##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended January 31, 2008.
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to.
 Commission
file number 000-28761
 JAG MEDIA HOLDINGS, INC.
  Nevada
    
    88-0380546(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 
 
 
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
  o þ




---



##### Table of Contents



JAG MEDIA HOLDINGS, INC.
 FORM 10-Q
 For the Quarter Ended October 31, 2007
 INDEX
 PAGEPART I. FINANCIAL INFORMATION
    
    
    1ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
    
    
    1Condensed Consolidated Balance Sheets at January 31, 2008 (Unaudited) and July 31, 2007
    
    
    2Condensed Consolidated Statements of Operations for the Six Months and Three Months
ended January 31, 2008 and 2007 (Unaudited)
    
    
    3Condensed Consolidated Statement of Changes in Stockholders Equity (Deficiency) for
the Six Months ended January 31, 2008 (Unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Six Months Ended January 31,
2008 and 2007 (Unaudited)
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    14ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    21ITEM 4T: CONTROLS AND PROCEDURES
    
    
    21PART II. OTHER INFORMATION
    
    
    23ITEM 1: LEGAL PROCEEDINGS
    
    
    23
 i




---



##### Table of Contents



PAGEITEM 1A: RISK FACTORS
    
    
    23ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    23ITEM 3: DEFAULTS UPON SENIOR SECURITIES
    
    
    23ITEM 4: SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
    
    
    23ITEM 5: OTHER INFORMATION
    
    
    23ITEM 6: EXHIBITS
    
    
    23SIGNATURES
    
    
    24EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONSEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
  ii




---



##### Table of Contents



PART 1.
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 January 31,
    
    
    July 31,2008
    
    
    2007(unaudited)
    
    
    (see Note 1)AssetsCurrent assets:Cash and cash equivalents
    
    $
    49,495
    
    
    $
    507Accounts receivable, net of allowance for doubtful accounts of $7,500
    
    
    58,719
    
    
    
    34,345Other current assets
    
    
    402,189
    
    
    
    44,426Total current assets
    
    
    510,403
    
    
    
    79,278Equipment, net of accumulated depreciation of $170,136 and $154,975
    
    
    39,910
    
    
    
    55,071Totals
    
    $
    550,313
    
    
    $
    134,349Liabilities and Stockholders EquityCurrent liabilities:Accounts
payable and accrued expenses
    
    $
    414,358
    
    
    $
    1,088,819Deferred revenues
    
    
    12,803
    
    
    
    18,695Derivative liability
    
    
    
    
    
    
    11,058,561Total current liabilities
    
    
    427,161
    
    
    
    12,166,075Convertible debentures payable, net of unamortized debt discount of $912,820
    
    
    
    
    
    
    2,607,180Total liabilities
    
    
    427,161
    
    
    
    14,773,255Mandatorily redeemable Class B common stock; par value $.00001 per share:400,000 shares designated as Series 2; 381,749 shares issued and
outstanding
    
    
    4
    
    
    
    440,000 shares designated as Series 3; 21,500 shares issued and
outstanding
    
    
    
    
    
    
    4
    
    
    
    4Commitments and contingenciesStockholders equity (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;
60,207,816 and 48,048,617 shares issued and outstanding
    
    
    602
    
    
    
    480Additional paid-in capital
    
    
    62,600,246
    
    
    
    45,806,278Accumulated deficit
    
    
    (62,477,700
    )
    
    
    (60,445,668
    )Total stockholders equity (deficiency)
    
    
    123,148
    
    
    
    (14,638,910
    )Totals
    
    $
    550,313
    
    
    $
    134,349
  1




---



##### Table of Contents



Six Months
    
    
    Three MonthsEnded January 31,
    
    
    Ended January 31,2008
    
    
    2007 (restated)
    
    
    2008
    
    
    2007 (restated)Revenues
    
    $
    78,635
    
    
    $
    101,137
    
    
    $
    41,903
    
    
    $
    57,806Operating expenses:Cost of revenues
    
    
    8,025
    
    
    
