**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**




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




**For
      the quarterly period ended September 30, 2008**




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




For
      the
      transition period from ______________to ______________




Commission
      file number 333-134658





SPLINTERNET
      HOLDINGS, INC.


(Exact
      Name of Registrant as Specified in Its Charter)





Delaware
            
            22-393-8509(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (IRS
                Employer Identification No.)





535
      Connecticut Avenue, 2ndfloor,
      Norwalk, CT 06854


(Address
      of Principal Executive Offices)





Registrant’s
      Telephone Number, Including Area Code: ( 203)
      354-9164





_____________________________________________________________


Former
      Name, Former Address and Former Fiscal Year, if Changed Since Last
      Report.




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 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 xNo
o





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
      the definition of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer
              o
              
              Accelerated filer
              oNon-accelerated filer
              o
              
              Smaller reporting company
              x




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


Yes oNo
x




As
      of November 13,
      2008,
      there were 61,503,179 outstanding shares of Common Stock, $.001 par
      value.








**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARIES**





**TABLE
      OF CONTENTS**





**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements.
            3Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.
            14Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk.
            22Item
                4T.
            Controls
                and Procedures.
            22**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings.
            23Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds.
            23Item
                3.
            Default
                upon Senior Securities.
            23Item
                4.
            Submission
                of Matters to a Vote of Security Holders.
            23Item
                5.
            Other
                Information.
            23Item
                6.
            Exhibits.
            24**SIGNATURES**
            25


2




**PART
      I – FINANCIAL INFORMATION**





**Item
                1.**
            **Financial
                Statements.**Condensed
                Consolidated Balance Sheets at September 30, 2008 (Unaudited) and
                December
                31, 2007Condensed
                Consolidated Statements of Operations (Unaudited) for the three months
                and
                nine months ended September 30, 2008 and 2007Condensed
                Consolidated Statements of Cash Flows (Unaudited) for the nine months
                ended September 30, 2008 and 2007Notes
                to the Condensed Consolidated Financial Statements
                (Unaudited)


3


**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEETS**





September 30,
            
            December 31,2008
            
            2007(unaudited)**ASSETS**Cash
                and cash equivalents
            
            $
            11,546
            
            $
            1,105,057Accounts
                receivable
            
            
            28,950
            
            
            32,363Prepaid
                expenses
            
            
            3,838
            
            
            40,848Notes
                receivable
            
            
            155,946
            
            
            155,916Total
                current assets
            
            
            200,280
            
            
            1,334,184Property
                and equipment, net
            
            
            36,104
            
            
            23,504Goodwill
            
            
            2,831,790
            
            
            -Security
                deposits
            
            
            14,394
            
            
            13,544Total
                assets
            
            $
            3,082,568
            
            $
            1,371,232**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Liabilities:Accounts
                payable
            
            $
            127,161
            
            $
            28,693Accrued
                expenses
            
            
            124,401
            
            
            44,304Deferred
                revenue
            
            
            40,000
            
            
            -Loans
                from officers
            
            
            88,080
            
            
            -Total
                current liabilities
            
            
            379,642
            
            
            72,997Total
                liabilities
            
            
            379,642
            
            
            72,997CommitmentsStockholders’
                equity:Capital
                stock:Preferred
                stock, 10,000,000 shares authorized and none outstandingCommon
                stock, $0.001 par value; 90,000,000 shares authorized; 61,503,179
                and
                56,715,000 shares issued and outstanding
            
            
            61,503
            
            
            56,715Additional
                paid-in capital
            
            
            5,886,158
            
            
            3,195,171Accumulated
                deficit
            
            
            (3,244,735
            )
            
            (1,953,651
            )Total
                stockholders’ equity
            
            
            2,702,926
            
            
            1,298,235Total
                liabilities and stockholders’ equity
            
            $
            3,082,568
            
            $
            1,371,232




See
      notes
      to condensed consolidated financial statements.


4




**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(UNAUDITED)**




Three Months Ended
              September 30,
            
            Nine Months ended
              September 30,2008
            
            2007
            
            2008
            
            2007Service
                revenue
            
            $
            244,167
            
            $
            105,104
            
            $
            645,125
            
            $
            140,533Cost
                of revenue
            
            
            239,172
            
            
            102,877
            
            
            619,917
            
            
            117,570Gross
                profit
            
            
            4,995
            
            
            2,227
            
            
            25,208
            
            
            22,963Selling,
                general and administrative expenses
            
            
            462,195
            
            
            320,991
            
            
            1,158,875
            
            
            913,372Research
                and development costs
            
            
            63,688
            
            
            25,475
            
            
            178,847
            
            
            86,625Loss
                from operations
            
            
            (520,888
            )
            
            (344,239
            )
            
            (1,312,514
            )
            
            (977,034
            )Interest
                income
            
            
            3,449
            
            
            20,163
            
            
            21,847
            
            
            65,577Interest
                expense
            
            
            417
            
            
            -
            
            
            417
            
            
            -Net
                loss
            
            $
            (517,856
            )
            $
            (324,077
            )
            $
            (1,291,084
            )
            $
            (911,457
            )Net
                loss per share:Basic
                and Diluted
            
            $
            (0.01
            )
            $
            (0.01
            )
            $
            (0.02
            )
            $
            (0.02
            )Weighted
                average common shares outstanding:Basic
                and Diluted
            
            
            61,503,179
            
            
            53,500,500
            
            
            59,380,946
            
            
            53,500,500





See
      notes
      to condensed consolidated financial statements.


5




**SPLINTERNET
      HOLDINGS, INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**





Nine Months Ended September 30,2008
            
            2007Cash
                flow from operating activities:Net
                loss
            
            $
            (1,291,084
            )
            $
            (911,457
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
            
            
            4,812
            
            
            2,896Non-cash
                stock option expense
            
            
            86,217
            
            
            -Change
                in assets and liabilities, net of acquisitionDecrease/(increase)
                in accounts receivable
            
            
            3,413
            
            
            (18,583
            )Decrease/(increase)in
                prepaid expenses
            
            
            40,305
            
            
            (7,834
            )Increase
                in notes receivable
            
            
            (30
            )
            
            -Decrease/(increase)
                in deposits
            
            
            -
            
            
            (2,500
            )Increase/(decrease)
                in security deposits
            
            
            
            
            
            10,000Increase
                in deferred revenue
            
            
            40,000
            
            
            -Increase
                in accounts payable and accrued expenses
            
            
            112,438
            
            
            32,959Net
                cash used in operating activities
            
            
            (1,003,928
            )
            
            (894,519
            )Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            -
            
            
            (11,107
            )Net
                cash used in investing activities
            
            
            -
            
            
            (11,107
            )Cash
                flows from financing activities:Pre
                acquisition loans to Vidiation, Inc.
            
            
            (165,000
            )
            
            -Loan
                from officer
            
            
            75,417
            
            
            -Return
                of common stock proceeds
            
            
            -
            
            
            (12,500
            )Net
                cash used in financing activities
            
            
            (89,583
            )
            
            (12,500
            )Net
                decrease in cash and cash equivalents
            
            
            (1,093,511
            )
            
            (918,126
            )Cash
                and cash equivalents, beginning of period
            
            
            1,105,057
            
            
            2,307,232Cash
                , end of period
            
            $
            11,546
            
            $
            1,389,106Non-Cash
                Investing and Financing Activities:Issuance
                of stock to purchase Vidiation, Inc.
            
            $
            2,609,557
            
            $
            -




See
      notes
      to condensed consolidated financial statements.


