To the Board of Directors and Stockholders of

ROO Group, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of ROO Group, Inc. and Subsidiaries as of December 31, 2007, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for each of the two years in the period 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 audit included consideration of internal control over financial reporting as a basis for 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 consolidated 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 position of ROO Group, Inc. and Subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


	MOORE STEPHENS, P. C.
	Certified Public Accountants.
New York, New York
March 27, 2008

F-1

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007

(Amounts in Thousands, Except Share and Per Share Data)

*Assets:*
Current assets:
Cash and cash equivalents	$	10,189
Accounts receivable, net		3,057
Other current assets		1,288
Restricted cash		100

Total current assets		14,634

Property and equipment, net		1,307
Deferred tax assets		263
Software, net		505
Customer list, net		253
Domain names, net		30
Goodwill		1,123

Total assets	$	18,115

*Liabilities and Stockholders' Equity:*
Current liabilities:
Bank overdraft and other obligations	$	190
Accounts payable		3,121
Accrued expenses		1,616
Income tax payable		139
Other current liabilities		1,478

Total current liabilities		6,544

Capital lease obligations		292
Total liabilities		6,836
Commitments and contingencies		—
Minority interest		(76	)

Stockholders' Equity:
Series A preferred shares, $0.0001 par value: authorized 10,000,000 shares; issued and outstanding 10,000,000		1
Common stock, $0.0001 par value: authorized 500,000,000 shares; issued and outstanding 38,936,039		4
Additional paid-in capital		74,820
Accumulated deficit		(63,524	)
Accumulated other comprehensive income		54
Total stockholders' equity		11,355

Total liabilities and stockholders' equity	$	18,115

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-2

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Amounts in Thousands, Except Share and Per Share Data)

	Years ended December 31,
	2007			2006

Revenue	$	13,929		$	9,768
Expenses:
Operations		13,541			8,530
Research and development		6,146			2,140
Sales and marketing		7,530			5,318
General and administrative (exclusive of non-cash compensation)		11,540			6,098
Non-cash compensation		4,748			2,597
Settlement of MVD agreement		500			—
Impairment of property and equipment		788			—
Impairment of intangible assets		3,124			—
Impairment of goodwill		250			—

Total expenses		48,167			24,683

(Loss) from operations		(34,238	)		(14,915	)

Interest income		725			166
Interest expense		(70	)		(78	)
Other income (expense)		(51	)		—
Registration rights liquidated damages		(792	)		(70	)

Net (loss) before income taxes		(34,426	)		(14,897	)

Income tax expense (benefit)		125			(92	)

Net (loss) before minority interest		(34,551	)		(14,805	)

Minority interest		(13	)		180

Deduct: Preferred shares dividend		—			—

Net (loss) available to common shareholders	$	(34,564	)	$	(14,625	)

Basic and diluted net (loss) per common share	$	(0.99	)	$	(0.92	)

Weighted average common shares outstanding		34,869,325			15,901,049

Comprehensive (loss):
Net (loss)	$	(34,564	)	$	(14,625	)
Foreign currency translation		46			43

Comprehensive (loss)	$	(34,518	)	$	(14,582	)

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-3

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in Thousands, Except Share and Per Share Data)

	Series A Preferred Shares		Series A Preferred Shares Par Value	Common Stock			Common Stock Par Value
Balance - January 1, 2006	9,500,000	$	1	13,176,436		$	1

Issuance of stock in private placements	—		—	12,798,377			2
Stock-based compensation	—		—	—			—
Issuance of Series A Preferred shares as Performance Bonuses	500,000		—	—			—
Issuance of stock for share price guarantee related to Reality Group	—		—	—			—
Issuance of stock for achievement of milestones related to Undercover	—		—	100,000			—
Issuance of warrants for services	—		—	—			—
Foreign currency translation adjustment	—		—	—			—
Net (loss)	—		—	—			—

Balance - December 31, 2006	10,000,000	$	1	26,074,813		$	3

Issuance of stock in private placements	—		—	10,000,000			1
Stock-based compensation	—		—	—			—
Issuance of stock for News Corp.	—		—	2,000,000			—
Issuance of stock for MyVideoDaily acquisition	—		—	92,379			—
Return and cancellation of stock for MyVideoDaily acquisition	—		—	(92,379	)		—
Issuance of stock upon conversion of warrants	—		—	10,000			—
Issuance of stock upon cashless conversion of warrants	—		—	195,726			—
Issuance of stock into escrow related to Wurld Media	—		—	655,500			—
Foreign currency translation adjustment	—		—	—			—
Net (loss)	—		—	—			—

Balance - December 31, 2007	10,000,000	$	1	38,936,039		$	4

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-4

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Amounts in Thousands, Except Share and Per Share Data)

	Other Additional Paid-in Capital			Accumulated (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity

Balance - January 1, 2006	$	23,366		$	(14,335	)	$	(35	)	$	8,998
Issuance of stock in private placements		19,476			—			—			19,478
Stock-based compensation		2,404			—			—			2,404
Issuance of Series A Preferred shares as Performance Bonuses		64			—			—			64
Issuance of stock for share price guarantee related to Reality Group		(961	)		—			—			(961	)
Issuance of stock for achievement of milestones related to Undercover		260			—			—			260
Issuance of warrants for services		129			—			—			129
Foreign currency translation adjustment		—			—			43			43
Net (loss)		—			(14,625	)		—			(14,625	)


