Unassociated Document

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the fiscal year ended December 31, 2008

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

FOR THE TRANSITION PERIOD FROM ___________ TO _____________

Commission file number 000-33033

(Name of registrant in its charter)

Delaware		02-0575232
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

228 Hamilton Ave., 3rd floor

(Address of Principal Executive Offices including Zip Code)

(Registrant's Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.0001 par value

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

Indicate by check mark whether the registration (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not 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. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨

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

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

Aggregate market value of common stock held by non-affiliates at March 31, 2009: $ 123,819,237 (see Note A)

Number of shares of common stock outstanding at March 31, 2009: 34,438,313

DOCUMENTS INCORPORATED BY REFERENCE: None

Note A: Based upon the $9.00 price in the most recent transaction involving the sale of the Company's common stock as there is no active trading market.

Total Number of Pages: 65

Exhibit Index is on Page 62

2008 ANNUAL REPORT ON FORM 10-K

Part I.		Page
Item 1.	Business	3
Item 2.	Description of Property	23
Item 3.	Legal Proceedings	23
Item 4.	Submission of Matters to a Vote of Security Holders	23
Part II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 8.	Financial Statements and Supplementary Data	30
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	51
Item 9A(T).	Controls and Procedures	52
Item 9B.	Other Information	53
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	56
Item 12.	Security Ownership of Certain Beneficial Owners and Management	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence	60
Item 14.	Principal Accounting Fees and Services	60
Item 15.	Exhibits, Financial Statement Schedule	60
Signatures		61
Exhibits Index		62
Certifications

Our disclosure and analysis in this report contains forward-looking statements. When used in this discussion, the words "believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include, but are not limited to, statements about our product development, product release, marketing, fundraising and expansion plans, and our objectives, expectations, intentions, and target markets, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements for many reasons, including the factors described under "Description of Business—Risk Factors Affecting Future Performance" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov .

hereUare, Inc. ("hereUare", "HUA", or "the Company"), formerly known as PeopleNet International Corporation, is a Delaware corporation headquartered in Santa Clara, California. hereUare was incorporated on February 5, 1997 under the original name of American Champion Media, Inc. hereUare was formed by, and had been a wholly owned subsidiary of Pacific Systems Control Technology, Inc., formerly known as American Champion Entertainment, Inc., a Delaware corporation. The board of directors of Pacific Systems determined that it was in the stockholders' best interest to separate the two companies and allow them to operate independently. Through a spin-off transaction on February 8, 2002, hereUare became an independent entity and Pacific Systems distributed its shares of hereUare to the stockholders of Pacific Systems as of the record date of January 16, 2002. The securities of hereUare are not currently traded on any market.

On September 22, 2006, the Company acquired hereUare Communications, Inc., a Delaware corporation, by reverse merger. Details of the acquisition are available on the Company's Current Report on Form 8-K dated September 22, 2006, as filed with the SEC on September 28, 2006, as amended by Form 8-K/A filed on December 8, 2006. On March 26, 2007, the Company changed its name from PeopleNet International Corporation to hereUare, Inc.

Discontinued Business

In 2001 and 2002, we licensed and then purchased a safe web browser software for children. We evaluated this asset at December 31, 2003 and determined that this asset had been impaired and was of no value, based upon the fair market value of similar assets. We recorded an impairment expense equal to the remaining book value of this asset.

In 2002 we purchased all rights relating to the intellectual property of a business communication software package. We evaluated this asset at December 31, 2003 and determined that this asset has been impaired and was of no value, based upon the fair market value of similar assets. We recorded an impairment expense equal to the remaining book value of this asset.

hereUare, Inc. ("hereUare," "HUA," or "the Company") is a diversified technology company developing Internet software and telecom solutions. The Company's key products deliver a simple, yet powerful platform, which can be uniquely tailored to different Internet needs or telecom styles. The Company's products provide a unique online platform for users, from individuals, through small & medium businesses to larger corporate enterprises, with a personalized, all-in-one web-based solution that aggregates any user's needs, from any location, with the use of any Internet device. The innovative hereUare platform and accompanying solutions are a result of seven years of comprehensive research and development packaged into a portfolio of products, some of which utilize pioneering and involved patent pending technologies that may drastically enhance a user's Internet experience.

Different from many Internet companies, hereUare approaches the online market and wireless communications with a holistic view that focuses on daily usage patterns. hereUare's integrated product suite consists of five primary applications as described below, and serves five primary Internet revenue segments: a) Consumers, b) Retailers, c) Advertisers, d) Small & Medium Businesses ("SMBs"), and e) Larger Enterprises.

hereUare applications:

hereUareEngine, Search - a powerful and intelligent search tool that efficiently delivers applicable information from the Internet in a simple and precise presentation through its unique hereUare patent pending "relevancy search bar". hereUareEngine is capable of searching over 10 billion indexed pages, providing powerful information and is designed for all types of users from novice to expert. hereUare had indexed 10 billion pages but discovered that a majority of the indexed pages were duplicates or contained SPAM . hereUare has developed a methodology to filter pages as they are indexed in order to help avoid (but not entirely eliminate) duplicate pages and SPAM. hereUare is the process of indexing pages using this filter and thus has not yet achieved its goal of a 10 billion page index but plans to do so during 2009, although no assurance of success can be given.

·	hereUareClassifies, Classified Advertising - our centralized online marketplace for merchandise, jobs, real estate, automotive, etc. in local communities around the world for the buying and selling of items.

·	hereUareMessage, e-Messaging & Groupware - a HUA web-based office tool that allows for group collaboration through emails, group emails, and shared calendars and tasks, using a concentrated common interfaced network and database.

Additionally, HUA has developed and plans to launch “hereUareVoice, VoIP”, a peer-to-peer Internet voice connection which would use advanced patent-pending HUA engineered "click-to-call" and "follow-me-everywhere" custom calling features. This application’s cost-structure, primarily inter-connects with telephone and cell phone providers, has made it fiscally unfeasible for HUA at this time, but the Company plans to launch this application in the future.

Every HUA application is interconnected through the interchangeable functionalities of each application. For example, a user can click a phone number from a website generated from our hereUareEngine search to order a pizza through our hereUareVoice VoIP, when released, or conversely click a phone numbr from a user’s hereUareMessage contact list to place a call. Both functions are enabled without the requirement of a user to insert user data or information. This level of seamlessness is designed to increase user efficiency, while greatly enhancing the overall ease-of-use for a user. hereUare believes there is a direct correlation between product integration and the success of a business that relies on the Internet as its point of sale.

hereUare is committed to transforming communication between people, markets and communities who use them. hereUare is dedicated to designing user-friendly applications and collaborative interactive technology that includes our unique search, messaging and voice applications to facilitate mobility for online user convergence across the globe.

The hereUare team understands the broad global and local connectivity that is required to conduct business competitively and effectively; as such we pride ourselves on providing one seamless, easy-to-use platform that limitlessly expands the communication reach of enterprises, businesses and individuals in the 21st century.

Through the intuitive integration of various technology channels, hereUare’s goal is to place an all-in-one communication solution at the fingertips of its users. It is our mission to build useful online applications that collaborate with any device, anywhere, that meet and exceed the far-reaching expectations of our diverse users.

