---

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# UNITED STATES
                                    SECURITIES AND EXCHANGE COMMISSION
                                          WASHINGTON, D.C. 20549

---

# FORM 10-K

# (Mark One)

|x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 2008
|- | ---------------------------------------------------------------------------------------------------------------------------

|o | TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the transition period from _______ to ______
|- | -------------------------------------------------------------------------------------------------------------------------------------

# Commission file
number: 000-52558

|DISABOOM, INC                                 
|----------------------------------------------
|(Name of small business issuer in its charter)
|                                              
|                                              

|Colorado                                                         | 20-5973352                       
|---------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of  
incorporation or organization) | (IRS Employer
Identification No.)
|                                                                 |                                  
|                                                                 |                                  

|7730 E. Belleview Ave, Suite A-306  
   Greenwood Village, CO 80111 | 80111                            
|------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of  
incorporation or organization)    | (IRS Employer
Identification No.)
|                                                                    |                                  
|                                                                    |                                  

Registrant's telephone
number, including area code:   (720) 407-6530

Securities registered
pursuant to Section 12(b) of the Exchange Act:   None

|Securities registered pursuant to Section 12(g) of the Exchange Act:
|--------------------------------------------------------------------
|Common Stock                                                        
|(Title of Class)                                                    
|                                                                    

Indicate by check mark if the
registrant is a well known,  seasoned issuer,  as defined in Rule 405 of the Securities
Act:     Yes o   
No x

Check  whether  the  registrant  is
not  required to file  reports  pursuant to Section 13 or 15(d) of the Exchange Act:
   Yes o   
No x

Check whether the issuer (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past twelve (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

Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no
disclosure will be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.      o

Indicate by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or
a smaller reporting company (as defined in Exchange Act Rule 12b-2).

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

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

The aggregate market value of the
common stock held by non-affiliates of the Registrant as of June 30, 2008 was
approximately $28,459,389  based upon the closing sale price of the
Registrants Common Stock on such date, as reported on the NASD OTC-Bulletin Board.
Shares of Common Stock held by each executive officer and director and each person owning
more than 10% of the outstanding Common Stock of the Registrant have been excluded in that
such persons may be deemed to be affiliates of the Registrant. This determination of
affiliate status is not necessarily a conclusive determination for other purposes.

The number of shares outstanding of
the Registrants Common Stock, as of March 19, 2009, was 44,801,937 shares.

---



# PART I

Cautionary Statement
about Forward-Looking Statements

This
Form 10-K contains forward-looking statements regarding future events and the
Companys future results that are subject to the safe harbors created under the
Securities Act of 1933 (the Securities Act) and the Securities Exchange Act of
1934 (the Exchange Act). These statements are based on current expectations,
estimates, forecasts, and projections about the industry in which the Company operates and
the beliefs and assumptions of the Companys management. Words such as
expects, anticipates, targets, goals,
projects, intends, plans, believes,
seeks, estimates, continues, may,
variations of such words, and similar expressions are intended to identify such
forward-looking statements. In addition, any statements that refer to projections of the
Companys future financial performance, the continuing development of the
Companys website, the prospects for selling advertising on the website and new
visitors and visitor page views related to advertising agreements, the Companys
anticipated growth and potentials in its business, and other characterizations of future
events or circumstances are forward-looking statements. Readers are cautioned that these
forward-looking statements are only predictions and are subject to risks, uncertainties,
and assumptions that are difficult to predict, including those identified elsewhere
herein, including under Risk Factors. Therefore, actual results may differ
materially and adversely from those expressed in any forward-looking statements.

The
Company is under no duty to update any of these forward-looking statements after the date
of this report. You should not place undue reliance on these forward-looking statements.

# ITEM 1. DESCRIPTION OF
BUSINESS

Overview

We
were incorporated under the laws of the State of Colorado on September 5, 2006 with the
primary purpose of developing, operating and marketing the first interactive online
community dedicated to constantly improving the way Americans with disabilities or
functional limitations live their lives. It also serves as a comprehensive online resource
and social networking platform not only for people living with such conditions, but their
immediate families and friends, caregivers, recreation and rehabilitation providers,
employers, and other related communities. Our headquarters are located in the metropolitan
area of Denver, Colorado.

The
Company released a limited availability beta version of its main website on September 1,
2007, and released an updated and enhanced general availability version of its main
website on January 24, 2008. On October 9, 2007, the Company acquired an online dating and
social networking website with the domain name Lovebyrd.com, and re-branded Lovebyrd.com
in the quarter ended March 31, 2008 as a related website of Disaboom.com. On February 1,
2008 the Company launched a website with the domain name DisaboomJobs.com, which is
dedicated to providing employment-related resources and services to the disability
community and their employers. The Companys main website and related microsites for
dating and employment-related resources and services are collectively referred to herein
as the Disaboom Network.

There
are more than 54 million American adults living with disabilities or functional
limitations today in the United States alone, and over 650 million worldwide. We believe
Disaboom offers a new solution to the challenges and difficulties faced by this
traditionally underserved market. Persons living with disabilities or functional
limitations have unique needs, as do the people in their lives who are directly affected
by such disabilities or functional limitations.

We
promote the trademarked name of our website, Disaboom.com, and related microsites
DisaboomJobs.com and Lovebyrd.com, by primarily implementing a combination of search
engine marketing/search engine optimization (SEM/SEO) advertising campaigns,
as well as social marketing and social media campaigns, intended to encourage people to
visit our sites. We believe that with the present absence of a comprehensive,
community-oriented website dedicated to people living with or directly affected by
disabilities or functional limitations, this traditionally underserved target audience
will visit and participate in our community, and contribute to its growth and success.

1

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Summary
of Activities to Date

Our
activities in 2007 were primarily organizational in nature, including planning and
developing version 1.0 of our main website (www.disaboom.com) and social
networking platform, researching and beginning to implement our marketing and business
development initiatives, planning and beginning to establish our sales operations, and
continuing to build our management team and staff. During the twelve months ended
December 31, 2008 our focus changed from organizational matters and the initial launch of
our main website, to operational matters related to (a) expanding the resources,
services, product offerings and capabilities of our main website and social networking
platform, (b) launching additional resources and services through related microsites and
the Companys marketplace, (c) integrating our main website and related microsites
into the Disaboom Network, (d) driving Internet traffic into our community, and (e)
beginning to generate traditional cost per mille (CPM) related advertising
and sponsorship revenues, as well as directory services revenues.

Business
Changes and Business Progress in the Context of General Economic Conditions

Beginning
in the three month period ended September 30, 2008, the Company implemented actions aimed
to respond aggressively to changing general economic and internet advertising industry
conditions. While the growth of traditional static banner and display advertising has
generally slowed in several online advertising market sectors due to pricing declines,
advertising agency commitments, budget cutbacks, recessionary economic conditions and
other factors, we believe the growth and outlook of niche market, search related, targeted
landing page and microsite related, social network related, targeted rich media, and other
forms of targeted and niche online advertising remains relatively strong. Beginning in the
three month period ended September 30, 2008 through December 31, 2008, and through the
filing date of this Form 10-K, the Company aggressively reduced its investment in online
media/advertising related expenditures. We also continue to constantly monitor and
evaluate our business needs and resources and may scale back in certain areas that are not
deemed essential to the Companys near term success.

The
Companys online media/advertising related expenditures were reduced by approximately
80% from the quarter ended September 30, 2008 versus the prior quarter, and approximately
90% from the three month period ended December 31, 2008 versus the quarter ended September
30, 2008. Total cash operating expenditures were also reduced approximately 20% during the
quarter ended September 30, 2008 versus the previous quarter, and approximately 40% from
the three month period ended December 31, 2008 versus the quarter ended September 30,
2008.

In
addition to the foregoing, from the quarter ended June 30, 2008 through the quarter ended
September 30, 2008, the Companys revenue increased 39%, from $141,355 to $196,242.
From the quarter ended September 30, 2008 through the three month period ended December
31, 2008, the Companys revenue increased approximately 86%, from $196,242 to
$364,695. Total cash collections increased 66%, to $219,095, during the quarter ended
September 30, 2008 versus the previous quarter, and increased 70% for the three month
period ending December 31, 2008 versus the quarter ended September 30, 2008. The
Companys revenue increased approximately 800%, from $83,682 to $752,152 during the
twelve month period ended December 31, 2008 versus the prior year.

Online
media/advertising related expenditures were reduced by approximately 80% from the quarter
ended September 30, 2008 versus the prior quarter, and approximately 90% from the three
month period ended December 31, 2008 versus the quarter ended September 30, 2008. The
purpose of this reduction was to aggressively respond to changing market conditions and to
transition the Company to a base of primarily organic traffic. After an initial decline in
monthly unique visitors early in the quarter ended September 30, 2008, monthly unique
visitors increased 50% during the period from August to September 2008, and increased an
additional 57% from September to October 2008, to reach over 656,000 monthly unique
visitors. From the quarter ended September 30, 2008 through the three month period ended
December 31, 2008, the Companys unique visitors increased approximately 240% to
reach over 3.2 million unique visitors. Absolute and relative increases in monthly unique
visitors and organic traffic not only reduce the need for advertising and branding
campaigns to promote the Disaboom Network via media related expenditures, but also
increase the Companys available advertising impression inventory for CPM and
directory services sales.

Throughout
the twelve month period ending December 31, 2008, the Companys CPM advertising
impression inventory remained sold out. During the period from September 2008 through
December 31, 2008, as the Companys internet traffic increased substantially, the
Companys deliveries of CPM advertising commitments and related sponsorship
obligations, billings and earned revenue correspondingly grew significantly, enabling the
Company to begin to hire, train and re-invest in dedicated CPM and sponsorship sales
executives in late December 2008 and into 2009.

While
early in 2009 the Company experienced delays in the renewals and implementation of several
2008 advertising campaigns and a generally softer market among smaller
advertisers, the Companys recently hired CPM and sponsorship sales personnel are
aggressively proposing on a variety of advertising and sponsorship opportunities for the
second calendar quarter of 2009. The Company anticipates continued substantial growth in
2009 as a result of its niche advertising market opportunity, growing base of monthly
unique visitors and portfolio of products, continued operating efficiencies, and the
further penetration of its community with primarily organic traffic.

2

---



Focus
Going Forward

Our
focus through the period ending December 31, 2008 and into 2009 will likely continue to
be: (i) the ongoing development and evolution of our portfolio of products, resources and
services related to the Disaboom Network, our social networking platform, our community,
and our customers;

(ii)                 the
renewal of existing customer contracts, and sale of new advertising
          sponsorship, CPM, email, newsletter, job posting, and lead generation products,
          thereby generating revenue and cash flow;

(iii)                 the
sale of various types of marketplace directory services, including business
          listings and company profiles, thereby generating revenue and cash flow;

(iv)                 to
drive internet traffic to and within our online community, and increase brand
          awareness, through various online, search engine-related, social marketing and
          social media campaigns, business development and partnership initiatives, and
          other activities;

(v)                 to
release a re-designed, updated, and significantly enhanced version of its           main
website (www.disaboom.com) during the summer of 2009; and

(v)                 the
continued growth of our sales and cash collections, as well as the proactive
          management of our total cash operating expenditures, with the aim of ultimately
          achieving the status of cash flow positive in our business operations in the
          later part of 2009.

Ultimately,
the features and portfolio of products offered through the Disaboom Network and the
Companys social networking platform that we will focus our time and resources to,
may change due to general market conditions and as a result of which generates revenue and
cash flow for the Company.

We
believe that the greater the awareness in the marketplace of the Disaboom Network, our
community and brand, and our social networking platform, the greater the amount of market
penetration, organic traffic, advertising product opportunities and billable revenue we
will experience and capitalize upon.

Our Target Market

Approximately
16% of the American adult population lives with a disability that makes it difficult to
perform functional activities such as walking, climbing stairs, reaching, or lifting and
carrying objects. About 7.6 million adults experience difficulty dressing, bathing, or
simply getting around their home, while 18.2 million Americans are unable to even leave
their homes without help. We believe that not only do the millions of persons living with
disabilities or functional limitations have a need and desire for a comprehensive
resource aimed at their unique needs, but their immediate family, friends, caregivers,
recreation and rehabilitation providers, and employers can also utilize such a
comprehensive resource. An estimated one in three Americans is either living with or
directly affected by a disability or functional limitation.

Our Product

We
believe that Disaboom.com currently is the only comprehensive, interactive online
community dedicated to serving the specific needs of persons living with or directly
affected by a disability or functional limitation. Disaboom.com is not solely a medical
information website providing healthcare content about a particular condition or
diagnosis, but a community based website and comprehensive resource addressing a broad
range of topics and issues related to living with a disability or functional
limitation. The primary components of our website are content, community, and microsites,
each of which serving as a gateway and complementary resource to the other.

3

---



Content

Disaboom.com
provides a broad spectrum of authoritative, frequently updated, and useful information
designed to help people understand how to live most effectively with their specific
disability related condition. Visitors have the option of starting with an in depth
initial diagnosis and condition overview (the Core Knowledge content),
including the most recent medical developments, or going directly to information that
answers questions about their daily living needs. All articles are archived permanently
on the site, and are searchable by title, author, most recently published, and most
comments. The content component of the site is organized into two broad sections
 Living and Health.

The
Livingsection of our website focuses on providing people living with a disability
or functional limitation the information and resources they need to engage in the daily
challenges, opportunities, and activities of their lives. In addition, it provides people
directly affected by a disability or functional limitation (e.g., caregivers, immediate
family or friends, rehabilitation providers, etc.) the information and resources they
need to provide understanding, support and assistance to those in their lives who
currently live with a disability or functional limitation. The Living section is
currently composed of the following channel categories:

| |  | Lifestyle
| | - | ---------

| |  | Caregivers
| | - | ----------

| |  | Education
| | - | ---------

| |  | Advocacy
& Politics
| | - | -------------------

| |  | Adaptive
Driving
| | - | ----------------

| |  | Accessible
Homes
| | - | ----------------

| |  | Disability
Resources
| | - | --------------------

The types of information included in
each of these channel categories are:

Lifestyle.       Topics
in the Lifestyle area currently include Accessible Travel,           Adaptive Sports,
Assistive Technology, Baby Boomers, Dating & Relationships,           Disability
Books, Disability Employment, Disabled Veterans, Living Forward,           Movies, Music,
Parenting Special Needs Children, Theater & Dance, and TV.           Lifestyle
includes feature articles, how-to pieces, personal narratives,           individual
profiles, and short, actionable info briefs. Examples of           these
types of articles are Functional Kitchens Have Universal           Appeal, Tired
of Typing? Try Talking to Your PC,          Im an Ironman, (a
profile of Trish Downing, the first female           paraplegic to compete in an
Ironman-length triathlon), and How to Talk to           Your Doctor about Pain.

Caregivers.
      This section provides dozens of articles of various aspects of           being a
caregiver for someone with a disability. This may include caregiving for           a
child, spouse, sibling, parent, or friend. The focus is on resources,           how-to, and
special topics such as stress management and service           animals.

Education.      Higher education is the focus of the Education section, including scholarship
resources, articles on student success strategies, overviews of online education options,
and career-education insights.

Advocacy
& Politics.Disability-related laws and legislation, rights, initiatives,
benefits, and policies are addressed here, in articles, resource listings, how-to, and
overview articles.

Adaptive
Driving.       For drivers with disabilities, this section comprises blogs and articles on
accessible racing, car enthusiasts, RV-ing and camping, adaptive driving, and adaptive
driving equipment.

Accessible
Homes.       Geared toward those needing to remodel an existing home or build a new home to
accommodate a disability, this section includes articles, blogs, tips, book excerpts, and
accessibility calculators all related to creating an accessible home.

Disability
Resources.      These resources include information about emergency preparedness,
organizations, and the full texts of disability laws.

The
Health section of our website is intended to provide comprehensive medical information
and education on disability-related conditions. It is designed to enable people living
with, or directly affected by a disability or functional limitation, including the
newly-diagnosed, to better understand their conditions, their treatment options, and what
they need to know from a health perspective for their day-to-day lives. The Health
section is not a series of simple medical briefs or summaries about a particular
condition, instead we believe it is a comprehensive medical resource providing
authoritative information written by medical experts on:

| |  | Amyotrophic
lateral sclerosis (ALS, or Lou Gehrig's Disease)
| | - | ------------------------------------------------------------

| |  | Ankylosing
spondylitis
| | - | ----------------------

4

---



| |  | Brain
and traumatic brain injuries
| | - | ----------------------------------

| |  | Cancer
| | - | ------

| |  | Cerebral
palsy
| | - | --------------

| |  | Deafness,
hearing loss
| | - | ----------------------

| |  | Diabetes
| | - | --------

| |  | Fibromyalgia
| | - | ------------

| |  | Hip
& knee surgery
| | - | ------------------

| |  | Multiple
sclerosis
| | - | ------------------

| |  | Muscular
dystrophy
| | - | ------------------

| |  | Amputations
(upper and lower extremities of adult and pediatric)
| | - | ----------------------------------------------------------------

| |  | Orthopedics
(hip replacements, knee replacements, back surgery)
| | - | ---------------------------------------------------------------

| |  | Arthritis
Center (includes osteoarthritis,  rheumatoid arthritis, gout, pseudogout,  ankylosing
spondylitis,  reactive                   arthritis and reiter's  arthritis,  psoriatic
 arthritis,  enteropathic  arthritis,  Lyme disease and other infectious
                  arthritis)
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Depression
| | - | ----------

| |  | Pain
Center (includes Pain - overview, fibromyalgia, back pain, neck pain, shoulder
pain, sciatica, herniated disc, myofascial pain, phantom pain, reflex
sympathetic dystrophy as well as complex regional pain syndrome, depression and
pain (one topic)
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Parkinson's
disease
| | - | -------------------

| |  | Pediatrics
(spina bifida, cerebral palsy, brachial plexus palsy)
| | - | ----------------------------------------------------------------

| |  | Spinal
cord injuries (includes sexuality and fertility)
| | - | -------------------------------------------------------

| |  | Sports
concussion
| | - | -----------------

| |  | Stroke
and stroke prevention
| | - | ----------------------------

| |  | Vertigo
(dizziness)
| | - | -------------------

| |  | Visual
deficits & rehabilitation
| | - | --------------------------------

| |  | Women's
health (includes osteoporosis, pelvic pain, and urinary incontinence)
| | - | -----------------------------------------------------------------------------

The
foregoing conditions were selected for Disaboom.coms initial focus based on the
number of people currently living with the particular condition, recent growth rates in
particular conditions, associated chronic conditions, and other considerations. For
example, for the following major conditions:

Multiple
sclerosis is newly diagnosed in an estimated 10,400 people every year, or about 200
new cases per week. People with multiple sclerosis experience fatigue, heat sensitivity,
muscle weakness, decreased coordination, blurred vision, and cognitive impairments such
as memory problems, slowed thinking, and decreased concentration.

Orthopedic
patients, those suffering musculoskeletal impairments such as arthritis, back pain,
hip replacements, knee replacements and back surgery, represent one in seven Americans.
Arthritis, in fact, is the leading chronic condition reported by the elderly. Back and
knee problems account for a large portion of orthopedic patients and resulted in 31
million and 19 million physician visits respectively in 2003. Those who suffer from
musculoskeletal impairments live with pain, fatigue, and sleep disturbances, and often
complain that their bodies ache.

Pediatric
conditions, including cerebral palsy and spina bifida, impact the lives of both
children and adults, with an estimated 764,000 children and adults in the United States
having at least one symptom of cerebral palsy. Additionally, about 8,000 babies and
infants are diagnosed with this condition each year, a diagnosis that often signals a
life spent dealing with seizures, mental retardation, and problems with movement,
posture, limping, jaw control, chewing, sucking, and swallowing. Another roughly 70,000
Americans live with spina bifida. The illness affects an average of eight babies per day,
and causes numbness, bladder control issues, paralysis, coordination problems and latex
allergies, among other challenging difficulties.

Spinal
cord injuries are experienced by nearly 11,000 individuals in the United States
annually, and more than 190,000 Americans currently live with paralysis caused by spinal
cord injuries.

Stroke is
the leading cause of serious, long-term disability in the U.S., and on average, someone
in this country has a stroke every 45 seconds. According to the American Heart
Association, in 1999, more than one million Americans reported difficulties with daily
living activities resulting from a stroke.

5

---



Traumatic
brain injuries are sustained by roughly 1.5 million people in the United States every
year. As a result, approximately 80,000 of those people experience the onset of long-term
disabilities. The Centers for Disease Control and Prevention estimates that at least 5.3
million Americans have a long-term need for help performing daily living activities as a
result of traumatic brain injuries.

In
addition to the Core Knowledge content that addresses each of the disability-related
conditions, Disaboom.com also provides current updates of recent research findings
through brief summaries of research reports, written in lay language, as well as
condition-specific medical advice, and a glossary of disability-related medical terms.
Disaboom has entered into independent contractor agreements with individuals (the Content
Providers) in several specialties to provide current medical journal reviews and
summaries as well as other written materials to be used by the Company on the website.

The
Health section also offers a Fitness and Nutrition area that includes
consumer-oriented articles that will lead people from the basic medical information in
the Core Knowledge entries to the next step: i.e., how do I live as well as possible with
this condition? Fitness and Nutrition content is a mix of contributed, licensed, and
commissioned content.

Community

Disaboom.com
provides a Community section designed to give users an opportunity to share their stories
and challenges, respond to others stories, and develop friendships and connections
based on shared interests and experiences. The Community section is also designed to
engage visitors in such a way that they visit and participate interactively on the site
at a high frequency, thereby increasing site visits, repeat visitors, and amount of time
visitors spend on the site.

