**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**










**FORM
      10-QSB**


x
              Quarterly
                  report under Section 13 or 15(d) of the Securities Exchange Act
                  of
                  1934for
                  the quarterly period ended April 30, 2008.o
              Transition
                  report under Section 13 or 15(d) of the Exchange Actfor
                  the transition period from ________ to
                  _________.




**Commission
      file number 000-28761.**





**JAG
      MEDIA HOLDINGS, INC.**


(Exact
      name of small business issuer as specified in its Charter)





**Nevada**
            
            **88-0380546**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)





**6865
      SW 18th Street**


**Suite
      B-13**


**Boca
      Raton, Florida 33433**


(Address
      of Principal Executive Offices)





**(866)
      300-7410**


(Issuer’s
      Telephone Number, Including Area Code)







Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for such shorter period that the Registrant was required to file such reports)
      and (2) has been subject to such filing requirements for the past 90
      days.




Yes x No o




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




Yes o
      No x




As
      of
      June 18, 2008, the Issuer had 60,360,993 shares
      of Common Stock, 380,931 shares
      of Series 2 Class B Common Stock and 21,500 shares
      of Series 3 Class B Common Stock issued and outstanding.




Transitional
      Small Business Disclosure Format (Check one):  Yes o No x







INDEX


PagePart
                  I Financial InformationItem
                  1: Financial Statements (Unaudited)Condensed
                  Consolidated Balance Sheets at April 30, 2008 and July 31,
                  2007
              1Condensed
                  Consolidated Statements of Operations for the Nine and Three Months
                  ended
                  April 30, 2008 and 2007
              2Condensed
                  Consolidated Statement of Changes in Stockholders’ Deficiency for the Nine
                  Months ended April 30, 2008
              3Condensed
                  Consolidated Statements of Cash Flows for the Nine Months ended
                  April 30,
                  2008 and 2007
              4Notes
                  to Condensed Consolidated Financial Statements
              5Item
                  2: Management’s Discussion and Analysis
              16Item
                  3: Controls and Procedures
              23Part
                  II Other InformationItem
                  1: Legal Proceedings
              25Item
                  2: Unregistered Sale of Equity Securities and Use of
                  Proceeds
              25Item
                  3: Defaults Upon Senior Securities
              25Item
                  4: Submission of Matters to Vote of Security Holders
              25Item
                  5: Other Information
              25Item
                  6: Exhibits
              25SignaturesEX-31.1:
                  CERTIFICATIONEX-31.2:
                  CERTIFICATIONEX-32.1:
                  CERTIFICATIONS




PART
      I. FINANCIAL
      INFORMATION


JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
  CONDENSED
        CONSOLIDATED BALANCE SHEETS
 APRIL
        30,
        2008 and JULY 31, 2007




April
                30,
            
            July
                31,2008
            
            2007(unaudited)
            
            (see
                Note 1)AssetsCurrent
                assets:Cash
                and cash equivalents
            
            $
            59,016
            
            $
            507Accounts
                receivable, net of allowance for doubtful accounts of $7,500
            
            
            47,010
            
            
            34,345Other
                current assets
            
            
            156,272
            
            
            44,426Total
                current assets
            
            
            262,298
            
            
            79,278Equipment,
                net of accumulated depreciation of $136,952 and $154,975
            
            
            37,001
            
            
            55,071Totals
            
            $
            299,299
            
            $
            134,349Liabilities
                and Stockholders' DeficiencyCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            479,362
            
            $
            1,088,819Deferred
                revenues
            
            
            6,734
            
            
            18,695Derivative
                liability
            
            
            -
            
            
            11,058,561Total
                current liabilities
            
            
            486,096
            
            
            12,166,075Convertible
                debentures payable, net of unamortized debt discount of $912,820
            
            
            -
            
            
            2,607,180Total
                liabilities
            
            
            486,096
            
            
            14,773,255Mandatorily
                redeemable Class B common stock; par value $.00001 per share:400,000
                shares designated as Series 2; 381,749 shares issued andoutstanding
            
            
            4
            
            
            440,000
                shares designated as Series 3; 21,500 shares issued andoutstanding
            
            
            -
            
            
            -4
            
            
            4Commitments
                and contingenciesStockholders
                deficiency:Preferred
                stock; par value $.00001 per share; 50,000,000 shares authorized,
                none
                issued Common stock; par value $.00001 per share; 500,000,000 shares
                authorized;60,467,816
                and 48,048,617 shares issued and outstanding
            
            
            604
            
            
            480Additional
                paid-in capital
            
            
            62,859,167
            
            
            45,806,278Accumulated
                deficit
            
            
            (63,046,572
            )
            
            (60,445,668
            )Total
                stockholders'
                deficiency
            
            
            (186,801
            )
            
            (14,638,910
            )Totals
            
            $
            299,299
            
            $
            134,349





See
      Notes
      to Condensed Consolidated Financial Statements.




1




JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS
 NINE
        AND
        THREE MONTHS ENDED APRIL 30, 2008 AND 2007
 (UNAUDITED)


Nine Months
            
            Three MonthsEnded April 30,
            
            Ended April 30,2008
            
            2007 (restated)
            
            2008
            
            2007 (restated)Revenues
            
            $
            119,736
            
            $
            164,308
            
            $
            41,101
            
            $
            63,171Operating
                expenses:Cost
                of revenues
            
            
            18,569
            
            
            60,654
            
            
            10,544
            
            
            18,522Selling
                expenses
            
            
            46,700
            
            
            71,241
            
            
            33,102
            
            
            11,425General
                and administrative expenses
            
            
            1,567,071
            
            
            1,445,181
            
            
            566,327
            
            
            648,567Totals
            
            
            1,632,340
            
            
            1,577,076
            
            
            609,973
            
            
            678,514Loss
                from operations
            
            
            (1,512,604
            )
            
            (1,412,768
            )
            
            (568,872
            )
            
            (615,343
            )Other
                income (expense):Gain
                (loss) on change in value of derivative liability
            
            
            602,338
            
            
            (2,190,710
            )
            
            -
            
            
            (385,673
            )Interest
                income
            
            
            -
            
            
            97
            
            
            -
            
            
            -Interest
                expense
            
            
            (1,690,638
            )
            
            (1,287,001
            )
            
            -
            
            
            (211,070
            )Net
                loss
            
            $
            (2,600,904
            )
            
            (4,890,382)
                $
            
            $
            (568,872
            )
            $
            (1,212,086
            )Basic
                and diluted net loss per share
            
            $
            (0.05
            )
            $
            (0.11
            )
            $
            (0.01
            )
            $
            (0.03
            )Basic
                and diluted weighted average common shares outstanding
            
            
            55,397,648
            
            
            46,001,871
            
            
            60,398,483
            
            
            47,663,673





See
      Notes
      to Condensed Consolidated Financial Statements.




2


JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF CHANGES
        IN STOCKHOLDERS’ DEFICIENCY
 NINE
        MONTHS ENDED APRIL 30, 2008
 (UNAUDITED)


Common StockAdditional Paid-in
            
            AccumulatedNumber of Shares
            
            Amount
            
            Capital
            
            Deficit
            
            TotalBalance,
                August 1, 2007
            
            
            48,048,617
            
            $
            480
            
            $
            45,806,278
            
            $
            (60,445,668
            )
            $
            (14,638,910
            )Amortization
                of unearned stock-based compensation
            
            
            
            
            
            
            
            
            3,854
            
            
            
            
            
            3,854Effect
                of issuance of common stock in exchange for services and payment
                of
                accounts payable
            
            
            165,000
            
            
            2
            
            
            109,348
            
            
            
            
            
            109,350Effect
                of issuance of options in exchange for services
            
            
            
            
            
            
            
            
            82,524
            
            
            
            
            
            82,524Shares
                issued on conversion of convertible debentures
            
            
            8,800,000
            
            
            88
            
            
            3,519,912
            
            
            
            
            
            3,520,000Shares
                issued as payment for accrued interest on convertible debentures
            
            
            1,339,199
            
            
            13
            
            
            535,666
            
            
            
            
            
            535,679Shares
                issued on exercise of options
            
            
            1,415,000
            
            
            14
            
            
            773,936
            
            
            
            
            
            773,950Shares
                issued on exercise of warrants
            
            
            700,000
            
            
            7
            
            
            279,993
            
            
            
            
            
            280,000Capital
                contribution from payment by prospective merger partner of the Company
                's
                costs
            
            
            
            
            
            
            
            
            230,113
            
            
            
            
            
            230,113Reclassification
                of derivative liability upon exercise of options for 905,000 shares
            
            
            
            
            
            
            
            
            433,652
            
            
            
            
            
            433,652Beneficial
                conversion charge incurred upon conversion of accrued interest on
                convertible debentures at $0.40 per share while fair market value
                of
                common stock was $0.91 per share
            
            
            
            
            
            
            
            
            682,991
            
            
            
            
            
            682,991Reclassification
                of fair value of warrants from derivative liability due to exercise
                of
                warrants and debt conversion
            
            
            
            
            
            
            
            
            10,400,900
            
            
            
            
            
            10,400,900Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            (2,600,904
            )
            
            (2,600,904
            )Balance,
                April 30, 2008
            
            
            60,467,816
            
            $
            604
            
            $
            62,859,167
            
            $
            (63,046,572)
            
            $
            (186,801
            )





See
      Notes
      to Condensed Consolidated Financial Statements.