HUA Applications and Solutions

As a daily Web destination, hereUare intends to offer a Product Suite of four key revenue producing applications. Providing a valuable sense of the style that is illustrated in the design of our applications, our desire is to present a warm and welcoming presence for any community on the Internet today. It is our intention to continue developing unique applications that provide daily relevance to any user, anytime whether it applies to our search, VoIP, or messaging technology. The direction of the Company over the past several years is to place a premium on quick, easy and efficient online tools that enhance the online experience for any user.

hereUareEngine Search

The hereUareEngine search solution stems from two primary design philosophies: 1) a "green" search engine that is environmental responsible and 2) a search style that's easily navigated regardless of the user's experience level. This solution offers comprehensive and relevant search results which will eventually access over 10 billion indexed pages. The required software that powers hereUareEngine search uses less hardware than typically used by our competitors to search indexed pages; hence, the "green" search solution which uses less energy. This equates to a lower capital requirement and operating cost; one of the product's key competitive advantages. In addition to the "green" search engine, hereUare offers a search style that categorizes the keyword search to allow further refinement without requiring the user to use a sophisticated Boolean search approach.

hereUareEngine Search features:

Dynamically generated graphical indicators of relevant content - HUA provides a unique way to indicate the level of relevancy of a search result. This allows the user to easily identify the most relevant search data results rather than reading a long list of content that is potentially not of interest or relevant to the user.

Large search library – will consist of over 10 billion indexed pages once HUA completes the indexing process. hereUare had believed it already had indexed over 10 billion pages but discovered that a majority of the pages were duplications or contained spam and as a result, hereUare has less than one billion indexed pages currently. Our hereUare Engine search product requires us to increase the number of indexed pages to over 10 billion in order to be effective. As a result, we have developed and implemented some new technologies in order to eliminate the page duplications and spam that existed in our prior number of indexed pages and we are crawling or spidering the web in order to increase the number of indexed pages. We are not planning to offer our hereUare search engine product until after we have indexed close to 10 billion pages for our hereUare Engine software to search. When complete, this will be an entry barrier to any new search engine. It is time-consuming and expensive to build a library of billions of indexed pages for a competitive result and there can be no assurance of when hUa will have a complete library.

More efficient scaling algorithm - requiring significantly less servers compared to the competition in the market when indexing the same number of pages. This is achieved through advanced proprietary software and indexing algorithms.

High relevancy - supports sophisticated search queries allowing nested Boolean format for experts, and also supports simple step-by-step searches, leading novices through categories to the most relevant information they seek.

Search query – hereUare Engine query results include all common formats such as PDF, Microsoft Word, Power Point, Excel and Postscript documents.

hereUareEngine search engine is supported by an advertisement server which is designed to provide the Company with a powerful revenue-generating source. With hereUareEngine acting as the backbone of the HUA product suite, particularly hereUareClassifies, the Company is poised to offer effective methods for advertisers to narrowly target their online marketing campaigns across hereUare's product suite and applications.

The hereUareVoice Voice over Internet Protocol (VoIP) telephony solution will offer a peer-to-peer (P2P) connection, delivering high quality audio while requiring minimal bandwidth. The service will work over almost any Internet connection, even at dial-up access speeds. The hereUareVoice VoIP service will be managed through our HUA engineered 'Softphone' a multi-media user interface that works in association with our VoIP technology. It serves as a dialing pad for initiating calls directly from a PC to any receiving device over the Internet. The Softphone applet is downloaded from the hereUare website as a stand-alone onscreen phone.

For versatility, the Softphone supports an external phone or headset connected to a computer for dialing and receiving calls. The Softphone is designed to be a multi-media communication portal, which when expanded incorporates and connects to –hereUareEngine and hereUareMessage.

hereUare does not intend to charge customers monthly fees or connection charges for hereUareVoice VoIP, or to require a user contract for VoIP service. Calls made between two hereUareVoice connections will be free from anywhere in the world. For calls made outside of the hereUare community, hereUare will offer one of the most competitive international rates on the market. However, the cost of these inter-connects is prohibitive for the Company at this time and will remain until the Company has substantial cash on hand. Yet, the Company believes that being able to offer such interconnects is essential to the success of hereUareVoice. Therefore, the Company does not currently plan to be offering this product except on a limited basis until after the Company has raised approximately one million dollars in financing.

Planned hereUareVoice VoIP Features:

Peer-to-peer connection - resulting in low voice delay.

Direct Inward Dialing (DID) - offering maximum privacy by allowing users from outside the hereUare network to reach a hereUare VoIP user without the need to give out any personal number.

Follow-me-everywhere call forwarding capability - allowing users to direct calls to their land or mobile number, even when the computer is not online.

Click-to-Call - a patent-pending HUA engineered technology that is capable of detecting a phone number in a web browser and allowing the hereUareVoice or VoIP user to initiate a call by simply clicking on the number.

The company holds an International FCC 214 license and is telecom compliant for all tariff requirements in the United States.

Click-to-Call and Pay-per-Call Market Opportunity

Although the Click-to-Call (CTC) will be a feature built into our hereUareVoice solution, the application will be powerful enough to stand on its own as a unique online downloadable browser tool. hereUare's CTC will take consumers directly to advertisers and retailers in one step by clicking on the displayed phone number resulting from a search or an advertisement. The hereUare patent-pending CTC technology will immediately connect users to their selected destination from any web page. This feature will take targeted marketing campaigns to the next level by providing a convenient way for impulse buyers and advertisers to achieve immediate satisfaction.

The CTC feature will allow hereUare to be innovative with its business proposal to advertisers by allowing a "pay-per-call" model. According to this model, the advertisers will pay only when a customer initiates a call. The billing will be reversed so that the caller does not pay, rather the advertiser subsidizes the cost of the call. Businesses will greatly benefit from this model as it minimizes the investment risk for their advertisement dollars and provides a powerful way to capture their audience. Consumers will benefit from this convenience, while at the same time their privacy is protected, because their home numbers and personal information are shielded. Businesses are able to self-manage the tools such that they do their own "auditing" of the efficacy of the pay-per-call advertising; thus, they improve the return on investment of their online marketing campaigns. The hereUare CTC model will eliminate the click fraud experienced by many advertisers. By including "pay-per-call" in its service offerings, hereUare expects to be able to increase VoIP and advertising revenue, plus increase market shares through push and pull marketing.

Studies by the Kelsey Group indicate that the response rate for telephone-based ads is 8%, compared with 3% for Pay-per-Click ads. hereUare's CTC feature has the potential, if properly positioned and successful, to capture a significant share of this new emerging market.

hereUareClassifies Classified Advertising

hereUareClassifies allows consumers and businesses to buy, sell, advertise, and connect to the discussion forums based on topics like business, relationships, entertainment, and shopping. hereUareClassifies provides advertisers with simple uploading for their listings through the use of pictures and step-by-step descriptions that allow users to instantly start utilizing the services.

hereUareClassifies features:

Multiple options - from a simple basic service plan to a premium package

Self-managed listings - with simple step-by-step walkthrough and visual ad displays

Priority Ranking - options which keep an ad on the top of the category in which it is posted to improve response and generate more advertising exposure

Differentiating capability - allow listings with a variety of font options for ad text

Sponsored Links - in any category, help businesses stand out

While the main portion of the hereUareClassifies product has been developed, further testing is required and launch is currently planned during the second quarter of 2009 provided the required testing is successful and the Company raises adequare financing.

hereUareMessage e-Messaging & Groupware

hereUareMessage offers a powerful and simple solution for messaging with collaborative applications for the SMB market and email hosting business. The application is a web-based design which provides SMBs with a collaborative tool to support multiple office locations in a shared-management environment. The web-based messaging solution reduces IT overhead for businesses.

hereUareMessage provides a user-friendly graphical web-based interface with instant access to information. Email messages, contacts, appointments and tasks are clearly arranged and easy to manage from almost any location, anywhere. Users are provided with a choice to assign tasks, appointments and information as private and/or public for others to view.