Through
the Community section, Disaboom.com members can start a blog, participate in
conversations in the discussion area, and engage in real-time chat.

Blogs.  A
blog serves as a personal publishing platform on any topic of           interest. For
example, bloggers post pictures, videos, their personal stories           (challenges,
opportunities, triumphs, losses), poems, political commentary, and           reactions to
current events. Blogs empower members to share their ideas on           subjects of
personal importance and then gain community feedback through           comments.

Discussions.  Discussion
forums are intended to cultivate conversation in the           community. Forums provide
an easy vehicle for members to ask questions of each           other, engage in debate,
and give back to the community by sharing experiences           and expertise. We
included and established forums as part of the general           availability release of
our website on October 1, 2007, and the community has           taken over. Discussions
cover a multitude of topics ranging from medical topics           such as Living
with Fibromyalgia to personal questions such as           Do you want
attention (for your disability)? We currently have over           50,000 forum
topics within our community.

Chat.   Members
can connect with each other in real time through the           chat section of community.
Chat enables instant live connections between users           and facilitates meaningful,
immediate interaction and conversation.

Groups.     Groups
were launched in January 2008 and provide a way for site members to connect with each
other based on common interests and/or experiences. For example, several bloggers who
write regularly about their roles as caregivers may decide to start a caregiver group.
Members of the group will be able to post topic-related blogs, pictures, and videos
directly to the groups online location. Instead of having to keep track of multiple
blogs and blog authors, individuals interested in reading caregiver-themed content will
be able to simply subscribe to the Caregiver Group. All members will have the ability to
start a group and gather like-minded members to their cause. There are currently about 70
active groups within our community and growing.

Video

In
addition to the Living, Health, and Community sections, Disaboom also offers a Video
section where various Disaboom and third party produced videos are available for viewing
by site visitors and registered members of our community. These may include promotional
videos, event-related videos, or professionally-produced videos that Disaboom or its
partners have created to share with the Disaboom community; in addition, we anticipate
adding the capability to upload user generated videos within the next three to six
months.

6

---



Microsites

Disaboom.com
also provides additional features designed for members and non-members to develop
personal relationships, professional opportunities, and support our community  through
microsites. A microsite is a separate website which addresses a specific market, business
or community need, and is integrated with the Companys core Content and Community
product platform, and partner websites as applicable.

Dating.
On October 9, 2007, we acquired the rights to the internet domain and website of
Lovebyrd.com, an online dating and social networking service for individuals living with
disabilities and other conditions that make it difficult to meet and connect with other
people. In February 2008 we began re-branding Lovebyrd.com as a related website of
Disaboom.com

DisaboomJobs.
The Companys internet domain DisaboomJobs.com currently provides services to both
our community as well as employers. Approximately 15 years after the enactment of the
Americans with Disabilities Act, while estimates vary widely, the unemployment rate of
people living with disabilities remains substantial. Through DisaboomJobs, members of the
community can currently search for job openings from a database of over 500,000 open
positions. DisaboomJobs also provides information about employment related consulting and
other services, directly related to our community, which the Company can provide to
corporations who employ people living with a disability. For example, employers are
eligible for certain federal and state tax credits and incentives for hiring eligible
employees with a disability, and corporations contracting with the Federal Government are
responsible for compliance with disability-related physical accommodations, website
accessibility, and other requirements. Visitors to DisaboomJobs are able to post their
resumes via a resume builder, with the aim of enhancing the capabilities of job seekers
to search for job openings which may be a better fit given their unique needs, and
continuing to increase content and how to information for users regarding
their careers, employment and job search, and for employers on both Disaboom.com and
DisaboomJobs.com.

Website
and Marketplace Advertising

We
expect that a significant source of our revenue will continue to be generated from
traditional CPM display advertising and sponsorship sales. Traditional CPM display
advertising and various sponsorship product fees and rates vary depending upon location,
placement, size of the advertisement, and other factors. For example, premium rates are
charged for home page, condition landing page, and section sponsorships while a lesser
fee will apply to run of site advertisements which continuously rotate throughout the
main website and/or Disaboom Network. On July 7, 2008, the Company launched a marketplace
business directory on its main disability related website www.disaboom.com. The
marketplace enables local and national business owners and managers a cost-effective
channel to reach our targeted community through searchable national and local business
listings, text advertising packages linked to its business listing products, and the
ability to build and upload a company profile on Disabooms disability employment
related website www.disaboomjobs.com. Company profiles enable local and national business
owners and managers to become a featured company interested in and committed to the
employment of people living with a disability or functional limitation. We are promoting
our portfolio of products to a broad base of dedicated and disability related industries,
including to medical equipment, online learning, consumer products, and the travel and
tourism industries.

Competition

We
compete in the market for internet services and information which is a highly competitive
and volatile market. We compete with other   profit and nonprofit medical
information websites such as WebMD.com, RevolutionHealth.com and Healthcommunities.com
for our medical information services. However, our community is targeted and dedicated to
persons living with or directly affected by disabilities or functional limitations which
we believe provides us a competitive advantage versus general medical information or
diagnosis-oriented websites.

We
compete with other social networking websites for social networking services such as
MySpace.com, Friendster.com, Facebook.com, Bebo.com, Xanga.com, Ning.com, eHarmony.com,
and Match.com. We hope to develop a loyal base of site visitor and participants through
the social networking aspect of the website, which in-turn will help generate various
types of advertising and sponsorship sales specifically targeted to consumers of
disability related products and services. We believe we have a competitive advantage over
general social networking sites because we are targeting, through a broad array of
content, community, and other services, a specific group of persons with specific
consumer and information needs.

7

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We
compete with large general internet service companies such as Google, Inc., Yahoo!, Inc.,
Microsoft, Inc., and America Online for online marketing and advertising. However,
because our website content is specifically targeted to persons living with, or directly
affected by disabilities or functional limitations, the Company believes there will be
little competition for advertisement and sponsorship sales targeting that specific
market. We compete with full service information, product, and networking sites for the
disabled community such as Disabled-World.com. We compete with Craigs List and eBay
for online sales of consumer goods from consumer to consumer through our classifieds
section. However, our classifieds will be specifically targeted to consumers of
disability related products. We believe that through our marketing and branding efforts,
ongoing product development, the depth and breadth of our content, quality customer
service, and partnerships and relationships with advertisers, sponsors, medical
professionals, and other leaders in the health industry we will be able to develop, and
retain, a loyal client base in order to compete effectively in the very competitive
online marketplace.

Patents
and trademarks

We
own and maintain a portfolio of intellectual property assets which we hope to continue to
build. We believe that our intellectual property assets create great value to the Company
and therefore we are taking steps to protect those assets through trademark, copyright,
trade secret, and trademark laws of the United States and through contractual agreements.

In
order to develop a trademark portfolio and protect the Companys brand, we have
registered the following trademarks with the U.S. Patent and Trademark Office on the
Principal Register: the word mark DISABOOM, registration numbers 3544049 and 3437483, the
word plus design mark for Disaboom, registration number 3490074, and the word mark LIVE
FORWARD, registration number 3439778. We abandoned an application for the word mark
DISABOOM.COM.

Effect
of existing or probable government regulations on the business.

-FTC
and FDA regulation of drug and medical device advertising and promotion

The
FDA and the FTC regulate the form, content and dissemination of labeling, advertising and
promotional materials of pharmaceutical or medical device companies, including
direct-to-consumer prescription drug and medical device advertising. The FTC regulates
over-the-counter drug advertising and, in some cases, medical device advertising.
Generally, based on FDA requirements, companies must limit advertising materials to
discussions of FDA-approved uses and claims.

Information
that promotes the use of pharmaceutical products or medical devices that is put on our
website is subject to the full array of the FDA and FTC requirements and enforcement
actions. The FDA and FTC would most likely be focused on the advertisements placed on our
pages, any other pharmaceutical information found in our education pages, and the
products sold through our e-commerce site. The FTC and FDA look for editorial
independence from advertisers and sponsors in informational or educational discussions of
regulated pharmaceuticals or medical devices. The FDA and the FTC place the principal
burden of compliance with advertising and promotional regulations on advertisers and
sponsors to make truthful, substantiated claims. If the FDA or the FTC finds that any
information on our website violates FDA or FTC regulations, they may take regulatory or
judicial action against us or the advertiser or sponsor of that information. State
attorneys general may also take similar action based on their states consumer
protection statutes.

-Drug
Advertising.

The
Federal Food, Drug, and Cosmetic Act, or FDC Act, requires that prescription drugs be
approved for a specific medical indication by the FDA prior to marketing. Marketing,
advertising or otherwise commercializing products prior to approval is prohibited. Upon
approval, the FDAs regulatory authority extends to the labeling and advertising of
prescription drugs sold throughout the United States which may only be promoted and
advertised for their approved indications. The labeling and advertising must not be false
or misleading, and must present all material information, including risk information.
Labeling and advertising that violate these legal standards are subject to FDA
enforcement action.

The
FDA regulates the safety, effectiveness, and labeling of over-the-counter drugs.
Together, the FDA and FTC require that OTC drug formulation and labeling comply with FDA
approvals or regulations and the promotion of OTC drugs must be truthful, adequately
substantiated, and consistent with the labeled uses. OTC drugs that do not meet these
requirements are subject to FDA or FTC enforcement action depending on the nature of the
violation. In addition, state attorneys general can also bring enforcement actions for
alleged unfair or deceptive advertising.

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Any
increase in FDA regulation of the online advertisements of prescription drugs could make
it more difficult for us to obtain advertising and sponsorship revenue. Only recently has
the FDA relaxed its formerly restrictive policies on direct to consumer advertising of
prescription drugs. If the FDA changes its policies to make them more restrictive, this
could also make it more difficult for us to obtain advertising and sponsorship revenue.

-FTC
regulation of general internet advertising and marketing

The
FTC regulates internet advertising under the Federal Trade Commission Act which allows
the FTC to act in the interest of all consumers to prevent deceptive and unfair acts or
practices. The FTC requires that advertisements be true and not misleading to consumers
and that they be substantiated. The FTC also requires clear and conspicuous disclosures.

Failure
to comply with the FTCs prohibition of false or misleading claims in advertisements
could result in enforcement actions or civil lawsuits for fines and civil penalties. We
believe that we have taken steps to protect our company from liability for displaying or
disseminating ads in violation of these regulations through our advertising agreements
and Company advertising policy. However, a regulatory authority may find that the Company
has violated the advertising regulations and may bring an enforcement action against the
Company.

-Medical
Professional Regulation

Most
states regulate the practice of medicine requiring professional licensing. Some states
prohibit business entities from practicing medicine. We do not believe that we are
engaged in the practice of medicine, but rather we provide information to the general
public. The Company has agreements with licensed medical professionals who provide
educational information in the form of content for the Companys website. We do not,
and do not intend to, provide professional medical advice, diagnosis or treatment through
our website. A state may determine that some aspect of our business violates that states
licensing laws and may seek to have us discontinue those portions or subject us to
penalties or licensure requirements. Any determination that we are a healthcare provider
and acted improperly as a healthcare provider may result in liability to us.

Many
states regulate the ability of medical professionals to advertise or maintain referral
services. We do not represent that a physicians use of the Companys online
directory will comply with these or other state laws regulating professional practice. It
is possible a state or a court may determine we are responsible for any non-compliance
with these laws, which could affect our ability to offer this service to our customers.

-Consumer
Protection Regulation

Advertising
viewed by visitors on our website and consumer sales from our e-commerce website are
subject to federal and state consumer protection laws which regulate unfair and deceptive
practices. We are also subject to various other federal and state consumer protection
laws, including the ones described below. Most state consumer protection laws are
enforced by the Attorneys General of each state.

-COPPA

The
Childrens Online Privacy Protection Act (COPPA) protects personal
information of children under the age of 13 disclosed online by prohibiting unfair or
deceptive acts or practices in connection with the collection, use, and/or disclosure of
personal information from and about children. Our website does not target children under
13, nor do we plan to allow anyone under the age of 18 to register as a Disaboomer.
Therefore, the Company will not knowingly be collecting the personal information of
children under the age of 13.

-CAN-SPAM

The
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM)
regulates commercial emails and provides recipients the right to request the sender to
stop sending messages. CAN-SPAM establishes penalties for sending commercial email which
are intended to deceive the recipient as to source or content. At this time, we
periodically send commercial emails to Disaboomers or other users of our site. Many
states have also enacted anti-spam laws. The CAN-SPAM Act preempts many of these
statutes.

9

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Employees

As
of March 9, 2009 we had 30 employees, 27 of which are full time and three of which are
part  time.

# ITEM 1A RISK FACTORS

Our securities are highly speculative
and involve a high degree of risk, including among other items the risk factors described
below.

We have a lack of
operating history and lack of revenues from operations and are uncertain we will be able
to maintain sufficient cash to accomplish our business objectives.

To date we have only realized nominal
revenues and have limited operating history. For the year ended December 31, 2008 we
incurred a net loss of $10,813,591. Further, our only significant assets are our websites.
Our ability to successfully generate revenues from our websites is dependent on a number
of factors, including availability of funds to continue to add content to the site, to
adequately develop and maintain the website as outlined in our business plan, to
commercialize our website through advertising, sponsorships and strategic alliances, and
to attract and retain visitors to our site. There can be no assurance that we will not
encounter setbacks with our websites. With our projected operations and expenditures we
expect that our current financial resources are sufficient to fund our operations into the
fourth calendar quarter of 2009.

To date the Company has in large part relied on equity financing to fund our operations. In March 2009 we raised
additional equity funds through a private placement.  We currently project that our current on-hand
financial resources, our 2009 expected revenue growth, plus the equity funds raised in March 2009, will provide
sufficient funds to meet our cash flow needs through December 31, 2009.  However, we cannot provide any assurance that
 our projections will prove
accurate or that unexpected liquidity needs will not arise. As such, we may need to attempt to raise outside
capital through either debt or equity financing during the 2009 fiscal year to fund our operations. Management
and our Board of Directors continually monitors our financial resources and may adjust our planned business
activities and operations in an attempt to ensure we have sufficient operating capital.

We have limited liquidity
and may have the need for subsequent funding.

We will attempt to adjust our
expenditures in consideration of our financial resources.  Company management and our
board of directors monitor our actual and projected sales, costs and expenses on a regular
basis and, if necessary, adjust Company priorities and planned expenditures in an attempt
to ensure we have sufficient operating capital.  We have and will continue to
evaluate our actual and projected costs and expenditures for our business operations. The
weak US and global economy combined with instability in global financial and capital
markets have currently limited the availability of equity funding and reduced demand
across many industries, including the internet advertising industry. While, as described in the previous risk factor,  the Company
anticipates it can fund its operations into the fourth calendar quarter of 2009 at which
point it believes it will become cash flow positive, there is no guarantee that it will be
able to achieve its financial projections and projected status of cash flow positive
during these highly volatile and unpredictable economic and capital market conditions. If
the disruptions in the global financial and capital markets continue, and the Company
requires additional funding, debt or equity financing may not be available to us on
acceptable terms, if at all. Further, equity financing, if available, may result in
substantial dilution to existing stockholders.  If we are unable to fund  our current and planned
operations our business, financial condition and results of operations will be adversely
impacted.

The business of providing
services over the internet is difficult to evaluate and our business model is unproven.

Because we recently began our
business operations during the quarter ended March 30, 2008, it is difficult to evaluate
our business and prospects. Our revenue and income potential is unproven and our business
model is emerging. We may never achieve favorable operating results or profitability.

We may be unable to
generate significant advertising or sponsorship revenues.

We expect to derive a significant
portion of our revenues from advertising and sponsorship through our main website and our
related microsites. We may not, however, be able to generate adequate advertising or
sponsorship revenues. There are no widely accepted standards that measure the
effectiveness of web advertising. Advertisers and sponsors that have traditionally relied
on other advertising media may be reluctant to advertise on the web. Advertisers that
already have invested substantial resources in other advertising or sponsor methods may be
reluctant to adopt a new strategy and our business would be adversely affected.

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Different pricing models are used to
sell advertising on the internet. It is difficult to predict which, if any, will emerge as
the industry standard. The proliferation of websites across the internet may cause
advertising and sponsor pricing levels to exist or evolve which are below levels
originally anticipated in the Companys business plan. This makes it difficult to
project future advertising and sponsor revenues. Moreover, certain security, filtering and
proprietary software programs that limit or prevent certain types of advertising from
being delivered to a web users computer are available. Widespread adoption of this
software could adversely affect the commercial viability of web advertising.

# There is no assurance
that we will be successful in expanding our operations and, if successful, managing
our future growth.

Although we released a limited
availability beta version of our main website on September 1, 2007, and released an
updated and enhanced general availability version of our main website on January 24, 2008,
we are continuing to develop portions of our website and our business operations. Payments
for website development and expansion of our operations have and will result in
significant operating costs. If we are unable to generate revenues that are sufficient to
cover our significant operating costs, our results of operations will be materially and
adversely affected. In addition, we may experience periods of rapid growth, including
increased staffing levels. Such growth will place a substantial strain on our management,
operational, financial and other resources. Moreover, we will need to train, motivate and
manage employees and partners, as well as attract sales, technical and other
professionals. Any failure to expand these areas and implement such procedures and
controls in an efficient manner and at a pace consistent with our business objectives
would have a material adverse affect on our business, financial condition and results of
operations.

We are dependent on our key
personnel, and the loss of any could adversely affect our business.

We depend on the continued
performance of the members of our management team, particularly John Walpuck. Mr. Walpuck
has contributed significantly to the expertise of our team and the position of our
business. Mr. Walpuck has entered into a two-year employment agreement with the Company.
If we lose the services of Mr. Walpuck, and are unable to locate suitable replacements for
him in a timely manner, it could have a material adverse effect on our business. We do not
have, and we do not expect to obtain, key man life insurance for any members of management
in the foreseeable future.

We face significant
competition; and, our competitors may have greater resources or research and development
capabilities than we have, and we may not have the resources necessary to successfully compete
with them.

Our business has been to create an
interactive online resource for people living with or directly affected by disabilities or
functional limitations. We are currently not aware of any significant competitors
commercially offering this resource; however, the online marketplace for general
healthcare information, resources, products and services, as well as social networking, is
intensely competitive, rapidly evolving and subject to rapid technological change. As we
continue to develop and launch modifications and updated releases of our websites, we have
found the internet and advertising business is highly competitive, and we may face
increasing competition. Additionally, we are aware that many of our potential competitors
operating in the online marketplace for general healthcare information, resources and
services have greater financial and technical resources, more experience in research and
development, and more established marketing and distribution capabilities than we have.
Some of our customers may also complete with us. These organizations are also better known
and have more customers. We may be unable to compete successfully against these
organizations if they expand their focus and operations to directly target our marketplace
serving people living with or directly affected by disabilities or functional limitations.

We also compete for visitors,
members, consumers, content and service providers, advertisers, sponsors, partners and
acquisition candidates with a range of companies, including the following categories of
companies:

| |  | online
services or websites  targeted to the healthcare  industry and healthcare  consumers
 generally,  including  webmd.com,                medscape.com,  pol.net,  ivillage.com,
 medcareonline.com,   mediconsult.com,   betterhealth.com,   drkoop.com,  onhealth.com,
               healthcentral.com and thriveonline.com;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | publishers
and distributors of traditional offline media, including those targeted to healthcare
professionals,  many of which                have established or may establish websites;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | general
purpose consumer online services and portals which provide access to healthcare-related
content and services;
| | - | ---------------------------------------------------------------------------------------------------------------------

| |  | public
sector and non-profit websites that provide healthcare information without advertising or
commercial sponsorships;
| | - | -------------------------------------------------------------------------------------------------------------------------

| |  | vendors
of healthcare  information,  products and services  distributed through other means,
 including direct sales, mail and                fax messaging; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | web
search and retrieval services and other high-traffic websites.
| | - | ------------------------------------------------------------------

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We face significant
competition from traditional media companies which could adversely affect our future operating
results.

We also compete with traditional
media companies for advertising. Most advertisers currently spend only a portion of their
advertising budgets on internet advertising. If we fail to persuade advertisers to spend a
portion of their budget on advertising with us, our revenues could decline and our future
operating results could be adversely affected.

Performance or security
problems with our website could negatively impact our business.

Our success depends greatly on (i)
the successful and ongoing development of our website and related micro sites, and (ii)
maintaining our sites to minimize delays and systems problems. Our customer satisfaction
and our business could be harmed if we or our customers experience system delays, failures
or loss of data. The occurrence of a major catastrophic event or other system failure at
any of our or our vendor facilities could interrupt data processing or result in the loss
of stored data. In addition, we depend on the efficient operation of internet connections
from customers to our systems and vendors. These connections, in turn, depend on the
efficient operation of Web browsers, internet service providers and internet backbone
service providers, all of which have had periodic operational problems or experienced
outages.

A material security breach could
damage our reputation or result in liability. We may be required to spend significant
capital and other resources to protect against security breaches or to alleviate problems
caused by breaches. Any well-publicized compromise of internet security could deter people
from using the internet or from conducting transactions that involve transmitting
confidential information, including confidential healthcare information. Therefore, it is
critical that these facilities and infrastructure remain secure and are perceived by the
marketplace to be secure.

Despite the implementation of
security measures, this infrastructure may be vulnerable to physical break-ins, computer
viruses, programming errors, attacks by third parties or similar disruptive problems.

Technology may change
faster than we can update our applications and services.

Medical information exchange is a
relatively new and evolving market. The pace of change in this market is rapid and there
are frequent new product introductions and evolving industry standards. We may be
unsuccessful in responding to technological developments and changing customer needs. In
addition, our applications and services offerings may become obsolete due to the adoption
of new technologies or standards.