3




JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 
 CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS
 NINE
        MONTHS ENDED APRIL 30, 2008 AND 2007
 (UNAUDITED)


2008
            
            2007 (restated)Operating activities:Net
                loss
            
            $
            (2,600,904
            )
            $
            (4,890,382
            )Adjustments
                to reconcile net loss to net cash used in operating activities:Depreciation
            
            
            19,368
            
            
            27,007Amortization
                of unearned, stock-based compensation
            
            
            3,854
            
            
            22,700Beneficial
                conversion charge included in interest expense
            
            
            682,991(Gain)
                loss on change in value of derivative liability
            
            
            (602,338
            )
            
            2,190,710Amortization
                of debt discount
            
            
            912,820
            
            
            1,009,851Costs
                of the Company paid by potential merger partner
            
            
            230,113
            
            
            412,605Effect
                of issuance of common stock in exchange for services
            
            
            97,150
            
            
            62,200Amortization
                of deferred consulting costs
            
            
            366,964
            
            
            -Loss
                on abandonment of fixed assets
            
            
            6,029
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (12,665
            )
            
            (15,380
            )Other
                current assets
            
            
            (48,775
            )
            
            44,722Accounts
                payable and accrued expenses
            
            
            (60,241
            )
            
            703,310Deferred
                revenues
            
            
            (11,961
            )
            
            (818
            )Net
                cash used in operating activities
            
            
            (1,017,595
            )
            
            (433,475
            )Investing
                activities:Equipment
                purchases
            
            
            (7,246
            )
            
            (15,545
            )Net
                cash used in investing activities
            
            
            (7,246
            )
            
            (15,545
            )Financing
                activities:Proceeds
                from exercise of stock options and warrants
            
            
            1,083,350
            
            
            4,000Net
                cash provided by financing activities
            
            
            1,083,350
            
            
            4,000Net
                increase (decrease) in cash and cash equivalents
            
            
            58,509
            
            
            (445,020
            )Cash
                and cash equivalents, beginning of period
            
            
            507
            
            
            450,618Cash
                and cash equivalents, end of period
            
            $
            59,016
            
            $
            5,598Supplemental
                disclosure of noncash financing activities:Effect
                of convertible debentures converted to common stock
            
            $
            3,520,000
            
            $
            555,000Effect
                of issuance of common stock as payment for accrued interest
            
            $
            535,679Fair
                value of fully-vested common stock issued to consultant inexchange
                for services
            
            $
            94,150
            
            $
            36,000Fair
                value of options issued for payment of accounts payable
            
            $
            15,200Fair
                value of options issued for future services
            
            $
            460,851Reclassification
                of derivative liability upon exercise of options
            
            $
            433,652Reclassification
                of fair value of warrants from derivative liabilityto
                additional paid-in capital
            
            $
            10,400,900




See
      Notes
      to Condensed Consolidated Financial Statements.




4




JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 Note
        1 —
Basis of presentation:
 
 In
        the
        opinion of management, the accompanying unaudited condensed consolidated
        financial statements reflect all adjustments, consisting of normal recurring
        adjustments, necessary to present fairly the financial position of JAG Media
        Holdings, Inc. (“JAG Media”) and its subsidiaries as of April 30, 2008,
        their results of operations for the nine and three months ended April 30,
        2008 and 2007, changes in stockholders’ deficiency for the nine months
        ended April 30, 2008 and cash flows for the nine months ended April 30, 2008
        and
        2007 (see Note 9). JAG Media and its subsidiaries are referred to together
        herein as the “Company.” Pursuant to rules and regulations of the Securities and
        Exchange Commission (the “SEC”), certain information and disclosures normally
        included in financial statements prepared in accordance with accounting
        principles generally accepted in the United States of America have been
        condensed or omitted from these consolidated financial statements unless
        significant changes have taken place since the end of the most recent fiscal
        year. Accordingly, these condensed consolidated financial statements should
        be
        read in conjunction with the consolidated financial statements, notes to
        consolidated financial statements and the other information in the audited
        consolidated financial statements of the Company as of July 31, 2007 and
        2006 and for the years ended July 31, 2007, 2006 and 2005 (the “Audited
        Financial Statements”) included in the Company’s Annual Report on Form 10-K (the
“10-K”) for the year ended July 31, 2007 that was previously filed with the
        SEC. The accompanying condensed consolidated balance sheet as of July 31,
        2007 has been derived from the audited consolidated financial statements
        included in the 10-K.
 
 The
        results of the Company’s operations for the nine and three months ended April
        30, 2008 are not necessarily indicative of the results of operations to be
        expected for the full year ending July 31, 2008.
 
 As
        further explained in Note 1 to the Audited Financial Statements and Note 8
        herein, the Company gathers and compiles financial and investment information
        from contacts at financial institutions and other Wall Street professionals
        and
        generates revenues by releasing such information to subscribers in a
        consolidated format on a timely basis through facsimile transmissions and
        a web
        site. As a result of an acquisition on November 24, 2004 (see Note 5 to the
        Audited Financial Statements), the Company is also in the business of developing
        related software focused on streaming video solutions. Development of these
        products has been limited as a result of the Company’s lack of financial
        resources. The business acquired had not generated any significant revenue
        as of
        the date of the acquisition or through April 30, 2008.
 
 The
        Company is actively pursuing potential mergers. As further discussed in Note
        10
        to the Audited Financial Statements, on December 27, 2005, the Company
        entered into an agreement and plan of merger that was amended on various
        dates
        through April 14, 2008 (the “Merger Agreement”) with, among others,
        Cryptometrics, Inc., a Delaware corporation (“Cryptometrics”), pursuant to which
        Cryptometrics would have merged with a newly created subsidiary of the Company.
        In consideration of the merger, the stockholders of Cryptometrics would have
        acquired shares of common stock of the Company, which would, upon issuance,
        represent approximately 87% of the outstanding shares of the Company’s common
        stock in exchange for all of the issued and outstanding shares of common
        stock
        of Cryptometrics. On June 18, 2008, the Company received a letter
        from Cryptometrics dated June 17, 2008, stating that the automatic termination
        date of the Merger Agreement had expired and that Cryptometrics had decided
        not to extend the Merger Agreement any further. The letter further stated
        that
        the Merger Agreement between the Company and Cryptometrics had by its terms
        been terminated, and was void and of no force or effect. The Company is
        actively seeking alternative merger candidates.
 
 The
        accompanying condensed consolidated financial statements have been prepared
        assuming that the Company will continue as a going concern. However, as shown
        in
        the accompanying condensed consolidated financial statements, the Company
        only
        generated revenues of approximately $119,700 and it incurred a net loss of
        approximately $2,601,000 and a cash flow deficiency from operating activities
        of
        approximately $1,018,000 for the nine months ended April 30, 2008. In addition,
        as of April 30, 2008, the Company only had cash and cash equivalents available
        of approximately $59,000. These matters raise substantial doubt about the
        Company’s ability to continue as a going concern.
 
 Management
        believes that, in the absence of a substantial increase in subscription
        revenues, it is probable that the Company will continue to incur losses and
        negative cash flows from operating activities through at least April 30,
        2009
        and that the Company will need to obtain additional equity or debt financing
        to
        sustain its operations.
  5
 
 JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 Note
        1 —
Basis of presentation (continued):
 
 Management
        believes that the Company will be able to obtain sufficient financing directly,
        or find an appropriate merger candidate that has such financing, to enable
        it to
        continue as a going concern through at least April 30, 2009. However, if
        the
        Company cannot obtain sufficient additional financing by that date, the Company
        may be forced thereafter to restructure its operations, file for bankruptcy
        or
        entirely cease its operations.
 
 The
        accompanying condensed consolidated financial statements do not include any
        adjustments related to the recoverability and classification of assets or
        the
        amount and classification of liabilities that might be necessary should the
        Company be unable to continue as a going concern.
 
 Note
        2 —
Net earnings (loss) per share:
 
 The
        Company presents “basic” earnings (loss) per share and, if applicable,
“diluted” earnings per share pursuant to the provisions of Statement of
        Financial Accounting Standards No. 128, “Earnings per Share”. Basic
        earnings (loss) per share is calculated by dividing net income or loss by
        the weighted average number of common shares outstanding during each period.
        The
        calculation of diluted earnings per share is similar to that of basic earnings
        per share, except that the denominator is increased to include the number
        of
        additional common shares that would have been outstanding if all potentially
        dilutive common shares, such as those issuable upon the exercise of outstanding
        stock options and warrants and the conversion of outstanding convertible
        debentures were issued during the period and the treasury stock method had
        been
        applied to the proceeds from the exercise of the options and warrants and
        net
        income was adjusted for interest on the convertible debentures.
 
 As
        of
        April 30, 2008, there were stock options and warrants outstanding for the
        purchase of a total of 750,000 and 11,300,000 shares of common stock,
        respectively (all previously convertible debentures had been converted — see
        Notes 4 and 5 herein). However, diluted per share amounts have not been
        presented in the accompanying condensed consolidated statements of operations
        because the Company had a net loss in the nine and three months ended April
        30,
        2008 and 2007 and the assumed effects of the exercise of the Company’s stock
        options and warrants and the conversion of convertible debentures that were
        outstanding during all or part of those periods would have been anti-dilutive.
 
 Note
        3 —
Income taxes:
 
 As
        of
        April 30, 2008, the Company had Federal net operating loss carryforwards
        of
        approximately $38,105,000 available to reduce future Federal taxable income
        which will expire from 2019 through 2027.
 