In addition to providing publicly accessible basic features free of charge that are comparable to the largest email systems available from market leaders such as Yahoo and Google, our hereUareMessage system will also provide paid solutions for more demanding users and SMBs such as private domain names, file sharing, and calendar sharing.

The Company believes that hereUareMessage is ready for release and once the Company raises approximately two hundred thousand dollars, the Company intends to recruit and retain a sales team and release hereUareMessage.

The Market for HUA Applications

Based on the Internet advertising model, Internet Search is the most recognized revenue generating application. Search revenue is primarily fueled by targeted ads and revenue from "pay for Click". The online classified market continues to grow as users rapidly migrate to the Internet as their source for news, research, and commerce. As the number of consumers that visit the Internet increases, advertisers have followed suit, thus shifting a greater proportion of their ad dollars to the Internet from the older forms of media. It is estimated that newspaper classified revenues have fallen by as much as 40% recently in certain categories.

Messaging, also referred to as Groupware or Collaborative software, has been widely accepted by Internet users and is now expanding to serve SMBs. As virtual offices are established in dispersed locations to address a global work environment, the acceptance of a centralized web-based office tool is expected to create a new category of users for an old application: email. SMBs, too small to create and maintain their own communication networks, will give new life to an application that the individual user now expects for free.

VoIP technology has advanced drastically in recent years as voice quality and call stability has improved. This trend will lead to greater market opportunities as individual consumers and businesses accept the technology as a low cost option to traditional telecom solutions. This application is in the initial stages of growth and is expected to continue to expand in worldwide acceptance as VoIP technology is more readily understood and accepted

Our initial marketing strategy is to market hereUare message to the SMB market. This approach focuses on both on direct sales and also channel development with value-added resellers (VARs) and distributors who will offer our hereUareMessage messaging product line to SMBs and enterprises. If we are able to gain traction with this product, and if we are able to complete the hereUareClassifies product and index 10 billion pages for the hereUareSearch product, the Company intends to release these two products along with hereUareVoice, and thereby market a suite of interrelated products.

For this suite, our planned marketing strategy approaches the market from three different perspectives, with the primary goal of driving adoption of hereUare's applications. Our first approach would focus on building brand awareness primarily through online advertising and eyeball acquisition of carefully placed and strategically located ads and links that draw attention to the hereUare Search page that will be the Company's landing page. The HUA marketing team has identified multiple sites as co-branding partners which will host HUA search and links. As a central destination web page, the HUA landing page is designed to lead users into the company's other applications.

The second prong for marketing once our product suite is available would be an active public relations campaign where the Company and its applications are promoted through a viral marketing approach that attract interested users through word of mouth. Active viral marketing or viral advertising refers to marketing techniques that use pre-existing social networks to produce or increase in brand awareness, through a self-replicating or viral process using social connections and word-of-mouth or online Internet dialogue to enhance the power of online networking. Viral marketing is a unique online phenomenon that facilitates and encourages people to pass along fresh ideas, concepts and products, and therefore market a message voluntarily. Viral promotions may take the form of video clips, interactive games, images, or emails and have proven very effective in recent years, as proven by the success of YouTube, MySpace and Facebook. Some data suggest that a satisfied customer tells an average of three people about a product or service he/she likes, and eleven people about a product or service which he/she did not like. Viral marketing is based on this natural human behavior, and has been very useful to the online community in promoting ideas, concepts and products.

Our third approach for marketing once the product suite is available would center around the establishment of relationships with large communities for positioning HUA as the default user gateway or portal to the Internet. As described below, HUA had identified large communities of Internet users among unique demographic groups in the USA and in Asia.

hereUare plans to jumpstart the viral marketing effect with identified vertical market segments and partners. We are attempting to establish relationships with community groups in the U.S., Vietnam and China. These relationships, if established, can give us access to user gateways of a large number of users that play an essential role in the success of our commercial launch for our hereUareEngine, hereUareVoice, and hereUareMessage applications. Our goal is to establish these relationships on the basis of hereUare being the default user gateway. We would direct our marketing programs toward a vertical focus through promotion with sponsorships, radio stations, bulletin board groups, and community events. These relationships could drive traffic through HUA products, and the strategy is designed to attract eyeballs to the hereUare website; this could enable a network effect that stems from self-proliferating community behavior.

We plan to employ both online and offline components in our sales-focused campaign. Online initiatives will include keyword advertisements, targeted banner advertisements, email lists, and contextual text links. Offline campaigns will focus on direct marketing strategies that will include mailings and inserts in relevant publications. Our direct sales team will establish channels with value-added resellers (VARs) and distributors to expand and actively reach the enterprise market with our messaging (and eventually VoIP) solutions.

International Strategy

Currently, the Company is not marketing its products outside the United States. However, uniquely positioned, hereUare's executive team has established strong working relationships with the relevant branches of the governments of Vietnam and China. These relationships are critical to entering the Asia market, where economies are projected to continue double digit growth well into the next decade. These relationships potentially are a key competitive advantage for hereUare over competitors who face high barriers of entry in these markets.

Vietnam and China have historically had poor telecom infrastructure. The development and establishment of VoIP as a communication alternative will meet the immediate needs of many users that cannot afford traditional telecom infrastructure. The VoIP solution provides voice connectivity without the extra cost of data infrastructure, while it provides greater access to telecom products without a high termination fee. With a communication infrastructure that is still under developed in these countries, VoIP is an easy, cost-efficient solution. In these countries, government approval is vital and necessary for rolling out and distributing our VoIP product solution. The hereUareMessage e-messaging application is another cost-effective solution to the communication problems that continue to exist in these countries. The hereUare messaging system includes an email hosting solution that scales from small business to governmental level usage. This allows the government the flexibility to support and control the development of communication tools in regions that lack investment capital.

hereUare presently has an office in Vietnam where it undertakes a substantial portion of its engineering and operations activities. In doing so in a location with lower labor and overhead costs, hereUare has been able to reduce the costs of such activities.

The Internet is a consumer market in which brand recognition is essential to any viral marketing campaign for the attraction and retention of traffic. Therefore, hereUare has carefully studied and selected its brand and domain name. Extensive focus group studies indicate that the hereUare name suggests and promotes a central Internet destination that serves all the needs of the user. As a brand, the hereUare message delivers the company's mission as a one-stop destination, where any device can be used, any where, any time. "hereUare" is easily pronounced and understood by non-English speaking users, which enhances its acceptance as a global brand. Generally speaking, the Internet domain name has become a valuable commodity. As a result, it has become a serious challenge to find a name that will resonate with consumers, while serving as a company's mission. hereUare has overcome this challenge successfully, with its easily understood name and products registered and trademarked.

Online the company plans to promote its brand through the use of sponsored links and vertical event sponsorships. As described in the Market Entry section above, sponsorship of events in large communities similar to the Christian Life Center mirrors the viral marketing effect and creates brand awareness. In partnership or in a syndicated situation, the hereUare logo is to be used followed by the powered by hereUare tagline.

Intellectual Property

We rely on a combination of patent, trademark, copyright, and trade secret laws in the U.S. and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We also enter into confidentiality and invention assignment agreements with our employees and consultants and confidentiality agreements with other third parties, and we rigorously control access to our proprietary technology. We license our search technology on a non-exclusive royalty-bearing basis; our license expires, unless renewed by agreement with the licensor, in October 2016. Trademarks which we own or license include "hereUare".