We depend on service and content
providers to provide information and data feeds on a timely basis. Our website could
experience disruptions or interruptions in service due to the failure or delay in the
transmission or receipt of this information. In addition, our members and consumers depend
on internet service providers, online service providers and other website operators for
access to our websites. All of them have experienced significant outages in the past and
could experience outages, delays and other difficulties in the future due to system
failures unrelated to our systems. Any significant interruptions in our services or
increases in response time could result in a loss of potential or existing members,
consumers, strategic partners, advertisers or sponsors and, if sustained or repeated,
could reduce the attractiveness of our services.

If we are unable to
provide services which generate significant traffic to our websites, or we are unable
to enter into distribution relationships which drive significant traffic to our websites,
our >business could be harmed, hampering our ability to increase our revenues.

Our success is largely dependent on
the number of visitors to our websites, the number of page views and in turn, advertising
and sponsorship revenue. Our marketing plan is measured by the number of page views or
website hits we receive. Although management has based its estimates on what it believes
to be reasonable assumptions, there can be no assurance that the number of page views can
be accurately predicted, which in turn will substantially impact the ability to attract
the requisite purchasers with spending power as well as advertisers and sponsors to our
site, who advertise based on website traffic numbers. A material reduction in our website
hits will substantially affect our business plan, projected revenues and net income.

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The majority of our
revenues will be derived from traditional CPM display advertising and sponsorships, and
the reduction in spending by or loss of current or potential advertisers or sponsors
would cause our revenues and operating results to decline.

The majority of our total revenues
will come from advertising and sponsorships. Our ability to grow advertising and
sponsorship revenue depends upon:

| |  | growing
and retaining our user base;
| | - | ------------------------------------

| |  | attracting
new and broadening our relationships with existing advertisers and sponsors;
| | - | ---------------------------------------------------------------------------------------

| |  | attracting
advertisers and sponsors to our user base;
| | - | -----------------------------------------------------

| |  | increasing
demand for our advertising and sponsorships;
| | - | -------------------------------------------------------

| |  | deriving
better demographic and other information from our users; and
| | - | ---------------------------------------------------------------------

| |  | driving
continued and increased acceptance of the web by advertisers and sponsors as an effective
advertising medium.
| | - | ---------------------------------------------------------------------------------------------------------------------

Advertising agreements often have
payments contingent upon guaranteed minimum usage, impressions, or click-through levels.
Accordingly, it is difficult to forecast certain advertising revenues accurately. Any
reduction in spending by or loss of existing or potential future advertisers or sponsors
would cause our revenues to decline. Further, we may be unable to adjust spending quickly
enough to compensate for any unexpected revenue shortfall.

Decreases or delays in
advertising spending by our advertisers or sponsors due to general economic conditions
could harm our ability to generate advertising revenue.

Expenditures by advertisers and
sponsors tend to be cyclical, reflecting overall economic conditions and budgeting and
buying patterns. Since we expect to derive the majority of our revenues from advertising,
any decreases in or delays in advertising or sponsorship spending due to general economic
conditions could reduce our revenues or negatively impact our ability to grow our
revenues.

If we are unable to
acquire compelling content at reasonable costs or if we do not develop compelling content,
the number of users of our services may not grow as anticipated, or may decline, which
could harm our operating results.

Our success depends in part upon our
ability to create, license and aggregate compelling content from third parties, and
deliver that content through our websites. We provide audio and video content to our
users, and we believe that users will increasingly demand high-quality audio and video
content, including user-generated content, such as music, film, speeches, news footage,
concerts and other special events. Such content may require us to make substantial
payments to third parties from whom we license or acquire such content. Our ability to
maintain and build relationships with third-party content providers is critical to our
success. In addition, as new methods for accessing the internet become available,
including through alternative devices, we may need to enter into amended content
agreements with existing third-party content providers to cover these new devices. Also,
to the extent that we develop content of our own, our current and potential third-party
content providers may view our services as competitive with their own, and this may
adversely affect their willingness to contract with us. We may be unable to enter into
new, or preserve existing, relationships with the third parties whose content we seek to
obtain. In addition, as competition for compelling content increases both domestically and
internationally, our content providers may increase the prices at which they offer their
content to us, and potential content providers may not offer their content on terms
agreeable to us. An increase in the prices charged to us by third-party content providers
could harm our operating results and financial condition. Further, many of our content
licenses with third parties are non-exclusive. Accordingly, other webcasters and other
media such as radio or television may be able to offer similar or identical content. This
increases the importance of our ability to deliver compelling editorial content and
personalization of this content for users in order to differentiate the Company from other
businesses. If we are unable to license or acquire compelling content at reasonable
prices, if other companies broadcast content that is similar to or the same as that we
provide, or if we do not develop compelling editorial content or personalization services,
the number of users of our services may not grow as anticipated, or may decline, which
could harm our operating results.

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Our intellectual property
rights are valuable, and any inability to protect them could reduce the value of our
brand image and harm our business and our operating results.

We create, own and maintain a wide
array of intellectual property assets, including copyrights, trademarks, trade dress,
trade secrets and rights to certain domain names, which we believe are among our most
valuable assets. We seek to protect our intellectual property assets through copyright,
trade secret, trademark and other laws of the United States, and through contractual
provisions. The efforts we have taken to protect our intellectual property and proprietary
rights may not be sufficient or effective at stopping unauthorized use of those rights. In
addition, effective trademark, copyright and trade secret protection may not be available
or cost-effective in every country in which our website and media properties are
distributed or made available through the internet. There may be instances where we are
not able to fully protect or utilize our intellectual property assets in a manner to
maximize competitive advantages. Further, while we attempt to ensure that the quality of
our brand is maintained by our licensees, our licensees may take actions that could impair
the value of our brand, our proprietary rights or the reputation of our products and media
properties. We realize that third parties may, from time to time, copy significant content
available on Disaboom.com for use in competitive internet services. Protection of the
distinctive elements of Disaboom.com may not be available under copyright law. If we are
unable to protect our proprietary rights from unauthorized use, the value of our brand
image may be reduced. Any impairment of our brand could negatively impact our business. In
addition, protecting our intellectual property and other proprietary rights is expensive
and time consuming. Any increase in the unauthorized use of our intellectual property
could make it more expensive to do business and consequently harm our operating results.

We may in the future be
subject to intellectual property infringement claims, which are costly to defend,
could result in significant damage awards, and could limit our ability to provide certain content
or use certain technologies in the future.

Third parties may in the future
assert claims against us alleging infringement of copyrights, trademark rights, trade
secret rights or other proprietary rights, or alleging unfair competition or violations of
privacy rights or failure to maintain confidentiality of user data. In addition, third
parties may make trademark infringement and related claims against us. As we expand our
business and develop new technologies, products and services, we may become increasingly
subject to intellectual property infringement claims. In the event that there is a
determination that we have infringed third-party proprietary rights such as copyrights,
trademark rights, trade secret rights or other third party rights such as publicity and
privacy rights, we could incur substantial monetary liability, be required to enter into
costly royalty or licensing agreements or be prevented from using the rights, which could
require us to change our business practices in the future and limit our ability to compete
effectively. We may also incur substantial expenses in defending against third-party
infringement claims regardless of the merit of such claims. In addition, many of our
agreements with our customers or affiliates require us to indemnify them for certain
third-party intellectual property infringement claims, which could increase our costs in
defending such claims and our damages. The occurrence of any of these results could harm
our brand and negatively impact our operating results.

We are subject to United
States and foreign government regulation on internet services which could subject us to claims and remedies
including monetary liabilities and limitations on our business practices.

We are subject to regulations and
laws directly applicable to providers of internet services both domestically and
internationally. The application of existing domestic and international laws and
regulations to Disaboom.com relating to issues such as user privacy and data protection,
defamation, pricing, advertising, taxation, gambling, sweepstakes, promotions, financial
market regulation, consumer protection, content regulation, quality of services,
telecommunications and intellectual property ownership and infringement in many instances
is unclear or unsettled. In addition, we will also be subject to any new laws and
regulations directly applicable to our domestic and international activities. Further, the
application of existing laws to Disaboom.com regulating or requiring licenses for certain
businesses of our advertisers including, for example, distribution of pharmaceuticals,
alcohol, adult content, tobacco or firearms, as well as insurance and securities brokerage
and legal services, can be unclear. We may incur substantial liabilities for expenses
necessary to comply with these laws and regulations or penalties for any failure to
comply. Compliance with these laws and regulations may also cause us to change or limit
our business practices in a manner adverse to our business. A number of federal laws,
including those referenced below, impact our business. The Digital Millennium Copyright
Act (DMCA) is intended, in part, to limit the liability of eligible online
service providers for listing or linking to third-party websites that include materials
that infringe copyrights or other rights of others. Portions of the Communications Decency
Act (CDA) are intended to provide statutory protections to online service
providers who distribute third party content. Disaboom.com relies on the protections
provided by both the DMCA and CDA in conducting its business. Any changes in these laws or
judicial interpretations narrowing their protections will subject us to greater risk of
liability and may increase our costs of compliance with these regulations or limit our
ability to operate certain lines of business. The Childrens Online Protection Act
and the Childrens Online Privacy Protection Act are intended to restrict the
distribution of certain materials deemed harmful to children and impose additional
restrictions on the ability of online services to collect user information from minors. In
addition, the Protection of Children From Sexual Predators Act of 1998 requires online
service providers to report evidence of violations of federal child pornography laws under
certain circumstances. The costs of compliance with these regulations may increase in the
future as a result of changes in the regulations or the interpretation of them. Further,
any failures on our part to comply with these regulations may subject us to significant
liabilities.

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Changes in regulations or
user concerns regarding privacy and protection of user data could adversely affect our
business.

Federal, state and international laws
and regulations may govern the collection, use, sharing and security of data that we
receive from our users and partners. In addition, we have, and post on our website our own
privacy policies and practices concerning the collection, use and disclosure of user data.
Any failure, or perceived failure, by us to comply with our posted privacy policies or
with any data-related consent orders, Federal Trade Commission requirements or other
federal, state or international privacy-related laws and regulations could result in
proceedings or actions against us by governmental entities or others, which could
potentially have an adverse effect on our business. Further, the failure or perceived
failure to comply with our policies or applicable requirements related to the collection,
use, sharing or security of personal information or other privacy-related matters could
result in a loss of user confidence in us and ultimately in a loss of users, partners or
advertisers, which could adversely affect our business. In addition, the interpretation
and application of user data protection laws are in a state of flux. Complying with these
varying requirements could cause us to incur substantial costs or require us to change our
business practices in a manner adverse to our business.

RISKS RELATED TO OUR
SECURITIES

We do not plan to pay
dividends on our common stock.

We do not anticipate paying cash
dividends to the holders of our common stock in the foreseeable future. Accordingly,
investors in our common stock must rely upon subsequent sales after price appreciation as
the sole method to realize a gain on an investment in our common stock. There are no
assurances that the price of our common stock will ever appreciate in value particularly
if we continue to sustain operating losses. Investors seeking cash dividends should not
buy our common stock.

We currently have a
limited trading market as there is limited liquidity on the OTC Bulletin Board which may
impact your ability to sell your shares.

Currently our shares of our Common
Stock are traded on the NASD  OTC Bulletin Board. However, there is limited trading
volume in our shares. When fewer shares of a security are traded on the OTC Bulletin
Board, price volatility may increase and price movement may outpace the ability of the OTC
Bulletin Board to deliver accurate quote information. If low trading volumes in our common
stock continue, there may be a lower likelihood of orders for shares of our common stock
being executed, and current prices may differ significantly from prices quoted by the OTC
Bulletin Board at the time of order entry.

Our common stock is
subject to the penny stock rules which limit the market for our common stock.

Because our stock is traded on the
NASD-OTC Bulletin Board, if the market price of the common stock is less than $5.00 per
share, the common stock is classified as a penny stock. SEC Rule 15g-9 under
the Exchange Act imposes additional sales practice requirements on broker-dealers that
recommend the purchase or sale of penny stocks to persons other than those who qualify as
an established customer or an accredited investor. This includes
the requirement that a broker-dealer must make a determination that investments in penny
stocks are suitable for the customer and must make special disclosures to the customers
concerning the risk of penny stocks. Many broker-dealers decline to participate in penny
stock transactions because of the extra requirements imposed on penny stock transactions.
Application of the penny stock rules to our common stock reduces the market liquidity of
our shares, which in turn affects the ability of holders of our common stock to resell the
shares they purchase, and they may not be able to resell at prices at or above the prices
they paid.

There may be a greater
risk of fraud on the NASD-OTC Bulletin Board.

NASD-OTC Bulletin Board securities
are more frequently targets for fraud or market manipulation because they are not
regulated as closely as securities listed on exchanges. Dealers may dominate the market
and set prices that are not based on competitive forces. Individuals or groups may create
fraudulent markets and control the sudden, sharp increase of price and trading volume and
the equally sudden collapse of market prices. While there is regulation of the NASD-OTC
Bulletin Board, it is not as comprehensive as the regulation of the listed exchange. If
this should occur, the value of an investment in our common stock could decline
significantly.

# ITEM 2. DESCRIPTION OF
PROPERTY

In
June 2007 we entered into a Sublease Agreement for the lease of office space at 7730 E.
Belleview Avenue, Suite A-306, Greenwood Village, CO 80111, which we utilize as our
corporate offices. The sublease commenced June 15, 2007 and terminates on July 31, 2009.
We pay $7,667 per month under the terms of the sublease.

On
July 8, 2008 we entered into a lease agreement for the lease of additional office space.
The lease commenced July 11, 2008 and terminates on July 31, 2009. We pay $3,249 per
month under the terms of the lease.

15

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# ITEM 3. LEGAL PROCEEDINGS

Not
Applicable.

# ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

On
November 5, 2008 we held our annual meeting of shareholders. We reported the results of
that meeting in a current report on Form 8-K filed with the Securities and Exchange
Commission on November 7, 2008.

# PART II

ITEM 5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS

Shares
of our common stock began trading on the NASD  OTC Bulletin Board on May 30, 2007.
As of March 20, 2009, there were approximately 245 holders of record of our common stock.
This does not include persons who hold our common stock in brokerage accounts and
otherwise in street name.

Our
 transfer agent is Corporate Stock Transfer,  Inc., 3200 Cherry Creek South Drive,  Suite
430, Denver, Colorado 80209.

The
table below sets forth the high and low closing prices of the Companys Common Stock
during the periods indicated as reported on Yahoo Finance (http://finance.yahoo.com). The
quotations reflect inter-dealer prices without retail mark-up, mark-down or commission
and may not reflect actual transactions.

|Quarter ended      |  | High |   | Low  | 
|------------------ |  | ---- | - | ---- | 
|
|June 30, 2007      |  |      | $ | 1.87 | 
|September 30, 2007 |  |      | $ | 1.60 | 
|December 31, 2007  |  |      | $ | 1.70 | 
|March 31, 2008     |  |      | $ | 1.60 | 
|June 30, 2008      |  |      | $ | 1.42 | 
|September 30, 2008 |  |      | $ | 1.01 | 
|December 31, 2008  |  |      | $ | 0.25 | 

The closing sales price of the Common
Stock as reported on March 18, 2009, was $.14 per share.

Dividends

Since
its inception the Company has not declared or paid cash or other dividends on its Common
Stock. The Company has no plans to pay any dividends, although it may do so if its
financial position changes.

16

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Securities Authorized
Under Equity Compensation Plans Information

The
Company currently has two equity compensation plans.  The 2006 Stock Option Plan (the
2006 Plan) was approved by the Board of Directors and adopted by the
shareholders on November 13, 2006.  Our Board of Directors has adoptedthreeamendments to the 2006 Plan which have increased the number of shares
reserved under the 2006 Plan from 1,750,000 to 7,000,000. These amendments were adopted on
April 2, 2007 (Amendment No. 1), June 26, 2007 (Amendment No.
2), and October 1, 2007 (Amendment No. 3). At our annual
meeting of shareholders held on August 21, 2007 our shareholders approved Amendment No. 1
and Amendment No. 2 that together increased the number of shares reserved under the
2006 Plan to 5,000,000 shares.

Amendment
No. 3 increased the shares reserved under the Plan from 5,000,000 to 7,000,000
shares.  Because of the lapse of time between its adoption by the Board and the date
at which we held our most recent meeting of shareholders (being November 5, 2008) exceeded
one year, certain tax benefits that may have been available to option recipients from
options granted from the shares reserved by Amendment No. 3 are unavailable. 
Obtaining shareholder approval of Amendment No.3 more than one year after its
adoption by the Board would not have made options granted within the shares reserved by
Amendment No. 3 eligible for the favorable tax treatment.  As such to date we have
not submitted Amendment No. 3 to our shareholders for approval and do not plan to do
so.  However, the Company may, and has, utilized the shares reserved by
Amendment No. 3 for the grant of options and the issuance of bonus shares, however
recipients may not be entitled to certain favorable tax treatment for such grants. 
Accordingly, to date the Company has generally tried to utilize the shares reserved by
Amendment No. 3 for persons who are likely ineligible to fully receive the beneficial tax
treatment that would have been available if the Company received shareholder approval of
Amendment No. 3 within one year of its adoption by the Board.

As
of March 18, 2009 there are 562,250  shares available for the grant of stock
options or the issuance of stock bonuses under the 2006 Plan.

On
September 16, 2008 the Board of Directors adopted the 2008 Stock Option Plan (the
2008 Plan) and reserved 3,000,000 shares under the 2008 Plan.  As of March 18, 2009 there are 1,815,000
 shares available for the grant of stock options or the issuance of stock bonuses under the 2008 Plan.

The
following table gives information about the Companys Common Stock that may be issued
upon the exercise of options, warrants and rights under the Companys compensation
plans (including individual compensation arrangements) as of December 31, 2008.

# SECURITIES AUTHORIZED
FOR ISSUANCE UNDER EQUITY PLANS

|Plan Category                    |  | Number of securities to be issued upon exercise of outstanding options, warrants and rights |  | Weighted average exercise price of outstanding options, warrants, and rights |  | Number of securities remaining available for future issuance |       
|-------------------------------- |  | ------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------- |  | ------------------------------------------------------------ | ------
|Equity compensation plans        |  |                                                                                             |  |                                                                              |  |                                                              |       
|approved by security holders (1) |  |                                                                                             |  | 7,622,750                                                                    |  |                                                              | $ 0.37
|                                 |  |                                                                                            
|Equity compensation plans not    |  |                                                                                            
|approved by security holders(2)  |  |                                                                                             |  | 1,626,847                                                                    |  |                                                              | $ 1.21
|                                 |  |                                                                                             |  |                                                                             
|                                 |  |                                                                                            
|Total                            |  |                                                                                             |  | 9,249,597                                                                    |  |                                                              | $ 0.51

| | (1) | Includes:
(i) options to acquire 7,622,750 shares of common stock under the 2006                and
2008 Plans.
| | --- | ---------------------------------------------------------------------------------------------------------------

| | (2) | Includes:
(i) warrants to purchase 450,000 shares of Common Stock as                compensation
for services to Memphis Consulting, (ii) warrants to purchase                66,325
shares of Common Stock as compensation for services to W3 Ventures, Inc.;
               (iii) warrants to purchase 10,000 shares of Common Stock as compensation
for                services to Lori Sunshine; (vi) 18,000 shares of Restricted Stock as
               compensation for services to Memphis Consulting; (vii) 1,000 shares of
               Restricted Stock as compensation for services to Kurt Palisi; (viii)
56,522                shares of Restricted Stock as compensation for services to Nicholas
Buoniconti;                (ix) 1,000,000 warrants of compensation for consulting
services to Robert                Skinner; (x) 25,000 warrants of compensation for
consulting services to the Geek                Factory.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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Recent
Sales of Unregistered Securities

The
following sets forth the information required by Item 701 of Regulation S-K with respect
to the unregistered sale of equity securities that occurred during the quarter ending
December 31, 2008, or subsequently and not previously reported in our quarterly report on
Form 10-Q for the quarter ended September 30, 2008 or in a current report on Form 8-K.

On
December 30, 2008, pursuant to the Plan, we granted employees an aggregate of 135,000
options to purchase our common stock exercisable at $.21 per share with the options
vesting on an annual basis over a three year period from the date of grant. The options
were granted in consideration for the recipients expanded responsibilities and
continuing services to be rendered as employees. To the extent these option grants
constituted sales of securities we relied on the exemption from registration
provided by Section 4(2) under the Securities Act of 1933 for the grants because we: (i)
did not engage in any public advertising or general solicitation in connection with the
grants; (ii) made available to each recipient disclosure regarding all aspects of our
business including our reports filed with the SEC and our press releases, and other
financial, business, and corporate information; and (iii) believed that for each grant the
recipients obtained all information regarding the Company he or she requested (or believed
appropriate) and received answers to all questions he or she (and their advisors) posed,
and otherwise understood the risks of accepting our securities for investment purposes. No
commissions or other remuneration was paid in connection with this issuance.

# ITEM 6. SELECTED
FINANCIAL DATA

Not
Applicable.

# ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Liquidity
and Capital Resources

At
December 31, 2008, the Company held cash, cash equivalents and short term investments
totaling $1,951,676,  compared to $6,645,193 at December 31, 2007. During our
fiscal years ended December 31, 2008 and December 31, 2007 we generated limited amounts
of revenues and cash collections through the sale of various advertising, sponsorship and
directory services products from our main website Disaboom.com, and related microsites
DisaboomJobs.com and Lovebyrd.com. However, we currently fund our operations primarily
through funds raised through private placements completed in March, September, October
and December 2007 and March and April 2008. Additionally, in March and April 2008 we
received gross proceeds of $2,623,501 upon the exercise of certain warrants the Company
issued in September and October 2007. On March 9, 2007 we completed a private placement
of our common stock, issuing 6,296,000 shares for aggregate gross proceeds of $3,148,000.
The shares were issued at $0.50 per share.

