- Securities Registration Statement (S-1/A)

As filed with the Securities and Exchange Commission on April 24, 2009

No. 333- 157352

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________

FORM S-1/A

(Amendment No. 1)

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

__________________________

BETAWAVE CORPORATION

(Exact name of registrant as specified in its charter)

__________________________

Nevada	8999	20-2471683
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

706 Mission Street, 10 th Floor

San Francisco, CA 94103

(415) 738-8706

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

__________________________

Tabreez Verjee, President

Betawave Corporation

706 Mission Street, 10 th Floor

San Francisco, CA 94103

(415) 738-8706

(Name, address, including zip code, and telephone number, including area

code, of agent for service)

__________________________

With Copies to:

John W. Campbell III, Esq.

John M. Rafferty, Esq.

Morrison & Foerster LLP

425 Market Street

San Francisco, California 94105

(415) 268-7000

Anthony J. McCusker, Esq.

Brian C. Patterson, Esq.

Gunderson Dettmer Stough

Villeneuve Franklin & Hachigian LLP

1200 Seaport Blvd.

Redwood City, California 94063

(650) 321-2400

__________________________

Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. þ

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

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 Securities Exchange Act of 1934. (Check one):

Large accelerated filer ¨		Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company)		Smaller reporting company þ

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Amount to be Registered			Proposed Maximum Offering Price Per Share(1)			Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee(3)
Shares of common stock, par value $0.001 per share, issuable upon exercise of warrants		28,261,172	(1)	$	0.175	(2)	$	4,945,705.10	$	194.37
Shares of common stock, par value $0.001 per share, issuable upon conversion of Series A preferred stock		70,652,930		$	0.175		$	12,364,262.75	$	485.92
Total:		98,914,102		$	0.175		$	17,309,967.85	$	680.29

(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, there is also being registered hereby such indeterminate number of additional shares of common stock of Betawave Corporation as may be issued or issuable because of stock splits, stock dividends, stock distributions, and similar transactions.

(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933 and based on the average of the high and low bid prices of Common Stock on February 12, 2009 as reported by the OTC Bulletin Board.

(3) Previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities under this prospectus until the registration statement of which it is a part and filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 24, 2009

BETAWAVE CORPORATION

PROSPECTUS

70,652,930 Shares of Common Stock

(underlying Series A preferred stock)

28,261,172 Shares of Common Stock

(underlying Warrants)

This prospectus relates to the offering from time to time by the selling stockholders of Betawave Corporation identified in this prospectus under “Selling Stockholders”, and any of their pledgees, donees, transferees or other successors-in-interest, of up to 98,914,102 shares of common stock, par value $0.001 per share, including (i) 70,652,930 shares they may acquire on conversion of Series A preferred stock and (ii) 28,261,172 shares they may acquire on exercise of warrants. The Series A preferred stock and warrants were issued to the selling stockholders in a private placement completed in December 2008 (the “ Private Placement ”). The Series A preferred stock and warrants were sold as units at a purchase price of $4.00 per unit, with each unit consisting of (i) one share of Series A preferred stock and (ii) a warrant to purchase eight shares of common stock.

The Series A preferred stock is convertible into common stock at any time at the rate of 20 shares of common stock for each share of Series A preferred stock (subject to certain anti-dilution and other adjustments as set forth in the certificate of designation of the Series A preferred stock). Each share of Series A preferred stock will have a liquidation preference of $4.00 per share and is entitled to receive dividends, prior and in preference to any declaration or payment of any dividend on the common stock, at the rate of $0.32 per annum when and if any such dividends are declared by our board of directors. The warrants have an exercise price of $0.20 per share (subject to adjustment). All of the warrants expire in five years.

For more details of the Private Placement, see “Description of Securities” included elsewhere in this prospectus.

The selling stockholders or their pledgees, donees, transferees or other successors-in-interest may sell all or a portion of these shares from time to time in market transactions through the OTC Bulletin Board or any other market on which our common stock is then traded, in negotiated transactions or otherwise, and at prices and on terms that will be determined by then prevailing market prices or at negotiated prices directly or through a broker or brokers, who may act as agent or as principal or by a combination of such methods of sale.

We will not receive any proceeds from the sale of shares of common stock offered by the selling stockholders, and any of their pledgees, donees, transferees or other successors-in-interest, under this prospectus. We will receive the proceeds from any cash exercises of the warrants, which we intend to use for general corporate purposes, including, but not limited to, working capital.

Our common stock is traded on the OTC Bulletin Board under the symbol “BWAV.OB”. On April 23, 2009, the closing price of our common stock was $0.13 per share.

Investing in our common stock involves a high degree of risk. Before making any investment in our common stock, you should read and carefully consider the risks described in this prospectus under “Risk Factors” beginning on page 6 of this prospectus.

You should rely only on the information contained in this prospectus or any prospectus supplement or amendment thereto. We have not authorized anyone to provide you with different information.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated , 2009

TABLE OF CONTENTS

		Page

SUMMARY		2

RISK FACTORS		6

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		22

SELLING STOCKHOLDERS		23

DETERMINATION OF OFFERING PRICE		27

PLAN OF DISTRIBUTION		27

USE OF PROCEEDS		28

MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED MATTERS		29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		34

BUSINESS		45

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS		53

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		58

EXECUTIVE COMPENSATION		59

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		66

DESCRIPTION OF SECURITIES		67

LEGAL MATTERS		69

EXPERTS		69

WHERE YOU CAN FIND MORE INFORMATION		69

FINANCIAL STATEMENTS		F-1

SUMMARY

This summary does not contain all of the information that should be considered before investing in our common stock. Investors should read the entire prospectus carefully, including the more detailed information regarding our business, the risks of purchasing our common stock discussed in this prospectus under “Risk Factors,” and our financial statements and the accompanying notes.

In this prospectus, unless the context requires otherwise, “Betawave,” the “Company,” “we,” “us,” and “our” refer to Betawave Corporation, a Nevada corporation, and its wholly-owned subsidiaries (GoFish Technologies, Inc., Internet Television Distribution Inc., and BM Acquisition Corp., Inc.), taken as a whole, and also refers to the operations of GoFish Technologies, Inc. prior to the October 27, 2006 merger which resulted in GoFish Technologies, Inc. becoming a wholly-owned subsidiary of Betawave Corporation. Internet Television Distribution Inc. and BM Acquisition Corp., Inc. have no present operations.

Our Company

The Company is the industry’s first attention-based digital media company. We have assembled some of the leading immersive casual gaming, virtual world, social play and entertainment websites into a network of sites (the “Betawave Network”). We generate revenue by selling innovative, accountable and attention-grabbing advertising campaigns on those sites to brand advertisers. We offer marketers broad reach into a targeted audience in desirable editorial environments. We combine the scale of a portal or advertising network with the custom programs and client focus of a niche publisher.

The Betawave Network delivers scale with a unique monthly audience of over 25 million domestically and attention with an average audience engagement of more than 48 minutes per month. To ensure that we consistently offer the highest level of service to publishers and advertisers, we are highly discriminating in our selection of publishers. We seek to ensure that the Betawave Network is comprised of quality publishers that have unique value propositions for marketers and advertisers trying to reach youth, moms, and a growing audience base of 18 to 34 year olds.

We enter into agreements with our publishers where we are responsible for selling their advertising inventory. Generally, these relationships are exclusive and allow us to decide how we sell the advertising inventory, what we sell and to whom we sell it. We have secured advertising buys from strong brands, including four of the biggest spenders against kids online. In addition, we procure media content that we believe to be compelling to both users of the sites within the Betawave Network and advertisers in categories targeting these users. In February 2009, we launched Betawave TV, an ad-supported video platform with distribution on several publishers in the Betawave Network. The product features advertiser-safe, family-friendly programming including quality animation, youth-oriented news, action sports, movie and video game information, special events, celebrity interviews, fashion, and health and beauty segments.

Our goal is to become the most valuable digital media company for brand advertisers. To do so, we seek to expand the size of the Betawave Network by forging relationships with publishers that have large, deeply engaged audiences with which advertisers want their brands to be affiliated.

We sell our inventory and marketing services in the United States through a sales and marketing organization that consisted of 41 employees as of April 7, 2009. These employees are located at our headquarters in San Francisco, California, and New York, New York, and also in our sales offices in Los Angeles, California, and Chicago, Illinois. The team is focused on selling advertising space on our network to top quality brands and their advertising agencies.

In addition, we operate a business development team tasked with sourcing, securing and retaining quality publishers into our network. These employees are located at our headquarters in San Francisco. They keep current with the latest online trends in our targeted demographics and are responsible for finding and securing relationships with a broad network of sites that extends the reach of our network portfolio.

Our market consists of publishers that operate websites with large, deeply engaged audiences and advertisers interested in reaching consumers online within our target demographics. Publisher websites provide a platform for brands to engage consumers through effective and targeted advertising initiatives. Our advertisers provide us with revenue by paying us to promote their brands, products and services on the websites in our network.

We believe that advertisers must reach consumers online as this is where they increasingly spend time relative to other media. The advertiser’s ability to effectively reach these consumers, however, is being impacted by several trends taking place on the Internet that lead to fragmentation of Internet traffic. This fragmentation makes it difficult for marketers to reach their targeted demographics at scale. Betawave believes it can provide the diversity, scale and the targeting of an advertising network with the integration, editorial quality and customization of large publishers. Betawave seeks to bridge the gap by uniting mid-size sites, offering rich content experiences, and introducing standard and immersive ad formats uniformly across our portfolio. The focus on immersive experiences is central to the concept of Attention-Based Media.

We compete against well-capitalized advertising companies as well as smaller companies. The market for our services is highly competitive.

Advertisers have several options for how to reach consumers online. Betawave has several attributes which we believe allow us to compete aggressively for online advertising dollars. With over 25 million unique users in the United States, the average U.S. user on the Betawave Network spends 48 minutes per month according to comScore MediaMetrix, with tweens (9-14) and teen girls spending well over 60 minutes per month and teen boys just under that number. The average of one minute per page across publishers in the Betawave Network is 41% higher than the Internet average and is 66% higher than the minutes per page average at teen sites and is two times as high as the minutes per page average at social networking sites.

Publishers have several options to monetize the traffic on their websites. They can build a direct sales organization to sell the advertising space on their website directly or partner with a third party advertising network to sell their advertising. We believe our company is attractive to publishers in our targeted demographics because of our ability to attract relevant, high quality advertisers at higher CPMs than can otherwise be obtained. We have expertise in defining innovative ad products and strategy, and we provide related platforms such as Betawave TV. We also believe that we are uniquely positioned with our focus and experience with attention-based media and we offer an unprecedented level of transparency and integration on our partner sites.

For more information regarding our business, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” included elsewhere in this prospectus.

Corporate Information

We were incorporated under the laws of the State of Nevada on February 2, 2005. Our principal executive offices are located at 706 Mission Street, 10 th Floor, San Francisco, CA 94103. The telephone number at our principal executive offices is (415) 738-8706. Our website address is www.betawave.com. Information contained on our website is not intended to be part of this prospectus and the reference to our website is an inactive textual reference only.

The Offering

This prospectus relates to the resale by the selling stockholders identified in this prospectus of up to 98,914,102 shares of our common stock, including 70,652,930 shares they may acquire on conversion of Series A preferred stock and 28,261,172 shares they may acquire on exercise of warrants. The Series A preferred stock and warrants were purchased by the selling stockholders in a series of private placements made exclusively to accredited investors completed on December 12, 2008, and the common stock issuable upon conversion or exercise of those securities may be offered for sale by the selling stockholders from time to time. No shares are being offered for sale by the Company.

Common stock outstanding prior to offering		29,229,284 shares as of April 7, 2009

Common stock offered by the selling stockholders		98,914,102 (assuming all shares of Series A preferred stock have been converted and all warrants have been exercised)

Common stock to be outstanding after the offering		128,143,386 (assuming all shares of Series A preferred stock have been converted and all warrants have been exercised)

Use of Proceeds		We will not receive any proceeds from the sale of common stock offered by the selling stockholders under this prospectus. We will receive the proceeds from any cash exercises of warrants, which we intend to use for general corporate purposes, including, but not limited to, working capital.

OTC Bulletin Board Symbol		“BWAV.OB”

Background

Pursuant to the terms of a securities purchase agreement dated December 3, 2008, which we entered into with the selling stockholders, we raised approximately $22.5 million in gross proceeds and cancelled indebtedness representing an aggregate principal amount of approximately $5,427,864 in exchange for the issuance of shares of our Series A preferred stock and warrants to purchase our common stock. The cancelled indebtedness was (a) our 6% senior convertible notes due June 7, 2010 (the “Senior Notes”) issued under the terms of that certain purchase agreement, dated as of June 7, 2007, that we entered into with such investors, and (b) our unsecured convertible 15% original issue discount notes due June 8, 2010 (collectively, the “Subordinated Notes”) that we issued under the terms of the subscription agreement dated April 18, 2008 (the “April 2008 Subordinated Notes”) and the accession agreement dated June 30, 2008 (the “June 2008 Subordinated Notes”).

The Series A preferred stock and warrants were sold as units at a purchase price of $4.00 per unit, with each unit consisting of (i) one share of Series A preferred stock and (ii) a warrant to purchase eight shares of common stock. The Series A preferred stock and warrants were sold at two closings that occurred on December 3, 2008 and December 12, 2008.

Pursuant to the terms of the securities purchase agreement, we sold an aggregate of (i) 7,065,293 shares of our Series A preferred stock, which shares are convertible into 141,305,860 shares of our common stock, and (ii) warrants to purchase 56,522,344 shares of our common stock, at an exercise price of $0.20 per share, with a term of five years.

Qatalyst Partners LP (“Qatalyst”) acted as our financial advisor in connection with the financing. In accordance with the terms of our engagement letter with Qatalyst, we issued to Qatalyst warrants to purchase 6,665,343 shares of our common stock as compensation for its services to us, and we have paid Qatalyst a cash fee in accordance with the terms of the engagement letter.

The issuances of securities described above are exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(2) thereof.

Plan of Distribution

This offering is not being underwritten. The selling stockholders will sell their shares of our common stock at prevailing market prices or privately negotiated prices. The selling stockholders themselves directly, or through their agents, or through their brokers or dealers, may sell their shares from time to time, in (i) privately negotiated transactions, (ii) in one or more transactions, including block transactions in accordance with the applicable rules of the OTC Bulletin Board or (iii) otherwise in accordance with the section of this prospectus entitled “Plan of Distribution.” To the extent required, the specific shares to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, broker or dealer and any applicable commission or discounts with respect to a particular offer will be described in an accompanying prospectus. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus.

For additional information on the methods of sale, you should refer to the section of this prospectus entitled “Plan of Distribution,” beginning on page 27.

RISK FACTORS

We face a variety of risks that may affect our financial condition, results of operations or business, and many of those risks are driven by factors that we cannot control or predict. The following discussion addresses those risks that management believes are the most significant, although there may be other risks that could arise, or may prove to be more significant than expected, that may affect our financial condition, results of operations or business.

RISKS RELATED TO OUR COMPANY

We have a history of operating losses which we expect to continue, and we may not be able to achieve profitability.

We have a history of losses and expect to continue to incur operating and net losses for the foreseeable future. We incurred a net loss of approximately $5.3 million for the year ended December 31, 2006, a net loss of approximately $16.4 million for the year ended December 31, 2007 and a net loss of approximately $17.0 million for the year ended December 31, 2008. As of December 31, 2008, our accumulated deficit was approximately $41.1 million. We have not achieved profitability on a quarterly or on an annual basis. We may not be able to achieve profitability. Our revenues for the year ended December 31, 2008 were approximately $7.7 million. If our revenues grow more slowly than anticipated or if our operating expenses exceed expectations, then we may not be able to achieve profitability in the near future or at all, which may depress the price for our common stock.

The effects of the current global economic crisis may impact our business, operating results, or financial condition.

The current global economic crisis has caused significant disruptions and extreme volatility in global financial markets and increased rates of default and bankruptcy, and has significantly impacted levels of consumer spending. The current deterioration in economic conditions has caused and could cause additional decreases in or delays in advertising spending in general. In addition, many industry forecasts are predicting negative growth in certain channels of online advertising in 2009. These developments could negatively affect our business, operating results, or financial condition in a number of ways. For example, current or potential customers such as advertisers may delay or decrease spending with us or may not pay us or may delay paying us for previously purchased services. In addition, if consumer spending continues to decrease, this may affect consumer’s behavior on the Internet and online advertising spending.

A limited number of advertisers account for a significant percentage of our revenue, and a loss of one or more of these advertisers could materially adversely affect our results of operations.

We generate almost entirely all of our revenues from advertisers on our network. For the year ended December 31, 2008, revenue from our five largest advertisers accounted for 36.3% of our revenue. Our largest advertiser accounted for 12.3% of our revenue for the year ended December 31, 2008. Our advertisers can generally terminate their contracts with us at any time. The loss of one or more of the advertisers that represent a significant portion of our revenue could materially adversely affect our results of operations. In addition, our relationships with publishers participating in our network require us to bear the risk of non-payment of advertising fees from advertisers. Accordingly, the non-payment or late payment of amounts due to us from a significant advertiser could materially adversely affect our financial condition and results of operations.

A small number of publishers account for a substantial percentage of our revenue and our failure to develop and sustain long-term relationships with our publishers, or the reduction in traffic of a current publisher in our network, could limit our ability to generate revenue.

For the year ended December 31, 2008, advertising revenue connected to our largest publisher accounted for approximately 66% of our revenues. Until the sales cycle on the newest sites in our publisher network matures, a small number of publishers will account for a substantial percentage of our revenue. We cannot assure you that any of the publishers participating in our network will continue their relationships with us. Moreover, we may lose publishers to competing publisher networks that have longer operating histories, the ability to attract higher ad rates, greater brand recognition, or the ability to generate greater financial, marketing and other resources. Furthermore, we cannot assure you that we would be able to replace a departed publisher with another publisher with comparable traffic patterns and demographics, if at all. Accordingly, our failure to develop and sustain long-term relationships with publishers or the reduction in traffic of a current publisher in our network could limit our ability to generate revenue.

Our future financial results, including our expected revenues, are unpredictable and difficult to forecast.

Our revenues, expenses and operating results fluctuate from quarter to quarter and are unpredictable which could increase the volatility of the price of our common stock. We expect that our operating results will continue to fluctuate in the future due to a number of factors, some of which are beyond our control. These factors include:

our ability to attract and incorporate publishers into our network;

the ability of the publishers in our network to attract visitors to their websites;

the amount and timing of costs relating to the expansion of our operations, including sales and marketing expenditures;

our ability to control our gross margins;

our ability to generate revenue through third-party advertising and our ability to be paid fees for advertising on our network; and

our ability to obtain cost-effective advertising throughout our network.

Due to all of these factors, our operating results may fall below the expectations of investors, which could cause a decline in the price of our common stock. In addition, since we expect that our operating results will continue to fluctuate in the future, it is difficult for us to accurately forecast our revenues.

Our limited operating history in the operation of an online entertainment and media network of websites makes evaluation of our business difficult, and our revenues are currently insufficient to generate positive cash flows from our operations.

We have limited historical financial data upon which to base planned operating expenses or forecast accurately our future operating results. We formally launched our website in October 2004 and only began building our network during 2007. We formally launched our network in February 2008 and we rebranded as Betawave Corporation in January 2009. The revenue received currently is insufficient to generate positive cash flows from our operations.

We may need to raise additional capital to meet our business requirements in the future and such capital raising may be costly or difficult to obtain and could dilute current stockholders’ ownership interests.

We may need to raise additional capital in the future, which may not be available on reasonable terms or at all, especially in light of the recent downturn in the economy and dislocations in the credit and capital markets. The raising of additional capital may dilute our current stockholders’ ownership interests. We may need to raise additional funds through public or private debt or equity financings to meet various objectives including, but not limited to:

pursuing growth opportunities, including more rapid expansion;

acquiring complementary businesses;

growing our network, including the number of publishers and advertisers in our network;

hiring qualified management and key employees;

responding to competitive pressures; and

maintaining compliance with applicable laws.

In addition, the raising of any additional capital through the sale of equity or equity-backed securities would dilute our current stockholders’ ownership percentages and would also result in a decrease in the fair market value of our equity securities because our assets would be owned by a larger pool of outstanding equity. The terms of those securities issued by us in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance of warrants or other derivative securities, which may have a further dilutive effect.

If we are unable to obtain required additional capital, we may have to curtail our growth plans or cut back on existing business and, further, we may not be able to continue operating if we do not generate sufficient revenues from operations needed to stay in business.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition.

Our auditors have indicated that there are a number of factors that raise substantial doubt about our ability to continue as a going concern.

Our audited consolidated financial statements for the fiscal year ended December 31, 2008 were prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that we will continue in operation for the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. However, the report of our independent registered public accounting firm on our audited consolidated financial statements for the fiscal year ended December 31, 2008 has indicated that we have incurred net loss since our inception, have experienced liquidity problems, negative cash flows from operations, and a working capital deficit at December 31, 2008, that raise substantial doubt about our ability to continue as a going concern.

If we acquire or invest in other companies, assets or technologies and we are not able to integrate them with our business, or we do not realize the anticipated financial and strategic goals for any of these transactions, our financial performance may be impaired.

As part of our growth strategy, we routinely consider acquiring or making investments in companies, assets or technologies that we believe are strategic to our business. We do not have extensive experience in integrating new businesses or technologies, and if we do succeed in acquiring or investing in a company or technology, we will be exposed to a number of risks, including:

we may find that the acquired company or technology does not further our business strategy, that we overpaid for the acquired company or technology or that the economic conditions underlying our acquisition decision have changed;

we may have difficulty integrating the assets, technologies, operations or personnel of an acquired company, or retaining the key personnel of the acquired company;

our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises;

we may encounter difficulty entering and competing in new markets or increased competition, including price competition or intellectual property litigation; and

we may experience significant problems or liabilities associated with technology and legal contingencies relating to the acquired business or technology, such as intellectual property or employment matters.

If we were to proceed with one or more significant acquisitions or investments in which the consideration included cash, we could be required to use a substantial portion of our available cash. To the extent we issue shares of capital stock or other rights to purchase capital stock, including options and warrants, existing shareholders might be diluted.

Our recently announced business model and name changes carry a number of risks which may be harmful to our business.

We have recently refined our business model significantly to become an attention-based media company and have recently changed our name to Betawave Corporation. A significant portion of our future success will depend on us forging contractual relationships with additional third-party websites (“publishers”) under which we will assume responsibility for selling their inventory of available advertising opportunities, as well as syndicating video content to them. With the implementation of the new phase of our business strategy, we are susceptible to the risks of operating an advertising-supported business. There is no guarantee that we will enter into contracts with such publishers and, if we are unable to enter into such contractual relationships, our business will be adversely affected.

Furthermore, in connection with the development and implementation of our refined strategic focus, we have spent, and continue to expect to spend, additional time and costs, including those associated with advertising and marketing efforts and building a network that includes other publishers. If we are unable to effectively implement our refined strategic focus, our business and operating results would be adversely affected.

Our recent name change to Betawave Corporation and rebranding campaign may involve substantial costs and may not be favorably received by our base of users, advertisers, publishers in our network and other partners.

In January 2009, we changed our name from GoFish Corporation to Betawave Corporation and launched a campaign to rebrand our business using the “Betawave” name. As a result, we may lose any brand recognition associated with the “GoFish” name that we previously established with advertisers, publishers in our network and other partners. In addition, our rebranding campaign may involve substantial costs and may not be favorably received by advertisers, publishers in our network and other partners. We may not be able to establish, maintain and/or enhance brand recognition associated with the “Betawave” name that is comparable to the brand recognition that we may have previously had associated with the “GoFish” name. If we fail to establish, maintain and/or enhance brand recognition associated with the “Betawave” name, it could affect our ability to attract advertisers, publishers in our network and other partners, which could adversely affect our ability to generate revenues and could impede our business plan.

Our business depends on enhancing our brand, and any failure to enhance our brand would hurt our ability to expand our base of users, advertisers and publishers in our network.

Enhancing our brand is critical to expanding our base of users, advertisers, publishers in our network, and other partners. We believe that the importance of brand recognition will increase due to the relatively low barriers to entry in the Internet market. If we fail to enhance our brand, or if we incur excessive expenses in this effort, our business, operating results and financial condition will be materially and adversely affected. Enhancing our brand will depend largely on our ability to provide high-quality products and services, which we may not do successfully.

We intend to expand our operations and increase our expenditures in an effort to grow our business. If we are unable to achieve or manage significant growth and expansion, or if our business does not grow as we expect, our operating results may suffer.

Our business plan anticipates continued additional expenditure on development and other growth initiatives. We may not achieve significant growth. If achieved, significant growth would place increased demands on our management, accounting systems, network infrastructure and systems of financial and internal controls. We may be unable to expand associated resources and refine associated systems fast enough to keep pace with expansion. If we fail to ensure that our management, control and other systems keep pace with growth, we may experience a decline in the effectiveness and focus of our management team, problems with timely or accurate reporting, issues with costs and quality controls and other problems associated with a failure to manage rapid growth, all of which would harm our results of operations.

Payments to certain of our publishers have exceeded the related fees we receive from our advertisers.

We are obligated under certain agreements to make non-cancelable guaranteed minimum revenue share payments to certain of our publishers. In these agreements, we promise to make these minimum payments to the publisher for a pre-negotiated period of time. At December 31, 2008, our aggregate outstanding non-cancelable guaranteed minimum revenue share commitments totaled $5.65 million through 2010. It is difficult to forecast with certainty the fees that we will earn under agreements with guarantees, and sometimes the fees we earn fall short of the guaranteed minimum payment amounts.

Losing key personnel or failing to attract and retain other highly skilled personnel could affect our ability to successfully grow our business.

Our future performance depends substantially on the continued service of our senior management, sales and other key personnel. We do not currently maintain key person life insurance. If our senior management were to resign or no longer be able to serve as our employees, it could impair our revenue growth, business and future prospects. In addition, the success of our monetization and sales plans depends on our ability to retain people in direct sales and to hire additional qualified and experienced individuals into our sales organization.

To meet our expected growth, we believe that our future success will depend upon our ability to hire, train and retain other highly skilled personnel. Competition for quality personnel is intense among technology and Internet-related businesses such as ours. We cannot be sure that we will be successful in hiring, assimilating or retaining the necessary personnel, and our failure to do so could cause our operating results to fall below our projected growth and profit targets.

Decreased effectiveness of equity compensation could adversely affect our ability to attract and retain employees and harm our business.

We have historically used stock options as a key component of our employee compensation program in order to align employees’ interests with the interests of our stockholders, encourage employee retention, and provide competitive compensation packages. Volatility or lack of positive performance in our stock price may adversely affect our ability to retain key employees, many of whom have been granted stock options, or to attract additional highly-qualified personnel.

Rules issued under the Sarbanes-Oxley Act of 2002 may make it difficult for us to retain or attract qualified officers and directors, which could adversely affect the management of our business and our ability to retain the trading status of our common stock on the OTC Bulletin Board.

We may be unable to attract and retain those qualified officers, directors and members of board committees required to provide for our effective management because of rules and regulations that govern publicly held companies, including, but not limited to, certifications by principal executive officers. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of rules and regulations and the strengthening of existing rules and regulations by the SEC. The perceived increased personal risk associated with these recent changes may deter qualified individuals from accepting roles as directors and executive officers.

We may have difficulty attracting and retaining directors with the requisite qualifications. If we are unable to attract and retain qualified officers and directors, the management of our business and our ability to retain the quotation of our common stock on the OTC Bulletin Board or obtain a listing of our common stock on a stock exchange or NASDAQ could be adversely affected.

Our management has identified a number of material weaknesses in our internal control over financial reporting as of December 31, 2008, which, if not sufficiently remediated, could result in material misstatements in our annual or interim financial statements in future periods and the ineffectiveness of our disclosure controls and procedures.

In connection with our management’s assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, our management identified a number of material weaknesses in our internal control over financial reporting as of December 31, 2008. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls. As a result, our management has concluded that we did not maintain effective internal control over financial reporting as of December 31, 2008. In addition, based on the evaluation and the identification of these material weaknesses in our internal control over financial reporting, our Chief Executive Officer and our Chief Accounting Officer concluded that, as of December 31, 2008, our disclosure controls and procedures were not effective.

We are in the process of implementing remediation efforts with respect to our control environment and these material weaknesses. However, if these remediation efforts are insufficient to address these material weaknesses, or if additional material weaknesses in our internal control over financial reporting are discovered in the future, we may fail to meet our future reporting obligations, our financial statements may contain material misstatements and our financial conditions and results of operations may be adversely impacted. Any such failure could also adversely affect our results of periodic management assessment regarding the effectiveness of our internal control over financial reporting, as required by the SEC’s rules under Section 404 of the Sarbanes-Oxley Act of 2002. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements or failure to meet reporting obligations, which in turn could cause investors to lose confidence in reported financial information leading to a decline in our stock price.

Although we believe that these remediation efforts will enable us to improve our internal control over financial reporting, we cannot assure you that these remediation efforts will remediate the material weaknesses identified or that any additional material weaknesses will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting. Furthermore, there are inherent limitations to the effectiveness of controls and procedures, including the possibility of human error and circumvention or overriding of controls and procedures.

We may have undisclosed liabilities that could harm our revenues, business, prospects, financial condition and results of operations.

Our present management had no affiliation with Unibio Inc. (which changed its name to GoFish Corporation on September 14, 2006 and subsequently to Betawave Corporation on January 20, 2009) prior to the October 27, 2006 mergers, in which Betawave Corporation acquired GoFish Technologies, Inc. as a wholly-owned subsidiary in a reverse merger transaction and IDT Acquisition Corp., a wholly-owned subsidiary of Betawave Corporation, simultaneously merged with and into Internet Television Distribution, Inc. as a wholly-owned subsidiary. Pursuant to the mergers, the officers and board members of Betawave Corporation resigned and were replaced by officers of GoFish Technologies, Inc. along with newly elected board members.

Although the October 27, 2006 Agreement and Plan of Merger contained customary representations and warranties regarding our pre-merger operations and customary due diligence was performed, all of our pre-merger material liabilities may not have been discovered or disclosed. We do not believe this to be the case but can offer no assurance as to claims which may be made against us in the future relating to such pre-merger operations. The Agreement and Plan of Merger and Reorganization contained a limited, upward, post-closing, adjustment to the number of shares of common stock issuable to pre-merger GoFish Technologies Inc. and Internet Television Distribution Inc. shareholders as a means of providing a remedy for breaches of representations made by us in the Agreement and Plan of Merger and Reorganization, including representations related to any undisclosed liabilities, however, there is no comparable protection offered to our other stockholders. Any such undisclosed pre-merger liabilities could harm our revenues, business, prospects, financial condition and results of operations upon our acceptance of responsibility for such liabilities.

Regulatory requirements may materially adversely affect us.

We are subject to various regulatory requirements, including the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires the evaluation and determination of the effectiveness of a company’s internal control over its financial reporting. In connection with management’s assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified material weaknesses in our internal control over financial reporting as of December 31, 2008. As a result, we have incurred additional costs and may suffer adverse publicity and other consequences of this determination.

We may be subject to claims relating to certain actions taken by our former external legal counsel.

In February 2007, we learned that approximately half of the three million shares of our common stock issued as part of a private placement transaction we consummated in October 2006 to entities controlled by Louis Zehil, who at the time of the purchase was a partner of our former external legal counsel for the private placement transaction, McGuireWoods LLP, may have been improperly traded. We believe that Mr. Zehil improperly caused our former transfer agent not to place a required restrictive legend on the certificate for these three million shares and that Mr. Zehil then caused the entities he controlled to resell certain of these shares. Mr. Zehil’s conduct was reported to the SEC, and the SEC recently sued Mr. Zehil in connection with this matter and further alleged that Mr. Zehil engaged in a similar fraudulent scheme with respect to six additional public companies represented at the relevant time by McGuireWoods LLP. Mr. Zehil also is the subject of criminal charges brought by federal prosecutors in connection with the fraudulent scheme.

In December 2008, Sunrise Equity Partners, L.P. (“Sunrise”) brought an action against us in the United States District Court in the Southern District of New York on behalf of itself and all other purchasers of our securities in our 2006 private placement. In the complaint, Sunrise alleged, among other things, that we breached the representation in the subscription agreement for the 2006 private placement which provided that no purchaser in the private placement had an agreement or understanding on terms that differed substantially from those of any other investor. Sunrise claimed that we breached this representation because Mr. Zehil’s entities received certificates without any restrictive legend while all other investors in the private placement received certificates with such restrictive legends. In February 2009, the complaint was dismissed without prejudice. It is possible that Sunrise will re-file the complaint in federal or state court or that one or more other stockholders could also claim that they somehow suffered a loss as a result of Mr. Zehil’s conduct and attempt to hold us responsible for their losses. If any such claims are successfully made against us and we are not adequately indemnified for those claims from available sources of indemnification, then such claims could have a material adverse effect on our financial condition. We also may incur significant costs resulting from our investigation of this matter, defending any litigation against us relating to this matter, and our cooperation with governmental authorities. We may not be adequately indemnified for such costs from available sources of indemnification.

RISKS RELATED TO OUR BUSINESS

We may be unable to attract advertisers to our network.

Advertising revenues comprise, and are expected to continue to comprise, almost entirely all of our revenues generated from our network. Most large advertisers have fixed advertising budgets, only a small portion of which have traditionally been allocated to Internet advertising. In addition, the overall market for advertising, including Internet advertising, has been generally characterized in recent periods by softness of demand, reductions in marketing and advertising budgets, and by delays in spending of budgeted resources. Advertisers may continue to focus most of their efforts on traditional media or may decrease their advertising spending. If we fail to convince advertisers to spend a portion of their advertising budgets with us, we will be unable to generate revenues from advertising as we intend.

Even if we initially attract advertisers to our network, they may decide not to advertise to our community if their investment does not have the desired result, or if we do not deliver their advertisements in an appropriate and effective manner. If we are unable to provide value to our advertisers, advertisers may reduce the rates they are willing to pay or may not continue to place ads with us.

We generate almost entirely all of our revenue from advertising, and the reduction in spending by, or loss of, advertisers could seriously harm our business.

We generate almost entirely all of our revenues from advertisers on our network. Our advertisers can generally terminate their contracts with us at any time. If we are unable to remain competitive and provide value to our advertisers, they may stop placing ads with us, which would negatively affect our revenues and business. In addition, expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Any decreases in or delays in advertising spending due to general economic conditions could reduce our revenues or negatively impact our ability to grow our revenues. We also may encounter difficulty collecting from our advertisers. We are a relatively small company and advertisers may choose to pay our bills after paying debts of their larger clients.