 As
        of
        April 30, 2008, the Company’s deferred tax assets consisted of the effects of
        temporary differences attributable to the following:
  Deferred
                  revenues, net
              
              $
              2,000Unearned
                  compensation
              
              
              20,000Net
                  operating loss carryforwards
              
              
              14,334,00014,356,000Less
                  valuation allowance
              
              
              (14,356,000
              )Total
              
              $
              —
 
 Due
        to
        the uncertainties related to, among other things, the extent and timing of
        its
        future taxable income, the Company offset its net deferred tax assets by
        an
        equivalent valuation allowance as of April 30, 2008.
  6
 
 JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  The
        Company had also offset the potential benefits from its net deferred tax
        assets
        by an equivalent valuation allowance during the year ended July 31, 2007.
        As a result of increases in the valuation allowances of $1,057,000 and $196,000
        during the nine and three months ended April 30, 2008, respectively, and
        $724,000 and $206,000 during the nine and three months ended April 30, 2007,
        respectively, which were primarily attributable to the net loss incurred
        during
        each of those periods, there are no credits for income taxes reflected in
        the
        accompanying condensed consolidated statements of operations to offset pre-tax
        losses.
 
 Note
        4 —
Equity and debt financing agreements with YA Global:
 
 As
        further explained in Note 4 to the Audited Financial Statements, on
        April 9, 2002, the Company entered into an equity line purchase agreement
        (the “ Equity Line Agreement”) with YA Global pursuant to which the Company had,
        in effect, put options whereby, subject to certain conditions, it could have
        required YA Global to purchase shares of its common stock from time to time
        at
        an aggregate purchase price of $10,000,000 through August 2006. The
        purchase price was to be 95% of the lowest closing bid price of the Company’s
        common stock over a specified number of trading days commencing on specified
        dates. YA Global was entitled to a cash fee equal to 5% of the gross proceeds
        received by the Company from YA Global in connection with each put. As of
        May 25, 2006, the date the Equity Line Agreement was effectively cancelled,
        $4,035,000 of the Company’s Equity Line with YA Global had been utilized.
 
 On
        January 25, 2005, the Company entered into a Promissory Note Agreement with
        YA Global for a loan of $2,000,000. The $2,000,000 loan from YA Global was
        funded on February 2, 2005 net of a debt discount of $100,000 deducted at
        the time of funding which was being amortized over the original term of the
        loan. The unamortized debt discount was approximately $32,000 as of May 25,
        2006 when the promissory note was converted into common stock and a secured
        convertible debenture. The face amount of the promissory note and interest
        on
        the amount from time to time outstanding at a rate of 12% per year was
        originally payable either (i) out of the net proceeds to be received by the
        Company upon delivery of put notices under the Equity Line Agreement or
        (ii) in full by the Company within 663 calendar days, subsequently extended
        to 753 calendar days, of January 25, 2005 regardless of the availability of
        proceeds under the Equity Line Agreement, unless an extension was mutually
        agreed to by the parties in writing.
 
 Pursuant
        to the promissory note, the Company had agreed to deposit in escrow 35 put
        notices under the Equity Line Agreement for puts in an amount of $60,000
        each
        and one request for a put under the Equity Line Agreement in an amount of
        $181,017. Under the terms of the promissory note as amended on August 5,
        2005, the put notices were to have been held in escrow and released every
        14 days commencing November 4, 2005.
 
 All
        put
        notices were cancelled and returned to the Company on May 25, 2006,
        when the Company terminated its Equity Line with YA Global, converted $250,000
        of the principal of its $2,000,000 promissory note payable to YA Global into
        1,250,000 shares of the Company’s common stock which were issued on such
        date for which the fair value was $400,000, and converted the remaining
        principal amount of $1,750,000 and accrued interest of $150,000 on the
        promissory note into a secured convertible debenture in the principal amount of
        $1,900,000. In addition, the Company issued similar secured convertible
        debentures to YA Global in the principal amounts of $1,250,000 on May 25,
        2006 and $1,000,000 on May 31, 2006, which provided the Company with net
        proceeds of approximately $2,025,000 after fees and costs of $225,000 paid
        to YA
        Global which were recorded as part of the debt discount on the debentures.
        All
        the secured convertible debentures bore interest at the rate of 10% per
        year and were initially due to mature three years after issuance. They were
        convertible through maturity into shares of the Company’s common stock as
        described below.
 
 The
        Company was required to issue irrevocable transfer agent instructions relating
        to the issuance of stock certificates on conversion of the debentures or
        exercise of the warrants. The Company was also required to deliver on behalf
        of
        itself and its subsidiary, Pixaya LLC (formerly JAG Media LLC), security
        agreements executed by the Company and its subsidiary granting YA Global
        a
        security interest in all their respective assets. Pursuant to such security
        agreements, the Company and its subsidiary could not incur any further liens,
        declare a dividend, issue any guarantees or incur any new indebtedness in
        excess
        of $25,000 other than trade accounts payable. In accordance with the terms
        of
        the January 31, 2008 agreement between the Company and YA Global, the
        security agreements were terminated, effective upon conversion by YA Global
        of
        the remaining principal and accrued interest on the convertible debentures
        into
        common stock of the Company.
  7
 
 JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 YA
        Global
        had the right to convert the debentures, at its sole option, into shares
        of the
        Company’s common stock at a conversion price which was the lower of
        (i) $0.40 per share or (ii) a 10% discount to the lowest volume
        weighted average price, as reported by Bloomberg L.P, of the Company’s common
        stock during the 30 trading days prior to the conversion date (see Note 8
        herein).
 
 In
        connection with the foregoing May 25, 2006 transaction, the Company issued
        warrants to YA Global to purchase 12,000,000 shares of common stock. The
        warrants are exercisable through May 2011 at prices ranging from $0.40 to
        $0.80 per share (see Note 6 to the Audited Financial Statements, and
        Note 8 herein). The exercise price and number of shares issuable pursuant
        to each of the warrants are subject to antidilution provisions.
 On
          various dates from June 24, 2007 through May 20, 2008, the secured convertible
          debentures and warrants issued to YA Global were amended. As a result,
          on the
          date the proposed merger between the Company and Crypometrics would have
          closed
          and become effective, (i) Cryptometrics would have assumed all the rights
          and
          obligations under those amended agreements on behalf of the post-merger,
          combine
          company , and (ii) the secured convertible debentures would have become
          convertible at a discount of 5% to the lowest volume weighted price of
          the
          Company’s common stock during the 30 trading days prior to the conversion dates
          and the warrants issued to YA Global would have become convertible at a
          discount
          of 12% to the average of the volume weighted average price of the Company’s
          common stock during the 30 trading days prior to the exercise date. On
          March 11,
          March 31 and May 15, 2008, the Company and YA Global agreed to exclude
          certain
          warrants from a prior agreement. Accordingly, warrants covering 1,300,000
          and
          2,000,000 shares of common stock could have been exercised at any time
          at their
          original exercise prices of $.40 and $.50 per share, respectively, while
          warrants covering 5,000,000 of common stock could have been exercised at
          various
          dates commencing September 30, 2008 at 88% of the average of the Volume
          Weighted
          Average Price of the Common Stock as quoted by Bloomberg, L.P. during the
          thirty
          (30) trading days immediately prior to the “Exercise Restriction Date” or such
          shorter period if less than thirty (30) trading days had elapsed.
 Since
        the
        conversion of the secured convertible debentures could have resulted in the
        issuance of an indeterminable number of common shares because they were
        convertible at a discount from the market price, the Company determined that
        based on the guidance in the consensus for EITF Issue No. 00-19 (“EITF
        00-19”) “Accounting for Derivative Financial Instruments Indexed to, and
        Potentially Settled in a Company’s Own Stock”, the Company was prohibited from
        concluding that it would have a sufficient number of authorized and unissued
        shares to net-share settle any of those warrants or any other warrants or
        options previously issued or granted to non-employees while the debentures
        were
        outstanding. Therefore, as of the date the secured convertible debentures
        and
        the related warrants were initially issued, the Company recorded the related
        fair value of all warrants issued with the debentures and options previously
        issued to non-employees as a derivative liability as explained below. Subsequent
        changes in the fair value of such options and warrants at the end of each
        reporting period were recorded as increases or decreases to the liability
        and
        charges or credits to the Company’s results of operations until they were
        exercised and until all of the debentures were converted.
 
 As
        of
        July 31, 2006, the warrants for the purchase of 12,000,000 shares were
        valued at approximately $2,744,000 based on the Black-Scholes option pricing
        model assuming a risk free interest rate of 6% annually, no dividend payments,
        annual volatility of 338.441%, exercise prices ranging from $0.40 to
        $0.80 per share, and the stock price of $0.23 per share when valued.
        As of October 31, 2006, the fair value of the warrants was approximately
        $2,253,000. As of April 30, 2007, the fair value of the warrants was
        recalculated using the Black-Scholes option pricing model assuming a risk
        free
        interest rate of 6% annually, no dividend payments, annual volatility of
        223.697%, exercise prices ranging from $0.40 to $0.80 per share, and the
        stock price of $0.39 per share when valued. This resulted in an increase in
        the carrying value of the derivative liability of the warrants to approximately
        $4,817,000 and the recognition of unrealized losses on derivative liability
        of
        approximately $2,073,000 and $149,000 during the nine and three months ended
        April 30, 2007, respectively.
 