Balance - December 31, 2006	$	44,738		$	(28,960	)	$	8		$	15,790

Issuance of stock in private placements		23,874			—			—			23,875
Stock-based compensation		4,748			—			—			4,748
Issuance of stock for News Corp		340			—			—			340
Issuance of stock for MyVideoDaily acquisition		250			—			—			250
Return and cancellation of stock for MyVideoDaily acquisition		(250	)		—			—			(250	)
Issuance of stock upon conversion of warrants		12			—			—			12
Issuance of stock upon cashless conversion of warrants		—			—			—			—
Issuance of stock into escrow related to Wurld Media		1,108			—			—			1,108
Foreign currency translation adjustment		—			—			46			46
Net (loss)		—			(34,564	)		—			(34,564	)

Balance - December 31, 2007	$	74,820		$	(63,524	)	$	54		$	11,355

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-5

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

	Years ended December 31,
	2007			2006
Operating Activities:
Net (loss)	$	(34,564	)	$	(14,625	)
Adjustments to reconcile net (loss) to net cash (used) by operating activities:
Provision for doubtful accounts		120			225
Depreciation		902			173
Amortization of intangible assets		1,334			674
Impairment of property and equipment		788			—
Impairment of goodwill and intangible assets		3,374			—
Non cash stock based compensation		4,748			2,404
Non cash warrants and options for services		—			129
Non cash preferred stock issued as performance bonuses		—			64
Non cash issuance of shares for News Corporation agreement		340			—
Minority interest in subsidiaries		13			(180	)

Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable		231			(2,134	)
Other assets		(137	)		(767	)

Increase (decrease) in:
Accounts payable		1,348			673
Accrued expenses		613			294
Income tax payable		(34	)		(198	)
Other liabilities		139			842

Total adjustments		13,779			2,199

Net Cash (Used) By Operating Activities - Forward		(20,785	)		(12,426	)

Investing Activities:
Investment in Bickhams/Videodome		—			(20	)
Investment in restricted cash		(100	)		—
Investment in ROO Media Europe		—			(90	)
Cash paid in Sputnik acquisition		—			(197	)
Cash paid in MyVideoDaily acquisition		(250	)		—
Investment in assets acquired from Wurld Media		(3,174	)		—
Capitalization of content		(89	)		(160	)
Purchase of equipment		(729	)		(355	)

Net Cash (Used) By Investing Activities - Forward	$	(4,342	)	$	(822	)

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-6

ROO GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

	Years ended December 31,
	2007			2006
Net Cash (Used) By Operating Activities - Forwarded	$	(20,785	)	$	(12,426	)

Net Cash (Used) By Investing Activities - Forwarded		(4,342	)		(822	)

Financing Activities:
Proceeds from private placements, net		23,875			19,478
Bank overdraft and other obligations		(372	)		445
Proceeds from exercise of warrants		12			—
Payments on capital leases		(170	)		(20	)

Net Cash Provided By Financing Activities		23,345			19,903

Effect of Exchange Rate Changes on Cash		34			8
Net (Decrease) Increase in Cash		(1,748	)		6,663
Cash - Beginning of Year		11,937			5,274
Cash - End of Year	$	10,189		$	11,937

Supplemental Disclosures of Cash Flow Information:
Cash paid during the years for:
Income taxes	$	—		$	120
Interest	$	50		$	78

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

During the years ended December 31, 2006 and 2007, the Company acquired equipment under capital lease obligations of $211 and $184, respectively.

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

F-7

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(1) Basis of Presentation

ROO Group, Inc. ("we," "us," "our," the "Company" or "ROO Group"), through our operating subsidiaries, is a service provider that enables businesses to leverage digital media assets and provide an enhanced user experience. Our business is divided into two segments: Online Digital Media and Advertising Agency. Online Digital Media provides products and solutions that enable the broadcast of topical video content from our customers’ Internet web sites as well as monetizing that video through advertising sales. This includes website creation and providing the technology and content required for video to be played on computers via the Internet as well as emerging broadcast platforms such as set top boxes and wireless devices (mobile phones and PDAs). Advertising Agency provides varied forms of media and services which support our client campaigns. Our competencies span from creative, account service and media planning and buying to technical web development, direct marketing, incentive programs, CRM, and sales promotion.

(2) Summary of Significant Accounting Policies

Management Estimates - The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Certain amounts included in the financial statements are estimated based on currently available information and management's judgment as to the outcome of future conditions and circumstances. Changes in the status of certain facts or circumstances could result in material changes to the estimates used in the preparation of financial statements and actual results could differ from the estimates and assumptions.

Foreign Currency Translation - Assets and liabilities of ROO Group’s foreign subsidiaries are translated at current exchange rates and related revenues and expenses are translated at average exchange rates in effect during the periods. Resulting translation adjustments are recorded as a component of accumulated comprehensive income (loss) in stockholders' equity.

Fair value of Financial Instruments - Statement of Financial Accounting Standards (“SFAS”) No. 107, "Disclosures about Fair Value of Financial Instruments," defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. In assessing the fair value of our cash and cash equivalents, accounts receivables, other current assets, accounts payables, accrued liabilities, and other current liabilities, management concluded that the carrying amount of these financial instruments approximates fair value because of the immediate or short-term maturity of these financial instruments.