6





SPLINTERNET
      HOLDINGS, INC.AND
      SUBSIDIARIES


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**





**1.
      PRINCIPAL BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES**





On
      April
      3, 2006, Splinternet Holdings, Inc., a Company incorporated in the State of
      Delaware on March 22, 2006,conducted a share for share exchange of securities
      with Splinternet Communications, Inc. (“Splinternet”) whereby 214,002 shares of
      the common stock, par value $0.001 per share, of Splinternet Communications,
      Inc. were exchanged for 53,500,500 shares of the common stock, par value $0.001
      per share, of Splinternet Holdings, Inc. (the “Share Exchange”), as a result of
      which Splinternet Communications, Inc. became a wholly owned subsidiary of
      Splinternet Holdings, Inc. (“ the Company”). Splinternet Holdings, Inc. does not
      conduct any business or own any assets other than all of the issued and
      outstanding shares of Splinternet Communications, Inc.





On
      April
      30, 2008, the Company acquired Vidiation, Inc. (“Vidiation”), a newly-formed
      radiation detection marketing company, for a purchase price of approximately
      $2.6 million, excluding transaction costs of approximately $0.01 million.
      The acquisition was accounted for as a purchase business combination. The
      consolidated financial statements include the results of Vidiation from the
      date
      of acquisition. The purchase price was allocated to the net assets and
      liabilities acquired based on their estimated fair values as of the acquisition
      date. The excess of the purchase price over the estimated fair value of the
      net
      assets acquired was allocated to goodwill. A final determination of the purchase
      price allocation will be made within one year of the acquisition date upon
      completion of a third party valuation.  All
      significant inter-company accounts and transactions have been eliminated in
      the
      condensed consolidated financial statements.





Splinternet
      Communications, Inc. was incorporated in the State of Connecticut in January
      2000. Splinternet is a developer of VoIP (Voice over Internet Protocol)
      technology and services which enable the customer to make phone calls utilizing
      the Internet as an alternative to the traditional Public Switched Telephone
      Network.





**2.
      BASIS OF PREPARATION**





Pursuant
      to the rules and regulations of the Securities and Exchange Commission for
      Form
      10-Q, the financial statements, footnote disclosures and other information
      normally included in financial statements prepared in accordance with generally
      accepted accounting principles have been condensed. The financial statements
      contained in this report are unaudited but, in the opinion of the Company,
      reflect all adjustments, consisting of only normal recurring adjustments
      necessary as of September 30, 2008 and the results of operations and cash flows
      for the interim periods as of September 30, 2008 and for the three and nine
      month periods ended September 30, 2008 and 2007 to fairly present the financial
      position presented herein. The results of operations for any interim period
      are
      not necessarily indicative of results for the full year. The balance sheet
      at
      December 31, 2007 has been derived from the audited financial statements at
      that
      date but does not include all of the information and footnotes required by
      accounting principles generally accepted in the United States of America for
      complete financial statements.




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




Basic
      loss per share is computed by dividing net loss
      by the weighted average number of shares of common stock outstanding during
      the
      period. Diluted loss per share is computed by dividing net loss by the weighted
      average number of shares of common stock, potential common stock and potentially
      dilutive securities outstanding during each period. Options to purchase
      1,265,000 shares of the Company's common stock, as of September 30, 2008 and
      3,214,500 warrants to purchase shares of common stock as of September 30, 2007,
      were not included in the calculation, due to the fact that these options and
      warrants were anti-dilutive for the three and nine months ended September 30,
      2008 and 2007, respectively.




LIQUIDITY




As
      of
      September 30, 2008, the Company had approximately $11,500 in cash and
      liabilities of approximately $379,600. The Company’s net cash used in operating
      activities for the nine months ended September 30, 2008 was $1,003,928; hence,
      the Company will require additional funding in order to be adequately funded
      for
      the foreseeable future.


7


The
      Company has a history of substantial operating losses and an accumulated deficit
      of $3,244,735 as of September 30, 2008. For the nine months ended September
      30,
      2008, net loss was $1,291,084 **.** The
      Company has historically experienced cash flow difficulties primarily
      because expenses have exceeded revenues. The Company expect to incur additional
      operating losses for the immediate near future. These factors, among others,
      raise significant doubt about the Company's ability to continue as a
      going concern. If the Company is unable to generate sufficient revenue
      from operations to pay expenses or unable to obtain additional financing on
      commercially reasonable terms, the Company's business, financial
      condition and results of operations will be materially and adversely
      affected.





Recent
      Accounting Pronouncements




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards (“SFAS) No. 157, *Fair
      Value Measurements* ,
      which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. This statement does not require any new fair value
      measurements, but provides guidance on how to measure fair value by providing
      a
      fair value hierarchy used to classify the source of the information. SFAS
      No. 157 is effective for fiscal years beginning after November 15, 2007,
      and all interim periods within those fiscal years. In February 2008, the FASB
      released FASB Staff Position FSP FAS 157-2 - *Effective Date of FASB Statement No. 157* which
      delays the effective date of SFAS No. 157 for all nonfinancial assets and
      nonfinancial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (at least annually),
      to
      fiscal years beginning after November 15, 2008 and interim periods within those
      fiscal years. The implementation of SFAS No. 157 for financial assets and
      liabilities, effective January 1, 2008, did not have an impact on the
      Company’s consolidated financial position and results of operations.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159
      permits entities to choose to measure, on an item-by-item basis, specified
      financial instruments and certain other items at fair
      value.  Unrealized gains and losses on items for which the fair value
      option has been elected are required to be reported in earnings at each
      reporting date.  SFAS No. 159 is effective for fiscal years beginning
      after November 15, 2007, the provisions of which are required to be applied
      prospectively.  The
      Company adopted this Statement in fiscal year 2008 and the adoption of this
      Statement did not have a material effect on the Company’s consolidated financial
      position, results of operations, or cash flows..





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations”, which replaces SFAS No 141. The statement retains the purchase
      method of accounting for acquisitions, but requires a number of changes,
      including changes in the way assets and liabilities are recognized in the
      purchase accounting. It also changes the recognition of assets acquired and
      liabilities assumed arising from contingencies, requires the capitalization
      of
      in-process research and development at fair value, and requires the expensing
      of
      acquisition-related costs as incurred. SFAS No. 141R is effective
      for 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. The Company will adopt this Statement in fiscal year 2009 and its
      effects on future periods will depend on the nature and significance of any
      acquisitions subject to this Statement.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements-an Amendment of ARB No.
      51.* SFAS
      160 establishes accounting and reporting standards pertaining to ownership
      interests in subsidiaries held by parties other than the parent, the amount
      of
      net income attributable to the parent and to the noncontrolling interest,
      changes in a parent’s ownership interest, and the valuation of any retained
      noncontrolling equity investment when a subsidiary is
      deconsolidated.  This statement also establishes disclosure
      requirements that clearly identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners.  SFAS 160 is
      effective for fiscal years beginning on or after December 15,
      2008.  The adoption of SFAS 160 is not currently expected to have a
      material effect on the Company’s consolidated financial position, results of
      operations, or cash flows.


8


**3.
      MAJOR CUSTOMER**





During
      the three months ended September 30, 2008 and 2007, one customer (BuenaVox
      LLC)
      accounted for 79% and 96% of all revenues, respectively. For the nine months
      ended September 30, 2008 and 2007, the same customer accounted for 89% and
      88%
      of all revenues, respectively.





**4.
      TAXES**





Effective
      January 1, 2007, the Company adopted the provisions of FASB Interpretation
      No.
      48 (“FIN 48”), *“Accounting
      for Uncertainty in Income Taxes* —
*An
      Interpretation of FASB Statement No. 109*.” FIN 48 provides detailed
      guidance for the financial statement recognition, measurement and disclosure
      of
      uncertain tax positions recognized in the financial statements in accordance
      with SFAS No. 109. Tax positions must meet a “more-likely-than-not” recognition
      threshold at the effective date to be recognized upon the adoption of FIN 48
      and
      in subsequent periods. Upon the adoption of FIN 48, the Company had no
      unrecognized tax benefits. During the nine months ended September 30, 2008
      and
      2007, the Company recognized no adjustments for uncertain tax
      benefits.