If we fail to compete effectively against other Internet advertising companies, we could lose customers or advertising inventory and our revenue and results of operations could decline.

The Internet advertising markets are characterized by rapidly changing technologies, evolving industry standards, frequent new product and service introductions, and changing customer demands. The introduction of new products and services embodying new technologies and the emergence of new industry standards and practices could render our existing products and services obsolete and unmarketable or require unanticipated technology or other investments. Our failure to adapt successfully to these changes could harm our business, results of operations and financial condition.

The market for Internet advertising and related products and services is highly competitive. We expect this competition to continue to increase, in part because there are no significant barriers to entry to our industry. Increased competition may result in price reductions for advertising space, reduced margins and loss of market share. We compete against well-capitalized advertising companies as well as smaller companies.

We compete against self-serve advertising networks such as Google AdSense, Valueclick, Advertising.com and Tribal Fusion that serve impressions onto a wide variety of mostly small and medium sites. We compete against behavioral networks, such as Tacoda and Blue Lithium, which serve the same inventory as general networks, but add behavioral targeting. We also compete against other full-service advertising networks that provide a more complete service when selling advertising, such as Gorilla Nation and Glam.

If existing or future competitors develop or offer products or services that provide significant performance, price, creative or other advantages over those offered by us, our business, results of operations and financial condition could be negatively affected. Many current and potential competitors enjoy competitive advantages over us, such as longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales and marketing resources. As a result, we may not be able to compete successfully. If we fail to compete successfully, we could lose customers or advertising inventory and our revenue and results of operations could decline.

We face competition from websites catering to consumers, as well as traditional media companies, and we may not be included in the advertising budgets of large advertisers, which could harm our revenues and results of operations.

In the online advertising market, we compete for advertising dollars with all websites catering to consumers, including portals, search engines and websites belonging to other advertising networks. We also compete with traditional advertising media, such as direct mail, television, radio, cable, and print, for a share of advertisers’ total advertising budgets. Most large advertisers have fixed advertising budgets, a small portion of which is allocated to Internet advertising. We expect that large advertisers will continue to focus most of their advertising efforts on traditional media. If we fail to convince these companies to spend a portion of their advertising budgets with us, or if our existing advertisers reduce the amount they spend on our programs, our revenues and results of operations would be harmed.

We may be unable to attract and incorporate high quality publishers into our network.

Our future revenues and success depend upon, among other things, our ability to attract and contract with high-quality publishers to participate in our network. We cannot assure you that publishers will want to participate, or continue to participate, in our network. If we are unable to successfully attract publishers to our network, it could adversely affect our ability to generate revenues and could impede our business plan. Even if we do successfully attract publishers, we cannot assure you that we will be able to incorporate these publishers into our network without substantial costs, delays or other problems.

Our services may fail to maintain the market acceptance they have achieved or to grow beyond current levels, which would adversely affect our competitive position.

We have not conducted any independent studies with regard to the feasibility of our proposed business plan, present and future business prospects and capital requirements. Our services may fail to gain market acceptance and our infrastructure to enable such expansion is still limited. Even if adequate financing is available and our services are ready for market, we cannot be certain that our services will find sufficient acceptance in the marketplace to fulfill our long and short-term goals. Failure of our services to achieve or maintain market acceptance would have a material adverse effect on our business, financial condition and results of operations.

We may fail to select the best publishers for our network.

The number of websites has increased substantially in recent years. Our publishers’ websites face numerous competitors both on the Internet, and in the more traditional broadcasting arena. Some of these companies have substantially longer operating histories, significantly greater financial, marketing and technical expertise, and greater resources and name recognition than we do. Moreover, the offerings on our network may not be sufficiently distinctive or may be copied by others. If we fail to attain commercial acceptance of our services and to be competitive with these companies, we may not ever generate meaningful revenues. In addition, new companies may emerge at any time with services that are superior, or that the marketplace perceives are superior, to ours.

If we fail to anticipate, identify and respond to the changing tastes and preferences of consumers, our business is likely to suffer.

Our business and results of operations depend upon the appeal of the sites in our network to consumers. The tastes and preferences of our consumers frequently change, and our success depends on our ability to anticipate, identify and respond to these changing tastes and preferences by incorporating appropriate publishers into our network. If we are unable to successfully anticipate, identify or respond to changing tastes and preferences of consumers or misjudge the market for our network, we may not be able to establish relationships with the most popular publishers, which may cause our revenues to decline.

We may be subject to market risk and legal liability in connection with the data collection capabilities of the publishers in our network.

Many components of websites on our network are interactive Internet applications that by their very nature require communication between a client and server to operate. To provide better consumer experiences and to operate effectively, many of the websites on our network collect certain information from users. The collection and use of such information may be subject to U.S. state and federal privacy and data collection laws and regulations, as well as foreign laws such as the EU Data Protection Directive. Recent growing public concern regarding privacy and the collection, distribution and use of information about Internet users has led to increased federal, state and foreign scrutiny and legislative and regulatory activity concerning data collection and use practices. Any failure by us to comply with applicable federal, state and foreign laws and the requirements of regulatory authorities may result in, among other things, in liability and materially harm our business.

The websites on our network post privacy policies concerning the collection, use and disclosure of user data, including that involved in interactions between our client and server products. Because of the evolving nature of our business and applicable law, such privacy policies may now or in the future fail to comply with applicable law. The websites on our network are subject to various federal and state laws concerning the collection and use of information regarding individuals. These laws include the Children’s Online Privacy Protection Act, the Federal Drivers Privacy Protection Act of 1994, the privacy provisions of the Gramm-Leach-Bliley Act, the Federal CAN-SPAM Act of 2003, as well as other laws that govern the collection and use of information. We cannot assure you that the websites on our network are currently in compliance, or will remain in compliance, with these laws and their own privacy policies. Any failure to comply with posted privacy policies, any failure to conform privacy policies to changing aspects of the business or applicable law, or any existing or new legislation regarding privacy issues could impact the market for our publishers’ websites, technologies and products and this may adversely affect our business.

Activities of advertisers or publishers in our network could damage our reputation or give rise to legal claims against us.

The promotion of the products and services by publishers in our network may not comply with federal, state and local laws, including but not limited to laws and regulations relating to the Internet. Failure of our publishers to comply with federal, state or local laws or our policies could damage our reputation and adversely affect our business, results of operations or financial condition. We cannot predict whether our role in facilitating our customers’ marketing activities would expose us to liability under these laws. Any claims made against us could be costly and time-consuming to defend. If we are exposed to this kind of liability, we could be required to pay substantial fines or penalties, redesign our business methods, discontinue some of our services or otherwise expend resources to avoid liability.

We also may be held liable to third parties for the content in the advertising we deliver on behalf of our publishers. We may be held liable to third parties for content in the advertising we serve if the music, artwork, text or other content involved violates the copyright, trademark or other intellectual property rights of such third parties or if the content is defamatory, deceptive or otherwise violates applicable laws or regulations. Any claims or counterclaims could be time consuming, result in costly litigation or divert management’s attention.

We depend on third-party Internet, telecommunications and technology providers for key aspects in the provision of our services and any failure or interruption in the services that third parties provide could disrupt our business.

We depend heavily on several third-party providers of Internet and related telecommunication services, including hosting and co-location facilities, as well as providers of technology solutions, including software developed by third party vendors, in delivering our services. In addition, we use third party vendors to assist with product development, campaign deployment, video streaming for Betawave TV and support services for some of our products and services. These companies may not continue to provide services or software to us without disruptions in service, at the current cost or at all.

If the products and services provided by these third-party vendors are disrupted or not properly supported, our ability to provide our products and services would be adversely impacted. In addition, any financial or other difficulties our third party providers face may have negative effects on our business, the nature and extent of which we cannot predict. While we believe our business relationships with our key vendors are good, a material adverse impact on our business would occur if a supply or license agreement with a key vendor is materially revised, is not renewed or is terminated, or the supply of products or services were insufficient or interrupted. The costs associated with any transition to a new service provider could be substantial, require us to reengineer our computer systems and telecommunications infrastructure to accommodate a new service provider and disrupt the services we provide to our customers. This process could be both expensive and time consuming and could damage our relationships with customers.

In addition, failure of our Internet and related telecommunications providers to provide the data communications capacity in the time frame we require could cause interruptions in the services we provide. Unanticipated problems affecting our computer and telecommunications systems in the future could cause interruptions in the delivery of our services, causing a loss of revenue and potential loss of customers.

More individuals are using non-PC devices to access the Internet. We may be unable to capture market share for advertising on these devices.

The number of people who access the Internet through devices other than personal computers, including mobile telephones, smart phones, handheld computers and video game consoles, has increased dramatically in the past few years. Most of the publishers in our network originally designed their services for rich, graphical environments such as those available on desktop and laptop computers. The lower resolution, functionality and memory associated with alternative devices make the use of these websites difficult and the publishers in our network developed for these devices may not be compelling to users of alternative devices. In addition, the creative advertising solutions that thrive in rich environments may be less attractive to advertisers on these devises. The use of such creative advertising is part what makes our services attractive to advertisers and is what most contributes to our margins. If we are slow to develop services and technologies that are more compatible with non-PC communications devices or if we are unable to attract and retain a substantial number of publishers that focus on alternative device users to our online services, we will fail to capture a significant share of an increasingly important portion of the market for online services, which could adversely affect our business.

RISKS RELATED TO OUR INDUSTRY

Anything that causes users of websites on our network to spend less time on their computers, including seasonal factors and national events, may impact our profitability.

Anything that diverts users of our network from their customary level of usage could adversely affect our business. Geopolitical events such as war, the threat of war or terrorist activity, and natural disasters such as hurricanes or earthquakes all could adversely affect our profitability. Similarly, our results of operations historically have varied seasonally because many of our users reduce their activities on our website with the onset of good weather during the summer months, and on and around national holidays.

If the delivery of Internet advertising on the Web is limited or blocked, demand for our services may decline.

Our business may be adversely affected by the adoption by computer users of technologies that harm the performance of our services. For example, computer users may use software designed to filter or prevent the delivery of Internet advertising; block, disable or remove cookies used by our ad serving technologies; prevent or impair the operation of other online tracking technologies; or misrepresent measurements of ad penetration and effectiveness. We cannot assure you that the proportion of computer users who employ these or other similar technologies will not increase, thereby diminishing the efficacy of our products and services. In the event that one or more of these technologies became more widely adopted by computer users, demand for our products and services would decline.

Advertisers may be reluctant to devote a portion of their budgets to marketing technology and data products and services or online advertising.

Companies doing business on the Internet, including us, must compete with traditional advertising media, including television, radio, cable and print, for a share of advertisers’ total marketing budgets. Potential customers may be reluctant to devote a significant portion of their marketing budget to online advertising or marketing technology and data products and services if they perceive the Internet or direct marketing to be a limited or ineffective marketing medium. Any shift in marketing budgets away from marketing technology and data products or services or online advertising spending, or our offerings in particular, could materially and adversely affect our business, results of operations or financial condition. In addition, online advertising could lose its appeal to those direct marketers and advertisers using the Internet as a result of its ad performance relative to other media.

The lack of appropriate measurement standards or tools may cause us to lose customers or prevent us from charging a sufficient amount for our products and services.

Because many online marketing technology and data products and services remain relatively new disciplines, there is often no generally accepted methods or tools for measuring the efficacy of online marketing and advertising as there are for advertising in television, radio, cable and print. Therefore, many advertisers may be reluctant to spend sizable portions of their budget on online marketing and advertising until more widely accepted methods and tools that measure the efficacy of their campaigns are developed. In addition, direct marketers are often unable to accurately measure campaign performance across all response channels or identify which of their marketing methodologies are driving customers to make purchases. Therefore, our customers may not be able to assess the effectiveness of our services and as a result, we could lose customers, fail to attract new customers or existing customer could reduce their use of our services.

We could lose customers or fail to gain customers if our services do not utilize the measuring methods and tools that may become generally accepted. Further, new measurement standards and tools could require us to change our business and the means used to charge our customers, which could result in a loss of customer revenues and adversely impact our business, financial condition and results of operation.

We may infringe on third-party intellectual property rights and could become involved in costly intellectual property litigation.

Other parties claiming infringement by the advertisements or video content on the sites in our network could sue us. We may be liable to third parties for elements of advertising campaigns designed by us, which may violate the copyright, trademark, or other intellectual property rights of such third parties.

In addition, any future claims, with or without merit, could impair our business and financial condition because they could:

result in significant litigation costs;

divert the attention of management;

divert resources; or

require us to enter into royalty and licensing agreements that may not be available on terms acceptable to us or at all.

We may experience unexpected expenses or delays in service enhancements if we are unable to license third-party technology on commercially reasonable terms.

We rely on a variety of technology that we license from third parties. These third-party technology licenses might not continue to be available to us on commercially reasonable terms or at all. If we are unable to obtain or maintain these licenses on favorable terms, or at all, our ability to efficiently deliver advertisements at the best rates available might be impaired and this would adversely impact our business.

It is not yet clear how laws designed to protect children that use the Internet may be interpreted and enforced, and whether new similar laws will be enacted in the future which may apply to our business in ways that may subject us to potential liability.

The Children’s Online Privacy Protection Act (“COPPA”) imposes civil penalties for collecting personal information from children under the age of 13 without complying with the requirements of COPPA. Publishers in our network may violate COPPA on their websites.

Although COPPA is a relatively new law, the Federal Trade Commission (the “FTC”) has recently been more active in enforcing violations with COPPA. In the last two years, the FTC has brought a number of actions against website operators for failure to comply with COPPA requirements, and has imposed fines of up to $3 million. Future legislation similar to these Acts could subject us to potential liability if we were deemed to be noncompliant with such rules and regulations.

Increasing governmental regulation of the Internet could harm our business.

The publishers in our network are subject to the same federal, state and local laws as other companies conducting business on the Internet. Today there are relatively few laws specifically directed towards conducting business on the Internet. However, due to the increasing popularity and use of the Internet, many laws and regulations relating to the Internet are being debated at the state and federal levels. These laws and regulations could cover issues such as user privacy, freedom of expression, pricing, fraud, quality of products and services, advertising, intellectual property rights and information security. Furthermore, the growth and development of Internet commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies conducting business over the Internet.

Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, libel, obscenity and personal privacy could also harm our business. The majority of these laws was adopted before the advent of the Internet, and do not contemplate or address the unique issues raised by the Internet. The courts are only beginning to interpret those laws that do reference the Internet, such as the Digital Millennium Copyright Act and COPPA, and their applicability and reach are therefore uncertain. These current and future laws and regulations could harm our business, results of operation and financial condition.

In addition, several telecommunications carriers have requested that the Federal Communications Commission regulate telecommunications over the Internet. Due to the increasing use of the Internet and the burden it has placed on the current telecommunications infrastructure, telephone carriers have requested the FCC to regulate Internet service providers and impose access fees on those providers. If the FCC imposes access fees, the costs of using the Internet could increase dramatically which could result in the reduced use of the Internet as a medium for commerce and have a material adverse effect on our Internet business operations.

We depend on the growth of the Internet and Internet infrastructure for our future growth, and any decrease or less than anticipated growth in Internet usage could adversely affect our business prospects.

Our future revenue and profits, if any, depend upon the continued widespread use of the Internet as an effective commercial and business medium. Factors which could reduce the widespread use of the Internet include:

possible disruptions or other damage to the Internet or telecommunications infrastructure;

failure of the individual networking infrastructures of our merchant advertisers and distribution partners to alleviate potential overloading and delayed response times;

a decision by merchant advertisers to spend more of their marketing dollars in offline areas;

increased governmental regulation and taxation; and

actual or perceived lack of security or privacy protection.

In addition, websites have experienced interruptions in their service as a result of outages and other delays occurring throughout the Internet network infrastructure, and as a result of sabotage, such as electronic attacks designed to interrupt service on many websites. The Internet could lose its viability as a commercial medium due to reasons including increased governmental regulation or delays in the development or adoption of new technologies required to accommodate increased levels of Internet activity. If use of the Internet does not continue to grow, or if the Internet infrastructure does not effectively support our growth, our revenue and results of operations could be materially and adversely affected.

RISKS RELATED TO OUR COMMON STOCK

You may have difficulty trading our common stock as there is a limited public market for shares of our common stock.

Our common stock is currently quoted on the NASD’s OTC Bulletin Board under the symbol “BWAV.OB.” Our common stock is not actively traded and there is a limited public market for our common stock. As a result, a stockholder may find it difficult to dispose of, or to obtain accurate quotations of the price of, our common stock. This severely limits the liquidity of our common stock, and would likely have a material adverse effect on the market price for our common stock and on our ability to raise additional capital. An active public market for shares of our common stock may not develop, or if one should develop, it may not be sustained.

Applicable SEC rules governing the trading of “penny stocks” may limit the trading and liquidity of our common stock which may affect the trading price of our common stock.

Our common stock is currently quoted on the NASD’s OTC Bulletin Board. On April 7, 2009, the closing bid price of our common stock was $0.14 per share. Stocks such as ours which trade below $5.00 per share are generally considered “penny stocks” and subject to SEC rules and regulations which impose limitations upon the manner in which such shares may be publicly traded. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. Under these regulations, certain brokers who recommend such securities to persons other than established customers or certain accredited investors must make a special written suitability determination regarding such a purchaser and receive such purchaser’s written agreement to a transaction prior to sale. These regulations have the effect of limiting the trading activity of our common stock and reducing the liquidity of an investment in our common stock.

There is a limited public market for shares of our common stock, which may make it difficult for investors to sell their shares.

There is a limited public market for shares of our common stock. An active public market for shares of our common stock may not develop, or if one should develop, it may not be sustained. Therefore, investors may not be able to find purchasers for their shares of our common stock.

The price of our common stock has been and is likely to continue to be highly volatile, which could lead to losses by investors and costly securities litigation.

The trading price of our common stock has been and is likely to continue to be highly volatile and could fluctuate in response to factors such as:

actual or anticipated variations in our operating results;

announcements of technological innovations by us or our competitors;

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

adoption of new accounting standards affecting our industry;

additions or departures of key personnel;

introduction of new services by us or our competitors;

sales of our common stock or other securities in the open market;

conditions or trends in the Internet and online commerce industries; and

other events or factors, many of which are beyond our control.

The stock market has experienced significant price and volume fluctuations, and the market prices of stock in technology companies have been highly volatile. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against the Company. Litigation initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention and resources, which could harm our business and financial condition.

We do not anticipate dividends to be paid on our common stock, and stockholders may lose the entire amount of their investment.

A dividend has never been declared or paid in cash on our common stock, and we do not anticipate such a declaration or payment for the foreseeable future. We expect to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their shares. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure that stockholders will not lose the entire amount of their investment.

Securities analysts may not initiate coverage or continue to cover our common stock, and this may have a negative impact on our market price.

The trading market for our common stock will depend, in part, on the research and reports that securities analysts publish about us and our business. We do not have any control over these analysts. There is no guarantee that securities analysts will cover our common stock. If securities analysts do not cover our common stock, the lack of research coverage may adversely affect its market price. If we are covered by securities analysts, and our stock is downgraded, our stock price would likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, we could lose visibility in the financial markets, which could cause our stock price or trading volume to decline.

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common stock and our preferred stock.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 410,000,000 shares of capital stock consisting of 400,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share, of which we have designated 8,003,000 of such shares of Series A preferred stock. As of April 7, 2009, there were: (i) 29,229,284 shares of common stock outstanding; (ii) 7,065,293 shares of Series A preferred stock outstanding; (iii) 102,799,132 shares reserved for issuance upon the exercise of options granted or available for grant under our 2004 stock plan, our 2006 equity incentive plan, our 2007 non-qualified stock option plan and our 2008 stock incentive plan; and (iv) 67,351,020 shares reserved for issuance upon the exercise of outstanding warrants.

We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are currently quoted on the OTC Bulletin Board.

Even though we are not a California corporation, our common stock could still be subject to a number of key provisions of the California General Corporation Law.

Under Section 2115 of the California General Corporation Law (the “CGCL”), corporations not organized under California law may still be subject to a number of key provisions of the CGCL. This determination is based on whether the corporation has significant business contacts with California and if more than 50% of its voting securities are held of record by persons having addresses in California. In the immediate future, we will continue the business and operations of GoFish Technologies Inc. and a majority of our business operations, revenue and payroll will be conducted in, derived from, and paid to residents of California. Therefore, depending on our ownership, we could be subject to certain provisions of the CGCL. Among the more important provisions are those relating to the election and removal of directors, cumulative voting, standards of liability and indemnification of directors, distributions, dividends and repurchases of shares, shareholder meetings, approval of certain corporate transactions, dissenters’ and appraisal rights, and inspection of corporate records.

Panorama Capital, L.P., Rembrandt Venture Partners Fund Two, L.P., Rembrandt Venture Partners Fund Two-A, L.P. and Rustic Canyon Ventures III, L.P., whose interests may not be aligned with yours, collectively control approximately 65.97% of our company, which could result in actions of which you or other stockholders do not approve.

In two closings that occurred on December 3, 2008 and December 12, 2008, we completed a $22.5 million preferred stock financing pursuant to the terms of a securities purchase agreement dated December 3, 2008 that we entered into with Panorama Capital, L.P. (“Panorama”), Rembrandt Venture Partners Fund Two, L.P. (“Rembrandt Fund Two”), Rembrandt Venture Partners Fund Two-A, L.P. (“Rembrandt Fund Two-A” and, together with Rembrandt Fund Two, “Rembrandt”) and Rustic Canyon Ventures III, L.P. (“Rustic” and, together with Panorama and Rembrandt, the “Lead Investors”). The Lead Investors currently own, collectively, approximately 65.97% of our outstanding shares of common stock, assuming the conversion of Series A preferred stock. Prior to the December 2008 financing, the Lead Investors did not own any shares of our common stock.

In addition, pursuant to the investors’ rights agreement we entered into with the Lead Investors in connection with the December 2008 financing, we granted the following rights: (i) Panorama has the right to designate one board member for so long as Panorama shall own not less than 16,666,667 shares of common stock issued or issuable upon conversion of Series A preferred stock, (ii) Rustic has the right to designate one board member for so long as Rustic shall own not less than 12,500,000 shares of common stock issued or issuable upon conversion of Series A preferred stock, (iii) Rembrandt has the right to designate one board member for so long as Rembrandt shall own not less than 8,333,333 shares of common stock issued or issuable upon conversion of Series A preferred stock and (iv) Internet Television Distribution, Inc. and its affiliates have the right to appoint one board member for so long as Internet Television Distribution, Inc. shall own not less than 3,088,240 shares of common stock issued or issuable upon conversion of Series A preferred stock. The investors’ rights agreement also provides that each investor party to the investors’ rights agreement shall take all actions necessary within its control so that for as long as Panorama owns at least 16,666,667 shares of common stock issued or issuable upon conversion of Series A preferred stock, (i) the compensation committee of the board of directors shall consist of three members, at least two of which shall be directors appointed by the Lead Investors as stated above, and (ii) each committee of the board of directors shall include, at the option of Panorama, the member of the board of directors designated by Panorama.

As a result of the foregoing and provided the Lead Investors do vote their shares together, they will be able to determine a significant part of the composition of our board of directors, will hold significant voting power with respect to matters requiring stockholder approval and will be able to exercise significant influence over our operations. The interests of the Lead Investors may be different than the interests of other stockholders on these and other matters. This concentration of ownership also could have the effect of delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which could reduce the price of our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. This prospectus includes statements regarding our plans, goals, strategies, intentions, beliefs or current expectations. These statements are expressed in good faith and based upon a reasonable basis when made, but there can be no assurance that these expectations will be achieved or accomplished. These forward looking statements can be identified by the use of terms and phrases such as “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions “may,” “could,” “should,” etc. Items contemplating or making assumptions about, actual or potential future sales, market size, collaborations, and trends or operating results also constitute such forward-looking statements.

We believe that the statements we make regarding the following subject matters, among others, are forward-looking by their nature:

Our anticipated revenue growth, future operating losses and estimated need for additional capital in the future;

Future expansions in research and development, as well as the scope of our operations;

Anticipated continuation of market trends, such as “deportalization” and buying power in our target demographic;

Corporate governance developments, including the anticipated appointment of special Board committees; and

Continuing not to declare or pay cash dividends.

Since our common stock is considered a “penny stock” we are ineligible to rely on the safe harbor for forward-looking statements provided in Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Although forward-looking statements in this prospectus reflect the good faith judgment of our management, forward-looking statements are inherently subject to known and unknown risks, business, economic and other risks and uncertainties that may cause actual results to be materially different from those discussed in these forward-looking statements. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus. We assume no obligation to update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this prospectus, other than as may be required by applicable law or regulation. Readers are urged to carefully review and consider the various disclosures made by us in our reports filed with the SEC which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and cash flows. If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those expected or projected.

Applicable risks include those risks identified under the heading “Risk Factors” in the prospectus, including the following risks:

our historical operating losses and uncertainties relating to our ability to generate positive cash flow and operating profits in the future;

difficulty in evaluating our future prospects based on our limited operating history and relatively new business model;

our ability to attract new advertisers to our website and retain our present advertisers;

the highly competitive nature of our business;

our ability to keep pace with rapid technological change;

the strength of our existing brands and our ability to maintain and enhance those brands;

the success of the Internet video market in general and our product and service offerings; and

our ability to effectively manage our expected growth.

SELLING STOCKHOLDERS

This prospectus covers the resale from time to time by the selling stockholders identified in the table below of:

Up to 70,652,930 shares of common stock issuable upon conversion of the Series A preferred stock sold in the Private Placement; and

Up to 28,261,172 shares of common stock issuable upon exercise of the warrants sold in the Private Placement; and

The selling stockholders identified in the table below, and their pledgees, donees, transferees and other successors-in-interest that receive such shares from a selling stockholder as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus, may from time to time offer and sell under this prospectus any or all of the shares of common stock described under the column “Shares of Common Stock Being Offered in this Offering” in the table below. For additional information on the methods of sale, you should refer to the section of this prospectus entitled “Plan of Distribution,” beginning on page 27.

The table below has been prepared based upon the information furnished to us by the selling stockholders. Information concerning the selling stockholders may change from time to time and, if necessary, we will amend or supplement this prospectus accordingly. We cannot provide an estimate as to the number of shares of common stock that will be held by the selling stockholders upon termination of the offering covered by this prospectus because the selling stockholders may offer some or all of their shares of common stock under this prospectus.

The following table sets forth the name of each selling stockholder, the nature of any position, office, or other material relationship, if any, which the selling stockholder has had, within the past three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stock beneficially owned by such selling stockholder before this offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and such information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership is deemed to include any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock which the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement.

We have assumed all shares of common stock reflected on the table will be sold from time to time in the offering covered by this prospectus. Because the selling stockholders may offer all or any portion of the shares of common stock listed in the table below, no estimate can be given as to the amount of those shares of common stock covered by this prospectus that will be held by the selling stockholders upon the termination of the offering.

Unless otherwise set forth below, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the selling stockholder’s name, subject to community property laws, where applicable.

In computing the number of shares of common stock beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options, warrants or other convertible securities held by that person that are currently convertible or exercisable or become convertible or exercisable within 60 days of the date of this prospectus are deemed outstanding even if they have not actually been converted or exercised.

Selling Stockholder	Shares of Common Stock Owned Before this Offering			Shares of Common Stock Being Offered in this Offering			Shares of Common Owned Upon Completion of this Offering (a)		Percentage of Common Stock Outstanding Upon Completion of this Offering (b)
Alnoor Shivji		461,713	(1)		205,870	(2)		255,843		*
Boldcap Ventures LLC		1,616,061	(3)		720,580	(4)		895,481		*
Bridge Financial LLC		350,000	(5)		175,000	(6)		175,000		*
Harborview Master Fund L.P.		13,283,432	(7)		4,117,638	(8)		9,165,794		2.3	%
Internet Television Distribution LLC		18,524,324	(9)		6,485,290	(10)		12,039,034		3.6	%
James Moloshok		2,539,541	(11)		1,132,348	(12)		1,407,193		*
Jeremy Aksdal-Jansen		1,846,930	(13)		823,522	(14)		1,023,408		*
Julie Kantrowitz		230,843	(15)		102,928	(16)		127,915		*
Mahmood Panjwani		923,452	(17)		411,754	(18)		511,698		*
Panorama Capital, L.P.		70,000,000	(19)		35,000,000	(20)		35,000,000		15.4	%
Rembrandt Venture Partners Fund Two, L.P.		34,761,020	(21)		17,380,510	(22)		17,380,510		7.7	%
Rembrandt Venture Partners Fund Two-A, L.P.		238,980	(23)		119,490	(24)		119,490		*
Rustic Canyon Ventures III, L.P.		52,500,000	(25)		26,250,000	(26)		26,250,000		11.6	%
Rockmore Investment Master Fund Limited		1,821,512	(27)		910,756	(28)		910,756		*
The Hanna Family Trust		923,452	(29)		411,754	(30)		511,698		*
Technology Credit Partners, LLC		9,415,356	(31)		4,666,662	(32)		4,748,694		2.1	%

* Less than 1%.

(a) Assumes all of the shares of common stock covered by this prospectus held by the selling stockholders are sold in this offering.

(b) Applicable percentage ownership is based on 29,229,284 shares of common stock outstanding as of April 7, 2009, plus the number of shares of common stock issuable upon conversion of the outstanding shares of Series A preferred stock and upon exercise of the warrants.

(1) Includes 49,973 shares of common stock, 294,100 shares of common stock issuable upon conversion of Series A preferred stock and 117,640 shares of common stock issuable upon the exercise of warrants.

(2) Includes 147,050 shares of common stock issuable upon conversion of Series A preferred stock and 58,820 shares of common stock issuable upon the exercise of warrants.

(3) Includes 174,901 shares of common stock, 1,029,400 shares of common stock issuable upon conversion of Series A preferred stock and 411,760 shares of common stock issuable upon the exercise of warrants.

(4) Includes 514,700 shares of common stock issuable upon conversion of Series A preferred stock and 205,880 shares of common stock issuable upon the exercise of warrants.

(5) Includes 250,000 shares of common stock issuable upon conversion of Series A preferred stock and 100,000 shares of common stock issuable upon the exercise of warrants.

(6) Includes 125,000 shares of common stock issuable upon conversion of Series A preferred stock and 50,000 shares of common stock issuable upon the exercise of warrants.

(7) Includes 5,048,156 shares of common stock, 5,882,340 shares of common stock issuable upon conversion of Series A preferred stock and 2,352,936 shares of common stock issuable upon the exercise of warrants.

(8) Includes 2,941,170 shares of common stock issuable upon conversion of Series A preferred stock and 1,176,468 shares of common stock issuable upon the exercise of warrants.

(9) Includes 5,553,744 shares of common stock, 9,264,700 shares of common stock issuable upon conversion of Series A preferred stock and 3,705,880 shares of common stock issuable upon the exercise of warrants.

(10) Includes 4,632,350 shares of common stock issuable upon conversion of Series A preferred stock and 1,852,940 shares of common stock issuable upon the exercise of warrants. Internet Television Distribution LLC is an affiliate of Tabreez Verjee (our President and a member of our board of directors) and Riaz Valani (a member of our board of directors). Mr. Verjee and Mr. Valani share voting and investment power over the shares owned by Internet Television Distribution LLC.

(11) Includes 274,845 shares of common stock, 1,617,640 shares of common stock issuable upon conversion of Series A preferred stock and 647,056 shares of common stock issuable upon the exercise of warrants.

(12) Includes 808,820 shares of common stock issuable upon conversion of Series A preferred stock and 323,528 shares of common stock issuable upon the exercise of warrants.

(13) Includes 199,886 shares of common stock, 1,176,460 shares of common stock issuable upon conversion of Series A preferred stock and 470,584 shares of common stock issuable upon the exercise of warrants.

(14) Includes 588,230 shares of common stock issuable upon conversion of Series A preferred stock and 235,292 shares of common stock issuable upon the exercise of warrants.

(15) Includes 24,987 shares of common stock, 147,040 shares of common stock issuable upon conversion of Series A preferred stock and 58,816 shares of common stock issuable upon the exercise of warrants.

(16) Includes 73,520 shares of common stock issuable upon conversion of Series A preferred stock and 29,408 shares of common stock issuable upon the exercise of warrants.

(17) Includes 99,944 shares of common stock, 588,220 shares of common stock issuable upon conversion of Series A preferred stock and 235,288 shares of common stock issuable upon the exercise of warrants.

(18) Includes 294,110 shares of common stock issuable upon conversion of Series A preferred stock and 117,644 shares of common stock issuable upon the exercise of warrants.

(19) Includes 50,000,000 shares of common stock issuable upon conversion of Series A preferred stock and 20,000,000 shares of common stock issuable upon the exercise of warrants. Mike Jung serves as a Member of Panorama Capital Management, LLC, the general partners of Panorama Capital, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(20) Includes 25,000,000 shares of common stock issuable upon conversion of Series A preferred stock and 10,000,000 shares of common stock issuable upon the exercise of warrants. Mike Jung serves as a Member of Panorama Capital Management, LLC, the general partners of Panorama Capital, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(21) Includes 24,829,300 shares of common stock issuable upon conversion of Series A preferred stock and 9,931,720 shares of common stock issuable upon the exercise of warrants. Richard Ling serves as a Member of Rembrandt Venture Partners Fund Two, LLC, the general partner of Rembrandt Venture Fund Two, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(22) Includes 12,414,650 shares of common stock issuable upon conversion of Series A preferred stock and 4,965,860 shares of common stock issuable upon the exercise of warrants. Richard Ling serves as a Member of Rembrandt Venture Partners Fund Two, LLC, the general partner of Rembrandt Venture Fund Two, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(23) Includes 170,700 shares of common stock issuable upon conversion of Series A preferred stock and 68,280 shares of common stock issuable upon the exercise of warrants. Richard Ling serves as a Member of Rembrandt Venture Partners Fund Two, LLC, the general partner of Rembrandt Venture Fund Two, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(24) Includes 85,350 shares of common stock issuable upon conversion of Series A preferred stock and 34,140 shares of common stock issuable upon the exercise of warrants. Richard Ling serves as a Member of Rembrandt Venture Partners Fund Two, LLC, the general partner of Rembrandt Venture Fund Two, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(25) Includes 37,500,000 shares of common stock issuable upon conversion of Series A preferred stock and 15,000,000 shares of common stock issuable upon the exercise of warrants. Mark Menell serves as a Member of Rustic Canyon GP III, LLC, the general partner of Rustic Canyon Ventures III, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(26) Includes 18,750,000 shares of common stock issuable upon conversion of Series A preferred stock and 7,500,000 shares of common stock issuable upon the exercise of warrants. Mark Menell serves as a Member of Rustic Canyon GP III, LLC, the general partner of Rustic Canyon Ventures III, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(27) Includes 1,301,080 shares of common stock issuable upon conversion of Series A preferred stock and 520,432 shares of common stock issuable upon the exercise of warrants.

