When reading this section of this Quarterly Report, it is important that you also read the financial statements and related notes included elsewhere in this Quarterly Report and in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007. This section of this Quarterly Report contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. We use words such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "believe," "intend," "may," "will," "should," "could," and similar expressions to identify forward-looking statements. Our actual results may differ materially from the information contained in these forward-looking statements for many reasons, including those described in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 filed with the Securities and Exchange Commission ("SEC"). The risks described in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2007 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

OVERVIEW

General

We are a provider of Internet advertising services that facilitate access to relevant financial related information and services on the Internet, and offer our customers a variety of online financial services products. Our recent name change to Banks.com, Inc. is representative of our decision to focus on and become a leading provider of targeted traffic in the lucrative financial services vertical of online advertising. In this regard, we intend to continue building a cohesive business around our flagship domain property www.banks.com. Through www.banks.com, we provide access to current financial content, including financial articles, interest-rate tables, stock quotes, stock tracking and financial calculators. We believe that focusing our content in the high-traffic financial services vertical will allow us to provide our advertisers operating in that vertical access to highly relevant traffic.

We currently depend, and expect to continue to depend in the near future, upon a relatively small number of advertising network partners and direct advertisers for a significant percentage of our revenues. Our advertising network partners, Yahoo! Search Marketing and Ask.com, formerly known as Ask Jeeves, together represented approximately 29% and 85% of our revenues for the nine months ended September 30, 2008 and 2007, respectively, while a new advertising network partner in 2008, InfoSpace, represented 50% of our revenues for the nine months ended September 30, 2008. We had two contracts with Yahoo! Search Marketing, which terminated March 1, 2008 and June 1, 2008. Revenues generated from these contracts were approximately $1.5 million and $8.5 million for the nine months ended September 30, 2008 and 2007, respectively. The termination of these contracts has adversely impacted our results of operations and we are attempting to replace this relationship with other advertising network partners. However, we believe our change in strategy to focus on customer acquisition through proprietary financial products and services will reduce our reliance on advertising network partners. In addition, we have been aggressively reducing our sales and marketing and general and administrative ("SG&A") expenses. SG&A expenses were $2 million for the three months ended September 30, 2008, compared to $3.1 million for the same period in 2007, a reduction of 35%. For the nine months ended September 30, 2008, these expenses were $7.1 million compared to $8.9 million for the same period in 2007, a reduction of 20%. We anticipate continuing to reduce SG&A expenses on the go forward but anticipate the rate of reduction to slow.

Our overall business is evolving as a result of our change in strategic direction, as well as the changing dynamics within the online advertising industry. With these shifts, we have taken proactive measures to upgrade our traffic quality and conversion standards, as well as exiting some low margin business lines that no longer fit with our go forward strategy, such as domain parking (ParkingDotsŪ) and the desktop space. We have also taken measures to mitigate our reliance on advertising network partners by transitioning toward a primary revenue strategy of customer acquisition, proprietary financial services and expanding our direct advertiser base, with third party advertising networks being utilized to augment those revenue streams. The largest providers of online search and advertising, primarily Google and Yahoo! Search Marketing, have also upgraded their traffic conversion standards and algorithms. This transition of our business model, industry trends, the expiration of our contracts with Yahoo! Search Marketing in March and June 2008, and our contract with Ask.com being modified to terminate their license to distribute third party results to us, is having an adverse affect on our business. We are now focused on the financial services vertical of online advertising through our network of financial sites including www.banks.com.