The
      Company recognizes interest and penalties, if any, related to uncertain tax
      positions in selling, general and administrative expenses. No interest and
      penalties related to uncertain tax positions were accrued at September 30,
      2008.




The
      tax
      years 2003 through 2007 remain open to examination by the major taxing
      jurisdictions in which the Company operates. The Company expects no material
      changes to unrecognized tax positions within the next twelve
      months.




As
      of
      September 30, 2008 the Company has net operating loss carryforwards of
      approximately $3,230,000 available to offset taxable income through the
      year 2028.




The
      Company recorded a deferred income tax asset for the tax effect of net operating
      loss carryforwards and temporary differences, aggregating approximately
      $1,290,000 as of September 30, 2008. In recognition of the uncertainty regarding
      the ultimate amount of income tax benefits to be derived, the Company has
      recorded a valuation allowance of $1,290,000 at September 30, 2008.




**5.
      ACQUISITION OF VIDIATION, INC.**





On
      April
      30, 2008, the Company acquired Vidiation pursuant to which at closing
      Splinternet Merger Sub I, Inc. (a wholly owned subsidiary of the Company formed
      in 2008 for the purpose of such transaction) merged into Vidiation, as a result
      of which Vidiation became a wholly-owned subsidiary of the Company. The Company
      issued an aggregate of 4,788,179 shares of common stock of the Company to the
      shareholders of Vidiation in exchange for the cancellation of the then
      outstanding shares of common stock of Vidiation. As a result, the former
      shareholders of Vidiation own 7.8% of the total issued and outstanding shares
      of
      common stock of the Company.





In
      connection with the closing, the parties executed a supplemental closing
      agreement whereby, among other things, (i) the parties acknowledged that the
      Vidiation loans shall not be extinguished as a result of the transaction
      consummated under the Vidiation Merger Agreement, and (ii) Vidiation and Frank
      O’Connor reaffirmed and acknowledged their continuing obligation under the
      Vidiation loans. In addition, both Vidiation and Vidiation’s president agreed to
      indemnify the Company with respect to any of the then existing liabilities
      of
      Vidiation.


9


The
      costs
      of the acquisition were allocated on the basis of the estimated fair values
      of
      the assets acquired and liabilities assumed. The acquisition was accounted
      for
      using the purchase method whereby intangible assets identified in connection
      with the acquisition were recorded in accordance with the provisions of SFAS
      No.
      141.





Vidiation
      is a radiation detection marketing company. The acquisition is intended to
      accelerate revenue growth in the Company’s radiation detection business by
      increasing sales coverage through the addition of sales people from Vidiation
      with knowledge of the marketplace and existing client relationships, increasing
      the Company’s presence in targeted markets and providing greater coverage in
      several key industries. The acquisition is also intended to achieve cost
      synergies in general and administrative expenses.





The
      stock
      portion of the acquisition consists of 4,788,179 shares at a price per share
      of
      $.545, which was the average closing price of a share of Splinternet common
      stock for the average of the five consecutive trading days before and after
      the
      public announcement by Splinternet of the contemplated purchase of
      Vidiation.





In
      February, March and April 2008, the Company made loans to Vidiation, Inc. in
      the
      principal amount of $165,000 which loans are due on demand and accrue interest
      at a rate of 6.0% per annum to the date of payment in full. Such obligation
      has
      been guaranteed by Frank O’Connor and Vidiation, LLC. Such loans made by the
      Company to Vidiation, Inc. are referred to as the “Vidiation Loans”. These loans
      have been eliminated in the consolidated financial statements as of September
      30, 2008.




The
      following table summarizes the allocation of the purchase price based on
      estimated preliminary fair values of the assets acquired and liabilities assumed
      at the date of acquisition subject to a final third party
      valuation:




Total
                purchase price
            
            $
            2,609,558Assets
                acquiredCash
            
            $
            2,306Prepaid
                expenses
            
            
            3,294Fixed
                assets
            
            
            19,994Deposits
            
            
            850Accounts
                payable and accrued expenses
            
            
            79,000Notes
                payable
            
            
            169,678Net
                liabilities acquired
            
            
            (222,232
            )Goodwill
                (residual)
            
            $
            2,831,790





The
      pro
      forma effect on revenues, net loss, and loss per share amounts for the nine
      months ended September 30, 2008, assuming the Vidiation, Inc. transaction had
      closed on January 1, 2008, are as follows:


Revenues:
      $645,125


Net
      loss:
      $1,517,242


Loss
      per
      share: $0.02 per share





The
      unaudited pro forma combined financial information does not necessarily
      represent what would have occurred if the acquisition had taken place on the
      dates presented and is not representative of the Company’s future consolidated
      results.





**6.
      STOCK OPTION PLAN**




On
      April
      22, 2008, the Board of Directors of the Company adopted the Splinternet
      Holdings, Inc. 2008 Stock Incentive Plan (the “2008 Stock Plan”). Under the 2008
      Stock Plan, officers, other employees and directors of, and consultants to,
      the
      Company or its subsidiaries may be awarded stock options, stock appreciation
      rights and other stock awards. The number of shares subject to the 2008 Stock
      Plan may not exceed 6,000,000 shares in total. Adoption of the 2008 Stock Plan
      is subject to the approval by the Company’s shareholders within twelve months of
      the adoption by the Board of Directors. The 2008 Stock Plan provides for the
      grant of (i) options that are intended to qualify as incentive stock options
      ("Incentive Stock Options") within the meaning of Section 422 or 424 of the
      Internal Revenue Code to key employees and (ii) options not so intended to
      qualify ("Nonqualified Stock Options") to officers, employees of or consultants
      to the Company or any non employee director. On April 22 and 30, 2008, the
      Board
      of Directors granted 1,265,000 nonqualified stock options to employees and
      consultants. The Stock Option Plan is administered by a committee of the Board
      of Directors (or if there is no committee, the Board of Directors itself).
      The
      committee shall determine the terms of the options granted, including the
      exercise price, the number of shares subject to the option and the terms and
      conditions of exercise.


10


The
      exercise price of Incentive Stock Options granted under the plan must be at
      least equal to the fair market value of the shares on the date of the grant.
      The
      maximum term for each Incentive Stock Option granted is five years. Options
      shall be exercisable at such times and in such installments as the committee
      shall provide in the terms of each individual option. The maximum number of
      shares for which options may be granted to any individual in any fiscal year
      is
      2,000,000. The Stock Option Plan also provides for the granting of stock
      appreciation rights, restricted stock awards, restricted stock unit awards,
      performance awards, qualified performance awards and stock awards. The Board
      of
      Directors has not granted any of these other types of awards.




Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of SFAS 123(R), using the modified prospective transition method. The
      adoption of SFAS 123(R) resulted in share-based compensation expense for
      the three and nine months ended September 30, 2008 of approximately $86,217
      for
      the options expected to vest. For the nine months ended September 30, 2007
      there
      were no grants of stock options.




The
      Company recognizes stock-based compensation costs on a straight-line basis
      over
      the requisite service period of the award, which is generally the option vesting
      term. The Company has a 100% valuation allowance recorded against its deferred
      tax assets; therefore the stock-based compensation has no tax effect on the
      Consolidated Statements of Operations.




The
      following table summarizes stock option activity:




**Options Outstanding**
            
            **Shares Subjec****t**
              **to Options**
              **Outstanding**
            
            **Weighted-**
              **Average**
              **Exercise Price**
              **Per Option**
            
            **Weighted-**
              **Average**
              **Remaining**
              **Contractual**
              **Life**Balance
                at January 1, 2008
            
            
            0Granted
                Options
            
            
            1,265,000
            
            $
            1.35
            
            
            4.8
                YearsBalance
                at September 30, 2008
            
            
            1,265,000
            
            $
            1.35
            
            
            4.8
                Years




At
      September 30, 2008 the aggregate intrinsic value was $0.