(28) Includes 650,540 shares of common stock issuable upon conversion of Series A preferred stock and 260,216 shares of common stock issuable upon the exercise of warrants. Rockmore Capital, LLC (“Rockmore Capital”) and Rockmore Partners, LLC (“Rockmore Partners”), each a limited liability company formed under the laws of the State of Delaware, serve as the investment manager and general partner, respectively, to Rockmore Investments (US) LP, a Delaware limited partnership, which invests all of its assets through Rockmore Investment Master Fund Ltd., an exempted company formed under the laws of Bermuda (“Rockmore Master Fund”). By reason of such relationships, Rockmore Capital and Rockmore Partners may be deemed to share dispositive power over the shares of our common stock owned by Rockmore Master Fund. Rockmore Capital and Rockmore Partners disclaim beneficial ownership of such shares of our common stock. Rockmore Partners has delegated authority to Rockmore Capital regarding the portfolio management decisions with respect to the shares of common stock owned by Rockmore Master Fund and, as of the date of this prospectus, Mr. Bruce T. Bernstein and Mr. Brian Daly, as officers of Rockmore Capital, are responsible for the portfolio management decisions of the shares of common stock owned by Rockmore Master Fund. By reason of such authority, Messrs. Bernstein and Daly may be deemed to share dispositive power over the shares of our common stock owned by Rockmore Master Fund. Messrs. Bernstein and Daly disclaim beneficial ownership of such shares of our common stock and neither of such persons has any legal right to maintain such authority. No other person has sole or shared voting or dispositive power with respect to the shares of our common stock as those terms are used for purposes under Regulation 13D-G of the Exchange Act. No person or “group” (as that term is used in Section 13(d) of the Exchange Act, or the SEC’s Regulation 13D-G) controls Rockmore Master Fund.

(29) Includes 99,944 shares of common stock, 588,220 shares of common stock issuable upon conversion of Series A preferred stock and 235,288 shares of common stock issuable upon the exercise of warrants.

(30) Includes 294,110 shares of common stock issuable upon conversion of Series A preferred stock and 117,644 shares of common stock issuable upon the exercise of warrants.

(31) Includes 82,032 shares of common stock, 6,666,660 shares of common stock issuable upon conversion of Series A preferred stock and 2,666,664 shares of common stock issuable upon the exercise of warrants.

(32) Includes 3,333,330 shares of common stock issuable upon conversion of Series A preferred stock and 1,333,332 shares of common stock issuable upon the exercise of warrants. Technology Credit Partners, LLC is an affiliate of Tabreez Verjee (our President and a member of our board of directors) and Riaz Valani (a member of our board of directors). Mr. Verjee and Mr. Valani share voting and investment power over the shares owned by Technology Credit Partners, LLC.

DETERMINATION OF OFFERING PRICE

The selling stockholders will determine at what price they may sell the shares of common stock offered by this prospectus, and such sales may be made at prevailing market prices, or at privately negotiated prices.

PLAN OF DISTRIBUTION

The selling stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

ordinary brokerage transactions and transactions in which the broker-dealer solicits investors;

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

to cover short sales made after the date that this registration statement is declared effective by the SEC;

broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

through the distribution of common stock by any selling stockholder to its partners, members or stockholders;

any other method permitted pursuant to applicable law; and

a combination of any such methods of sale.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon a selling stockholder’s notification to us that any material arrangement has been entered into with a broker-dealer for the sale of such stockholder’s common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such shares of common stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon our being notified in writing by a selling stockholder that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the donees, assignees, transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed any necessary supplements to this prospectus under Rule 424(b), or other applicable provisions of the Securities Act, supplementing or amending the list of selling stockholders to include such donee, assignee, transferee, pledgee, or other successor-in-interest as a selling stockholder under this prospectus.

In the event that the selling stockholders are deemed to be “underwriters,” any broker-dealers or agents that are involved in selling the shares will be deemed to be “underwriters” within the meaning of the Securities Act, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of the shares of common stock will be paid by the selling stockholder and/or the purchasers. Each selling stockholder has represented and warranted to us that it acquired the securities subject to this registration statement in the ordinary course of such selling stockholder’s business and, at the time of its purchase of such securities such selling stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

We have advised each selling stockholder that it may not use shares registered on this registration statement to cover short sales of common stock made prior to the date on which this registration statement shall have been declared effective by the SEC. If a selling stockholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling stockholders will be responsible to comply with the applicable provisions of the Securities Act and the Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling stockholders in connection with resales of their respective shares under this registration statement.

We have agreed with the selling stockholders to keep this registration statement effective until all of the shares covered by this registration statement have been sold, or may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 promulgated under the Securities Act, without the requirement for the Company to be in compliance with the current public information requirement under Rule 144.

We are required to pay all fees and expenses incident to the registration of the shares, but we will not receive any proceeds from the sale of the common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

USE OF PROCEEDS

We will not receive any proceeds from the sale of shares of common stock by the selling stockholders under this prospectus. We will receive the proceeds from any cash exercises of the warrants, which we intend to use for general corporate purposes, including, but not limited to, working capital. If all the warrants held by the selling stockholders are exercised in cash, we will receive $5.7 million in proceeds.

The warrant holders may exercise their warrants at any time until their expiration, as further described under “Description of Securities” included elsewhere in this prospectus. Because the warrant holders may exercise the warrants in their own discretion, we cannot plan on specific uses of proceeds beyond application of proceeds to general corporate purposes. We have agreed to bear the expenses in connection with the registration of the common stock being offered hereby by the selling stockholders.

MARKET PRICE OF AND DIVIDENDS ON COMMON STOCK AND RELATED MATTERS

Our common stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers, Inc. under the symbol “BWAV.OB.” From July 3, 2006 until mid-September 2006 our stock was quoted under the symbol “UBIO.” From mid-September 2006 to February 26, 2009 our stock was quoted under the symbol “GOFH.OB.” From February 27, 2009 to the present, our stock has been quoted under the symbol “BWAV.OB.” The following table sets forth, for the fiscal quarters indicated, the high and low closing bid prices per share of our common stock as reported by the National Association of Securities Dealers composite feed or other qualified interdealer quotation medium. Such quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. Where applicable, the prices set forth below give retroactive effect to our 8.333334-for-1 forward stock split which was effected on October 9, 2006.

Fiscal Year 2007	High Bid		Low Bid

First Quarter	$	5.95	$	3.65
Second Quarter	$	4.30	$	1.04
Third Quarter	$	1.11	$	0.26
Fourth Quarter	$	0.55	$	0.16

Fiscal Year 2008	High Bid		Low Bid

First Quarter	$	0.57	$	0.23
Second Quarter	$	0.42	$	0.20
Third Quarter	$	0.37	$	0.18
Fourth Quarter	$	0.32	$	0.08

Fiscal Year 2009	High Bid		Low Bid
First Quarter	$	0.24	$	0.10
Second Quarter (through April 16, 2009)	$	0.18	$	0.12

As of April 7, 2009, there were 29,229,284 shares of our common stock issued and outstanding. As of April 7, 2009, there were 90 holders of record of shares of our common stock.

Dividend Policy

We have never declared or paid dividends. We intend to retain earnings, if any, to support the development of the business and therefore do not anticipate paying cash dividends for the foreseeable future. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including current financial condition, operating results and current and anticipated cash needs.

Securities Authorized for Issuance Under Equity Compensation Plans

As of December 31, 2008, we had the following securities authorized for issuance under (i) the 2004 stock plan, which was the stock option plan that was adopted by GoFish Technologies, Inc. prior to the merger in 2006 merger, (ii) the 2006 equity incentive plan, (iii) the 2007 non-qualified stock option plan (as hereinafter defined) and (iv) the 2008 stock incentive plan (as hereinafter defined):

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		3,207,799	$	0.23		16,498,084
Equity compensation plans not approved by security holders		76,839,697	$	0.41		(6,833,750	)
Total		80,047,496	$	0.41		9,664,334

2004 Stock Plan

In 2004, the board of directors of GoFish Technologies, Inc. adopted the 2004 stock plan. The 2004 stock plan authorized the board of directors to grant incentive stock options and non-statutory stock options to employees, directors, and consultants for up to 2,000,000 shares of common stock. Under the plan, incentive stock options and nonqualified stock options were to be granted at a price that is no less than 100% of the fair value of the stock at the date of grant. Options will be vested over a period according to the option agreement, and are exercisable for a maximum period of ten years after date of grant.

In May 2006, GoFish Technologies increased the shares reserved for issuance under the 2004 stock plan from 2,000,000 to 4,588,281. Upon completion of the merger in 2006, we decreased the shares reserved under the 2004 stock plan from 4,588,281 to 804,188 and suspended the 2004 stock plan.

2006 Equity Incentive Plan

Immediately prior to the merger in 2006, our board of directors and a majority of our stockholders approved and adopted the 2006 equity incentive plan. Initially a total of 2,000,000 shares of our common stock was reserved for issuance under the 2006 equity incentive plan. On October 30, 2006, in accordance with the terms of the 2006 equity incentive plan, our board of directors increased the number of shares reserved under the 2006 equity incentive plan to 4,000,000 shares, subject to approval by our stockholders within one year of such date. In March 2008, our board of directors suspended all future grants under the 2006 equity incentive plan.

2007 Non-Qualified Stock Option Plan

On October 24, 2007, our board of directors approved and adopted the 2007 non-qualified stock option plan. Initially, a total of 3,600,000 shares of our common stock was reserved for issuance under the 2007 non-qualified stock option plan. In accordance with the terms of the 2007 non-qualified stock option plan, on October 31, 2007, our board of directors increased the number of shares reserved under the 2007 non-qualified stock option plan to 4,000,000; on December 18, 2007, our board of directors increased the number of shares reserved under the 2007 non-qualified stock option plan to 5,500,000 shares; on February 5, 2008, our board of directors further increased the number of shares reserved under the 2007 non-qualified stock option plan to 10,500,000; on June 4, 2008, our board of directors further increased the number of shares reserved under the 2007 non-qualified stock option plan to 16,500,000; on December 2, 2008, our board of directors increased the number of shares reserved under the 2007 non-qualified stock option plan to 69,141,668; and on January 16, 2009, our board of directors increased the number of shares reserved under the 2007 non-qualified stock option plan to 82,963,169 shares. If an incentive award granted under the 2007 non-qualified stock option plan expires, terminates, is unexercised or is forfeited, or if any shares are surrendered to us in connection with an incentive award, the shares subject to such award and the surrendered shares will become available for further awards under the 2007 non-qualified stock option plan.

Administration. Our board of directors (or any committee composed of members of our board of directors appointed by our board of directors to administer the 2007 non-qualified stock option plan), administers the 2007 non-qualified stock option plan. The administrator has the authority to, among other things, (i) select the employees, consultants and directors to whom options may be granted, (ii) grant options, (iii) determine the number of shares underlying option grants, (iv) approve forms of option agreements for use under the 2007 non-qualified stock option plan, (v) determine the terms and conditions of the options and (vi) subject to certain exceptions, amend the terms of any outstanding option granted under the 2007 non-qualified stock option plan.

The 2007 non-qualified stock option plan also contains provisions governing: (i) the treatment of options under the 2007 non-qualified stock option plan upon the occurrence of certain corporate transactions (including merger, consolidation, sale of all or substantially all the assets of the Company, or complete liquidation or dissolution of the Company) and changes in control of the Company, (ii) transferability of options and (iii) tax withholding upon the exercise or vesting of an option.

Grants. The 2007 non-qualified stock option plan authorizes grants of nonqualified stock options to eligible employees, directors and consultants. The term of each option under the 2007 non-qualified stock option plan may be no more than ten years from the date of grant. Options granted under the 2007 non-qualified stock option plan entitle the grantee, upon exercise, to purchase a specified number of shares from us at a specified exercise price per share. The exercise price for an Option is determined by the administrator, but it cannot be less than the fair market value of our common stock on the date of grant unless agreed to otherwise at the time of the grant.

Duration, Amendment, and Termination. The 2007 non-qualified stock option plan will continue in effect for a term of ten years, unless sooner terminated. Our board of directors may at any time amend, suspend or terminate the 2007 non-qualified stock option plan.

2008 Stock Incentive Plan

On March 31, 2008, in connection with the suspension of our 2006 equity incentive plan, our board of directors adopted the 2008 stock incentive plan. As originally adopted, the 2008 stock incentive plan provided for the issuance of up to 2,400,000 shares of common stock pursuant to awards granted thereunder, up to 2,200,000 of which may be issued pursuant to incentive stock options granted thereunder.

On June 4, 2008, our board of directors adopted an amendment to the 2008 stock incentive plan to (i) decrease the maximum aggregate number of shares of common stock that may be issued pursuant to awards granted under the plan from 2,400,000 shares to 1,500,000 shares and (ii) decrease the maximum aggregate number of shares that may be issued pursuant to incentive stock options granted under the plan from 2,200,000 shares to 1,500,000 shares.

On December 2, 2008, our board of directors adopted an amendment to the 2008 stock incentive plan to increase the maximum aggregate number of shares of common stock that may be issued pursuant to awards granted under the plan from 1,500,000 shares to 19,224,774 shares. On December 11, 2008, holders of a majority of the outstanding shares of our capital stock adopted the 2008 stock incentive plan, as amended through such date.

Purpose . The purpose of the 2008 stock incentive plan is to provide our employees (including officers), consultants and directors, whose present and potential contributions are important to our success, an incentive, through ownership of common stock, to continue in service to us, and to help us compete effectively with other enterprises for the services of qualified individuals.

Shares Reserved for Issuance under the 2008 Stock Incentive Plan . A total of 19,224,774 shares of common stock are reserved for issuance under the 2008 stock incentive plan. The number of shares of common stock available under the 2008 stock incentive plan is subject to adjustment in the event of a stock split, stock or other extraordinary dividend, or other similar change in common stock or the Company’s capital structure.

Administration . The 2008 stock incentive plan is administered, with respect to grants to employees, directors, officers, and consultants, by the plan administrator (the “Administrator”), defined as our board of directors or one or more committees designated by the board.

Terms and Conditions of Awards . The 2008 stock incentive plan provides for the grant of stock options, restricted stock, restricted stock units, and stock appreciation rights (collectively referred to as “awards”). Stock options granted under the 2008 stock incentive plan may be either incentive stock options under the provisions of Section 422 of the Internal Revenue Code of 1986, as amended, or nonqualified stock options. Incentive stock options may be granted only to employees. Awards other than incentive stock options may be granted to our employees, directors and consultants or to employees, directors and consultants of our related entities. Each award granted under the 2008 stock incentive plan shall be designated in an award agreement.

Subject to applicable laws, the Administrator has the authority, in its discretion, to select employees, directors and others to whom awards may be granted from time to time, to determine whether and to what extent awards are granted, to determine the number of shares of common stock or the amount of other consideration to be covered by each award (subject to the limitations set forth above under “Shares Reserved for Issuance under the 2008 Stock Incentive Plan”), to approve award agreements for use under the 2008 stock incentive plan, to determine the terms and conditions of any award (including the vesting schedule applicable to the award), to amend the terms of any outstanding award granted under the 2008 stock incentive plan, to construe and interpret the terms of the 2008 stock incentive plan and awards granted, to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable non-U.S. jurisdictions and to take such other action not inconsistent with the terms of the 2008 stock incentive plan, as the Administrator deems appropriate.

The 2008 stock incentive plan provides that stockholder approval is required in order to (i) reduce the exercise price of any option or the base appreciation amount of any stock appreciation right awarded under the 2008 stock incentive plan or (ii) cancel any option or stock appreciation right awarded under the 2008 stock incentive plan in exchange for another award at a time when the exercise price exceeds the fair market value of the underlying shares unless the cancellation and exchange occurs in connection with a Corporate Transaction (defined below). However, canceling an option or stock appreciation right in exchange for another option, stock appreciation right, restricted stock or other award, with an exercise price, purchase price or base appreciation amount (as applicable) that is equal to or greater than the exercise price or base appreciation amount (as applicable) of the original option or stock appreciation right will not require stockholder approval.

Change in Capitalization . Subject to any required action by our stockholders, the number of shares of common stock covered by outstanding awards, the number of shares of common stock that have been authorized for issuance under the 2008 stock incentive plan, the exercise or purchase price of each outstanding award, the maximum number of shares of common stock that may be granted subject to awards to any participant in a calendar year, and the like, shall be proportionally adjusted by the Administrator in the event of (i) any increase or decrease in the number of issued shares of common stock resulting from a stock split, stock dividend, combination or reclassification or similar event affecting common stock, (ii) any other increase or decrease in the number of issued shares of common stock effected without receipt of consideration by the Company or (iii) any other transaction with respect to common stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete), distribution of cash or other assets to stockholders other than a normal cash dividend, or any similar transaction; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”

Corporate Transaction or Change in Control . Effective upon the consummation of a Corporate Transaction (as defined in the 2008 stock incentive plan), all outstanding awards shall terminate. However, all such awards shall not terminate to the extent the contractual obligations represented by the awards are assumed by the successor entity. Except as provided in an individual award agreement, the Administrator shall have the authority to provide for the full or partial automatic vesting and exercisability of one or more outstanding unvested awards under the 2008 stock incentive plan and the release from restrictions on transfer and repurchase or forfeiture rights of such awards in connection with a Corporate Transaction or Change in Control (as defined in the 2008 stock incentive plan), on such terms and conditions as the Administrator may specify.

Under the 2008 stock incentive plan, a Corporate Transaction is generally defined as:

acquisition of 50% or more of our stock by any individual or entity including by tender offer or a reverse merger;

a sale, transfer or other disposition of all or substantially all of the assets of the Company;

a merger or consolidation in which the Company is not the surviving entity; or

a complete liquidation or dissolution.

Under the 2008 stock incentive plan, a Change in Control is generally defined as:

	·	acquisition of 50% or more of the Company’s stock by any individual or entity which a majority of our board members (who have served on our board for at least twelve months) do not recommend our stockholders accept, or

a change in the composition of our board of directors over a period of twelve months or less such that a majority of our board members ceases, by reason of one or more contested elections for board membership, to be comprised of individuals who have either been board members continuously for a period of at least twelve months or have been board members for less than twelve months and were elected or nominated for election by at least a majority of board members who have served on our board of directors for at least twelve months.

Amendment, Suspension or Termination of the 2008 Stock Incentive Plan . Our board of directors may at any time amend, suspend or terminate the 2008 stock incentive plan. The 2008 stock incentive plan will be for a term of ten years unless sooner terminated by the board. To the extent necessary to comply with applicable provisions of federal securities laws, state corporate and securities laws, the Internal Revenue Code of 1986, as amended, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to awards granted to residents therein, we shall obtain stockholder approval of any such amendment to the 2008 stock incentive plan in such a manner and to such a degree as is required.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations provides information that we believe is relevant to an assessment and understanding of our financial condition and results of operations. This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the audited consolidated financial statements and related notes thereto included elsewhere in this prospectus.

This prospectus, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains, in addition to historical information, forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (e.g., “will,” “may,” “could,” “should,” etc.) or similar expressions identify certain of these forward-looking statements.

These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this prospectus. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this prospectus, and in particular, the risks discussed under the heading “Risk Factors” included elsewhere in this prospectus and those discussed in other documents we file with the SEC. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus.

Overview

Betawave Corporation is a young and rapidly growing company that operates an attention-based digital media company. We have assembled some of the leading immersive casual gaming, virtual world, social play and entertainment websites into a network of sites (the “Betawave Network”). We generate revenue by selling innovative, accountable and attention-grabbing advertising campaigns on those sites to brand advertisers.

During most of fiscal year 2008, the Company sold advertising on a network of websites focused on children ages six to 17 and their co-viewing parents.

In December 2008, the Company completed its Series A preferred stock financing in which it raised approximately $22.5 million in gross proceeds and cancelled indebtedness representing an aggregate principal amount of approximately $5.4 million in exchange for the issuance of shares of the Company’s Series A preferred stock and warrants to purchase the Company’s common stock.

In January 2009, the Company changed its name from GoFish Corporation to Betawave Corporation and launched a rebranding campaign and changed its focus to selling advertising and providing content for websites in high attention environments.

In March 2009, the Company entered into a loan and security agreement with Silicon Valley Bank that provides for a secured revolving credit arrangement to provide advances in an aggregate principal amount of up to $4 million (based upon a percentage of certain eligible billed and unbilled accounts receivable). See Note 17 to our audited consolidated financial statements included in this prospectus.

Results of Operations

The following discussion of the results of our operations and financial condition should be read in conjunction with our audited consolidated financial statements and related notes thereto included in this prospectus beginning on page F-1.

Summary of 2008 Results

Our total revenues for the year ended December 31, 2008 were approximately $7.7 million, increasing 270% from the prior year amount of approximately $2.1 million. The increase reflects higher sales from advertising that was sold across the Betawave Network. According to comScore Media Metrix, the Betawave Network reached roughly 25 million unique U.S. users per month at the end of 2008 compared to just under 20 million unique U.S. users per month at the end of 2007.

Total costs of revenues and expenses for the year ended December 31, 2008 were approximately $22.5 million, increasing 30% from the prior year amount of approximately $17.3 million. This increase was primarily due to direct payments to publishers for revenue share on advertising revenues, compensation related expenses and loss on debt extinguishment.

Our operating loss for the year ended December 31, 2008 was approximately $14.8 million, decreasing 3% from the prior year amount of approximately $15.2 million in 2007. This decrease in operating loss was primarily the result of the increase in total revenues, which was partly offset by higher total cost of revenues and expenses.

Our net loss for the year ended December 31, 2008 was approximately $17.0 million, increasing 3.6% from the prior year amount of approximately $16.4 million. This increase in net loss was primarily the result of increased interest expense, which was not fully offset by interest income and miscellaneous income, notwithstanding the increase in total revenues.

2009 Outlook

We expect that revenue will increase in fiscal 2009 as a result of our planned continued expansion of the Betawave Network’s reach, scale and scope. We also expect to incur additional expenses for the development and expansion of our publisher network. In addition, we anticipate gains in operating efficiencies as a result of the increase to our sales and marketing organization. Our revenue expectations are based on certain assumptions and subject to certain risk factors and uncertainties that could cause actual results to differ materially from those expectations. Our revenue expectations assume that we will continue in operation for the foreseeable future. As discussed under the heading “Risk Factors,” our auditors have indicated that our inability to generate sufficient revenue raises substantial doubt as to our ability continue as a going concern. In addition, our revenues fluctuate from quarter to quarter and are unpredictable. We expect that our revenues will continue to fluctuate in the future due to a number of factors, some of which are beyond our control. Accordingly, it is difficult for us to accurately forecast our revenues. Factors causing fluctuations in our revenues include: (i) our ability to attract quality publishers to the Betawave Network; (ii) the ability of our publishers to increase the number of visitors to their sites; (iii) the amount and timing of costs relating to the expansion of our operations, including sales and marketing expenditures; (iv) our ability to control our gross margins; and (v) our ability to generate revenue through third-party advertising and our ability to be paid fees for advertising on the Betawave Network.

We expect to continue to experience an operating loss in fiscal year 2009, despite the anticipated increase in revenue as we incur additional expenses for the development and expansion of the Betawave Network and operational infrastructure. However, we anticipate these losses will decrease from current levels as we continue to grow and develop.

Revenue

We derive almost entirely all of our revenues from fees we receive from our advertisers. We believe an opportunity exists to provide advertisers with a platform to engage consumers through effective and targeted advertising initiatives that provide the reach of a portal with the engagement of niche sites. Factors that we believe will influence the success of our advertising programs include:

growth in the number of users populating the websites on the Betawave Network;

growth in the amount of time spent per user on the websites on the Betawave Network;

the number of advertisers and the variety of products available;

advertisers’ return on investment and the efficacy of click-through conversions;

enhanced ad vehicles, products, services and sponsorships; and

our fees and rates.

We believe that Internet advertising currently represents a small segment of the overall advertising market and that the growth in Internet usage and consumers’ behavioral changes will eventually lead to a dramatic shift in ad revenues from traditional media to the Internet. To take advantage of this, the main focus of our advertising programs is to provide usefulness to our advertisers, and relevancy to our users. We are continuing to take steps to increase our revenue by offering a comprehensive solution for advertising across the Betawave Network. We also intend to broaden our reach through syndication opportunities brought about by the launch of Betawave TV. Through this commitment to premium content, scaled distribution, and scope, we hope to broaden our appeal to the advertising community, which we believe will ultimately drive both the quality and quantity of constituents looking to advertise through the Betawave Network.

The following table presents our revenues for the periods presented:

Revenues — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Revenues		$	7,701,599			$	2,081,182				270	%

Our revenues increased $5,620,417 in 2008 from 2007. The increase in 2008 reflects higher sales from advertising that was sold across our network of owned and affiliate publisher websites. Revenues in both periods consisted of advertising fees, primarily from banner and text-based ads. As we begin to add publisher websites into the Betawave Network, we have been able to generate a greater number of user impressions for our advertisers. Additionally, these sales reflect the build out of our sales organization, which grew from 9 to 14 throughout the year. These sales personnel were primarily responsible for the corresponding increase in revenue over the prior year.

Cost of Revenues — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Cost of Revenues		$	6,551,870			$	2,437,047				169	%

Cost of revenues consist primarily of direct payments to publishers on advertising revenues, costs associated with hosting our websites, ad serving costs for impressions delivered in connection with advertising revenues and production costs for Betawave TV.

Cost of revenues increased $4,114,823 in 2008 from 2007. The increase included $4,213,395 of payments to publishers, $275,313 for ad serving costs, $90,513 for licensing expenses, $84,107 for share-based compensation related to SFAS No, 123(R), $75,569 for advergame development costs and $15,714 for development of custom media player. These increases were partly offset by a reduction in video production costs of $540,335 and a reduction in web hosting costs of $99,453.

Sales and Marketing — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Sales and Marketing		$	6,480,550			$	6,174,158				5	%

Sales and marketing expenses consist primarily of advertising and other marketing related expenses, compensation-related expenses, sales commissions, and travel costs.

Sales and marketing expenses increased $306,392 in 2008 from 2007. The increase was attributable to a $1,832,046 increase in personnel and other benefits related costs, including a $238,813 increase in share-based compensation expenses related to SFAS No. 123(R), a $168,134 increase in travel expenses and a $450,320 increase in allocation of facilities, IT and other operating expenses. These increases were partly offset by a $1,410,055 decrease in advertising and other marketing related expenses and a $734,053 decrease in professional services for public relations and related development research expense. The growth in direct sales personnel was responsible for the increases in personnel and other benefit related costs. The reduction in advertising, other marketing expenses, public relations and related development research expenses correlated to the refinement of our strategic focus and a reduced need for advertising campaigns.

Employees in sales and marketing at December 31, 2008 and 2007 were 34 and 20, respectively.

Product Development — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Product Development		$	713,964			$	2,261,481				(68	)%

Product development expenses consist primarily of compensation-related expenses incurred for the development of, and enhancement to, systems that enable us to drive and support revenue generating activities across our network of websites.

Product development expenses decreased $1,547,517 in 2008 from 2007. The decrease was attributable primarily to a decrease in compensation related expenses of $1,356,922 including a $194,552 decrease in share-based compensation expenses related to SFAS No. 123(R), and the reduction in the allocation of approximately $190,595 of facilities, IT and other operating expenses. The decrease in expenses reflects the scaleback of product development projects which resulted in a reduction of employees from 14 at the beginning of 2007 to 5 at the end of 2008.

Employees in product development at December 31, 2008 and 2007 were 5 and 5, respectively.

General and Administrative — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
General and Administrative		$	6,024,801			$	5,186,981				16	%

General and administrative expenses consist primarily of compensation-related expenses (including stock-based compensation expenses) related to our executive management, finance and human resource organizations and legal, accounting, insurance, investor relations and other operating expenses to the extent not otherwise allocated to other functions.

General and administrative expenses increased $837,820 in 2008 from 2007. The increase was attributable to a $1,401,236 increase in compensation-related expenses including a $1,422,503 increase in share-based compensation expenses related to SFAS No. 123(R) and a $190,015 increase in the amortization of deferred financing costs related to the debt issuance costs of the Senior Notes and the Subordinated Notes. These increases were partly offset by a $567,112 decrease in legal, accounting, D&O insurance, investor relations and other professional services, a $108,901 decrease in travel expenses and a $77,418 decrease in unallocated facilities, IT and other operating expenses. The issuance of employee options was primarily responsible for the increase in share-based compensation.

Employees in general and administrative at December 31, 2008 and 2007 were 7 and 5, respectively.

Loss on Debt Extinguishment — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Loss on Debt Extinguishment		$	2,736,832			$	—				N/A

In December 2008, we used proceeds from our $22.5 million preferred stock financing to repurchase the remaining, unconverted portion of our outstanding convertible debt and related detachable warrants. The repurchase occurred with a combination of cash payments and exchanges of convertible debt and warrants for either new Series A preferred stock and warrants or common stock. The transaction resulted in a loss on the extinguishment of debt.

Acquisition Costs — Comparison of the Years Ended December 31, 2008 and 2007

		Year Ended December 31, 2008				Year Ended December 31, 2007				Percent Change
Acquisition Costs		$	—			$	1,270,348				N/A

In fiscal year 2007, we incurred costs during the second quarter of 2007 associated with our previously proposed acquisition of Bolt Media, which was terminated in August 2007. During the period from February 2007 to September 2007, the Company advanced Bolt $1,020,338. The Company only had a secured interest in Bolt’s trade accounts receivables of $600,000. As a result, the Company recorded an allowance for doubtful accounts of $420,338. In addition, the Company incurred $850,010 of direct acquisition costs. The total related acquisition costs of $1,270,348 for the year ended December 31, 2007 was expensed.

Other Income and Expenses — Comparison of the Years Ended December 31, 2008 and 2007

	Year Ended December 31, 2008			Year Ended December 31, 2007			Percent Change
Interest Income	$	23,238		$	147,007			(84	)%
Miscellaneous Income		278,740			536			51,904	%
Interest Expense		(2,465,545	)		(1,276,568	)		93	%

Total Other Income (Expense)		(2,163,567	)		(1,129,025	)		92	%

Other expense increased $1,034,542 in 2008 from 2007. The increase was a result of increased interest expense, which was not fully offset by interest income and miscellaneous income.

Interest income is derived primarily from short-term interest earned on operating cash balances.

Miscellaneous income represents income from the settlement of a dispute with a third party service provider.

The increase in interest expense during fiscal year 2008 as compared to fiscal year 2007 is as a result of the payment of interest during 2008 on both the Senior Notes and the Subordinated Notes. Interest expense during fiscal year 2007 included only the payment of interest for a partial year on the Subordinated Notes.

Liquidity and Capital Resources

To date, we have funded our operations primarily through private sales of securities and borrowings. As of December 31, 2008, we had $11,863,121 in cash and cash equivalents. We may need to raise additional capital in the future, which may not be available on reasonable terms or at all. The raising of additional capital may dilute our current stockholders’ ownership interests.

Net cash used in operating activities was $7,077,358 and $13,550,034 for the years ended December 31, 2008 and 2007, respectively. For the year ended December 31, 2008, the cash used in operating activities was primarily due to a net loss of $8,804,358, which is net of non cash expenses of $8,165,627 and a change in working capital of $1,727,000. The non cash expense items included loss on debt extinguishment of $2,736,832, loss on disposal of fixed assets of $1,959, depreciation and amortization of $260,028, amortization of convertible note fees of $474,618, stock-based compensation of $2,723,377, and non cash interest expense of $1,866,537 and non cash cost of revenues of $102,000. For the year ended December 31, 2007, the primary use of cash was due to a net loss of $13,402,032, which is net of non cash expenses of $2,975,826 and a negative change in working capital of $148,002. The non cash expense items included depreciation and amortization of $224,784, amortization of convertible note fees of $273,714, stock-based compensation of $1,172,506 and non cash interest expense of $884,484 and write off of acquisition advances of $420,338.

Net cash used in investing activities was $41,118 for the year ended December 31, 2008 and net cash provided by investing activities was $692,846 for the year ended December 31, 2007. For the year ended December 31, 2008, net cash used in investing activities consisted of the purchase of property and equipment in the amount of $41,118 and funds of $550,000 held as restricted cash which were equally offset by release of such funds from restricted cash. For the year ended December 31, 2007, net cash provided by investing activities consisted of payment of acquisition advances of $600,000, an additional $1,728,728 of funds released from restricted cash from the sale of our common stock and write off of $17,216 advances to founder and stockholder, and cash used in investing activities consisted of acquisition advances of $1,020,338, the purchase of property and equipment in the amount of $524,781 and funds held as deposits of $107,979.

Net cash provided by financing activities was $17,872,763 and $10,596,480 for the years ended December 31, 2008 and 2007, respectively. The net cash provided by financing activities for the year ended December 31, 2008 was derived from the proceeds from the issuance of Series A Preferred Stock of $21,022,438 (net of issuance cost of $1,477,562), advances of $610,000 from a shareholder, proceeds from issuance of unsecured convertible original issue discount notes in the amount of $3,188,700, repayment to shareholder of $400,000, repayment of convertible notes in the amount of $6,414,187 and purchase of warrants in the amount of $134,188. The net cash provided by financing activities for the year ended December 31, 2007 was derived from the proceeds from the issuance of our senior convertible notes and related warrants in the amount of $9,219,707, proceeds from the issuance of common stock in the amount of $1,761,566, repayment of amounts due to a stockholder of $384,793, and repayments of notes payable which were equally off set against proceeds from the issuance of such notes payable.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are reasonably likely to occur, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of the consolidated financial statements.

Revenue Recognition

We recognize revenue from the display of graphical advertisements on the websites of the publishers in Betawave’s Network as “impressions” are delivered up to the amount contracted for by the advertiser. An “impression” is delivered when an advertisement appears in pages viewed by users. Arrangements for these services generally have terms of less than one year.

We recognize these revenues as such because the services have been provided, and the other criteria set forth under Staff Accounting Bulletin Topic 13: Revenue Recognition have been met, namely, the fees charged by the Company are fixed or determinable, the advertisers understand the specific nature and terms of the agreed-upon transactions and collectability is reasonably assured. In accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-19, Reporting Revenue Gross as Principal Versus Net as an Agent (“EITF 99-19”), Betawave reports revenues on a gross basis principally because the Company is the primary obligor to the advertisers.

Costs of Revenues and Expenses

Cost of revenues and expenses primarily consist of payments to publishers in the Betawave Network, personnel-related costs, including payroll, recruitment and benefits for executive, technical, corporate and administrative employees, in addition to professional fees, insurance and other general corporate expenses. We believe the key element to the execution of our strategy is the hiring of personnel in all areas that are vital to our business. Our investments in personnel include business development, sales and marketing, advertising, service and general corporate marketing and promotions.