The Company has been granted two US patents:

·	Granted February 2006 - method and system for simulating multiple independent client devices in a wired or wireless network;

·	Granted February 2007 - system for distributed network authentication and access control.

The Company has not included the use of the technology covered by these two patents in its current plans.

We have U.S. patents pending covering aspects of our hereUareEngine and hereUareVoice applications, which we cannot be sure will be granted or if they are granted will be valid and enforceable and of a scope to cover aspects of commercial importance. We cannot predict whether the failure to obtain these patents or the invalidation of any patents we obtain would result in the introduction of competitive products which would adversely affect our future revenues. We presently intend to pursue any infringement of patents which issue from these applications either by litigation, arbitration, or negotiation. However, there can be no assurance that any of our patents will be sufficiently broad in scope to afford protection from products with comparable characteristics that may be sold by competitors in the future. There also can be no assurance that the validity of any patents actually granted will not be challenged.

Government Regulation

Once we begin to offer our services, we will be subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. In addition, laws and regulations relating to user privacy, freedom of expression, content (including gambling and underage sexual material), advertising, information security and intellectual property rights are being debated and considered for adoption by many countries throughout the world. In the U.S., laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, which include actions for defamation, libel, invasion of privacy and other data protection claims, tort, unlawful activity, copyright or trademark infringement and other theories based on the nature and content of the materials searched, the ads posted or the content generated by users. Certain foreign jurisdictions are also testing the liability of providers of online services for activities of their users and other third parties. Any court ruling that imposes liability on providers of online services for activities of their users and other third parties could adversely impact our business prospects. In addition, because our services may become accessible worldwide, certain foreign jurisdictions may claim that we are required to comply with their laws, even where we have no local entity, employees or infrastructure.

As of March 31, 2009, we have four full-time employees. In order to conserve cash, thirteen employees in Vietnam have been put on leave without pay. Assuming the Company can raise the necessary financing, the Company plans to re-hire them, perhaps as early as May 1, 2009, although no assurance can be given.

Risk Factors Affecting Future Performance.

We lack revenue history and currently do not have a proven business model to generate revenue. Absent revenue, our business will fail.

In the past years, we have concentrated on developing our products and have not generated significant revenues. We have only recently begun testing our products and services on a limited basis and have generated minimal revenues. There can be no assurance that as we roll-out our products, we will be able to generate material revenues from them. Many of our services, such as search and VoIP, have been historically offered free of charge to users, with companies depending upon advertising to generate revenues. There can be no assurance that we will be able to persuade advertisers that it is cost effective for them to pay us for advertising their products and services. Even if we are successful initially in generating advertising revenue, there can be no assurance that we will be successful long-term. hereUareMessage has not generated any revenue to date and is the product from which we plan to receive most of our revenue in the near-term. Because we have no experience in selling hereUareMessage, there can be no assurances that we will be successful in generating revenue from it.

We have never been and may never become profitable. We will need to be profitable in order to succeed.

We have never been profitable. In fact, during both fiscal 2007 and 2008, we were not even able to operate with a gross profit. There can be no assurance that we will ever generate a gross profit, much less and operating profit. Even if we achieve profitability, there can be no assurance that we will be able to sustain it.

We expect to incur operating losses for the foreseeable future.

Some of our products are still in the developmental stage, and prior to completing the commercialization of our products, we anticipate that we may incur operating expenses without realizing substantial revenues, for example while indexing 10 billion pages for hereUare Search. We therefore expect to incur losses into the foreseeable future.

If we are unable to manage our projected growth, our prospects may be limited and our potential for profitability may be adversely affected.

We intend to expand our sales and marketing, and research and development programs. Rapid expansion may strain our managerial, financial and other resources. If we are unable to manage our projected growth, our business, operating results and financial condition could be adversely affected. Our systems, procedures, controls and management resources also may not be adequate to support our future operations. We will need to continually improve our operational, financial and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies and result in reduced prospects for our company.

We are materially dependent on acceptance of our products in development by our target markets. If our products, when commercially ready, are not accepted, our revenues will be adversely affected and we may not be able to generate revenue from these markets.

The target markets for our technologies and products in development will principally include consumers, retailers, advertisers, small to medium businesses, and enterprises. If our products in development are not widely accepted by these markets, we may not be able to generate sales of our products into these markets. Technology for the Internet evolve quickly as compared to other industries, if technology evolves beyond the capabilities of our products, the market may not accept our products.

Our dependence on new products and enhancements to current products means that we are dependent upon our research and development team for key components of our platforms and delivery systems and technical or personnel issues could delay the launch of our products and reduce acceptance rates of our products.

We depend on our research and development department for the delivery of components integral to our systems. Our reliance on these teams creates risks related to our potential inability to launch our systems. Specifically, we depend or may in the future depend on these teams to write software code to power our systems or to help implement them, such as indexing ten billion pages for hereUareSearch. Any interruption of our technology development could significantly delay the introduction or update our products and have a material adverse effect on our revenues, profitability and financial condition. Within the last year we have abandoned two products: OneBizDirectory (a web-based yellow pages) and OneUniverse (a social networking platform), in part because of team issues and in part due to market conditions. There can be no assurance that we will be able to continue with our new product development and the enhancement of our current products and failure to do so may requires us to abandon additional products.

Defects in our systems could reduce demand for our products and result in delays in market acceptance and injury to our reputation.

Complex software systems and technologies used in our products may contain undetected defects that are subsequently discovered at any point in the lifecycle of our products. Defects in our products may result in a loss of sales, delay in market acceptance, loss of opportunity or other economic loss to our customers, and injury to our reputation and increased costs to remedy interruptions in our service or products.

We depend on our technology and products which incorporate our technology. The loss of access to this technology as a result of intellectual property claims or otherwise would terminate or delay the further development of our products, injure our reputation or otherwise impair our viability as a company.

We rely on technologies that we acquired or developed through our proprietary research and development efforts. The loss of these technologies for any reason would seriously impair our business and future viability. If we are required to enter into license agreements with third parties for replacement technologies, and assuming such licenses are even available to us, we could be subject to high royalty payments. In addition, any defects in our technology or any technology we may license in the future could prevent the implementation or impair the functionality of our products, delay new product introductions or injure our reputation and results of operations.

We may be unable to adapt or upgrade our technologies and products as the markets in which we compete evolve, which would leave us at a significant competitive disadvantage.

The Internet and online marketplace is rapidly evolving as new technologies are developed to create unforeseen needs. We may be unable to adapt or upgrade our technologies, or otherwise invent and develop new technologies, to meet theses competitive technologies. If we cannot develop new more sophisticated or advanced technologies and systems, or interface with newly developed technologies from our competitors our business could suffer serious harm to its reputation and could negatively impact our results of operations.

We have few capital resources and will be dependent upon future financing to generate the cash necessary to operate our business. Should we fail to raise such financing, we may be forced to cease operations.