On
September 26, 2007 we had a closing of $5,346,000 under a private placement of
unregistered securities. A total of 7,128,000 common shares were issued on September 26,
2007 and 5,346,000 warrants to purchase the same number of common shares. On October 9,
2007 we had a final closing of $349,500. A total of 449,333 common shares and 337,000
warrants to purchase the same number of common shares were issued in this final closing.
For both the September and October 2007 closings for each $0.75 invested, each purchaser
received one common share plus warrants to acquire three-fourths of a share. The warrants
are exercisable at $1.00 per share.

On
December 10, 2007, we closed a $5,000,000 private placement under the same terms as those
of the private placement closed in September and October 2007. On December 10, 2007 we
issued a total of 6,666,665 common shares and 5,000,000 warrants to purchase the same
number of common shares.

18

---



On
March 12, 2008 we closed $1,552,000 in gross proceeds under a private placement, and
issued 1,552,000 shares of common stock. The shares were issued at $1.00 per share. On
April 4, 2008 we closed $800,000 in gross proceeds under a private placement, and issued
800,000 shares of common stock. These shares were issued at $1.00 per share.

On
March 10, 2008 and April 2, 2008 we issued an aggregate of 2,623,501 shares of common
stock at $1.00 upon the exercise of warrants that the Company issued in September and
October 2007. We received gross proceeds of $2,623,501 upon the exercise of the warrants.

On
March 19, 2009, the Company closed on $296,250 in gross proceeds under a
private placement. In the closing, the Company issued a total of 1,975,000 shares of
common stock at a price of $.15 per share.  The shares were issued in reliance on Section
4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, and
the offering was made to accredited investors only.

With our projected sales, operations and expenditures we expect that our current financial resources are
sufficient to fund our operations until the fourth calendar quarter of 2009 at which time we anticipate
that we will be cash flow positive. However, in the event we fail to achieve our projections during
fiscal 2009, we will likely need to raise additional funds
during the year through equity or debt financing to continue to fund our planned business operations.
Current conditions in the global and financial markets have currently limited the availability of these
resources. We cannot assure you that, if necessary, capital will be available on reasonable terms, if at
all. Therefore, the inability to raise additional funds, either through equity or debt financing, could
materially impair our ability to generate revenues, or continue our current business operations.

Results of Operations:

During
2007 the activities of the Company were primarily organizational in nature. During the
year  ended December 31, 2008 our focus changed from organizational matters and
the initial launch of our main website, to operational matters related to (a) expanding
the resources, services, product offerings and capabilities of our main website and
social networking platform, (b) launching additional resources and services through
related microsites and the Companys marketplace, (c) integrating our main website
and related microsites into the Disaboom Network, (d) driving Internet traffic into our
community, and (e) beginning to generate traditional cost per mille (CPM)
related advertising and sponsorship revenues, as well as directory services revenues.
Accordingly, during the first six months of 2008, the Company remained in the development
stage for financial reporting purposes. However, because of the Companys
financial results and growth during the year, we exited the development stage for
financial reporting purposes during the quarter ended September 30, 2008.

The Company has, and will continue
 to respond aggressively to changing general economic and internet
advertising industry conditions. While the growth of traditional static banner and
display advertising has generally slowed in several online advertising market sectors due
to pricing declines, advertising agency commitments, budget cutbacks, recessionary
economic conditions and other factors, the growth and outlook of niche market, search
related, targeted landing page and microsite related, social network related, targeted
rich media, and other forms of targeted and niche online advertising remains relatively
strong. Beginning in the quarter ended September 30, 2008, and through the filing date of this Form 10-K, the Company aggressively reduced its
investment in online media/advertising related expenditures. We also continue to
constantly monitor and evaluate our business needs and resources and may scale back in
certain areas that are not deemed essential to the Companys near term success.

During
the year ended December 31, 2008, the Company experienced a net loss of $ 10,813,591 or
($.25) per share, compared to a net loss of $7,949,350, or (.28) per share during the
year ended December 31, 2007. During the  year ended December 31, 2008, our
operating expenses totaled $11,229,958. Approximately 88% of the expenditures we incurred
related to payroll and stock compensation costs ($ 3,698,857), website development costs
($162,855), marketing and advertising costs ($5,232,859) and legal and consulting fees
($748,810).

As
of December 31, 2007, the Company had 25 full time and 2 part time employees, and
outsourced all of its design, development and marketing efforts related to the initial
limited and general availability launches of its main website. As of December 31, 2008,
the Company had 27 full time and 3 part time employees dedicated to all aspects of the
Companys website and content development, sales, and administrative operations, and
limited third Party vendor relationships. The Companys online media/advertising
related expenditures were reduced by approximately 80% from the quarter ended September
30, 2008 versus the prior quarter, and approximately 90% from the three month period
ended December 31, 2008 versus the quarter ended September 30, 2008. Total cash operating
expenditures were also reduced approximately 20% during the quarter ended September 30,
2008 versus the previous quarter, and approximately 40% from the three month period ended
December 31, 2008 versus the quarter ended September 30, 2008. Total cash operating
expenditure reductions included reductions of approximately 60% of the Companys
workforce from a high of approximately 45 fulltime personnel during the quarter ended
September 30, 2008, to a total of 27 fulltime personnel as of December 31, 2008.

19

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During
the quarter ended December 31, 2007 and through the twelve months ended December 31,
2008, the Company began receiving revenue through the sale of various CPM display
advertising, sponsorship and directory services products on the Disaboom Network. During
the quarter ended September 30, 2007, the Company had no earned revenue from its website
as we were still in the planning and early development stage of our website.
The Companys revenue increased 800%, from $83,682 to $752,152 during the twelve month period ended December 31,
2008 versus the prior year. Although we did not release the first fully operational version of our website until
approximately February 1, 2008, we did receive limited revenues in 2007 during the fourth quarter.
 Existing sales agreements range in term from one
month test agreements to twelve month agreements over which the contract value is earned
and recognized as revenue. Advertising revenue is recognized ratably over the period in
which it is earned through the development of sponsor landing pages, microsites and
channels, publishing business listings or company profiles, or the delivery of
advertising impressions by recognized and independent third party vendors. From the
quarter ended June 30, 2008 through the quarter ended September 30, 2008, the Companys
revenue increased 39%, from $141,355 to $196,242. From the quarter ended September 30,
2008 through the three month period ended December 31, 2008, the Companys revenue
increased 186%, from $ 196,242 to $ 364,695. Total cash collections from the sale of CPM
display advertising, sponsorship and directory services products increased 66%, to
$219,095, during the quarter ended September 30, 2008 versus the previous quarter, and
increased 68% for the three month period ending December 31, 2008 versus the quarter
ended September 30, 2008.

Online
media/advertising related expenditures were reduced by approximately 80% from the quarter
ended September 30, 2008 versus the prior quarter, and approximately 90% from the three
month period ended December 31, 2008 versus the quarter ended September 30, 2008. The
purpose of this reduction was to aggressively respond to changing market conditions and
to transition the Company to a base of primarily organic traffic. After an initial
decline in monthly unique visitors early in the quarter ended September 30, 2008, monthly
unique visitors increased 50% during the period from August to September 2008, and
increased an additional 57% from September to October 2008, to reach over 656,000 monthly
unique visitors. From the quarter ended September 30, 2008 through the three month period
ended December 31, 2008, the Companys unique visitors increased approximately 240%
to reach over 3.2 million unique visitors. Absolute and relative increases in monthly
unique visitors and organic traffic not only reduce the need for advertising and branding
campaigns to promote the Disaboom Network via media related expenditures, but also
increase the Companys available advertising impression inventory for CPM and
directory services sales.

Throughout
the year ending December 31, 2008, the Companys CPM advertising
impression inventory remained sold out. During the period from September 2008 through
December 31, 2008, as the Companys internet traffic increased substantially, the
Companys deliveries of CPM advertising commitments and related sponsorship
obligations, billings and earned revenue correspondingly grew significantly, enabling the
Company to begin to hire, train and re-invest in dedicated CPM and sponsorship sales
executives in late December 2008 and into 2009. While early in 2009 the Company has
experienced delays in the renewals and implementation of several 2008 advertising
campaigns and a generally softer market among smaller advertisers, the Companys
recently hired CPM and sponsorship sales executives are aggressively proposing on a
variety of advertising and sponsorship opportunities for the second calendar quarter of
2009. The Company anticipates continued substantial growth in 2009 as a result of its
niche advertising market opportunity, growing base of monthly unique visitors and
portfolio of products, continued operating efficiencies, and the further penetration of
its community with primarily organic traffic.

As
described above, during our fiscal years ended December 31, 2007 and December 31, 2008 we
generated limited amounts of revenues and cash collections through the sale of various
advertising, sponsorship and directory services products from the Disaboom Network. We
currently fund our operations primarily through funds raised in private placements of our
common stock completed in March, September, October, and December 2007, and March and
April 2008. Additionally, in March and April 2008 we received funds upon the exercise of
certain warrants the Company issued in its September and October 2007 private placements.
With our projected sales, operations and expenditures we expect that our current
financial resources are sufficient to fund our operations until the fourth calendar
quarter of 2009 at which time we anticipate that we shall be cash flow positive. However,
in the event we fail to achieve our projections during calendar 2009, we expect that
during fiscal 2009 we will need to raise additional funds  through equity or
debt financing to continue to fund our planned business operations. Current conditions in
the global and financial markets have currently limited the availability of these
resources. We cannot assure you that capital will be available on reasonable terms, if at
all. Therefore, the inability to raise additional funds, either through equity or debt
financing, could materially impair our ability to generate revenues, or continue our
current business operations.

20

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At
December 31, 2008, the Companys cash, cash equivalents and short-term investments
(primarily mutual funds) were $1,951,676. As reflected in our statement of
operations during the 2008 fiscal year the Company recorded $138,004 of interest related
to cash accounts and dividends on marketable securities held by the Company.  The
Company also recorded an unrealized loss of $473,789as a result of a decrease in value of mutual
funds. As a result of general market conditions, these funds continued decreasing in
value, and we anticipate that the line item for interest income or loss in our financial
statements for our quarter ending March 31, 2009 will reflect a loss for the quarter.  The
Company actively monitors its investment policies and decisions and will evaluate whether
it is appropriate for the Company to continue to invest in the marketable securities at
issue.

Off-Balance
Sheet Arrangements

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

Critical
Accounting Policies

The
preparation of financial statements in conformity with U. S. generally accepted
accounting principles requires management to make a variety of estimates and assumptions
that affect (i) the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and (ii) the
reported amounts of revenues and expenses during the reporting periods covered by the
financial statements.

Our
management routinely makes judgments and estimates about the effect of matters that are
inherently uncertain. As the number of variables and assumptions affecting the future
resolution of the uncertainties increase, these judgments become even more subjective and
complex. Although we believe that our estimates and assumptions are reasonable, actual
results may differ significantly from these estimates. Changes in estimates and
assumptions based upon actual results may have a material impact on our results of
operation and/or financial condition. Our significant accounting policies are disclosed in
Note 2 to the Financial Statements included in this prospectus.

While
all of the significant accounting policies are important to the Companys financial
statements, the following accounting policies and the estimates derived therefrom, have
been identified as being critical:

Revenue
recognition:

During
the year ended December 31, 2008, the Company began receiving of revenue primarily through
the sale of various CPM display advertising, sponsorship, and directory services products
on the Disaboom Network. CPM display advertising and sponsorship revenue comprised 75% of
the Companys total revenue during 2008. CPM display advertising and sponsorship
revenue, and directory services revenues, are recognized ratably over the period in which
it is delivered and earned through (1) the development and release of sponsor landing
pages, microsites and channels on the Companys websites, (2) the delivery of
advertising impressions by recognized and independent third party vendors, and (3) the
publication and availability of national and local business listings and other directory
service products in the Companys marketplace. The Company has agreements ranging in
term from one month test agreements to twelve month advertising, sponsorship and directory
services agreements.

Website
development costs:

The
Company has adopted the provisions of Financial Accounting Standards Board
(FASB) Emerging Issues Task Force (EITF) 00-2, Accounting for
Web Site Development Costs, which specifies the appropriate accounting for costs
incurred in connection with the development and maintenance of web sites. Under EITF 00-2,
costs related to certain web site development activities are expensed as incurred (such as
planning and operating stage activities). Costs relating to certain website application
and infrastructure development are generally capitalized, and are amortized over their
estimated useful life. Based upon the Companys product development process and the
constant modification of the Companys website, costs incurred by the Company during
the application development stage have been insignificant. Through December 31, 2008, the
Company has expensed all significant website development costs, as these costs primarily
related to planning and operational activities. For the years ended December 31, 2008 and
2007, website development costs of approximately $162,855 and $475,462, respectively, were
expensed.

Short-term
investments:

Short-term
investments consist of a certificate of deposit with an original maturity of six months
and mutual funds. The Company accounts for short-term marketable securities in accordance
with SFAS, No. 115, Accounting for Certain Investments in Debt and Equity
Securities.

21

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Marketable
securities are classified as trading securities, as the Company expects to use these funds
for operating purposes within the next year. Trading securities are reported at fair
market value and unrealized gains and losses are included in earnings.

The
Company currently maintains a bank account through Cambridge Investment Research Advisors,
Inc. Through this account the Company invests a portion of its cash in short term
commercial notes that are highly liquid and historically low risk. Subsequent to September
30, 2008, the current credit crisis in the United States has continued and capital market
conditions have been highly volatile. The market value of the Companys short term
investments have declined and the Company has recorded an unrealized loss of approximately
$426,376 for the year ended December 31, 2008, which represents approximately 27% of the
Companys short-term investments.

Stock-based
compensation:

The
Company accounts for stock options and similar equity instruments in accordance with SFAS
No. 123(R), Share-Based Payment. SFAS 123(R) requires the recognition of the
cost of employee services received in exchange for an award of equity instruments in the
financial statements and is measured based on the grant date fair value of the award.
SFAS 123(R) also requires the stock option compensation expense to be recognized over the
period during which an employee is required to provide service in exchange for the award
(usually the vesting period).

Use
of estimates in financial statement preparation:

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

Accounts
receivable:

Accounts
receivable are recorded at their face amount less an allowance for doubtful accounts. The
allowance for doubtful accounts reflects managements best estimate of probable
losses in the accounts receivable balance. Management determines the allowance based on
known doubtful accounts, historical experience, and other currently available evidence.

Recent
pronouncements:

In
April 2008, the FASB issued FSP SFAS 142-3, DeterminationoftheUsefulLife ofIntangibleAssets. FSP SFAS 142-3 amends the factors
that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,
Goodwill and Other Intangible Assets. Previously, under the provisions of SFAS No. 142,
an entity was precluded from using its own assumptions about renewal or extension of an
arrangement where there was likely to be substantial cost or material modifications. FSP
SFAS 142-3 removes the requirement of SFAS No. 142 for an entity to consider whether
an intangible asset can be renewed without substantial cost or material modification to
the existing terms and conditions and requires an entity to consider its own experience
in renewing similar arrangements. FSP SFAS 142-3 also increases the disclosure
requirements for a recognized intangible asset to enable a user of financial statements
to assess the extent to which the expected future cash flows associated with the asset
are affected by the entitys intent or ability to renew or extend the arrangement.
FSP SFAS 142-3 is effective for fiscal years beginning after December 15, 2008 and
interim periods within those fiscal years. Early adoption is prohibited. The guidance for
determining the useful life of a recognized intangible asset is applied prospectively to
intangible assets acquired after the effective date. Accordingly, the Company does not
anticipate that the initial application of FSP SFAS No. 142-3 will have an impact on
the Company. The disclosure requirements must be applied prospectively to all intangible
assets recognized as of, and subsequent to, the effective date.

In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations,
(SFAS No. 141R). SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all
the assets acquired and liabilities assumed in a transaction at the acquisition-date fair
value with limited exceptions. SFAS No. 141R will also change the accounting treatment
and disclosure for certain specific items in a business combination. SFAS No. 141R
applies prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after December
15, 2008. Accordingly, any business combinations the Company engages in will be recorded
and disclosed following existing GAAP until December 31, 2008. The Company expects SFAS
No. 141R will have an impact on accounting for business combinations once adopted and the
effect is dependent upon acquisitions at that time.

22

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In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
HedgingActivities (SFAS No. 161). SFAS No. 161 amends and expands
the disclosure requirements for FASB Statement No. 133, Derivative Instruments and
Hedging Activities (SFAS No. 133). It requires enhanced disclosure
about (i) how and why an entity uses derivative instruments, (ii) how derivative
instruments and related hedge items are accounted for under SFAS No. 133 and its related
interpretations, and (iii) how derivative instruments and related hedge items affect an
entitys financial position, financial performance, and cash flows. SFAS No. 161 is
effective for the Company as of January 1, 2009. As the Company does not hold any
derivative instruments, management does not expect SFAS 161 will have an impact, on its
financial position and results of operations.

In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated FinancialStatements, an Amendment of ARB 51 (SFAS 160)
which is effective for the Company on January 1, 2009. This statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. This statement requires
consolidated net income to be reported at amounts that include the amounts attributable
to both the parent and the non-controlling interest. It also requires disclosure on the
face of the consolidated statement of net income, the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. In addition, this
statement establishes a single method of accounting for changes in a parents
ownership interest in a subsidiary that do not result in deconsolidation and requires
that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated.
The Company does not expect the adoption of this statement to have a material impact on
its financial statements

# ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MAREKT RISK

Not
Applicable.

# ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

See
Financial Statements following the signature page of this Form 10-K.

# ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not
applicable.

# ITEM 9A. Controls and
Procedures

Evaluation
of Disclosure Controls and Procedures

The
Companys principal executive officer and principal financial officer have evaluated
the effectiveness of the Companys disclosure controls and procedures (as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the
period covered by this report (December 31, 2008). Based on such evaluation, the
Companys principal executive officer and principal financial officer have concluded
that, as of the end of such period, the Companys disclosure control and procedures
are effective in recording, processing, summarizing and reporting, on a timely basis,
information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act.

Disclosure
controls and procedures are controls and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commissions rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our reports filed under
the Exchange Act is accumulated and communicated to management, including our principal
executive officer and our principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.

23

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Internal
Control over Financial Reporting

Our
management is also responsible for establishing internal control over financial reporting
(ICFR) as defined in Rules 13a-I5(f) and 15(d)-15(f) under the 1934 Act. Our
ICFR are intended to be designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes
in accordance with U.S. generally accepted accounting principles. Our ICFR are expected to
include those policies and procedures that management believes are necessary that:

| | (1) | pertain
to the maintenance of records that, in reasonable detail, accurately and
               fairly reflect the transactions and dispositions of the assets of the
Company;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | provide
reasonable assurance that transactions are recorded as necessary to                permit
preparation of financial statements in accordance with generally accepted
               accounting principles, and that receipts and expenditures of the Company
are                being made only in accordance with authorizations of management and
our                directors; and provide reasonable assurance regarding prevention or
timely                detection of unauthorized acquisition, use or disposition of the
Companys                assets that could have a material effect on the financial
statements.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management
recognizes that there are inherent limitations in the effectiveness of any system of
internal control, and accordingly, even effective internal control can provide only
reasonable assurance with respect of financial statement preparation and may not prevent
or detect misstatements. In addition, effective internal control at a point in time may
become ineffective in future periods because of changes in conditions or due to
deterioration in the degree of compliance with our established policies and procedures.

As
of December 31, 2008, management assessed the effectiveness of the Companys ICFR
based on the criteria for effective ICFR established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) and SEC guidance on conducting such assessments by smaller reporting companies and
non-accelerated filers. Based on that assessment, management concluded that, during the
period covered by this report, such ICFR were
effective as of December 31, 2008.

This
Annual Report does not include an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting. Managements
report was not subject to attestation by our independent registered public accounting firm
pursuant to temporary rules of the SEC that permit us to provide only managements
report in this Annual Report.

There
were no changes in our internal control over financial reporting during the quarter ended
December 31, 2008, that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

# ITEM 9B. Other
Information

Not
Applicable.

24

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# PART III

# ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The
persons below served as directors and executive officers of the Company as of March 20,
2009. Executive officers of the Company are elected by the Board of Directors, and serve
for a term of one year and until their successors have been elected and qualified or until
their earlier resignation or removal by the Board of Directors. There are no family
relationships among any of the directors and executive officers of the Company. Except as
described below, none of our executive officers or directors have been involved in any
legal proceedings within the past five years. Finally, except with respect to Mr.
Walpucks employment agreement, there is no agreement or understanding between the
Company and each director or executive officer pursuant to which he was selected as an
officer or director.

|Name                |  | Age |  | Position | 
|------------------- |  | --- |  | -------- | 
|
|J.W. Roth           |  |     |  | 45       | 
|John Walpuck        |  |     |  | 47       | 
|Victor Lazzaro, Jr. |  |     |  | 63       | 
|David Petso         |  |     |  | 47       | 
|R. Jerry Overgaard  |  |     |  | 68       | 
|Patrick Templeton   |  |     |  | 66       | 
|Scott Chandler      |  |     |  | 47       | 

J.W.
          Roth is a co-founder of Disaboom and was appointed to serve on our Board of
          Directors in November 2006 and currently serves as the Chairman of our Board of
          Directors. Mr. Roth served as our Chief Executive Officer until November 4,
          2008. Since 1997 Mr. Roth has served as the as the President of JW Roth &
          Company, Inc., a consulting company. Prior to founding JW Roth & Company,
          Mr. Roth worked in the financial sales industry for American National Insurance
          Company and the Prudential Insurance Company. Additionally, Mr. Roth has worked
          for, and been associated with, the business development of several companies
          such as Fear Creek Ranches, IMI Global, Inc., CattleNetwork, Inc., Front Porch
          Direct, the CTURN Corp, and Aspen BioPharma, Inc.