Accounting for Stock Based Compensation

Prior to January 1, 2006, we used the intrinsic value method to record stock-based compensation for employees, which requires that deferred stock based compensation be recorded for the difference between an option’s exercise price and the fair value of the underlying common stock on the grant date of the option.

Effective January 1, 2006, we adopted the fair value recognition provisions of FASB Statement No. 123 (R), Share-Based Payment , (“SFAS 123 (R)”) using the modified prospective transition method. Under that transition method, compensation cost recognized for the periods ended December 31, 2008 and 2007 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and (b) compensation cost for all share-based payments granted or modified subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R).

Share-based compensation expense for performance-based options granted to non-employees is determined in accordance with SFAS 123(R) and Emerging Issues Task Force Issue No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services (EITF 96-18”), at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. The fair value of options granted to non-employees is measured as of the earlier of the performance commitment date or the date at which performance is complete (“measurement date”). When it is necessary under generally accepted accounting principles to recognize the cost for the transaction prior to the measurement date, the fair value of unvested options granted to non-employees is remeasured at the balance sheet date.

We currently use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. We estimate the volatility of our common stock at the date of the grant based on a combination of the implied volatility of publicly traded options on our common stock and our historical volatility rate. The dividend yield assumption is based on historical dividend payouts. The risk-free interest rate is based on observed interest rates appropriate for the term of our employee options. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, we amortize the fair value on a straight-line basis. All options are amortized over the requisite service periods of the awards, which are generally the vesting periods. If factors change we may decide to use different assumptions under the Black-Scholes option model and stock-based compensation expense may differ materially in the future from that recorded in the current periods.

The following table presents share-based compensation expense included in the Consolidated Statements of Operations related to employee and non-employee stock options, restricted shares and warrants as follows as of December 31, 2008 and 2007:

	December 31, 2008		December 31, 2007
Cost of revenue	$	84,106	$	—
Sales and marketing		700,340		461,526
Product development		18,501		213,053
General and administrative		1,920,430		497,927
Total share-based compensation	$	2,723,377	$	1,172,506

Share-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the service period, generally the vesting period of the equity grant.

The fair value of each option grant has been estimated on the date of grant using the Black-Scholes valuation model with the following assumptions (weighted average) at December 31, 2008 and 2007:

	December 31, 2008			December 31, 2007
Risk free interest rate		2.16	%		4.08	%
Expected lives	5.91 Years			5.95 Years
Expected volatility		75.84	%		68.33	%
Dividend yields		0	%		0	%

The weighted-average grant date fair value of the options granted during the years ended December 31, 2008 and 2007 were $0.14 and $0.81, respectively.

At December 31, 2008, there was $7,365,758 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans. This cost is expected to be recognized over the weighted average period of 2.79 years.

Basic net loss per share to common stockholders is calculated based on the weighted-average number of shares of common stock outstanding during the period excluding those shares that are subject to repurchase by the Company. Diluted net loss per share attributable to common shareholders would give effect to the dilutive effect of potential common stock consisting of stock options, warrants, convertible debt and preferred stock. Dilutive securities have been excluded from the diluted net loss per share computations as they have an antidilutive effect due to the Company’s net loss for the years ended December 31, 2008 and 2007.

The following outstanding stock options, warrants, convertible debt and preferred stock (on an as-converted into common stock basis) were excluded from the computation of diluted net loss per share attributable to holders of common stock as they had an antidilutive effect as of December 31, 2008 and 2007:

	December 31, 2008		December 31, 2007
Shares issuable upon exercise of employee and non-employee stock options		4,717,067		7,194,770
Shares issuable upon exercise of warrants		5,744,335		7,598,899
Shares issuable upon conversion of notes		—		6,412,500
Shares issuable upon conversion of Series A preferred stock		7,355,648		—
Total		17,817,050		21,206,169

Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repair and maintenance costs that do not improve or extend the lives of the respective assets are expensed as incurred. Depreciation and amortization charges are calculated using the straight-line method over the following estimated useful lives:

		Estimated Useful Life
Computer equipment and software		3 years
Furniture and fixtures		5 years
Leasehold improvements		Shorter of estimated useful Life or lease term

Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. If factors change we may decide to use shorter or longer estimated useful lives and depreciation and amortization expense may differ materially in the future from that recorded in the current periods.

Impairment of Long-Lived Assets

We continually evaluate whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets may warrant revision or that the remaining balance of long-lived assets may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, we typically make various assumptions about the future prospects the asset relates to, consider market factors and use an estimate of the related undiscounted future cash flows over the remaining life of the long-lived assets in measuring whether they are recoverable. If the estimated undiscounted future cash flows exceed the carrying value of the asset, a loss is recorded as the excess of the asset’s carrying value over its fair value. There have been no such impairments of long-lived assets through December 31, 2008.

Assumptions and estimates about future values are complex and often subjective. They can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy and our internal forecasts. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, different assumptions and estimates could materially affect our reported financial results. More conservative assumptions of the anticipated future benefits could result in impairment charges, which would increase net loss and result in lower asset values on our balance sheet. Conversely, less conservative assumptions could result in smaller or no impairment charges, lower net loss and higher asset values.

Income Taxes

We are subject to income taxes, federal and state, in the United States of America. We use the asset and liability approach to account for income taxes. This methodology recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax base of assets and liabilities and operating loss and tax carryforwards. We then record a valuation allowance to reduce deferred tax assets to an amount that more likely than not will be realized. In evaluating our ability to recover our deferred income tax assets we consider all available positive and negative evidence, including our operating results, ongoing tax planning and forecasts of future taxable income. Through December 31, 2008, we have provided a valuation allowance of approximately $15.8 million against our entire net deferred tax asset, primarily consisting of net operating loss carryforwards. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

Advertising and Promotion Costs

Expenses related to advertising and promotions of products are charged to expense as incurred. Advertising and promotional costs totaled $129,414 and $1,731,170 for the years ended December 31, 2008 and 2007, respectively.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued (SFAS) No. 141 (Revised 2007) (SFAS 141R), Business Combinations . This statement will significantly change the accounting for business acquisitions both during the period of the acquisition and in subsequent periods. SFAS 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R will be effective January 1, 2009 for the Company and will be applied to all business combinations occurring on or after that date.

Concurrent with the issuance of SFAS No. 141R, the FASB issued SFAS No. 160 (“SFAS 160”), Noncontrolling Interests in Consolidated Financial Statements—An Amendment of ARB No. 51 . SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 will also be effective for the Company effective January 1, 2009. Early adoption is not permitted. The Company does not currently expect the adoption of SFAS 160 to have any impact on its financial statements.

In March 2008, the FASB issued SFAS No. 161 (“SFAS 161”), Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 . SFAS 161 intends 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. SFAS 161 also requires disclosure about an entity’s strategy and objectives for using derivatives, the fair values of derivative instruments and their related gains and losses. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008, and will be applicable to the Company in the first quarter of fiscal 2009. The Company does not currently expect the adoption of SFAS 161 to have any impact on its financial statements.

In May 2008, the FASB issued SFAS No. 162 (“SFAS 162”), The Hierarchy of Generally Accepted Accounting Principles . SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS 162 will be effective 60 days following the SEC’s approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles . The Company does not believe SFAS 162 will have a significant impact on the Company’s consolidated financial statements.

In June 2008, the FASB issued Staff Position FSP EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities : (“FSP EITF 03-6-1”). FSP EITF 03-6-1 provides that unvested shares-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earning per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform to the provisions in FSP EITF 03-6-1. Early application of FSP EITF 03-6-1 is prohibited. The adoption of FSP EITF 03-6-1 is not anticipated to have a material effect on the Company’s consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any 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 is material to investors.

BUSINESS

Company Overview

Betawave Corporation is an attention-based digital media company. We have assembled some of the leading immersive casual gaming, virtual world, social play and entertainment websites into a network of sites (the “Betawave Network”). We generate revenue by selling innovative, accountable and attention-grabbing advertising campaigns on those sites to brand advertisers.

Our Mission

Our History

Our business was originally conducted by GoFish Technologies, Inc. (“GoFish Technologies”), which was incorporated in California in May 2003. GoFish Technologies originally operated a multimedia search service, delivering targeted results for Internet searches conducted on digital media content from the entertainment and media sectors. During the third quarter of 2005, due to the increasing popularity of user-generated video, GoFish Technologies refined its focus to aggregating original short-form and user-generated video at the URL www.gofish.com.

In order to obtain additional financing to continue its operations, in October 2006, GoFish Technologies completed a reverse merger and related transactions, which also resulted in the business of GoFish Technologies being acquired by a publicly-traded company. These transactions consisted principally of three parts. In the first part of these transactions, GoFish Technologies merged with and into GF Acquisition Corp., a wholly-owned subsidiary of GoFish Corporation (formerly known as Unibio Inc. until September 14, 2006) (“GoFish Corporation”), which was originally a publicly-traded “shell company” as that term is defined in Rule 405 of the Securities Act, and Rule 12b-2 of the Exchange Act. In the second part of these transactions, ITD Acquisition Corp., a wholly-owned subsidiary of GoFish Corporation, merged with and into Internet Television Distribution Inc., a Delaware corporation (“ITD”) (collectively both the GoFish Technologies and the ITD mergers are referred to herein as the “mergers”). In the third part of these transactions, GoFish Corporation split-off a wholly-owned subsidiary, GF Leaseco, Inc. (“GF Leaseco”), through the sale of all of the outstanding capital stock of GF Leaseco to the former owners of GoFish Corporation.

As a result of the mergers, GoFish Corporation acquired the business of GoFish Technologies and continued its business operations as a publicly-traded company whose common stock is quoted on the NASD’s OTC Bulletin Board. Also, as a result of the mergers, GoFish Technologies and ITD became wholly-owned subsidiaries of GoFish Corporation.

During 2007, GoFish Corporation made a strategic decision to focus on an aspect of its business where it saw an attractive market opportunity and began building a network of youth oriented websites for which it could sell advertising and deliver premium content. As a result of its success in the youth market, the Company expanded its focus to include “moms.” By June 2008, GoFish Corporation had built the largest youth-focused advertising network in the United States which was also top 10 in the “moms” category based on the number of unique monthly users, in each case, excluding portals and as measured by comScore Media Metrix. Our sites were high engagement sites that delivered consumers in a deeply engaged state of mind, far in excess of industry averages.

In June 2008, GoFish Corporation appointed Matt Freeman, a leading digital advertising executive, to serve as its new Chief Executive Officer. In December 2008, GoFish Corporation completed a financing in which it raised approximately $22.5 million in gross proceeds and cancelled indebtedness representing an aggregate principal amount of approximately $5.4 million in exchange for the issuance of shares of Series A preferred stock and warrants to purchase common stock.

In January 2009, GoFish Corporation changed its name to “Betawave Corporation” and launched a rebranding campaign, announcing that it would focus on the highest attention span media environments as measured by time spent per month, time spent per page and receptivity to brand advertising, and not solely on youth and moms.

Business Operations

Betawave is the industry’s first attention-based media company. We deliver quality advertising and content to large audiences of highly-engaged users through innovative ad formats. Publishers in the Betawave Network span all types of online experiences enjoyed by Internet users, including entertainment focused and educational virtual worlds, casual and massively multi-player games avatar-based social networks, educational, informational and photo sharing sites. We offer marketers broad reach into a targeted audience in desirable editorial environments. We combine the scale of a portal or advertising network with the custom programs and client focus of a niche publisher

The Betawave Network delivers scale with a unique monthly audience of over 25 million domestically and attention with an average audience engagement of more than 48 minutes per month. We have extended beyond the narrow industry definition of a vertical advertising network as we provide additional services to our publishers, for example, securing and providing our publishers with: (i) relevant and engaging video content for use on their sites, (ii) enabling technology, and (iii) business services to facilitate the growth of capabilities and revenue on their sites. In addition, we work with publishers to ensure that their brand is well positioned and their website is maximized for monetization through standard and immersive advertising experiences.

To ensure that we consistently offer the highest level of service to publishers and advertisers, we are highly discriminating in our selection of publishers. We seek to ensure that the Betawave Network is comprised of quality publishers that have unique value propositions for marketers and advertisers trying to reach youth, moms, and a growing audience base of 18 to 34 year olds. Some of the publishers in the Betawave portfolio are:

Miniclip.com (www.miniclip.com), the Internet’s largest dedicated online games website;

Cartoon Doll Emporium (www.cartoondollemporium.com), a leading dress-up game destination for girls age 6-16;

Shutterfly (www.shutterfly.com), the leading site for publishing, sharing and printing pictures and has an audience primarily composed of moms and families: memory makers; and

Cookie Jar Entertainment (www.thecookiejarcompany.com), a global independent producer, marketing and brand manager of such renowned children’s properties as “Magi-Nation,” “The Doodlebops,” “Caillou,” “Spider Riders” and “Johnny Test.”

We enter into agreements with our publishers where we are responsible for selling their advertising inventory. Generally, these relationships are exclusive and allow us to decide how we sell the advertising inventory, what we sell and to whom we sell it. We have secured advertising buys from strong brands, including four of the biggest spenders against kids online. Our advertisers fall into various categories, including consumer packaged goods (e.g. Kellogg’s, General Mills, Procter & Gamble), entertainment (e.g. Disney, Cartoon Network, Lionsgate), consumer electronics and software (e.g. Sony, Electronics Arts, Nintendo, Ubisoft) and retail (e.g. Lego, Hasbro, Sears).

In addition, we procure media content that we believe to be compelling to both users of the sites within the Betawave Network and advertisers in categories targeting these users. In February 2009, we launched Betawave TV, an ad-supported video platform with distribution on several publishers in the Betawave Network. The product features advertiser-safe, family-friendly programming including quality animation, youth-oriented news, action sports, movie and video game information, special events, celebrity interviews, fashion, and health and beauty segments.

Betawave TV offers marketers a scalable video advertising and distribution solution and enables them to extend their relationship beyond display media and immersive integrations. The universal video player is customized for each publisher’s look and feel and is incorporated into the navigation of each site ensuring a high level of consumer adoption. Sponsorship opportunities include the ability to feature messages before and after professionally produced video programming, as well as through overlays at appropriate points in the viewing experience.

Betawave has secured distribution agreements with several prestigious content providers including:

Cookie Jar Entertainment – A leading independent producer of children’s entertainment and world-renowned programmer of the CBS Saturday morning kids’ block presents long-term franchises like: “Johnny Test,” “Paddington Bear,” “Mona the Vampire,” “Dark Oracle,” “The Wombles,” “Ripley’s Believe It or Not!,” “The Wonderful Wizard of Oz,” “Animal Crackers” and “Emily of New Moon” plus special full-length animated movies.

Kids Who Rip – An action sports movement of kids who are fearless, fun, focused and ready to show the world their skills. From surfing, to skateboarding, to snowboarding, these kids are positive role models who know who they and are ready to compete to win.

MGM – One of the movie world’s most prestigious studios provides live action and animated programming ranging from series like “Pink Panther and Sons” and “All Dogs Go To Heaven” to full-length live-action movies and TV series.

Teen/Kid News – The creator of Eyewitness News, Al Primo, presents news coverage just for kids and teens. Delivered on a full-news set by an anchor team of youth who bring the audience the latest on celebrities, news and events of special appeal.

Young Hollywood – R.J. Williams founded Young Hollywood to create unique celebrity programming that provides an authentic take on the next generation of Hollywood. It’s the inside story of celebrity life as told by the best source…the celebrities themselves. The programming offers unparalleled access to the world beyond the velvet rope.

The advertising that we sell on the publisher sites in the Betawave Network can be divided into two categories: Direct Sales and Remnant Inventory.

Direct Sales

The majority of our revenues come from direct sales to brand advertisers. Direct sales of advertising can take the following two forms:

IAB Graphical Advertising – IAB graphical advertising is standard banner and text ads where advertisers pay a cost per thousand impressions (“CPM”) fee directly to us. Banners are ad graphics hyperlinked to the URL of the advertiser or to a custom landing page within the Betawave portfolio. This form of online advertising entails embedding an advertisement on a web page. It is intended to attract traffic to the advertiser’s website by linking them from the ad on a website to the website of the advertiser, to initiate an action within the site where the banner is embedded (i.e. watch a movie trailer), or to increase metrics on brand awareness. The banner advertisement is constructed from an image (GIF, JPEG, PNG), JavaScript program or multimedia object employing technologies such as Java, Shockwave or Flash.

Rich Media/Immersive Advertising – We also provide custom marketing opportunities to brands by tailoring advertising solutions to specific needs and leveraging the rich, immersive environments of publishers in the Betawave portfolio. These include roadblocks, front page takeovers, rich media ads, video and interstitial ads, custom integration in leading virtual worlds, advergames and custom sponsorships. These opportunities provide for the highest CPMs, which start at $10. These out-of-the-box ideas are developed on a custom basis with the goal of productizing the solution for future advertisers and campaigns.

Our blended CPM on direct sales advertising is currently over $5.

Remnant Inventory

Advertising inventory on a website that is not sold directly to an advertiser is referred to as “remnant inventory.” Publishers typically monetize this inventory, at a small fraction of direct sales, through third-party ad networks (ValueClick, Tribal Fusion, and Advertising.com) and ad network exchanges (Right Media and ContextWeb). We offer our publishers the ability to achieve a higher rate of return on their remnant inventory through our network of strategic partnerships. Our service is designed to be easy to implement and lifts the operational minutia and complexity for publishers of having to monetize remnant inventory.

In addition, we may monetize a percentage of remnant inventory through cost per click (“CPC”) or cost per action (“CPA”) campaigns. In the case of CPC advertisements, advertisers will pay fees per click throughs to their site generated from ads placed throughout the website. CPA banners placed throughout the website generate fees only when an action occurs as a result of the click-through on an individual advertisement. That action may be a purchase, a registration, or some other transaction. We do not currently have, or plan to have, any CPC or CPA campaigns. However, we may choose to include these formats in the future.

Sales and Marketing

We sell our inventory and marketing services in the United States through a sales and marketing organization that consisted of 41 employees as of April 7, 2009. These employees are located at our headquarters in San Francisco, California and New York, New York and also are based in Los Angeles, California and Chicago, Illinois. The team is focused on selling advertising space on the Betawave network of websites (the “Betawave Network”) to top quality brands and their advertising agencies.

In addition, we operate a business development team tasked with sourcing, securing and retaining quality publishers into the Betawave Network. These employees are located at our headquarters in San Francisco. They keep current with the latest online trends and are responsible for finding and securing relationships with a broad network of sites that extends the reach of the Betawave Network.

Market

Despite the economic downturn, eMarketer still forecasts online ad spending will increase in 2009 to $25.7 billion up from an estimated $23.6 billion in 2008, ultimately reaching $42 billion by 2013. The research firm gives several reasons for the resiliency of Internet advertising spending in the context of the overall macroeconomic decline in the economy. These are: measurability with a better understanding of the audience, more effective ad placements resulting in increased prices, easier purchases for advertisers and their agencies through networks and exchanges, better targeting, wooing audiences through video advertising and reaching that vital audience by following eyeballs. eMarketer also projects that Internet ad spend growth will surpass all other major media. Search-based advertising still leads in ad spending but the greatest growth will come from rich media and video ads, both categories in which Betawave is an active participant.

The growth of online video consumption further underscores the trend of people consuming media online at the expense of other sources. According to comScore Media Metrix, in November 2008, 146 million people (77% of the U.S. Internet audience) viewed online video, watching 34% more videos than they did in 2008. The increase in online video consumption has lead to the creation of new vernacular, for example, “Video snacking,” a term now used to describe how consumers are creating viewing habits around repeated, quick consumption of online video, causing significant spikes in online video watching right at lunchtime. As MediaPost puts it, there are “more people, watching more videos, more often.”

We believe that advertisers must reach consumers online as this is where they increasingly spend time relative to other media. The advertiser’s ability to effectively reach these consumers, however, is being impacted by several trends taking place on the Internet. Consumer behavior online is changing through an accelerated progression towards “deportalization.” Deportalization describes the phenomenon where Internet traffic moves from large portals to smaller, niche sites. The drivers of this trend are search and increased user confidence with regard to the medium. We expect that, in the next several years, the large sites will continue to lose traffic to smaller sites.

This fragmentation makes it difficult for marketers to reach their targeted demographics at scale. As a result, they are turning to advertising networks to help them bridge the gap. A survey done at the iMedia Brand Summit showed that brand agency executives think that ad networks will be the second most important channel for their advertising dollars in 2009. Most ad networks, however, are geared towards direct response advertisers (“e-tailers”) and specialize in driving consumers towards an immediate response (i.e. purchase online). These ad networks have become fairly commoditized and provide little in the way of the quality, transparent and integrated experiences that brand advertisers seek. That realm has typically belonged to the same portals and large publishers which are now quickly losing market share to small and medium sized sites which have, until now, relied on general ad networks to sell their advertising .

Betawave believes there is a better way to approach this opportunity, bringing together the best of both worlds - diversity, scale and the targeting of a network with the integration, editorial quality and customization of large publishers. Betawave seeks to bridge the gap by uniting mid-size sites, offering rich content experiences, and introducing standard and immersive ad formats uniformly across our portfolio. The focus on immersive experiences is central to the concept of Attention-Based Media. Our offering is built around products that leverage the consumer activities in which our publisher sites specialize. Betawave works closely with the publishers to understand audience expectations of the site experience and to ensure that the delivery of the intersection between audience needs and brand needs, the “Attention Opportunity” is systematically sought and delivered for every marketing campaign. Betawave does not operate portfolio sites. Thus, we retain flexibility to optimize inventory based on changing traffic patterns or brand needs.

In this way, Betawave offers the rich, impactful, scalable experiences and objective-based solutions that have typically been the expertise of the Portals while mitigating the negative impact of deportalization suffered by competitors entrenched by owned and operated properties. We believe that buying advertising through Betawave provides marketers the ability to reach their intended audience while achieving scale and without sacrificing deep engagement. In addition, marketers can supplement campaigns anchored on other sites and extend their reach against key demographics due to a large percentage of unduplicated audience with top competitors also serving these demographics. As an example, for a youth target, comScore Media Metrix reported that, in January 2009, 43% of Betawave users did not visit the other top three youth sites.

Betawave breaks down its advertising opportunities into demographic categories, which is how brand advertisers tend to buy media. At inception, Betawave served the 6-17 year old demographic. We later expanded to the “moms” demographic as there is a high concentration of women visiting the same websites their children use either through co-play or on their own time. Betawave will expand beyond just youth and moms as there are opportunities for us to reach new demographics through attention-based executions. We already reach 7.1 million 18-34 year olds, who spend 44 minutes per month on the sites in the Betawave Network.

It is our belief that brand advertisers trying to reach the youth demographic are relatively underserved by the current online market, particularly in the area of deep immersive advertising experiences. The youth demographic tends to be on the cusp of the most recent online trends, including gaming, virtual worlds and social networking. Kids and teens also represent an important consumer segment. According to Packaged Facts, a consumer goods market research company, teens alone have an estimated total annual aggregate income of $80 billion, while the buying power of kids is expected to total $21.4 billion in 2010. Combined, kids and teens influence an estimated additional $225 billion in spending by their parents.

There are an estimated 31.5 million 6 to 17 year old Internet users per month in the U.S (source: comScore Media Metrix) and eMarketer estimates that 82% of US teens ages 12 to 17 and 43.5% of children ages 3 to 11 will use the Internet on a monthly basis in 2009. Approximately 48% of consumers between the ages of 8 and 12 spend two hours online every day, according to eMarketer, while 24% of teens between 13 and 17 spend more than 15 hours online each week. A recent article by AdAge titled “SOURCE” suggests that the rise of social-networking sites, online video and applications for portable media devices will further drive up the hours young consumers spend with these forms of media, eroding the advertising base of television.

In addition, there are an estimated 50 million moms in the U.S. today with spending power estimated at $2.1 trillion. This is projected to grow to $3 trillion by 2012. According to Nielsen NetRatings, 32 million of these women in the U.S. who have children under 18 go online, which translates to about 64% of all moms and 40% of all women online in the U.S. today. Although moms go online for their own enjoyment, many spend time monitoring their child’s behavior, including as much as 47% of women with children ages 12-17 who use social networking sites, according to a study by Razorfish and CafeMom. MediaPost also noted a significant trend in how women are using video compared to last year, noting that women watched 41% more online videos than they did last year, with average videos per month up 33% to 79 videos and average minutes watching online video up 46% to 227 minutes. The average video length for women is 2.9 minutes, vs. 3.4 for men. Moms control 85% of household spending and upwards of two-thirds of online moms research products online.

For publishers, Betawave is designed to provide a scalable offering, expertise in high impact, cross-network takeovers and sponsorships and immersive experiences, and established relationships with brand marketers and their agencies. Specifically, mid-size publishers benefit from the reach of other partners increasing the value of their own site through the combined scale while still being able to execute upon the immersive experiences that define their offering. This results in increased mindshare from marketers. Generally, the publishers in the Betawave Network would not have access to the type and quality of advertising that they receive as a result of their inclusion in the Betawave Network.

Competition

We compete against well-capitalized advertising companies as well as smaller companies. The market for our services is highly competitive.

Advertisers have several options for how to reach consumers online. Advertisers must first select between the various mediums, including television, radio, direct mail, print media and the Internet, as well as others. In the online advertising market, we compete for advertising dollars with all websites catering to our target demographics, including portals, large independent sites, and websites belonging to other advertising networks.

Historically, the portals have been a primary vehicle for big brands to reach big audiences online. Though once experts in audience and customer-centric solutions, the portals have largely devolved into utility environments that offer reach at the expense of attention and engagement, in part due to the trend of “Deportalization” described above. Betawave offers an alternative for brand advertisers who are seeking both scale and attention with increasing efficiency and accountability.

Betawave has several attributes which we believe allow us to compete aggressively for online advertising dollars. With over 25 million unique users in the United States, the average U.S. user on the Betawave Network of sites spends 48 minutes per month according to comScore MediaMetrix, with tweens (9-14) and teen girls spending well over 60 minutes per month and teen boys just under that number. The average of 1 minute per page across publishers in the Betawave Network is 41% higher than the Internet average and is 66% higher than the minutes per page average at teen sites and is two times as high as the minutes per page average at social networking sites.

Publishers have several options to monetize the traffic on their websites. They can build a direct sales organization to sell the advertising space on their website directly. However, the high cost to build, train and operate such an organization is significant and cost prohibitive for many but the largest websites. In addition, it requires substantial traffic to achieve advertiser mindshare.

Publishers can also partner with a third party advertising network to sell their advertising. There are several ways to categorize advertising networks, but they can generally be divided into several categories based on how they target consumers. The first is performance-based networks, such as Google (AdSense), Valueclick and Advertising.com, which try to use a variety of optimization tools to increase the value of a publisher’s ad inventory. However, in general, these companies cater to the direct response model and tend to deliver low CPMs and advertisers with low relevance to the sites themselves. Behavioral-targeting networks, such as Tacoda and Revenue Science use a consumer’s past web-surfing habits to target them with relevant ads. Contextual networks try to match an ad's subject to that of the page on which it appears. Video and widget networks sell in videos and widgets.

Finally, publishers can choose to use full-service advertising representation networks that provide a more robust solution when selling advertising. Some companies, such as Gorilla Nation, incorporate a wide variety of sites into their network. Others, such as Glam Media, aggregate inventory in a specific vertical and sell advertising to those trying to reach that audience. These companies are able to offer more relevant advertising to the publishers in their network while delivering better content alignment for brands. Few, if any, offer the depth of products offered by Betawave , and none offer the same combination of scale, transparency and custom advertising opportunities that websites on the Betawave Network offer.

We believe our company is attractive to publishers in our targeted demographics because of our ability to attract relevant, high quality advertisers at higher CPMs than can otherwise be obtained. We have expertise in defining innovative ad products and strategy, and we provide related platforms such as Betawave TV. We also believe that we are uniquely positioned with our focus and experience with attention-based media. Betawave is the only online media company targeted to youth and moms that offers this level of transparency and integration on its partner sites.

Intellectual Property and Other Proprietary Rights

We currently rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. We also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and generally control access to and distribution of our confidential and proprietary information. We rely on the technology of third parties to assist us with several aspects of our business. When doing so, we obtain appropriate licenses which allow us to use that technology. We have registered the trademark “GOFISH” in the United States. We have applied for registration of the service marks “BETAWAVE” and “ATTENTION-BASED MEDIA” in the United States. These applications are currently pending.

Government Regulation

We are subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. Laws applicable to e-commerce, online privacy and the Internet generally are becoming more prevalent and it is possible that new laws and regulations may be adopted regarding the Internet or other online services in the United States and foreign countries. Such new laws and regulations may address user privacy, advertising, freedom of expression, pricing, content and quality of products and services, taxation, intellectual property rights and information security. The nature of such legislation and the manner in which it may be interpreted and enforced cannot be fully determined at this time. Such legislation could subject us and/or our customers to potential liability or restrict our present business practices, which, in turn, could have an adverse effect on our business, results of operations and financial condition. In addition, the FTC has investigated the privacy practices of several companies that collect information about individuals on the Internet. The adoption of any such laws or regulations might also decrease the rate of growth of Internet use generally, which, in turn, could decrease the demand for our service or increase our cost of doing business or in some other manner have a material adverse effect on our business, results of operations and financial condition.

The Children’s Online Privacy Protection Act (“COPPA”) imposes civil penalties on persons collecting personal information from children under the age of 13. We do not knowingly collect personal information from children under the age of 13. We work with our publishers to ensure that they are compliant with COPPA and we currently require all new publishers to protect us from any violation of applicable laws on their website.

Employees

As of April 7, 2009, we had 52 full-time employees and two part-time employees. None of our employees is represented by a labor union, and we consider our employee relations to be good. We believe that our future success will depend in part on our continued ability to attract, hire and retain qualified personnel.

Seasonality

Both seasonal fluctuations in Internet usage and traditional retail seasonality have affected, and are likely to continue to affect, our business. Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects our business. Further, Internet user traffic typically drops during the summer months, which reduces the amount of online advertising. Online advertising has, in the past, peaked during the fourth quarter holiday season. Advertising expenditures tend to vary in cycles that reflect overall economic conditions as well as budgeting and buying patterns. Our revenue has been, and may continue to be, affected by these fluctuations. Our revenue has been, and will continue to be, materially affected by the recent decline in the economic prospects of our customers and the economy and our industry in general, which has had the effect of altering our current and prospective customers’ spending priorities and budget cycles and extending our sales cycle.

Description of Property

Our executive offices are located at 706 Mission Street, 10 th Floor, San Francisco, California 94103, and our telephone number is (415) 738-8706. Our executive offices in San Francisco consist of approximately 10,000 square feet, and we currently lease the facilities for $17,968 per month under a lease expiring in April 2010. Our monthly rental payment will increase to $20,010 beginning in April 2009. Our New York office is located at 34 West 22nd Street, 5th. Floor, New York, New York. The New York office consists of approximately 2,300 square feet, and we currently lease it for $8,625 per month under a lease expiring in October 2011. We have an office in Los Angeles at 4571 Wilshire Blvd. 3rd. Floor, Los Angeles, California. The office is approximately 1,500 square feet plus common areas, and we lease it for approximately $2,900 per month on a month-to-month basis. We also have an office in Chicago at 221 North LaSalle Street. The office is approximately 871 square feet and we currently lease the facilities for $1,350 per month under a lease expiring in February 2010.

Legal Proceedings

From time to time we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations or claims are pending against us or involve us that, in the opinion of our management, would reasonably be expected to have a material adverse effect on our business and financial condition.

In December 2008, Sunrise brought an action against us in the United States District Court in the Southern District of New York on behalf of itself and all other purchasers of our securities in our 2006 private placement. In the complaint, Sunrise alleged, among other things, that we breached the representation in the subscription agreement for the 2006 private placement which provided that no purchaser in the private placement had an agreement or understanding on terms that differed substantially from those of any other investor. Sunrise claimed that we breached this representation because Mr. Zehil’s entities received certificates without any restrictive legend while all other investors in the private placement received certificates with such restrictive legends. The complaint was dismissed without prejudice in February 2009. Although it is possible that Sunrise may refile the lawsuit in state or federal court, in the opinion of our management, we do not reasonably expect this case to have a material adverse effect on our business and financial condition.

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Set forth below is certain information regarding our directors, executive officers and key personnel.

Name	Age	Position
Matt Freeman	39	Chief Executive Officer and Director
James Moloshok	59	Executive Chairman and Director
Tabreez Verjee	33	President and Director
Lennox L. Vernon	62	Chief Accounting Officer and Director of Operations
John Durham	57	Director
Michael Jung	39	Director
Richard Ling	48	Director
Mark Menell	44	Director
Riaz Valani	32	Director

Our directors and officers hold office until the earlier of their death, resignation, or removal or until their successors have been duly elected and qualified. There are no family relationships among our directors and executive officers. Our above-listed officers and directors have neither been convicted in any criminal proceeding during the past five years nor parties to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining them from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal of state securities laws or commodities laws. Similarly, no bankruptcy petitions have been filed by or against any business or property of any of our directors or officers, nor has bankruptcy petition been filed against a partnership or business association in which these persons were general partners or executive officers.

Matt Freeman, Chief Executive Officer and Director

Matt Freeman is the former founder and Chief Executive Officer of Tribal DDB Worldwide, an interactive agency that is a part of Omnicom Group’s DDB Worldwide. Prior to joining the Company and since 1998, Mr. Freeman served as chief executive officer of Tribal DDB Worldwide, where he helped grow the company from $5 million in annual revenue to over 1,500 employees and $250 million in annual revenue while building a global network of 45 offices spanning 28 countries. Prior to that, from 1997 to 1998, he served as executive creative director for Modem Media/Poppe Tyson, where he helped with the merger integration between Modem Media and Poppe Tyson (since then acquired by Digitas, Inc.; now a Division of Publicis Group). Previously, from 1995 to 1997, he was partner and executive creative director for Poppe Tyson (formerly a division of True North, now Interpublic Group), where he helped shape and scale one of the industry’s first and largest interactive agencies. In January 2006, AdWeek named Tribal DDB Worldwide its Interactive Agency of the Year and in January 2008 Adverting Age awarded it Global Agency Network of the Year. Both publications cited Freeman’s leadership as a critical factor in Tribal’s enduring success. Mr. Freeman, a graduate of Dartmouth College and the NY School of Visual Arts, has been inducted into the American Advertising Federation Hall of Achievement; is the Founder of the Interactive Agency Board of the IAB, is an active Board member of the Advertising Club and the American Association of Advertising Agencies (4As) and is a member of the Marketing Advisory Board of the Modern Museum of Art (MOMA).