As of December 31, 2008 we had cash of only $6,900 and working capital of ($835,625). Historically, we relied on funds raised from private sale of our common stock to accredited investors and were only able to support our small operation and development of our technology. Although we are currently seeking substantial financing to launch our products and services and to pay down our third party accounts payable and accrued expenses of $482,403 as of December 31, 2008, the loss we incurred during the first quarter of 2009, and our debt to related parties ($309,070 as of December 31, 2008), there is no assurance that we will be successful in raising the funds necessary on favorable terms. Management remains doubtful whether enough revenues can be generated in the near term to sustain our operations and intends to seek substantial funding for introducing and marketing our suite of software products. Otherwise, we will not be able to introduce them in a large-scale manner and may have to scale down or cease our operations. In the event that financing activities cannot generate adequate funds to launch our marketing efforts, we intend to curtail our operations until such funds are available. Although the Company continues to seek financing to support our working capital needs, we have no assurance that we will be successful in raising the funds required. In the event that the Company is not successful in generating sufficient capital resources on terms acceptable to us, there could be a material adverse effect on our business, results of operations, liquidity, and financial condition.

We will need to raise additional capital, which will be dilutive to our current shareholders.

We will need to raise additional funds in order to advance our business plan, and to carry out a full scale commercialization of our products. To the extent we need to raise additional capital, we may do so in the near future, if conditions in the markets are favorable. If and when we achieve initial market acceptance our technologies and products, we may desire to attempt to accelerate our growth to take advantage of increasing demand and raise additional capital at that time as well. Any additional capital could take the form of equity or debt financing. In addition, any future equity financing will be dilutive to shareholders.

We face significant competition from large-scale Internet content, product and service aggregators, principally Google, Microsoft and AOL.

We face significant competition from companies, principally Google, Microsoft and AOL, that have aggregated a variety of Internet products, services and content in a manner similar to ours. These companies are in dominant positions in the Internet service industry and have well established relationships with online advertisers. Their strength may adversely affect our ability to execute our business plan. Their services directly compete with ours, including Internet search, local search and directories, consumer e-mail service, VoIP, and advertising solutions. These large-scale competitors and possible additional entrants have significantly greater operational, strategic, financial, personnel or other resources than we do, as well as greater brand recognition overall. These competitors are expected to be continuously more effective than us in targeting services and advertisements to the specific preferences of their users thereby giving them a competitive advantage.

We also face competition from other Internet service companies, including Internet access providers, device manufacturers offering online services and destination websites.

Our users must access our services through Internet access providers, including wireless providers and providers of cable and broadband Internet access. To the extent that an access provider or device manufacturer offers online services competitive with ours, the user may elect to use the services or properties of that access provider or manufacturer. In addition, the access provider or manufacturer may make it difficult to access our services by not listing them in the access provider's or manufacturer's own directory. Such access providers and manufacturers may prove better able to target services and advertisements to the preferences of their users.

We also compete for customers, users and advertisers with many other providers of online services, including destination websites and social media and networking sites. Some of these competitors may have more expertise in a particular segment of the market, and within such segment, have longer operating histories, larger advertiser or user bases, and more brand recognition or technological features than we offer.

In the future, competitors may acquire additional competitive offerings, and if we are unable to complete strategic acquisitions or investments, our business could be adversely affected. Further, competitors may consolidate with each other to become more competitive, and new competitors may enter the market. If our competitors are more successful than we are in developing compelling products or attracting and retaining users, advertisers or customers, then we may have difficulty in executing our business plan.

We face significant competition from traditional media companies which could limit our ability to generate advertising revenue.

We also compete with traditional media companies for advertising. Most advertisers currently spend only a small portion of their advertising budgets on Internet advertising. We do not have indication that these traditional advertisers will allocate some of their advertising budget for our services.

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

Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Since our business plan anticipates significant activities from advertising, any decreases in or delays in advertising spending due to general economic conditions could reduce our chances in carrying out our plan.

We are, and 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.

Internet, technology, media companies and patent holding companies often possess a significant number of patents. Further, many of these companies and other parties are actively developing or purchasing search, indexing, electronic commerce and other Internet-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding the ownership of technologies and rights associated with online business are likely to continue to arise in the future.

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 patents, 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, any of 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.

If we are unable to protect our intellectual property, or obtain patents for the technologies we are currently researching, we may lose a competitive advantage or incur substantial litigation costs to protect our rights and we be unable to protect our intellectual property rights.

Our future success depends in part upon our proprietary technology. Our protective measures, including future patents, trademarks and trade secret laws, may prove inadequate to protect our proprietary rights. We are in the process of filing patent applications for our technologies and although we do not currently foresee issues arising as a result of our pending patents, there can be no assurance that any of these patents will be issued or that patents will not be challenged. Established companies in our industry generally are aggressive in attempts to block new entrants to their markets, and our products, if developed and commercialized, may interfere (or may be alleged to interfere) with the intellectual property rights of these companies. Our viability will depend on its products not infringing patents that we expect would be vigorously prosecuted. Furthermore, the validity and breadth of claims in our technology patents involve complex legal and factual questions and, therefore, are highly uncertain. Even if we are granted patents relating to our technology, there can be no assurance that we would be able to successfully assert our patents against competing products. Once we receive a patent, the scope of any patent to which we have or may obtain rights may not prevent others from developing and selling competing products. The validity and breadth of claims covered in technology patents involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy, and expensive. In addition, any future patents which we may file may be held invalid upon challenge; others may claim rights in or ownership of our patents.

We may not be able to enforce or protect our intellectual property rights, which may harm our ability to compete and adversely affect our business.

Our ability to enforce our patents, copyrights, software licenses, and other intellectual property is subject to general litigation risks, as well as uncertainty as to the enforceability of our intellectual property rights in various countries. When we seek to enforce our rights, we are often subject to claims that the intellectual property right is invalid, is otherwise not enforceable, or is licensed to the party against whom we are asserting a claim. In addition, our assertion of intellectual property rights often results in the other party seeking to assert alleged intellectual property rights of its own against us, which may adversely impact our business in the manner discussed above. If we are not ultimately successful in defending ourselves against these claims in litigation, we may not be able to sell a particular product or family of products, due to an injunction, or we may have to pay material amounts of damages, which could in turn negatively affect our results of operations. In addition, governments may adopt regulations or courts may render decisions requiring compulsory licensing of intellectual property to others, or governments may require that products meet specified standards that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances may negatively impact our competitive position and our business.

If we are unable to retain our existing senior management and key personnel and hire new highly skilled personnel, we may not be able to execute our business plan.

We are substantially dependent on the continued services of our senior management, including our chief executive officer, Benedict Van, and our chief technical officer (name withheld due to privacy purposes). These individuals have acquired specialized knowledge and skills in the Internet industries and our business operations. The loss of any of these individuals could harm our business. Additionally, within the past year, we have experienced a great deal of turnover. Our CFO resigned, effective as of December 4, 2008, and our engineering manager in charge of certain new product development previously resigned. Our business is also dependent on our ability to retain, hire and motivate talented, highly skilled personnel, particularly sales people. The competition for such executives and for other highly skilled personnel can be intense, particularly in the San Francisco Bay Area, where our corporate headquarters, and the headquarters of several of our vertical and horizontal competitors, are located. If we do not succeed in recruiting, retaining and motivating our key employees and in attracting new key personnel, we may be unable to meet our business plan and as a result, our stock price may decline. Because the success of hereUareMessage is highly dependent on sales personnel, if we do not succeed in recruiting, retaining and motivating top sales people, the success of our hereUareMessage launch could be in jeopardy.

Our directors and executive officers may experience conflicts of interest which may detrimentally affect our business development activities and our results of operations.

Our principal executive officers and directors, also serve in capacities at other companies that may be a direct or indirect conflict to our business. They may also be inventors or visionaries of our technologies. To the extent that our interests diverge from those of the other companies our executive officers and directors may become subject to conflicts of interest which could lead them to make decisions which are not necessarily in the best interests of our other stockholders. This could result in material adverse consequences to our company, its value and the value of your investment in the Company.