**Number
                  Outstanding**
              
              
              
              **Weighted-**
                **Average**
                **Fair Value at**
                **Grant Date**
              
              **Weighted-**
                **Average**
                **Contractual**
                **Life**Non-Vested options
                  at December 31, 2007
              
              
              0
              
              $
              —Options
                  Granted
              
              
              1,265,000
              
              $
              .81
              
              
              5.0Options
                  Vested
              
              
              -
              
              $Non-Vested
                  options at September 30, 2008
              
              
              1,265,000
              
              $
              .81
              
              
              4.6


11




As
      of
      September 30, 2008, there was approximately $535,000 of unrecognized
      compensation cost related to non-vested stock option awards, which is expected
      to be recognized over a remaining weighted-average vesting period of
      4.6 years.




The
      fair
      value of options granted during the three and nine months ended September 30,
      2008 was approximately $1,031,000.




No
      stock
      options have been exercised or vested since the adoption of the Stock Option
      Plan.





The
      fair
      value of each option grant is estimated on the date of grant using the Black
      Scholes option pricing model with the following weighted-average assumptions
      used for grants during the nine months ended September 30, 2008: risk-free
      interest rate of 2.4% and 2.96%  based on the U.S. Treasury yields in
      effect at the time of grant; expected dividend yields of 0 percent as the
      Company has not, and does not intend to, declare dividends; and expected lives
      of 5 years based upon the length of the grant. The expected volatility used
      was 83% based on an average of volatility calculations from several public
      companies in the same industry. Options have vesting periods of 3 years with
      contractual lives of 5 years.





In
      accordance with Emerging Issues Task Force No. 96-18, “ *Accounting
      for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
      or
      In Conjunction with Selling, Goods or Services”* ,
      the
      Company measures the fair value of the equity instruments issued to
      non-employees using the stock price and other measurement assumptions as of
      the
      earlier of the date at which a commitment for performance by the counterparty
      to
      earn the equity instruments is reached, or the date at which the counterparty’s
      performance is complete.





**7.
      SEGMENT INFORMATION**





The
      Company conducts its operations in two business segments; the Radiation Sensor
      and Detection Division and the VoIP Division. The accounting policies of the
      reportable segments are the same as those described in Note 2 of the Company’s
      consolidated financial statements included in the Form 10-K for the year ended
      December 31, 2007. The Company evaluates the performance of its operating
      segments primarily based on revenues and operating income. Corporate costs
      are
      generally allocated to the segments based on a three factor formula (revenues,
      payroll and certain assets).





Three
                Months ended September 30, 2008
            
            Radiation
            
            VoIP
            
            Corporate
            
            TotalRevenues
            
            $
            -
            
            $
            244,167
            
            $
            -
            
            $
            244,167Operating
                income (loss)
            
            
            (525,883
            )
            
            4,995
            
            
            -
            
            
            (520,888
            )Total
                assets
            
            
            2,847,754
            
            
            55,592
            
            
            179,222
            
            
            3,082,568Capital
                expenditures
            
            
            -
            
            
            -
            
            
            -
            
            
            -Depreciation
            
            
            1,062
            
            
            1,088
            
            
            
            
            
            2,150Nine
                Months ended September 30, 2008Revenues
            
            $
            -
            
            $
            645,125
            
            $
            -
            
            $
            645,125Operating
                income (loss)
            
            
            (1,115,096
            )
            
            (197,418
            )
            
            -
            
            
            (1,312,514
            )Total
                assets
            
            
            2,847,754
            
            
            55,592
            
            
            179,222
            
            
            3,082,568Capital
                expenditures
            
            
            -
            
            
            -
            
            
            -
            
            
            -Depreciation
            
            
            1,549
            
            
            3,263
            
            
            -
            
            
            4,812





The
      Company operated only in the VoIP segment during 2007; therefore segment
      information is only presented for 2008.


12





**8.  
      LOANS FROM OFFICERS**





On
      September 5, 2008, the President and current CEO of the Company loaned $75,417
      to the Company in the form of a demand loan. The interest rate of the loan
      is 8%
      per annum, which will be paid quarterly. The loan is secured by all the assets
      of the Company.





An
      officer of Vidiation advanced Vidiation $12,663 prior to its acquisition by
      the
      Company. The amount is non interest bearing and has no term.





**9.  
      CONTINGENCY**





The
      Company recently became involved in a claim described below arising in the
      ordinary course of business. Management is of the opinion that the ultimate
      outcome of this matter would not have a material adverse impact on the financial
      position of the Company or the results of its operations and the Company intends
      to vigorously defend itself against this claim.





An action
      was commenced against Vidiation, Inc., Vidiation, LLC, Frank O’Connor and others
      in Fairfax Circuit Court, Fairfax, Virginia wherein it is alleged that
      it is owed $59,000 for consulting services rendered prior to the
      acquisition of Vidiation, Inc. Splinternet Holdings, Inc. was recently added
      as
      a defendant whereby it is alleged that Splinternet Holdings, Inc.
      assumed all of the assets and liabilities of Vidiation, Inc. The
      Company intends to defend itself vigorously against this claim and
      does not currently have enough information to assess the likely outcome of
      this
      matter.





**10.  
      SUBSEQUENT EVENT**





On
      October 10, 2008, the Company appointed Ambassador L. Paul Bremer, III to serve
      as a member of the Company’s Board of Directors. In connection with his
      appointment, the Board has agreed to issue to Ambassador Bremer, or his
      designee, 1,000,000 shares of the Company’s common stock which will vest
      quarterly over two years with acceleration of vesting when authorized by the
      Board of Directors in acknowledgement of extraordinary circumstances or success.
      As a result, unless accelerated, 125,000 shares will be issued to Ambassador
      Bremer quarterly and the Company will record a non-cash stock compensation
      expense for the fair value of shares issued.





On
      October 14, 2008, at a meeting of the Board of Directors, Ambassador L. Paul
      Bremer, III was elected as Chairman of the Board effective immediately. James
      C
      Ackerly, who has been Chairman prior to Ambassador Bremer’s election, will
      continue to serve as the Company’s President, Chief Executive Officer, Secretary
      and Treasurer.





On
      October 21, 2008, the President and current CEO of the Company loaned $75,000
      to
      the Company in the form of a demand loan. The terms of the loan are more fully
      described above.





On
      October 29, 2008, the President and current CEO of the Company loaned $40,000
      to
      the Company in the form of a demand loan. The terms of the loan are more fully
      described above.


13


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





The
      following discussion should be read in conjunction with the Financial Statements
      included in this report and is qualified in its entirety by the
      foregoing.





**Forward-Looking
      Statements**





This
      report contains “forward-looking statements”, which involve known and unknown
      risks, uncertainties and other factors which could cause actual financial or
      operating results, performances or achievements expressed or implied by such
      forward-looking statements not to occur or be realized. These forward-looking
      statements generally are based on our best estimates of future results,
      performances or achievements, based upon current conditions and assumptions.
      Forward-looking statements may be identified by the use of forward-looking
      terminology such as “may,” “can,” “could,” “project,” “expect,” “believe,”
“plan,” “predict,” “estimate,” “anticipate,” “intend,” “continue,” “potential,”
“would,” “should,” “aim,” “opportunity” or similar terms, variations of those
      terms or the negative of those terms or other variations of those terms or
      comparable words or expressions. These risks and uncertainties include, but
      are
      not limited to:





·
            general
                economic conditions in both foreign and domestic
                markets,





·
            cyclical
                factors affecting our industry,





·
            lack
                of growth in our industry,





·
            our
                ability to comply with government
                regulations,





·
            a
                failure to manage our business effectively and profitably,





·
            our
                ability to sell both new and existing products and services at profitable
                yet competitive prices, and





·
            other
                risks and uncertainties set forth from time to time in our filings
                with
                the Securities and Exchange
                Commission.