F-8

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(2) Summary of Significant Accounting Policies (Continued)

Risk Concentrations - Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and trade accounts receivable. We place our cash and cash equivalents with high credit quality institutions to limit credit exposure. We believe no significant concentration of credit risk exists with respect to these investments. The amount of cash beyond insured amounts as of December 31, 2007, was $10,084.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the nature of our customers who are dispersed across many industries and geographic regions. The allowance for doubtful accounts as of December 31, 2007 was $282. As of December 31, 2007, one customer accounted for approximately 12% of our trade accounts receivable. We routinely assess the financial strength of customers and, based upon factors concerning credit risk, we establish an allowance for doubtful accounts. Management believes that accounts receivable credit risk exposure beyond such allowance is limited.

We generally do not require collateral for our financial instruments.

Impairment of Long-Lived Assets - We review our long-lived assets and identifiable intangibles for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such factors and circumstances exist, we compare the projected undiscounted future cash flows associated with the future use and disposal of the related asset or group of assets to their respective carrying amounts. Impairment, if any, is measured as the excess of the carrying amount over the fair value based on market value (when available) or discounted expected cash flows of those assets, and is recorded in the period in which the determination is made.

Cash and Cash Equivalents - We consider all highly liquid investments with original maturities of ninety days or less when purchased to be cash and cash equivalents.

Restricted Cash - As of December 31, 2007, we pledged approximately $100 as collateral for a standby letter of credit that guarantees our obligation related to a real estate lease agreement.

Property and Equipment - Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for using the straight-line and declining balance methods of accounting over the estimated useful lives of the assets [See Note 6].

Routine maintenance and repair costs are charged to expense as incurred and renewals and improvements that extend the useful life of the assets are capitalized. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts and any resulting gain or loss is reported in the statement of operations.

Income Taxes - Pursuant to SFAS No. 109, "Accounting for Income Taxes," income tax expense [or benefit] for the year is the sum of deferred tax expense [or benefit] and income taxes currently payable [or refundable]. Deferred tax expense [or benefit] is the change during the year in a company's deferred tax liabilities and assets. Deferred tax liabilities and assets are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Intangible Assets - Amortizable intangible assets of the Company are recorded at cost less accumulated amortization. Amortization is computed using the straight-line method over the estimated useful lives of the assets, with periods of up to five years. All intangible assets, including goodwill, are reviewed for impairment annually or more frequently if events or circumstances indicate that carrying amounts may not be recoverable [See Note 8].

F-9

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(2) Summary of Significant Accounting Policies (Continued)

Research and Development - Costs incurred in research and development are expensed as incurred. Software development costs are required to be capitalized when a product’s technological feasibility has been established through the date the product is available for general release to customers. The Company does not capitalize any software development costs, as technological feasibility is generally not established until a working model is completed, at which time substantially all development is complete.

Revenue Recognition - Revenues are derived principally from professional services, digital media management and advertising. Revenue is recognized when service has been provided.

Stock-Based Compensation - On January 1, 2006, we adopted SFAS No. 123R, "Share-Based Payment," or SFAS 123R. Among other items, SFAS 123R requires companies to record compensation expense for share-based awards issued to employees and directors in exchange for services provided. The amount of the compensation expense is based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods. Our share-based awards include stock options and restricted stock awards.

We adopted SFAS 123R using the modified prospective transition method, which requires the application of the accounting standard to all share-based awards issued on or after January 1, 2006 and any outstanding share-based awards that were issued but not vested as of January 1, 2006. For the years ended December 31, 2006 and 2007, we recognized $2,597 and $4,748, respectively of stock-based compensation expense in our consolidated financial statements. We recognized expense because we had (a) stock options granted prior to January 1, 2006 that had not yet vested as of January 1, 2006 and (b) stock options granted subsequent to January 1, 2006.

The estimated fair value underlying our calculation of compensation expense for stock options is based on the Black-Scholes-Merton pricing model. SFAS 123R requires forfeitures of share-based awards to be estimated at the time of grant and revised, if necessary, in subsequent periods if estimates change based on the actual amount of forfeitures experienced.

Net (Loss) Per Share - We compute net (loss) income per common share under the provisions of SFAS No. 128, "Earnings per Share," which establishes standards for computing and presenting earnings per share. SFAS No. 128 requires us to report both basic net (loss) income per share, which is based on the weighted average number of common shares outstanding during the period, and diluted net (loss) income per share, which is based on the weighted average number of common shares outstanding plus all potentially dilutive common shares outstanding. All equivalent shares underlying options, warrants, and convertible Series A Preferred Stock were excluded from the calculation of diluted loss per share because we had net losses for all years presented and therefore equivalent shares would have an anti-dilutive effect.

Reclassification - Certain prior period amounts have been reclassified to conform to the current presentation.