John Walpuck was appointed to
our Board of Directors in April 2007 and also serves as our Chief Executive Officer, Chief
Financial Officer, President, Secretary and Treasurer. He also served as Chief Operating
Officer from April 2007 until his appointment as President on August 21, 2007. Mr. Walpuck
has over 20 years of financial and management experience to the Company, and over 15 years
of experience in the Internet and web-based software industries. Prior to joining
Disaboom, Mr. Walpuck served as the Senior Vice President and Chief Financial Officer of
Nine Systems, a San Diego based streaming media software services company acquired by
Akamai. Prior to that, he served as a corporate officer, financial executive and
management consultant to privately-held and publicly traded companies ranging from
start-ups to organizations with over $50 billion in revenue, including XO Communications,
TecSec, Inc., MCI Communications, General Electric, and PSINET, Inc. Mr.
Walpucks experience spans 15 industries, 40 countries, and a broad range of
financial and corporate matters. A CPA and CMA, Mr. Walpuck also holds an MBA from
the University of Chicago and a Bachelors degree from Edinboro University.

Victor Lazzaro was appointed
to our Board of Directors in February 2007. Mr. Lazzaro also serves as a director for
Colorado Catheter Company, Inc. Before joining Disaboom, Mr. Lazzaro founded, and
currently is the President of, International Health Technology Company, a consulting firm
providing planning methods, strategies and processes to bring specialty medical clinics to
China. Mr. Lazzaro is also currently a managing Director of Tivis Healthcare, a private
equity company, focused on acquiring and building healthcare businesses. Prior to founding
International Health Technology, Mr. Lazzaro served as the President and Chief Executive
Officer of United HealthCares Mountain States Division from March 2000 to November
2005. Mr. Lazzaro also served as Chief Financial Officer and Chief Executive Officer for a
California HMO and Louisiana insurance company from 1982 to 1990, and Regional Vice
President of Health Plan Operations (Gulf South) for Prudential Insurance Company of
America from 1990 to 2000.

R.
          Jerry Overgaard was appointed to our Board of Directors in November 2006.
          Mr. Overgaard has served as Vice President of Financial Products of MKA Capital
          Group Advisors, LLC, since August 2004. Mr. Overgaard served as Vice President,
          Institutional Sales Division, for Dreyfus Services Corporation from 1998 to
          2004. Mr. Overgaard began his career in 1962 with IBM Corporation and has spent
          the last 27 years in the financial services industry.

David Petso was appointed to
our Board of Directors in March 2007. Mr. Petso also serves as a director for Colorado
Catheter Company, Inc. Since 1980 Mr. Petso has worked for Petso Financial Consultants,
LLC. Mr. Petso is currently the president and owner of Petso Financial Consultants and has
over twenty-five years of experience in the financial planning industry.

25

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Patrick Templeton was
appointed to our Board of Directors in July 2007. Mr. Templeton has over 35 years of
experience the fields of government relations and public affairs. Following sixteen years
with GE and four years at the National Aeronautics and Space Administration where he was
Chief of External Relations, he established his own consulting firm, Templeton and
Company. Since 1995, Mr. Templeton has been Senior Consultant to the government relations
firm of BKSH & Associates. From 1999 through 2003, Mr. Templeton was also employed by
the Coalinga Corporation, a private financial management company, serving as Washington
Representative. Additionally, Mr. Templeton is Chairman of the Board of the EdVenture
Group, a non-profit corporation that provides technology and related consulting services
to educators and businesses. Mr. Templeton is also associated with outreach activities of
prominent disabilities organizations.

Scott Chandler was elected to
serve on our Board of Directors on November 5, 2008. Mr. Chandler has over 15 years of
senior and executive level management experience. Mr. Chandler is currently managing
partner for Franklin Court Partners, LLC, a company that provides a range of business
consulting services including advising clients in the following areas: developing business
plans to raise initial funding, assisting companies secure additional financing, business
restructuring, and litigation support. Currently Mr. Chandler also serves as a director of
other companies including Cimetrix Inc. (CMXX.OB) a software company engaged in the
design, development, marketing, and support of factory automation solutions for the
semiconductor and electronics industries. Prior to founding Franklin Court Partners, LLC
Mr. Chandler was the Chief Financial Officer and Senior Vice President for RHYTHMS
NetConnections, a provider of broadband services utilizing digital subscriber line
technology. Additionally, Mr. Chandler has worked for other companies engaged in the
telecommunications industry. Mr. Chandlers business career began with Arthur
Andersen & Co as a Senior Consultant/Accountant. Mr. Chandler earned an M.B.A. from
the Wharton School of the University of Pennsylvania, and a B.A from Whitworth College.

Significant
Employees

Although we do not consider the
following persons to be executive officers each of the below persons make significant
contributions to our current and planned business operations.

Kim Dority joined Disaboom in
September 2007 and currently serves as the Companys Vice President of Content. Ms.
Dority has over thirty years of experience in content development, publishing, product
creation and information strategy consulting in at least eight different industries.
 She has worked for and consulted with start-ups, early stage and Fortune 500
companies and non-profits on numerous projects to optimize and align internal and external
information resources with their strategic goals, and has developed successful content to
drive those strategic goals. Included among her major projects are the development
and implementation of information strategies for students, faculty, marketing, and
accreditation goals for a growing online MBA program, and the design and creation of the
first digital library for online learners, which she subsequently built into a successful
digital library business for the online learning industry. She holds a Masters
Degree in Information Science from the University of Denver, and a Bachelors Degree
in Comparative Literature from the University of California, Irvine.

Harry Brumleve joined Disaboom
in November 2007 and currently serves as the Companys Vice President of Engineering.
Mr. Brumleve has over 15 years of web and product-based software development experience to
the Company. Prior to joining Disaboom, was the Director of Software for
ManiaTV.com. Mr. Brumleve has founded and worked primarily for early stage and
startup companies and has also worked and consulted for such established corporations as
Accenture, Anheuser-Busch and Cambridge Technology Partners in the US and abroad. Mr.
Brumleve holds a Bachelors Degree in Computer Science (with a double major in
German) from the University of Missouri.

Section
16(a) Beneficial Ownership Reporting Compliance

Section
16(a) of the Exchange Act, as amended, requires the Companys officers and directors
and persons who own more than 10% of the Companys outstanding Common Stock to file
reports of ownership with the Securities and Exchange Commission (SEC).
Directors, officers, and greater than 10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

Based
solely on a review of Forms 3, 4, and 5 and amendments thereto furnished to the Company
during and for the Companys year ended December 31, 2008, there were no directors,
officers or more than 10% stockholders of the Company who failed to timely file a Form 3,
4 or 5 except our former Chief Operating Officer, Ken Klispie, failed to timely file a
Form 4 reporting an option grant in April 2008.

Code
of Ethics

On
March 9, 2007, the Board of Directors adopted a code of ethics that applies to all of our
officers and employees, including our principal executive officer, principal financial
officer, principal accounting officer and controller. Our Code of Ethics establishes
standards and guidelines to assist the directors, officers, and employees in complying
with both the Companys corporate policies and with the law and is posted at our
website www.disaboom-inc.com. Persons desiring a copy of our Code of Ethics will be
provided one at no cost upon submitting a written request to the Company at its corporate
offices.

26

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Audit
Committee

The
Company has a separately designated standing audit committee established in accordance
with Section 3(a)(58)(A) of the Exchange Act. Mr. Chandler, Mr. Overgaard and Mr. Petso
currently serve on the Companys Audit Committee, each of whom is considered
independent. Mr. Chandler has been designated as the chairman and financial expert on the
Audit Committee. The Company defines independent as that term is defined in
Rule 4200(a)(15) of the Nasdaq listing standards.

The
audit committee was formed on March 9, 2007. The Board of Directors has adopted a written
charter for the audit committee.

# ITEM 11. EXECUTIVE
COMPENSATION

Compensation and other
Benefits of Executive Officers

The
following table sets out the compensation received for each fiscal year since our
inception, in respect to each of the individuals who served as the Companys chief
executive officer and chief financial officer at any time during the last fiscal year and
the Companys most highly compensated executive officers whose total compensation
exceeded $100,000.

# EXECUTIVE SUMMARY
COMPENSATION

|Name and Principal Position           |  | Fiscal Year |      | Salary ($) |  | Bonus ($) |         | Option Awards ($) |   | All Other Compensation ($) |  | Total ($) |        
|------------------------------------- |  | ----------- | ---- | ---------- |  | --------- | ------- | ----------------- | - | -------------------------- |  | --------- | -------
|
|JW Roth (1)                           |  |             | 2008 |            |  | $         | 214,384 |                   | $ | 0                          |  | $         | 0      
|Chief Executive Officer               |  |             | 2007 |            |  | $         | 100,000 |                   | $ | 7,692                      |  | $         | 0      
|                                      |  |             |      |            |  |          
|John Walpuck (2)                      |  |             | 2008 |            |  | $         | 200,000 |                   | $ | 0                          |  | $         | 89,046 
|President and Chief Financial Officer |  |             | 2007 |            |  | $         | 128,750 |                   | $ | 7,962                      |  | $         | 226,293
|                                      |  |             |      |            |  |          
|Kimberly Dority                       |  |             | 2008 |            |  | $         | 121,831 |                   | $ | 0                          |  | $         | 47,990 
|Vice President, Content               |  |             | 2007 |            |  | $         | 40,937  |                   | $ | 2,260                      |  | $         | 9,496  
|                                      |  |             |      |            |  |          
|Harry Brumleve                        |  |             | 2008 |            |  | $         | 120,000 |                   | $ | 0                          |  | $         | 20,358 
|Vice President, Engineering           |  |             | 2007 |            |  | $         | 11,673  |                   | $ | 1,000                      |  | $         | 14,146 

| | (1) | Mr.
Roth served as the Companys Chief Executive Officer until November 4,
2008. On November 4, 2008, the Company and Mr. Roth, mutually agreed to
terminate the terms and obligations of his three year employment agreement with
the Company. Although, Mr. Roth no longer serves as the Companys Chief
Executive Officer, he is continuing to serve as the Chair of the Companys
Board of Directors. The Company agreed to pay Mr. Roth severance equal to twelve
months of his annual salary ($200,000) and for his accrued but unused paid time
off, which is included under the All Other Compensation column
above.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | On
November 4, 2008, the Company entered into an amended and restated employment
               agreement with Mr. Walpuck, who was appointed to serve as the Companys
               Chief Executive Officer. Pursuant to his employment agreement Mr. Walpuck
is                paid a monthly travel and housing allowance, which is included under
the                All Other Compensation column above.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

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Compensation
Discussion and Analysis

The
following Compensation Discussion and Analysis describes the material elements of
compensation for the persons identified in the Summary Compensation Table above.

The
Compensation Committee of our Board of Directors (the Committee) reviews and
approves the total direct compensation packages for each of our executive officers. To
date the Company has generally entered into employment agreements with its executive
officers. Notably the salary and other benefits payable to executive officers have set
forth in employment agreements which are discussed below as applicable. Stock option
grants, as applicable to certain of the named executive officers, are approved by the full
board of directors. Company management determines the salary and total compensation for
persons who are not deemed executive officers.

Cash
Compensation Payable to Our Executive Officers.

Our
named executive officers receive a base salary payable in accordance with our normal
payroll practices and pursuant to any employment agreement between each of these officers
and Disaboom (which agreements are described in more detail below). Based on the
Committees knowledge of the industry and Disabooms performance to date the
Committee believes that their base salaries are competitive to those that are received by
comparable officers with comparable responsibilities in similar companies. Both Messrs.
Roth and Walpuck received standard fees for serving in their capacity as directors.

When
the Committee considers total cash compensation for our named executive officers, we do so
by evaluating their responsibilities, experience and the competitive marketplace locally
and regionally. Specifically, the Committee considers the following factors:

| | 1. | the
executive's  leadership and operational  performance and potential to enhance
 medium-to-long          term value to the Company's shareholders;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | performance
  compared  to  the  financial,   operational  and  strategic  objectives  and  goals
         established for the Company;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 3. | the
nature, scope and level of the executive's responsibilities;
| | -- | ----------------------------------------------------------------

| | 4. | competitive
 market  compensation paid by other companies for similar  positions,  experience and
         performance levels, locally and regionally;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | the
executive's current salary, bonus, cash incentive  compensation,  and the appropriate
balance          between incentives for short-to-medium term performance; and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 6. | The
Company's financial resources.
| | -- | ----------------------------------

Option
Grants to our Named Executive Officers.

We
have granted stock  options to certain of our named  executive  officers.  These option
grants are intended to provide  incentives to our officers who  contribute to the success
of Disaboom by offering them the  opportunity  to acquire an  ownership  interest in it.
We believe  that option  grants also help to align  the  interests  of our  management
 and  employees  with the  interests  of  shareholders.  When granting  options to our
executive  officers (and all of our employees)  our board of directors  evaluates each
 person's  current,  past  and  potential  contributions  to the  Company  and  attempts
 to grant an appropriate  and fair award to each  employee.  In the case of our
 executive  officers  and senior  level employees  we  consider  the  stock  option
 grants  to be a  material  element  of  that  person's  total compensation.

Of
our executive officers,  and persons named in the executive  compensation table above, we
have granted stock options to: (i) our Chief Executive  Officer,  President and Chief
Financial  Officer,  John Walpuck;  (ii) our Chairman of the Board, Mr. Roth; (iii) our
Vice President of Content,  Kim Dority;  and (iv) our Vice  President of  Engineering,
 Mr.  Brumleve.  We believe  that these  option  grants serve as additional  incentive
 for our officers and employees in turn the  achievement  of these  objectives  will help
our performance.

Employment
Agreements with our Named Executive Officers and Key Employees

Historically
 we have  entered  into  employment  agreements  with  most of our  named  executive
officers.  Each of our  executive  officers  is paid a  salary  for  their  services  and
 certain  of our executive  officers  have been  granted  stock  options  in
 consideration  for their  services.  When the Committee  considers  salaries  for  our
 executives,  it does so by  evaluating  their  responsibilities, experience,  the
competitive  marketplace,  and our financial  resources and projections.  Pursuant to its
Charter,  our Compensation  Committee  reviews and approves the terms of the
 compensation  granted to our executive officers.

28

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J.W. Roth:    On October 1, 2007, we
entered into an employment agreement with our former Chief Executive Officer and
current Chairman of the Board, J. W. Roth. The agreement was for an initial three
year term. On November 4, 2008 the Company and Mr. Roth mutually agreed to terminate
Mr. Roth's employment agreement. Mr. Roth currently serves as our Chairman of the
Board and provides the Company consulting services pursuant to an agreement with the
Company dated November 4, 2008.

John Walpuck:    On April 2, 2007 we
entered into an employment agreement with John Walpuck who currently serves as our Chief
Executive Officer, President, Chief Financial Officer, Secretary and Treasurer. The
employment agreement was for an initial two year term. On November 4, 2008 we entered
into an amended and restated employment agreement with Mr. Walpuck. Pursuant to the
amended and restated agreement, Mr. Walpuck is paid an annual salary of $200,000. Mr.
Walpuck is eligible for an annual bonus and receives a housing and travel allowance.
Unless the employment agreement is terminated for cause, or as a result of Mr.
Walpuck's death or disability, if we terminate the agreement Mr. Walpuck will be
entitled to a severance payment equal to up to six months of his annual salary.

Upon his initial  employment with
the Company,  Mr. Walpuck was granted 1,750,000 options to purchase our common  stock at
$0.50  per  share,  of which  250,000  options  vested  immediately,  250,000  vested  on
September 1, 2007,  500,000  vested on January 1, 2008,  and 500,000 vest on January 1,
2009  provided Mr. Walpuck is an employee or director of the Company on each vesting
 date.  The final  250,000  options only vest upon the occurrence of certain Company
events including a merger,  acquisition or  consolidation.  On November 4, 2008 Mr.
 Walpuck  was granted  2,500,000  options to purchase  our common  stock at $0.20 per
share,  of which 500,000 vested  immediately  and the remaining  options  vesting
 quarterly on a pro-rata basis over a three year term.

Harry Brumleve:    On October 30,
2008 we entered into an employment agreement with Harry Brumleve who currently serves
as our Vice President of Engineering. The employment agreement was for an initial one
year term. Pursuant to the agreement, Mr. Brumleve is paid an annual salary of
$135,000. Unless the employment agreement is terminated for cause, or as a result of
Mr. Brumleve's death or disability, if we terminate the agreement Mr. Brumleve will
be entitled to a severance payment equal to three months of his annual salary.

Upon his initial  employment  with
the Company on November 28,  2007,  Mr.  Brumleve  was granted  125,000 options to
 purchase  our common  stock at $1.40 per share with  100,000  options  vesting  pro-rata
on an annual  basis  over a three  year  period  from the date of grant,  and 25,000
 options  vesting  upon the achievement  of certain  defined  performance  objectives.
 On May 7, 2008 and  September  10, 2008 he was subsequently  granted  25,000 and 75,000
options to purchase our common stock at $1.25 and $.52 per share, with the options
 vesting  pro-rata on quarterly and annual bases over two and three year periods from the
dates of grant,  respectively.  The May 7 and  September  10, 2008 options  were granted
in  consideration for Mr. Brumleve's  promotion to become our Vice President of
Engineering,  expanded  responsibilities and continuing  services to be  rendered to the
 Company.  As a result of a result of  significant  changes in market  conditions  and
other factors,  the exercise  prices of Mr.  Brumleve's  November 28, 2007, May 7, 2008
and September 10, 2008 option grants were  subsequently  amended to each be at a strike
price of $.45 per share (see the Company's  Subsequent Events financial statement
footnote for additional  information). On November 5, 2008, Mr.  Brumleve was granted an
additional  150,000 options to purchase our common stock exercisable  at $.18 per share
with the options  vesting on a  quarterly  basis over  approximately  a one year period
from the date of grant upon the  achievement of certain  defined  interim  performance
 goals, with all of such  options  vesting  upon the  Company  achieving  the status of
cash flow  positive in our business operations in the later part of 2009.

29

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# OUTSTANDING EQUITY
AWARDS AT FISCAL YEAR-END 2008

|                   | Option Awards | 
|------------------ | ------------- | 
|
|
|
|JW Roth(1)         |               | 
|                   |               | 
|John Walpuck(2)    |               | 
|                   |               | 
|                   |               | 
|Harry Brumleve(2)  |               | 
|                   |               | 
|                   |               | 
|                   |               | 
|                   |               | 
|Kimberly Dority(3) |               | 
|                   |               | 
|                   |               | 
|                   |               | 

| | (1) | On
November 5, 2009 Mr. Roth was granted an option to purchase 50,000 shares of
               common stock exercisable at $0.18 per share (the closing sale price on the
date                of grant). The option vests in full one year from the date of grant
and may be                exercised until November 4, 2012.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The
material terms of Mr. Walpucks and Mr. Brumleves option grants
               are described in the employment agreements with our named Executive
Officers and                Key Employees notes above.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Upon
her initial employment with the Company on September 4, 2007, Ms. Dority
               was granted 75,000 options to purchase our common stock at $1.40 per share
               vesting pro-rata on an annual basis over a three year period from the date
of                grant. On May 7, 2008 she was subsequently granted 50,000 options to
purchase                our common stock at $1.25 per share, with 25,000 options vesting
pro-rata on a                quarterly basis over a two year period, and 25,000 options
vesting pro-rata on                an annual basis over a three year period from the
dates of grant, respectively.                The May 7, 2008 options were granted in
consideration for Ms. Doritys                promotion to become our Vice President
of Content, expanded responsibilities and                continuing services to be
rendered to the Company. As a result of a result of                significant changes in
market conditions and other factors, the exercise prices                of Ms. Doritys
September 4, 2007 and May 7, 2008 option grants were                subsequently amended
to each be at a strike price of $.45 per share (see the                Companys
Subsequent Events financial statement footnote for additional
               information). On November 5, 2008, Ms. Dority was granted an additional
150,000                options to purchase our common stock exercisable at $.18 per share
with the                options vesting on a quarterly basis over approximately a one
year period from                the date of grant upon the achievement of certain defined
interim performance                goals, with all of such options vesting upon the
Company achieving the status of                cash flow positive in our business
operations in the later part of 2009.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Option Exercises and
Stock Vested

None
of our executive officers exercised any stock options, SARs or similar instruments during
the fiscal year ended December 31, 2008, or subsequently. None of our current executive
officers serving were granted restricted common stock that was subject to a vesting
schedule during our fiscal year ended December 31, 2008, or subsequently.

# Pension Benefits

Disaboom
has no defined benefit plans, supplemental executive retirement plans or actuarial plans.

30

---



# Nonqualified Defined
Contribution and Other Deferred Compensation Plans

Disaboom
does not have any nonqualified defined contribution or deferred compensation plans.

# Director Compensation

In
January 2007 the Board adopted resolutions whereby each board member receives $550 for
participating in Board meetings and is reimbursed for travel and related expenses if the
meeting is attended in person. We have also granted our directors stock options in
consideration for serving on our Board of Directors. Generally directors have been granted
options upon their appointment to the board of Directors. Additionally, on March 2007 our
Board of Directors formed an Audit Committee, a Compensation Committee and a Nominating
Committee. At that time each of our then independent directors were granted options in
consideration for services provided to the Company, with certain directors being granted
additional options for serving on committees of the Board of Directors.

On
November 5, 2008 after being re-elected at our annual meeting of shareholders our Board of
Directors granted each of our directors a second option grant in consideration for their
on-going services to the Company.