You
      should carefully consider these risks, uncertainties and other information,
      disclosures and discussions which contain cautionary statements identifying
      important factors that could cause actual results to differ materially from
      those provided in the forward-looking statements. Splinternet Holdings, Inc.
      undertakes no obligation to update or revise any forward-looking statements,
      whether as a result of new information, future events or otherwise.





**Overview**




Splinternet
      Holdings, Inc. (“we”, “us”, “our”, the “Company” or “Splinternet”) was
      incorporated in the State of Delaware on March 22, 2006. On April 3, 2006,
      Splinternet Holdings, Inc. conducted a share for share exchange of securities
      with Splinternet Communications, Inc. whereby 214,002 shares of the common
      stock, par value $0.001 per share, of Splinternet Communications, Inc. were
      exchanged for 53,500,500 shares of the common stock, par value $0.001 per share,
      of Splinternet Holdings, Inc. (the “Share Exchange”), as a result of which
      Splinternet Communications, Inc. became a wholly owned subsidiary of Splinternet
      Holdings, Inc. Splinternet Holdings, Inc. does not conduct any business or
      own
      any assets other than all of the issued and outstanding shares of Splinternet
      Communications, Inc. Splinternet Communications, Inc. was incorporated in the
      State of Connecticut in January 2000. Splinternet is a developer of VoIP (Voice
      over Internet Protocol) technology and services which enable the customer to
      make phone calls utilizing the internet as an alternative to the traditional
      Public Switched Telephone Network.





On
      April
      30, 2008, the Company acquired Vidiation, Inc. The Company issued an aggregate
      of 4,788,179 shares of common stock of the Company to the shareholders of
      Vidiation, Inc. in exchange for the cancellation of the then outstanding shares
      of common stock of Vidiation, Inc.


14





Vidiation,
      Inc. is a newly-formed radiation detection marketing company, which acquired
      certain assets held by Vidiation, LLC. Both Vidiation, Inc. and Vidiation,
      LLC
      are companies formerly controlled by Frank O’Connor, who has remained President
      of Vidiation, Inc.





In
      February, March and April 2008, the Company made loans to Vidiation, Inc. in
      the
      principal amount of $165,000 which loans are due on demand and accrue interest
      at a rate of 6.0% per annum to the date of payment in full. Such obligation
      has
      been guaranteed by Frank O’Connor and Vidiation, LLC. Such loans made by the
      Company to Vidiation, Inc. are referred to as the “Vidiation
      Loans”.





On
      April
      30, 2008, and in connection with the closing, the parties executed a
      supplemental closing agreement whereby, among other things, (i) the parties
      acknowledged that the Vidiation Loans shall not be extinguished as a result
      of
      the transaction consummated under the Vidiation Merger Agreement, and (ii)
      Vidiation, Inc. and Frank O’Connor reaffirmed and acknowledged their continuing
      obligation under the Vidiation Loans. In addition, both Vidiation, Inc. and
      Frank O’Connor agreed to indemnify the Company with respect to any of the then
      existing liabilities of Vidiation, Inc.





Since
      our
      inception, the Company has generated limited revenues. Although we recently
      completed an acquisition of a company in the anti-terrorism industry, we are
      presently considering the acquisition of other companies operating in either
      the
      VoIP market space or with compatible products and which can benefit from the
      Company’s infrastructure under circumstances where there is a strategic,
      technology, and marketing fit for enhancement. In addition to seeking
      acquisition candidates, during the quarter ended September 30, 2008, the Company
      continued purchasing long distance minutes at wholesale prices from phone
      companies and then reselling them at a markup to its customers.





Additionally,
      we believe our infrastructure is sufficiently flexible to allow the development
      and deployment of a variety of radiation detection products and services. We
      continue to develop those products and expect to begin marketing them actively
      and expect to recognize additional revenue in the fourth quarter. The Company
      believes that over time it will build sales volume sufficient to cover the
      costs
      of operations through this strategy. There is no guarantee that the Company
      will
      be successful in its efforts to either acquire other companies or generate
      service or equipment sales sufficient to cover its costs of
      operations.





*Recent
      Events*





On
      April
      22, 2008, the Board of Directors of the Company adopted the Splinternet
      Holdings, Inc. 2008 Stock Incentive Plan (the “2008 Stock Plan”). Under the 2008
      Stock Plan, officers, other employees and directors of, and consultants to,
      the
      Company or its subsidiaries may be awarded stock options, stock appreciation
      rights and other stock awards. The number of shares subject to the 2008 Stock
      Plan may not exceed 6,000,000 shares. The adoption of the 2008 Stock Plan is
      subject to the approval by the Company’s shareholders within twelve months of
      the adoption by the board of directors.





**Results
      of Operations**




SERVICE
      REVENUE





Service
      revenue for the three months and nine months ended September 30, 2008 were
      $244,167 and $645,125 which is an increase from $105,104 and $140,533 for the
      three months and nine months ended September 30, 2007. The Company continues
      to
      provide hosting services but new switching and termination services accounts
      for
      the increase in revenues during the three and nine months ended September 30,
      2008.





COST
      OF
      REVENUE





The
      use
      of VoIP services requires a combination of hardware and software to convert
      the
      electronic signals which would otherwise comprise a traditional telephone call
      into a packetized data stream and route those packets over a data network,
      such
      as the Internet.


15





In
      2007,
      the Company began purchasing long distance minutes at wholesale prices from
      phone companies and then resells them at a markup to its customers. For the
      three months and nine months ended September 30, 2008, the costs of the
      wholesale minutes were $239,172 and $619,917. For the three months and nine
      months ended September 30, 2007, the costs of the wholesale minutes were
      $102,877 and $117,570 respectively. The Company continues to provide hosting
      services but new switching and termination services which were initiated during
      the second quarter 2007 accounts for the increase in cost of revenue during
      the
      three and nine months ended September 30, 2008.





SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES





In
      the
      three months ended September 30, 2008, selling, general and administrative
      costs
      were $462,195 which is an increase from $320,991 in the comparable period in
      2007. Selling, general and administrative costs for the nine months ended
      September 30, 2008 were $1,158,875 which is an increase from $913,172 in the
      nine months ended September 30, 2007.  The
      increases were the result of two events which the Company undertook during
      the
      first half of 2008. The first was a change in our business strategy which moved
      the Company from an emphasis on VoIP to new radiation detection products and
      services. The second was the acquisition of Vidiation, Inc. Vidiation has four
      full-time salaried employees and three consultants. With this acquisition the
      Company’s selling, general and administrative expenses have also increased due
      to more sales travel and conference attendance.





RESEARCH
      AND DEVELOPMENT





Research
      and development increased to $63,688 and $178,847 in the three months and nine
      months ended September 30, 2008 from $25,475 and $86,625 for the comparable
      periods in 2007. The increases were the result of consulting expenses related
      to
      product development associated with the Company’s radiation detection device and
      software.





INTEREST
      INCOME





Interest
      earned in the three months and nine months ended September 30, 2008 were $3,449
      and $21,847 compared to $20,163 and $65,577 for the comparable periods in 2007.
      This was primarily due to a lower average balance invested in 2008 due to the
      Company using cash to fund operations and lower interest rates.