F-10

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(2) Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements - In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115," which is effective for fiscal years beginning after November 15, 2007. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Unrealized gains and losses on items for which the fair value option is elected would be reported in earnings. We have evaluated the new statement and have determined that it will not have a significant impact on the determination or reporting of our financial results.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" (SFAS 141(R)), which replaces SFAS No. 141, "Business Combinations." SFAS 141(R) retains the underlying concepts of SFAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but SFAS 141(R) changed the method of applying the acquisition method in a number of significant aspects. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. SFAS 141(R) is effective on a prospective basis for all business combinations for which the acquisition date is on or after the beginning of the first annual period subsequent to December 15, 2008, with the exception of the accounting for valuation allowances on deferred taxes and acquired tax contingencies. SFAS 141(R) amends SFAS 109 such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141(R) would also apply the provisions of SFAS 141(R). Early adoption is not permitted. We are currently evaluating the effects, if any, that SFAS 141(R) may have on our financial statements and believe it could have a significant impact if business combinations are consummated. However, the effect is indeterminable as of December 31, 2007.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51." This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, with earlier adoption prohibited. This statement requires the recognition of a noncontrolling interest (minority interest) as equity in the consolidated financial statements and separate from the parent's equity. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. It also amends certain of ARB No. 51's consolidation procedures for consistency with the requirements of SFAS 141(R). This statement also includes expanded disclosure requirements regarding the interests of the parent and its noncontrolling interest. We are currently evaluating this new statement and anticipate that the statement will not have a significant impact on the reporting of our results of operations.

(3) Going Concern

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred substantial net operating losses and used substantial amounts of cash in our operating activities. Since ROO Group’s inception, we have incurred losses, had an accumulated deficit, and have experienced negative cash flows from operations. We expect this trend to continue. The expansion and development of our business will likely require additional capital. This condition raises substantial doubt about our ability to continue as a going concern. We expect cash flows from operating activities to improve, primarily as a result of an increase in revenue, although there can be no assurance thereof. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flows or obtain additional financing when required, we may have to modify, delay or abandon some or all of our business and expansion plans.

F-11

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(4) Acquisitions

On January 27, 2006 ROO Media Corporation purchased the remaining 24% of ROO Media Europe Limited that it did not own for $90.

On October 1, 2006, ROO Group, through a majority-owned subsidiary (the “Acquiring Subsidiary”), entered into an agreement to acquire the business, assets and name from an Australian based interactive marketing agency. As consideration for the business, assets and name, 24.5% of the issued shares of the Acquiring Entity were transferred to the shareholders of the agency. Also, a cash amount of $250 was paid to the shareholders of the agency in December 2006. In addition to this amount, 50% of any further payment as detailed in Note 11 will be made to the shareholders of the agency less the cash amount of $250.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (October 1, 2006).

Current assets	$	43
Property, Plant and Equipment		55
Intangible Asset - Customer List		262
Total Assets Acquired		360

Current Liabilities		163
Total Liabilities Assumed		163

Net Assets Acquired	$	197

In 2007, the “Acquiring Subsidiary” changed its name to Sputnik Agency Pty. Ltd.

On October 1, 2006, The Reality Group Pty Ltd. (“Reality Group”), a 51% owned subsidiary of the Company, and the shareholders of Cooee Melbourne Pty Ltd. (“Cooee”) entered into an agreement, pursuant to which Reality Group acquired the business and assets of Cooee. Cooee is a provider of integrated communication solutions, including direct marketing, internet advertising and sales promotion. As consideration for the business and assets of Cooee, Reality Group will make a cash payment monthly for a period of 21 months to the shareholders of Cooee, subject to adjustment as follows. For the first six months, a payment of approximately $20 will be paid to Cooee at the conclusion of the month. After every six months, the amount due and payable to Cooee will be reconciled against revenue earned and paid from Cooee’s clients. At the end of each six month period, a reconciliation statement will be prepared and provided by Reality Group to Cooee. In the event that revenue from the six month period exceeds $394 (based on the pro rata expectation of a $788 annualized revenue) or is less than $394, the variance percentage between the expected $394 revenue shall be either adjusted by way of deduction or an increase in respect of the fee paid in the following six month period in equal installments.

The operations of Cooee, which are included in the operations of Reality Group during the period from October 1, 2006 to December 31, 2007, have been included in the consolidated statements.

In November 2007, it was mutually agreed to terminate the Cooee acquisition agreement and settle the remaining payments. As final settlement of all payments per this agreement, $24 has been accrued and recorded in Accrued Expenses. An impairment loss of $86 was recorded during the year ended December 31, 2007 related to the net book value of customer lists purchased (See note 8).

F-12

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(4) Acquisitions (Continued)

On November 21, 2006, we issued 100,000 shares of our common stock in full and final settlement of the milestones, as detailed in the agreement to purchase Undercover Media Pty Ltd. The shares were valued at $260, based on the closing trading value on the previous day of $2.60. The value of these shares was originally recorded as an intangible asset (See Note 8).

On January 22, 2007, we entered into an Asset Purchase Agreement (the "APA") with RJM Price & Company, Inc. (“RJM”) and Robertson Price. Pursuant to the APA, we acquired all of the properties, rights and assets constituting the business of RJM, which operates under the name MyVideoDaily (“MVD”). The APA provided for consideration of up to an aggregate of $1,350, of which $250 was paid upon the execution of the APA. The APA included milestone payments, which provided certain defined targets and conditions to be met. Pursuant to the terms of the APA, we also entered into an employment agreement with Mr. Price. On May 17, 2007, RJM was issued 92,379 shares of our common stock valued at $250, for achieving the first quarter milestone.

On October 18, 2007, we entered into a settlement agreement with RJM and Robertson Price, resolving all payment and other obligations among the parties arising out of the APA dated as of January 22, 2007. Pursuant to the agreement, ROO paid RJM $500 on October 23, 2007, and RJM delivered to ROO 92,379 shares of ROO common stock, which had been previously issued by ROO. These shares have been canceled and the value recorded on May 17, 2007 has been reversed. This agreement is the full and final settlement of any outstanding items or amounts related to the APA. The $250 paid upon execution of the APA was recorded as goodwill. The $500 paid upon the execution of the settlement agreement was recorded as settlement of MVD agreement in the Statement of Operations. As of December 31, 2007, the goodwill of $250 was impaired and recorded as impairment of goodwill expense in the Statement of Operations (See Note 8).