 As
        of
        July 31, 2007, the warrants for the purchase of 12,000,000 shares were
        valued at approximately $11,059,000 based on the Black-Scholes option pricing
        model assuming a risk free interest rate of 6% annually, no dividend payments,
        annual volatility of 216.543%, exercise prices ranging from $0.40 to
        $0.80 per share, and the stock price of $0.95 per share when valued.
 
 As
        of
        January 31, 2008, the warrants for the purchase of 12,000,000 shares were
        valued
        at approximately $10,400,900 based on the Black-Scholes option pricing model
        assuming a risk free interest rate of 5.25% annually, no dividend payments,
        annual volatility of 203.855%, exercise prices ranging from $0.40 to
        $0.80 per share, and the stock price of $0.91 per share when valued.
        This resulted in the recognition of unrealized gain on derivative liability
        of
        approximately $658,000 during the nine months ended April 30, 2008.
  8
  JAG
        MEDIA
        HOLDINGS, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 
 In
        addition, as explained below, all of the remaining debentures were converted
        on
        January 31, 2008. As a result, the Company no longer had any equity
        instruments that could result in the issuance of an indeterminable number
        of
        common shares. Accordingly, the fair value of the warrants of $10,400,900
        at the
        time of the exercise of the 700,000 warrants and the conversion of the
        debentures was reclassified from derivative liability to additional paid-in
        capital.
 
 The
        issuance of convertible debentures and warrants to YA Global also caused
        the
        Company to reclassify the fair value of 200,000 options issued to a consultant
        that were outstanding as of May 25, 2006 from stockholders’ equity to the
        derivative liability and include the fair value of all options and warrants
        subsequently granted to non-employees for services as a derivative liability
        until the options and warrants are exercised or expire. As of July 31,
        2006, the outstanding options granted to the consultant were valued at
        approximately $46,000 using the Black-Scholes option pricing model. On
        October 2, 2006, the Company granted options to another consultant with a
        fair value at the date of grant of approximately $36,000 which is being
        amortized over the service period. The fair value at the date of the grant
        was
        determined using the Black-Scholes option pricing model assuming a risk free
        interest rate of 6% annually, no dividend payments, annual volatility of
        231.079%, an exercise price of $0.05 per share, and the stock price of
        $0.18 per share when issued. As of October 31, 2006, the fair value of
        all options granted to non-employees was recalculated using the Black-Scholes
        option pricing model and the assumptions used for the valuation of the warrants
        described above. As a result, the Company recognized a derivative liability
        of
        $82,000 for the approximate fair value of non-employee options as of October
        31,
        2006. As of July 31, 2007, all of the options issued to non-employees had
        been exercised or had expired.
 
 During
        the nine months ended April 30, 2008 and 2007, respectively, YA Global converted
        debentures in the principal amounts of $3,520,000 into 8,800,000 shares of
        the
        Company’s common stock and $555,000 into 4,432,111 shares of the Company’s
        common stock. The Company recorded amortization of debt discount attributable
        to
        the debentures of approximately $913,000 and $0 during the nine months and
        three
        months ended April 30, 2008, including $705,000 and $0 which was accreted
        as a
        result of the conversions. The Company recorded amortization of debt discount
        attributable to the debentures of approximately $1,010,000 and $125,000 during
        the nine and three months ended April 30, 2007, including $555,000 and $0
        which
        was accreted as a result of the conversions. As a result, the Company had
        no
        debentures outstanding as of April 30, 2008.
 
 In
        connection with the conversion of all of the remaining debentures on
        January 31, 2008, YA Global agreed to the conversion of the accrued
        interest thereon, totaling approximately $535,700, at $0.40 per share which
        resulted in the issuance by the Company of 1,339,199 shares of common stock.
        In
        addition to interest expense of approximately $95,000 and charged to operations
        in the nine months ended April 30, 2008 based on the terms of the debentures,
        the Company also recorded a non-cash charge to interest expense of approximately
        $683,000 to reflect the beneficial conversion feature arising from the
        conversion of the accrued interest at $0.40 per share on January 31, 2008
        when the fair market value of the Company’s common stock was $0.91 per share.
 Note
          5 —
Accounts payable and accrued expenses
  As
          of
          April 30, 2008, a subsidiary of the Company, Pixaya(UK) Limited, owed
          approximately $46,000 on an unsecured overdraft line of credit, which is
          included in accounts payable and accrued expenses. As of April 30, 2008
          Pixaya
          was in default of this line of credit.
  Note 6 —
        Other issuances of common stock and stock options:
 
 Shares
        issued for services:
 As
        explained in Note 6 to the Audited Financial Statements, the Company has
        issued, from time to time, common stock to employees as compensation and
        to
        non-employees, including investment analysts and commentators and other
        consultants that have entered into agreements to provide the Company with
        financial information that is released to subscribers, as consideration for
        consulting, professional and other services.
 
 During
        the nine months ended April 30, 2008, the Company issued a total of 165,000
        shares of its common stock with an aggregate fair value of $109,350 to certain
        employees and consultants, of which approximately $97,350 and $24,700 was
        charged to general and administrative expense during the nine and three months
        ended April 30, 2008, respectively, and $12,000 was applied to settle
        outstanding accounts payable.
  9


JAGMEDIA
      HOLDINGS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





Options
      issued for services:





As
      explained in Note 6 to the Audited Financial Statements, the Company has
      issued, from time to time, stock options for the purchase of common stock to
      employees as compensation and to non-employees, including investment analysts
      and commentators and other consultants that have entered into agreements to
      provide the Company with financial information that is released to subscribers,
      as consideration for consulting, professional and other services.





As
      of
      April 30, 2008, the Company has options outstanding for the purchase of
      750,000 shares of, effectively, common stock all of which were granted
      pursuant to the Company’s 1999 Long-term Incentive Plan (the “Incentive Plan”)
      which provides for individual awards to officers, employees, directors,
      consultants and certain other individuals that may take the form of stock
      options and certain other types of awards for which the value is based in whole
      or in part upon the fair market value of, the Company’s common stock. The number
      of shares of common stock that may be subject to all types of awards under
      the
      Incentive Plan as amended may not exceed 6,000,000 shares. The options
      typically vest upon grant but in no case later than two and one-half years
      after
      grant and expire the earlier of the tenth anniversary of the grant or the
      90th day following termination of employment; provided that during such
      90 day period the option will be exercisable only to the extent it was
      vested as of the date of such termination.





As
      explained in Note 2 to the Audited Financial Statements, through
      July 31, 2006, the Company recognized the cost of grants of options to
      employees and non-employees based on the fair value of the equity instruments
      at
      the date issued amortized over the periods in which the related services were
      rendered in accordance with the provisions of Statement of Financial Accounting
      Standards No. 123, “Accounting for Stock-Based Compensation”
(“SFAS 123”). Accordingly, the Company had been estimating the fair value
      of stock options using an option-pricing model (generally, the Black-Scholes
      model) that meets the criteria set forth in SFAS 123 and common stock using
      its market value. It has been recording such value through charges to
      compensation cost and corresponding credits to equity. The charges to
      compensation cost are being amortized to expense over the vesting period. As
      required, effective August 1, 2006, the Company adopted Statement of
      Financial Accounting Standards No. 123 (Revised 2004), “Share-Based
      Payment” (“SFAS 123(R)”) using the modified prospective application
      transition method. Because the fair value recognition provisions of
      SFAS No. 123 and SFAS No. 123(R) are materially consistent,
      the adoption of SFAS No. 123(R) did not have a significant impact on
      the methods used by the Company to value and account for its options or its
      financial position and results of operations. In accordance with
      SFAS No. 123(R), the Company reclassified previously unamortized
      unearned compensation of $34,870 from unearned compensation to additional
      paid-in capital as of the date of adoption. There was no charge to operations.





During
      the nine and three months ended April 30, 2008, respectively the Company issued
      options for the purchase of 1,165,000 and 260,000 shares of common stock to
      non-employees with a fair value on the date of issuance of approximately
      $461,000 and $83,000 based on the Black-Scholes option pricing model assuming
      a
      risk free interest rate of between 2.08% and 6% annually, no dividend payments,
      annual volatility ranging from 96.478% to 216.543%, and exercise prices ranging
      from $0.60 to $0.86 per share when issued.





During
      the nine and three months ended April 30, 2008, respectively, employees and
      non-employees exercised options to purchase 1,415,000 and 260,000 shares of
      common stock at prices ranging from $0.02 to $0.86 per share with an aggregate
      purchase price of approximately $774,000 and $176,000. The Company also received
      proceeds of $29,400 during the nine months ended April 30, 2008 for the payment
      of the remaining balance of the exercise price for options exercised prior
      to
      July 31, 2007. As a result of the exercise of options during the nine
      months ended April 30, 2008, all of the options granted to non-employees had
      been exercised or had expired and the Company reclassified approximately
      $434,000 from the derivative liability to additional paid-in capital. In
      addition, the Company recognized an unrealized loss on the change in the value
      of the derivative liability related to options of approximately $55,000 and
      $0
      during the nine and three months ended April 30, 2008 and approximately $74,000
      and $210,000 during the nine and three months ended April 30, 2007.


10


JAG
      MEDIA
      HOLDINGS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





As
      of
      April 30, 2008, the Company has the ability to grant options to purchase an
      additional 5,250,000 shares of common stock under the Incentive Plan.