NET
      LOSS





We
      recognized a net loss of $517,856, during the three months ended September
      30,
      2008 compared to a net loss of $324,077 during the same period in the prior
      year
      for an overall increase in net loss of $193,779. We recognized a net loss of
      $1,291,084, during the nine months ended September 30, 2008 compared to a net
      loss of $911,457 during the same period in the prior year for an overall
      increase in net loss of $379,627. The increases in the net loss were primarily
      the result of the acquisition of Vidiation, Inc. This was due to an emphasis
      being placed on development of new radiation detection products and services.
      We
      believe the steps being taken in development of our new radiation detection
      products and services offerings will allow us to increase revenues and return
      to
      profitability.





**Financial
      Condition, Liquidity and Capital Resources**




As
      of
      September 30, 2008, we had approximately $11,500 in cash and liabilities of
      approximately $379,600. Our net cash used in operating activities for the nine
      months ended September 30, 2008 was $1,003,928; hence, we require additional
      funding in order to be adequately funded for the foreseeable future. Further,
      with the registration of shares of our Common Stock with the Securities and
      Exchange Commission and subsequent commencement of trading on the OTC Bulletin
      Board under the symbol “SLNH” which trading commenced on October 5, 2006, we
      feel we will have increased access to both private and public capital
      markets.


The
        Company has a history of substantial operating losses and an accumulated
        deficit
        of $3,244,735 as of September 30, 2008. For the nine months ended September
        30,
        2008, net loss was $1,291,084 **.** The
        Company has historically experienced cash flow difficulties primarily
        because expenses have exceeded revenues. The Company expect to incur additional
        operating losses for the immediate near future. These factors, among others,
        raise significant doubt about the Company's ability to continue as a
        going concern. If the Company is unable to generate sufficient revenue
        from operations to pay expenses or unable to obtain additional financing
        on
        commercially reasonable terms, the Company's business, financial
        condition and results of operations will be materially and adversely
        affected.




16


Net
      cash
      used by operating activities for the nine months ended September 30, 2008 was
      $1,003,928 which was primarily the result of the net loss of $1,291,084. Net
      cash used in investing activities for the nine months ended September 30, 2008
      was $0 compared to $11,107 for the nine months ended September 30, 2007. This
      change was due to eliminating the purchase of property and equipment. For the
      nine months ended September 30, 2008, net cash used in financing activities
      was
      $89,583 compared to $12,500 which was provided by financing activities for
      the
      nine months ended September 30, 2007. The change in 2008 was due to the loans
      to
      Vidiation, Inc. of $165,000 during the first nine months of 2008 offset by
      a
      loan from our President of $75,417 versus a return of an overpayment of equity
      in 2007. We will require additional capital to finance our future
      operations.  We can provide no assurance that we will obtain
      additional financing sufficient to meet our future needs on commercially
      reasonable terms or otherwise.  If we are unable to obtain the
      necessary financing, our business, operating results and financial condition
      will be materially and adversely affected.





Subsequent
      to September 30, 2008 the President and current CEO loaned the Company $115,000
      which bears interest at 8% per annum and is due on demand.





Capital
      Commitments





The
      Company currently has no material commitments for capital
      expenditures.




Trends





The
      radiation detection industry, which the Company has recently entered, is subject
      to federal, state, and international governmental regulation. Unknown matters,
      new laws and regulations, or stricter interpretations of existing laws or
      regulations may materially affect our entry into this business or operations
      in
      the future and/or could increase the cost of compliance. Our products will
      have
      to comply with various domestic and international standards that are used by
      regulatory and accreditation bodies for approving such services and products.
      The failure of the Company to obtain accreditation for its products and services
      may adversely affect us and the market perception of the effectiveness of our
      proposed products. In the future, changes in these standards and accreditation
      requirements may also result in the Company having to incur substantial costs
      to
      adapt its offerings and procedures. Additionally, changes affecting radiation
      detection practices, including new understandings of the hazards of radiation
      exposure and amended regulations, may impact how the Company’s services are used
      by its customers and may, in some circumstances, cause the Company to alter
      its
      products and delivery of its services.





The
      VoIP
      industry in which we operate is in a state of dynamic and rapid change. VoIP
      services are gaining acceptance in the marketplace and we intend to take
      advantage of that trend by attempting to sell into a more willing marketplace,
      despite the increased competition.





We
      have
      noted that several VoIP service retailers in the United States are currently
      offering services to end users for no charge, as a promotional program to
      attract users to their systems. We acknowledge that this may attract users,
      but
      do not believe there is any assurance users acquired in this manner can be
      converted into sources of revenue, even if they are part of a subscriber base
      to
      which advertising can be delivered on behalf of third parties. The role of
      United States retail services in that environment is unknown.





Seasonal
      Fluctuations





There
      have been no fluctuations in our business to date which can be attributed to
      seasonality.





Employment
      Agreements





Currently,
      we have no written employment agreements with any of our employees or
      officers.





**Risk
      Factors**





*We
      have a limited operating history and a history of substantial operating losses
      and we may not be able to continue our business.*


17





We
      have a
      history of substantial operating losses and an accumulated deficit of $3,244,735
      as of September 30, 2008. For the nine months ended September 30, 2008, our
      net
      loss was $1,291,084 **.** We have
      historically experienced cash flow difficulties primarily because our expenses
      have exceeded our revenues. We expect to incur additional operating losses
      for
      the immediate near future. These factors, among others, raise significant doubt
      about our ability to continue as a going concern. If we are unable to generate
      sufficient revenue from our operations to pay expenses or we are unable to
      obtain additional financing on commercially reasonable terms, our business,
      financial condition and results of operations will be materially and adversely
      affected.





*We
      will need additional financing in order to continue our operations which we
      may
      not be able to raise.*





We
      will
      require additional capital to finance our future operations.  We can
      provide no assurance that we will obtain additional financing sufficient to
      meet
      our future needs on commercially reasonable terms or otherwise.  If we
      are unable to obtain the necessary financing, our business, operating results
      and financial condition will be materially and adversely affected.





*Our
      performance depends on market acceptance of our products and we cannot be sure
      that our products are commercially viable.*





We
      expect
      to derive a substantial portion of our future revenues from the sales of
      radiation detection equipment and services that is only now entering the initial
      marketing phase. Although we believe our products and technologies will be
      commercially viable, these are new products.  If markets for our
      products fail to develop further, develop more slowly than expected or are
      subject to substantial competition, our business, financial condition and
      results of operations will be materially and adversely affected.





*Rapidly
      changing technology and substantial competition may adversely affect our
      business.*





Our
      business is subject to rapid changes in technology.  We can provide no
      assurances that research and development by competitors will not render our
      technology obsolete or uncompetitive.  We compete with a number of
      companies that have technologies and products similar to those offered by us
      and
      have greater resources, including more extensive research and development,
      marketing and capital than we do.  If our technology is rendered
      obsolete or we are unable to compete effectively, our business, operating
      results and financial condition will be materially and adversely
      affected.





*Defects
      in our products may adversely affect our business.*





Complex
      technologies such as the technologies developed by us may contain defects when
      introduced and also when updates and new products are released. Our introduction
      of technology with defects or quality problems may result in adverse publicity,
      product returns, reduced orders, uncollectible or delayed accounts receivable,
      product redevelopment costs, loss of or delay in market acceptance of our
      products or claims by customers or others against us. Such problems or claims
      may have a material and adverse effect on our business, financial condition
      and
      results of operations.





*If
      we
      are unable to successfully integrate acquisitions, our revenue growth and future
      profitability may be negatively impacted.*




The
      process of integrating an acquired business, technology or product may result
      in
      unforeseen operating difficulties and expenditures and may absorb significant
      management attention and capital that would otherwise be available for ongoing
      development of our business. In addition, we may not be able to maintain the
      levels of operating efficiency that any company we may acquire achieved or
      might
      have achieved separately. Additional risks we face include:




·
            the
                need to implement or remediate controls, procedures and policies
                appropriate for a public company in an acquired company that, prior
                to the
                acquisition, lacked these controls, procedures and
                policies;


18


·
            cultural
                challenges associated with integrating employees from an acquired
                company
                or business into our organization;




·
            retaining
                key employees from the businesses we
                acquire;




·
            the
                need to integrate an acquired company’s accounting, management
                information, human resource and other administrative systems to permit
                effective management; and




·
            to
                the extent that we engage in strategic transactions outside of the
                United
                States, we face additional risks, including risks related to integration
                of operations across different cultures and languages, currency risks
                and
                the particular economic, political and regulatory risks associated
                with
                specific countries.