    42,132
    
    
    
    3,404
    
    
    
    17,482Selling expenses
    
    
    13,598
    
    
    
    59,816
    
    
    
    6,302
    
    
    
    35,554General and administrative expenses
    
    
    1,000,744
    
    
    
    796,614
    
    
    
    563,517
    
    
    
    529,764Totals
    
    
    1,022,367
    
    
    
    898,562
    
    
    
    573,223
    
    
    
    582,800Loss from operations
    
    
    (943,732
    )
    
    
    (797,425
    )
    
    
    (531,320
    )
    
    
    (524,994
    )Other income (expense):Gain (loss) on change in value of derivative liability
    
    
    602,338
    
    
    
    (1,805,035
    )
    
    
    (1,331,600
    )
    
    
    (2,297,988
    )Interest income
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    20Interest expense
    
    
    (1,690,638
    )
    
    
    (1,075,881
    )
    
    
    (1,500,791
    )
    
    
    (607,632
    )Net loss
    
    $
    (2,032,032
    )
    
    $
    (3,678,246
    )
    
    $
    (3,363,711
    )
    
    $
    (3,430,594
    )Basic and diluted net loss per share
    
    $
    (0.04
    )
    
    $
    (0.08
    )
    
    $
    (0.06
    )
    
    $
    (0.07
    )Basic and diluted weighted average common shares
outstanding
    
    
    52,951,588
    
    
    
    45,198,064
    
    
    
    55,236,625
    
    
    
    46,423,522
  2




---



##### Table of Contents



Common Stock
    
    
    AdditionalNumber of
    
    
    
    
    
    
    Paid-in
    
    
    AccumulatedShares
    
    
    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
    
    
    
    
    
    
    
    109,350Shares 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
    
    
    1,155,000
    
    
    
    12
    
    
    
    597,539
    
    
    
    
    
    
    
    597,551Shares 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,032,032
    )
    
    
    (2,032,032
    )Balance, January 31, 2008
    
    
    60,207,816
    
    
    $
    602
    
    
    $
    62,600,246
    
    
    $
    (62,477,700
    )
    
    $
    123,148
  3




---



##### Table of Contents



2008
    
    
    2007 (restated)Operating activities:Net loss
    
    $
    (2,032,032
    )
    
    $
    (3,678,246
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    15,204
    
    
    
    18,053Amortization
of unearned, stock-based compensation
    
    
    3,854
    
    
    
    15,967Beneficial
conversion charge included in interest expense
    
    
    682,991(Gain) loss on change in value of derivative liability
    
    
    (602,338
    )
    
    
    1,805,035Amortization of debt discount
    
    
    912,820
    
    
    
    884,611Costs of the Company paid by potential merger partner
    
    
    230,113
    
    
    
    239,106Effect of issuance of common stock in exchange for services
    
    
    72,448
    
    
    
    62,200Amortization of deferred consulting costs
    
    
    280,395
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (24,374
    )
    
    
    (1,540
    )Other current assets
    
    
    14,055
    
    
    
    9,479Accounts payable and accrued expenses
    
    
    (125,206
    )
    
    
    232,807Deferred revenues
    
    
    (5,892
    )
    
    
    (928
    )Net cash used in operating activities
    
    
    (577,962
    )
    
    
    (413,456
    )Investing activities:Equipment purchases
    
    
    
    
    
    
    (15,545
    )Net cash used in investing activities
    
    
    
    
    
    
    (15,545
    )Financing activities:Proceeds from exercise of stock options
    
    
    626,950
    
    
    
    Net cash provided by financing activities
    
    
    626,950
    
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    48,988
    
    
    
    (429,001
    )Cash and cash equivalents, beginning of period
    
    
    507
    
    
    
    450,618Cash and cash equivalents, end of period
    
    $
    49,495
    
    
    $
    21,617Supplemental disclosure of noncash financing activities:Noncash effect of convertible debentures converted to common stock
    