We review our operations based on both our financial results and non financial measures. Our primary source of revenue is our Internet advertising services. The key financial factors upon which management focuses in reviewing performance are revenue-per-click and cost-per-click, which for the nine months ended September 30, 2008 were approximately $0.19 and $0.09, respectively, compared to approximately $0.27 and $0.10, respectively for the nine months ended September 30, 2007. When an Internet user clicks-through on a sponsored listing through our distribution network, our arrangements with our advertising network partners and direct advertisers provide that we receive a fixed percentage of their related advertising revenue. A significant reduction in click-throughs or an advertising network partner exerting significant pricing pressures on us would have a material adverse effect on our results of operations. We anticipate that an increase in customer acquisitions will come at the expense of paid advertiser clicks, but believe a growth in customer acquisition will allow us to build a more sustainable long term business model. Therefore, future comparisons between the number of paid clicks we generate year over year may not be a reliable measure of the success of our business if viewed in isolation. Our largest expense is traffic acquisition costs, which consist primarily of Internet advertising costs and revenue-sharing payments to our distribution network partners for access to their online user traffic. We seek to decrease our cost-per-click by increasing the number of proprietary web properties that we own. When Internet users access our web properties through direct navigation, it reduces our payments to distribution network partners.

Trends and Uncertainties

The application or perceived effect of new and existing laws and regulations with respect to the Internet or other online services, could have a material adverse effect on our business, prospects, financial condition and results of operations. For example, on April 17, 2007, the U.S. House of Representatives passed H.R. 1677, The TaxPayer Protection Act of 2007 ("H.R. 1677"). Section 8 of H.R. 1677 amends Section 333, Title 31 of the U.S. Code to include Internet domain addresses in the prohibition on misuse of the U.S. Department of the Treasury names and symbols. We own the Internet domain address www.irs.com. "IRS" is an acronym commonly associated with the Internal Revenue Service, a division of the U.S. Department of the Treasury. Although we believe the passage of this bill into law in its identical form is currently speculative, the perceived effect of this pending legislation is harming our ability to retain advertisers on our website www.irs.com, as evidenced by the loss of one of our largest advertisers on this website, Second Story Software (Tax Act). The loss of this advertiser contributed to the 42% decrease in our paid clicks and the 30% decrease in our revenues per click for the nine months ended September 30, 2008 compared to the same period for 2007. The passage of H.R. 1677 into law in its current form could further adversely affect our use of our Internet domain address www.irs.com as well as our overall operations. H.R. 1677 was introduced in the 110th U. S. Congress. It will therefore fail to be enacted if not also passed by the U.S. Senate, and ultimately signed into law by the President of the United States, by the end of this Congressional session in January 2009.

The largest providers of online search and advertising, primarily Google and Yahoo! Search Marketing, have upgraded traffic conversion standards and algorithms and prohibited us from using certain search parameters that were in use in the prior year. Our results of operations have been adversely affected by this trend. Our results of operations have also been adversely affected by the expiration of our contracts with Yahoo! Search Marketing on March 1, 2008 and June 1, 2008, and the modification of our contract with Ask.com to terminate our license to distribute third party results. As a result of this shift in industry dynamics and the negative reactions of our current and potential advertisers to H.R. 1677, both of which have had an adverse effect on our financial condition and results of operations, we have taken proactive measures to mitigate our reliance on advertising network partners by transitioning toward a strategy of customer acquisition, proprietary products, and a direct advertiser base. Hence, we have voluntarily exited certain pay per click business lines such as ParkingDotsŪ and the Desktop space. We are now focused on the financial services vertical of online advertising through our network of financial sites including www.banks.com and www.irs.com. Our new strategy should result in less dependency on the pay-per-click model, which has been negatively affected by these recent legislative and industry trends. In addition, we have been aggressively reducing our sales and marketing and general and administrative ("SG&A") expenses. SG&A expenses were $2 million for the three months ended September 30, 2008, compared to $3.1 million for the same period in 2007, a reduction of 35%. For the nine months ended September 30, 2008, these expenses were $7.1 million compared to $8.9 million for the same period in 2007, a reduction of 20%. We anticipate continuing to reduce SG&A expenses on the go forward but anticipate the rate of reduction to slow.