Future
      acquisitions and investments could involve the issuance of our equity
      securities, potentially diluting our existing shareholders, the incurrence
      of
      debt, contingent liabilities or amortization expenses, write-offs of goodwill,
      intangibles, or acquired in-process technology, or other increased expenses,
      any
      of which could harm our financial condition. Our shareholders may not have
      the
      opportunity to review, vote on or evaluate future acquisitions or
      investments.





*Our
      stock price can be extremely volatile.*





Our
      common stock is traded on the OTC Bulletin Board. There can be no assurance
      that
      an active public market will continue for the common stock, or that the market
      price for the common stock will not decline below its current price. Such price
      may be influenced by many factors, including, but not limited to, investor
      perception of us and our industry and general economic and market conditions.
      The trading price of the common stock could be subject to wide fluctuations
      in
      response to announcements of our business developments or our competitors,
      quarterly variations in operating results, and other events or factors. In
      addition, stock markets have experienced extreme price volatility in recent
      years. This volatility has had a substantial effect on the market prices of
      companies, at times for reasons unrelated to their operating performance. Such
      broad market fluctuations may adversely affect the price of our common
      stock.





*Trading
      on the OTC Bulletin Board may be sporadic because it is not a stock exchange,
      and stockholders may have difficulty reselling their shares*.





Our
      common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on
      the
      OTC Bulletin Board is often thin and characterized by wide fluctuations in
      trading prices, due to many factors that may have little to do with our
      operations or business prospects. Moreover, the OTC Bulletin Board is not a
      stock exchange, and trading of securities on the OTC Bulletin Board is often
      more sporadic than the trading of securities listed on the NASDAQ
      SmallCap.





*Our
      common stock is subject to the “penny stock” rules of the SEC and the trading
      market in our securities is limited, which makes transactions in our stock
      cumbersome and may reduce the value of an investment in our
      stock.*





The
      Securities and Exchange Commission has adopted Rule 15g-9 which establishes
      the
      definition of a “penny stock,” for the purposes relevant to us, as any equity
      security that has a market price of less than $5.00 per share or with an
      exercise price of less than $5.00 per share, subject to certain exceptions.
      For
      any transaction involving a penny stock, unless exempt, the rules require that
      a
      broker or dealer approve a person's account for transactions in penny stocks
      and
      the broker or dealer receive from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be
      purchased.





In
      order
      to approve a person's account for transactions in penny stocks, the broker
      or
      dealer must obtain financial information and investment experience objectives
      of
      the person and make a reasonable determination that the transactions in penny
      stocks are suitable for that person and the person has sufficient knowledge
      and
      experience in financial matters to be capable of evaluating the risks of
      transactions in penny stocks.


19





The
      broker or dealer must also deliver, prior to any transaction in a penny stock,
      a
      disclosure schedule prescribed by the Commission relating to the penny stock
      market, which, in highlight form sets forth the basis on which the broker or
      dealer made the suitability determination and that the broker or dealer received
      a signed, written agreement from the investor prior to the
      transaction.





Generally,
      brokers may be less willing to execute transactions in securities subject to
      the
“penny stock” rules. This may make it more difficult for investors to dispose of
      our common stock and cause a decline in the market value of our
      stock.





Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading and about the commissions payable to both
      the
      broker-dealer and the registered representative, current quotations for the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.





*We
      do
      not expect to pay dividends on our common stock.*





We
      have
      not declared dividends on our common stock since our incorporation and we have
      no present intention of paying dividends on our common stock.





**MANY
      OF THESE RISKS AND UNCERTAINTIES ARE OUTSIDE OF OUR CONTROL AND ARE DIFFICULT
      FOR US TO FORECAST. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED
      OR
      IMPLIED IN THE FORWARD-LOOKING STATEMENTS.**





**Critical
      Accounting Policies**





The
      following is a discussion of the accounting policies that the Company believes
      are critical to its operations :




Use
      of
      Estimates





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





Revenue
      recognition





We
      follow
      the guidance of the Securities and Exchange Commission’s (“SEC”) Staff
      Accounting Bulletin 104 for revenue recognition.  In general, we record
      revenue when persuasive evidence of an arrangement exists, services have been
      rendered or product delivery has occurred, the sales price to the customer
      is
      fixed or determinable, and collectability is reasonably assured.




We
      recognize revenue when products have been shipped or services have been
      performed. In cases where a customer prepays a subscription for services to
      be
      performed in a period which extends from one accounting period into a subsequent
      period, we only recognize the portion of income due for services performed
      in
      the current reporting period. In cases where there is an acceptance period
      during which a subscriber may cancel their agreement without penalty, we defer
      the revenue recognition until the end of that acceptance period.




Goodwill




Goodwill
      represents the excess of the purchase price of acquired businesses over the
      estimated fair value of the tangible and identifiable intangible net assets
      acquired. Under SFAS No. 142, *Goodwill
      and Other Intangible Assets,* goodwill
      is not amortized but is tested for impairment, at least annually, at the
      reporting unit level. A reporting unit can be an operating segment or a business
      if discrete financial information is prepared and reviewed by management. Under
      the impairment test, if a reporting unit’s carrying amount exceeds its estimated
      fair value, goodwill impairment is recognized to the extent that the reporting
      unit’s carrying amount of goodwill exceeds the implied fair value of the
      goodwill.


20


Impairment
      of long-lived assets and intangible assets




The
      Company reviews long-lived assets and intangible assets other than goodwill
      for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of the respective asset may not be recoverable. Such evaluation
      may be based on a number of factors including current and projected operating
      results and cash flows, changes in management’s strategic direction as well as
      other economic and market variables. The Company’s policy regarding long-lived
      assets and intangible assets other than goodwill is to evaluate the
      recoverability of these assets by determining whether the balance can be
      recovered through undiscounted future operating cash flows. Should events or
      circumstances indicate that the carrying value might not be recoverable based
      on
      undiscounted future operating cash flows, an impairment loss would be
      recognized.




Recent
      accounting pronouncements




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards Board (“SFAS”)
      No. 157, *Fair
      Value Measurements* ,
      which
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. This statement does not require any new fair value
      measurements, but provides guidance on how to measure fair value by providing
      a
      fair value hierarchy used to classify the source of the information. SFAS
      No. 157 is effective for fiscal years beginning after November 15, 2007,
      and all interim periods within those fiscal years. In February 2008, the FASB
      released FASB Staff Position FSP FAS 157-2 - *Effective Date of FASB Statement No. 157* which
      delays the effective date of SFAS No. 157 for all nonfinancial assets and
      nonfinancial liabilities, except those that are recognized or disclosed at
      fair
      value in the financial statements on a recurring basis (at least annually),
      to
      fiscal years beginning after November 15, 2008 and interim periods within those
      fiscal years. The implementation of SFAS No. 157 for financial assets and
      liabilities, effective January 1, 2008, did not have an impact on our
      consolidated financial position and results of operations.