The
      table
      below summarizes the stock option activity pursuant to our Incentive Plan for
      the nine months ended April 30, 2008:




**Weighted****Weighted**
            
            **Average****Average**
            
            **Remaining**
            
            **Aggregate****Exercise**
            
            **Contractual**
            
            **Intrinsic****Shares**
            
            **Price**
            
            **Term**
            
            **Value**Options
                outstanding August 1, 2007
            
            
            1,000,000
            
            $
            0.02Granted
            
            
            1,165,000
            
            $
            0.66Exercised
            
            
            (1,415,000
            )
            $
            0.55Options
                outstanding April 30, 2008
            
            
            750,000
            
            $
            0.02
            
            
            3.34
            
            $
            607,500Options
                exercisable April 30, 2008
            
            
            750,000
            
            $
            0.02
            
            
            3.34
            
            $
            607,500


The
      fair
      value of each option granted by the Company in the nine months ended April
      30,
      2008 and 2007 was estimated on the date of grant using the Black-Scholes option
      pricing model with the following assumptions:


**Nine Months Ended**
            
            **Nine Months Ended****April 30, 2008**
            
            **April 30, 2007**Risk-free
                interest rate
            
            
            2.08
                - 6.00
            %
            
            6.00
            %Dividend
                yield
            
            
            0.00
            %
            
            0.00
            %Expected
                life
            
            
            1.5 to 11 months
            
            
            5 yearsExpected volatility factor
            
            
            96.478% to 216.543
            %
            
            231.079
            %





Expected
      volatilities are based on historical volatility of our stock. We have adopted
      the guidance of the SEC’s Staff Accounting Bulletin No. 107 to temporarily
      employ the simplified method of estimating the expected life of the option..
      The
      simplified method utilizes the average of the vested term and the original
      contract term. Our short term historical experience with exercise and
      post-vesting employment termination behavior supports this method for
      determining the option’s expected life. When sufficient historical experience
      has been obtained, we will use such experience for future estimations of the
      expected life. The expected life represents the period of time that options
      granted are expected to be outstanding. The risk-free rate is based on the
      U.S.
      Treasury rate with a maturity corresponding to the options expected life.





Other
      Equity Transactions





As
      explained in Notes 1 and 7 herein, the Company entered into a Merger Agreement
      with, among others, Cryptometrics. Pursuant to the terms of the merger,
      Cryptometrics has paid various legal and accounting costs, totaling
      approximately $810,000 on behalf of the Company, including approximately
      $230,000 in the nine months ended
      April 30, 2008, that will not have to be repaid by the Company to Cryptometrics
      in the event that the merger is
      not
      successfully completed. The costs paid by Cryptometrics have been charged to
      operating expenses and the amounts received by the Company have been recorded
      as
      a capital contribution and included in additional paid-in capital.





**Note 7
      — Litigation:**





The
      Company is a party to various claims and lawsuits incidental to its business.
      In
      the opinion of management, it is probable that the resolution of such
      contingencies will not materially affect the consolidated financial position
      or
      results of operations of the Company in subsequent years.


11





JAG
      MEDIA
      HOLDINGS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





**Note 8
      — Cryptometrics merger:**





As
      explained in Notes 1 and 10 to the Audited Financial Statements and Note 1
      herein, the Company entered into a Merger Agreement on December 27, 2005,
      which was amended on various dates through April 14, 2008 with, among others,
      Cryptometrics pursuant to which Cryptometrics would merge with a newly created
      subsidiary of the Company. In consideration of the merger, the stockholders
      of
      Cryptometrics would have acquired shares of common stock of the Company, which
      would, upon issuance, represent approximately 87% of the combined companies’
outstanding shares of common stock, in exchange for all of the issued and
      outstanding shares of common stock of Cryptometrics. As of March 14, 2008,
      the shares of common stock to be received by the stockholders of Cryptometrics
      became registered under the U.S. Securities Act of 1933, as amended. If
      consummated, the proposed transaction would have been accounted for as a
      reverse acquisition in which Cryptometrics would be the acquirer for accounting
      purposes. As of April 30, 2008, the automatic termination date for the proposed
      merger with Cryptometrics had elapsed. In a letter from Cryptometrics to
      the Company dated June 17, 2008 and received by the Company on June 18, 2008,
      Cryptometrics had stated that it decided not to extend the Merger Agreement
      any
      further and that the Merger Agreement had by its terms been terminated, and
      was
      void and of no force or effect.





12




JAG
      MEDIA
      HOLDINGS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





**Note 9
      — Restatement of Unaudited Interim Financial Statements:**





In
      connection with the preparation of the Annual Report on Form 10-K of the Company
      for the fiscal year ended July 31, 2007, the Company’s independent
      registered public accounting firm brought to the attention of the management
      of
      the Company that certain of the Company’s legal and accounting costs which,
      pursuant to the terms of the Merger Agreement with Cryptometrics were paid
      for
      by Cryptometrics, should have been charged to operating expenses and the amounts
      received by the Company should have been recorded as capital contributions
      and
      included in additional paid-in capital in the periods in which the costs were
      incurred (see Notes 6 and 11 to the Audited Financial Statements). As a result,
      management completed an investigation focused on the Company’s accounting for
      all expenses paid for by Cryptometrics during the term of the Merger Agreement
      and determined that certain of the expenses should have been recorded in each
      of
      the quarters ended October 31, 2006, January 31, 2007 and
      April 30, 2007.





In
      addition, the Company’s independent registered public accounting firm brought to
      the attention of the management of the Company that the expected volatility
      factors used to determine the fair value of the derivative liabilities that
      were
      valued based on the Black-Scholes options pricing model were overstated during
      each of the first three quarters of the year ended July 31, 2007. As a
      result, management completed an investigation and determined that the volatility
      factors should have ranged from 223.697% to 229.281% instead of the 340.64%
      to
      370.96% and, accordingly, the derivative liabilities recorded at the end of
      each
      of the quarters ended October 31, 2006, January 31, 2007 and
      April 30, 2007 were overstated and the gain or loss on change in derivative
      liability for each of the quarters then ended was understated or overstated.





Upon
      completion of these investigations, management has identified certain
      adjustments related to the costs paid by Cryptometrics on behalf of the Company
      and the overstatement of the volatility factors that necessitate the restatement
      of the Company’s financial statements for each of the first three quarters of
      fiscal 2007. Previously issued financial statements for those quarters should
      not be relied upon. The following tables reflect the impact of the restatements
      as of April 30, 2007 and for the nine and three months then ended:


13




JAG
      MEDIA
      HOLDINGS, INC. AND SUBSIDIARIES


NOTES
      TO
      CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)





JAG
      Media
      Holdings, Inc. and Subsidiaries


Restated
      Condensed Consolidated Balance Sheet (Unaudited)


April
      30,
      2007




As
                Previously
            
            RestatementReported
            
            Adjustment
            
            As
                Restated4/30/2007
            
            4/30/2007
            
            4/30/2007AssetsCurrent
                assets:Cash
                and cash equivalents
            
            $
            5,598
            
            $
            —
            
            $
            5,598Accounts
                receivable, net of allowance for doubtful accounts of $7,500
            
            
            30,959
            
            
            
            
            
            30,959Other
                current assets
            
            
            26,042
            
            
            
            
            
            26,042Total
                current assets
            
            
            62,599
            
            
            —
            
            
            62,599Equipment,
                net of accumulated depreciation of $146,127
            
            
            63,919
            
            
            
            
            
            63,919Total
            
            $
            126,518
            
            $
            —
            
            $
            126,518Liabilities
                and Stockholders’ DeficiencyCurrent
                liabilities:Accounts
                payable and accrued expenses
            
            $
            936,102
            
            $
            —
            
            $
            936,102Deferred
                revenues
            
            
            21,630
            
            
            
            
            
            21,630Derivative
                liability
            
            
            5,114,349
            
            
            (213,891
            )
            
            4,900,458Total
                current liabilities
            
            
            6,072,081
            
            
            (213,891
            )
            
            5,858,190Convertible
                debentures payable, net of unamortized debt discount of $1,038,060
            
            
            2,481,940
            
            
            
            
            
            2,481,940Total
                liabilities
            
            
            8,554,021
            
            
            (213,891
            )
            
            8,340,130Mandatorily
                redeemable Class B common stock; par value $.00001 per share:
              400,000
                shares designated as Series 2: 381,741 shares issued and outstanding
            
            
            4
            
            
            
            
            
            440,000
                shares designated as Series 3; 21,500 shares issued and outstanding
            
            
            —
            
            
            
            
            
            —4
            
            
            
            
            
            4Commitments
                and contingenciesStockholders’
                deficiency:Preferred
                stock; par value $.00001 per share; 50,000,000 shares authorized,
                none
                issuedCommon
                stock; par value $.00001 per share; 500,000,000 shares authorized;
                47,708,617 shares issued and outstanding
            
            
            477
            
            
            
            
            
            477Additional
                paid-in capital
            
            
            44,934,199
            
            
            412,606
            
            
            45,346,805Accumulated
                deficit
            
            
            (53,362,183
            )
            
            (198,715
            )
            
            (53,560,898
            )Total
                stockholders’ deficiency
            
            
            (8,427,507
            )
            
            213,891
            
            
            (8,213,616
            )Total
            
            $
            126,518
            
            $
            —
            
            $
            126,518


14




Jag
      Media
      Holdings, Inc. and Subsidiaries


Restated
      Condensed Consolidated Statements of Operations (Unaudited)


Nine
      and
      Three Months Ended April 30, 2007




Nine Months Ended April 30, 2007
            
            Three Months Ended April 30, 2007As
            
            
            
            
            