On February 16, 2007, Wurld Media, Inc. (‘Wurld Media’) issued a promissory note to the Company in the principal amount of $1,500. Pursuant to the promissory note the Company advanced to Wurld Media the sum of $800, and in its sole discretion may make additional advances of up to, but not exceeding $1,500. The promissory note accrues interest at the annual rate of 8% and in the event of a default will accrue interest at the annual rate of 10%. The promissory note is secured by all of the assets of Wurld Media. The promissory note is due and payable upon the earlier of (i) the closing of the acquisition of the assets of Wurld Media, in which event, the loan amount will be credited against the purchase price of the assets or (ii) November 26, 2007. This promissory note has been paid in full and is included in the assets of Wurld Media acquired. The loan made to Wurld Media was recorded as a component of “Investment in assets acquired from Wurld Media” on the Statement of Cash Flows.

On June 15, 2007, Gregory Kerber issued a promissory note to the Company in the principal amount of $400. Pursuant to the promissory note, the Company advanced to Mr. Kerber the sum of $394. The promissory note accrues interest at the rate of 8% and in the event of a default will accrue interest at the rate of 10%. The promissory note is secured by certain of his shares in Wurld Media. The promissory note is due and payable upon demand by the Company. This promissory note has been paid in full and is included in the assets of Wurld Media acquired. The loan made to Mr. Kerber was recorded as a component of “Investment in assets acquired from Wurld Media” on the Statement of Cash Flows.

On July 12, 2007, ROO HD, Inc. (“ROO HD”), a wholly owned subsidiary of ROO Group, entered into an asset purchase agreement with Wurld Media, Gregory Kerber and Kirk Feathers. Wurld Media specializes in the peer-to-peer distribution of music, movies, games, TV shows and other audio, video, and audio/video content. The acquisition was completed and closed on July 17, 2007. The assets acquired by ROO HD, pursuant to the agreement, included: (i) certain fixed assets, equipment, fixtures, and leasehold improvements located at Wurld Media’s office in Saratoga Springs, New York; (ii) certain intellectual property of Wurld Media; (iii) the customer logs, location files and records of Wurld Media, (iv) all claims, entitlements, rebates, refunds, settlements, awards or other rights related to the assets acquired by ROO HD. The consideration for the assets acquired by ROO HD was an aggregate of $4,320, consisting of $3,174 in cash, $38 in accrued liabilities related to the purchase and the issuance of 655,500 shares of our common stock valued on July 17, 2007 at $1.69 per share or $1,108. The total purchase consideration was allocated to the assets acquired at their estimated fair values as of the date of acquisition, as determined by management, as $3,180 of software and $1,140 of fixed assets.

At the end of December 2007, we decided to abandon the development and assets of the peer-to-peer business that we acquired in the asset purchase agreement with Wurld Media (See Note 8).

F-13

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(5) Related Party Transactions

On March 6, 2007, Reality Group Pty. Ltd. issued a promissory note to the Company in the principal amount of $380. Pursuant to the promissory note the Company advanced to Reality Group the sum of $190, on March 6, 2007, and $190 on March 13, 2007. Interest on the promissory note accrues at the rate of 8% per annum. The promissory note is due on June 30, 2008 and is secured by all the assets of Reality Group. In addition, Grant Lee and Mike Bollan agreed to pledge 20% of the ordinary shares of Reality Group which they own as security for Reality Group’s obligations under the promissory note. This eliminates in consolidation.

On May 11, 2007, Reality Group Pty. Ltd. issued a promissory note to the Company in the principal amount of $400. Pursuant to the promissory note the Company advanced to Reality Group the sum of $400, on May 11, 2007. Interest on the promissory note accrues at the rate of 8% per annum. The promissory note is due on May 11, 2008. This eliminates in consolidation.

(6) Property and Equipment

Property and equipment at December 31, 2007 consists of the following:

	Assets
	under Capital			Motor			Computer			Leasehold			Furniture and			Office
	Lease			Vehicles			Software			Improvements			Fixtures			Equipment			Total
Cost	$	290		$	61		$	169		$	536		$	268		$	1,208		$	2,532
Accumulated Depreciation		(197	)		(51	)		(103	)		(141	)		(60	)		(673	)		(1,225	)

Net	$	93		$	10		$	66		$	395		$	208		$	535		$	1,307

Estimated useful life		7 years			6 years			2 years			5 years			5 years			4 years

Depreciation expense (including amortization of capital lease assets) amounts to $902 and $173 for the years ended December 31, 2007 and 2006, respectively.

F-14

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(7) Goodwill and Intangible Assets

As of December 31, 2007, goodwill totals $1,123 and is comprised of $1,033, which represents the excess of acquisition costs over the fair value of net assets of the Reality Group acquisition at the date of acquisition of $1,990 less $957, which represents the buyback of shares which was recorded as a reduction of goodwill. Also included in goodwill is $90 related to the acquisition of 24% of ROO Media Europe Limited, which was owned by a third party.