We operate in intensely competitive industries, and our failure to respond quickly to technological developments and incorporate new features into our products could have an adverse effect on our ability to compete.

We operate in intensely competitive industries that experience rapid technological developments, changes in industry standards, changes in customer requirements, and frequent new product introductions and improvements. If we are unable to respond quickly and successfully to these developments, we may lose our competitive position, and our products or technologies may become uncompetitive or obsolete. To compete successfully, we must maintain a successful R&D effort, develop new products and enhance the synergies between our products, and improve our existing products and processes at the same pace or ahead of our competitors. We may not be able to successfully develop and market these new products, the products we invest in and develop may not be well received by customers, and products developed and new technologies offered by others may affect the demand for our products. These types of events could have a variety of negative effects on our competitive position and our financial results, such as reducing our revenue, increasing our costs, lowering our gross margin percentage, and requiring us to recognize impairments of our assets.

We may have difficulty scaling and adapting our existing technology architecture to accommodate increased traffic when we launch our products and services.

Our products and services have only been tested on a limited basis. As we launch our products and services through our marketing campaign, we expect Internet traffic to our websites to significantly increase over a short time. We have very limited experience in handling a heightened traffic level by our hardware and customer service operations. Our future will depend on our ability to adapt to rapidly changing technologies, to adapt our products and services to evolving industry standards and to improve the performance and reliability of our products and services. Rapid increases in the levels or types of use of our online properties and services could result in delays or interruptions in our service.

New technologies could block our advertisements or our search marketing listings, which would harm our operating results.

Technologies have been developed and are likely to continue to be developed that can block the display of our advertisements or our search marketing listings. Advertisement-blocking technology could have an adverse affect on our ability to execute our plan to capture revenues.

Our online operations are subject to security risks and systems failures.

Online security breaches could materially adversely affect our collective businesses, financial condition, or results of operations. Any well-publicized compromise of security could deter use of the Internet in general or use of the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials in particular. In offering online payment services, we may increasingly rely on technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as consumer credit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments could compromise or breach the algorithms that we use to protect our consumers' transaction data. In addition, experienced programmers or "hackers" may attempt to misappropriate proprietary information or cause interruptions in our services which could require us to expend significant capital and resources to protect against these problems.

Other system failures.

The uninterrupted performance of our computer systems is critical to the operations of our Internet sites. We may have to restrict access to our Internet sites to solve problems caused by computer viruses or other system failures. Our customers may become dissatisfied by any systems disruption or failure that interrupts our ability to provide our content. Repeated system failures could substantially reduce the attractiveness of our Internet site and/or interfere with commercial transactions, negatively affecting our ability to generate revenues. Our Internet sites must, in the future if we grow, accommodate a high volume of traffic and deliver regularly updated content. Our sites have, on occasion, experienced slower response times and network failures. These types of occurrences in the future could cause users to perceive our web sites as not functioning properly and therefore induce them to frequent Internet sites other than ours. In addition, our customers depend on their own Internet service providers for access to our sites. Our revenues could be negatively affected by outages or other difficulties customers experience in accessing our Internet sites due to Internet service providers' system disruptions or similar failures unrelated to our systems.

We may be exposed to liability over privacy concerns.

Despite the display of our privacy policy on our website, any penetration of our network security or misappropriation of our customers' personal or credit card information could subject us to liability. We may be liable for claims based on unauthorized purchases with credit card information, impersonation or other similar fraud claims. Claims could also be based on other misuses of personal information, such as for unauthorized marketing purposes. These claims could result in litigation, which could divert management's attention from the operation of our business and result in the imposition of significant damages. In addition, the Federal Trade Commission and several states have investigated the use by Internet companies of personal information. In 1998, the U.S. Congress enacted the Children's Online Privacy Protection Act of 1998. The Federal Trade Commission recently promulgated final regulations interpreting this act. We depend upon collecting personal information from our customers and we believe that the regulations under this act will make it more difficult for us to collect personal information from some of our customers. Any failure to comply with this act may make us liable for substantial fines and other penalties. We could also incur expenses if new regulations regarding the use of personal information are introduced or if our privacy practices are investigated.

Our management owns or controls a significant number of the outstanding shares of Common Stock and will continue to have significant ownership of its voting securities for the foreseeable future.

Our management, either directly or indirectly through their control of affiliated companies, own or control approximately 48.01% of our issued and outstanding capital stock as of December 31, 2008. See "Security Ownership of Certain Beneficial Owners and Management." As a result, these persons would have the ability, acting as a group, to effectively control our affairs and business, including the election of directors and subject to certain limitations, approval or preclusion of fundamental corporate transactions. This concentration of ownership may be detrimental to the interest of our minority shareholders in that it may:

limit shareholders' ability to elect or remove directors;

delay or prevent a change in the control;

impede a merger, consolidation, take over or other transaction involving the Company; or

discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.

We do not intend to pay dividends in the foreseeable future.

We have never paid cash dividends. We do not anticipate that we would pay cash dividends in the foreseeable future. Instead, we intend to retain future earnings, if any, for reinvestment in its business and/or to fund future acquisitions. You should not invest in our securities in the anticipation of receiving dividends.

Item 2. Description of Property.

On June 8, 2006, the Company entered into a 5-year lease agreement with CarrAmerica Techmart which expires on June 15, 2011. Rent expenses in future periods pursuant to this lease agreement are shown below. In July 2008, we subleased the space for the remainder of the lease term to Egenera, Inc. pursuant to a sublease agreement by which the sublessee pays for all of the future rent expenses.

Year	Expense		Sub-lease		Net Expense
2008	$	88,279	$	44,715	$	43,563
2009	$	90,987	$	90,987	$	-
2010	$	93,666	$	93,666	$	-
2011	$	43,458	$	43,458	$	-

On August 1, 2007, the Company entered into a lease for 530 square meters of office space in Vietnam with Nguyen Van Tan and Vo Thi Ngoc Lan which expires on August 1, 2012. The lease commences on August 1, 2007 and rent expense is fixed at $4,200 per month. The Company prepaid the rent under this lease for 24 months through July 31, 2009.

On January 28, 2008, the Company entered into a 5-year lease agreement, with an option to purchase, with 1061 Terra Bella Associates, LLC, which expires on February 28, 2013. Rent expense per this new lease agreement is as following:

2008:	$	183,600
2009:	$	283,900
2010:	$	294,100
2011:	$	304,300
2012:	$	314,500
Thereafter:	$	52,700

Due to the Company’s precarious cash position during and since the fourth quarter of 2008, it has not made rent payments on the Terra Bella lease since 2008 and is currently in default and in discussion with the landlord about how to handle the situation. Until the situation is resolved, the Company is leasing office space at Hamilton Avenue Palo Alto on a month-to-month basis at a rent of approximately $300 per month.

Item 3. Legal Proceedings.

No lawsuits or proceedings are currently pending against hereUare.

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

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

There is currently no active market for our securities.

