicative of the results
that we may achieve.


- 26
-
 
 We
require capital to fund our operations and may not be able to obtain such
capital in the near term on acceptable terms or at all.
 
 The
likelihood of our success must be considered in light of the expenses,
difficulties and delays that could be encountered and the uncertain business and
regulatory environment in which we do and will operate.  For ongoing
operations and positioning we must, among other things, successfully obtain
sufficient capital to: (a) support the development of highly scalable and
fully functioning transactional software and hardware systems, which development
includes continuous enhancement of the RedRoller System; (b) negotiate
beneficial relationships with package delivery carriers and service providers;
(c) attract, retain and motivate qualified personnel; (d) ensure that the
appropriate infrastructure is present to support current and future operations;
(e) support marketing, public relations, and other programs necessary to
increase awareness of our business and of the RedRoller System; and (f)
establish a cash reserve for contingencies.
 
 Our
ability to obtain additional capital on acceptable terms or at all is subject to
a variety of uncertainties, including:
  §
                  Investors’
      perceptions of, and demand for, securities of value-added services
      companies;
 §
                  Conditions
      of the U.S. and other capital markets in which we may seek to raise
      funds;
 §
                  Our
      future results of operations, financial condition and cash
      flows;
 §
                  Economic,
      political and other conditions in the United States and other
      countries.
 
 We will
be required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. There is no
assurance that we will be successful in locating a suitable financing
transaction in a timely fashion or at all. In addition, there is no assurance
that we will be successful in obtaining the capital we require by any other
means. Future financings through equity investments are likely to be dilutive to
our existing stockholders. Also, the terms of securities we may issue in future
capital transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition and results of operations.
 
 If we
cannot raise additional funds on favorable terms or at all, we may not be able
to carry out all or parts of our growth strategy and/or achieve our business
objectives. If the amount of capital we are able to raise from financing
activities, together with our revenues from operations, is not sufficient to
satisfy our capital needs, even to the extent that we reduce our operations
accordingly, we may be required to cease operations and/or seek protection under
the bankruptcy laws.
 
 If
we lose our key personnel or are unable to attract and retain qualified
personnel, the quality of our services may decline and our business may be
adversely affected.
 
 We rely
heavily on the expertise, experience and continued services of our senior
management, including our president, chief executive officer, chief information
officer and chairman. The loss of any of our senior management or other key
personnel could adversely impact our ability to achieve our business objectives.
We believe our future success will depend upon our ability to retain these key
employees and our ability to attract and retain other skilled personnel. We
cannot guarantee that any employee will remain employed by us for any definite
period of time and the loss of personnel could have a material adverse effect on
our business and company. Qualified employees periodically are in great demand
and may be unavailable in the time frame required to satisfy our customers’
requirements. Expansion of our business could require us to employ additional
personnel. There can be no assurance that we will be able to attract and retain
sufficient numbers of highly skilled employees in the future. The loss of
personnel or our inability to hire or retain sufficient personnel at competitive
rates could impair the growth of our business. We do not yet maintain a key man
life insurance policy on any of our employees.
 
 The
future growth of our business will be adversely impacted if end-users are
unwilling to pay a subscription fee to utilize the RedRoller
System.
 
 There can
be no assurance that our end-user customers or third-party companies wishing to
utilize our technology will be willing to pay any fees to use the RedRoller
System.  If the fee or license structures related to use of the
RedRoller System are not accepted by users and/or third-party companies, it
would have a material adverse affect on our operating and financial
results.  Further modification of our business and operating model
while operating our business could introduce a number of additional issues,
problems, or other risks for us during our early operating stages.
 
 - 27
-
 We
may be unable to protect our intellectual property, which could reduce the value
of our services and our brand.
  Our
ability to compete effectively depends on our ability to protect our proprietary
technologies and processes.  There can be no assurance that our
efforts to protect against infringement of our intellectual property will be
sufficient to prevent competition from emerging.  Similarly, there is
no assurance that competing products or offerings imitating our business model
cannot or will not be developed.  We rely on a combination of
trademark, copyright and trade secret laws to establish and protect our
intellectual property.  We also use technical measures,
confidentiality agreements and non-compete agreements to protect our
intellectual property. Any infringement by third parties on our intellectual
property could have a negative impact on our business and have an adverse effect
on the price of our common stock.
 
 Our
products may infringe upon the intellectual property rights of others and
resulting claims against us could be costly and require us to enter into
disadvantageous license or royalty arrangements.
 