    $
    3,520,000
    
    
    $
    555,000Effect of
issuance of common stock as payment for accrued interest
    
    $
    535,679Receivable from investor for warrants exercised
    
    $
    280,000Fair value of fully-vested common stock issued to consultant in
exchange for services
    
    $
    94,150
    
    
    $
    36,000Fair value of options issued for payment of accounts payable
    
    $
    15,200Fair value of options issued for future services
    
    $
    378,327Reclassification of derivative liability upon exercise of options
    
    $
    433,652Reclassification
of fair value of warrants from derivative liability to additional paid-in capital
    
    $
    10,400,900
  4




---



##### Table of Contents



5




---



##### Table of Contents



Deferred revenues, net
    
    $
    4,000Unearned compensation
    
    
    20,000Net operating loss carryforwards
    
    
    14,138,00014,162,000Less valuation allowance
    
    
    (14,162,000
    )Total
    
    $
    
   6




---



##### Table of Contents



7




---



##### Table of Contents



8




---



##### Table of Contents



9




---



##### Table of Contents



WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Term
    
    ValueOptions outstanding August 1, 2007
    
    
    1,000,000
    
    
    $
    0.02Granted
    
    
    905,000
    
    
    $
    0.65Exercised
    
    
    (1,155,000
    )
    
    $
    0.52Options outstanding January 31, 2008
    
    
    750,000
    
    
    $
    0.02
    
    
    
    3.57
    
    
    $
    667,500Options exercisable January 31, 2008
    
    
    750,000
    
    
    $
    0.02
    
    
    
    3.57
    
    
    $
    667,500
  Six Months Ended
    
    
    Six Months EndedJanuary 31, 2008
    
    
    January 31, 2007Risk-free interest rate
    
    
    5.25 - 6.00
    %
    
    
    6.00
    %Dividend yield
    
    
    0.00
    %
    
    
    0
    %Expected life
    
    
    1.5 to 3 months
    
    
    
    5 yearsExpected volatility factor
    

    203.855% to 216.543
    %
    
    
    231.079
    %
   10




---



##### Table of Contents



Note 6  Litigation:
  Note 7  Cryptometrics merger:
       11




---



##### Table of Contents



Note 8  Restatement of Unaudited Interim Financial Statements:
    12




---



##### Table of Contents



As Previously
    
    RestatementReported
    
    Adjustment
    
    As Restated1/31/2007
    
    1/31/2007
    
    1/31/2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,617
    
    
    $
    
    
    
    $
    21,617Accounts receivable, net of allowance for doubtful accounts of $7,500
    
    
    17,120
    
    
    
    
    
    
    
    17,120Other current assets
    
    
    61,730
    
    
    
    
    
    
    
    61,730Total current assets
    
    
    100,467
    
    
    
    
    
    
    
    100,467Equipment, net of accumulated depreciation of $136,988
    
    
    73,058
    
    
    
    
    
    
    
    73,058Total
    
    $
    173,525
    
    
    $
    
    
    
    $
    173,525Liabilities and Stockholders DeficiencyCurrent liabilities:Accounts payable and accrued expenses
    
    $
    466,229
    
    
    $
    
    
    
    $
    466,229Deferred revenues
    
    
    21,520
    
    
    
    
    
    
    
    21,520Derivative liability
    
    
    4,823,317
    
    
    
    (192,532
    )
    
    
    4,630,785Total current liabilities
    
    
    5,311,066
    
    
    
    (192,532
    )
    
    
    5,118,534Convertible debentures payable, net of unamortized debt discount of $1,163,300
    
    
    2,356,700
    
    
    
    
    
    
    
    2,356,700Total liabilities
    
    
    7,667,766
    
    
    
    (192,532
    )
    
    
    7,475,234Mandatorily 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;
47,508,617 shares issued and outstanding
    
    
    475
    
    
    
    
    
    
    
    475Additional paid-in capital
    
    
    44,807,468
    
    
    
    239,106
    
    
    
    45,046,574Accumulated deficit
    
    
    (52,302,188
    )
    
    
    (46,574
    )
    