James Moloshok, Executive Chairman and Director

James Moloshok joined us as our Executive Chairman and a director on December 18, 2007. Prior to joining us, from 2005 to 2007, Mr. Moloshok was President of Digital Initiatives for HBO Network, where Mr. Moloshok was responsible for exploring new opportunities for the company, focusing on innovative content and fast-changing technology. Prior to that, from 2001 to 2005, Mr. Moloshok served in various positions with Yahoo! Inc., serving most recently as Senior Vice President, Entertainment and Content Relationships, during which he helped build partnerships with movie studios, TV networks and producers. Prior to that, Mr. Moloshok was a co-founder of Windsor Digital, an entertainment and investment company. From 1999 to 2000, Mr. Moloshok served as president of Warner Bros. Online and president and CEO of Entertaindom.com, an original entertainment destination for Time Warner. From 1989 to 1999, Mr. Moloshok served as Senior Vice President of Marketing at Warner Bros. and previously held the same position at Lorimar Telepictures, a television distribution company, which was formed when Lorimar merged with Telepictures in 1986 where he was also responsible for marketing to consumers, broadcasters and advertisers. Mr. Moloshok also serves on the board of directors of SpectrumDNA, Inc.

Tabreez Verjee, President and Director

Tabreez Verjee has served as Betawave’s President since February 26, 2007 and has served as a director since October 27, 2006. Mr. Verjee is currently a General Partner at Global Asset Capital, LLC, which directed more than $500 million in committed assets from leading global institutional investors across two venture capital funds and over 40 portfolio companies in the United States and Europe. Prior to that, Mr. Verjee co-headed IMDI/Sonique and successfully negotiated its sale to Lycos. Sonique was one of the most popular consumer Internet music applications with approximately four million unique users and status as the fifth most downloaded application on the Internet in 1999. Mr. Verjee also brings media finance expertise to Betawave from his prior role as managing director of Global Entertainment Capital, which was a pioneer in media asset securitizations with $150 million in committed capital. Mr. Verjee began his career as a strategy consultant at Bain & Company. Mr. Verjee received his bachelor of science in Engineering with honors at the University of California at Berkeley. He is currently on the board of directors of kiva.org and is a charter member of TiE.

Lennox L. Vernon, Chief Accounting Officer & Director of Operations

Lennox Vernon joined Betawave as its Chief Accounting Officer and Director of Operations on October 30, 2006. Mr. Vernon brings over 25 years of successful financial and operations experience to Betawave. Prior to joining Betawave and since 2004, Mr. Vernon was Controller of Moderati Inc., a provider of high-impact mobile content to consumers and wireless carriers. Previously, from 2003 to 2004, Mr. Vernon was the Controller of Optiva Inc. and from 2002 to 2003, he was the Controller of PaymentOne Corporation. From 2000 through 2002, Mr. Vernon was a financial consultant whereby he managed financial accounting and economic projects, and completed year end reports, annual reports and proxy statements. Mr. Vernon has also worked for many years at various software companies including Fair Isaac, as Acting CFO, at Macromedia, a developer of software tools for web publishing, multimedia and graphics, as Vice President Controller and at Pixar, a high-tech graphics and animation studio, as Corporate Controller. Mr. Vernon graduated from San Jose State University with a Bachelor of Science, and is a certified public accountant in the State of California.

John Durham, Director

John Durham joined our board of directors on November 1, 2007. Mr. Durham is currently CEO and Managing Partner at Catalyst, which specializes in connecting emerging technology companies, publishers and brand marketers facilitating the integration of paid media, non-paid media and emerging media. Mr. Durham was previously President of Sales & Marketing for Jumpstart Automotive Media since August 2006 and on the board of directors of Jumpstart Automotive Media since 2004. From 2004 to 2006, Mr. Durham had served as the Executive Vice President, Business Strategy at Carat Fusion. Prior to that, he was a founder of Pericles Communication. Before the launch of Pericles Communication, Mr. Durham had served as Chief Operating Officer of Interep Interactive. Prior to that, he was with Winstar Interactive/Interep Interactive, which he joined in March 1998 as Vice President of Advertising Sales. Mr. Durham has been teaching advertising and marketing classes since 1992 and currently teaches advertising in the MBA program at the University of San Francisco. He also founded and is the president of the Bay Area Interactive Group, an Internet industry networking group. Mr. Durham also serves on the board of directors of ZVUE Corporation.

Michael Jung, Director

Michael Jung joined our board of directors on December 3, 2008. Mr. Jung is a partner at Panorama Capital. Mr. Jung was part of the founding team at Panorama Capital in late 2005 and became a partner in November 2008. Panorama is the successor to the venture capital program of JPMorgan Partners, which Mr. Jung joined in 2003. Prior to working in venture capital, he was vice president of corporate strategy and development at the Exigen Group, an enterprise software and services company where he managed the company’s day-to-day business development activities. He also served as vice president of strategic corporate development at Ask Jeeves, leading the company’s mergers and acquisitions and strategic partnership efforts. Early in his career, Mr. Jung advised a variety of high technology companies both as an investment banker with BancBoston Robertson Stephens and as an attorney with Gunderson Dettmer. He holds a JD and an MBA from the University of Michigan and bachelor’s degree in political economy of industrial societies from the University of California, Berkeley.

Richard Ling, Director

Richard Ling joined our board of directors on December 12, 2008. Mr. Ling founded Rembrandt Venture Partners in 2004. Prior to co-founding Rembrandt, Mr. Ling was the founding CEO and Chairman of MetaLINCs Inc., an e-mail search and analytics company acquired by Seagate in 2007. Prior to MetaLINCs Mr. Ling was the co-founder, President and CEO of AlterEgo Networks Inc., a wireless infrastructure company, acquired by Macromedia Inc. in March 2002. Before AlterEgo, Mr. Ling led the e-Commerce product organization at Inktomi, where he was responsible for overseeing all areas of the group’s engineering and operations, including site and network operations and product development. Mr. Ling was a co-founder, VP of Products and Engineering, and acting CTO at Impulse Buy Networks Inc., leading the development, operations and product management groups. Impulse Buy Networks was acquired by Inktomi in 1998.

Mark Menell, Director

Mark Menell joined our board of directors on December 12, 2008. Mr. Menell has been a partner at Rustic Canyon since January 2000. From August 1990 to January 2000, Mr. Menell was an investment banker at Morgan Stanley & Co. Incorporated, including as principal and co-head of Morgan Stanley’s Technology Mergers and Acquisitions Group, in Menlo Park, CA. Mr. Menell is a member of the board of directors of GSI Commerce, Inc. (NASDAQGS: GSIC).

Riaz Valani, Director

Riaz Valani joined our board of directors on October 27, 2006. Mr. Valani is currently a General Partner at Global Asset Capital, LLC, where he has worked since 1997. He previously served as Chairman of Viventures Partners SA and President of IMDI/Sonique. Mr. Valani was a Managing Director of Global Entertainment Capital and was with Gruntal & Co. focused on private equity and asset securitizations. Mr. Valani was one of the two investment bankers that engineered the acclaimed “David Bowie Bonds” which was awarded Euromoney’s Deal of the Year in 1997. Mr. Valani also privatized Quorum Growth Capital, one of Canada’s leading publicly traded venture capital firms in a successful management led buyout. Cumulatively he has several billion dollars of transactional expertise across structured finance, real estate, and private equity. He has overseen portfolios of over fifty venture investments in technology, media, and telecom companies, and real estate investments in over twenty office and hospitality properties. He currently serves as a director of Maritz Properties, Inc., Avex Funding Corporation and is a Charter Member of TiE.

Board of Directors and Corporate Governance

Our board of directors consists of eight members: Matt Freeman, James Moloshok, Tabreez Verjee, John Durham, Michael Jung, Richard Ling, Mark Menell and Riaz Valani. Mr. Jung, Mr. Ling and Mr. Menell were appointed to our board of directors pursuant to the terms of the investors’ rights agreement that we entered into in connection with the December 2008 preferred stock financing. Mr. Jung was appointed by Panorama Capital, L.P., Mr. Ling was appointed by Rembrandt Venture Partners Fund Two, L.P. and Rembrandt Venture Partners Fund Two-A, L.P. and Mr. Menell was appointed by Rustic Canyon Ventures III, L.P. See “Investors’ Rights Agreement” below.

Board Committees

The board of directors has established a compensation committee, which sets the compensation for officers of the Company, reviews management organization and development, reviews significant employee benefit programs and establishes and administers executive compensation programs. The compensation committee currently consists of Mr. Jung, Mr. Menell and Mr. Durham. The board of directors has also established an audit committee, which oversees the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements. The audit committee currently consists of Mr. Menell and Mr. Durham.

We have not formally designated a nominating committee.

Our board of directors intends to appoint such persons and form such committees as may be required to meet the corporate governance requirements imposed by Sarbanes-Oxley Act of 2002. Therefore, we intend that a majority of our directors will eventually be independent directors and at least one director will qualify as an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-B, as promulgated by the SEC. Additionally, our board of directors is expected to appoint a nominating committee and to adopt a charter relative to such committee. Until further determination by our board of directors, the full board of directors will undertake the duties of the nominating committee. We do not currently have an “audit committee financial expert.”

Investors’ Rights Agreement

In connection with the December 2008 preferred stock financing, we entered into an investors’ rights agreement with the Lead Investors. The investors’ rights agreement includes the following provisions relating to the composition of our board of directors and our board committees:

each investor party to the investors’ rights agreement is required to take all actions necessary within its control and to vote all of its shares to ensure that the size of our board of directors shall be set and remain at eight directors;

each investor party to the investors’ rights agreement is required to take all actions necessary within its control so as to elect the following individuals to our board of directors:

Four representatives designated by holders of a majority of the outstanding shares of common stock issuable or issued upon conversion of the Series A preferred stock (the “Investor Directors”), (i) one of whom shall be designated by Panorama for so long as Panorama shall own not less than 16,666,667 shares of the common stock issued or issuable upon conversion of Series A preferred stock, (ii) one of whom shall be designated by Rustic for so long as Rustic shall own not less than 12,500,000 shares of the common stock issued or issuable upon conversion of Series A preferred stock, (iii) one of whom shall be designated by Rembrandt for so long as Rembrandt shall own not less than 8,333,333 shares of the common stock issued or issuable upon conversion of Series A preferred stock and (iv) one of whom shall be designated by ITD for so long as ITD shall own not less than 3,088,240 shares of the common stock issued or issuable upon conversion of Series A preferred stock.

Two representatives of Company management (the “Common Directors”), one of whom shall be our then-current Chief Executive Officer (currently Matt Freeman) and the other of whom shall be our then-current President (currently Tabreez Verjee).

Two individuals who, subject to certain exceptions, are not then one of our officers or employees and who are not affiliated with holders of shares of Series A preferred stock or our management, and who are designated with the mutual agreement (in good faith) of both the Common Directors and a majority of the Investor Directors.

each investor party to the investors’ rights agreement is required to take all actions necessary within its control so that for as long as Panorama owns at least 16,666,667 shares of common stock issued or issuable upon conversion of Series A preferred stock (i) the compensation committee of the board shall consist of three members, at least two of which shall be Investor Directors; and (ii) each committee of the board shall include, at the option of Panorama, the member of the board designated by Panorama.

Section 16(a) Beneficial Ownership Reporting Compliance

We are not subject to Section 16(a) of the Exchange Act.

Code of Ethics

We have adopted a Code of Ethics that applies to all of our employees and officers, including our principal executive, financial and accounting officers, and our directors and employees. We have posted the Code of Ethics on our Internet website at http://www.gofishcorp.com/roller/corp/category/investors/code%20of%20conduct. We recently amended our Code of Ethics to reflect our name change to Betawave Corporation. . We intend to make all required disclosures concerning any amendments to, or waivers from, our Code of Ethics that, in each case, apply to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, on our Internet website.

Material Changes to Procedures to Nominate Directors

We did not make any material changes to the procedures by which security holders may recommend nominees to our board of directors.

Stockholder Communication

Stockholders desiring to send a communication to our board of directors, or to a specific director, may do so by delivering a letter to the Secretary of the Company at 706 Mission Street, 10 th Floor, San Francisco, California 94103. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “stockholder-board communication” or “stockholder-director communication.” All such letters must identify the author as a stockholder and clearly state whether the intended recipients of the letter are all members of our board of directors or certain specified individual directors. The Secretary will circulate such letters to the appropriate director or directors of Betawave.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding the beneficial ownership of our common stock as of April 7, 2009. The table sets forth the beneficial ownership of each person who, to our knowledge, beneficially owns more than 5% of the outstanding shares of common stock, each of our directors and executive officers, and all of our directors and executive officers as a group. The address of each director and executive officer is c/o Betawave Corporation, 706 Mission Street, 10 th Floor, San Francisco, California 94103.

Beneficial Owner	Shares of Common Stock Beneficially Owned			Percentage of Class of Shares Beneficially Owned(1)
Tabreez Verjee		34,419,338	(2)		59.3	%
Riaz Valani		28,753,039	(3)		55.0	%
James Moloshok		4,979,843	(4)		14.7	%
Matt Freeman		4,930,618	(5)		14.4	%
Michael Jung		70,000,000	(6)		70.5	%
Richard Ling		35,000,000	(7)		54.5	%
Mark Menell		52,500,000	(8)		64.2	%
John Durham		292,942	(9)		1.0	%
Lennox L. Vernon		175,175	(10)		0.6	%
Executive Officers and Directors as Group (9 persons)		203,111,275			89.7	%

(1) Beneficial ownership percentages are calculated based on 29,229,284 shares of common stock issued and outstanding as of April 7, 2009. Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. The number of shares beneficially owned by a person includes shares underlying options, warrants or other convertible securities held by that person that are currently exercisable (or convertible) or exercisable (or convertible) within 60 days of April 7, 2009. The shares issuable pursuant to the exercise of those options, warrants or other convertible securities are deemed outstanding for computing the percentage ownership of the person holding those options, warrants or other convertible securities, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. The persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person’s name, subject to community property laws, where applicable, unless otherwise noted in the applicable footnote.

(2) Includes (i) 6,479,658 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Verjee, (ii) 5,553,744 shares of common stock, 9,264,700 shares of common stock issuable upon conversion of Series A preferred stock and 3,705,880 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Internet Television Distribution LLC, of which Mr. Verjee is a member and over which Mr. Verjee and Mr. Valani have shared voting and investment power; and (iii) 82,032 shares of common stock, 6,666,660 shares of common stock issuable upon conversion of Series A preferred stock and 2,666,664 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Technology Credit Partners LLC, of which Mr. Verjee is a member and over which Mr. Verjee and Mr. Valani have shared voting and investment power. Excludes 13,111,450 shares underlying stock options not exercisable within 60 days of April 7, 2009 and held by Mr. Verjee.

(3) Includes (i) 46,805 shares of common stock held by Mr. Valani, (ii) 766,554 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Valani, (iii) 5,553,744 shares of common stock, 9,264,700 shares of common stock issuable upon conversion of Series A preferred stock and 3,705,880 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Internet Television Distribution LLC, of which Mr. Valani is a member and over which Mr. Valani and Mr. Verjee have shared voting and investment power; and (iv) 82,032 shares of common stock, 6,666,660 shares of common stock issuable upon conversion of Series A preferred stock and 2,666,664 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Technology Credit Partners LLC, of which Mr. Valani is a member and over which Mr. Valani and Mr. Verjee have shared voting and investment power. Excludes 186,667 shares underlying stock options not exercisable within 60 days of April 7, 2009 and held by Mr. Valani.

(4) Includes (i) 274,845 shares of common stock held by Mr. Moloshok, (ii) 2,440,302 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Moloshok, (iii) 1,617,640 shares of common stock issuable upon conversion of Series A preferred stock held by Mr. Moloshok, and (iv) 647,056 shares issuable upon exercise of warrants exercisable within 60 days of April 7, 2009. Excludes 3,495,372 shares underlying stock options not exercisable within 60 days of April 7, 2009 and held by Mr. Moloshok.

(5) Includes 4,930,618 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Freeman. Excludes 24,650,293 shares underlying stock options not exercisable within 60 days of April 7, 2009 held by Mr. Freeman.

(6) Includes 50,000,000 shares of common stock issuable upon conversion of Series A preferred stock and 20,000,000 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Panorama Capital, L.P. Mike Jung serves as a Member of Panorama Capital Management, LLC, the general partner of Panorama Capital, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(7) Includes 25,000,000 shares of common stock issuable upon conversion of Series A preferred stock and 10,000,000 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Rembrandt Venture Partners Fund Two, L.P. and Rembrandt Venture Partners Fund Two-A, L.P. Richard Ling serves as a Member of Rembrandt Venture Partners Fund Two, LLC, the general partner of Rembrandt Venture Fund Two, L.P. and Rembrandt Venture Fund Two-A, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(8) Includes 37,500,000 shares of common stock issuable upon conversion of Series A preferred stock and 15,000,000 shares of common stock issuable upon exercise of warrants exercisable within 60 days of April 7, 2009 held by Rustic Canyon Ventures III, L.P. Mark Menell serves as a Member of Rustic Canyon GP III, LLC, the general partner of Rustic Canyon Ventures III, L.P. He shares voting control and dispositive power over the shares but disclaims beneficial ownership, except to the extent of his proportionate pecuniary interest therein.

(9) Includes (i) 2,800 shares of common stock held by Mr. Durham, (ii) 240,182 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Durham and (iii) 50,000 shares of common stock issuable upon exercise of a warrant exercisable within 60 days of April 7, 2009 held by Catalyst SF, of which Mr. Durham is a member and over which he has shared voting and investment power. Excludes 334,046 shares underlying stock options not exercisable within 60 days of April 7, 2009 held by Mr. Durham.

(10) Includes 175,175 shares underlying stock options exercisable within 60 days of April 7, 2009 held by Mr. Vernon. Excludes 679,639 shares underlying stock options not exercisable within 60 days of April 7, 2009 held by Mr. Vernon.

EXECUTIVE COMPENSATION

The following table summarizes all compensation recorded by us in each of the fiscal years ended December 31, 2008 and 2007 for (i) all individuals serving as our principal executive officer and our principal financial officer during fiscal year ended December 31, 2008 and (ii) our two most highly compensated executive officers other than our principal executive officer, each of whom was serving as one of our executive officers at the end of the fiscal year ended December 31, 2008 and whose total compensation for the fiscal year ended December 31, 2008 exceeded $100,000. Such officers are referred to herein as our “Named Executive Officers.”

Executive Compensation

	Annual Compensation
Name and Principal Position	Fiscal Year	Salary (S)		Bonus (S)		Stock Awards		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Matt Freeman (2)	2008	$	250,131		—		—	$	3,258,678		—		—		—		3,508,809
Chief Executive Officer (Principal Executive Officer)
Michael Downing (3)	2008	$	88,566		—		—		—		—		—	$	100,000	$	188,566
Former Chief Executive Officer (Former Principal Executive Officer)	2007	$	175,000		—		—		—		—		—		—	$	175,000
Lennox L. Vernon	2008	$	160,000		—		—	$	72,632		—		—		—	$	232,632
Chief Accounting Officer and Director of Operations	2007		160,000		—		—	$	13,117		—		—		—	$	173,117
James Moloshok (4)	2008		—		—		—	$	432,023		—		—	$	240,000	$	672,023
Executive Chairman and Director
Tabreez Verjee	2008	$	175,000				—		2,139,078		—		—		—		2,244,676
President	2007	$	148,264	$	100,000		—		—		—		—		—	$	248,264

(1) The amounts shown in this column represent the compensation costs of stock options for financial reporting purposes for fiscal years 2008 and 2007 under FAS 123(R), rather than an amount paid to or realized by the named executive officer. The FAS 123(R) value as of the grant date for options is spread over the number of months of service required for the grant to become non-forfeitable. The FAS 123(R) value as of the grant date for options is spread over the number of months of service required for the grant to become non-forfeitable. Compensation costs shown in this column reflect ratable amounts expensed for grants that were made in fiscal years 2008 and 2007. There can be no assurance that the FAS 123(R) amounts will ever be realized.

(2) Mr. Freeman was appointed as our Chief Executive Officer on June 4, 2008. Mr. Freeman was not one of our Named Executive Officers for fiscal year 2007.

(3) Mr. Downing resigned as our Chief Executive Officer on June 4, 2008. Mr. Downing continues to provide limited consulting services to us under his independent contractor agreement. The $100,000 appearing under "All Other Compensation" for fiscal year 2008 reflects the amount earned by Mr. Downing during such fiscal year under his independent contractor agreement dated as of June 4, 2008, pursuant to which he agreed to provide limited consulting services to us for a period of one year in exchange for a total of $120,000, payable in monthly installments through February 1, 2009.

(4) Mr. Moloshok was not one of our Named Executive Officers for fiscal year 2007. The $240,000 appearing under "All Other Compensation" reflects the amount earned by Mr. Moloshok during fiscal year 2008 under his consulting agreement dated as of December 18, 2007

Outstanding Equity Awards at Fiscal Year-End for Fiscal Year 2008

The following table sets forth the stock option and stock awards of each of our Named Executive Officers outstanding at the end of fiscal year 2008.

Outstanding Equity Awards at Fiscal Year-End for Fiscal Year 2008

	Option Awards										Stock Awards
	Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration	Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested		Equity Incentive Plan Awards: number of Unearned Shares, Units or Other Rights That Have Not Vested		Equity Inventive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
Name	Exercisable		Unexercisable				(#)	($)		Date		(#)	($)			(#)	($)
Matt Freeman		416,667		2,083,333	(1)		—	$	0.23	6/5/2018		—	$	—		—	$	—
		416,667		2,083,333	(2)		—	$	0.80	6/5/2018		—	$	—		—	$	—
		—		21,795,024	(3)		—	$	0.20	12/2/2018		—	$	—		—	$	—
		—		999,441	(4)		—	$	0.60	12/2/2018		—	$	—		—	$	—
		—		999,441	(5)		—	$	0.80	12/2/2018		—	$	—		—	$	—
		—		999,441	(6)		—	$	1.00	12/2/2018		—	$	—		—	$	—
		—		999,441	(7)		—	$	1.20	12/2/2018		—	$	—		—	$	—
		—		999,441	(8)		—	$	1.40	12/2/2018		—	$	—		—	$	—
Michael Downing		150,000		150,000	(9)		—	$	0.23	6/4/2018		—	$	—		—	$	—
James Moloshok		881,250		618,750	(10)		—	$	0.23	12/18/2017		—	$	—		—	$	—
		906,323		2,718,970	(11)		—	$	0.20	12/2/2018		—	$	—		—	$	—
		—		235,641	(12)		—	$	0.60	12/2/2018		—	$	—		—	$	—
		—		235,641	(13)		—	$	0.80	12/2/2018		—	$	—		—	$	—
		—		235,641	(14)		—	$	1.00	12/2/2018		—	$	—		—	$	—
		—		235,641	(15)		—	$	1.20	12/2/2018		—	$	—		—	$	—
		—		235,641	(16)		—	$	1.40	12/2/2018		—	$	—		—	$	—
Tabreez Verjee		1,296,296		1,203,704	(17)		—	$	0.35	2/1/2018		—	$	—		—	$	—
		3,364,763		10,094,289	(18)		—	$	0.20	12/2/2018		—	$	—		—	$	—
		—		999,441	(19)		—	$	0.60	12/2/2018		—	$	—		—	$	—
		—		999,441	(20)		—	$	0.80	12/2/2018		—	$	—		—	$	—
		—		999,441	(21)		—	$	1.00	12/2/2018		—	$	—		—	$	—
		—		999,441	(22)		—	$	1.20	12/2/2018		—	$	—		—	$	—
		—		999,441	(23)		—	$	1.40	12/2/2018		—	$	—		—	$	—
Lennox L. Vernon		33,854		28,646	(24)		—	$	1.50	10/30/2016		—	$	—		—	$	—
		31,250		43,750	(25)		—	$	0.37	10/24/2017		—	$	—		—	$	—
		—		599,363	(26)		—	$	0.20	12/2/2018		—	$	—		—	$	—
		—		38,494	(27)		—	$	0.60	12/2/2018		—	$	—		—	$	—
		—		38,494	(28)		—	$	0.80	12/2/2018		—	$	—		—	$	—
		—		38,494	(29)		—	$	1.00	12/2/2018		—	$	—		—	$	—
		—		38,494	(30)		—	$	1.20	12/2/2018		—	$	—		—	$	—
		—		38,494	(31)		—	$	1.40	12/2/2018		—	$	—		—	$	—

(1)	These stock options vest monthly from June 2008 through June 2011.

(2)	These stock options vest monthly from June 2008 through June 2011.

(3)	These stock options vest monthly from January 2009 through June 2012.

(4)

These stock options vest only upon the earlier of a liquidation event or a firmly underwritten public offering of our common stock at a price per share equal to or greater than $0.40 and pursuant to which all of our common stock issuable upon conversion of the Series A preferred stock and upon exercise of the warrants held by the investors party to the December 3, 2008 securities purchase agreement will be sold.

(5)

(6)

(7)

(8)

(9)	These stock options vest monthly from June 2008 through June 2009.

(10)	These stock options vest monthly from December 2007 through December 2009.

(11)	These stock options vest monthly from January 2009 through June 2012.

(12)

(13)

(14)

(15)

(16)

(17)	These stock options vest monthly from February 2008 through February 2011.

(18)	These stock options vest monthly from January 2009 through June 2012.

(19)

(20)

(21)

(22)

(23)

(24)	These stock options vest monthly from October 2006 through October 2010.

(25)	These stock options vest monthly from October 2007 through October 2010.

(26)	These stock options vest monthly from January 2009 through June 2012.

(27)

(28)

(29)

(30)

(31)

Director Compensation for Fiscal Year 2008

The compensation paid by us to non-employee directors for fiscal year 2008 is set forth in the table below:

Name	Fees Earned or Paid in Cash ($)		Stock Awards (1) ($)		Option Awards(2) ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
John Durham(2)	$	29,625	$	—	$	23,492	$	—	$	—	$	—	$	53,117
Peter Guber	$	—	$	—	$	257,832	$	—	$	—	$	—		257,832
Michael Jung	$	—	$	—	$	—	$	—	$	—	$	—		—
Richard Ling	$	—	$	—	$	—	$	—	$	—	$	—		—
Mark Menell	$	—	$	—	$	—	$	—	$	—	$	—		—
Riaz Valani (3)	$	88,000	$	—	$	179,800	$	—	$	—	$	—	$	267,800

(1) The amounts shown in this column represent the compensation costs of stock options for financial reporting purposes for fiscal years 2008 and 2007 under FAS 123(R), rather than an amount paid to or realized by the director. The FAS 123(R) value as of the grant date for options is spread over the number of months of service required for the grant to become non-forfeitable. The FAS 123(R) value as of the grant date for options is spread over the number of months of service required for the grant to become non-forfeitable. Compensation costs shown in the column “Option Awards” reflect ratable amounts expensed for grants that were made in fiscal years 2008 and 2007. There can be no assurance that the FAS 123(R) amounts will ever be realized.

(2) Represents compensation paid to Catalyst Strategy, Inc., a corporation that is an affiliate of Mr. Durham, pursuant to a services agreement between our company and Catalyst.

(3) Mr. Valani earned fees and was granted stock options pursuant to a consulting agreement entered into with our company dated February 1, 2008.

Employment Agreements with Our Named Executive Officers

Matt Freeman

Mr. Freeman entered into a new employment agreement, dated as of December 3, 2008, which supersedes his prior employment agreement dated June 5, 2008. His employment agreement provides for a salary at the monthly rate of $50,000, less standard payroll deductions and tax withholdings. In addition, under the terms of the employment agreement, in connection with the closings of our December 2008 preferred stock financing, Mr. Freeman will receive a bonus payment of $75,000 if he remains with the Company until the one-year anniversary of his start date. Mr. Freeman is eligible to receive incentive compensation of up to $150,000 per year, contingent upon attainment of performance targets to be mutually agreed upon with the Board.

The term of Mr. Freeman’s employment as our Chief Executive Officer is indefinite, subject to termination by either party in accordance with the terms of the employment agreement. We may terminate Mr. Freeman at any time, without notice, for any reason or no reason at all. Pursuant to the terms of his employment agreement, in the event that Mr. Freeman’s employment is terminated by us other than for cause, death or disability, Mr. Freeman is eligible to receive, among other things, severance payments, in the form of a salary continuation, equal to one year’s base salary (subject to reduction to six months if Mr. Freeman finds subsequent employment prior to the expiration of the twelve month period) and an additional twelve months of vesting on the options granted to Mr. Freeman from the date of termination, which, to the extent unexercised, will expire on the earlier of three years after such termination or the expiration date as set forth in the applicable stock option agreement. If Mr. Freeman’s employment is terminated by death or disability, Mr. Freeman is entitled to receive an additional twelve months of vesting on the options granted to Mr. Freeman from the date of termination, which, to the extent unexercised, will expire upon the earlier of three years after such termination or the expiration date set forth in the applicable stock option agreement. In the event of a “change of control,” 50% of any unvested options granted to Mr. Freeman shall become fully vested immediately prior to the occurrence of the change of control. In addition, if there is a “change of control” before Mr. Freeman’s service terminates and if Mr. Freeman’s employment is terminated without cause or resigns for good reason within 12 months of the “change of control,” then in addition to the foregoing vesting of any unvested options, any remaining unvested options shall vest immediately prior to the termination of employment. Mr. Freeman shall have 36 months from such separation of employment to exercise his vested options (provided that no such exercise period shall extend beyond the maximum term specified in the applicable stock option agreement).

James Moloshok

On December 10, 2008, we entered into an employment agreement with James Moloshok. Mr. Moloshok had previously served as a consultant to us since December 18, 2007. Under the terms of the employment agreement, Mr. Moloshok is required to devote an average of 30 hours per week to his work for us for an indefinite term, subject to termination by either party in accordance with the terms of the employment agreement. We may terminate Mr. Moloshok at any time without notice, for any reason or no reason at all.

The employment agreement provides that Mr. Moloshok will be paid a base monthly salary of $20,000, less standard payroll deductions and tax withholdings. Under the employment agreement, Mr. Moloshok will also be eligible to (i) receive incentive compensation of $100,000 per year, contingent upon attainment of performance targets to be agreed to with our board of directors and (ii) participate in an incentive compensation plan to be established by our board of directors under which Mr. Moloshok will be eligible to receive up to 150,000 fully vested shares of restricted stock per year, contingent upon attainment of performance targets to be agreed to with our board of directors. In the event Mr. Moloshok’s employment is terminated by us other than for cause, death or disability, or if Mr. Moloshok resigns for good reason, the employment agreement provides for a severance payment of $120,000 and an additional six months of vesting on any options, restricted stock or restricted stock units awarded to Mr. Moloshok. In the event of a “change of control” before Mr. Moloshok’s service terminates, any unvested options, restricted stock, and restricted stock unit awards granted to Mr. Moloshok will immediately become fully vested.

Tabreez Verjee

On December 3, 2008, we entered into an amended and restated employment agreement with Tabreez Verjee, which supersedes and replaces his prior employment agreement dated February 26, 2007. Mr. Verjee’s employment agreement provides that Mr. Verjee will devote 95% of his time to the performance of his duties to us as President for a salary at the monthly rate of $17,500, less standard payroll deductions and tax withholdings. Mr. Verjee will also be eligible to receive incentive compensation of up to $100,000 per year, contingent upon attainment of performance targets to be mutually agreed upon with the Board.

The term of Mr. Verjee’s employment as our President is indefinite, subject to termination by either party in accordance with the terms of the amended and restated employment agreement. We may terminate Mr. Verjee at any time, without notice, for any reason or no reason at all. Pursuant to the terms of his amended and restated employment agreement, in the event that Mr. Verjee’s employment is terminated by us other than for cause, death or disability, Mr. Verjee is eligible to receive, among other things, severance payments, in the form of a salary continuation, equal to one year’s base salary (subject to reduction to six months if Mr. Verjee finds subsequent employment prior to the expiration of the twelve month period) and any unvested options awarded to Mr. Verjee will fully and immediately vest, which, to the extent unexercised, will expire on the earlier of three years after such termination or the expiration date as set forth in the applicable stock option agreement. If Mr. Verjee’s employment is terminated by death or disability, Mr. Verjee’s unvested options will become fully vested which, to the extent unexercised, will expire upon the earlier of three years after such termination or the expiration date as set forth in the applicable stock option agreement. In the event of a “change of control,” 50% of any unvested options granted to Mr. Verjee shall become fully vested immediately prior to the occurrence of the change of control. In addition, if there is a “change of control” before Mr. Verjee’s service terminates and if Mr. Verjee’s employment is terminated without cause or resigns for good reason within 12 months of the “change of control,” then in addition to the foregoing vesting of any unvested options, any remaining unvested options shall vest immediately prior to the termination of employment. Mr. Verjee shall have 36 months from such separation of employment to exercise his vested options (provided that no such exercise period shall extend beyond the maximum term specified in the applicable stock option agreement).

Lennox L. Vernon

On December 10, 2008, we entered into an amended and restated employment agreement with Lennox L. Vernon, which supersedes and replaces his previous employment agreement dated October 30, 2006. His amended and restated employment agreement provides that Mr. Vernon will serve as our Chief Accounting Officer and Director of Operations at an annual base salary of $160,000, less standard payroll deductions and tax withholdings. Mr. Vernon is also eligible to receive annual bonus payments of up to 15% of his base salary, contingent upon meeting certain goals determined by the CEO. Subsequently, Mr. Vernon’s annual base salary was increased to $168,000.

The term of Mr. Vernon’s employment as our Chief Accounting Officer and Director of Operations is indefinite, subject to termination by either party in accordance with the terms of the amended and restated employment agreement. We may terminate Mr. Vernon at any time upon 30 days’ notice, for any reason or no reason at all. Pursuant to the terms of his amended and restated employment agreement, in the event that Mr. Vernon’s employment is terminated by us other than for cause, death or disability, Mr. Vernon is eligible to receive, among other things, severance payments in the form of a salary continuation equal to three months’ base salary. Generally, if Mr. Vernon’s employment is terminated by us for or without cause, by Mr. Vernon with or without good reason, or by death or disability, Mr. Vernon’s unvested options will immediately expire. If there is a “change of control” before Mr. Vernon’s service terminates, and if Mr. Vernon’s employment is terminated without cause or if Mr. Vernon resigns for good reason within 12 months of the “change of control,” any unvested options granted to Mr. Vernon will immediately become fully vested. Any unexercised vested options will expire one month after the termination of Mr. Vernon’s employment.