 There can
be no assurance that the intellectual property used in the RedRoller System does
not infringe upon that of another company.  As of the date hereof, we
have filed for one patent and intend to periodically review the RedRoller System
and may apply for additional patents as appropriate.  Although we
attempt to avoid infringing upon known proprietary rights of third parties,
there can be no assurance that competitors or other third parties will not at
some future time allege or claim infringement by us with respect to current or
future products, patents, copyrights or other proprietary rights. Any claims
relating to the infringement of third-party proprietary rights, even if not
successful or meritorious, could result in costly litigation, divert resources
and our management’s attention or require us to enter into royalty or license
agreements which are not advantageous to us. In addition, parties making these
claims may be able to obtain injunctions, which could prevent us from selling
our products and services.  If any such claim is made and adjudicated
successfully against us, it would have a material adverse affect on our
operations and financial position and the price of our common
stock.
 
 We
depend on our relationships with various carriers for a significant portion of
our revenues.
 
 Our
business strategy is to provide our customers with the ability to purchase,
among other things, shipping services from various carriers. Accordingly, we are
dependent upon secondary and tertiary service providers to fulfill our
obligations to our customers.  We do not yet have fully negotiated,
binding agreements with various carrier providers.  Hence, if we are
unable to finalize or continue contractual discussions or arrangements with key
carriers, or if such arrangement(s) expire or are terminated after they are
entered into, our business would be adversely affected. If DHL, FedEx or
Endicia should terminate any agreement with us, our competitive position
and financial results would be materially adversely affected.  Should
we establish relationships with shipping carriers that are not able to provide
acceptable service levels to our customers, our competitive position and
financial results could be adversely affected.
 
 We
may face increasing competition, which could reduce our market share and
materially adversely affect our financial condition and results of
operations.
 
 There
exist a number of large, well-capitalized companies that could compete with
us.  The introduction by others of a similar system either in the
United States or internationally, which provides similar services to the
RedRoller System, could negatively impact us and our financial
condition.  If we are unable to establish our name and brand among our
potential customers, our ability to attract new users may be adversely affected.
In addition, other present or future competitors may develop services, products
or technologies that may achieve greater market acceptance than our service or
products.  Many of our current and potential competitors have longer
operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than we have
available.  These competitors may be able to respond more quickly to
new or emerging technologies and changes in customer requirements and to devote
greater resources to the development, promotion and sale of their products and
services than us, and there can be no assurance that we will be able to compete
successfully against these larger competitors.
 
 - 28
-
 Unexpected
network failures or interruptions, security breaches or computer virus attacks
could impair our ability to provide our services which could damage our
reputation and harm our business operations.
 
 Security
breaches relating to the RedRoller System, by ‘hackers’ or otherwise, could
damage our reputation and cause us to lose customers.  The security of
our customers’ confidential transaction data could be jeopardized as a result of
the accidental or intentional acts of Internet users, current and former
employees or others, or computer problems or viruses. Security breaches
experienced by other electronic commerce companies could reduce consumers’
confidence in the RedRoller System.  The costs required to mitigate or
otherwise remedy a security breach could be substantial and could impair our
goodwill and affect customer retention negatively.
 
 The
RedRoller System is hosted by a major third-party service provider in the Boston
area. Interruption, impaired performance or insufficient capacity of the
RedRoller System from a materially larger-than-expected influx of customers or
software systems failures by carrier’s systems with which the RedRoller System
communicates could lead to interruptions, failure(s) or delays in the provision
of our service, loss of data or our  inability to process orders,
which could cause us to lose customers.
 
 We
are currently in the process of redesigning and enhancing  the
RedRoller System.  Our failure to properly and effectively redesign
the RedRoller System in a timely manner could lead to less demand than
anticipated for our products and services and reduce our revenues.
 