            AsPreviously
            
            Restatement
            
            As
            
            Previously
            
            Restatement
            
            AsReported
            
            Adjustment
            
            Restated
            
            Reported
            
            Adjustment
            
            RestatedRevenues
            
            $
            164,308
            
            $
            —
            
            $
            164,308
            
            $
            63,171
            
            $
            —
            
            $
            63,171Operating
                expenses:Cost
                of revenues
            
            
            60,654
            
            
            
            
            
            60,654
            
            
            18,522
            
            
            
            
            
            18,522Selling
                expenses
            
            
            71,241
            
            
            
            
            
            71,241
            
            
            11,425
            
            
            
            
            
            11,425General
                and administrative expenses
            
            
            1,032,575
            
            
            412,606
            
            
            1,445,181
            
            
            475,067
            
            
            173,500
            
            
            648,567Totals
            
            
            1,164,470
            
            
            412,606
            
            
            1,577,076
            
            
            505,014
            
            
            173,500
            
            
            678,514Loss
                from operations
            
            
            (1,000,162
            )
            
            (412,606
            )
            
            (1,412,768
            )
            
            (441,843
            )
            
            (173,500
            )
            
            (615,343
            )Other
                income (expense):Loss
                on change in value of derivative liability
            
            
            (2,404,601
            )
            
            213,891
            
            
            (2,190,710
            )
            
            (407,032
            )
            
            21,359
            
            
            (385,673
            )Interest
                income
            
            
            97
            
            
            
            
            
            97
            
            
            —
            
            
            
            
            
            —Interest
                expense
            
            
            (1,287,001
            )
            
            
            
            
            (1,287,001
            )
            
            (211,070
            )
            
            
            
            
            (211,070
            )Net
                loss
            
            $
            (4,691,667
            )
            $
            (198,715
            )
            $
            (4,890,382
            )
            $
            (1,059,945
            )
            $
            (152,141
            )
            $
            (1,212,086
            )Basic
                and diluted net loss per share
            
            $
            (0.10
            )
            
            
            
            $
            (0.11
            )
            $
            (0.02
            )
            
            
            
            $
            (0.03
            )Basic
                and diluted weighted average common shares outstanding
            
            
            46,001,871
            
            
            
            
            
            46,001,871
            
            
            47,663,673
            
            
            
            
            
            47,663,673


15


**Item 2.
      Management’s Discussion and Analysis**





**Critical
      Accounting Policies and Estimates**


Our
      discussion and analysis of our financial condition and results of operations
      are
      based upon our condensed consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America for interim financial statements filed with the
      Securities and Exchange Commission. The preparation of these condensed
      consolidated financial statements requires us to make estimates and judgments
      that affect the reported amounts of assets, liabilities, revenues and expenses,
      and related disclosure of contingent assets and liabilities. On an on-going
      basis, we evaluate our estimates, including those related to accounts
      receivable, equipment, stock-based compensation, income taxes and contingencies.
      We base our estimates on historical experience and on various other assumptions
      that are believed to be reasonable under the circumstances, the results of
      which
      form the basis for making judgments about the carrying values of assets and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or conditions.





The
      accounting policies and estimates used as of July 31, 2007, as outlined in
      our previously filed Form 10-K, have been applied consistently for the nine
      months ended April 30, 2008.





**Related
      Party Transactions**





None.





**Off-Balance
      Sheet arrangements**





We
      are
      not party to any off balance sheet arrangements.





**Results
      of operations**


**Nine
      months ended April 30, 2008 as compared to nine months ended April 30,
      2007.**




Nine
                Months Ended April 30,2008
            
            2007
                (restated)
            
            $
                ChangeRevenues
            
            $
            119,736
            
            $
            164,308
            
            $
            (44,572
            )Operating
                expenses:Cost
                of revenues
            
            
            18,569
            
            
            60,654
            
            
            (42,085
            )Selling
                expenses
            
            
            46,700
            
            
            71,241
            
            
            (24,541
            )General
                and administrative expenses
            
            
            1,567,071
            
            
            1,445,181
            
            
            121,890Totals
            
            
            1,632,340
            
            
            1,577,076
            
            
            55,264Loss
                from operations
            
            
            (1,512,604
            )
            
            (1,412,768
            )
            
            (99,836
            )Other
                income (expense) :Gain
                (loss) on change in value of derivative liability
            
            
            602,338
            
            
            (2,190,710
            )
            
            2,793,048Interest
                income
            
            
            —
            
            
            97
            
            
            (97
            )Interest
                expense
            
            
            (1,690,638
            )
            
            (1,287,001
            )
            
            (403,637
            )Net
                loss
            
            $
            (2,600,904
            )
            $
            (4,890,382
            )
            $
            2,289,478





16


**Revenues**





Revenues
      consist of subscription revenues from annual, semi-annual, quarterly and monthly
      subscriptions relating to our product “JAGNotes.” JAGNotes is a daily
      consolidated investment report that summarizes newly issued research, analyst
      opinions, upgrades, downgrades, and analyst coverage changes from various
      investment banks and brokerage houses. Revenues decreased for the nine months
      ended April 30, 2008 versus the nine months ended April 30, 2007 due
      to the lack of advertising, the site’s reduced content, and increased
      competition and the lack of sales of streaming video
      products.





**Cost
      of revenues**





Cost
      of
      revenues includes the cost to transmit the product over the telephone and fax
      lines, on-line service charges for our web site, and costs in connection with
      the development and maintenance of the web site.





During
      the nine months ended April 30, 2008, there were approximately $7,600 of
      consulting fees as compared to approximately $24,000 for the nine months ended
      April 30, 2007. Such fees included non-cash charges associated with the
      amortization of unearned compensation arising from the issuance of options
      in
      exchange for services of approximately $7,600 for the nine months ended April
      30, 2008 and the amortization of unearned compensation arising from the issuance
      of shares in exchange for services of approximately $10,000 for the nine months
      ended April 30, 2007. The decrease in consulting fees is a result of the
      expiration of consulting contracts associated with commentators for our
      jagnotes.com website. In addition, costs associated with the transmission of
      our
      product over telephone and fax line and costs associated with the maintenance
      of
      our web site declined.





During
      the nine months ended April 30, 2008, there were no costs associated with the
      manufacture of our streaming video products as compared to approximately $23,000
      for the manufacture of streaming video products placed in test markets during
      the nine months ended April 30, 2007.





**Selling
      expenses**





Selling
      expenses consist primarily of advertising and other promotional expenses. The
      decrease results primarily from a reduction of new sales and marketing expenses
      of Pixaya, our United Kingdom subsidiary. Such fees include approximately
      $33,000 and $16,800 of non-cash amortization of options issued to a consultant
      for 150,000 and 200,000 shares of common stock with a fair market value of
      approximately $48,000 and $36,000 in exchange for services during the nine
      months ended April 31, 2008 and 2007, respectively. During the nine months
      ended
      April 30, 2007 we had also incurred $15,000 for training classes for resellers
      of the Survaya Cam.





**General
      and administrative expenses**


General
      and administrative expenses consist primarily of compensation and benefits
      for
      the officers, other compensation, which includes non-cash charges for the
      issuance of 40,000 shares of our common stock with an aggregate fair value
      of
      $25,600 to certain employees, occupancy costs, professional fees and other
      office expenses. The increase in general and administrative expenses is
      primarily attributable to liabilities arising from a payroll tax audit of
      approximately $45,000, and non-cash charges of approximately $326,000 for a
      portion of the issuance of 905,000 options with an aggregate fair value of
      approximately $378,000 to non-employees for services, offset by a decrease
      in
      payroll expenses of approximately $335,000 due to a reduction in the number
      of
      employees during the nine months ended April 30, 2008 versus the nine
      months ended April 30, 2007.


17


*Gain
      (loss) on change in value of derivative liability*





The
      gain
      on change in value of the derivative liability for the nine months ended April
      30, 2008 reflects the effect of the decrease in the fair market value of our
      common stock. As of January 31, 2008, YA Global Investments, L.P. (“YA
      Global”) (formerly known as Cornell Capital) converted debentures in the
      principal amounts of $3,520,000 into 8,800,000 shares of our common stock.
      Therefore, all of the remaining debentures were converted on January 31,
      2008. As a result, we no longer had any equity instruments that could result
      in
      the issuance of an indeterminable number of common shares. Accordingly, we
      no
      longer had to record the warrants at fair value and the fair value of the
      warrants of $10,400,900 was reclassified from derivative liability to additional
      paid-in capital.




As
      of
      January 31, 2008, the fair market value of the 12,000,000 warrants was
      approximately $10,400,900 while as of July 31, 2007, the fair market value
      of those warrants was approximately $11,059,000, resulting in a gain of
      approximately $658,000 for the nine months ended April 30, 2008 compared to
      a loss of $2,073,000 for the nine months ended April 30, 2007 as a result
      of an increase in the value of our stock.





As
      a
      result of changes in the fair market value of our common stock, we also recorded
      an unrealized loss on the change in value of the derivative liability of
      approximately $55,000 and $118,000 in the nine months ended April 30, 2008
      and 2007, respectively, related to changes in the fair value of options that
      were outstanding during portions of those periods. No options issued to
      non-employees were outstanding as of April 30, 2008 or July 31, 2007.