In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      No. 159”). SFAS No. 159 permits entities to choose to measure, on an
      item-by-item basis, specified financial instruments and certain other items
      at
      fair value.  Unrealized gains and losses on items for which the fair
      value option has been elected are required to be reported in earnings at each
      reporting date.  SFAS No. 159 is effective for fiscal years beginning
      after November 15, 2007, the provisions of which are required to be applied
      prospectively.  We
      adopted this Statement in fiscal year 2008 the adoption of this Statement did
      not have a material effect on our consolidated financial position, results
      of
      operations, or cash flows.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), *Business
      Combinations* ,
      which
      replaces SFAS No 141. The statement retains the purchase method of accounting
      for acquisitions, but requires a number of changes, including changes in the
      way
      assets and liabilities are recognized in the purchase accounting. It also
      changes the recognition of assets acquired and liabilities assumed arising
      from
      contingencies, requires the capitalization of in-process research and
      development at fair value, and requires the expensing of acquisition-related
      costs as incurred. SFAS No. 141R is effective for 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.  We
      will
      adopt this Statement in fiscal year 2009 and its effects on future periods
      will
      depend on the nature and significance of any acquisitions subject to this
      Statement.





In
      December 2007, the FASB issued SFAS No. 160, *Noncontrolling
      Interests in Consolidated Financial Statements-an Amendment of ARB No.
      51.* SFAS
      160 establishes accounting and reporting standards pertaining to ownership
      interests in subsidiaries held by parties other than the parent, the amount
      of
      net income attributable to the parent and to the noncontrolling interest,
      changes in a parent’s ownership interest, and the valuation of any retained
      noncontrolling equity investment when a subsidiary is
      deconsolidated.  This statement also establishes disclosure
      requirements that clearly identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners.  SFAS 160 is
      effective for fiscal years beginning on or after December 15,
      2008.  The adoption of SFAS 160 is not currently expected to have a
      material effect on our consolidated financial position, results of operations,
      or cash flows.


21





**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off balance sheet arrangements that are reasonably likely to have
      a
      current or future effect on our financial condition, revenues, results of
      operations, liquidity or capital expenditures.





**Item
      3.** **Quantitative
      and Qualitative Disclosures About Market Risk**





Not
      applicable. ****





**Item
      4T.** **Controls
      and Procedures**





We
      maintain disclosure controls and procedures that are designed to ensure (1)
      that
      information required to be disclosed by us in the reports we file or submit
      under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is
      recorded, processed, summarized, and reported within the time periods specified
      in the Securities and Exchange Commission’s (“SEC”) rules and forms, and (2)
      that this information is accumulated and communicated to our management,
      including our Chief Executive Officer and Chief Financial Officer, as
      appropriate, to allow timely decisions regarding required disclosure. In
      designing and evaluating the disclosure controls and procedures, management
      recognizes that any controls and procedures, no matter how well designed and
      operated, can provide only reasonable assurance of achieving the desired control
      objectives, and management necessarily was required to apply its judgment in
      evaluating the cost benefit relationship of possible controls and
      procedures.





Prior
      to
      the filing date of this report, under the supervision and review of our Chief
      Executive Officer and Chief Financial Officer, we conducted an evaluation of
      the
      effectiveness of the design and operation of our disclosure controls and
      procedures as of the end of the period covered by this report. Based on that
      evaluation, our Chief Executive Officer and Chief Financial Officer have
      concluded that our disclosure controls and procedures are effective in alerting
      them in a timely manner to material information regarding us that is required
      to
      be included in our periodic reports to the SEC.





In
      addition, there have been no significant changes in our internal controls or
      in
      other factors that could significantly affect those controls that occurred
      during the fiscal quarter covered by this report that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting. We can provide no assurance, however, that our system
      of
      disclosure controls and procedures will always achieve its stated goals under
      all future conditions, no matter how remote.


22


**PART
      II - OTHER INFORMATION**





**Item
      1.** **Legal
      Proceedings**





Except
      as
      set forth below, we are not a party to any pending legal proceeding, nor is
      our
      property the subject of a pending legal proceeding, that is not in the ordinary
      course of business or otherwise material to the financial condition of our
      business. None of our directors, officers or affiliates is involved in a
      proceeding adverse to our business or has a material interest adverse to our
      business.





Kerrigan
      & Associates, Inc. (“Kerrigan”) has commenced an action against Vidiation,
      Inc., Vidiation, LLC, Frank O’Connor and others in Fairfax Circuit Court,
      Fairfax, Virginia wherein Kerrigan alleges that it is owed $59,000 for
      consulting services rendered prior to our acquisition of Vidiation, Inc.
      Splinternet Holdings, Inc. was recently added as a defendant whereby Kerrigan
      alleges that Splinternet Holdings, Inc. assumed all of the assets and
      liabilities of Vidiation, Inc. We intend to defend ourselves vigorously against
      this claim and do not currently have enough information to assess the likely
      outcome of this matter.





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





On
      April
      22, 2008, we granted options to six persons to purchase an aggregate of 585,000
      shares of common stock with an exercise price of $1.25 per share and, on April
      30, 2008, we granted options to five persons to purchase an aggregate of 680,000
      shares of common stock with an exercise price of $1.43 per share. These stock
      options vest annually over three years beginning one year from the date of
      issuance. These stock options were granted pursuant to the Company’s 2008 Stock
      Incentive Plan which was adopted by the Board of Directors of the Company on
      April 22, 2008. The issuance of these stock options was exempt from registration
      requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.





On
      April
      30, 2008, we consummated the transaction contemplated by an Agreement and Plan
      of Merger dated February 7, 2008 among Splinternet Holdings, Inc., Vidiation,
      Inc. and Splinternet Merger Sub I, Inc. (our wholly owned subsidiary formed
      for
      the purpose of such transaction) (the “Merger Sub”) pursuant to which the Merger
      Sub has merged into Vidiation, Inc. resulting in Vidiation, Inc. becoming our
      wholly-owned subsidiary.. Upon closing, we issued an aggregate of 4,788,179
      shares of our common stock to the shareholders of Vidiation, Inc. in exchange
      for the cancellation of the then outstanding shares of common stock of
      Vidiation, Inc. The exchange of Vidiation, Inc. common stock for our common
      stock was exempt pursuant to Section 4(2) of the Securities Act of 1933, as
      amended.





In
      connection with the appointment of Ambassador L. Paul Bremer, III to serve
      as a
      member of the Company’s Board of Directors, effective October 10, 2008, the
      Board has agreed to issue to Ambassador Bremer, or his designee, 1,000,000
      shares of our common stock which will vest quarterly over two years with
      acceleration of vesting when authorized by the Board of Directors in
      acknowledgement of extraordinary circumstances or success. As a result, unless
      accelerated, 125,000 shares will be issued to Ambassador Bremer on each
      applicable vesting date. No shares have been issued to date. The issuance of
      these shares of common stock will be exempt from registration requirements
      pursuant to Section 4(2) of the Securities Act of 1933, as amended.





**Item
      3.** **Defaults
      Upon Senior Securities**





Not
      applicable.





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





Not
      applicable.





**Item
      5.** **Other
      Information**





Not
      applicable.


23





**Item
      6.** **Exhibits**





10.1
            Security
                Agreement dated September 5, 2008 with James C. Ackerly


10.2
            Form
                of Secured Demand Promissory Note for loans from James C.
                Ackerly


31.1
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002(Rules
                13a-14 and 15d-14 of the Exchange
                Act)


31.2
            Certification
                of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of2002
                (Rules 13a-14 and 15d-14 of the Exchange
                Act)


32.1
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of2002
                (18 U.S.C. 1350)


32.2
            Certification
                of Principal Financial Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of2002
                (18 U.S.C. 1350)


24





**SIGNATURES**




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.





**SPLINTERNET
                HOLDINGS, INC.**(Registrant)Dated:
                November 13, 2008
            By:
            /s/
                James C. AckerlyJames
                C. Ackerly, Chief Executive Officerand
                President (Principal Executive Officer)Dated:
                November 13, 2008
            By:
            /s/
                John T. GrippoJohn
                T. Grippo, Chief Financial Officer(Principal
                Financial Officer)


25