 The
RedRoller System has been substantially redesigned and enhanced to support
monthly subscription fees from users.  This is a major product
redesign and there can be no assurance that our redesign and periodic
enhancements to the RedRoller System will be accepted by users, will work as
expected, or that various versions of the RedRoller System will be introduced on
time or to users at any particular time or be free from defects or deficiencies
at any stage of its introduction or use.  If the RedRoller System does
not work as designed or contains deficiencies or defects that negatively impact
the RedRoller System’s usability or operability, our operations and financial
condition and/or results could be adversely affected.
 We have
outsourced a significant amount of the work related to the redesign of the
RedRoller System to a subcontractor, who in turn, outsources much of its
software development work to a company located in India.  Outsourcing
software development to other countries, either directly or through
subcontractors, introduces additional risk into the software development
process.  Various factors, including inefficient communications due to
distance and time, can impact the effectiveness of the resultant output from
outsourcing any portion of a software development process.  Although we
maintain periodic communications with our contracted technical personnel, we
could experience problems related to this outsourcing of technical work which
could in turn negatively impact the software code produced and thereby affect
the operational effectiveness of the redesigned RedRoller System.  In such
a case or cases, we may be forced to absorb additional expenses to rectify any
problems caused by or associated with this subcontracted development
work.
 
 If
we are not able to manage our growth, we may never achieve
profitability.
 
 Our
success will depend in part on our ability to expand and manage our operations
and facilities. There can be no assurance that we will be able to manage our
growth, meet the staffing requirements for our business or foradditional collaborative
relationships or successfully assimilate and train new employees. In addition,
to manage our growth effectively, we may be required to expand our management
base and enhance our operating and financial systems. If we continue to grow,
there can be no assurance that the management skills and systems currently in
place will be adequate or that we will be able to manage any additional growth
effectively. Failure to achieve any of these goals could have a material adverse
effect on our business, financial condition or results of
operations.
 
 We
are subject to the reporting requirements of federal securities laws, which can
be expensive.
 
 We are
subject to the information and reporting requirements of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and
other federal and state securities laws. The costs of preparing and filing
annual and quarterly reports, proxy statements and other information with the
SEC and furnishing audited reports to stockholders will cause our expenses to be
higher than they would have been if we were a privately held
company.  It may be time consuming, difficult and costly for us to
develop and implement the internal controls and reporting procedures required by
the Sarbanes-Oxley Act of 2002. We may need to recruit, hire, train and retain
additional financial reporting, internal controls and other finance personnel in
order to develop and implement appropriate internal controls and reporting
procedures. If we are unable to comply with the internal controls requirements
of Sarbanes-Oxley, we may not be able to obtain the independent accountant
certifications required by Sarbanes-Oxley, which, if applicable, would have a
material adverse effect on us.
 
 - 29
-
 We
may not be able to implement Section 404 of the Sarbanes-Oxley Act on a timely
basis.
 
 The SEC,
as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules
generally requiring each public company to include a report of management on the
company's internal controls over financial reporting in its Annual Report on
Form 10-K that contains an assessment by management of the effectiveness of the
company’s internal controls over financial reporting beginning in the year ended
December 31, 2007. In addition, the company’s independent registered accounting
firm must attest to and report on management’s assessment of the effectiveness
of the company's internal controls over financial reporting. This requirement
will first apply to our Annual Report on Form 10-K for the fiscal year ending
December 31, 2008. We have not yet developed a complete Section 404
implementation plan. We have in the past discovered, and may in the future
discover, areas of our internal controls that need improvement. How companies
should be implementing these new requirements including internal control reforms
to comply with Section 404’s requirements and how independent auditors will
apply these requirements and test companies’ internal controls, is still
reasonably uncertain. We expect that we may need to hire and/or engage
additional personnel and incur incremental costs in order to complete the work
required by Section 404 and cannot guarantee that we will be able to complete a
Section 404 plan on a timely basis. Additionally, upon completion of a Section
404 plan, we may not be able to conclude that our internal controls are
effective, or in the event that we conclude that our internal controls are
effective, our independent accountants may disagree with our assessment and may
issue a report that is qualified. Any failure to implement required new or
improved controls, or difficulties encountered in their implementation, could
negatively affect our operating results or cause us to fail to meet our
reporting obligations.
 
 Public
company compliance may make it more difficult to attract and retain officers and
directors.
 
 The
Sarbanes-Oxley Act of 2002 and new rules subsequently implemented by the SEC
have required changes in the corporate governance practices of public companies.
As a public company, we expect these new rules and regulations to increase our
compliance costs in 2008 and beyond and to make certain activities more time
consuming and costly. As a public company, we also expect that these new rules
and regulations may make it more difficult and expensive for us to obtain and
maintain director and officer liability insurance, and we may be required to
accept reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified persons to serve on our board of directors or
as executive officers.
 
 We
are a holding company that depends on cash flow from our wholly owned subsidiary
to meet our obligations.
 