*Interest
      expense*





The
      increase in interest expense of approximately $404,000 arises from the net
      effects of an increase in charges to interest expense for the amortization
      of
      debt discount of approximately $705,000 accreted as a result of conversions;
      a
      non-cash charge to interest expense of approximately $683,000 to reflect the
      beneficial conversion feature arising from the conversion of accrued interest
      at
      $0.40 per share on January 31, 2008 when the fair market value of our
      common stock was $0.91 per share; and a decrease in charges to interest expense
      from a decrease in borrowings under our promissory note and secured convertible
      debentures payable to YA Global as a result of conversions into shares of our
      common stock. During the nine months ended April 30, 2008, interest
      totaling approximately $1,691,000 is comprised of interest on our secured
      convertible debentures, interest from amortization of debt discount, and the
      non-cash charge to interest expense of approximately $683,000 to reflect the
      beneficial conversion feature. Interest of approximately $95,000 was incurred
      as
      interest charged at 10% per annum on our convertible debentures.





Interest
      totaling approximately $1,287,000 during the nine months ended April 30,
      2007 was comprised of interest on our secured convertible debentures and
      interest from amortization of debt discount. Interest on debentures of
      approximately $277,000 was incurred as interest charged at 10% per annum on
      our
      convertible debentures. Interest expense of $1,010,000 was incurred from the
      amortization of debt discount related to costs incurred and deducted from the
      $2,250,000 convertible debentures issued May 25, 2006 and May 31,
      2006.


18





**Three
      months ended April 30, 2008 as compared to three months ended April 30,
      2007.**




Three
                MonthsEnded
                April 30,2008
            
            2007
                (restated)
            
            $
                ChangeRevenues
            
            $
            41,101
            
            $
            63,171
            
            $
            (22,070
            )Operating
                expenses:Cost
                of revenues
            
            
            10,544
            
            
            18,522
            
            
            (7,978
            )Selling
                expenses
            
            
            33,102
            
            
            11,425
            
            
            21,677General
                and administrative expenses
            
            
            566,327
            
            
            648,567
            
            
            (82,240
            )Totals
            
            
            60,973
            
            
            678,514
            
            
            (68,541
            )Loss
                from operations
            
            
            (568,872
            )
            
            (615,343
            )
            
            46,471Other
                expense:Loss
                on change in value of derivative liability
            
            
            —
            
            
            (385,673
            )
            
            385,673Interest
                expense
            
            
            —
            
            
            (211,070
            )
            
            211,070Net
                loss
            
            $
            (568,872
            )
            $
            (1,212,086
            )
            $
            643,214





*Revenues*





Revenues
      decreased for the three months ended April 30, 2008 versus the three months
      ended April 30, 2007 due to the lack of advertising and increased
      competition and the lack of sales of streaming video
      products.





*Cost
      of revenues*





During
      the three months ended April 30, 2008, there were approximately $7,600 of
      consulting fees as compared to approximately $4,000 for the three months ended
      April 30, 2007. Such fees included non-cash charges associated with the
      amortization of unearned compensation arising from the issuance of options
      in
      exchange for services of approximately $7,600 for the nine months ended April
      30, 2008 and the issuance of shares in exchange for services of approximately
      $10,000 for the nine months ended April 30, 2007. The decrease in consulting
      fees is a result of the expiration of consulting contracts associated with
      commentators for our jagnotes.com website. In addition, costs associated with
      the transmission of our product over telephone and fax line and costs associated
      with the maintenance of our web site declined.





*Selling
      expenses*





Selling
      expenses consist primarily of advertising and other promotional expenses. The
      increase results primarily from consulting fees paid to a consultant to maintain
      customer awareness of the Survaya Cam product of Pixaya, our United Kingdom
      subsidiary. Such fees included $33,000 and $7,200 of non-cash amortization
      of
      options issued to a consultant during the nine months ended April 30, 2008
      and 2007, respectively.


19


*General
      and administrative expenses*




The
      decrease in general and administrative expenses is attributable to an increase
      in non-cash charges of approximately $46,000 for a portion of the issuance
      of
      905,000 options with an aggregate fair value of approximately $378,000 to
      non-employees for services and an increase in non-cash charges of approximately
      $25,000 for a portion of the issuance of 110,000 shares of commons stock with
      an
      aggregate fair value of approximately $70,000 to a non-employee for services
      offset by a decrease in payroll expenses of approximately $164,000 due to a
      reduction in the number of employees during the three months ended
      April 30, 2008 as compared to April 30, 2007 .




*Loss
      on change in value of derivative liability*





During
      the three months ended January 31, 2008, YA Global converted debentures in
      the principal amount of $1,920,000 into 4,800,000 shares of our common stock.
      Therefore, all of the remaining debentures were converted on January 31,
      2008. As a result, we no longer had any equity instruments that could result
      in
      the issuance of an indeterminable number of common shares. Accordingly, we
      no
      longer had to record the warrants at fair value and the fair value of the
      warrants of $10,400,900 was reclassified from derivative liability to additional
      paid-in capital.





As
      we no
      longer have a derivative liability as of April 30, 2008, we did not record
      any
      gain or loss on the change in value of derivative liability for the three months
      ended April 30, 2008 compared to a loss of approximately $149,000 for the three
      months ended April 30, 2007 as a result of an increase in the fair market value
      of our stock.





As
      a
      result of changes in the fair market value of our common stock, we also recorded
      an unrealized loss on change in value of the derivative liability of
      approximately $6,000 in the three months ended April 30, 2007 related to
      changes in the fair value of non-employee options that were outstanding during
      that period. No options issued to non-employees were outstanding at April 30,
      2008 or April 30, 2007.





*Interest
      expense*





The
      decrease in interest expense of approximately $211,000 arises from the net
      effects of the complete conversion and resulting decrease in borrowings under
      our promissory note and secured convertible debentures payable to YA Global
      as a
      result of conversions into shares of our common stock as of January 31,
      2008.





**Liquidity
      and Capital Resources**





We
      only
      generated revenues of approximately $119,700 and we incurred a net loss of
      approximately $2,601,000 and a cash flow deficiency from operating activities
      of
      approximately $1,018,000 for the nine months ended April 30, 2008. In
      addition, at April 30, 2008, we only had cash and cash equivalents of
      approximately $59,000. These matters raise substantial doubt about our ability
      to continue as a going concern.





We
      believe that, in the absence of a substantial increase in subscription revenues
      or sales of our streaming video products, it is probable that the we will
      continue to incur losses and negative cash flows from operating activities
      through at least April 30, 2009 and that we will need to obtain additional
      equity or debt financing to sustain our operations until we can market our
      services, expand our customer base and achieve profitability or effect a merger.





We
      believe that we will be able to obtain sufficient financing, directly, or find
      an appropriate merger candidate that has such financing to enable us to continue
      as a going concern through at least April 30, 2009. However, if we cannot
      obtain sufficient additional financing by that date, we may be forced thereafter
      to restructure our operations, file for bankruptcy or entirely cease our
      operations.


20







Our
      cash
      and cash equivalent position of approximately $59,000 as of April 30, 2008
      results primarily from the transactions with YA Global described below and
      the
      exercise of stock options granted to employees and non-employees.





On
      April 9, 2002, we entered into an Equity Line Purchase Agreement with YA
      Global pursuant to which we had, in effect, put options whereby, subject to
      certain conditions, we could have required YA Global to purchase shares of
      our
      common stock from time to time at an aggregate purchase price of $10,000,000.
      The Equity Line Agreement became available to us on August 28, 2002, and
      would have remained available through August 28, 2006 unless it was
      terminated earlier by us in our sole discretion. The purchase price was 95%
      of
      the lowest closing bid price of our common stock over a specified number of
      trading days commencing on specified dates. YA Global was entitled to a cash
      fee
      equal to 5% of the gross proceeds received by us from YA Global in connection
      with each put. As of May 25, 2006, the date the Equity Line was effectively
      cancelled, $4,035,000 of the Equity Line had been used.





On
      January 25, 2005, we entered into a Promissory Note Agreement with YA
      Global for a loan of $2,000,000. The $2,000,000 loan from YA Global was funded
      on February 2, 2005 net of a debt discount of $100,000 deducted at the time
      of funding which was being amortized over the original term of the loan. The
      unamortized debt discount was $31,674 as of May 25, 2006 when the
      promissory note was converted into common stock and a secured convertible
      debenture.





On
      August 5, 2005, we and YA Global agreed, as permitted under the promissory
      note, to extend for three months the date by which we must pay all amounts
      due
      under the promissory note. The face amount of the promissory note (as amended)
      and interest on the amount from time to time outstanding at a rate of 12% per
      year was payable either (i) out of the net proceeds to be received by us
      upon delivery of put notices under the Equity Line Agreement or (ii) in
      full by us within 753 calendar days of January 25, 2005 regardless of the
      availability of proceeds under the Equity Line Agreement, unless an extension
      was mutually agreed to by the parties in writing.





Pursuant
      to the promissory note, we agreed to deposit in escrow 35 put notices under
      the
      Equity Line Agreement for puts in an amount of $60,000 each and one request
      for
      a put under the Equity Line Agreement in an amount of $181,017. Under the terms
      of the promissory note (as extended), the put notices were to have been held
      in
      escrow and be released every 14 days commencing November 4, 2005.





Upon
      an
      event of default (as defined in the promissory note), the entire principal
      balance and accrued interest of the promissory note, and all of other
      obligations of our Company under the promissory note, would become immediately
      due and payable without any action on the part of YA Global.