    
    (52,348,762
    )Total stockholders deficiency
    
    
    (7,494,245
    )
    
    
    192,532
    
    
    
    (7,301,713
    )Total
    
    $
    173,525
    
    
    $
    
    
    
    $
    173,525
 13




---



##### Table of Contents



Six Months Ended January 31, 2007
    
    
    Three Months Ended January 31, 2007As
    
    
    
    
    
    
    
    
    
    
    AsPreviously
    
    
    Restatement
    
    
    As
    
    
    Previously
    
    
    Restatement
    
    
    AsReported
    
    
    Adjustment
    
    
    Restated
    
    
    Reported
    
    
    Adjustment
    
    
    RestatedRevenues
    
    $
    101,137
    
    
    $
    
    
    
    $
    101,137
    
    
    $
    57,806
    
    
    $
    
    
    
    $
    57,806Operating expenses:Cost of revenues
    
    
    42,132
    
    
    
    
    
    
    
    42,132
    
    
    
    17,482
    
    
    
    
    
    
    
    17,482Selling expenses
    
    
    59,816
    
    
    
    
    
    
    
    59,816
    
    
    
    35,554
    
    
    
    
    
    
    
    35,554General and administrative expenses
    
    
    557,508
    
    
    
    239,106
    
    
    
    796,614
    
    
    
    317,819
    
    
    
    211,945
    
    
    
    529,764Totals
    
    
    659,456
    
    
    
    239,106
    
    
    
    898,562
    
    
    
    370,855
    
    
    
    211,945
    
    
    
    582,800Loss from operations
    
    
    (558,319
    )
    
    
    (239,106
    )
    
    
    (797,425
    )
    
    
    (313,049
    )
    
    
    (211,945
    )
    
    
    (524,994
    )Other income (expense):Loss on change in value of
derivative liability
    
    
    (1,997,567
    )
    
    
    192,532
    
    
    
    (1,805,035
    )
    
    
    (2,356,659
    )
    
    
    58,671
    
    
    
    (2,297,988
    )Interest income
    
    
    95
    
    
    
    
    
    
    
    95
    
    
    
    20
    
    
    
    
    
    
    
    20Interest expense
    
    
    (1,075,881
    )
    
    
    
    
    
    
    (1,075,881
    )
    
    
    (607,632
    )
    
    
    
    
    
    
    (607,632
    )Net loss
    
    $
    (3,631,672
    )
    
    $
    (46,574
    )
    
    $
    (3,678,246
    )
    
    $
    (3,277,320
    )
    
    $
    (153,274
    )
    
    $
    (3,430,594
    )Basic and diluted net loss per share
    
    $
    (0.08
    )
    
    
    
    
    
    $
    (0.08
    )
    
    $
    (0.07
    )
    
    
    
    
    
    $
    (0.07
    )Basic and diluted weighted average
common shares outstanding
    
    
    45,198,064
    
    
    
    
    
    
    
    45,198,064
    
    
    
    46,423,522
    
    
    
    
    
    
    
    46,423,522
 
 Item 2. Managements Discussion and Analysis
 Critical Accounting Policies and Estimates
   Related Party Transactions
  Off-Balance Sheet arrangements
  14




---



##### Table of Contents



Results of operations
 Six months ended January 31, 2008 as compared to six months ended January 31, 2007
 Six Months Ended January 31,2008
    
    
    2007 (restated)
    
    
    $ ChangeRevenues
    
    $
    78,635
    
    
    $
    101,137
    
    
    $
    (22,502
    )Operating expenses:Cost of revenues
    
    
    8,025
    
    
    
    42,132
    
    
    
    (34,107
    )Selling expenses
    
    
    13,598
    
    
    
    59,816
    
    
    
    (46,218
    )General and administrative expenses
    
    
    1,000,744
    
    
    
    796,614
    
    
    
    204,130Totals
    
    
    1,022,367
    
    
    
    898,562
    
    
    
    123,805Loss from operations
    
    
    (943,732
    )
    
    
    (797,425
    )
    