 We are a
holding company with no material assets other than the stock of our wholly owned
subsidiary, RedRoller, Inc. Accordingly, all our operations will be conducted by
RedRoller, Inc. and its wholly owned subsidiary Taylor Systems Engineering
Corporation. We currently expect that the earnings and cash flow of our
subsidiary will be retained and used by us in our operations.
 
 Risks
Related to Our Industry
 
 Changes
in government regulation of our industry and the Internet may adversely affect
our business.
 
 We are
subject to general business regulations and laws as well as regulations and laws
specifically governing the Internet and e-commerce. Existing and future laws and
regulations may impede the growth of the Internet or other online services.
These regulations and laws may cover taxation, restrictions on imports and
exports, customs, tariffs, user privacy, data protection, pricing, content,
copyrights, distribution, electronic contracts and other communications,
consumer protection, the provision of online payment services, broadband
residential Internet access and the characteristics and quality of products and
services. It is not clear how existing laws governing issues such as property
ownership, sales and other taxes, libel and personal privacy apply to the
Internet and e-commerce as the vast majority of these laws were adopted prior to
the advent of the Internet and do not contemplate or address the unique issues
raised by the Internet or e-commerce. Those laws that do reference the Internet
are only beginning to be interpreted by the courts, and their applicability and
reach are therefore uncertain.
 
 - 30
-
 The
growth of our business may be adversely affected due to the public concerns over
the security and privacy of confidential user information.
 
 A
significant prerequisite to online commerce and communications is the secure
transmission of confidential information over public networks. Our failure to
prevent security breaches could damage our reputation and brand and
substantially harm our business and results of operations. For example, a
majority of our fees are billed to our customers’ credit card accounts directly
and customers log on using their e-mail address. We rely on encryption and
authentication technology licensed from third parties to effect the secure
transmission of confidential information, including credit card numbers.
Advances in computer capabilities, new discoveries in the field of cryptography
or other developments may result in a compromise or breach of the technology
used by us to protect customer transaction data. In addition, any party who is
able to illicitly obtain a user’s password could access the user’s transaction
data or personal information. Any compromise of our security could damage our
reputation and brand and expose us to a risk of loss or litigation and possible
liability which would substantially harm our business and results of operations.
In addition, anyone who is able to circumvent our security measures could
misappropriate proprietary information or cause interruptions in our operations.
We may need to devote significant resources to protect against security breaches
or to address problems caused by breaches.
 
 In
addition, under current credit card practices, we are liable for fraudulent
credit card transactions because we do not obtain a cardholder’s signature. We
do not currently carry insurance against this risk. To date, we have experienced
minimal losses from credit card fraud, but we continue to face the risk of
significant losses from this type of fraud. Our failure to adequately control
fraudulent credit card transactions could damage our reputation and brand and
substantially harm our business and results of operations.
 
 Risks
Relating to Our Common Stock
 
 There
is a limited trading market for our common stock, and we cannot ensure that a
deeper market will ever develop or be sustained.
 
 To date,
there has been a limited trading market for our common stock. We cannot predict
how liquid the market for our common stock might become. We currently have no
research analysts covering our stock, and there can be no assurance that we will
be able to secure such research coverage. At present, our common stock is quoted
on the automated quotation service of the Financial Institution Regulatory
Authority (“FINRA”), known as the
OTC Bulletin Board. Although we are not presently eligible, we intend to apply
for listing of our common stock on either the American Stock Exchange, The
Nasdaq Capital Market or another national securities exchange if and when we
meet the requirements for listing. We cannot ensure that we will be able to
satisfy such listing standards or that our common stock will be accepted for
listing on any such exchange. Should we fail to satisfy the initial listing
standards of such exchanges, or our common stock is otherwise rejected for
listing and remains listed on the OTC Bulletin Board or is suspended from the
OTC Bulletin Board for any reason, the trading price of our common stock could
suffer, the trading market for our common stock may become less liquid and our
common stock price may be subject to increased volatility.
 
 If
we fail to maintain an effective system of internal controls we may not be able
to accurately report our financial results or detect fraud. Consequently,
investors could lose confidence in our financial reporting and this may decrease
the trading price of our stock.
 
 We must
maintain effective internal controls to provide reliable financial reports and
detect fraud. We are in the process of evaluating changes to internal controls
for our new public company status but have not yet implemented significant
changes. Failure to implement changes to our internal controls or any other
factors that we identify as necessary to maintain an effective system of
internal controls could harm our operating results and cause investors to lose
confidence in our business, operations or reported financial information. Any
such inability to establish effective controls or loss of confidence would have
an adverse effect on our company and could adversely affect the trading price of
our stock.
 