Michael Downing

On October 27, 2006, we entered into an employment agreement with Michael Downing pursuant to which Mr. Downing served as our President and Chief Executive Officer. Mr. Downing’s employment agreement provided for a term of four years, subject to annual renewal thereafter, with an annual base salary of $175,000 and a bonus subject to our achieving our target performance levels as approved by our board of directors or the compensation committee thereof. Pursuant to the employment agreement, on October 27, 2006 Mr. Downing received an option grant from our 2006 equity incentive plan, to acquire 500,000 shares of our common stock at a price of $1.50 per share, which was the fair market value of our common stock on the date of grant. One-third (1/3) of the options vest upon the first anniversary of the date of grant. An additional one-thirty sixth (1/36) of the options vest on the last day of each month thereafter. Under the agreement, Mr. Downing was subject to traditional non-competition and employee non-solicitation restrictions while he was employed by us. Mr. Downing and his spouse and dependents were entitled to participate in our benefit plans in substantially the same manner, including but not limited to responsibility for the cost thereof, and at substantially the same levels as we make such opportunities available to all of our managerial or salaried executive employees and their dependents.

On February 26, 2007, in conjunction with Mr. Downing’s resignation as president, we and Mr. Downing entered into an amendment to his employment agreement. The amendment clarified that Mr. Downing was no longer our President but continued to serve as our Chief Executive Officer. The amendment also provided that the appointment of Tabreez Verjee as our president did not constitute good reason for Mr. Downing to terminate his employment with us under his employment agreement.

Mr. Downing’s employment was terminated effective as of June 4, 2008. As a result, the above option was canceled.

In connection with Mr. Downing’s resignation as our Chief Executive Officer and a director, on June 4, 2008, we and Mr. Downing entered into a Separation Agreement and Mutual Release pursuant to which, among other things: (i) we agreed to pay Mr. Downing all accrued salary and all accrued and unused vacation benefits earned through June 4, 2008, subject to standard payroll deductions, withholding taxes and other obligations; (ii) we agreed to forgive outstanding debt in the amount of $17,876.05 owed by Mr. Downing to us; (iii) the parties agreed to cancel an outstanding stock option previously granted to Mr. Downing to purchase 500,000 shares of our common stock; and (iv) the parties agreed to terminate Mr. Downing’s existing employment agreement and to release each other from any and all claims that they may have against each other.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Riaz Valani

Effective as of February 1, 2008, we entered into another one-year consulting agreement with Mr. Valani under which Mr. Valani is to provide us with business and corporate development consulting services and devote an average of 20% of his working time to provide such services. Pursuant to the terms of the consulting agreement, on February 5, 2008, our board of directors granted to Mr. Valani, non-qualified stock options under our 2007 non-qualified stock option plan to purchase 440,000 shares of common stock, with an exercise price of $0.31 per share, which was the closing price per share of our common stock on the OTC Bulletin Board on the date of grant. Thirty-three percent of the total amount of such options granted to Mr. Valani vested on the date of the grant and the remainder of the options granted to Mr. Valani vest monthly at the rate of 1/24 th per month, provided that Mr. Valani continues to provide services to us. In addition, the consulting agreement provides for us to pay to Mr. Valani a fee consisting of cash compensation of $8,000 per month, the payment of which is deferred until (i) our board of directors elects to pay the cash compensation in its discretion, (ii) the occurrence of a change in control, (iii) two years after the effective date of the consulting agreement or (iv) the date when Mr. Valani ceases to provide services to us and is no longer a member of our board of directors. In connection with the closings under the securities purchase agreement in December 2008, we terminated the consulting agreement.

Transactions with Internet Television Distribution LLC and Technology Credit Partners, Affiliates of Tabreez Verjee and Riaz Valani

In connection with the closings under the securities purchase agreement in December 2008, Internet Television Distribution LLC (“ITD”), which is an affiliate of Mr. Verjee and Mr. Valani, exchanged (i) Subordinated Notes held by ITD in the aggregate principal amount of $1,852,941 into 463,235 shares of Series A preferred stock and related warrants to purchase 3,705,880 shares of our common stock and (ii) warrants held by ITD to purchase 1,798,973 shares of common stock at an exercise price of $1.75 per share into 1,574,102 shares of common stock. ITD previously purchased the Subordinated Notes and warrants from us in April and June 2008 for an aggregate purchase price of $1,575,000.

In addition, in connection with the closings under the securities purchase agreement, Technology Credit Partners (“TCP”), which is also an affiliate of Mr. Verjee and Mr. Valani, exchanged (i) Senior Notes held by TCP in the aggregate principal amount of $1,000,000 into 333,333 shares of Series A preferred stock and related warrants to purchase 2,666,664 shares of our common stock and (ii) warrants held by TCP to purchase 93,750 shares of common stock at an exercise price of $1.75 per share into 82,032 shares of common stock. TCP purchased the Senior Notes and warrants from various prior holders of such securities during 2008.

Transactions with James Moloshok

In connection with the closings under the securities purchase agreement in December 2008, Mr. Moloshok exchanged (i) Subordinated Notes held by Mr. Moloshok in the aggregate principal amount of $323,529.41 into 80,882 shares of Series A preferred stock and related warrants to purchase 647,056 shares of our common stock and (ii) warrants held by Mr. Moloshok to purchase 314,108 shares of common stock at an exercise price of $1.75 per share into 274,845 shares of common stock. Mr. Moloshok previously purchased the Subordinated Notes and warrants from us in April and June 2008 for an aggregate purchase price of $275,000.

Transactions with Catalyst Strategy, Inc., an affiliate of John Durham

In connection with a services agreement between the Company and Catalyst Strategy, Inc. (“Catalyst”), a corporation that is an affiliate of Mr. Durham, on February 28, 2008 we issued to Catalyst a warrant to purchase 50,000 shares of our common stock for a period of five years at an exercise price of $1.75 per share. The exercise price of the warrant has subsequently been adjusted to $0.20 per share, pursuant to its exercise price adjustment provisions. Both the services agreement and the terms of the warrant grant were approved by our board of directors following disclosure of Mr. Durham’s relationship with Catalyst.

Director Independence

Our board of directors uses the definition of “independent director” as set forth in NASDAQ Marketplace Rule 4200(a)(15) in determining whether members of our board of directors are independent. Our board of directors has affirmatively determined that Mr. Durham, Mr. Mennell, Mr. Jung and Mr. Ling is each an “independent director” as that term is set forth in NASDAQ Marketplace Rule 4200(a)(15). Our board of directors did not consider any transactions, relationships or arrangements not disclosed pursuant to this section entitled “Certain Relationships and Related Transactions, and Director Independence” in making its subjective determination that each of these directors is an “independent director” as that term is set forth in NASDAQ Marketplace Rule 4200(a)(15).

DESCRIPTION OF SECURITIES

Authorized Capital Stock

Our articles of incorporation, as amended, authorize the issuance of 410,000,000 shares of capital stock, of which there are authorized 400,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share. On the close of business on October 9, 2006 we effected an 8.333334-for-1 forward stock split in the form of a stock dividend with respect to our common stock.

Capital Stock Issued and Outstanding

As of April 7, 2009, we had issued and outstanding:

29,229,284 shares of common stock;

7,065,293 shares of Series A preferred stock;

options to purchase 83,347,017 shares of common stock outstanding under our stock incentive plans; and

warrants to purchase 67,351,020 shares of common stock, of which warrants to purchase 63,787,687 shares have an exercise price of $0.20 per share, warrants to purchase 3,133,333 shares have an exercise price of $1.72 per share and warrants to purchase 430,000 shares have an exercise price of $1.75 per share.

The following description of our capital stock is derived from the provisions of our articles of incorporation and by-laws. Such description is not intended to be complete and is qualified in its entirety by reference to the relevant provisions of our articles of incorporation and by-laws, which have been publicly filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part.

Description of Common Stock

We are authorized to issue 400,000,000 shares of common stock, 29,229,284 shares of which are issued and outstanding. The holders of our common stock are entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Except as otherwise provided by law, and subject to any voting rights granted to holders of any preferred stock, amendments to our articles of incorporation generally must be approved by a majority of the votes entitled to be cast by all outstanding shares of common stock. The articles of incorporation do not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, our common stock holders will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available. Subject to any preferential rights of any outstanding series of preferred stock, upon liquidation, dissolution or winding up of us, our common stock holders will be entitled to receive pro rata all assets available for distribution to such holders.

Description of Preferred Stock

We are authorized to issue 10,000,000 shares of “blank check” preferred stock, $0.001 par value per share, 8,003,000 of which is designated as Series A preferred stock. We currently have 7,065,293 shares of Series A preferred stock issued and outstanding. Each share of Series A preferred stock is convertible into 20 shares of common stock, subject to certain anti-dilution and other adjustments as set forth in the certificate of designation of the Series A preferred stock.

So long as 2,434,657 shares of Series A preferred stock remain outstanding, holders of Series A preferred stock shall be entitled to elect four directors to our board of directors. Holders of Series A preferred stock also have voting rights and are entitled to vote, on an as converted basis, together with the holders of common stock as a single class with respect to any matter upon which holders of common stock have the right to vote.

The Series A preferred stock have a liquidation preference of $4.00 per share and are entitled to receive dividends, prior and in preference to any declaration or payment of any dividend on the common stock, at the rate of $0.32 per share per annum, when and if any such dividends are declared by our board of directors. So long as 2,434,657 shares of Series A preferred stock remain outstanding, we are required to obtain the consent of the holders of at least two-thirds of the outstanding shares of Series A preferred stock prior to taking certain actions, including altering or changing the rights, preferences or privileges of the shares of Series A preferred stock so as to affect adversely such shares of Series A preferred stock.

Indemnification; Limitation of Liability

Nevada Revised Statutes (“NRS”) Sections 78.7502 and 78.751 provide us with the power to indemnify any of our directors and officers. The director or officer must have conducted himself/herself in good faith and reasonably believe that his/her conduct was in, or not opposed to our best interests. In a criminal action, the director, officer, employee or agent must not have had reasonable cause to believe his/her conduct was unlawful.

Under NRS Section 78.751, advances for expenses may be made by agreement if the director or officer affirms in writing that he/she believes he/she has met the standards and will personally repay the expenses if it is determined such officer or director did not meet the standards.

Our bylaws include an indemnification provision under which we have the power to indemnify our directors and officers (including heirs and personal representatives) against all costs, charges and expenses actually and reasonably incurred, including an amount paid to settle an action or satisfy a judgment to which the director or officer is made a party by reason of being or having been a director or officer of ours or any of our subsidiaries.

Our bylaws also provide that our directors may cause us to purchase and maintain insurance for the benefit of a person who is or was serving as a director, officer, employee or agent of ours or any of our subsidiaries (including heirs and personal representatives) against a liability incurred by him/her as a director, officer, employee or agent.

Our indemnification agreements with certain of our executive officers and directors contain provisions which require us to indemnify them for costs, charges and expenses incurred in connection with their service as such. We are required to provide such indemnification if (i) the executive officer acted honestly and in good faith with a view to our best interests, and (ii) in the case of a criminal action or proceeding, the executive officer had reasonable grounds for believing that his conduct was lawful.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

LEGAL MATTERS

The validity of the common stock being offered hereby has been passed upon by McDonald Carano Wilson, LLP, Reno, Nevada.

EXPERTS

Rowbotham & Company LLP, an independent registered public accounting firm, have audited our financial statements for the years ended December 31, 2008 and 2007, as stated in their report appearing herein, and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC. You may read or obtain a copy of these reports at the SEC’s public reference room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the public reference room and its copy charges by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains registration statements, reports, proxy information statements and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov .

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock being offered by this prospectus. This prospectus is part of that registration statement. This prospectus does not contain all of the information set forth in the registration statement or the exhibits to the registration statement. For further information with respect to us and the shares we are offering pursuant to this prospectus, you should refer to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract, agreement or other document referred to are not necessarily complete, and you should refer to the copy of that contract or other documents filed as an exhibit to the registration statement. You may read or obtain a copy of the registration statement at the SEC’s public reference room and website referred to above.

BETAWAVE CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Audited Financial Statements	Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2008 and 2007		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2008 and 2007		F-4
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2008 and 2007		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2008 and 2007		F-6
Notes to the Consolidated Financial Statements		F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

Betawave Corporation

We have audited the accompanying consolidated balance sheets of Betawave Corporation and subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis of designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial positions of the Company as of December 31, 2008 and 2007, and the results of their operations and their cash flows for the years then ended, in conformity with United States generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred net loss since its inception, has experienced liquidity problems, negative cash flows from operations, and a working capital deficit at December 31, 2008, that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Rowbotham & Company LLP

San Francisco, California

March 30, 2009

F-2

Betawave Corporation

Consolidated Balance Sheets

As of December 31, 2008 and 2007

	December 31,			December 31,
	2008			2007
Assets
Current assets:
Cash and cash equivalents	$	11,863,121		$	1,108,834
Trade accounts receivable, net of allowance for doubtful accounts of none and $17,216 at December 31, 2008 and 2007, respectively		3,108,136			1,604,209
Prepaid expenses		961,829			503,792
Total current assets		15,933,086			3,216,835

Property and equipment, net		236,448			457,317
Convertible note fees, net amortization of none and $273,714 at December 31, 2008 and 2007, respectively		—			1,189,486
Deposits		113,029			117,979
Total assets	$	16,282,563		$	4,981,617

Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	4,085,886		$	1,398,262
Accrued liabilities		1,601,840			714,693
Deferred revenue		109,243			—
Total current liabilities		5,796,969			2,112,955

Convertible notes, net discount of none and $4,039,718 at December 31, 2008 and 2007, respectively		—			6,260,282

Commitments and contingencies		—			—

Stockholders’ equity (deficit):
Preferred Stock: $0.001 par value; 10,000,000 shares authorized; 7,065,293 and zero shares issued and outstanding at December 31, 2008 and 2007, respectively (liquidation value of $28,261,172 and zero at December 31, 2008 and 2007, respectively)		7,065			—
Common Stock: $0.001 par value; 400,000,000 shares authorized; 29,229,284 and 25,169,739 shares issued and outstanding at December 31, 2008 and 2007, respectively		29,230			25,171
Notes receivable from stockholders		(18,910	)		(18,910	)
Additional paid-in capital		51,563,483			20,727,408
Accumulated deficit		(41,095,274	)		(24,125,289	)
Total stockholders’ equity (deficit)		10,485,594			(3,391,620	)
Total liabilities and stockholders’ equity (deficit)	$	16,282,563		$	4,981,617

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

F-3

Betawave Corporation

Consolidated Statements of Operations

For the Years Ended December 31, 2008 and 2007

	December 31,			December 31,
	2008			2007
Revenues	$	7,701,599		$	2,081,182

Cost of revenues and expenses:
Cost of revenue		6,551,870			2,437,047
Sales and marketing		6,480,550			6,174,158
Product development		713,964			2,261,481
General and administrative		6,024,801			5,186,981
Loss on debt extinguishment		2,736,832			—
Acquisition costs		—			1,270,348
Total costs of revenues and expenses		22,508,017			17,330,015
Operating loss		(14,806,418	)		(15,248,833	)

Other income (expense):
Interest income		23,238			147,007
Miscellaneous income		278,740			536
Interest expense		(2,465,545	)		(1,276,568	)
Total other income (expense)		(2,163,567	)		(1,129,025	)
Net loss before provision for income taxes		(16,969,985	)		(16,377,858	)
Provision for income taxes		—			—
Net loss	$	(16,969,985	)	$	(16,377,858	)

Net loss per share - basic and diluted	$	(0.66	)	$	(0.68	)

Shares used to compute net loss per share - basic and diluted		25,707,208			24,024,966

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

F-4

Betawave Corporation Consolidated Statements of Stockholders’ Equity (Deficit) For the Years Ended December 31, 2008 and 2007

									Notes
									Receivable			Additional
	Preferred Stock				Common Stock				From			Paid-in			Accumulated
	Shares		Amount		Shares		Amount		Stockholders			Capital			Deficit			Total
Balances at January 1, 2007		—	$	—		23,099,230	$	23,100	$	(18,910	)	$	12,288,298		$	(7,747,431	)	$	4,545,057
Issuance of Common Stock in January for cash upon exercise of warrants		—		—		1,000,000		1,000		—			1,749,000			—			1,750,000
Issuance of Common Stock in January for cash upon exercise of options		—		—		25,879		25		—			1,475			—			1,500
Issuance of Common Stock in April for cash upon exercise of options		—		—		5,167		6		—			7,772			—			7,778
Issuance of warrants in June		—		—		—		—		—			5,298,493			—			5,298,493
Nonemployee stock-based compensation charge		—		—		—		—		—			227,883			—			227,883
Stock-based compensation charge		—		—		—		—		—			944,623			—			944,623
Issuance of Common Stock in November for cash upon exercise of options		—		—		39,463		40		—			2,248			—			2,288
Issuance of Common Stock in December for license, distribution and marketing agreement		—		—		1,000,000		1,000		—			199,000			—			200,000
Discount on investor warrant		—		—		—		—		—			8,616			—			8,616
Net loss		—		—		—		—		—			—			(16,377,858	)		(16,377,858	)
Balances at December 31, 2007		—		—		25,169,739		25,171		(18,910	)		20,727,408			(24,125,289	)		(3,391,620	)
Issuance of Common Stock in February to publisher for representation rights		—		—		300,000		300		—			101,700			—			102,000
Beneficial conversion on 2007 warrants		—		—		—		—		—			772,500			—			772,500
Conversion of 6% senior convertible note in June into common stock		—		—		25,000		25		—			39,975			—			40,000
Issuance of Series A preferred stock for cash, net of issuance costs		5,625,000		5,625		—		—		—			21,016,813			—			21,022,438
Conversion of 15% unsecured convertible original discount notes in December		1,029,406		1,029		—		—		—			4,116,595			—			4,117,624
Exchange of 15% unsecured convertible original issue discount notes warrants in December for common stock		—		—		3,498,013		3,498		—			556,401			—			559,899
Conversion of 6% senior convertible in December for preferred stock		410,887		411		—		—		—			1,643,138			—			1,643,549
Purchase of warrants associated with 6% Senior convertible notes in December		—		—		—		—		—			(134,188	)		—			(134,188	)
Exchange of 6% senior note warrants in December for common stock		—		—		82,032		82		—			(82	)		—			—
Exchange of placement agents warrants in December for common stock		—		—		154,500		154		—			(154	)		—			—
Nonemployee stock-based compensation charge		—		—		—		—		—			127,623			—			127,623
Stock-based compensation charge		—		—		—		—		—			2,595,754			—			2,595,754
Net loss		—		—		—		—		—			—			(16,969,985	)		(16,969,985	)
Balances at December 31, 2008		7,065,293	$	7,065		29,229,284	$	29,230	$	(18,910	)	$	51,563,483		$	(41,095,274	)	$	10,485,594

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

F-5

Betawave Corporation

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2008 and 2007

	December 31,			December 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(16,969,985	)	$	(16,377,858	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on debt extinguishment		2,736,832			—
Loss on disposal of fixed assets		1,959			—
Depreciation and amortization of property and equipment		260,028			224,784
Amortization of convertible note fees		474,618			273,714
Stock-based compensation		2,723,377			1,172,506
Non cash interest expense		1,866,813			884,484
Non cash cost of revenues		102,000			—
Write-off of acquisition advances		—			420,338
Changes in operating assets and liabilities:
Trade accounts receivable		(1,503,927	)		(1,599,057	)
Prepaid expenses		(458,037	)		(158,917	)
Deferred direct acquisition costs		—			66,040
Other assets		4,950			—
Accounts payable		2,687,625			902,180
Accrued liabilities		887,146			641,752
Deferred revenue		109,243			—
Net cash used in operating activities		(7,077,358	)		(13,550,034	)

Cash flows from investing activities:
Acquisition advances		—			(1,020,338	)
Payment of acquisition advances		—			600,000
Funds held as restricted cash		(550,000	)		—
Funds released from restricted cash		550,000			1,728,728
Funds held as deposits		—			(107,979	)
Advances to founder and stockholder		—			17,216
Purchase of property and equipment		(41,118	)		(524,781	)
Net cash provided by (used in) investing activities		(41,118	)		692,846

Cash flows from financing activities:
Proceeds from issuance of Series A Preferred Stock, net of issuance cost of $1,477,562		21,022,438			—
Proceeds from issuance of common stock, net of issuance cost		—			1,761,566
Proceeds from issuance of due to stockholder		610,000			—
Repayment of due to stockholder		(400,000	)		(384,793	)
Proceeds from issuance of notes payable		—			200,000
Repayment of notes payable		—			(200,000	)
Proceeds from issuance of unsecured convertible original issue discount notes due June 2010 and related warrants, net of fees of $101,300		3,188,700			—
Repayment of convertible promissory notes		(6,414,187	)		—
Purchase of warrants		(134,188	)		—
Proceeds from issuance of convertible notes and related warrants, net of fees of $1,080,293		—			9,219,707
Net cash provided by financing activities		17,872,763			10,596,480
Net increase (decrease) in cash and cash equivalents		10,754,287			(2,260,708	)
Cash and cash equivalents at beginning of the year		1,108,834			3,369,542
Cash and cash equivalents at the end of the year	$	11,863,121		$	1,108,834

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

F-6

Betawave Corporation

Notes to the Consolidated Financial Statements

For the Years Ended December 31, 2008 and 2007

1.	The Company

General - Unibio Inc. was incorporated in the state of Nevada on February 2, 2005. On September 14, 2006, Unibio Inc. changed its name to GoFish Corporation. In January 2009, GoFish Corporation changed its name to Betawave Corporation and launched a rebranding campaign focused on attention-based digital media.

Betawave Corporation (the “Company”) is the industry’s first attention-based media company. The Company delivers quality advertising and content to large audiences of highly-engaged users through innovative ad formats. The Company has assembled a platform of some of the leading immersive casual gaming, virtual world, social play and entertainment websites into a network of sites (the “Betawave Network”). The Company generates revenue by selling innovative, accountable and attention-grabbing advertising campaigns on those sites to brand advertisers.

Management’s Plan - The Company has incurred operating losses and negative cash flows since inception. Management expects that revenues will increase as a result of its planned continued expansion of Betawave’s Network’s reach, scale and scope. The Company also expects to incur additional expenses for the development and expansion of its publisher network, marketing campaigns for a number of its programming launches and the continuing integration of its businesses. In addition, the Company also anticipates gains in operating efficiencies as a result of the increase to its sales and marketing organization. However, the Company expects that operating losses and negative cash flows will continue for the foreseeable future but anticipates that losses will decrease from current levels to the extent that the Company continues to grow and develop. These Company’s expectations are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by such expectations. While the Company believes that it will be able to expand operations, gain market share, and raise additional funds, there can be no assurance that in the event the Company requires additional financing, such financing would be available on terms which are favorable or at all. Failure to generate sufficient cash flows from operations or raise additional capital would have a material adverse effect on the Company’s ability to achieve its intended business objectives. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Going Concern - The Company’s consolidated financial statements have been presented on a basis that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company continues to face significant risks associated with the successful execution of its strategy given the current market environment for similar companies. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2.	Summary of Significant Accounting Policies

Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

Principles of Consolidation - The consolidated financial statements include the financial statements of Betawave Corporation and its wholly-owned subsidiaries. All significant transactions and balances between the Betawave Corporation and its subsidiaries have been eliminated in consolidation.

Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Fair Value of Financial Instruments - The carrying amounts of cash and cash equivalents, accounts receivable, prepaid expenses, accounts payable, and accrued liabilities, approximate fair value due to the short-term maturities of these instruments.

F-7

Cash and Cash Equivalents - For purposes of reporting cash flows, the Company considers all short-term, interest-bearing deposits with original maturities of three months or less to be cash equivalents. Cash and cash equivalents include a certificate of deposit account.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents and accounts receivable. The Company’s credit risk is managed by investing its cash in a certificate of deposit account. The receivables credit risk is controlled through credit approvals, credit limits and monitoring procedures.

The Company places its cash in banks. Cash in excess of federally insured limits totaled $11,613,121 and $1,008,834 at December 31, 2008 and 2007, respectively.

Accounts Receivable - The Company generally requires no collateral from its customers. An allowance for doubtful accounts will be recorded based on a combination of historical experience, aging analysis, and information on specific accounts. Account balances will be written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company has recorded an allowance against its receivables of none and $17,216 at December 31, 2008 and 2007, respectively.

Accounts Receivable Concentrations - At December 31, 2008, three customers accounted for 26%, 13% and 7%, respectively, of accounts receivable. At December 31, 2007, three customers accounted for 27%, 21% and 9%, respectively, of accounts receivable.

Revenue Concentrations - The Company’s revenue is generated mainly from advertisers who purchase inventory in the form of graphical, text-based or video ads on the Company’s Network of websites. These advertisers’ respective agencies facilitate the purchase of inventory on behalf of their advertisers. For the year ended December 31, 2008, four customers accounted for 22%, 9%, 8% and 5%, respectively, of total revenues. For the year ended December 31, 2007, four customers accounted for 24%, 20%, 7% and 7%, respectively, of total revenues.

Property and Equipment - Property and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, while repair and maintenance costs that do not improve or extend the lives of the respective assets are expensed as incurred. Depreciation and amortization charges are calculated using the straight-line method over the useful lives of the assets, generally three years. Upon retirement or sale, the cost and related accumulated depreciation are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses.

Impairment of Long-Lived Assets - The Company continually evaluates whether events and circumstances have occurred that indicate the remaining estimated useful life of long-lived assets may warrant revision or that the remaining balance of long-lived assets may not be recoverable. When factors indicate that long-lived assets should be evaluated for possible impairment, the Company typically makes various assumptions about the future prospects the asset relates to, considers market factors and uses an estimate of the related undiscounted future cash flows over the remaining life of the long-lived assets in measuring whether they are recoverable. If the estimated undiscounted future cash flows are less than the carrying value of the asset, a loss is recorded as the excess of the asset’s carrying value over its fair value. There have been no such impairments of long-lived assets through December 31, 2008 and 2007.

Income Taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such loss carryforwards and deferred tax assets will not be realized.

F-8

Revenue Recognition - Revenues are recognized from the display of graphical advertisements on the websites of the publishers in the Company Network as “impressions” are delivered up to the amount contracted for by the advertiser. An “impression” is delivered when an advertisement appears in pages viewed by users. Arrangements for these services generally have terms of less than one year. These revenues are recognized as such because the services have been provided, and the other criteria set forth under Staff Accounting Bulletin Topic 13: Revenue Recognition have been met, namely, the fees charged by the Company are fixed or determinable, the advertisers understand the specific nature and terms of the agreed-upon transactions and collectability is reasonably assured. In accordance with Emerging Issues Task Force (“EITF”) Issue No. 99-19, Reporting Revenue Gross as Principal Versus Net as an Agent (“EITF 99-19”), Betawave reports revenues on a gross basis principally because the Company is the primary obligor to the advertisers.

Expense Recognition - Expenses are charged to expense as incurred.

Advertising and Promotion Costs - Expenses related to advertising and promotions of products are charged to expense as incurred. Advertising and promotional costs totaled $129,414 and $1,731,170 for the years ended December 31, 2008 and 2007, respectively.

Research and Development - Research and development costs are charged to operations as incurred.

Stock-Based Compensation - Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB Statement No. 123, Share-Based Payment , (“SFAS 123(R)”) using the modified prospective transition method. Under that transition method, compensation cost recognized for the periods ended December 31, 2008 and 2007 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and (b) compensation cost for all share-based payments granted or modified subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R).

The Company currently uses the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as by assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. We estimate the volatility of our common stock at the date of the grant based on a combination of the implied volatility of publicly traded options on our common stock and our historical volatility rate. The dividend yield assumption is based on historical dividend payouts. The risk-free interest rate is based on observed interest rates appropriate for the term of our employee options. We use historical data to estimate pre-vesting option forfeitures and record share-based compensation expense only for those awards that are expected to vest. For options granted, we amortize the fair value on a straight-line basis. All options are amortized over the requisite service periods of the awards, which are generally the vesting periods. If factors change we may decide to use different assumptions under the Black-Scholes option model and stock-based compensation expense may differ materially in the future from that recorded in the current periods.

F-9

Included in cost of revenues and expenses is $2,723,377 and $1,172,506 of stock-based compensation for the years ended December 31, 2008 and 2007, respectively. At December 31, 2008, this amount includes $36,820 of stock-based compensation related to non-employees, $2,595,755 related to employees, $66,000 related to restricted stock and $24,802 related to warrants. At December 31, 2007, this amount includes $86,216 of stock-based compensation related to non-employees, $944,623 related to employees and $141,667 related to the warrants.

The Company estimates the fair value of stock options using the Black-Scholes valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, expected option term, expected volatility of the stock over the option’s expected term, risk-free interest rate over the option’s expected term, and the expected annual dividend yield. The Company believes that the valuation technique and approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of the stock options granted during the years ended December 31, 2008 and 2007.

Loss Per Share - Basic net loss per share to common stockholders is calculated based on the weighted-average number of shares of common stock outstanding during the period excluding those shares that are subject to repurchase by the Company. Diluted net loss per share attributable to common shareholders would give effect to the dilutive effect of potential common stock consisting of stock options, warrants, convertible debt and preferred stock. Dilutive securities have been excluded from the diluted net loss per share computations as they have an antidilutive effect due to the Company’s net loss for the years ended December 31, 2008 and 2007.

	December 31, 2008		December 31, 2007
Shares issuable upon exercise of employee and non-employee stock options		4,717,067		7,194,770
Shares issuable upon exercise of warrants		5,744,335		7,598,899
Shares issuable upon conversion of notes		—		6,412,500
Shares issuable upon conversion of Series A preferred stock		7,355,648		—
Total		17,817,050		21,206,169

Comprehensive Loss - The Company has no components of comprehensive loss other than its net loss and, accordingly, comprehensive loss is the same as the net loss for all periods presented.

Segments - Segments are defined as components of the Company’s business for which separate financial information is available that is evaluated by the Company’s chief operating decision maker (its CEO) in deciding how to allocate resources and assess performance. The Company has only one overall operating segment.

Recent Accounting Pronouncements - In December 2007, the Financial Accounting Standards Board (FASB) issued (SFAS) No. 141 (Revised 2007) (SFAS 141R), Business Combinations . This statement will significantly change the accounting for business acquisitions both during the period of the acquisition and in subsequent periods. SFAS 141R provides companies with principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. SFAS 141R also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R will be effective January 1, 2009 for the Company and will be applied to all business combinations occurring on or after that date.

F-10

In May 2008, the FASB issued SFAS 162 (“SFAS 162”), The Hierarchy of Generally Accepted Accounting Principles . SFAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS 162 will be effective 60 days following the SEC’s approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles . The Company does not believe SFAS 162 will have a significant impact on the Company’s consolidated financial statements.

In June 2008, the FASB issued Staff Position FSP EITF No. 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities : (“FSP EITF 03-6-1”). FSP EITF 03-6-1 provides that unvested shares-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earning per share pursuant to the two-class method. EITF 03-6-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Upon adoption, a company is required to retrospectively adjust its earnings per share data (including any amounts related to interim periods, summaries of earnings and selected financial data) to conform to the provisions in EITF 03-6-1. Early application of FSP EITF 03-6-1is prohibited. The adoption of FSP EITF 03-6-1 is not anticipated to have a material effect on the Company’s consolidated financial statements.

During the first quarter of fiscal 2008, the Company adopted the following accounting standards:

In February 2008, the FASB issued FASB Staff Position (FSP) Financial Accounting Standard (FAS) 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Its Related Interpretive Accounting Pronouncements That Address Leasing Transactions , (“FSP FAS 157-1”) and FSP FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP FAS 157-2”). FSP FAS 157-1 removes leasing from the scope of SFAS No. 157, “Fair Value Measurements.” FSP FAS 157-2 delays the effective date of SFAS No. 157 from 2008 to 2009 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually.

In September 2006, the FASB finalized SFAS No. 157 which became effective January 1, 2008 except as amended by FSP FAS 157-1 and FSP FAS 157-2 as described above. This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements; however, it does not require any new fair value measurements. The adoption of this Statement did not have any effect on the Company’s consolidated financial statements.

F-11

In February 2007, the FASB issued SFAS No. 159 (“SFAS 159”), The Fair Value Option for Financial Assets and Financial Liabilities, which permits entities to elect to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. This election is irrevocable. SFAS 159 was effective in the first quarter of fiscal 2008. The Company has not elected to apply the fair value option to any of its financial instruments.

3.	Fair Value

The Company adopted the provisions of SFAS No. 157 as amended by FSP FAS 157-1 and FSP FAS 157-2 on January 1, 2008. Pursuant to the provisions of FSP FAS 157-2, the Company will not apply the provisions of SFAS No. 157 until January 1, 2009 for the following major categories of nonfinancial assets and liabilities from the consolidated balance sheet: property and equipment. The Company recorded no change to its opening balance of accumulated deficit as of January 1, 2008 as it did not have any financial instruments requiring retrospective application per the provisions of SFAS No. 157.

Fair Value Hierarchy - SFAS No. 157 specifies a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the company’s own assumptions of market participant valuation (unobservable inputs). In accordance with SFAS No. 157, these two types of inputs have created the following fair value hierarchy:

Level 1 - Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 - Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;

Level 3 - Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

SFAS No. 157 requires the use of observable market data if such data is available without undue cost and effort.

Measurement of Fair Value - The Company measures fair value as an exit price using the procedures described below for all assets and liabilities measured at fair value. When available, the company uses unadjusted quoted market prices to measure fair value and classifies such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use, where possible, current market-based or independently-sourced market parameters such as interest rates and currency rates. Items valued using internally generated models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be inputs that are readily observable. If quoted market prices are not available, the valuation model used generally depends on the specific asset or liability being valued.

Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2008:

		Level 1				Level 2				Level 3				Total
Cash and cash equivalents		$	11,863,121			$	—			$	—			$	11,863,121

F-12

4.	Property and Equipment, net

Property and equipment, net consisted of the following at December 31, 2008 and 2007:

	December 31, 2008			December 31, 2007
Computer equipment and software	$	652,877		$	614,009
Leasehold improvements		145,794			145,794
Furniture and fixtures		7,737			7,737
Total property and equipment		806,408			767,540
Less accumulated depreciation and amortization		(569,960	)		(310,223	)
Property and equipment, net	$	236,448		$	457,317

Depreciation and amortization expense totaled $260,028 and $224,748 for the years ended December 31, 2008 and 2007, respectively.

5.	Accrued Liabilities

Accrued liabilities consisted of the following at December 31, 2008 and 2007:

	December 31, 2008		December 31, 2007
Accrued vendor obligations	$	687,928	$	236,833
Accrued compensation		777,290		182,253
Accrued travel and entertainment		—		106,904
Accrued legal expenses		—		91,878
Accrued city and county taxes		41,836		53,182
Accrued interest expenses		—		39,483
Other		94,786		4,160
Total accrued liabilities	$	1,601,840	$	714,693

6.	Convertible Notes

In June 2007, the Company entered into a purchase agreement (the “Purchase Agreement”) pursuant to which they sold the June 2007 Notes in the aggregate principal amount of $10,300,000 and the June 2007 warrants to purchase an aggregate of 3,862,500 shares of common stock (the “June 2007 Warrants”) in a private placement transaction the “June 2007 Private Placement”). The June 2007 Notes were outstanding until their purchase by the Company on or before December 12, 2008.