As of December 31, 2008 there were 289 holders or record of our common stock. The number of record holders does not include beneficial owners whose shares are held in the names of banks, brokers, nominees or other fiduciaries.

hereUare has not declared or paid any cash dividends on its common stock. It intends to retain any future earnings to finance the growth and development of its business, and therefore it does not anticipate paying any cash dividends on its common stock in the future. The board of directors will determine any future payment of cash dividends depending on the financial condition, results of operations, capital requirements, general business condition and other relevant factors. If the Company issues preferred shares, although not currently anticipated, no dividends may be paid on the outstanding common stock until all dividends then due on the outstanding preferred stock will have been paid.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

In the quarterly period ended December 31, 2008, the Company sold an aggregate of 5,000 shares of $0.0001 par value common stock to one couple in a private placement exempt from registration under Rule 506 of Regulation D of the Securities Act of 1933. The shares were sold at $9.00 per share for aggregate proceeds of $45,000. These shares have not been issued yet. The couple were accredited investors.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

There were no purchases made by or on behalf of Registrant or any "affiliated purchaser" (as defined in Exchange Act Rule 10b-18(a)(3)) of shares of Registrant's $0.0001 par value common stock during the fourth quarter of fiscal 2008.

Item 6. Selected Financial Data.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following section discusses the significant operating changes, business trends, financial condition, earnings and liquidity that have occurred in the Company's as of and for the fiscal years ended December 31, 2008 and 2007. This discussion should be read in conjunction with the Company's consolidated financial statements and notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements that are subject to risks and uncertainties. When used in this discussion, the words "believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include, but are not limited to, statements about our product development, product release, marketing, fundraising and expansion plans, and our objectives, expectations, intentions, and target markets, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements for may reasons, including the factors described under "Description of Business—Risk Factors Affecting Future Performance" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements". This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company's fiscal year beginning October 1, 2009. Management is currently evaluating the effect of this pronouncement on financial statements.

In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows The new standard also improves transparency about the location and amounts of derivative instruments in an entity's financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. . It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. Management is currently evaluating the effect of this pronouncement on financial statements.

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations". This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company's fiscal year beginning October 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after September 30, 2009.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles." This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement will not have an impact on the Company's financial statements.

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60." The scope of this Statement is limited to financial guarantee insurance (and reinsurance) contracts, as described in this Statement, issued by enterprises included within the scope of Statement 60. Accordingly, this Statement does not apply to financial guarantee contracts issued by enterprises excluded from the scope of Statement 60 or to some insurance contracts that seem similar to financial guarantee insurance contracts issued by insurance enterprises (such as mortgage guaranty insurance or credit insurance on trade receivables). This Statement also does not apply to financial guarantee insurance contracts that are derivative instruments included within the scope of FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This Statement will not have an impact on the Company's financial statements.

	DECEMBER 31,
	2008			2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,900			705,839
Account receivable		106			110
Inventory		-			21,811
Prepaid expenses		35,301			165,653
Related party receivable		-			11,248
Advances for software development		-			170,000
Total Current Assets		42,307			1,074,661

PROPERTY AND EQUIPMENT-NET		701,289			399,893
INTANGIBLE ASSETS-NET		206,608			326,261
DEPOSITS		185,293			106,990
INVESTMENT		-			1,000,000
Total Non-Current Assets		1,093,190			1,833,144

TOTAL ASSETS	$	1,135,496			2,907,805

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	511,472			399,439
Deferred revenue		12,390			247
Due to related parties		309,070			-
Shares to be issued		45,000			-
Total current liabilities		877,932			399,685

STOCKHOLDERS' EQUITY:
Common stock, $0.0001 par value;
100,000,000 shares authorized;
34,438,313 shares issued and 34,338,313 shares outstanding as of December 31, 2008and 34,239,864 shares issued and outstanding as of December 31, 2007.		3,454			3,424
Treasury Stock; 100,000 shares		(10	)		-
Additional paid in capital		77,466,062			71,606,663
Subscription receivable		(8,000	)		(53,000	)
Accumulated deficit		(77,205,829	)		(69,048,968	)
Translation Adjustment		1,886			-
Total stockholders' equity		257,563			2,508,119
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,135,496			2,907,805

	FOR THE YEARS ENDED DECEMBER 31,
	2008			2007
NET REVENUE	$	27,737		$	35,996
COST OF GOODS SOLD		32,485			56,776
GROSS LOSS		(4,748	)		(20,780	)

OPERATING EXPENSES
Depreciation and amortization		415,575			297,932
Rent		402,423			278,452
Salaries and payroll taxes		1,106,375			956,820
Professional fees		934,741			700,135
Impairment of advance		170,000			-
Impairment of investment		1,000,000			-
General and administrative expenses		4,122,645			1,785,135
Total operating expenses		8,151,760			4,018,475

LOSS FROM OPERATIONS		(8,156,508	)		(4,039,255	)

OTHER INCOME (EXPENSE)
Other expense		-			(357	)
Interest income		2,167			1,928
Total Other Income/(loss)		2,167			1,571

LOSS BEFORE INCOME TAXES		(8,154,341	)		(4,037,684	)

INCOME TAX		2,520			1,849

NET LOSS		(8,156,861	)		(4,039,533	)

OTHER COMPREHENSIVE INCOME
Foreign currency translation gain		1,886			-

NET COMPREHENSIVE LOSS	$	(8,154,975	)	$	(4,039,533	)

*BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON STOCK OUTSTANDING		34,340,393			33,967,404

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.24	)	$	(0.12	)

	Common stock				Treasury stock											Other					Total
	Number of				Number of					Additional			Subscription			comprehensive		Accum.			stockholders'
	shares		Amount		shares		Amount			paid in capital			Receivable			income		deficit			equity (deficit)

Balance as of January 01, 2007		33,704,668	$	3,371						$	66,461,460		$	(12,000	)	$	-	$	(65,009,435	)	$	1,443,396

Shares issued for cash		508,195		51							3,513,912			(53,000	)		-		-			3,460,963

Cash received for subscription receivable from 2006		-		-							-			12,000			-		-			12,000

Shares issued for exercise of stock options		7,001		1							14,001			-			-		-			14,002

Shares issued for services		20,000		2							119,998			-			-		-			120,000

Write-off of old liability		-		-							304,673			-			-		-			304,673

Option expenses		-		-							1,192,618			-			-		-			1,192,618

Net loss for the year		-		-							-			-			-		(4,039,533	)		(4,039,533	)

Balance as of December 31, 2007		34,239,864		3,424		-		-			71,606,663			(53,000	)		-		(69,048,968	)		2,508,119

Shares issued for cash		298,449		30		-		-			2,685,998			-			-		-			2,686,028

Cash received for subscription receivable from 2007		-		-		-		-			-			45,000			-		-			45,000

Purchase of treasury shares		-		-		100,000		(10	)		(49,990	)		-			-		-			(50,000	)

Option expenses		-		-		-		-			3,223,391			-			-		-			3,223,391

Foreign currency translation		-		-		-		-			-			-			1,886		-			1,886

Net loss for the year				-		-		-			-			-			-		(8,156,861	)		(8,156,861	)

Balance as of December 31, 2008		34,538,313	$	3,454		100,000	$	(10	)		77,466,062		$	(8,000	)	$	1,886		(77,205,829	)	$	257,563

	FOR THE YEARS ENDED DECEMBER 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(8,156,861	)	$	(4,039,533	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization		415,575			297,932
Issuance of stock options for compensation		3,223,391			1,192,618
Issuance of shares for services		-			120,000
Impairment of an investment and advances		1,170,000			304,673
(Increase) decrease in current assets:
Inventory		21,811			(21,811	)
Other Assets		-			(127,829	)
Prepaid expense		130,356			-
Deposits		(78,303	)		(63,345	)
Advances		-			87,539
Related party receivable		320,318			(10,408	)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses		112,033			(58,875	)
Deferred Revenue		12,144			(845	)
Net cash used in operating activities		(2,829,535	)		(2,319,884	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(437,079	)		(298,251	)
Purchase of software		(70,471	)		(301,309	)
Leasehold Improvement		(89,768	)		-
Net cash used in investing activities		(597,318	)		(599,560	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from subsciption receivable		45,000			12,000
Proceeds from issuance of common stock for cash		2,731,028			3,474,965
Repurchase treasury stock		(50,000	)		-
Net cash provided by financing activities		2,726,028			3,486,965