 Persons
associated with our securities offerings, including consultants, may be
deemed to be broker dealers, which may expose us to claims for rescission or
damages.
 
 If our
securities are offered without engaging a registered broker-dealer we may face
claims for rescission and other remedies. We may become engaged in costly
litigation to defend these claims, which would lead to increased expenditures
for legal fees and divert managements’ attention from operating the business. If
we could not successfully defend these claims, we may be required to return
proceeds of the Private Placement to investors, which would harm our financial
condition.
 
 - 31
-
 Mergers
of the type we recently completed are usually heavily scrutinized by the SEC and
we may encounter difficulties or delays in obtaining future regulatory
approvals.
 
 In
November of 2007, we entered into a “reverse merger” transaction with RedRoller,
Inc., a privately held corporation; prior to this transaction, we were largely
an inactive corporation with little to no operations.  Historically,
the SEC and Nasdaq have not generally favored transactions in which a privately
held company merges into a largely inactive company with publicly traded stock,
and there is a significant risk that we may encounter difficulties in obtaining
the regulatory approvals necessary to conduct future financing or acquisition
transactions, or to eventually achieve a listing of shares on one of the Nasdaq
Stock Markets or on a national securities exchange. Effective August 22, 2005,
the SEC adopted rules dealing with private company mergers into dormant or
inactive public companies. As a result, it is likely that we will be scrutinized
carefully by the SEC and possibly by FINRA or Nasdaq, which could result in
difficulties or delays in achieving SEC clearance of any future registration
statements, including the registration statement we must file as a result of the
Private Placement, or other SEC filings that we may pursue, in attracting
FINRA-member broker-dealers to serve as market-makers in our stock, or in
achieving admission to one of the Nasdaq Stock Markets or any other national
securities market. As a consequence, our financial condition and the value and
liquidity of our shares may be negatively impacted.
 
 Because
we are not yet required to comply with rules requiring the adoption of certain
corporate governance measures, our stockholders have limited protections against
interested director transactions, conflicts of interest and similar
matters.
 
 The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities which are listed on those exchanges. Because we are not presently
required to comply with many of these corporate governance provisions, we have
not yet adopted these measures. Until we comply with the corporate governance
measures adopted by the national securities exchanges after the enactment of
Sarbanes-Oxley, regardless of whether such compliance is required, the absence
of standards of corporate governance may leave our stockholders without
protections against interested director transactions, conflicts of interest and
similar matters and investors may be reluctant to provide us with funds in the
future if we determine it is necessary to raise additional capital.
 
 Because
we became public by means of a reverse merger, we may not be able to attract the
attention of major brokerage firms.
 
 There may
be risks associated with our becoming public through a “reverse merger”
transaction. Securities analysts of major brokerage firms may not provide
coverage of us since there is no financial incentive to brokerage firms to
recommend the purchase of our common stock. No assurance can be given that
brokerage firms will, in the future, want to conduct any secondary offerings on
our behalf or otherwise cover our company.
 
 Our
stock price may be volatile in response to various factors, some of which are
out of our control.
 
 The
market price of our common stock is likely to be highly volatile and could
fluctuate widely in price in response to various factors, many of which are
beyond our control, including the following:
 
 §
                  changes
      in the package shipping industry and
markets;
 §
                  competitive
      pricing pressures;
 §
                  our
      ability to obtain working capital
financing;
 §
                  technological
      innovations or new competitors in our
market;
 §
                  additions
      or departures of key personnel;
 §
                  delays
      in introduction of the redesigned, subscription-based RedRoller System or
      versions thereof;
 §
                  limited
      “public float” in the hands of a relatively small number of persons whose
      sales or lack of sales could result in positive or negative pricing
      pressure on the market price for our common
  stock;
 §
                  sales
      of our common stock (particularly following effectiveness of the
      registration statement we filed on Form SB-2 in January of
      2008);
 §
                  our
      ability to execute our business
plan;
 §
                  operating
      results that fall below
expectations;
 §
                  loss
      of any strategic relationship;
 §
                  regulatory
      developments;
 §
                  economic
      and other external factors; and
 §
                  period-to-period
      fluctuations in our financial
results.
 
 - 32
-
 In
addition, the securities markets from time to time experience significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and
adversely affect the market price of our common stock.
 