    
    (146,307
    )Other income (expense) :Gain (loss) on change in value of derivative liability
    
    
    602,338
    
    
    
    (1,805,035
    )
    
    
    2,407,373Interest income
    
    
    
    
    
    
    95
    
    
    
    (95
    )Interest expense
    
    
    (1,690,638
    )
    
    
    (1,075,881
    )
    
    
    (614,757
    )Net loss
    
    $
    (2,032,032
    )
    
    $
    (3,678,246
    )
    
    $
    1,646,214
 Revenues
  Cost of revenues
   Selling expenses
  General and administrative expenses
  15




---



##### Table of Contents



Gain (loss) on change in value of derivative liability
    Interest expense
   16




---



##### Table of Contents



Three months ended January 31, 2008 as compared to three months ended January 31, 2007.
 Three MonthsEnded January 31,2008
    
    
    2007 (restated)
    
    
    $ ChangeRevenues
    
    $
    41,903
    
    
    $
    57,806
    
    
    $
    (15,903
    )Operating expenses:Cost of revenues
    
    
    3,404
    
    
    
    17,482
    
    
    
    (14,078
    )Selling expenses
    
    
    6,302
    
    
    
    35,554
    
    
    
    (29,252
    )General and administrative expenses
    
    
    563,517
    
    
    
    529,764
    
    
    
    33,753Totals
    
    
    573,223
    
    
    
    582,800
    
    
    
    (9,577
    )Loss from operations
    
    
    (531,320
    )
    
    
    (524,994
    )
    
    
    (6,326
    )Other income (expense) :Loss on change in value of derivative liability
    
    
    (1,331,600
    )
    
    
    (2,297,988
    )
    
    
    966,388Interest income
    
    
    
    
    
    
    20
    
    
    
    (20
    )Interest expense
    
    
    (1,500,791
    )
    
    
    (607,632
    )
    
    
    (893,159
    )Net loss
    
    $
    (3,363,711
    )
    
    $
    (3,430,594
    )
    
    $
    66,883
 Revenues
  Cost of revenues
  Selling expenses
  General and administrative expenses
  17




---



##### Table of Contents



Loss on change in value of derivative liability
    Interest expense
  18




---



##### Table of Contents



Liquidity and Capital Resources
           19




---



##### Table of Contents



20




---



##### Table of Contents



Seasonality
  Recent Accounting Pronouncements
  Recent
Events
   
 Item 3. Quantative and Qualitative Disclosure About Market Risk
  
 Item 4T. Controls and Procedures
      
    
    Management began to implement additional review procedures to ensure that all
accounting transactions were adequately communicated amongst and
between accounting personnel so that all transactions paid for or
assumed by another party on behalf of us are recorded by us on a
timely and accurate basis. In the early part of our fiscal quarter
ended January 31, 2008, the implementation process was completed.
 21




---



##### Table of Contents




    
    Management also completed in the early part of our fiscal quarter
ended January 31, 2008 additional review procedures to ensure that
all spreadsheet formulas are prepared on a consistent basis and that
results are reviewed prior to application to financial statement
valuations.
  22




---



##### Table of Contents



PART II. 
OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Amount
    
    Number ofDate of Conversion
    
    Converted
    
    Shares IssuedNovember 14, 2007
    
    $
    300,000
    
    
    
    750,000December 17, 2007
    
    $
    1,000,000
    
    
    
    2,500,000January 24, 2008
    
    $
    295,000
    
    
    
    737,500
 
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 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.
 23




---



##### Table of Contents



SIGNATURES
  JAG MEDIA HOLDINGS, INC.Date: March 24, 2008
    By:
    /s/ Thomas J. MazzarisiName:
    Thomas J. MazzarisiTitle:
    Chairman of the Board and Chief
Executive OfficerDate: March 24, 2008
    By:
    /s/ Stephen J. SchoepferName:
    Stephen J. SchoepferTitle:
    President, Chief Financial Officer,
Chief Operating Officer and Secretary 24




---



##### Table of Contents



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