The June 2007 Notes bore interest at a rate of 6% per annum. The June 2007 Notes had maturity dates three years from the date of issuance and were convertible into shares of the Company’s common stock at a conversion price of $1.60 per share, subject to full-ratchet anti-dilution protection.

The Purchase Agreement governing the June 2007 Notes contains various negative covenants which are no longer applicable to the Company.

The June 2007 Warrants issued to the investors in the June 2007 Private Placement were exercisable for a period of five years commencing one year after the date of issuance at an exercise price of $1.75 per share. Utilizing the Black-Scholes valuation model and the following assumptions: estimated volatility of 85%, a contractual life of six years, a zero dividend rate, 5.12% risk free interest rate, and the fair value of common stock of $1.72 per share at date of grant, the Company determined the allocated fair value of the warrant to be $4,924,202. The Company has recorded this amount as a debt discount and is amortizing the debt discount over the term of the June 2007 Notes. The amortization is being recorded as interest expense and totaled $1,559,331 and $884,484 for the years ended December 2008 and 2007, respectively.

F-13

On November 28, 2007, one of the original holders of the June 2007 Notes sold its right, title and interest in its June 2007 Note to a third party at a $42,500 discount. The Company paid the original holder $42,500 and treated it as a debt discount and is amortizing the debt discount over the term of the June 2007 Notes. The amortization is being recorded as interest expense and totaled $15,612 and $1,369 for the years ended December 31, 2008 and 2007, respectively.

As part of the June 2007 Private Placement, the Company paid placement agent fees equal to 7% of the gross proceeds raised in the June 2007 Private Placement, $721,000, and associated expenses of $367,909 for a total of $1,088,909. In addition, as part of the June 2007 Private Placement, the Company issued placement agent warrants to purchase an aggregate of 309,000 shares of the Company’s common stock (the “June 2007 Placement Agent Warrants”). A portion of the June 2007 Placement Agent Warrants that were exercisable for 193,125 of the Company’s common stock were exercisable for a period of five years commencing one year after issuance at an exercise price of $1.60 per share. Utilizing the Black-Scholes option-pricing model and an assumed estimated volatility of 85%, an assumed contractual life of five years, an assumed zero dividend rate, an assumed 5.12% risk free interest rate, and an assumed fair value of the Company’s common stock of $1.72 per share on the date of issuance, the Company determined the allocated fair value of this portion of the June 2007 Placement Agent Warrants that are exercisable for 193,125 shares of the Company’s common stock to be $235,722. The remaining portion of the June 2007 Placement Agent Warrants that are exercisable for 115,875 the Company’s common stock are exercisable for a period of five years commencing one year after issuance at an exercise price of $1.75 per share. Utilizing the Black-Scholes option-pricing model and an assumed estimated volatility of 85%, an assumed contractual life of five years, an assumed zero dividend rate, an assumed 5.12% risk free interest rate, and an assumed fair value of the Company’s common stock of $1.72 per share on the date of issuance, the Company determined the allocated fair value of this remaining portion of the June 2007 Placement Agent Warrants that were exercisable for 115,875 shares of the Company’s common stock to be $138,569. The total convertible note fees were $1,564,500. These fees are being amortized to expense over the term of the June 2007 Notes and amounted to $447,618 and $273,714 for the years ended December 31, 2008 and 2007, respectively.

Also embedded in the June 2007 Private Placement, is a nondetachable conversion feature that is in-the-money at the commitment date. Per EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” a beneficial conversion feature allows the securities to be convertible into common stock at the lower of a conversion rate fixed at the commitment date or a fixed discount to the market price of the common stock at the date of conversion. The embedded beneficial conversion feature is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. That amount is calculated at the commitment date as the difference between conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value).

The beneficial conversion feature amounted to $772,500 and is recorded as a debt discount and is amortizing over the term of the June 2007 Notes. The amortization is being recorded as interest expense and totaled $236,900 and $0 for the years ended December 31, 2008 and 2007, respectively.

In two separate closings, on April 18, 2008 and June 30, 2008, the Company sold unsecured convertible original issue discount notes due June 8, 2010 in the aggregate principal amount of $4,117,647 (the “2008 Notes”) and detachable warrants (the “2008 Warrants”) to purchase an aggregate of 3,997,723 shares of the Company’s common stock, in a private placement transaction for an aggregate purchase price of $3,500,000. The 2008 Notes and 2008 Warrants were outstanding until their conversion into stock of the Company on December 12, 2008. The 2008 Notes were discounted 15% from their respective principal amounts, and will bear interest at a rate of 15% per annum beginning one year from the date of issuance, payable on any conversion date or the maturity date of the 2008 Notes in cash or shares of the Company’s common stock, at the investor’s option. The 2008 Notes had a maturity date on June 8, 2010 and were convertible into shares of our common stock, at a conversion price of $2.06 per share, subject to full-ratchet anti-dilution protection. The Company has recorded $617,648 as a debt discount on the 2008 Notes and is amortizing the debt discount over the term of the 2008 Notes. The amortization is being recorded as interest expense and totaled $163,207 for the year ended December 31, 2008.

F-14

The 2008 warrants were exercisable after 181 days from issuance until April 18, 2013 at an exercise price of $1.75 per share. Utilizing the Black-Scholes option-pricing model and the following assumptions: estimated volatility of 64.9%, a contractual life of five years, a zero dividend rate, 3.34% risk free interest rate, and the fair value of common stock of $1.75 per share at date of grant, the Company determined the initial allocated fair value of the warrants to be $276,858. The Company has recorded $276,858 as a debt discount and is amortizing the debt discount over the term of the 2008 Notes. The amortization is being recorded as interest expense and totaled $70,973 for the year ended December 31, 2008. As part of the issuance on April 18, 2008 and June 30, 2008, the Company paid legal and due diligence fees of $101,300. These fees are being amortized to expense over the term of the 2008 Notes and amounted to $27,003 for the year ended December 31, 2008.

The 2008 Warrants provided for a contingent cash settlement feature, as such, the initial allocated fair value and subsequent re-measurements were classified as Warrant Liability in the Company’s consolidated financial statements. See Note 11.

Interest expense, including amortization of debt discount, totaled $2,465,545 and $1,276,568 for the years ended December 31, 2008 and 2007, respectively. In December 2008, the Company issued 7,065,293 in Series A Convertible Preferred Stock. Of the total shares issued, 5,625,000 shares were issued for net cash proceeds of $21,022,438 with the remaining shares issued in satisfaction of certain convertible notes and related detachable warrants. The Company utilized proceeds of $6,548,375 from the issuance of the preferred stock to repay the remaining convertible notes and reacquire related detachable warrants. At December 31, 2008, all convertible notes have been fully paid. See Note 12.

7.	Commitments and Contingencies

The Company leases office space under non-cancelable operating leases with expiration dates through 2011. The future minimum rental payments under these leases at December 31, 2008 are as follows:

	Future Minimum
Year Ending December 31:	Lease Payments
2009	$	340,116
2010		180,388
2011		94,248
	$	614,752

Rent expense totaled $363,122 and $244,452 for the years ended December 31, 2008 and 2007, respectively.

8.	Stockholders’ Equity

On September 14, 2006, the Company increased its authorized capital stock from 75,000,000 shares of common stock, par value $0.001, to 300,000,000 shares of common stock, par value $0.001, and 10,000,000 shares of preferred stock, par value $0.001. On December 11, 2008, pursuant to the approval of the Company’s Board of Directors and holders of a majority of outstanding shares of the Company’s capital stock, the Company increased its authorized shares of common stock, par value $0.001, to 400,000,000.

In December 2008, the Company exchanged certain equity classified warrants issued in conjunction with 6% convertible notes for 236,532 shares of Company common stock and $134,188 in cash. As the warrants were classified in equity, the net effect of these transactions was a reduction in additional paid-in capital of $134,188.

F-15

Series A Convertible Preferred Stock and Warrants

During 2008, the Company’s Board of Directors authorized 10,000,000 shares of Series A Convertible Preferred Stock (“preferred stock”) with a par value of $.001 per share. On two separate closings in December 2008, the Company issued to certain investors 5,625,000 shares of preferred stock along with warrants to purchase 45,000,000 shares of the Company’s common stock in exchange for $22,500,000.

The Company issued an additional 1,440,293 shares of preferred stock with warrants to purchase 11,522,344 shares of the Company’s common stock in exchange for certain convertible notes and related detachable warrants. The preferred stock and warrants were issued as combined units valued at $4 per unit with each unit consisting of 1 share of preferred stock with 1 warrant to purchase 8 shares of common stock for $.20 per share.

Utilizing the Black-Scholes option-pricing model and the following assumptions: estimated volatility of 78.12%, a contractual life of five years, a zero dividend rate, 1.93% risk free interest rate, and the fair value of common stock on the grant dates of $.20 on December 3, 2008 and $.16 on December 12, 2008, the Company determined the fair value of the warrants to be $5,568,761. The Company has determined that the warrants meet the requirements for equity classification contained within EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock . As such, the fair value of the warrants has been recorded in additional paid-in capital and will not be revalued on each reporting date.

The Company incurred $1,477,562 in stock issuance costs related to the transactions. The stock issuance costs have been recorded as reduction of the net proceeds from the sale. The Company also issued warrants to a placement agent as partial compensation for services related to the issuance of the preferred stock units. The warrants are for the purchase of 6,665,343 shares of the Company’s common stock and are exercisable for a period of 5 years at an exercise price of $.20 share. Utilizing the Black-Scholes option-pricing model and the following assumptions: estimated volatility of 78.12%, a contractual life of five years, a zero dividend rate, 1.93% risk free interest rate, and the fair value of common stock on the grant date of $.16 on December 12, 2008, the Company determined the fair value of the warrants to be $632,391. The Company has determined that the warrants meet the requirements for equity classification contained within EITF 00-19. However, the issuance of these warrants had no net impact on the Company’s consolidated financial statements as the direct stock issuance expenses deducted from issuance proceeds included in additional paid-in capital are offset by the fair value of the equity classified warrants issued.

Based on the fair market value of the Company’s stock on December 3, 2008, the preferred stock issued on that date contained a conversion feature that was in-the-money. Per EITF 98-5, a beneficial conversion feature allows the securities to be convertible into common stock at the lower of a conversion rate fixed at the commitment date or a fixed discount to the market price of the common stock at the date of conversion. The beneficial conversion feature is recognized and measured by allocating a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. That amount is calculated at the commitment date as the difference between conversion price and the fair value of the common stock or other securities into which the security is convertible, multiplied by the number of shares into which the security is convertible (intrinsic value).

The beneficial conversion feature amounted to $1,007,250. Because the Company’s preferred stock is not mandatorily redeemable and may be converted to common stock at any time, this beneficial conversion feature would normally be reflected as a dividend to the preferred stockholders. However, because the Company has an accumulated deficit, such an adjustment would necessarily reduce additional paid-in capital thus having no impact on the Company’s consolidated financial statements.

Each share of preferred stock is convertible into 20 shares of common stock, subject to certain anti-dilution and other adjustments as set forth in the certificate of designation of the preferred stock. So long as 2,434,657 shares of Series A preferred stock remain outstanding, holders of Series A preferred stock shall be entitled to elect four directors to the Company’s board of directors. Holders of Series A preferred stock also shall have voting rights and shall be entitled to vote, on an as converted basis as set forth in the certificate of designation, together with the holders of common stock as a single class with respect to any matter upon which holders of common stock have the right to vote.

F-16

The preferred stock will have a liquidation preference of $4.00 per share and shall be entitled to receive dividends, prior and in preference to any declaration or payment of any dividend on the common stock, at the rate of $0.32 per share per annum, when and if any such dividends are declared by the board of directors of the Company. Any declared and unpaid dividends are not cumulative. So long as 2,434,657 shares of Series A preferred stock remain outstanding, the Company will be required to obtain the consent of the holders of at least two-thirds of the outstanding shares of Series A preferred stock prior to taking certain actions.

9.	Stock Options and Warrants

In 2004, the Company’s Board of Directors adopted a 2004 Stock Plan (the “2004 Plan”).

The 2004 Plan authorized the Board of Directors to grant incentive stock options and nonstatutory stock options to employees, directors, and consultants for up to 2,000,000 shares of common stock. Under the Plan, incentive stock options and nonqualified stock options are to be granted at a price that is no less than 100% of the fair value of the stock at the date of grant. Options will be vested over a period according to the Option Agreement, and are exercisable for a maximum period of ten years after date of grant. Options granted to stockholders who own more than 10% of the outstanding stock of the Company at the time of grant must be issued at an exercise price no less than 110% of the fair value of the stock on the date of grant.

In May 2006, the Company increased the shares reserved for issuance under the 2004 Plan from 2,000,000 to 4,588,281. Upon completion of the Mergers, the Company decreased the shares reserved under the 2004 Plan from 4,588,281 to 804,188 and froze the 2004 Plan resulting in no additional options being available for grant under the 2004 Plan.

In 2006, the Company’s Board of Directors adopted a 2006 Stock Plan (the “2006 Plan”).

The 2006 Plan authorized the Board of Directors to grant incentive stock options and nonstatutory stock options to employees, directors, and consultants for up to 2,000,000 shares of common stock. In October 2006, the Board of Directors approved an additional issuance of 2,000,000 shares. Under the Plan, incentive stock options and nonqualified stock options are to be granted at a price that is no less than 100% of the fair value of the stock at the date of grant. Options will be vested over a period according to the Option Agreement, and are exercisable for a maximum period of ten years after date of grant. Options granted to stockholders who own more than 10% of the outstanding stock of the Company at the time of grant must be issued at an exercise price no less than 110% of the fair value of the stock on the date of grant. In March 2008, the Board of Directors froze the 2006 Plan resulting in no additional options being available for grant under the 2006 Plan.

F-17

On October 24, 2007, the Company board of directors approved the Non-Qualified Stock Option Plan (the “Non-Qualified Plan”). The purposes of the Non-Qualified Plan are to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of our business. The Non-Qualified Plan initially provided for a maximum aggregate of 3,600,000 shares of our common stock that may be issued upon the exercise of options granted pursuant to the Non-Qualified Plan. On November 1, 2007, the Company board of directors adopted an amendment to the Non-Qualified Plan to increase the total number of shares of our common stock that may be issued pursuant to the Non-Qualified Plan from 3,600,000 shares to 4,000,000 shares. On December 18, 2007, the Company board of directors adopted a further amendment to the Non-Qualified Plan to increase the total number of shares of our common stock that may be issued pursuant to the Non-Qualified Plan from 4,000,000 shares to 5,500,000 shares. On February 5, 2008, the Company’s board of directors adopted an additional amendment to the Non-Qualified Plan to increase the total plan shares that may be issued from 5,500,000 shares to 10,500,000 shares. On June 4, 2008, the Company’s board of directors further increased the number of shares reserved under the 2007 Plan to 16,500,000. On December 2, 2008, the board of directors increased the number of shares reserved under the 2007 Plan to 69,141,668. The Company’s board of directors (or any committee composed of members of the Company board of directors appointed by it to administer the Non-Qualified Plan), has the authority to administer and interpret the Non-Qualified Plan. The administrator has the authority to, among other things, (i) select the employees, consultants and directors to whom options may be granted, (ii) grant options, (iii) determine the number of shares underlying option grants, (iv) approve forms of option agreements for use under the Non-Qualified Plan, (v) determine the terms and conditions of the options and (vi) subject to certain exceptions, amend the terms of any outstanding option granted under the Non-Qualified Plan. The Non-Qualified Plan authorizes grants of nonqualified stock options to eligible employees, directors and consultants. The exercise price for an Option shall be determined by the administrator. The term of each option under the Non-Qualified Plan shall be no more than ten years from the date of grant. The Non-Qualified Plan became effective upon its adoption by our board of directors, and will continue in effect for a term of ten years, unless sooner terminated. The Company board of directors may at any time amend, suspend or terminate the Non-Qualified Plan. The Non-Qualified Plan also contains provisions governing: (i) the treatment of options under the Non-Qualified Plan upon the occurrence of certain corporate transactions (including merger, consolidation, sale of all or substantially all the assets of our company, or complete liquidation or dissolution of our company) and changes in control of our company, (ii) transferability of options and (iii) tax withholding upon the exercise or vesting of an option.

On March 31, 2008, the Board froze the 2006 Plan and adopted a new plan, the GoFish Corporation 2008 Stock Incentive Plan (as amended, the “2008 Plan”). The 2008 Plan is intended to replace the frozen 2006 Plan and permits options and other equity compensation to be awarded to most California employees. As originally adopted, the 2008 Plan provided for the issuance of up to 2,400,000 shares of the Company’s common stock pursuant to awards granted thereunder, up to 2,200,000 of which may be issued pursuant to incentive stock options granted thereunder. However, no awards (as defined in the 2008 Plan) were issued under the 2008 Plan.

On June 4, 2008, the Board adopted an amendment to the 2008 Plan to (i) decrease the maximum aggregate number of shares of Common Stock that may be issued pursuant to awards granted under the plan from 2,400,000 shares to 1,500,000 shares and (ii) decrease the maximum aggregate number of shares the Company’s common stock that may be issued pursuant to incentive stock options granted under the plan from 2,200,000 shares to 1,500,000 shares. On June 4, 2008, the Board also granted initial awards under the 2008 Plan, which were granted to certain non-officer employees and consultants of the Company. On December 2, 2008, the Board increased the number of shares reserved under the Plan to a maximum of 19,224,774. The 2008 Plan is administered, with respect to grants to employees, directors, officers, and consultants, by the plan administrator (the “Administrator”), defined as the Board or one or more committees designated by the Board. The 2008 Plan will initially be administered by the Board. The Board froze the 2004 Plan on October 27, 2006 and the 2006 Plan on March 31, 2008. As of December 31, 2008, there were 297,737 shares under the 2004 Plan and 3,073,229 shares under the 2006 Plan that were unavailable for further issuance.

F-18

A summary of stock option transactions is as follows:

	Options available for grant			Number of options			Weighted Average Exercise price
Balances at January 1, 2007		1,176,000			3,610,865		$	1.38
Additional shares reserved		5,500,000			—			—
Options granted		(6,476,400	)		6,476,400		$	1.40
Options exercised		—			(70,511	)	$	0.17
Options cancelled		2,821,984			(2,821,984	)	$	2.68
Balances at December 31, 2007		3,021,584			7,194,770		$	0.91
Additional shares reserved		82,866,442			—			—
Shares frozen under the 2004 and 2006 Plans		(3,370,966	)		—			—
Options granted		(75,606,727	)		75,606,727		$	0.39
Options exercised		—			—			—
Options cancelled		2,754,001			(2,754,001	)	$	1.30
Balances at December 31, 2008		9,664,334			80,047,496		$	0.41

The following table summarizes information concerning outstanding options as of December 31, 2008:

		Options Outstanding					Options Exercisable
	Exercise price	Number of Options		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value	Number of Options		Weighted Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value
$	0.06		364,300	5.43				358,376	5.41
$	0.19		234,765	9.89				4,765	9.89
$	0.20		48,628,342	9.92				4,744,094	9.92
$	0.23		5,070,000	9.29				1,542,917	9.18
$	0.24		82,000	9.42				15,750	9.42
$	0.25		105,000	9.58				25,000	9.58
$	0.27		400,000	8.83				155,556	8.83
$	0.29		400,000	9.24				83,951	9.24
$	0.35		4,840,000	9.08				2,728,611	9.08
$	0.37		1,820,358	8.79				1,072,387	8.80
$	0.42		130,000	9.02				—	—
$	0.60		2,998,324	9.92				—	—
$	0.80		5,498,324	9.70				416,667	9.43
$	1.00		2,998,324	9.92				—	—
$	1.20		2,998,324	9.92				—	—
$	1.40		2,998,324	9.92				—	—
$	1.50		116,840	7.81				88,200	7.81
$	3.08		50,000	7.96				29,167	7.96
$	3.65		64,271	7.87				64,271	7.87
$	3.78		15,000	8.38				5,938	8.38
$	3.80		65,000	8.30				27,083	8.30
$	5.79		170,000	8.08				81,042	8.08
			80,047,496	9.75	$	1,037,898		11,443,775	9.29	$	152,365

F-19

	December 31,		December 31,
	2008		2007
Cost of revenue	$	84,106	$	—
Sales and marketing		700,340		461,526
Product development		18,501		213,053
General and administrative		1,920,430		497,927
Total share-based compensation	$	2,723,377	$	1,172,506

The fair value of each option grant has been estimated on the date of grant using the Black-Scholes valuation model with the following assumptions (weighted-average) at December 31, 2008 and 2007:

	December 31,			December 31,
	2008			2007

Risk free interest rate		2.16	%		4.08	%
Expected lives	5.91 Years			5.95 Years
Expected volatility		75.84	%		68.33	%
Dividend yields		0	%		0	%

The weighted-average grant date fair value of the options granted during the years ended December 31, 2008 and 2007 were $0.14 and $0.81, respectively.

On December 2, 2008, the Company granted (under the Non-Qualified Plan) certain employees options to purchase 14,991,620 shares of Company common stock. These options will only vest with a change in control of the Company, as defined in the option agreement. As the condition for vesting is not probable, the Company has not recognized any compensation expense related to these options at December 31, 2008. At December 31, 2008, all of these options remain outstanding.

During 2008 and 2007, the Company accelerated vesting for certain employees who terminated their employment and modified the terms of other options. As a result, of these modifications the Company recognized additional compensation expense of $202,865 and $153,900 for the years ended December 31, 2008 and 2007, repectively.

The Company did not realize any tax benefits from tax deductions of share-based payment arrangements during the years ended December 31, 2008 and 2007.

F-20

Stock-based compensation expense related to stock options granted to non-employees is recognized as earned. In accordance with EITF 96-18, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, the Company re-values the non-employee stock-based compensation, at each reporting date, using the Black-Scholes pricing model. As a result, stock-based compensation expense will fluctuate as the estimated fair market value of the Company’s common stock fluctuates. The Company recorded stock-based compensation expense related to non-employees of $36,820 and $86,216 for the years ended December 31, 2008 and 2007, respectively.

A summary of outstanding Common Stock Warrants included those issued as non-employee compensation as of December 31, 2008 is as follows:

Securities into which warrants are convertible and reference	Shares		Exercise Price		Expiration Date
Common Stock- Non-employee compensation		380,000	$	1.75	February 2013
Common Stock- See note below		3,133,333	$	1.72	October 2011
Common Stock- Series A preferred stock units. See Note 7.		56,522,344	$	0.20	December 2013
Common Stock- Non-employee compensation. See Note 7.		6,665,343	$	0.20	December 2013
Common Stock- Non-employee compensation		50,000	$	1.75	November 2013
Common Stock- See note below		166,667	$	3.00	January 2012
Total		66,917,687

In October 2006, the Company assumed warrants exercisable into 4,133,333 shares of Common Stock. The warrants are immediately exercisable into shares of Common Stock at a per share price of $1.72 and expire five years from the date of issuance if unexercised and are callable by the Company under certain circumstances. 2,000,000 of the Investor Warrants were exercised for the purchase of 1,000,000 shares of the Company’s Common Stock in January 2007.

In January 2007, in conjunction with a Strategic Alliance Agreement, the Company issued warrants to purchase 500,000 shares of its common stock at an exercise price of $3.00 per share to a company. The warrants are exercisable for a period of five years. Utilizing the Black-Scholes valuation model and the following assumptions: estimated volatility of 62%, a contractual life of two and one-half -years, a zero dividend rate, 4.50% risk free interest rate, and the fair value of the common stock of $3.70 per share, the Company determined the fair value of the warrant to be $850,000. In August 2007, the Strategic Alliance Agreement was modified and the number of warrants was reduced from 500,000 to 166,667. Utilizing the Black-Scholes valuation model and the following assumptions: estimated volatility of 94%, a contractual life of two and one-half -years, a zero dividend rate, 4.76% risk free interest rate, and the fair value of the common stock of $0.34 per share at date of grant, the Company determined the fair value of the warrant to be $7,484. Because this amount is not in excess of amounts previously expensed, no addition stock-based compensation will be recognized.

10.	Income Taxes

The provision for income taxes consists of the following for the years ended December 31, 2008 and 2007:

	December 31,		December 31,
	2008		2007
Currently payable (refundable):
Federal	$	—	$	—
State		—		—
Total current		—		—

Deferred:
Federal		—		—
State		—		—
Total deferred		—		—
Provision for income taxes	$	—	$	—

F-21

A reconciliation of the provision for income taxes with the expected provision for income taxes computed by applying the federal statutory income tax rate (34%) to the net loss before provision for income taxes for the years ended December 31, 2008 and 2007 is as follows:

	December 31,			December 31,
	2008			2007
Provision for income taxes at federal statutory rate	$	(5,769,795	)	$	(5,642,436	)
Federal research tax credits		—			146,576
Expenses not deductible		150,665			259,337
Provision to return reconciliation		(234,301	)		(33,014	)
Change in federal valuation allowance		5,853,431			5,269,537
Provision for income taxes	$	—		$	—

As of December 31, 2008, the Company had approximately $36,074,000 of federal and $36,072,000 state operating loss carryforwards potentially available to offset future taxable income. These net operating loss carryforwards are expected to expire as follows:

Year Ended:	Federal		State
2013	$	—	$	21,000
2014		—		357,000
2015		—		1,804,000
2016		—		4,918,000
2017		—		15,014,000
2018		—		13,958,000
2023		21,000		—
2024		366,000		—
2025		1,793,000		—
2026		4,920,000		—
2027		15,016,000		—
2028		13,958,000		—
	$	36,074,000	$	36,072,000

The Tax Reform Act of 1986 (the “Act”) provides for a limitation on the annual use of net operating loss carryforwards following certain ownership changes (as defined in the Act) that could limit the Company’s ability to utilize these carryforwards. Prior equity financings may significantly limit the Company’s ability to utilize the net operating loss carryforwards.

The components of the deferred tax assets as of December 31, 2008 and 2007 are as follows:

	December 31,			December 31,
	2008			2007
Deferred tax assets:
Net operating losses	$	14,342,608		$	8,508,905
Depreciation and amortization		70,424			34,488
Stock-based compensation		1,205,972			176,900
Debt discount		—			352,290
Reserves and accruals		146,597			52,561
Deferred revenue		45,513			—
Total deferred tax asset		15,811,114			9,125,144
Valuation allowance		(15,811,114	)		(9,125,144	)
Net deferred tax assets	$	—		$	—

F-22

Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its net deferred tax assets.

In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes ( FIN 48) , which is applicable for fiscal years beginning after December 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS No. 109, Accounting for Income Taxes . FIN 48 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position reported or expected to be reported on a tax return. FIN 48 also provides guidance on the recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We adopted the provisions of FIN 48 on January 1, 2007. Upon adoption of FIN 48 and through December 31, 2007, we determined that we had no liability for uncertain income taxes as prescribed by FIN 48. Our policy is to recognize potential accrued interest and penalties related to the liability for uncertain tax benefits, if applicable, in income tax expense. Net operating loss carryforwards since inception remain open to examination by taxing authorities, and will continue to remain open for a period of time post utilization. The adoption of FIN 48 did not have an impact on the Company's results of operations and financial position.

There are no prior or current year tax returns under audit by taxing authorities, and management is not aware of any impending audits.

The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. In the event the Company has had a change in ownership, utilization of the carryforwards could be restricted.

11.	Warrant Liability

As discussed in Note 6, in two separate closings, on April 18, 2008 and June 30, 2008, the Company sold the 2008 Notes and the 2008 Warrants. The 2008 Warrants had a five-year term and were exercisable after 181 days from issuance until April 18, 2013 at an exercise price of $1.75 per share. The 2008 Warrant contained a net cash settlement feature, which was available to the warrant holders at their option, in certain change of control circumstances. As a result, under EITF 00-19, the warrants were required to be classified as a liability at their current fair value estimated using the Black-Scholes option-pricing model. Warrants that are classified as a liability are revalued at each reporting date until the warrants are exercised or expire with changes in the fair value reported as interest expense. Accordingly, we recorded a reduction in interest expense of $226,008 for the year ended December 31, 2008. The decrease represents the change in fair value of the warrant liability from the date of issuance, April 18, 2008, through December 12, 2008, the date the warrants were exchanged for Company common stock. See Note 6. The aggregate fair value and the assumptions used for the Black-Scholes option-pricing models as of December 12, 2008 were as follows:

	December 12,
	2008
Aggregate fair value	$	97,437
Expected volatility		78.12	%
Weighted average remaining contractual term(years)		4.47
Risk-free interest rate		1.93	%
Expected dividend yield		0	%
Common stock price	$	0.16

F-23

12.	Loss on Debt Extinguishment

In December 2008, the Company repurchased all of its then outstanding convertible debt and related detachable warrants. The repurchase occurred with a combination of cash payments totaling $6,548,316 and exchanges of convertible debt and warrants for either new Series A preferred stock and warrants or common stock.

The Company recorded the transaction in accordance with APB No. 26, Early Extinguishment Debt and recognized a loss on the extinguishment as follows:

							Fair Value of
							Series A			Fair Value
							Preferred			of Common
	Net Carrying			Cash			Stock Units			Stock			Loss on Debt
Description	Amount			Payment			Issued			Issued			Extinguishment
Conversion of 6% convertible notes into 410,887 preferred stock units	$	1,135,221		$	—		$	(1,643,549	)	$	—		$	(508,328	)
Conversion of 15% convertible notes into 1,029,406 preferred stock units		3,457,321			—			(4,117,624	)		—			(660,303	)
Exchange of liability classified warrants for common stock		97,437			—			—			(559,682	)		(462,245	)
Repurchase of 6% convertible notes		6,124,399			(6,414,187	)		—			—			(289,788	)
Write-off of unamortized issuance costs		(816,168	)		—			—			—			(816,168	)
	$	9,998,210		$	(6,414,187	)	$	(5,761,173	)	$	(559,682	)	$	(2,736,832	)

13.	Related Party Transactions

The following is the activity between the Company and a founder and stockholder related to amounts due from this individual as of December 31, 2008 and 2007:

	December 31,		December 31,
	2008		2007
Beginning balance	$	—	$	17,216
Amounts advanced		—		660
Allowance for doubtful account		—		(17,876	)
Due from founder and stockholder	$	—	$	—

F-24

The following is the activity between the Company and stockholders related to non-interest bearing notes receivable as of December 31, 2008 and 2007:

	December 31,		December 31,
	2008		2007
Beginning balance	$	18,910	$	18,910
Notes receivable originally issued		—		—
Notes receivable cancelled upon the repurchase of Common Stock		—		—
Notes receivable from stockholders	$	18,910	$	18,910

The following is the activity between the Company and a stockholder related to amounts due to this individual as of December 31, 2008 and 2007:

	December 31,			December 31,
	2008			2007
Beginning balance	$	—		$	384,793
Amounts received by the Company		610,000			—
Amounts repaid by the Company		(400,000	)		(384,793	)
Amounts converted to convertible original issue discount notes		(210,000	)		—
Due to stockholder	$	—		$	—

14.	Cash Flow Information

Cash paid during the years ended December 31, 2008 and 2007 is as follows:

	December 31,		December 31,
	2008		2007
Interest	$	629,843	$	309,000
Income taxes	$	—	$	—

Supplemental disclosure of non-cash investing and financing activities for the years ended December 31, 2008 and 2007 is as follows:

	December 31,		December 31,
	2008		2007
Conversion of Convertible Promissory Notes into common stock	$	40,000	$	—
Issuance of common stock for warrants	$	559,899	$	—
Issuance of Series A preferred stock units for the extinguishment of debt	$	5,761,173	$	—
Issuance of common stock to a publisher	$	102,000	$	—
Convertible notes issued upon conversion of amounts due to stockholder	$	210,000	$	—
Beneficial conversion feature associated with convertible notes	$	772,500	$	—
Decrease in warrant liability	$	115,147	$	—
Issuance of common stock for warrants	$	236	$	—
Initial recording of warrant liability	$	213,175	$	—
Issuance of warrants with convertible notes	$	—	$	4,924,202
Issuance of warrants to placement agents	$	—	$	374,291
Issuance of common stock for license agreement	$	—	$	200,000
Issuance of warrants to investors	$	—	$	8,616

F-25

15.	Acquisitions

In February 2007, the Company announced that it had entered into a merger agreement, pursuant to which Bolt, Inc., a/k/a Bolt Media, Inc., a Delaware corporation (“Bolt”), pursuant to which Bolt would merge with and in to a wholly-owned subsidiary of the Company. In August 2007, the Company terminated the Bolt merger.

During the period from February 2007 to September 2007, the Company advanced Bolt $1,020,338. The Company only has a secured interest in Bolt’s trade accounts receivables of $600,000. As a result, the Company recorded an allowance for doubtful accounts of $420,338. In addition, the Company incurred $850,010 of direct acquisition costs. The total related acquisition costs of $1,270,348 for the year ended December 31, 2007 have been expensed.

The accounts receivable of $600,000 has been repaid.