Recent Developments

As of September 30, 2008, while we were current with respect to payment of principal and interest on our 13.50% Senior Subordinated Notes Due 2011, in the aggregate principal amount of $7.0 million (the "Notes"), and

had paid an additional 3 monthly principal payments in advance, we were not in compliance with the financial covenants contained in the Investment Agreement relating to the Notes, which are measured on the last day of each fiscal quarter. Consequently, Investors holding at least 51% of the Notes have the right to, among other things, accelerate our indebtedness under the Notes, or to take possession of, sell, lease, or otherwise dispose of any of our assets that were pledged as collateral for the Notes. While an Event of Default exists, such Investors may also require us to pay interest on the Notes at a rate per annum that is 4% greater than the rate of interest otherwise then in effect for the Notes. The holders of our Notes have informed us that they intend to seek interest on the Notes at this increased rate while an event of default exists under the Notes. Therefore, we are accruing interest accordingly beginning October 1, 2008. We are still in discussions with the holders of the Notes to obtain a waiver of compliance with the financial covenants. We can offer no assurances that we will be able to obtain such a waiver.

During the month of October, we completed the sale of some non-core assets in an effort to pay down additional principal on the Notes and reduce monthly interest costs. The domain names Camps.com and GreatCruises.com, as well as a trademark that we owned for the term "InterSearch", were all sold for a total proceeds of approximately $218,000, all of which was used to pay down principal on the Notes. We expect to continue to sell non-core assets as proper opportunities arise and use any proceeds from such sales to continue to pay down the principal balance on the Notes.

On October 10, 2008, we received a letter from the NYSE Alternext US LLC (the "Exchange") indicating that we are below certain of the Exchange's continued listing standards. Specifically, we are not in compliance with
Section 1003(a)(iv) of the Exchange's Company Guide (the "Company Guide") in that we have sustained losses which are so substantial in relation to our overall operations or our existing financial resources, or our financial condition has become so impaired that it appears questionable, in the opinion of the Exchange, as to whether we will be able to continue operations and/or meet our obligations as they mature. The letter from the Exchange also indicated that, due to its low selling price, our common stock may not be suitable for auction market trading.

The Exchange afforded us an opportunity to submit a plan of compliance to the Exchange by November 10, 2008, which deadline was later extended to November 17, 2008, demonstrating our ability to regain compliance with the Exchange's continued listing standards. While we intend to submit such a plan to the Exchange, there is no assurance that the Exchange will accept our plan of compliance or, if accepted, that we will make progress consistent with the plan, which could, among other things, result in the Exchange initiating delisting proceedings.

On October 21, 2008, we announced that we have entered into an advertising partnership with InfoSpace, Inc., whereby InfoSpace will provide search services on www.banks.com. The launch of InfoSpace's metasearch technology on our www.banks.com and www.look.com sites will allow our users to search and receive the most relevant results from the top search engines in the industry, including Google and Yahoo. We believe that InfoSpace's unique metasearch algorithm will enable our users to receive more relevant advertising and organic results which should equate into increased revenues from search related services during tax season, our peak traffic season.

Business Segments

We had no reportable segments for the three- or nine-month periods ended September 30, 2008.

Quarterly Results May Fluctuate

We enter into agreements with various distribution partners to provide distribution for the uniform resource locator, or URL, strings and advertisement listings of our advertising network partners. We generally pay distribution partners based on a percentage of revenue or a fixed amount per click-through on these listings. The level of paid clicks contributed by our distribution partners has varied, and we expect it will continue to vary, from quarter to quarter and year to year, sometimes significantly, for several reasons, including our ability to increase our distribution, which impacts the number of Internet users who have access to advertisers' listings on our network, the amount these advertisers spend on their sponsored listings and the number of our advertising network partners.

We anticipate that these variables will fluctuate in the future, affecting our growth rate and our financial results. In particular, it is difficult to project the number of paid clicks we will deliver to our advertising network partners and web properties, how much advertisers will spend, and the rate of revenue sharing with our distribution network partners.

Our quarterly results have fluctuated in the past and may continue to do so in the future due to seasonal fluctuations in the level of Internet usage. As is typical in our industry, the second and third quarters of the calendar year generally experience relatively lower usage than the first and fourth quarters. It is generally understood that during the spring and summer months of the year, Internet usage is lower than during other times of the year, especially in comparison to the fourth quarter of the calendar year. The extent to which usage may decrease during these off-peak periods is difficult to predict. In addition, we expect that our acquisition of the website business of www.irs.com will further cause our revenues to be largely seasonal in nature, with peak revenues occurring during the U.S. tax filing season of January through April. Therefore, our quarterly results should not be relied upon as indicative of results for the entire fiscal year.