At December 31, 2007 intangible assets include the following:

	Customer List			Software			Domain Name

Cost	$	931		$	1,320		$	54
Less Amortization		(678	)		(815	)		(24	)

Totals	$	253		$	505		$	30

Estimated future annual amortization expense as of December 31, 2007 is as follows:

	Customer List		Software		Domain Name

2008	$	134	$	265	$	11
2009		70		226		11
2010		49		14		8

Totals	$	253	$	505	$	30

The customer lists were acquired as a component of the Reality Group and Sputnik acquisitions and are being amortized over a 4 year period on a straight line basis. The software is being amortized over a 5 year period on a straight line basis. The Company purchased the domain name www.roo.com in November 2005 and it is being amortized over a 5 year period on a straight line basis.

F-15

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(8) Impairment of Assets

At the end of December 2007, we decided to abandon the development and assets of the peer-to-peer business that we acquired in the Asset Purchase Agreement with Wurld Media, which was comprised of software and property and equipment. Accordingly, we evaluated the ongoing value of these assets. Based on this evaluation, we determined that software with a carrying amount of $2,783 was impaired; this is recorded as loss on impairment of intangible assets in the Statement of Operations. Based on this evaluation, we also determined that property and equipment with a carrying amount of $855 was impaired and we wrote it down by $788; this amount was recorded as loss on impairment of property and equipment in the Statement of Operations. Subsequent to December 31, 2007, $33 of this property and equipment was sold to a third party for book value, and no gain or loss was recorded on the sale.

At the end of 2007, we determined that goodwill recorded when we acquired the properties, rights and assets pursuant to the Asset Purchase Agreement with MVD was impaired. We evaluated the goodwill for impairment by comparing the estimated fair value, which was based on the present value of estimated future cash flows to be generated to the carrying amount of $250. The estimated future cash flows were determined to be negligible based on actual results in 2007. Based on this evaluation, we determined that goodwill was impaired and we recorded $250 as a loss on impairment of goodwill in the Statement of Operations.

At the end of November 2007, we decided to stop the production of content and terminate the content production department. We have and will continue to license content from outside sources. Accordingly, we evaluated the ongoing value of the content recorded as an asset. Based on this evaluation, we determined that content with a carrying amount of $255 was impaired; this amount was recorded as impairment of intangible assets in the Statement Operations.

In November 2007, it was mutually agreed to terminate the agreement between Reality Group and Coeee and settle the remaining payments in the agreement due to the loss of the customers acquired from Cooee. Accordingly, we evaluated the ongoing value of these assets. Based on this evaluation, we determined that customer lists with a gross carrying amount of $220 and a net carrying amount of $86 was impaired; this is recorded as impairment of intangible assets in the Statement Operations.

(9) 401(k) Plan

Beginning in 2007, the Company offered its eligible U.S. employees the opportunity to participate in a defined contribution retirement plan qualifying under the provisions of Section 401(k) of the Internal Revenue Code (“the 401(k) Plan”). Each employee is eligible to contribute, on a tax-deferred basis, a portion of annual earnings not to exceed certain federal income tax limitations. The 401(k) Plan also includes company matching contributions for all participants making elective deferrals. The Company makes matching contributions for all eligible employees who contribute to the 401(k) Plan an amount equal to the salary deferrals that do not exceed 3% of their compensation. The Company has accrued $62 for matching contributions as of December 31, 2007 and will make the contribution by March 15, 2008 as required by the 401(k) Plan. The Company ceased matching contributions to the 401(k) Plan effective January 1, 2008.

F-16

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(10) Income Taxes

Income taxes consisted of the following:

	Years ended December 31,
	2007			2006
Current:
Australian Federal Tax expense (benefit)	$	114		$	(84	)
Non-Current:
Australian Federal Tax expense (benefit)		11			(8	)
*Totals*	$	125		$	(92	)

The reconciliation of reported income tax expense to the amount of income tax expense that would result from applying Australian federal tax rates to pretax income is as follows:

Statutory Federal Income Tax (benefit)	$	16		$	(138	)
Other (Non Allowable Deductions)		109			46
*Totals*	$	125		$	(92	)

The components of deferred tax assets and liabilities as of December 31, 2006 for Australian federal taxes, are as follows:

Deferred Tax Assets:
Provision Accounts	$	89
Depreciation		(7	)
Other Liabilities		21
Tax Loss Carryforward		160
*Total*	$	263

At December 31, 2007, we have approximately $37,500 in U.S. federal net operating tax loss carryforwards expiring at various dates through 2027. The Tax Reform Act of 1986 enacted a complex set of rules which limits a company's ability to utilize net operating loss carryforwards and tax credit carryforwards in periods following an ownership change. These rules define an ownership change as a greater than 50 percent point change in stock ownership within a defined testing period which is generally a three-year period. As a result of stock issued by us from time to time, including the stock issued related to the conversion of outstanding warrants, or the result of other changes in ownership of our outstanding stock, we may have experienced an ownership change and consequently our utilization of net operating loss carryforwards could be significantly limited. A 100% valuation allowance has been established due to the uncertainty about the realization of the deferred tax asset.