All
      put
      notices were canceled and returned to us on May 25, 2006, when we
      terminated the Equity Line Agreement with YA Global, converted $250,000 of
      principal of our $2,000,000 promissory note payable to YA Global into 1,250,000
      shares of our common stock which were issued on such date for which the fair
      value was $400,000 and converted the remaining principal amount of $1,750,000
      and accrued interest of $150,000 on the promissory note into a secured
      convertible debenture in the principal amount of $1,900,000. In addition, we
      issued similar secured convertible debentures to YA Global in the principal
      amounts of $1,250,000 on May 25, 2006 and $1,000,000 on May 31, 2006,
      which provided us with net proceeds of approximately $2,025,000 after fees
      and
      costs which were recorded as part of the debt discount on the debentures. All
      the secured convertible debentures bore interest at the rate of 10% per year
      and
      were initially due to mature three years after issuance. They were convertible
      through maturity into shares of our common stock as provided in the debentures.





We
      were
      required to issue irrevocable transfer agent instructions relating to the
      issuance of stock certificates on conversion of the debentures or exercise
      of
      the warrants. We were also required to deliver on behalf of ourselves and our
      subsidiary, Pixaya LLC (formerly known as JAG Media LLC), security agreements
      executed by us and our subsidiary, Pixaya LLC, granting YA Global a security
      interest in all their respective assets. Pursuant to such security agreement,
      we
      and our subsidiary could not incur any further liens, declare a dividend, issue
      any guarantees or incur any new indebtedness in excess of $25,000 other than
      trade accounts payable. In accordance with the terms of the January 31,
      2008 agreement between us and YA Global, the security agreements were
      terminated, effective upon conversion by YA Global of the remaining principal
      and accrued interest on the convertible debentures into our common stock.


21





YA
      Global
      had the right to convert the debentures, at its sole option, into shares of
      our
      common stock at a conversion price which was the lower of (i) $0.40 per share
      or
      (ii) a 10% discount to the lowest volume weighted average price, as
      reported by Bloomberg, LP, of our common stock during the 30 trading days prior
      to the conversion date.





In
      connection with the foregoing May 25, 2005 transaction, we issued warrants
      to YA Global to purchase 12,000,000 shares of common stock. The warrants are
      exercisable through May 2011 at prices ranging from $0.40 to $0.80 per
      share. The exercise price and number of share issuable to each of the warrants
      are subject to antidilution provisions.





Since
      the
      conversion of the secured convertible debentures and the related warrants could
      have resulted in the issuance of an indeterminable number of common shares
      since
      they were convertible at a discount from the market price, we determined that
      based on the guidance in the consensus for EITF Issue No. 00-19 (“EITF
      00-19”) “Accounting for Derivative Financial Instruments Indexed to, and
      Potentially Settled in a Company’s Own Stock,” we were prohibited from
      concluding that we would have a sufficient number of authorized and unissued
      shares to net-share settle any of those warrants or any other warrants or
      options previously issued or granted to non-employees while the debentures
      were
      outstanding. Therefore, as of the date the secured convertible debentures and
      the related warrants were initially issued, the Company recorded the related
      fair value of all warrants issued with the debentures and options previously
      issued to non-employees as a derivative liability as explained below. Subsequent
      changes in the fair value of such options and warrants at the end of each
      reporting period were recorded as increases or decreases to the liability and
      charges or credits to the Company’s results of operations until they were
      exercised and until all of the debentures were converted.





As
      of
      July 31, 2007, the warrants for the purchase of 12,000,000 shares of common
      stock were valued at approximately $11,059,000 based on the Black-Scholes option
      pricing model assuming a risk free interest rate of 6% annually, no dividend
      payments, annual volatility of 216.543%, exercise prices ranging from $0.40
      to
      $0.80 per share, and the stock price of $0.95 per share when valued.





As
      of
      January 31, 2008, the warrants for the purchase of 12,000,000 shares were
      valued at approximately $10,400,900 based on the Black-Scholes option pricing
      model assuming a risk free interest rate of 5.25% annually, no dividend
      payments, annual volatility of 203.855%, exercise prices ranging from $0.40
      to
      $0.80 per share, and the stock price of $0.91 per share when valued. This
      resulted in an unrealized gain on derivative liability of approximately $658,000
      during the nine months ended April 30, 2008.





On
      January 31, 2008, warrants for the purchase of 700,000 shares were
      exercised at the price of $0.40 per share, resulting in an increase in
      additional paid-in capital of approximately $280,000. During the nine months
      ended April 30, 2008, YA Global converted debentures in the principal amount
      of
      $3,520,000 into 8,800,000 shares of our common stock. As a result, the Company
      no longer had any equity instruments that could result in the issuance of an
      indeterminable number of common shares. Accordingly, the fair value of the
      warrants of $10,400,900 at the time of the exercise of the 700,000 warrants
      and
      the conversion of the debentures was reclassified from derivative liability
      to
      additional paid-in capital as of January 31, 2008.


22





During
      the nine months ended April 30, 2008, we issued options for the purchase of
      1,165,000 shares of common stock to non-employees valued at approximately
      $559,000 based on the Black-Scholes option pricing model assuming a risk free
      interest rate of 2.08% to 6% annually, no dividend payments, annual volatility
      ranging from 96.478% to 216.543%, and exercise prices ranging from $0.60 to
      $0.86 per share when issued.





During
      the nine months ended April 31, 2008 employees and non-employees exercised
      options to purchase 1,415,000 shares of common stock at prices ranging from
      $0.02 to $0.86 per share with an aggregate purchase price of approximately
      $774,000. We also received proceeds of $29,400 for the payment of the remaining
      balance of the exercise price for options exercised prior to July 31, 2007.





**Seasonality**





We
      do not
      believe that our business is subject to seasonal trends or inflation. On an
      ongoing basis, we will attempt to minimize any effect of inflation on our
      operating results by controlling operating costs and whenever possible, seeking
      to insure that subscription rates reflect increases in costs due to inflation.





**Recent
      Accounting Pronouncements**





The
      FASB
      and the Accounting Standards committee of the American Institute of Certified
      Public Accountants had issued certain accounting pronouncements as of April
      30,
      2008 that will become effective in subsequent periods; however, we do not
      believe that any of those pronouncements would have significantly affected
      our
      financial accounting measurements or disclosures had they been in effect during
      the nine months ended April 30, 2008 and 2007 or that they will have a
      significant effect at the time they become effective.





**Recent
      Events**





Our
      Merger Agreement with Cryptometrics, dated as of December 27, 2005,
      previously amended as of January 24, 2007, February 26, 2007,
      April 4, 2007, April 20, 2007, May 10, 2007, May 18, 2007,
      September 18, 2007, November 13, 2007, February 6, 2008 and March
      31, 2008 was further amended on April 14, 2008. Such amendments
      successively extended the automatic termination date of the Merger
      Agreement.




On
      June 18, 2008, we received a letter from
      Cryptometrics dated June 17, 2008, stating that the automatic termination
      date of the Merger Agreement had expired and that Cryptometrics had decided
      not to extend the Merger Agreement any further. The letter further stated that
      the Merger Agreement between us and Cryptometrics had by its terms been
      terminated, and was void and of no force or effect. The Company is
      actively seeking alternative merger candidates.




**Item
      3. Controls and Procedures.**




(a)
      Evaluation of Disclosure Controls and Procedures:




As
      of the
      end of the fiscal quarter ended April 30, 2008, our Chief Executive Officer
      and
      Chief Financial Officer carried out an evaluation of the effectiveness of the
      design and operation of our disclosure controls and procedures that we have
      in
      place with respect to the accumulation and communication of information to
      management and the recording, processing, summarizing and reporting thereof.
      Based upon that evaluation, the Chief Executive Officer and Chief Financial
      Officer concluded that our disclosure controls and procedures were effective
      as
      of that date in alerting them in a timely manner to material information
      relating to JAG Media Holdings, Inc. (including its consolidated subsidiaries)
      required to be included in our periodic SEC filings.




23




(b)
      Changes in Internal Control over Financial Reporting:




There
      have been no changes in internal control over financial reporting that occurred
      during the most recent fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




24


**PART
      II. OTHER INFORMATION**




**Item
      1. Legal Proceedings**




None.




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




None.




**Item
      3. Defaults Upon Senior Securities**




Our
      wholly owned United Kingdom subsidiary, Pixaya (UK) Limited, is in default
      with respect to the payment of amounts due under its overdraft facility with
      HSBC Bank plc. As of the date of the filing of this report, the total amount
      of
      principal and interest owed as a result of this default is approximately
£23,879.62, equivalent to approximately $46,679.16.




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




None.




**Item
      5. Other Information**




None.




**Item
      6. Exhibits**




31.1
            
            Section
                302 Certification of Chief Executive Officer.31.2
            
            Section
                302 Certification of Chief Financial Officer.32.1
            
            Section
                906 Certification of Chief Executive Officer and Chief Financial
                Officer.




25


**SIGNATURES**




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




**JAG
                MEDIA HOLDINGS, INC.**Date:
                June 20, 2008
            By:
            /s/
                Thomas J. MazzarisiName:
            Thomas
                J. MazzarisiTitle:
            Chairman
                of the Board and
              Chief
              Executive
                Officer




Date:
                June 20, 2008
            By:
            /s/
                Stephen J. SchoepferName:
            Stephen
                J. SchoepferTitle:
            President,
                Chief Financial Officer,
              Chief
                Operating Officer
              and
                Secretary




26




**EXHIBIT
      INDEX**




31.1
            
            Section
                302 Certification of Chief Executive Officer31.2
            
            Section
                302 Certification of Chief Financial Officer32.1
            
            Section
                906 Certification of Chief Executive Officer and Chief Financial
                Officer




27