 We
do not anticipate dividends to be paid on our common stock, and investors may
lose the entire amount of their investment.
 
 Cash
dividends have never been declared or paid on our common stock, and we do not
anticipate such a declaration or payment for the foreseeable future. We expect
to use future earnings, if any, to fund business growth. Therefore, stockholders
will not receive any funds absent a sale of their shares. We cannot assure
stockholders of a positive return on their investment when they sell their
shares, nor can we assure that stockholders will not lose the entire amount of
their investment.
 
 Our
common stock may be deemed a “penny stock,” which would make it more difficult
for our investors to sell their shares.
 
 Shares
of our common stock may be subject to the “penny stock” rules adopted under
Section 15(g) of the Exchange Act. The penny stock rules apply to companies
whose common stock is not listed on a national securities exchange and trades at
less than $5.00 per share or that have tangible net worth of less than
$5,000,000 ($2,000,000 if the company has been operating for three or more
years). These rules require, among other things, that brokers who trade penny
stock to persons other than “established customers” complete certain
documentation, make suitability inquiries of investors and provide investors
with certain information concerning trading in the security, including a risk
disclosure document and quote information under certain circumstances. Many
brokers have decided not to trade penny stocks because of the requirements of
the penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in such securities is limited. If we remain subject to the
penny stock rules for any significant period, it could have an adverse effect on
the market, if any, for our securities. In as much as our securities are subject
to the penny stock rules, investors will find it more difficult to dispose of
our securities.
 
 Offers
or availability for sale of a substantial number of shares of our common stock
may cause the price of our common stock to decline.
 
 Sales of
significant amounts of our common stock in the public market at any particular
time, either upon the expiration of any statutory holding period, under Rule
144, upon expiration of lock-up periods applicable to outstanding shares, upon
the exercise of outstanding stock options or warrants, or otherwise, could
create a circumstance commonly referred to as an “overhang” in anticipation of
which the market price of our common stock could fall. The existence of an
overhang, whether or not sales have occurred or are occurring, also could make
more difficult our ability to raise additional financing through the sale of
equity or equity-related securities in the future at a time and price that we
deem reasonable or appropriate.
 
 Stockholders
may experience dilution of their ownership interests because of the future
issuance of additional shares of our common stock and our preferred
stock.
  In the
future, we may issue our authorized but previously unissued equity securities,
resulting in the dilution of the ownership interests of present holders of
shares of our common stock. We are authorized to issue an aggregate of
225,000,000 shares of capital stock consisting of 200,000,000 shares of common
stock, par value $0.001 per share, and 25,000,000 shares of “blank check”
preferred stock, par value $0.001 per share, with such preferences and rights as
may be determined by our board of directors at the time of issuance.
Specifically, our board of directors has the authority to issue preferred stock
without further stockholder approval. As a result, our board of directors could
authorize the issuance of a series of preferred stock that would grant to
holders the preferred right to our assets upon liquidation, the right to receive
dividend payments before dividends are distributed to the holders of common
stock and the right to the redemption of the shares, together with a premium,
prior to the redemption of common stock. In addition, our board of directors
could authorize the issuance of a series of preferred stock that has greater
voting power than our common stock or that is convertible into common stock,
which could decrease the relative voting power of the common stock or result in
dilution to our existing stockholders. We may also issue additional shares of
common stock or other securities that are convertible into or exercisable for
common stock in connection with hiring or retaining employees, future
acquisitions, future sales of our securities for capital raising purposes, or
for other business purposes. The future issuance of any such additional shares
of our common stock may create downward pressure on the trading price of our
common stock. There can be no assurance that we will not be required to issue
additional shares, warrants or other convertible securities in the future in
conjunction with any capital raising efforts, including at a price (or exercise
prices) below the price at which shares of our common stock are then
traded.




Item
      6.
            Exhibits




Exhibits:




31.1
            Certification
      of CEO pursuant to Rule 13a-14(a)/15d-14(a).31.2
            Certification
      of CFO pursuant to Rule 13a-14(a)/15d-14(a).32.1
            Certification
      of CEO pursuant to Section 1350.32.2
            Certification
      of CFO pursuant to Section 1350.


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-






SIGNATURE




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








REDROLLER
      HOLDINGS, INC.By:
              /s/ Michael
      TriboletName:
              Michael
      TriboletTitle:
              Chief
      Executive Officer(Principal
      Executive Officer)


August
19, 2008


















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