F-17

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(11) Commitments and Contingencies

Leases - The Company is a party to a number of non-cancelable lease agreements primarily involving office premises and computer equipment. Computer equipment leases are generally for three year periods. There are five leases of office premises. The first is in New York, New York, United States and is for three years and ten months ending in November 2008 with no renewal options. The second is in South Melbourne, Victoria, Australia and is for a five year period ending in July 2011. The third is in Windsor, Victoria, Australia and is for eight years ending in June 2013. The fourth is in Clifton Park, New York, United States and is for five years ending in July 2012. The fifth is in London, United Kingdom and is for five years ending in August 2012.

The following is a schedule of future minimum payments under capital leases and operating leases, and obligations under capital leases (present value of future minimum rentals) as of December 31, 2007.

Periods January to December unless stated otherwise	Capital			Operating Property		Total

2008	$	129		$	1,366	$	1,495
2009		104			1,201		1,305
2010		90			1,223		1,313
2011		83			986		1,069
2012		—			448		448
Thereafter		—			54		54

Total Minimum Lease Payments		406		$	5,278	$	5,684
Less Amount Representing Interest		(92	)

*Total Obligations Under Capital Leases*	$	314

Rent expense amounted to $1,170 and $743 for the years ended December 31, 2007 and 2006, respectively.

F-18

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(11) Commitments and Contingencies (continued)

Contingent acquisition - A contingent liability has been calculated based on the agreement between ROO Broadcasting Limited, a wholly owned subsidiary of the Company and the holders of the 49% non-controlling interest in Sputnik on October 28, 2005. Subject to the conditions described below, the Company may issue additional shares ("Additional Shares") of common stock to those holders, issuable after December 31, 2007, calculated as follows:

51% of [(1 * Sputnik Revenue) + (4 * Sputnik Earnings)]

Average ROO Share Price

where: "Sputnik Revenue" means the billings less all media and third party supplier costs of Sputnik for the twelve month period ending December 31, 2007; "Sputnik Earnings" means the earnings of Sputnik before tax and after deduction of interest and all other expenses for the twelve month period ending December 31, 2007; and "Average ROO Share Price" means the average price of the Company's common stock during the final five trading days of December 2007.

If the Company does not issue the computed number of Additional Shares, ROO Broadcasting Limited’s 51% ownership of Sputnik will be reduced on a pro rata basis by the difference between the computed number of Additional Shares and the actual number of Additional Shares issued. If the Company does not issue any Additional Shares, ROO Broadcasting will relinquish all of its 51% ownership of Sputnik. However, if the Sputnik Earnings are greater than 15% of the Sputnik Revenue and the number of Additional Shares, to be issued are less than 4.9% of the then current outstanding shares of common stock of the Company, the Company must proceed with issuing the maximum number of Additional Shares in accordance with the above formula. As of December 31, 2007, neither of these conditions was met and therefore we are under no obligation to complete the transaction (See Note 17 for more information). The contingent liability calculated is approximately $3,000 as of December 31, 2007 based on actual results for the year ended December 31, 2007.

On March 12, 2008, the Company entered into a binding Content Distribution Agreement (“CDA”) with Kamera Content AB (“Kamera”), providing for a collateralized and callable advance payment by the Company of $300,000. The CDA provides the Company with an exclusive time period during which to negotiate the acquisition of Kamera. Concurrent with the CDA, the Company executed a non-binding Letter of Intent (“Kamera LOI”) for the purchase of 100% of the capital stock of Kamera by the Company. According to the Kamera LOI, the cash immediately payable to effect the purchase of Kamera Content AB by the Company is US$2.5 million upon closing of the acquisition. As additional consideration, according to the Kamera LOI, the Company will issue to Kamera common shares upon closing of the acquisition and at future dates based on certain timing and performance related benchmarks and thresholds. All the common stock payments considered under the Kamera LOI may be paid in cash instead, at the election of the Company.

Employment Agreements - On December 18, 2007, ROO Group, Inc. the Company entered into an Executive Management Agreement (the “Management Agreement”) with KIT Capital Limited (“KIT”) for a term commencing on January 9, 2008 and terminating on January 9, 2011, unless sooner terminated or mutually extended. KIT shall designate Kaleil Isaza Tuzman as Chief Executive Officer, Jamie Levine as Head of Communications and Rosario Davi as Corporate Development Manager of the Company. The Agreement provides for compensation as follows: (i) $50,800 monthly, (ii) signing incentive payment of $68,500, (iii) an incentive bonus equal to the greater of (x) the preceding twelve months’ base compensation or (y) the previous month’s monthly installment of base compensation multiplied by twelve if the Company shall achieve 2 consecutive quarters of profitability or the Company’s total monthly revenue equals of exceeds $6 million. The Management Agreement provides that upon termination of the Agreement or after the expiration date for any reason except cause (as defined in the Agreement), the Company shall pay KIT, in addition to any other payments due hereunder, a cash severance payment equal to the greater of (i) the total amount paid to KIT during the preceding twelve months, including base compensation and all bonuses, or (ii) the previous month’s monthly installment of base compensation multiplied by twelve.

Litigation - Our wholly owned subsidiary, ROO HD, Inc. (“ROO HD”), has been served as a defendant in a lawsuit entitled Julie Vittengl et al. vs. ROO HD, Inc., a purported class action pending in New York Supreme Court, Saratoga County. The suit, brought by four former employees of Wurld Media, Inc. (“Wurld”) purportedly on behalf of themselves and “others similarly situated,” claims that ROO HD’s acquisition of certain assets of Wurld was a fraudulent conveyance and that ROO HD is the alter-ego of Wurld. Plaintiffs seek the appointment of a receiver to take charge of the Company’s property in constructive trust for plaintiff and payment of plaintiff’s unpaid wages and costs of suit, both in an unspecified dollar amount. ROO HD timely filed its answer to the complaint, and there have been no further developments. ROO HD believes the suit is without merit and will defend it vigorously.