16.	Quarterly Financial Data (Unaudited)

	December 31, 2008
	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
Revenues	$	657,150		$	1,282,439		$	2,786,139		$	2,975,871

Cost of revenues and expenses		4,272,216			4,200,764			5,147,610			8,887,427
Operating loss		(3,615,066	)		(2,918,325	)		(2,361,471	)		(5,911,556	)

Other income (expense):
Interest income		4,525			5,659			5,662			7,392
Miscellaneous income		100			—			—			278,640
Interest expense		(568,957	)		(649,386	)		(893,227	)		(353,975	)
Total other income (expense)		(564,332	)		(643,727	)		(887,565	)		(67,943	)

Net loss before provision for income taxes		(4,179,398	)		(3,562,052	)		(3,249,036	)		(5,979,499	)
Provision for income taxes		—			—			—			—
Net loss	$	(4,179,398	)	$	(3,562,052	)	$	(3,249,036	)	$	(5,979,499	)

Net loss per share – basic and diluted	$	(0.17	)	$	(0.14	)	$	(0.13	)	$	(0.23	)

Shares used to compute net loss per share – basic and diluted		25,298,310			25,483,475			25,494,739			26,266,004

F-26

	December 31, 2007
	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
Revenues	$	24,074		$	31,686		$	485,812		$	1,539,610

Cost of revenues and expenses		3,526,008			5,836,555			3,719,304			4,248,148
Operating loss		(3,501,934	)		(5,804,869	)		(3,233,492	)		(2,708,538	)

Other income (expense):
Interest income		33,839			21,292			65,471			26,405
Miscellaneous income		954			(417	)		—			(1	)
Interest expense		—			(97,067	)		(612,501	)		(567,000	)
Total other income (expense)		34,793			(76,192	)		(547,030	)		(540,596	)

Net loss before provision for income taxes		(3,467,141	)		(5,881,061	)		(3,780,522	)		(3,249,134	)
Provision for income taxes		—			—			—			—
Net loss	$	(3,467,141	)	$	(5,881,061	)	$	(3,780,522	)	$	(3,249,134	)

Net loss per share - basic and diluted	$	(0.15	)	$	(0.24	)	$	(0.16	)	$	(0.13	)

Shares used to compute net loss per share - basic and diluted		23,811,698			24,129,424			24,130,276			24,346,947

17.	Subsequent Event

On March 27, 2009, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank that provides for a secured revolving credit arrangement to provide advances in an aggregate principal amount of up to $4 million on the terms and conditions set forth in the Loan and Security Agreement. The Loan and Security Agreement consists of a $4 million credit facility with a $500,000 sublimit for stand-by letters of credit, $500,000 sublimit for cash management services and a $500,000 sublimit for foreign exchange contracts. The borrowings are secured based upon a percentage of certain eligible billed and unbilled accounts receivables. The Company may borrow, repay and reborrow under the line of credit facility at any time. As of March 27, 2009, the advances under the line of credit facility shall accrue interest at a per annum rate equal to 3.0% above the greater of (i) Silicon Valley Bank’s announced prime rate or (ii) 7.0%. This interest rate shall be adjusted upwards at times when the Company’s liquidity ratio (as described in the Loan and Security Agreement) equals less than 2.25 to 1.00. The Company is required to pay a termination fee if the Loan and Security Agreement is terminated prior to March 27, 2011 (the “Maturity Date”) in an amount equal to the interest that would have accrued on an advance of an aggregate principal amount of $1 million through the Maturity Date.

The Company’s line of credit is collateralized by substantially all of the Company’s assets and requires the Company to comply with customary affirmative and negative covenants principally relating to liens, indebtedness, investments, distributions to shareholders, use and disposition of assets, the satisfaction of a liquidity ratio test and minimum tangible net worth requirements. In addition, the Loan and Security Agreement contains customary events of default. Upon the occurrence of an uncured event of default, among other things, Silicon Valley Bank may declare that all amounts owing under the credit arrangement are due and payable and the applicable interest rate shall become 4% above the rate that would otherwise apply. The line of credit and facility expire on the Maturity Date. As of March 30, 2009, there is no amount outstanding under this revolving credit arrangement.

F-27

In connection with the execution of the Loan and Security Agreement, the Company issued a warrant to Silicon Valley Bank on March 27, 2009, which allows Silicon Valley Bank to purchase up to 600,000 shares of the Company’s common stock at a warrant price of $0.20 per share. This warrant expires on the fifth anniversary of its issue date, subject to earlier expiration in accordance with its terms.

F-28

PROSPECTUS

Up to 98,914,102 shares of common stock, par value $0.001 per share

, 2009

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

Set forth below is an estimate (except for registration fees, which are actual) of the approximate amount of the fees and expenses payable by us in connection with the issuance and distribution of the shares of common stock.

EXPENSE	AMOUNT

Registration Fees	$	680
Legal Fees		50,000
Accounting Fees		10,000
Miscellaneous Fees and Expenses		5,000

Total	$	65,680

Item 14. Indemnification of Directors and Officers.

Under Nevada law, a corporation shall indemnify a director or officer against expenses, including attorneys’ fees, actually and reasonably incurred by him, to the extent the director or officer has been successful on the merits or otherwise in defense of any action, suit or proceeding. A corporation may indemnify a director or officer who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding. Excepted from that immunity are:

A willful failure to deal fairly with the company or its stockholders in connection with a matter in which the director has a material conflict of interest;

A violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);

A transaction from which the director derived an improper personal profit; and

Willful misconduct.

Our bylaws include an indemnification provision under which we have the power to indemnify our directors, officers, employees and other agents (including heirs and personal representatives) against all costs, charges and expenses actually and reasonably incurred, including an amount paid to settle an action or satisfy a judgment to which the director or officer is made a party by reason of being or having been a director or officer of ours. Our bylaws further provide for the advancement of all expenses incurred in connection with a proceeding upon receipt of an undertaking by or on behalf of such person to repay such amounts if it is determined that the party is not entitled to be indemnified under our bylaws. No advance will be made by us to a party if it is determined that the party acted in bad faith. The indemnification rights are contractual rights and will continue as to a person who has ceased to be a director, officer, employee, or other agent, and will inure to the benefit of the heirs, executors, and administrators of such a person.

We have entered into indemnity agreements with certain of our directors and executive officers. Each of these indemnity agreements generally provides for indemnification of certain expenses, judgments, fines, and settlement amounts incurred by such director or executive officer in any action or proceeding, including any action by or in the right of ours arising out of his services to us, to any of our subsidiaries, or to any other company or enterprise to which he provides services at our request. Each of these indemnity agreements generally provides for the advancement of expenses, makes indemnification contingent on his good faith in acting or failing to act, and excepts the obligation to indemnify for expenses or liabilities paid directly to him by directors’ and officers’ insurance.

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Item 15. Recent Sales of Unregistered Securities.

There have been no sales of unregistered securities within the last three years which would be required to be disclosed pursuant to Item 701 of Regulation S-K, except for the following:

SVB Loan Transaction

In connection with the Loan and Security Agreement that we entered into with Silicon Valley Bank on March 27, 2009, we issued a warrant to Silicon Valley Bank providing Silicon Valley Bank with the right to purchase up to 600,000 shares of our common stock at an exercise price of $0.20 per share. The warrant expires on the fifth anniversary of the issue date of the warrant, subject to earlier expiration in accordance with the terms of the warrant. The issuance of the warrant was exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission.

2008 Series A Financing

Pursuant to the terms of a securities purchase agreement dated December 3, 2008, which we entered into with the selling stockholders, we raised approximately $22.5 million in gross proceeds and cancelled an aggregate principal amount of approximately $5,427,864 of the Senior Notes and the Subordinated Notes in exchange for the issuance of an aggregate of 7,065,293 shares of our Series A preferred stock and warrants to purchase 56,522,344 shares of our common stock. The Series A preferred stock and warrants were sold as units at a purchase price of $4.00 per unit, with each unit consisting of (i) one share of Series A preferred stock and (ii) a warrant to purchase eight shares of common stock. The Series A preferred stock and warrants were sold at two closings that occurred on December 3, 2008 and December 12, 2008.

Qatalyst acted as our financial advisor in connection with the financing. We have paid Qatalyst a cash fee and have issued warrants to purchase 6,665,352 shares of our common stock to Qatalyst as compensation for its services to us in accordance with the terms of our engagement letter with Qatalyst.

In addition, in connection with the closings under the securities purchase agreement, all remaining warrants originally issued in connection with the issuance of the Senior Notes, the Subordinated Notes and certain other transactions were converted into shares of common stock or repurchased by us. We paid approximately $72,500 and issued 154,500 shares of the common stock of the Company to repurchase and convert warrants to purchase 4,184,170 shares of common stock originally issued to such warrant holders.

The issuance of each of the foregoing securities was exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission.

Other 2008 Transactions

In two separate closings, on April 18, 2008 and June 30, 2008, we sold the Subordinated Notes and related warrants to purchase an aggregate of 3,997,723 shares of our common stock at an exercise price of $1.75 per share, in a private placement transaction for an aggregate purchase price of $3,500,000. The Subordinated Notes were discounted 15% from their respective principal amounts, and bore interest at a rate of 15% per annum beginning one year from the date of issuance. The Subordinated Notes and related warrants were cancelled in connection with the Series A preferred stock financing and are no longer outstanding, as described further above under the subheading “2008 Series A Financing.”

On February 28, 2008 we issued warrants to purchase an aggregate of 120,000 shares of our common stock at an exercise price of $1.75 per share for a period of five years to designees of The Investor Relations Group (“IRG”). O f these warrants, 30,000 vested and remain outstanding and 90,000 have expired. We also issued on February 28, 2008, warrants to purchase 50,000 shares of our common stock for a period of five years (the “Catalyst Restricted Warrant”) to Catalyst Strategy, Inc. (“Catalyst”) at an exercise price of $1.75 per share.

2007 Transactions

On December 10, 2007, in connection with our advertising representation agreement with MiniClip Limited, a company registered in the United Kingdom (“MiniClip”), we issued to MiniClip 300,000 shares of our common stock and a warrant to purchase an additional 300,000 shares of our common stock at an exercise price of $1.75 per share for a period of five years.

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On December 12, 2007, in connection with our license agreement with MTV Networks, a division of Viacom International Inc. (“MTVN”), we issued to MTVN 1,000,000 restricted shares registered in the name of Viacom International, Inc. of common stock of the Company and granted MTVN a participation right in certain future financings of the Company to purchase additional securities equal to an aggregate of 35% of the aggregate gross proceeds of any such financing during the term our license agreement with MTVN.

On November 28, 2007, we issued to an accredited investor a warrant to purchase 46,875 shares at an exercise price of $1.75 per share. This warrant was cancelled in connection with the Series A preferred stock financing and is no longer outstanding, as described further above under the subheading “2008 Series A Financing.”

In connection with our original Strategic Alliance Agreement with Kaleidoscope Sports and Entertainment LLC (“KSE”), we issued 500,000 warrants to KSE. Each of these warrants gave holder the right to purchase one share of our common stock for a period of up to five years at a price of $3.00 per share. On August 10, 2007, we entered into an Amended and Restated Strategic Alliance Agreement with KSE, pursuant to which, among other things, KSE surrendered its warrants under the original Strategic Alliance Agreement in exchange for new warrants to purchase 166,667 shares of common stock, exercisable at a price of $3.00 per share, upon commencement of the term of the Amended and Restated Strategic Alliance Agreement, while the Amended and Restated Strategic Alliance Agreement was terminated as of August 4, 2008, KSE continues to have six months from the date of termination within which to exercise its warrants to purchase 166,667 shares of common stock.

In June 2007, we sold the Senior Notes in the aggregate principal amount of $10.3 million and warrants to purchase an aggregate of 3,862,500 shares of our common stock in a private placement transaction. The notes bore interest at a rate of 6% per annum. The warrants issued to the investors were each exercisable to purchase one share of our common stock at a price of $1.75 per share at any time during a five year period commencing on the one year anniversary of the issuance date. We also issued an aggregate of 309,000 warrants to the placement agents, 193,125 of which had an exercise price of $1.60 and 115,875 of which had an exercise price of $1.75. The Senior Notes and related warrants were cancelled in connection with the Series A preferred stock financing and are no longer outstanding, as described further above under the subheading “2008 Series A Financing.”

Securities issued in connection with 2006 private offering

On October 27, 2006, we closed a private offering of 8,166,669 units of our securities, raising an aggregate of approximately $12,250,000 in cash and cancelled indebtedness, each unit consisting of one share of our common stock and warrant to purchase one-half (1/2) of a share of our common stock for a period of five years at an exercise price of $1.75 per whole share. In connection with the private offering we also issued 100,000 warrants to purchase 50,000 shares to a financial advisor. In January 2007, 2,000,000 of these warrants were exercised for 1,000,000 shares of our common stock.

The issuance of the foregoing securities was exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission.

Securities issued in connection with 2006 mergers

Prior to October 27, 2006, all of the issued and outstanding shares of Series A Preferred Stock of GoFish Technologies Inc. converted, on a one-for-one basis, into shares of GoFish Technologies Inc. common stock. On October 27, 2006, the holders of the common stock of GoFish Technologies Inc. surrendered all of their issued and outstanding shares and received 3,632,555 shares of our common stock in connection with the merger pursuant to which GoFish Corporation acquired GoFish Technologies, Inc. In addition, (i) holders of issued and outstanding warrants to purchase common shares of GoFish Technologies Inc. received warrants for the purchase of shares of our common stock, and (ii) holders of issued and outstanding options to purchase common shares of GoFish Technologies Inc. received options for the purchase of shares of our common stock. All of the warrants have subsequently expired. Further, 1-0 Holdings LLC was issued 300,000 shares of our common stock for finder and advisory services in connection with this merger and the concurrent private placement described immediately above.

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On October 27, 2006, the holders of the common stock of ITD surrendered all of their issued and outstanding shares and received 3,500,000 shares of our common stock in connection with the merger of ITD Acquisition Corp., a wholly owned subsidiary of Unibio, Inc., merger with and into ITD.

The issuance of the foregoing securities was exempt from registration under Section 4(2) of the Securities Act and Rule 506 of Regulation D as promulgated by the Securities and Exchange Commission.

Option Issuances

During the period October 24, 2007 through January 31, 2009, we issued an aggregate of 84,197,984 stock options under our 2007 non-qualified stock option plan to 40 individuals. The options have exercise prices ranging from $0.20 to $1.50. The issuance of the options was exempt from registration under Section 4(2) of the Securities Act.

During the period October 27, 2006 through September 30, 2007, we issued an aggregate of 4,099,000 stock options under our 2006 equity incentive plan to 33 individuals. The options have exercise prices ranging from $1.50 to $5.79. The issuance of the options was exempt from registration under Section 4(2) of the Securities Act.

In connection with our October 2006 merger, we adopted the GoFish Technologies, Inc. 2004 option plan. In January 2007, 25,879 options granted thereunder were exercised for a like number of shares at an exercise price of $0.058 per share. In May 2007, 5,176 options granted thereunder were exercised for a like number of shares at an exercise price of $1.50 per share. The issuance of the shares was exempt from registration under Section 4(2) of the Securities Act.

Item 16. Exhibits and Financial Statement Schedules

Exhibit No.	Description	Reference

2.1	Agreement and Plan of Merger and Reorganization, dated as of October 27, 2006, by and among the Registrant, GF Acquisition Corp., GoFish Technologies, Inc., ITD Acquisition Corp. and Internet Television Distribution Inc.	Incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

3.1	Amended and Restated Articles of Incorporation of the Registrant filed with the Nevada Secretary of State on December 12, 2008.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated December 12, 2008 filed with the Securities and Exchange Commission on December 18, 2008 (File No. 333-131651)

3.2	Certificate of Amendment to the Amended and Restated Articles of Incorporation of the Registrant filed with the Nevada Secretary of State on January 20, 2009.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated January 16, 2009 filed with the Securities and Exchange Commission on January 21, 2009 (File No. 333 131651)

3.3	Bylaws of the Registrant.	Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on February 7, 2006 (File No. 333-131651).

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Exhibit No.	Description	Reference

3.4	First Amendment to Bylaws of the Registrant.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

4.1	Form of Warrant of the Registrant issued in private offering completed October 27, 2006.	Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.2	Lock Up Agreement by and between Michael Downing and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.3	Lock Up Agreement by and between Riaz Valani and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.4	Lock Up Agreement by and between Tabreez Verjee and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.4 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.5	Purchase Agreement dated as of June 7, 2007 by and among the Registrant and the investors identified on the signature pages thereto.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.6	Registration Rights Agreement dated as of June 7, 2007, by and among the Registrant and the investors identified on the signature pages thereto.	Incorporated by referenced to Exhibit 4.2 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

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Exhibit No.	Description	Reference

4.7	Form of the June 2007 Notes.	Incorporated by referenced to Exhibit 4.3 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.8	Form of the June 2007 Warrants.	Incorporated by referenced to Exhibit 4.4 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.9	Subscription Agreement, dated as of April 18, 2008, by and among the Registrant and the subscribers identified on the signature page thereto.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.10	Accession Agreement, dated as of June 30, 2008, by and among the Registrant and the subscribers identified on the signature page thereto.	Incorporated by referenced to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.11	Form of the 2008 Notes.	Incorporated by referenced to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.12	Form of the 2008 Warrants.	Incorporated by referenced to Exhibit 4.4 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.13	Certificate of Designation of Rights, Preferences, Privileges and Restrictions of Series A Preferred Stock of the Registrant.	Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

4.14	Warrant to Purchase Stock issued to Silicon Valley Bank, dated March 27, 2009.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated March 27, 2009 filed with the Securities and Exchange Commission on April 1, 2009 (File No. 333-131651).

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Exhibit No.	Description	Reference

5.1	Opinion of McDonald Carano Wilson, LLP.	Previously filed.

10.1	Escrow Agreement, dated as of October 27, 2006, by and among the Registrant, Michael Downing, Riaz Valani and Gottbetter & Partners, LLP.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.2	Form of Subscription Agreement, dated as of October 27, 2006, by and among the Registrant and the investors in the private offering completed October 27, 2006.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.3	Form of Registration Rights Agreement, dated as of October 27, 2006, including the Consent and Acknowledgment thereto, by and among the Registrant and the investors in the private offering completed October 27, 2006.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.4	Split Off Agreement, dated as of October 27, 2006, by and among the Registrant, Dianxiang Wu, Jianhua Xue, GoFish Technologies, Inc. and GF Leaseco, Inc.	Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.5	Form of Indemnity Agreement by and between the Registrant and Outside Directors of the Registrant.	Incorporated by reference to Exhibit 10.6 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.6	2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.7 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

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Exhibit No.	Description	Reference

10.7	Form of Incentive Stock Option Agreement by and between the Registrant and participants under the 2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.8 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.8	Form of Non-Qualified Stock Option Agreement by and between the Registrant and participants under the 2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.9 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.9	Employment Agreement dated as of October 30, 2006, by and between the Registrant and Greg Schroeder.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated October 30, 2006 filed with the Securities and Exchange Commission on November 3, 2006 (File No. 333-131651).

10.10	Employment Agreement dated as of October 27, 2006, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K dated October 27, 2006, filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.11	Strategic Alliance Agreement, dated as of December 22, 2006, by and between the Registrant and Kaleidescope Sports and Entertainment LLC.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 22, 2006 filed with the Securities and Exchange Commission on December 28, 2006 (File No. 333-131651).

10.12	Form of Base Warrant issued to designees of Kaleidescope Sports and Entertainment LLC as of January 1, 2007.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 22, 2006 filed with the Securities and Exchange Commission on December 28, 2006 (File No. 333-131651).

10.13	Form of Lock Up Agreement, to be dated as of the Closing Date, by and among the Registrant and the persons to whom Betawave Common Stock will be issued in the merger.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated February 11, 2007 filed with the Securities and Exchange Commission on February 12, 2007 (File No. 333-131651).

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Exhibit No.	Description	Reference

10.14	Amendment to Employment Agreement dated as of February 26, 2007, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated February 26, 2007 filed with the Securities and Exchange Commission on March 2, 2007 (File No. 333-131651).

10.15	Separation Agreement and Mutual Release dated as of June 4, 2008, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated June 4, 2008 filed with the Securities and Exchange Commission on June 9, 2008 (File No. 333-131651).

10.16	Independent Contractor Agreement dated as of June 4, 2008, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated June 4, 2008 filed with the Securities and Exchange Commission on June 9, 2008 (File No. 333-131651).

10.17	First Amendment to Strategic Alliance Agreement, dated as of June 29, 2007, by and between GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.22 to Registrant’s Amendment No. 1 to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on July 11, 2007 (File No. 333-142460).

10.18	Second Amendment to Strategic Alliance Agreement, dated as of July 31, 2007, by and between GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 13, 2007 (File No. 333-145406).

10.19	Amended and Restated Strategic Alliance Agreement, dated as of August 10, 2007, by and among GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.24 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 13, 2007 (File No. 333-145406).

10.20	Amendment to Employment Agreement dated as of July 11, 2007, by and between the Registrant and Greg Schroeder.	Incorporated by reference to Exhibit 10.25 to Amendment No. 2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 24, 2007 (File No. 333-142460)

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Exhibit No.	Description	Reference

10.21	2007 Non-Qualified Stock Option Plan (as amended through February 5, 2008).	Incorporated by reference to Exhibit 10.29 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651).

10.22*	Advertising Representation Agreement, dated as of December 10, 2007, by and between the Registrant and MiniClip.	Incorporated by reference to Exhibit 10.30 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651)

10.23*	Amendment to Advertising Representation Agreement, dated as of November 12, 2008, by and between the Registrant and MiniClip.	Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on March 31, 2009 (File No. 333-131651)

10.24	Stock and Warrant Issuance Agreement, dated as of December 10, 2007, by and between MiniClip Limited and the Registrant.	Incorporated by reference to Exhibit 10.31 to Registrant’s Amendment to Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on April 1, 2008 (File No. 333-131651)

10.25	Stock Issuance and Participation Rights Agreement, dated as of December 12, 2007, by and between MTV Networks, a division of Viacom International Inc. and the Registrant.	Incorporated by reference to Exhibit 10.31 to Registrant’s Amendment to Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on April 1, 2008 (File No. 333-131651)

10.26	Consulting Agreement, dated as of December 18, 2007, by and between the Registrant and James Moloshok.	Incorporated by reference to Exhibit 10.33 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651)

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Exhibit No.	Description	Reference

10.27	2008 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 9, 2008. (File No. 333-131651).

10.28	Form of Option Agreement by and between Betawave Corporation and the participants under the 2008 Stock Incentive Plan	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.29	Employment Agreement dated as of June 5, 2008, by and between the Registrant and Matt Freeman.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 9, 2008. (File No. 333-131651).

10.30	Securities Purchase Agreement, dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedules A-1, A-2 and A-3 thereto.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

10.31	Form of Warrant to Purchase Common Stock issued in private offering completed December 12, 2008.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

10.32	Investors’ Rights Agreement, dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedule A thereto.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

10.33	Form of Lock-Up Agreement entered into by the Company pursuant to the Securities Purchase Agreement dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedule A thereto.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.34	Employment Agreement dated as of December 3, 2008, by and between the Registrant and Matt Freeman.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

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Exhibit No.	Description	Reference

10.35	Amended and Restated Employment Agreement dated as of December 3, 2008, by and between the Registrant and Tabreez Verjee.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.36	Amended and Restated Employment Agreement dated as of December 10, 2008, by and between the Registrant and Lennox L. Vernon.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.37	Employment Agreement dated as of December 10, 2008, by and between the Registrant and James Moloshok.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.38	Loan and Security Agreement dated as of March 27, 2009, by and between the Registrant and Silicon Valley Bank.	Incorporated by referenced to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated March 27, 2009 filed with the Securities and Exchange Commission on April 1, 2009 (File No. 333-131651).

21.1	Subsidiaries of the Registrant.	Incorporated by reference to Exhibit 21.1 to Amendment No. 2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 24, 2007 (File No. 333-142460)

23.1	Consent of Rowbotham and Company LLP.	Filed herewith.

23.2	Consent of McDonald Carano Wilson, LLP (included in Exhibit 5.1).	Previously filed.

24.1	Power of Attorney (included on signature page).	Previously filed.

*	Confidential treatment requested for certain portions of this exhibit, which portions are omitted and filed separately with the Securities and Exchange Commission.

Item 17. Undertakings.

The undersigned registrant hereby undertakes:

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(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (§ 230.430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

II-14

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of San Francisco, State of California, on April 24, 2009 .

	BETAWAVE CORPORATION

	By:	/s/ Tabreez Verjee
		Name: Tabreez Verjee
		Title: President

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

*	Chief Executive Officer and Director	April 24, 2009
Matt Freeman	(Principal Executive Officer)

/s/ Tabreez Verjee	President and Director	April 24, 2009
Tabreez Verjee

*	Chief Accounting Officer and Director of Operations	April 24, 2009
Lennox L. Vernon	(Principal Financial and Accounting Officer)

	Director
John Durham

*	Director	April 24, 2009
Michael Jung

*	Director	April 24, 2009
Richard Ling

*	Director	April 24, 2009
Mark Menell

*	Executive Chairman and Director	April 24, 2009
James Moloshok

*	Director
Riaz Valani

*By:	/s/ Tabreez Verjee
	Tabreez Verjee
	Attorney-in-Fact

II-15

EXHIBIT INDEX

Exhibit No.	Description	Reference
2.1	Agreement and Plan of Merger and Reorganization, dated as of October 27, 2006, by and among the Registrant, GF Acquisition Corp., GoFish Technologies, Inc., ITD Acquisition Corp. and Internet Television Distribution Inc.	Incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

3.1	Amended and Restated Articles of Incorporation of the Registrant filed with the Nevada Secretary of State on December 12, 2008.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated December 12, 2008 filed with the Securities and Exchange Commission on December 18, 2008 (File No. 333-131651)

3.2	Certificate of Amendment to the Amended and Restated Articles of Incorporation of the Registrant filed with the Nevada Secretary of State on January 20, 2009.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated January 16, 2009 filed with the Securities and Exchange Commission on January 21, 2009 (File No. 333 131651)

3.3	Bylaws of the Registrant.	Incorporated by reference to Exhibit 3.2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on February 7, 2006 (File No. 333-131651).

3.4	First Amendment to Bylaws of the Registrant.	Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

4.1	Form of Warrant of the Registrant issued in private offering completed October 27, 2006.	Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.2	Lock Up Agreement by and between Michael Downing and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.2 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

II-16

Exhibit No.	Description	Reference
4.3	Lock Up Agreement by and between Riaz Valani and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.3 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.4	Lock Up Agreement by and between Tabreez Verjee and Tompkins Capital Group.	Incorporated by reference to Exhibit 4.4 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

4.5	Purchase Agreement dated as of June 7, 2007 by and among the Registrant and the investors identified on the signature pages thereto.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.6	Registration Rights Agreement dated as of June 7, 2007, by and among the Registrant and the investors identified on the signature pages thereto.	Incorporated by referenced to Exhibit 4.2 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.7	Form of the June 2007 Notes.	Incorporated by referenced to Exhibit 4.3 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.8	Form of the June 2007 Warrants.	Incorporated by referenced to Exhibit 4.4 to Registrant’s Current Report on Form 8-K dated June 7, 2007 filed with the Securities and Exchange Commission on June 8, 2007 (File No. 333-131651).

4.9	Subscription Agreement, dated as of April 18, 2008, by and among the Registrant and the subscribers identified on the signature page thereto.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

II-17

Exhibit No.	Description	Reference
4.10	Accession Agreement, dated as of June 30, 2008, by and among the Registrant and the subscribers identified on the signature page thereto.	Incorporated by referenced to Exhibit 4.2 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.11	Form of the 2008 Notes.	Incorporated by referenced to Exhibit 4.3 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.12	Form of the 2008 Warrants.	Incorporated by referenced to Exhibit 4.4 to Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008 (File No. 333-131651).

4.13	Certificate of Designation of Rights, Preferences, Privileges and Restrictions of Series A Preferred Stock of the Registrant.	Incorporated by reference to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

4.14	Warrant to Purchase Stock issued to Silicon Valley Bank, dated March 27, 2009.	Incorporated by referenced to Exhibit 4.1 to Registrant’s Current Report on Form 8-K dated March 27, 2009 filed with the Securities and Exchange Commission on April 1, 2009 (File No. 333-131651).

5.1	Opinion of McDonald Carano Wilson, LLP.	Previously filed.

10.1	Escrow Agreement, dated as of October 27, 2006, by and among the Registrant, Michael Downing, Riaz Valani and Gottbetter & Partners, LLP.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.2	Form of Subscription Agreement, dated as of October 27, 2006, by and among the Registrant and the investors in the private offering completed October 27, 2006.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

II-18

Exhibit No.	Description	Reference
10.3	Form of Registration Rights Agreement, dated as of October 27, 2006, including the Consent and Acknowledgment thereto, by and among the Registrant and the investors in the private offering completed October 27, 2006.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.4	Split Off Agreement, dated as of October 27, 2006, by and among the Registrant, Dianxiang Wu, Jianhua Xue, GoFish Technologies, Inc. and GF Leaseco, Inc.	Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.5	Form of Indemnity Agreement by and between the Registrant and Outside Directors of the Registrant.	Incorporated by reference to Exhibit 10.6 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.6	2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.7 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.7	Form of Incentive Stock Option Agreement by and between the Registrant and participants under the 2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.8 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.8	Form of Non-Qualified Stock Option Agreement by and between the Registrant and participants under the 2006 Equity Incentive Plan.	Incorporated by reference to Exhibit 10.9 to Registrant’s Current Report on Form 8-K dated October 27, 2006 filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.9	Employment Agreement dated as of October 30, 2006, by and between the Registrant and Greg Schroeder.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated October 30, 2006 filed with the Securities and Exchange Commission on November 3, 2006 (File No. 333-131651).

II-19

Exhibit No.	Description	Reference
10.10	Employment Agreement dated as of October 27, 2006, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.5 to Registrant’s Current Report on Form 8-K dated October 27, 2006, filed with the Securities and Exchange Commission on October 31, 2006 (File No. 333-131651).

10.11	Strategic Alliance Agreement, dated as of December 22, 2006, by and between the Registrant and Kaleidescope Sports and Entertainment LLC.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 22, 2006 filed with the Securities and Exchange Commission on December 28, 2006 (File No. 333-131651).

10.12	Form of Base Warrant issued to designees of Kaleidescope Sports and Entertainment LLC as of January 1, 2007.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 22, 2006 filed with the Securities and Exchange Commission on December 28, 2006 (File No. 333-131651).

10.13	Form of Lock Up Agreement, to be dated as of the Closing Date, by and among the Registrant and the persons to whom Betawave Common Stock will be issued in the merger.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated February 11, 2007 filed with the Securities and Exchange Commission on February 12, 2007 (File No. 333-131651).

10.14	Amendment to Employment Agreement dated as of February 26, 2007, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated February 26, 2007 filed with the Securities and Exchange Commission on March 2, 2007 (File No. 333-131651).

10.15	Separation Agreement and Mutual Release dated as of June 4, 2008, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated June 4, 2008 filed with the Securities and Exchange Commission on June 9, 2008 (File No. 333-131651).

10.16	Independent Contractor Agreement dated as of June 4, 2008, by and between the Registrant and Michael Downing.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated June 4, 2008 filed with the Securities and Exchange Commission on June 9, 2008 (File No. 333-131651).

II-20

Exhibit No.	Description	Reference
10.17	First Amendment to Strategic Alliance Agreement, dated as of June 29, 2007, by and between GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.22 to Registrant’s Amendment No. 1 to Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on July 11, 2007 (File No. 333-142460).

10.18	Second Amendment to Strategic Alliance Agreement, dated as of July 31, 2007, by and between GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 13, 2007 (File No. 333-145406).

10.19	Amended and Restated Strategic Alliance Agreement, dated as of August 10, 2007, by and among GoFish Technologies, Inc., the Registrant and Kaleidoscope, Inc. (acting through its wholly-owned subsidiary, Kaleidoscope Sports and Entertainment LLC).	Incorporated by reference to Exhibit 10.24 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 13, 2007 (File No. 333-145406).

10.20	Amendment to Employment Agreement dated as of July 11, 2007, by and between the Registrant and Greg Schroeder.	Incorporated by reference to Exhibit 10.25 to Amendment No. 2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 24, 2007 (File No. 333-142460)

10.21	2007 Non-Qualified Stock Option Plan (as amended through February 5, 2008).	Incorporated by reference to Exhibit 10.29 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651).

10.22*	Advertising Representation Agreement, dated as of December 10, 2007, by and between the Registrant and MiniClip.	Incorporated by reference to Exhibit 10.30 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651)

10.23*	Amendment to Advertising Representation Agreement, dated as of November 12, 2008, by and between the Registrant and MiniClip.	Incorporated by reference to Exhibit 10.12 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2008 filed with the Securities and Exchange Commission on March 31, 2009 (File No. 333-131651)

II-21

Exhibit No.	Description	Reference
10.24	Stock and Warrant Issuance Agreement, dated as of December 10, 2007, by and between MiniClip Limited and the Registrant.	Incorporated by reference to Exhibit 10.31 to Registrant’s Amendment to Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on April 1, 2008 (File No. 333-131651)

10.25	Stock Issuance and Participation Rights Agreement, dated as of December 12, 2007, by and between MTV Networks, a division of Viacom International Inc. and the Registrant.	Incorporated by reference to Exhibit 10.31 to Registrant’s Amendment to Annual Report on Form 10-KSB/A for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on April 1, 2008 (File No. 333-131651)

10.26	Consulting Agreement, dated as of December 18, 2007, by and between the Registrant and James Moloshok.	Incorporated by reference to Exhibit 10.33 to Registrant’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission on March 31, 2008 (File No. 333-131651)

10.27	2008 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.4 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 9, 2008. (File No. 333-131651).

10.28	Form of Option Agreement by and between Betawave Corporation and the participants under the 2008 Stock Incentive Plan	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.29	Employment Agreement dated as of June 5, 2008, by and between the Registrant and Matt Freeman.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 9, 2008. (File No. 333-131651).

10.30	Securities Purchase Agreement, dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedules A-1, A-2 and A-3 thereto.	Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

II-22

Exhibit No.	Description	Reference
10.31	Form of Warrant to Purchase Common Stock issued in private offering completed December 12, 2008.	Incorporated by reference to Exhibit 10.2 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

10.32	Investors’ Rights Agreement, dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedule A thereto.	Incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K dated December 3, 2008 filed with the Securities and Exchange Commission on December 9, 2008 (File No. 333-131651).

10.33	Form of Lock-Up Agreement entered into by the Company pursuant to the Securities Purchase Agreement dated as of December 3, 2008, by and among the Registrant and the investors listed on Schedule A thereto.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.34	Employment Agreement dated as of December 3, 2008, by and between the Registrant and Matt Freeman.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.35	Amended and Restated Employment Agreement dated as of December 3, 2008, by and between the Registrant and Tabreez Verjee.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.36	Amended and Restated Employment Agreement dated as of December 10, 2008, by and between the Registrant and Lennox L. Vernon.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

10.37	Employment Agreement dated as of December 10, 2008, by and between the Registrant and James Moloshok.	Incorporated by reference to Exhibit 10.23 to Registrant’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on February 13, 2009 (File No. 333-157352)

II-23

Exhibit No.	Description	Reference
10.38	Loan and Security Agreement dated as of March 27, 2009, by and between the Registrant and Silicon Valley Bank.	Incorporated by referenced to Exhibit 10.1 to Registrant’s Current Report on Form 8-K dated March 27, 2009 filed with the Securities and Exchange Commission on April 1, 2009 (File No. 333-131651).

21.1	Subsidiaries of the Registrant.	Incorporated by reference to Exhibit 21.1 to Amendment No. 2 to Registrant’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on August 24, 2007 (File No. 333-142460)

23.1	Consent of Rowbotham and Company LLP.	Filed herewith.

23.2	Consent of McDonald Carano Wilson, LLP (included in Exhibit 5.1).	Previously filed.

24.1	Power of Attorney (included on signature page).	Previously filed.

*	Confidential treatment requested for certain portions of this exhibit, which portions are omitted and filed separately with the Securities and Exchange Commission.