On
March 1, 2008 pursuant to an oral agreement Mr. Hall began providing the Company
consulting services related to the continuing development of our website and technical
operations. During the quarter ended September 30, 2008, we ceased paying Mr. Hall fees
pursuant to the oral agreement.  In consideration for these services we paid Mr. Hall
$73,202. The consulting fees paid to Mr. Hall are included in the Fees Earned or
Paid in Cash in the Director Compensation Table below.

The
following table reflects the compensation of our directors for our fiscal year ended
December 31, 2008:

# DIRECTOR COMPENSATION

|Name                  |  | Fees Earned or Paid in Cash |   | Option Awards |  | Total |       
|--------------------- |  | --------------------------- | - | ------------- |  | ----- | ------
|
|Victor Lazzaro(1)     |  |                             | $ | 9,350         |  | $     | 13,500
|                      |  |                            
|R. Jerry Overgaard(1) |  |                             | $ | 12,100        |  | $     | 13,500
|                      |  |                            
|David Petso(1)        |  |                             | $ | 14,300        |  | $     | 13,500
|                      |  |                            
|Patrick Templeton(1)  |  |                             | $ | 6,600         |  | $     | 13,500
|                      |  |                            
|Scott Chandler(2)     |  |                             | $ | 1,100         |  | $     | 13,500
|                      |  |                            
|Kevin Hall(3)         |  |                             | $ | 72,535        |  | $     | 71,000
|                      |  |                            
|Dr. Glen House(4)     |  |                             | $ | 7,150         |  | $     |      

| | (1) | Messrs.
Lazzaro, Overgaard, Petso and Templeton served on the Companys                Board
of Directors for the full fiscal year ending December 31, 2008. Each of
               Messrs. Lazzaro, Overgaard, and Petso were nominated and re-elected to
serve on                the Companys Board of Directors on November 5, 2008.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Mr.
Chandler was  elected to the
               Companys Board of Directors on November 5, 2008.
| | --- | -------------------------------------------------------------------------------------------------

| | (3) | Mr.
Hall was appointed to the Companys Board of Directors on an February
               29, 2008, and served on the Board through November 4, 2008. Due to
personal                reasons, Mr. Hall requested not to stand for election at our
annual meeting of                shareholders held on November 5, 2008. Accordingly, Mr.
Hall ceased serving as a                director on that date. The Fees Earned or
Paid in Cash column above                includes $73,202 in business/technology
consulting fees.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Dr.
House was appointed to the Companys Board of Directors in November
               2006, and served on the Board through November 4, 2008. Due to personal
reasons,                Dr. House requested not to stand for election at our annual
meeting of                shareholders held on November 5, 2008. Accordingly, Dr. House
ceased serving as                a director on that date.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

---



During
our 2008 fiscal year Messrs. Roth and Walpuck served on our Board of Directors and also
served as executive officers of the Company. None of the named executive officers received
separate stock option compensation for serving as a director, but did receive the Board
meeting fees described herein. Messrs. Roth and Walpuck Board meeting fees are included in
the All Other Compensation column of the Summary Compensation Table above.

# ITEM 12. SECURITY
OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of
Certain Beneficial Owners

The number of shares outstanding of the Companys Common Stock at March 19, 2009 was
44,710,270. The following table sets forth the beneficial ownership of the Companys
Common Stock as of March 19, 2009 by each Director and each Executive Officer of the
Company, by all Directors and Executive Officers as a group, and sets forth the number of
shares of Common Stock owned by each person who owned of record, or was known to own
beneficially, more than 5% of the outstanding shares of Common Stock.

# SECURITY OWNERSHIP OF
BENEFICIAL OWNERS AND MANAGEMENT

|Name and Address of Beneficial Owner                |  | Amount and Nature of Beneficil Ownership |  | Percentage of Common Stock | 
|--------------------------------------------------- |  | ---------------------------------------- |  | -------------------------- | 
|
|J.W. Roth(1)                                        |  |                                          |  | 7,525,000                  | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|John Walpuck(2)                                     |  |                                          |  | 2,666,667                  | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|Victor Lazzaro, Jr.(3)                              |  |                                          |  | 330,333                    | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|R. Jerry Overgaard(4)                               |  |                                          |  | 1,049,667                  | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|David Petso(5)                                      |  |                                          |  | 736,667                    | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|Patrick Templeton(6)                                |  |                                          |  | 148,553                    | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|Scott Chandler(7)                                   |  |                                          |  | 54,500                     | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|All Directors and Executives as a Group (7 Persons) |  |                                          |  | 12,511,387                 | 
|                                                    |  |                                         
|J. Glen House (5% beneficial owner)                 |  |                                          |  | 7,500,000                  | 
|7730 E. Belleview Avenue                            |  |                                         
|Suite A-306                                         |  |                                         
|Greenwood Village, CO 80111                         |  |                                         
|                                                    |  |                                         
|*   Indicates less than one percent.                |  |                                         



32

---



The number of shares beneficially
owned is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
and the information is not necessarily indicative of beneficial ownership for any other
purpose. Under such rule, beneficial ownership includes any shares as to which the selling
stockholders have sole or shared voting power or investment power and also any shares,
which the selling stockholders have the right to acquire within 60 days. The actual number
of shares of common stock outstanding may increase prior to the effectiveness of this
registration statement due to penalty shares which may be issued.

|(1) | Does
not include 50,000 options that were granted on November 5, 2008 and vest
               in full one year from the date of grant.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes
500,000 shares purchased on March 23, 2007 and options to purchase
               1,500,000 shares of common stock granted on April 2, 2007. Does not
include                options to purchase 250,000 shares of common stock that vest on
the occurrence                of certain company events. Also includes 666,667 options
granted on November 4,                2008, but does not include 1,833,333 options that
vest quarterly between April                30, 2009 through October 31, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes
140,000 shares of common stock purchased in the private placement
               completed on March 9, 2007 held in the Victor Lazzaro, Jr. Trust DTD
10/3/05.                Also includes 113,333 shares and 10,000 shares underlying
warrants purchased by                Nanine A. Odell, Mr. Lazzaros wife. Also
includes options to purchase                67,00 shares of common stock granted on March
9, 2007 that vested on December                31, 2008. Does not include options to
purchase 33,000 shares of common stock                granted on March 9, 2007 that vest
on December 31, 2009, and thereafter. Does                not include 75,000 options of
common stock granted on November 5, 2008 that vest                on November 5, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes
400,000 shares purchased in November 2006 and includes vested options                to
purchase 33,000 shares of common stock. Also includes 600,000 shares and
               16,667shares underlying warrants purchased by Mr. Overgaards wife.
Does                not include 75,000 shares of common stock granted on November 5, 2008
that vest                on November 5, 2009. Does not include 17,000 options of common
stock that vest                on December 31, 2009.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes
620,000 shares of common stock, vested options to purchase 100,000                shares
of common stock, 16,667 shares underlying warrants purchased on October                5,
2007. Also includes options to purchase 50,000 shares of common stock granted
               on March 9, 2007 that vest on December 31, 2009. Does not include 75,000
options                of common stock granted on November 5, 2008 that vest on November
5, 2009.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes
27,745 shares purchased in the private placement completed on December                10,
2007 and 20,808 shares underlying warrants purchased on December 10, 2007.
               Includes 100,000 vested options Does not include 75,000 options of common
stock                granted on November 5, 2008 that vest on November 5, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Includes
54,500 shares of common stock. Does not                include
75,000 options that were granted on November 5, 2008 and vest in full                one
year from the date of grant.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes
in Control

None.

# ITEM 13.  CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

There
have not been any transactions, or proposed transactions, during the last two years, to
which the Company was or is to be a party, in which any Company director or executive
officer, any nominee for election as a director, any security holder owning beneficially
more than five percent of the common stock of the Company, or any member of the immediate
family of the aforementioned persons had or is to have a direct or indirect material
interest, except as follows:

J.W.
Roth, an officer and director of the Company advanced approximately $63,000 to the
Company to help fund our working capital start up costs. Mr. Roth converted $50,000 into
100,000 shares of our common stock during our initial private placement which closed in
March 2007, and the remaining $13,000 was subsequently repaid. Mr. Roth currently serves
as our Chairman of the Board and provides the Company consulting services pursuant to an
agreement with the Company dated November 4, 2008.

33

---



Prior
to Patrick Templeton being appointed to our Board of Directors, we engaged BKSH & Associates
(BKSH) to provide Disaboom governmental relations consulting services. We paid BKSH a
monthly fee of $7,500 for three months for the consulting services. In his capacity as a
consultant for BKSH, Mr. Templeton was involved in providing such consulting services to
Disaboom, and in that capacity received half of the fees Disaboom paid to BKSH, for an
aggregate of approximately $11,250.

The
Company currently maintains a bank account through Petso Financial Advisors,
Inc./Cambridge Investment Research Advisors, Inc. Through this account the Company invests
a portion of its cash in short term liquid investments. David Petso, who currently serves
on our Board of Directors and as the Chairman of our Audit Committee, is the president of
Petso Financial Advisors. Mr. Petso has not received any commissions or other remuneration
as a result of our maintenance of the account at Petso Financial Advisors.

On
February 29, 2008 Kevin Hall was appointed to our Board of Directors. Further, on March 1,
2008 Mr. Hall began providing the Company consulting services related to the continuing
development of our website and technical operations.  In consideration for these
services we paid Mr. Hall $73,202.

Additionally,
as described above we have entered into employment agreements with certain of our
executive officers and directors. The terms of the agreements which are currently
effective are described in the executive compensation section of this Form 10-K.

Director
Independence

Our
Board of Directors currently consists of Messrs. Roth, Walpuck, Petso, Lazzaro, Overgaard,
Templeton and Chandler. The Company defines independent as that term is
defined in Rule 4200(a) (15) of the Nasdaq listing standards. Messrs. Petso, Templeton,
Lazzaro, Overgaard, and Chandler qualify as independent and none has any material
relationship with the Company that might interfere with his exercise of independent
judgment.

# ITEM 14.  PRINCIPAL
ACCOUNTANT FEES AND SERVICES

# (a)    Audit Fees.

Our
principal accountant, GHP Horwath, P.C., billed us aggregate fees in the amount of
approximately $45,000 for the fiscal year ended December 31, 2008 and approximately
$51,500 for the fiscal year ended December 31, 2007. These amounts were billed for
professional services that GHP Horwath provided for the audit of our annual financial
statements, registration statement consents, review of the financial statements included
in our reports on 10-Q and other services typically provided by an independent registered public accounting firm  in
connection with statutory and regulatory filings or engagements for those fiscal years.

# (b)    Audit-Related Fees.

Audit
Related Fees represent aggregate fees billed for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit or review
of the Companys financial statements that are not included under the caption
Audit Fees above. There were no audit related fees billed by GHP Horwath, P. C. for
 fiscal years ended 2008 and 2007.

# (c)    Tax Fees

Tax
Fees represent aggregate fees billed for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning. There were no tax fees billed
by GHP Horwath, P.C. for fiscal years ended 2008 or 2007.

# (d)    All Other Fees

All
Other Fees represent aggregate fees billed for all other products and services provided by
the principal accountant not otherwise disclosed above. There were no other fees from GHP
Horwath, P.C. for services rendered to the Company, other than for services described
above, for the years ended December 31, 2008 or 2007.

34

---



# (e)    Audit
Committees Pre-Approval Practice

Section
10A(i) of the Securities Exchange Act of 1934 prohibits our auditors from performing audit
services for us as well as any services not considered to be audit services
unless such services are pre-approved by the Audit Committee of the Board of Directors, or
unless the services meet certain de minimis standards. The Audit Committees
charter provides that the Audit Committee must:

| | Preapprove
all audit services that the auditor may provide to us or any subsidiary (including,
without limitation, providing comfort letters in connection with securities underwritings
or statutory audits) as required by §10A(i)(1)(A) of the Securities Exchange Act of
1934 (as amended by the Sarbanes-Oxley Act of 2002).
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Preapprove
all non-audit services (other than certain de minimis services described in §10A(i)(1)(B)
of the Securities Exchange Act of 1934 (as amended by the Sarbanes-Oxley Act of 2002))
that the auditors propose to provide to us or any of its subsidiaries.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
Audit Committee considers at its meetings, when appropriate, whether to approve any audit
services or non-audit services. In some cases, management may present the request; in
other cases, the auditors may present the request.

# PART IV

Exhibits

|EXHIBIT NO | DESCRIPTION
|---------- | -----------

|3.1 | Articles
of Incorporation filed September 6, 2006. (1)
|--- | ------------------------------------------------------

|3.1.1 | Articles
of Amendment to the Articles of Incorporation filed November 13, 2006. (1)
|----- | -----------------------------------------------------------------------------------

|3.1.2 | Articles
of Amendment to the Articles of Incorporation filed August 21, 2007. (2)
|----- | ---------------------------------------------------------------------------------

|3.1.3 | Articles
of Amendment to the Articles of Incorporation filed November 5, 2008. (5)
|----- | ----------------------------------------------------------------------------------

|3.2 | Bylaws,
as amended. (4)
|--- | -----------------------

|4.1 | Specimen
Certificate of Common Stock. (1)
|--- | -----------------------------------------

|10.1 | 2006
Stock Option Plan. (1)
|---- | ---------------------------

|10.4 | Amended
and Restated Employment Agreement with John Walpuck dated November 4, 2008. (5)
|---- | ---------------------------------------------------------------------------------------

|10.5 | Sublease
Agreement with Merlin Technical Solutions, Inc. (3)
|---- | ------------------------------------------------------------

|10.7 | Business
Consulting Agreement with J.W. Roth dated November 4, 2008. (5)
|---- | ------------------------------------------------------------------------

|10.9 | 2008
Stock Option Plan (6).
|---- | ---------------------------

|10.10 | Severance Agreement with J.W. Roth dated November 3, 2008.  Filed herewith.
|----- | ---------------------------------------------------------------------------

|23.1 | Consent of GHP Horwath, P. C.  Filed herewith.
|---- | ----------------------------------------------

|31.1 | Certification
of Principal Executive Officer and Principal Financial Officer Pursuant to Exchange Act
Rules 13a-14 and                15d-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002, filed herewith.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.2 | Certification
of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, filed herewith.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) | Incorporated
by reference from Form 10-QSB filed May 15, 2007.
|--- | --------------------------------------------------------------

|(2) | Incorporated
by reference from Form 8-K, filed August 24, 2007.
|--- | ---------------------------------------------------------------

|(3) | Incorporated
by reference from Form 8-K filed June 11, 2007.
|--- | ------------------------------------------------------------

|(4) | Incorporated
by reference from Form 8-K filed March 6, 2008.
|--- | ------------------------------------------------------------

|(5) | Incorporated
by reference from Form 8-K filed November 7, 2008.
|--- | ---------------------------------------------------------------

|(6) | Incorporated by reference from From S-1/A-2 filed on October 16, 2008.
|--- | ----------------------------------------------------------------------

35

---



# SIGNATURES

In accordance with Section 13 or
15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

|                     | DISABOOM, INC. |                                                                                                  
|-------------------- | -------------- | -------------------------------------------------------------------------------------------------
|                     |                |                                                                                                  
|Date: March 20, 2009 | By:            | /s/ John Walpuck                                                                                 
|                     |                | John Walpuck,
Chief Executive Officer, Chief Financial
Officer and Principal Accounting   Officer
|                     |                |                                                                                                  

Pursuant to the  requirement of the
Securities  Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated:

|                     |     |                             
|-------------------- | --- | ----------------------------
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ J.W. Roth               
|                     |     | J.W. Roth, Director         
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ John Walpuck            
|                     |     | John Walpuck, Director      
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ R. Jerry Overgaard      
|                     |     | R. Jerry Overgaard, Director
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ David Petso             
|                     |     | David Petso, Director       
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ Victor Lazzaro          
|                     |     | Victor Lazzaro, Director    
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ Patrick Templeton       
|                     |     | Patrick Templeton, Director 
|                     |     |                             
|Date: March 20, 2009 | By: | /s/ Scott Chandler          
|                     |     | Scott Chandler, Director    
|                     |     |                             

36

---



# DISABOOM, INC.

# YEAR ENDED DECEMBER
31, 2008

# CONTENTS

|                                                                                 | PAGE | 
|-------------------------------------------------------------------------------- | ---- | 
|
|Report of Independent Registered Public Accounting Firm                          |      | 
|                                                                                 |      | 
|Financial Statements:                                                            |      | 
|                                                                                 |      | 
|Balance sheets as of December 31, 2008 and 2007                                  |      | 
|                                                                                 |      | 
|Statements of operations for the years ended December 31, 2008 and 2007          |      | 
|                                                                                 |      | 
|Statement of shareholders' equity for the years ended December 31, 2008 and 2007 |      | 
|                                                                                 |      | 
|Statements of cash flows for the years ended December 31, 2008 and 2007          |      | 
|                                                                                 |      | 
|Notes to financial statements                                                    |      | 

---



# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
           Disaboom, Inc.            Denver, Colorado

We have audited the accompanying
balance sheets of Disaboom, Inc. as of December 31, 2008 and 2007, and the related
statements of operations, shareholders equity and cash flows for each of the years
then ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial statements
based on our audits.

We conducted our audits in
accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of Disaboom, Inc. as of December 31, 2008 and 2007, and the results of its
operations and its cash flows for each of the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

/s/ GHP HORWATH, P.C.GHP HORWATH, P.C.

Denver, Colorado            March
19, 2009

---



# DISABOOM, INC.

# BALANCE SHEETS

|                                                                       | December 31, 2008 |  | December 31, 2007 |            
|---------------------------------------------------------------------- | ----------------- |  | ----------------- | -----------
|
|ASSETS                                                                 |                   |  |                   |            
|Current assets:                                                        |                   | 
|Cash and cash equivalents                                              |                   |  | $                 | 1,035,637  
|Short-term investments                                                 |                   |  |                   | 916,039    
|Accounts receivable, net of allowance for doubtful                     |                   | 
|accounts of $10,000 at December 31, 2008                               |                   |  |                   | 220,144    
|Prepaid expenses                                                       |                   |  |                   | 136,349    
|                                                                       |                   |  |                   |            
|Total current assets                                                   |                   |  |                   | 2,308,169  
|                                                                       |                   | 
|Property and equipment, net                                            |                   |  |                   | 59,312     
|Deposits                                                               |                   |  |                   | 10,917     
|                                                                       |                   |  |                   |            
|Total assets                                                           |                   |  | $                 | 2,378,398  
|                                                                       |                   |  |                   |            
|LIABILITIES AND SHAREHOLDERS' EQUITY                                   |                   | 
|Current liabilities:                                                   |                   | 
|Accounts payable                                                       |                   |  | $                 | 249,555    
|Accrued expenses                                                       |                   |  |                   | 221,323    
|Unearned revenue                                                       |                   |  |                   | 293,607    
|Other current liabilities                                              |                   |  |                   | 3,157      
|                                                                       |                   |  |                   |            
|Total liabilities (all current)                                        |                   |  |                   | 767,642    
|                                                                       |                   |  |                   |            
|Commitments and contingencies                                          |                   | 
|Shareholders' equity:                                                  |                   | 
|Preferred stock, $0.0001 par value; authorized                         |                   | 
|10,000,000 shares; none issued and outstanding                         |                   |  |                   |           
|Common stock, $0.0001 par value; authorized 100,000,000                |                   | 
|shares; 43,343,603 and 41,926,080 issued and outstanding, respectively |                   |  |                   | 4,334      
|Additional paid-in capital                                             |                   |  |                   | 20,399,547 
|Accumulated deficit                                                    |                   |  |                   | (18,793,125
|                                                                       |                   |  |                   |            
|Total shareholders' equity                                             |                   |  |                   | 1,610,756  
|                                                                       |                   |  |                   |            
|Total liabilities and shareholders' equity                             |                   |  | $                 | 2,378,398  
|                                                                       |                   |  |                   |            

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

F-3

---



# DISABOOM, INC.

# STATEMENTS OF
OPERATIONS

|                                         | Year Ended December 31, 2008 |  | Year Ended December 31, 2007 |            
|---------------------------------------- | ---------------------------- |  | ---------------------------- | -----------
|
|Revenue                                  |                              |  | $                            | 752,152    
|Expenses:                                |                              | 
|Sales and marketing                      |                              |  |                              | (5,260,639 
|General, administrative and other        |                              |  |                              | (5,969,319 
|                                         |                              |  |                              |            
|Loss from operations                     |                              |  |                              | (10,477,806
|                                         |                              | 
|Other income (expense):                  |                              | 
|Interest income                          |                              |  |                              | 138,004    
|Loss on short-term investments           |                              |  |                              | (473,789   
|                                         |                              |  |                              |            
|Net loss                                 |                              |  | $                            | (10,813,591
|                                         |                              |  |                              |            
|Net loss per share, basic and diluted    |                              |  | $                            | (0.25      
|                                         |                              |  |                              |            
|Weighted average number of common shares |                              | 
|outstanding, basic and diluted           |                              |  |                              | 42,840,371 
|                                         |                              |  |                              |            