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS		1,886			-

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS		(698,939	)		567,521
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		705,839			138,318
CASH & CASH EQUIVALENTS, ENDING BALANCE	$	6,900		$	705,839

SUPPLEMENTAL DISCLOSURES:
Income tax payments	$	2,520		$	1,849
Interest payments	$	-		$	-

	2008			2007
Equipment	$	934,964		$	544,896
Furniture		141,078			94,067
Leasehold improvement		89,768			-
		1,165,810			638,963
Less accumulated depreciation		(464,522	)		(239,070	)
	$	701,289		$	399,893

	2008			2007

Software solutions	$	546,912		$	476,441

Domain name		32,321			32,321

		579,233			508,762

Less accumulated amortization		(372,625	)		(182,501	)

	$	206,608		$	326,261

	2008		2007
Rent deposit – Mountain View	$	114,750	$	56,990
Rent deposit – Los Angeles		2,189		-
Rent deposit – Vietnam		10,000		-
Attorney retainer deposit		50,000		50,000
Others		8,354		-
	$	185,293	$	106,990

	2008		2007
Accounts payable	$	378,873	$	237,573
Accrued litigation		72,000		72,000
Other accrued expenses		65,600		89,866
	$	511,472	$	399,439

	2008			2007
The United States Tax Rates - Federal		-34	%		-34	%
State tax		-6	%		-6	%
Vietnam Tax Rate		-25	%		-25	%
Changes in valuation allowance		65	%		65	%
Tax expense at actual rate		-			-

	2008			2007
Current tax expense:
The United States Federal	$	-		$	-
State		2,520			1,849
Vietnam		-			-
Total Current	$	2,520		$	1,849

Deferred tax credit:
The United States Federal	$	2,695,000		$	866,654
State		449,000			152,939
Vietnam Deferred Tax		65,000			-
Total deferred tax asset (liabilities)	$	3,209,000		$	1,019,593
Less: valuation allowance		(3,209,000	)		(1,019,593	)
Net deferred tax credit		-			-
Tax expense	$	2,520		$	1,849

	2008			2007
Deferred tax asset	$	10,663,000		$	7,454,000
Valuation allowance		(10,663,000	)		(7,454,000	)
	$	-		$	-

Cash	$	474,851
Prepaid expenses		34,251
Property, plant & equipment		33,326
Intangible asset		4,368
Investment		1,000,000
Deposit		1,994
Total assets		1,548,791

Less:
Accounts payable and accruals		30,360
Due to related parties		357,230
Total liabilities		387,590

Total acquisition cost	$	1,161,201

Cost
Total investment	$	31,971,000
Total acquisition cost		1,161,201
Deemed dividend	$	30,809,799

	Proforma
	(unaudited)
	2006
Statement of Operations:
Revenues	$	42,810
Cost of sales		77,952
Gross profit (Loss)		(35,142	)
Operating expenses		13,542,787
Loss from operations		(13,577,929	)

Other income		5,177

Loss before income taxes		(13,572,752	)

Provision for income taxes		800
Net loss	$	(13,573,552	)

Basic & diluted weighted average number of common stock outstanding		33,274,978

Basic & diluted loss /share	$	(0.41	)

501,862 shares		For cash
6,333 shares		For stock subscription receivable
7,001 shares		For exercise of stock options
20,000 shares		For services

			Weighted
			Average		Aggregate
			Exercise		Intrinsic
	Under Plan		Price		Value
Balance, December 31, 2007		7,436,999		1.86	$	13,832,818
Granted		815,000		9.00
Lapsed		2,868,000		5.42
Exercised		0		-
Balance, December 31, 2008		5,383,999		0.97	$	5,222,479

	Amortization

2009:	$	165,127
2010:	$	123,846

Name	Age	Position with the Company
Benedict Van	48	Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors
James McCargo	57	Director
David A. Brewer	56	Director

Name	Number of securities underlying unexercised options Exercisable		Number of securities underlying unexercised options Unexercisable		Option Exercise Price		Option Expiration Date
Benedict Van, Chief Executive Officer, Chairman of the Board, and Director		2,699,999		0	$	0.08	5/18/2009
Anthony K. Chan, Chief Financial Officer and Director		600,000		0	$	0.08	5/18/2009

Name and Address of Beneficial Owner (6)	Number of Shares of Common Stock (7)			Percentage of Common Stock Ownership*
ECapital Group, Inc. (1)		13,769,886			39.98	%
PeopleWeb Communications, Inc. (1)		3,060,229			8.89	%
Adel M. Ali		3,260,000			9.47	%
Benedict Van (director and executive officer) (1)		2,886,358	(2)		7.78	%
Anthony K. Chan (director and executive officer)		249,146			*
James McCargo (director)		392,833	(3)		1.13	%
David A. Brewer (director)		391,500	(4)		1.13	%
Gregory B. Pelling (director)		0			*
All Directors and Officers as a group (5 persons)		3,919,837	(5)		10.38	%

Description of Services	2008		2007
Audit Fees	$	45,500	$	45,500
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
Total	$	45,500	$	45,500

Signature	Title	Date
By: /s/ Benedict Van	Chief Executive Officer (Principal Executive Officer),	April 15, 2009
Benedict Van	Chief Financial Officer and Chairman of the Board of Directors
By: /s/ James McCargo *	Member of the Board of Directors	April 15, 2009
James McCargo
By: /s/ David A. Brewer *	Member of the Board of Directors	April 15, 2009
David A. Brewer

* By Benedict Van, attorney-in-fact

Exhibit No.		Exhibit Description
3.1(1)		Certificate of Incorporation, as amended on July 24, 2001
3.1(5)		Certificate of Ownership and Merger of PeopleNet Name Change Subsidiary, Inc. with and into PeopleNet International Corporation
3.2(1)		By-laws
4.1(1)		2001 Stock Option Plan
4.2(1)		2001 Non-Employee Director Stock Option Plan
4.3(1)		2001 Stock Incentive Plan
10.1(1)		Agreement between American Champion Media & American Champion Entertainment dated as of July 10, 2001
10.2(1)		Agreement among ACEI, American Champion Media, ECapital Group & Anthony Chan, dated as of June 20, 2001
10.3(1)		Agreement between American Champion Media & World Channel dated as of December 27, 2000
10.4(1)		Agreement between American Champion Media & Brighter Child Interactive dated as of September 30, 1999
10.5(1)		Agreement between American Champion Media & Prestige Toys Corp dated as of October 13, 1999
10.6(2)		Agreement - Sale of Assets between ECapital Group & PeopleNet International dated March 21, 2002
10.7(2)		Agreement - Sale of Assets between PeopleNet Corporation & PeopleNet International dated March 21, 2002
10.8(3)		Lease Agreement with CarrAmerica Techmart, LLC
10.9(4)		Agreement and Plan of Merger with hereUare Communications, Inc., dated August 25, 2006
10.10(6)		Lease Agreement with 1061 Terra Bella Associates, LLC
21.0 (6)		Subsidiaries of the registrant