RESULTS OF OPERATIONS

The following table sets forth information for the three and nine months ended
September 30, 2008 and 2007 derived from our unaudited condensed consolidated
financial statements which, in the opinion of our management, reflect all
adjustments, which are of a normal recurring nature, necessary to present such
information fairly (in thousands).



                                           Three Months Ended        Nine Months Ended
                                             September 30,             September 30,
                                            2008          2007        2008         2007
   Statements of Operations Data:
   Revenues                              $     1,363      5,102        9,542      23,110

   Cost of revenues                              548      2,489        4,487       9,101
   Sales and marketing                           233        629          884       1,121
   General and administrative                  1,749      2,491        6,227       7,818

   Total expenses                              2,530      5,609       11,598      18,040

   (Loss) earnings from operations            (1,167 )     (507 )     (2,056 )     5,070
   Interest expense                              282        296          878         890

   (Loss) earnings before income taxes        (1,449 )     (803 )     (2,934 )     4,180

   Income taxes (benefit)                       (493 )     (270 )       (934 )     1,742

   Net (loss) earnings                   $      (956 )     (533 )     (2,000 )     2,438

The following table sets forth our historical operating results as a percentage of revenue for the periods indicated:

                                         Three Months Ended          Nine Months Ended
                                            September 30,              September 30,
                                         2008           2007        2008          2007
 Revenues                                   100 %          100 %       100 %         100 %

 Cost of revenues                            40             49          47            39
 Sales and marketing                         17             12           9             5
 General and administrative                 128             49          65            34

 Total expenses                             185            110         121            78

 (Loss) earnings from operations            (85 )          (10 )       (21 )          22
 Interest expense                            21              6           9             4

 (Loss) earnings before income taxes       (106 )          (16 )       (30 )          18

 Income taxes (benefit)                     (36 )           (5 )       (10 )           8

 Net (loss) earnings                        (70 )          (11 )       (20 )          10

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

Revenue. Revenue decreased 73% from $5.1 million for the three months ended September 30, 2007 to $1.4 million for the same period in 2008. This can be attributed to the loss of certain direct advertisers and the decrease in paid clicks as we transition to a business strategy that is less dependent on paid clicks and more focused on building a long term customer base. See the section above entitled "Overview" for additional information regarding our revised business strategy. As a result of this change in emphasis, and the circumstances dictating it, the number of paid clicks and revenue per click both decreased year over year. Paid clicks went from 21 million in the three months ended September 30, 2007 to 8 million in the same period for 2008. In addition, revenue per click was $.23 for the three months ended September 30, 2007 and decreased to $.15 for the same period in 2008.

Cost of Revenue. Cost of revenue was $2.5 million for the three months ended September 30, 2007 and decreased to $548,000 for the same period in 2008. This 78% decrease is primarily attributable to a decrease in Search Engine Marketing efforts resulting in lower traffic acquisition costs which is directly related to the termination of our Yahoo and Ask contracts.

Sales and Marketing. Sales and marketing expense decreased from $629,000 for the three months ended September 30, 2007 to $233,000 for the same period in 2008. This decrease of $396,000 is mainly attributable to a decrease in personnel and consulting costs.

General and Administrative. General and administrative expenses decreased 30% from $2.5 million for the three months ended September 30, 2007 to $1.7 million for the same period in 2008. We have taken proactive measures to reduce expenses to coincide with the decrease in revenue. The decrease is due primarily to a decrease in personnel and benefit costs of $277,000, a decrease in technology infrastructure costs of $289,000, and a decrease in travel expense of $47,000, partially offset by an increase in depreciation and amortization of $77,000. We anticipate continuing to reduce general and administrative expenses on the go forward but anticipate the rate of reduction to slow.

Interest Expense. Interest expense was $296,000 for the three months ended September 30, 2007 compared to $282,000 for the same period in 2008.