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

F-4

---



# DISABOOM, INC.

# STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY

|                                                              | Common stock |  | Additional Paid-In |            | Accumulated |   |      
|------------------------------------------------------------- | ------------ |  | ------------------ | ---------- | ----------- | - | -----
|
|Balances at January 1, 2007                                   |              |  |                    | 21,250,000 |             | $ | 2,125
|                                                              |              | 
|Issuance of common stock in private placement                 |              | 
|at $0.50 per share, March 2007                                |              |  |                    | 5,796,000  |             |   | 580  
|                                                              |              | 
|Issuance of common stock to an employee in                    |              | 
|exchange for cash at $0.50 per share, April 2007              |              |  |                    | 500,000    |             |   | 50   
|                                                              |              | 
|Issuance of common stock and warrants in private              |              | 
|placements at $0.75 per share (net of offering                |              | 
|costs of $971,867), September, October and                    |              | 
|December 2007                                                 |              |  |                    | 14,243,998 |             |   | 1,424
|                                                              |              | 
|Issuance of common stock for acquisition of website           |              |  |                    | 55,000     |             |   | 6    
|                                                              |              | 
|Issuance of common stock for services                         |              |  |                    | 58,194     |             |   | 6    
|                                                              |              | 
|Issuance of common stock for payable                          |              |  |                    | 12,888     |             |   | 1    
|                                                              |              | 
|Issuance of common stock upon exercise of option              |              |  |                    | 10,000     |             |   | 1    
|                                                              |              | 
|Warrants issued for consulting services                       |              |  |                    |           |             |   |     
|                                                              |              | 
|Compensation expense under stock option plan                  |              |  |                    |           |             |   |     
|                                                              |              | 
|Net loss                                                      |              |  |                    |           |             |   |     
|                                                              |              |  |                    |            |             |   |      
|Balances at December 31, 2007                                 |              |  |                    | 41,926,080 |             |   | 4,193
|                                                              |              | 
|Issuance of common stock in private placement                 |              | 
|at $1.00  per share, March 2008                               |              |  |                    | 1,552,000  |             |   | 155  
|                                                              |              | 
|Issuance of common stock in private placements                |              | 
|at $1.00  per share (net of offer costs of $10,000),          |              | 
|April 2008                                                    |              |  |                    | 800,000    |             |   | 80   
|                                                              |              | 
|Issuance of common stock upon exercise of option and warrants |              |  |                    | 131,181    |             |   | 13   
|                                                              |              | 
|Warrants issued for consulting services                       |              |  |                    |           |             |   |     
|                                                              |              | 
|Return of co-founder, director, officer  shares to treasury   |              |  |                    | (3,750,000 | )           |   | (375 
|                                                              |              | 
|Issuance of common stock for services                         |              |  |                    | 60,841     |             |   | 6    
|                                                              |              | 
|Warrant redemptions                                           |              |  |                    | 2,623,501  |             |   | 262  
|                                                              |              | 
|Compensation expense under the stock option plan              |              |  |                    |           |             |   |     
|                                                              |              | 
|Net loss                                                      |              |  |                    |           |             |   |     
|                                                              |              |  |                    |            |             |   |      
|Balances at December 31, 2008                                 |              |  |                    | 43,343,603 |             | $ | 4,334
|                                                              |              |  |                    |            |             |   |      

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

F-5

---



# DISABOOM, INC.

# STATEMENTS OF CASH
FLOWS

|                                                             | Year ended December 31, 2008 |  | Year ended December 31, 2007 |            
|------------------------------------------------------------ | ---------------------------- |  | ---------------------------- | -----------
|Cash flows from operating activities:                        |                              |  |                              |            
|Net loss                                                     |                              |  | $                            | (10,813,591
|Adjustments to reconcile net loss to cash                    |                              | 
|used in operating activities:                                |                              | 
|Stock-based compensation expense                             |                              |  |                              | 865,683    
|Common stock issued for services                             |                              |  |                              | 52,500     
|Provision for losses on accouts receivable                   |                              |  |                              | 10,000     
|Unrealized loss on short-term investments                    |                              |  |                              | 473,790    
|Common stock issued for website                              |                              |  |                              |           
|Depreciation expense                                         |                              |  |                              | 20,735     
|Changes in operating assets and liabilities:                 |                              | 
|Accounts receivable                                          |                              |  |                              | (152,431   
|Prepaid expenses and deposits                                |                              |  |                              | (35,280    
|Accounts payable                                             |                              |  |                              | 17,294     
|Accrued expenses                                             |                              |  |                              | 35,335     
|Advances, related party                                      |                              |  |                              |           
|Unearned revenue                                             |                              |  |                              | 287,617    
|Other current liabilities                                    |                              |  |                              | (5,413     
|                                                             |                              |  |                              |            
|Net cash used in operating activities                        |                              |  |                              | (9,243,761 
|                                                             |                              |  |                              |            
|Cash Flows from investing activities:                        |                              | 
|Purchases of investment securities                           |                              |  |                              | (122,843   
|Sales of investment securities                               |                              |  |                              | 945,457    
|Purchase of property and equipment                           |                              |  |                              | (49,914    
|                                                             |                              |  |                              |            
|Net cash used in investing activities                        |                              |  |                              | 772,700    
|                                                             |                              |  |                              |            
|Cash flows from financing activities:                        |                              | 
|Proceeds from issuance of common stock                       |                              |  |                              | 2,342,000  
|Proceeds from redemption of warrants, net                    |                              |  |                              | 2,611,766  
|Proceeds from exercise of options and warrants               |                              |  |                              | 120,181    
|Proceeds applied to receivable from issuance of common stock |                              |  |                              |           
|                                                             |                              |  |                              |            
|Net cash provided by financing activities                    |                              |  |                              | 5,073,947  
|                                                             |                              |  |                              |            
|(Decrease) increase in cash and cash equivalents             |                              |  |                              | (3,397,114 
|Cash and cash equivalents at beginning of period             |                              |  |                              | 4,432,751  
|                                                             |                              |  |                              |            
|Cash and cash equivalents at end of period                   |                              |  | $                            | 1,035,637  
|                                                             |                              |  |                              |            
|Supplemental disclosure of non-cash investing and financing  |                              | 
|activities:                                                  |                              | 
|Conversion of related party advances to common stock         |                              |  |                              |            
|Payment of accounts payable with common stock                |                              |  |                              |            

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

F-6

---



# DISABOOM, INC.

# NOTES TO FINANCIAL
STATEMENTS

# DECEMBER 31, 2008 AND
2007

|1. | Organization, basis of presentation and managements plans:
|-- | -----------------------------------------------------------

| | Disaboom,
Inc. (the Company) was incorporated in the State of Colorado on September 5,
2006 with the primary purpose of developing the first interactive online community
dedicated to constantly improving the way Americans with disabilities or functional
limitations live their lives. It serves as a comprehensive online resource not only for
people living with such conditions, but their immediate families and friends, caregivers,
recreation and rehabilitation providers, and employers. The activities of the Company in
2007 were primarily organizational in nature, including planning and developing version
1.0 of our main website (www.disaboom.com) and social networking platform,
researching and beginning to implement our marketing and business development
initiatives, planning and beginning to establish our sales operations, and continuing to
build our management team and staff. During the twelve months ended December 31, 2008 our
focus changed from organizational matters and the initial launch of our main website, to
operational matters related to (a) expanding the resources, services, product offerings
and capabilities of our main website and social networking platform, (b) launching
additional resources and services through related microsites and the Companys
marketplace, (c) integrating our main website and related microsites into the Disaboom
Network, (d) driving Internet traffic into our community, and (e) beginning to generate
traditional cost per mille (CPM) related advertising and sponsorship
revenues, as well as directory services revenues.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | For
the periods prior to September 30, 2008, the Company was classified as a development
stage company in accordance with Statement of Financial Accounting Standards (FAS)
No. 7, Accounting and Reporting by Development Stage Enterprises.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the year ended December 31, 2008, the Company
realized $752,152 of revenues and incurred a net loss of $10,813,592. The ability to
successfully generate future revenues is dependent on a number of factors, including
availability of funds to continue to add content to the site, to adequately develop and
maintain the website as outlined in the Companys business plan, to commercialize
the Companys website through advertising, sponsorships and strategic alliances, and
to attract and retain visitors to the site. There can be no assurance that the Company
will not encounter setbacks related to these activities.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | To
date the Company has in large part relied on equity financing to fund its operations. In
March 2009, the Company raised additional equity funds through a private placement (Note
4).  Management currently projects that 2009 expected revenue growth, plus the
equity funds raised in March 2009, will provide sufficient funds to meet cash flow needs
through December 31, 2009. However, management cannot provide any assurance that the
projections will prove accurate or that unexpected liquidity needs will not arise.  As
such, the Company may need to attempt to raise outside capital through either debt or
equity financing during the 2009 fiscal year to fund our operations.  Management and
the Board of Directors monitor financial resources and may adjust planned business
activities and operations as needed to ensure we have sufficient operating capital.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2. | Summary
of significant accounting policies:
|-- | -------------------------------------------

| | Revenue
recognition:
| | --------------------

| | During
the year ended December 31, 2007, the Company began receiving revenue primarily through
the sale of various CPM display advertising, sponsorship, and directory services products
on the Disaboom Network. CPM display advertising and sponsorship revenue comprised
approximately 75% of the Companys total revenue during 2008. CPM revenue from
display advertising, sponsorship, and directory services, are recognized ratably over the
period in which it is delivered and earned through (1) the development and release of
sponsor landing pages, microsites and channels on the Companys websites, (2) the
delivery of advertising impressions by recognized and independent third party vendors,
and (3) the publication and availability of national and local business listings and
other directory service products in the Companys marketplace. The Company has
agreements ranging in term from one month test agreements to twelve month advertising and
sponsorship agreements. At December 31, 2008, unearned revenue of $293,607 represents
amounts received under advertising contracts for which the CPM display advertisements,
sponsorships, or directory services products have not yet been presented or fully
delivered.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash
and cash equivalents:
| | --------------------------

| | The
Company considers all highly liquid investments with original maturities of three months
or less at date of purchase to be cash equivalents.
| | ------------------------------------------------------------------------------------------------------------------------------------------------

F-7

---



| | Short-term
investments:
| | -----------------------

| | Short-term
investments consist of a certificate of deposit with an original maturity of six months
and mutual funds. The Company accounts for short-term marketable securities in accordance
with Statement of financial Accounting Standards ("SFAS"), No. 115, Accounting for
Certain Investments in Debt and Equity securities.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Marketable
securities are classified as trading securities, as the Company expects to use these
funds for operating purposes within the next year. Trading securities are reported at
fair market value and unrealized gains and losses are included in earnings.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The Company currently maintains a bank account through Cambridge Investment
Research Advisors, Inc. Through this account the Company invests a portion of
its cash in short term commercial notes that are highly liquid and historically
low risk. Subsequent to September 30, 2008, the current credit crisis in The
United States has continued and capital market conditions have been highly
volatile. The market value of the Companys short term investments have
declined and the company has recorded an unrealized loss of approximately
$474,000 for the year ended December 31, 2008, which represents approximately
27% of the Companys short-term investments.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Use
of estimates in financial statement preparation:
| | ----------------------------------------------------

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

| | Accounts
 receivable:
| | ---------------------

| | Accounts
receivable are recorded at their face amount less an allowance for doubtful accounts. The
Allowance for doubtful accounts reflects managements best estimate of probable
losses in the accounts receivable balance. Management determines the allowance based on
known troubled accounts, historical experience, and other currently available evidence.
The Company generally does not require collateral trom its customers. At December
31, 2008, two customers accounted for 36% and 13% of accounts receivable and 2 customers
accounted for 33% and 9% of total revenues. At December 31,
2007, three customers accounted for 25%, 24% and 14% of accounts receivable, and two
customers accounted for 28% and 24% of total revenues.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Website
development costs:
| | --------------------------

| | The
Company has adopted the provisions of Financial Accounting Standards Board (FASB)
Emerging Issues Task Force (EITF) 00-2, Accounting for Web Site
Development Costs, which specifies the appropriate accounting for costs incurred in
connection with the development and maintenance of web sites. Under EITF 00-2, costs
related to certain web site development activities are expensed as incurred (such as
planning and operating stage activities). Costs relating to certain website application
and infrastructure development are generally capitalized, and are amortized over their
estimated useful life. Based upon the Companys product development process and the
constant modification of the Companys website, costs incurred by the Company during
the application development stage have been insignificant. Therefore, through December
31, 2008, the Company has expensed all significant website development costs, as these
costs primarily related to planning and operational activities. For the years ended
December 31, 2008 and 2007, website development costs of approximately $163,000 and
$475,000, respectively, were expensed.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Property
and equipment:
| | -----------------------

| | Property
and equipment are stated at cost. Depreciation is calculated using the straight-line
method over the estimated useful lives of the assets. Upon retirement or disposal of
assets, the accounts are relieved of cost and accumulated depreciation and the related
gain or loss is reflected in earnings. The useful lives are generally as follows:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                 | 
|------------------------------------------------ | 
|
|Furniture and fixtures                           | 
|Computer software, hardware and office equipment | 

| | Expenditures
for maintenance, repair and renewals of minor items are charged to expense as incurred.
| | ----------------------------------------------------------------------------------------------------

F-8

---



| | Stock-based
compensation:
| | -------------------------

| | The
Company accounts for stock options and similar equity instruments in accordance with SFAS
No. 123(R), Share-Based Payment. SFAS 123(R) requires the recognition of the
cost of employee services received in exchange for an award of equity instruments in the
financial statements and is measured based on the grant date fair value of the award.
SFAS 123(R) also requires the stock option compensation expense to be recognized over the
period during which an employee is required to provide service in exchange for the award
(usually the vesting period).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2008 the Company granted 6,659,000 stock options to employees
and consultants at a weighted average exercise price of $.60 per share. The options are
subject to various vesting schedules and are exercisable through 2014. The fair value of
stock options at the dates of
grant
was $1,608,741. The Company used the following assumptions to determine the fair value of
stock
cption grants during the twelve months ended December 31, 2008 and 2007:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        | 2008 |  | 2007         | 
|----------------------- | ---- |  | ------------ | 
|
|Expected term (years)   |      |  | 2.25 - 4     | 
|Volatility              |      |  | 69 - 85%     | 
|Risk-free interest rate |      |  | 1.47 - 3.73% | 
|Dividend yield          |      |  | 0%           | 

| | The
expected term of stock options represents the period of time that the stock options
granted are expected to be outstanding and was calculated using the simplified method per
the guidance of SAB 107 Share Based Payment (SAB 107) for plain
vanilla options. The expected volatility is based on the historical price
volatility of the common stock of similar companies. The risk-free interest rate
represents the U.S. Treasury bill rate for the expected term of the related stock
options. The dividend yield represents the anticipated cash dividend over the expected term
of the stock options.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
summary of stock option activity for the year ended December 31, 2008 is presented
below:
| | -------------------------------------------------------------------------------------------

|                                 | Shares Under Option |  | Weighted Average Exercise Price |            | Weighted Average Remaining Contractual Life (Years) |   | Aggregate Intrinsic Value | 
|-------------------------------- | ------------------- |  | ------------------------------- | ---------- | --------------------------------------------------- | - | ------------------------- | 
|Outstanding at January 1, 2008   |                     |  | $                               | 6,158,500  |                                                     | $ | 0.85                      | 
|Granted                          |                     |  |                                 | 6,659,000  |                                                     | $ | 0.60                      | 
|Exercised                        |                     |  |                                 | (22,000    | )                                                   | $ | 0.50                      | 
|Expired                          |                     |  |                                 | (500,498   | )                                                   | $ | 0.84                      | 
|Forfeited                        |                     |  |                                 | (4,697,252 | )                                                   | $ | 1.17                      | 
|                                 |                     |  |                                 |            |                                                     |  
|Outstanding at December 31, 2008 |                     |  |                                 | 7,597,750  |                                                     | $ | 0.44                      | 
|                                 |                     |  |                                 |            |                                                     |  
|Vested at December 31, 2008      |                     |  |                                 | 2,508,663  |                                                     | $ | 0.53                      | 
|                                 |                     |  |                                 |            |                                                     |  

| | During
the year ended December 31, 2008, compensation expense of $172,768 was recorded relative
to the   2006 and 2008 Plans. Total intrinsic value of the options exercised during
the year ended December 31, 2008 was $15,400 when exercised.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | As
of December 31, 2008, the Company had $599,582 of unrecognized compensation cost related
to stock options that will be recognized over a weighted average period of approximately
3 years.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Asummary
of the status of the Companys non-vested shares as of and for the year ended
December 31, 2008, is presented below.
| | -----------------------------------------------------------------------------------------------------------------------------

|                               | Nonvested Shares Under Option |  | Weighted Average Grant Date Fair Value |           
|------------------------------ | ----------------------------- |  | -------------------------------------- | ----------
|
|Outstanding January 1, 2008    |                               |  |                                        | 4,726,000 
|Granted                        |                               |  |                                        | 6,659,000 
|Vested                         |                               |  |                                        | (1,598,661
|Forfeited                      |                               |  |                                        | (4,697,252
|                               |                               |  |                                        |           
|Nonvested at December 31, 2008 |                               |  |                                        | 5,089,087 
|                               |                               |  |                                        |           

F-9

---



| | Loss
per share:
| | ---------------

| | The
Company computes net earnings (loss) per share in accordance with SFAS No. 128, Earnings
per Share, which establishes standards for computing and presenting net earnings
(loss) per share. Basic earnings (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding during the period.
Diluted earnings per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding and the number of dilutive potential common
share equivalents during the period. Stock options and warrants are not considered
in the calculation, as the impact of potential common shares (17,046,090 at December 31,
2008 and 18,377,521 at December 31, 2007) would be to decrease loss per share. Therefore,
diluted loss per share is equivalent to basic loss per share.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Income
taxes:
| | -------------

| | The
Company accounts for income taxes in accordance with Statement of Financial Accounting
Standard No. 109, Accounting for Income Taxes (SFAS 109). Under the
provisions of SFAS 109, a deferred tax liability or asset (net of a valuation allowance)
is provided in the financial statements by applying the provisions of applicable laws to
measure the deferred tax consequences of temporary differences that will result in net
taxable or deductible amounts in future years as a result of events recognized in the
financial statements in the current or preceding years.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
January 2007, the Company adopted the provisions of the Financial Accounting Standards
Board (FASB) issued Interpretation No. 48, Accounting for
Uncertainties in Income Taxes, an interpretationof SFAS No. 109, Accounting
for Income Taxes (FIN 48). FIN 48 prescribes a recognition
threshold and measurement attribute for the recognition and measurement of tax positions
taken or expected to be taken on income tax returns.  FIN 48 also provides guidance
on de-recognition of income tax assets and liabilities, classification of current and
deferred income tax assets and liabilities, and accounting for interest and penalties
associated with tax positions.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Based
on managements assessment of FIN 48, it was concluded that the adoption of FIN 48,
as of January 1, 2007, had no significant impact on the Companys results of
operations or financial position, and required no adjustments to the opening balance
sheet accounts.  The year-end analysis supports the same conclusion, and the Company
does not have an accrual for uncertain tax positions as of December 31, 2008.  There
have been no income tax related interest or penalties assessed or recorded and if
interest and penalties were to be assessed, the Company would charge interest and
penalties to income tax expense.  It is not anticipated that unrecognized tax
benefits would significantly increase or decrease within 12 months of the reporting date.  The
Company files income tax returns in the U.S. and various state jurisdictions and there
are open statutes of limitations for taxing authorities to audit the Companys tax
returns from 2006 through the current period.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Fair
Value:
| | -----------

| | The
carrying amount of cash and cash equivalents, accounts receivable, accrued expenses and
deferred revenue is deemed to approximate fair value due to the immediate or short-term
maturity of these financial instruments.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company adopted SFAS No. 157, Fair Value Measurements(SFAS 157)
on January 1, 2008. SFAS 157 defines fair value, establishes a framework for
measuring fair value, establishes a fair value hierarchy based on the quality of inputs
used to measure fair value and enhances disclosure requirements for fair value
measurements.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | SFAS 157
defines fair value as the price that would be received to sell an asset or pay to
transfer a liability in an orderly transaction between market participants at the
measurement date. Additionally, SFAS 157 requires the use of valuation techniques
that maximize the use of observable inputs and minimize the use of unobservable inputs.
These inputs are prioritized below:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Level 1:  Observable inputs such as quoted market prices in active markets for identical assets
or liabilities, such as the Companys equity securities reflected in the table below.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Level 2:  Observable market-based inputs or unobservable inputs that are corroborated by market
data.
| | -----------------------------------------------------------------------------------------------------

F-10

---



| | Level
3:   Unobservable inputs for which there is little or no market data, which require the
use of the reporting entity's own assumptions.
| | --------------------------------------------------------------------------------------------------------------------------------------------

| | The
following table sets forth the Companys financial assets measured at fair value by
level within the fair value hierarchy. As required by FAS 157, assets are classified
in their entirety based on the lowest level of input that is significant to the fair
value measurement. The Company did not have any Level 2 and Level 3 financial assets
as of December 31, 2008.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                             | Total |  | Level 1 |          
|---------------------------- | ----- |  | ------- | ---------
|
|Assets:                      |       |  |         |          
|Cash equivalents             |       |  | $       | 770,388  
|Certificate of deposit       |       |  |         | 100,000  
|Marketable equity securities |       |  |         | 816,039  
|                             |       |  |         |          
|                             |       |  | $       | 1,686,427
|                             |       |  |         |          

| | Effective
January 1, 2008, the Company also adopted SFAS No. 159, The Fair Value Option for
FinancialAssets and Financial LiabilitiesIncluding anAmendment of
FASB Statement No. 115, which allows an entity to choose to measure certain financial
instruments and liabilities at fair value on a contract-by-contract basis. Subsequent
fair value measurement for the financial instruments and liabilities an entity chooses to
measure will be recognized in earnings. As of December 31, 2008, the Company did not
elect such option for our financial instruments and liabilities.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Advertising
expense:
| | --------------------

| | The
Company expenses advertising expenses as incurred. Advertising expenses for the years
ended December 31, 2008 and 2007 were approximately $2,237,000 and $902,000,
respectively. Advertising expenses are included in sales and marketing expenses in the
statement of operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Recent
pronouncements:
| | ----------------------

| | In
April 2008, the FASB issued FSP SFAS 142-3, Determination of the Useful Life
of Intangible Assets. FSP SFAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under SFAS No. 142, Goodwill and Other
Intangible Assets. Previously, under the provisions of SFAS No. 142, an entity was
precluded from using its own assumptions about renewal or extension of an arrangement
where there was likely to be substantial cost or material modifications. FSP SFAS 142-3
removes the requirement of SFAS No. 142 for an entity to consider whether an
intangible asset can be renewed without substantial cost or material modification to the
existing terms and conditions and requires an entity to consider its own experience in
renewing similar arrangements. FSP SFAS 142-3 also increases the disclosure requirements
for a recognized intangible asset to enable a user of financial statements to assess the
extent to which the expected future cash flows associated with the asset are affected by
the entitys intent or ability to renew or extend the arrangement. FSP SFAS 142-3 is
effective for fiscal years beginning after December 15, 2008 and interim periods
within those fiscal years. Early adoption is prohibited. The guidance for determining the
useful life of a recognized intangible asset is applied prospectively to intangible
assets acquired after the effective date. Accordingly, the Company does not anticipate
that the initial application of FSP SFAS No. 142-3 will have an impact on the
Company. The disclosure requirements must be applied prospectively to all intangible
assets recognized as of, and subsequent to, the effective date.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations,
(SFAS No. 141R). SFAS No. 141R will change the accounting for business
combinations. Under SFAS No. 141R, an acquiring entity will be required to recognize all
the assets acquired and liabilities assumed in a transaction at the acquisition-date fair
value with limited exceptions. SFAS No. 141R will also change the accounting treatment
and disclosure for certain specific items in a business combination. SFAS No. 141R
applies prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after December
15, 2008. Accordingly, any business combinations the Company engages in will be recorded
and disclosed following existing GAAP until December 31, 2008. The Company expects SFAS
No. 141R will have an impact on accounting for business combinations once adopted and the
effect is dependent upon acquisitions at that time.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-11

---



| | In
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
HedgingActivities (SFAS No. 161). SFAS No. 161 amends and expands
the disclosure requirements for FASB Statement No. 133, Derivative Instruments and
Hedging Activities (SFAS No. 133). It requires enhanced disclosure
about (i) how and why an entity uses derivative instruments, (ii) how derivative
instruments and related hedge items are accounted for under SFAS No. 133 and its related
interpretations, and (iii) how derivative instruments and related hedge items affect an
entitys financial position, financial performance, and cash flows. SFAS No. 161 is
effective for the Company as of January 1, 2009. As the Company does not hold any
derivative instruments, management does not expect SFAS 161 will have an impact, on its
financial position and results of operations.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated FinancialStatements, an Amendment of ARB 51 (SFAS 160)
which is effective for the Company on January 1, 2009. This statement amends ARB 51 to
establish accounting and reporting standards for the non-controlling interest in a
subsidiary and for the deconsolidation of a subsidiary. This statement requires
consolidated net income to be reported at amounts that include the amounts attributable
to both the parent and the non-controlling interest. It also requires disclosure on the
face of the consolidated statement of net income, the amounts of consolidated net income
attributable to the parent and to the non-controlling interest. In addition, this
statement establishes a single method of accounting for changes in a parents
ownership interest in a subsidiary that do not result in deconsolidation and requires
that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated.
The Company does not expect the adoption of this statement to have a material impact on
its financial statements
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. | Shareholders equity:
|-- | ---------------------

| | 2008
transactions:
| | ------------------

| | On
March 12, 2008, the Company closed on $1,552,000 in gross proceeds under a private
placement. In the closing, the Company issued a total of 1,552,000 shares of common stock
at a price of $1.00 per share. The shares were issued in reliance on Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, and the offering
was made to accredited investors only. The Company paid $10,000 and issued warrants to
purchase 10,000 shares of Company common stock as commissions for this offering. The
warrants have an exercise price of $1.00 per share and expire on March 12, 2011.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 1, 2008, the Company exercised its call option on certain warrants issued in
September and October 2007 requiring the warrant holders to either exercise the warrants
or be redeemed at $0.01 per share during the month of March 2008. In March and April 2008, the
Company issued an aggregate of 2,623,501 shares to investors upon the exercise of
warrants granted in September and October 2007. The Company received $2,623,501 upon the
exercise of the warrants. The proceeds are being used for working capital and general
corporate purposes. The shares were issued in reliance on the exemption from registration
contained in Section 4(2) of the 1933 Act and Rule 506 of Regulation D. Although the
Company paid commissions at the time of the issuance of the warrants, no commissions or
other remuneration was paid in connection with the shares issued upon the exercise of the
warrants. During this same period, 1,173,499 warrants that were called were not
exercised. In accordance with the provisions of the warrant agreement, the Company paid
$.01 per warrant or $11,735 to these warrant holders on April 4, 2008, and 1,173,499 shares
previously reserved for issuance under these redeemed warrants became available for other
corporate purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 13, 2008, J. Glen House, a co-founder, and former director of the Company
voluntarily surrendered 3,750,000 shares of common stock back to the Company for no
consideration, reducing his total share ownership to 7,500,000 shares.  Dr. House
surrendered the shares to make additional capital stock available for other corporate
purposes.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
April 1, 2008, the Company entered into a consulting agreement whereby the business
consultant provides media and agency related services to the Company. The Company issued
the business consultant a warrant to purchase 100,000 shares of our common stock at $1.26
per share for a term of five years. The warrant was valued at $87,000 on the date of
grant, and was fully expensed at December 31, 2008. The shares underlying the warrant
vest in 11,111 share installments each month during the vesting term, contingent upon the
business consultant continuing to provide us with consulting services under the agreement.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-12

---



| | On
April 4, 2008, the Company closed on $800,000 in gross proceeds under a private
placement. In the closing the Company issued a total of 800,000 shares of common stock at
a price of $1.00 per share. The shares were issued in reliance on Section 4(2) of the
Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, and the offering
was made to accredited investors only. The Company paid $10,000 and issued 10,000
warrants in connection with this offering (being the same offering described above for
which the Company had an initial close of March 12, 2008).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Effective
April 8, 2008, the Company entered into a business consulting agreement. In consideration
for entering into the agreement, the Company issued the consultant a warrant to
purchase 1,000,000 shares of common stock at $1.15 per share exercisable for one year.
The warrant was valued at $377,000 on the date of grant and was fully expensed at
December 31, 2008.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
April 2008, the Company issued 36,296 unrestricted common shares to third parties in
exchange for services valued at $37,500.
| | --------------------------------------------------------------------------------------------------------------------------------

| | Effective
May 15, 2008, the Company entered into a business consulting agreement and issued the
consultant a warrant to purchase 25,000 shares of common stock. The warrant has an
exercise price of $1.40 per share, expires on May 15, 2013, and 20,000 shares underlying
the warrant only vest upon the occurrence of certain events. Compensation expense of
$23,915 was recorded in 2008.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
May 27, 2008, the Company issued an aggregate of 29,727 shares to an investor upon the
exercise of warrants granted in December 2007. We received $29,727 upon the exercise of the
warrants. The proceeds will be used for working capital and general corporate purposes.
The shares were issued to an accredited investor, and thus in reliance on the exemption
from registration contained in Section 4(2) of the 1933 Act and Rule 506 of Regulation D.
No commissions or other remuneration was paid upon the exercise of the warrant.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 6, 2008, we issued an aggregate of 79,454 shares to an investor upon the exercise of
warrants granted in December 2007. We received $79,454 upon the exercise of the warrants.
The proceeds will be used for working capital and general corporate purposes. The shares
were issued to an accredited investor, and thus in reliance on the exemption from
registration contained in Section 4(2) of the 1933 Act and Rule 506 of Regulation D. No
commissions or other remuneration was paid upon the exercise of the warrant.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
June 20, 2008, a former employee of the Company was issued 22,000 shares of the Companys
common stock in connection with the exercise and purchase of that employees vested
stock options. Cash of $11,000 was received on June 9, 2008. These shares were issued
under a registration statement on Form S-8.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2008 a former employee of the Company was issued 28,513
shares of the Companys common stock in exchange for consulting services, valued at
$15,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2007
transactions:
| | ------------------

| | In
March 2007, the Company completed a private placement of 5,796,000 shares of common stock
for gross proceeds of $2,898,000. The shares were issue at a price of $0.50 per share. As
part of the offering, $50,000 of advances due to the Chairman were converted to 100,000
shares of common stock. In April 2007, the Company issued 500,000 shares to an employee
at $.50 per share, for total gross proceeds of $250,000. There were no offering costs in
relation to this private placement.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
September 2007, the Company closed a private placement of 7,128,000 shares of common
stock and 5,346,000 warrants to purchase 5,346,000 common shares for gross proceeds of
$5,346,000. The shares were issued at a price of $0.75 per share. For each $0.75
invested, the purchaser received one common share plus warrants to acquire three-fourths
of share. Offering costs in relation to this private placement totaled approximately
$539,000.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
October 2007, the Company had a closing of $349,500 under a private placement of
unregistered securities. For each $0.75 invested, each purchaser received one common
share plus warrants to acquire three-fourths of a share. A total of 449,333 common shares
and 337,000 warrants to purchase the same number of common shares were issued in this
closing. Offering costs in relation to this private placement totaled approximately
$28,700.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-13

---



| | In
connection with the September 2007 and October 2007 private placements, the Company also
granted 554,800 warrants, exercisable at a price of $2.25 per share, to placement agents
as partial commissions for the offering. The warrants expire three years from their date
of issuance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
October 2007, the Company acquired the rights to the Internet domain and web site of
Lovebyrd.com in exchange for $25,000 cash and 55,000 shares of common stock valued at
$74,250. Lovebyrd.com is an online dating and social networking service for individuals
living with conditions that make it difficult to meet and connect with other people.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2007, the Company closed a $5,000,000 private placement under the same terms as
those of the private placement closed in September and October 2007. In December 2007 the
company issued a total of 6,666,665 common shares and 5,000,000 warrants to purchase the
same number of common shares were issued at closing. The shares of common stock are not
registered under the Securities Act of 1933, as amended. Offering costs in relation to
this private placement totaled $405,000. The Company also granted an aggregate of 455,396
warrants to placement agents as partial commissions for the offering containing the same
terms and conditions as those offered to investors.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Warrants
related to the September 2007, October 2007 and December 2007 private placements
consisted of two series, Redeemable and Non-Redeemable. For every four shares of Common
Stock purchased, each purchaser received Redeemable warrants to purchase two shares of
Common Stock and Non-Redeemable warrants to purchase one share of Common Stock,
exercisable at a price of $1.00 per share. Upon notification from the Company the
Redeemable warrants may be called or redeemed by the Company at a price of $1.00 per
warrant share if the following conditions are met: (1) the shares underlying the warrants
have been registered for at least 30 consecutive days, (2) the price of the Companys
stock has been at $1.25 for 20 consecutive trading days, and (3) the average trading
volume of the Companys stock has been at least 25,000 shares for 20 consecutive
trading days. Non-redeemable warrants cannot be redeemed by the Company but will expire
three years after issuance.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During
the year ended December 31, 2007, the Company also issued 18,000 shares of common stock
under a committed agreement (Note 4), 24,194 restricted common shares under an October
2007 Business Development Agreement with a third party, 12,888 unrestricted common shares
in exchange for $18,750 payables, 16,000 restricted common shares to a third parties in
exchange for services and 10,000 common shares in connection with the exercise and
purchase of an employees vested stock options.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | In
December 2007, the Company granted warrants to purchase 76,325 shares of our common stock
to consultants. The warrants were valued at $84,531 on the date of grant, are exercisable
at $1.00 per share and expire in December 2010.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. | Significant
agreements and subsequent events:
|-- | ---------------------------------------------

| | Effective
May 1, 2007, the Company entered into a consulting agreement with the Memphis Consulting
Group (MCG), whereby MCG provided investor relations services to the Company.

  Pursuant to the agreement, the Company paid MCG $12,000 per month.
Additionally, the Company issued MCG a warrant to purchase 400,000 shares of
 common stock at $1.45 per share for a term of five years. The shares underlying the
warrant vested in 100,000 share installments on September 30, 2007, December 31, 2007,
March 31, 2008 and June 30, 2008. The warrant issued  was
in addition to a  warrant to purchase 50,000 shares of our common stock issued to MCG
under the terms of our previous agreement with MCG. The warrant was valued at $411,200 on the date
of the grant, of which the final $205,600 was expensed during each of the years ended
December 31, 2008 and 2007.  Effective
November 1, 2008, the Company  terminated its monthly payments to MCG.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
July 5, 2007 the Company entered into a services agreement with Cowboy International,
Inc. (Cowboy). Cowboy was retained to help the Company create a comprehensive
and integrated marketing, advertising, and branding campaign for the Companys main
website. During 2007, the Company paid a total of approximately $904,000 to Cowboy for
services rendered. On January 31, 2008, the Company terminated its agreement with Cowboy.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-14

---



| | On
February 29, 2008, the Company filed a complaint against Cowboy in the District Court for
the County of Arapahoe, Colorado. On March 20, 2008, Cowboy removed the case from state
court to the United States District Court for the District of Colorado. On April 2, 2008,
Cowboy filed counterclaims seeking amounts allegedly due under the services agreement and
seeking monetary damages. On September 11, 2008, the United States District Court
dismissed the case upon the parties submission of a joint stipulation for
settlement and mutual releases. On that date, the parties entered into a mutual
settlement agreement and release, with neither party admitting liability, and pursuant to
which the Company paid Cowboy $90,000.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
February 29, 2008, Kevin Hall was appointed to the Companys Board of Directors.
Upon his appointment, Mr. Hall was granted an option to purchase 50,000 shares of the
Companys common stock exercisable at $1.42 per share. The option is subject to
vesting with 25,000 vesting on December 31, 2008 and the remaining 25,000 vesting on
December 31, 2009. However, because Mr. Hall no longer serves on our Board of Directors
the option has been forfeited. Further, on March 1, 2008, Mr. Hall began providing the
Company consulting services related to the continuing development of our business,
website and operations.  In consideration, the Company verbally agreed to pay Mr.
Hall $10,000 per month until approximately July 31, 2008, and thereafter agreed to
pay Mr. Hall $3,750 per calendar quarter until either the Company or Mr. Hall terminated the
agreement. As of July 31, 2008, the Company ceased to pay Mr. Hall for consulting
services.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Board of Directors has adopted the 2006 Stock Option Plan (the 2006 Plan).
The 2006 Plan authorizes the Board of Directors to grant stock bonuses or stock options
to purchase shares of the Companys common stock to employees, officers, directors
and consultants. Options granted under the 2006 Plan may be either incentive stock
options or non-qualified stock options. The aggregate number of shares of common stock as
to which options and bonuses may be granted under the 2006 Plan cannot exceed 7,000,000.
On September 16, 2008 the Board of Directors adopted the 2008 Stock Option Plan (the
2008 Plan) and reserved 3,000,000 shares under the 2008 Plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | During the
fall of 2008 as a result of significant changes in market conditions and other factors,
including employee retention, our Board of Directors discussed several options with
respect to the equity compensation element of our employees compensation. After
considering several options, on December 30, 2008, the Board of Directors approved
amendments to the Companys 2006 and 2008 Stock Option Plans to permit the Board of
Directors in its sole discretion to amend the exercise price of an option previously
issued to a recipient so that the exercise price of the option is less than the fair
market value on the date of grant.  However, the Board of Directors decided that the
Company would not amend the terms of options held by executives and members of the Board
of Directors.  As a result, on December 30, 2008 the Company has agreed to amend the
terms of options held by certain employees so that the exercise price of the option is
less than the fair market value on the date of grant, however all other terms of the
options remained unchanged from their original terms. The options at issue, which
had strike prices ranging from $.52 to $1.50 per share, were modified to a strike price
of $.45 per share. As a result of the modification, additional compensation of
approximately $6,400 was recognized at December 31, 2008 and approximately $26,200 of
additional compensation will be recognized over a weighted average period of
approximately 2 years.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 4, 2008, the Company and the Companys Chairman and former Chief Executive
Officer, mutually agreed to terminate the terms and obligations of his three year
employment agreement with the Company. Although the former executive officer is no longer
serving as the Companys Chief Executive Officer, he is continuing to serve as the
Chair of the Companys Board of Directors. The Company and the former Chief
Executive Officer agreed that certain restrictive covenants imposed on the executive
officer and the Companys indemnification obligations, as set forth in his
employment agreement, continue to be in force and effect. The Company agreed to pay the
former executive officer severance equal to twelve months of his annual salary and for
his accrued but unused paid time off. On November 4, 2008, the Company also entered into
a business consulting agreement with this former executive officer whereby he agreed to
provide the Company on-going consulting services with regards to matters including public
relations, business promotion, and business growth and strategic business development.
The business consulting agreement will continue indefinitely and provides that the
executive officer will continue to be paid at a rate equivalent to his current salary for
the months of November and December 2008, and thereafter thereafter will be paid $5,000
per month.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-15

---



| | On
November 4, 2008, the Company entered into an amended and restated employment agreement
with its current President and Chief Financial Officer who was appointed to serve as the
Companys Chief Executive Officer. Consistent with the executives original
employment agreement, he will continue to be paid his current annual salary and current
monthly travel and housing allowance, although the allowance is subject to review and
adjustment on the first anniversary date of the employment agreement. Further, the
executive officer was granted an option to purchase 2.5 million shares of the Companys
common stock exercisable at $0.20 per share, vesting quarterly on a pro-rata basis over
three years, including partial accelerated vesting if the Company undergoes a change in
control event.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
November 5, 2008 the Companys shareholders approved an amendment to our articles of
incorporation to increase the number of authorized common shares to 100,000,000 from
65,000,000 shares.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
March 19, 2009, the Company closed on $296,250 in gross proceeds under a
private placement. In the closing, the Company issued a total of 1,975,000 shares of
common stock at a price of $.15 per share.   The shares were issued in reliance on Section
4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, and
the offering was made to accredited investors only. No commissions or other remuneration
were paid in connection with these issuances.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. | Income
taxes:
|-- | -------------

| | No
income tax benefit from continuing operations was recorded for any of the periods
presented as management was unable to conclude that it was more likely than not that the
income tax benefit would be realized.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
reconciliation between income taxes computed at the statutory federal tax rate of 34% and
the effective tax rate for the year ended December 31, 2008 and 2007 is as follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | 2008 |  | 2007 |        
|--------------------------------------- | ---- |  | ---- | -------
|
|Federal tax benefit at statutory rate   |      |  |      | 34.00% 
|State taxes, net of federal benefit     |      |  |      | 3.03%  
|Permanent items                         |      |  |      | (0.34% 
|Change in valuation allowance and other |      |  |      | (36.69%
|                                        |      |  |      |        
|Effective income tax rate               |      |  |      | 0.00%  
|                                        |      |  |      |        

| | The
tax effects of temporary differences that would give rise to substantially all deferred
tax assets subject to the valuation allowance at December 31, 2008 and 2007 are as
follows:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                 | 2008 |  | 2007 |           
|-------------------------------- | ---- |  | ---- | ----------
|
|Deferred tax assets:             |      |  |      |           
|Net operating loss carryforwards |      |  | $    | 5,010,143 
|Intangible assets                |      |  |      | 721,016   
|Stock-based compensation         |      |  |      | 429,863   
|Property and equipment           |      |  |      | 42,195    
|Other                            |      |  |      | 226,497   
|                                 |      |  |      |           
|Gross deferred tax assets        |      |  |      | 6,429,714 
|                                 |      |  |      |           
|Less: Valuation allowance        |      |  |      | (6,429,714
|                                 |      |  |      |           
|Net deferred tax assets          |      |  | $    |          
|                                 |      |  |      |           

| | The
Tax Reform Act of 1986 contains provisions that limit the utilization of net operating
loss and tax credit carryforwards if there has been a change of ownership as described in
Section 382 of the Internal Revenue Code. Such an analysis has not been performed by the
Company to determine the impact of these provisions on the Companys net operating
losses. A limitation under these provisions would reduce the amount of losses available
to offset future taxable income of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | At
December 31, 2008, approximately $13.5 million of net operating loss carryforwards for
federal income tax purposes were available to offset future taxable income through the
year 2028.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-16

---



|6. | Commitments
and contingencies:
|-- | ------------------------------

| | Since
June 2007, the Company leases its administrative offices under a noncancelable operating
lease that expires on July 31, 2009. Since July 2008, the Company leases additional
office space at the same location under a noncancelable operating lease that expires on
July 31, 2009. Rent expense for the years ended December 31, 2008 and 2007 totaled
approximately $107,000 and $62,000 respectively. Future minimum payments under these
operating leases are approximately 76,000.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
Company is involved in various matters of litigation, claims and assessments arising in
the ordinary course of business. In the opinion of management, the eventual disposition
of these matters will not have a material adverse effect on the financial statements.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. | Property
and equipment:
|-- | -----------------------

| | At
December 31, 2008 and 2007, property and equipment consisted of the following:
| | ---------------------------------------------------------------------------------

|                                                  | 2008 |  | 2007 |        
|------------------------------------------------- | ---- |  | ---- | -------
|
|Computer Software, hardware, and office equipment |      |  | $    | 71,739 
|Furniture and fixtures                            |      |  |      | 12,865 
|                                                  |      |  |      |        
|Total of fixed assets                             |      |  |      | 84,604 
|Less: accumulated depreciation and amortization   |      |  |      | (25,292
|                                                  |      |  |      |        
|Total fixed assets less depreciation              |      |  | $    | 59,312 
|                                                  |      |  |      |        

F-17

---