Income Taxes. Income tax benefit was $270,000, an effective tax rate of 34%, for the three months ended September 30, 2007 compared to a $493,000 tax benefit, an effective tax rate of 34%, for the same period in 2008. This increase in income tax benefit is primarily a result of an increase in our pretax loss from $803,000 for the three months ended September 30, 2007 compared to a pretax loss of $1.4 million for the three months ended September 30, 2008. Differences from the statutory effective tax rate result from permanent tax differences, including stock compensation.

Net (Loss) Earnings. As a result of the foregoing, net loss for the three months ended September 30, 2008 was $956,000 or $0.04 per basic and diluted share compared to net loss of $533,000 or $0.02 per basic and diluted share for the same period in 2007.

Nine Months Ended September 30, 2008 Compared to Nine Months Ended September 30, 2007

Revenue. Revenue decreased 59% from $23.1 million for the nine months ended September 30, 2007 to $9.5 million for the same period in 2008. This can be attributed to the loss of certain direct advertisers and the decrease in paid clicks as we transition to a business strategy that is less dependent on paid clicks and more focused on building a long term customer base. See the section above entitled "Overview" for additional information regarding our revised business strategy. As a result of this change in emphasis, and the circumstances dictating it, the number of paid clicks and revenue per click both decreased year over year. Paid clicks went from 84 million in the nine months ended September 30, 2007 to 49 million in the same period for 2008. In addition, revenue per click was $.27 during the first nine months of last year and decreased to $.19 for the nine months ended September 30, 2008.

Cost of Revenue. Cost of revenue was $9.1 million for the nine months ended September 30, 2007 and decreased to $4.5 million for the same period in 2008. This 51% decrease is primarily attributable to a decrease in Search Engine Marketing efforts resulting in lower traffic acquisition costs.

Sales and Marketing. Sales and marketing expense decreased from $1.1 million for the nine months ended September 30, 2007 to $884,000 for the same period in 2008. This decrease of $237,000 is mainly attributable to a decrease in personnel and consulting costs.

General and Administrative. General and administrative expenses decreased 20% from $7.8 million for the nine months ended September 30, 2007 to $6.2 million for the same period in 2008. We have taken proactive measures to reduce expenses to coincide with the decrease in revenue. The decrease is due primarily to a decrease in personnel and benefit costs of $926,000, a decrease in technology infrastructure costs of $555,000, and a decrease in travel expense of $122,000, partially offset by an increase in depreciation and amortization of $254,000. We anticipate continuing to reduce general and administrative expenses on the go forward but anticipate the rate of reduction to slow.

Interest Expense. Interest expense was $890,000 for the nine months ended September 30, 2007 compared to $878,000 for the same period in 2008.

Income Taxes. Income tax expense was $1.7 million, an effective tax rate of 42%, for the nine months ended September 30, 2007 compared to a $934,000 tax benefit, an effective tax rate of 32%, for the same period in 2008. This decrease is primarily a result of a decrease in our pretax earnings from $4.2 million for the nine months ended September 30, 2007 compared to a pretax loss of $2.9 million for the nine months ended September 30, 2008. Differences from the statutory effective tax rate result from permanent tax differences, including stock compensation.

Net (Loss) Earnings. As a result of the foregoing, net loss for the nine months ended September 30, 2008 was $2 million or $0.08 per basic and diluted share compared to net earnings of $2.4 million or $0.10 per basic and $0.09 per diluted share for the same period in 2007.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our growth primarily through internally generated funds and the use of our line of credit. We have engaged in private sales of our common stock and debt financing in order to fund the purchase price of some of our acquisitions. We are unable to borrow additional capital under our credit facility at this time. As a result, until such time as additional sources of capital become available to us, our primary source of liquidity will be cash flows from operations as well as capital generated from asset sales to the extent such sales are approved by our lenders and then only to the extent such proceeds are not required to be applied to reduce our outstanding borrowings under our Notes. In addition, we expect to receive an income tax refund for the calendar year 2008 in early 2009. As of September 30, 2008, we had net working capital of $2 million, excluding amounts related to long term debt classified as a current liability due to events of default. As of . . .