On December 24, 2007, Rick Gell and Todd Pavlin, two former consultants of ROO Media sued that entity together with ROO Group and ROO Group's Founder and Vice Chairman Robert Petty and ROO Media’s former President and Chief Operating Officer Steve Quinn in New York Supreme Court, New York County, alleging breach of an oral employment agreement, fraudulent inducement and other claims relating to the plaintiffs’ employment at ROO Media. On February 21, 2008, defendants moved to dismiss the complaint, and the motion will be fully briefed to the Court by April 24, 2008, whereupon the Court shall rule, either with or without first taking oral argument. We believe the suit is without merit and will defend it vigorously.

F-19

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(12) Preferred Shares

The Series A Preferred Stock has a stated value of $.0001 and a liquidation preference over the common stock and any other class or series of capital stock whose terms expressly provide that the holders of Series A Preferred Stock should receive preferential payment. Holders of Series A Preferred Stock are entitled to vote on all matters submitted to shareholders and are entitled to ten votes for each share of Series A Preferred Stock owned. Except as otherwise expressly required by law, holders of shares of Series A Preferred Stock vote together with the holders of common stock on all matters and do not vote as a separate class. Beginning two years from the date of issuance of the Series A Preferred Stock, each one share of Series A Preferred Stock is convertible, at the option of the holder, into 0.04 shares of common stock, as adjusted. However, holders cannot convert any share of Series A Preferred Stock if the market price of the Common Stock is below $3.00 per share. If within two years from the date of issuance, there is a sale or other disposition of all or substantially all of our assets, a transaction or series of related transactions in which more than 50% of the voting power of security holders is disposed of, or upon a consolidation, merger or other business combination where the Company is not the survivor, then immediately prior to such event each holder of Series A Preferred Stock may convert any or all of such holder’s shares of Series A Preferred Stock into Common Stock as described above. The Company is prohibited from taking action which would adversely and materially affect any of the preferences, limitations or relative rights of the Series A Preferred Stock without the vote of the holders of a majority of the then outstanding shares of Series A Preferred stock.

On June 30, 2006, ROO Group, Inc. (the “Company”) issued 500,000 shares of Series A Preferred Stock to an employee. These shares were valued at the equivalent number (1:25) of common shares based upon the fair market value as at the issue date at $64. Such amount is included in "Non-Cash Compensation". These shares were issued as a performance bonus for, among other things, the employee’s role in helping expand and grow the Company’s business operations.

(13) Stock Issuances

On July 28, 2006, the Company issued 50,000 warrants at an exercise price of $2.00 to Highbridge International LLC for Investor Relations services. These warrants were valued under the Black-Scholes method as $129.

On August 18, 2006, the Company entered into a Common Stock Purchase Agreement pursuant to which the Company sold 4,420,000 shares of its common stock and 2,210,000 warrants to purchase shares of common stock to accredited investors, a number of which are existing shareholders of the Company. The offering closed on August 23, 2006. The warrants were valued under the Black-Scholes method as $2,658. The shares of common stock were sold at a price of $1.25 per share resulting in gross proceeds of $5,525. Each investor was issued warrants to purchase a number of shares of common stock equal to 50% of the number of shares of common stock purchased. The warrants have an exercise price of $2.00 per share and a term of five years.

The Company agreed to prepare and file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock sold in the private placement on or prior to 30 days following the closing date. If the registration statement was not filed within such time or if the registration statement was not declared effective within 120 days following the closing date, the Company would be required to pay liquidated damages to the investors equal to 1% of the dollar amount of their investment for each calendar month or portion thereof that the registration statement is not filed or declared effective. The Company failed to fulfill its obligations to timely file the Registration Statement and keep it effective and owes approximately $216 in liquidated damages to the investors, this amount has been accrued and is included in accrued expenses and registration rights liquidated damages.

F-20

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(13) Stock Issuances (Continued)

Savvian LLC, Burnham Hill Partners, a division of Pali Capital, Inc. and Brimberg & Co., registered broker-dealers, acted as placement agents for the sale of the Company's common stock. In connection with the closing, the Company paid the placement agents a cash fee of $461. In addition, the Company issued the placement agents 801,369 warrants to purchase shares of common stock with an exercise price of $1.25 per share for a period of five years and were valued under the Black-Scholes-Merton method as $1,057. The net proceeds of $4,985 were received after deducting placement agent fees of $461, legal fees of $74 and escrow agent fees of $5. The transaction was exempt from registration requirements pursuant to Rule 506 of Regulation D promulgated under the Securities Act of 1933, as amended.

On November 14, 2006, the Company entered into a securities purchase agreement pursuant to which the Company sold an aggregate of 8,378,377 shares of the Company’s common stock and warrants to purchase an additional 2,513,513 shares of the Company’s common stock to accredited investors resulting in gross proceeds of $15,500. The offering closed on November 16, 2006. The unit price of the common stock and corresponding warrant was $1.85. The warrants have an exercise price of $3.00 per share and a term of five years. The warrants were valued under the Black-Scholes-Merton method as $2,943. At any time at which the market price of the Company's Common Stock exceeds $5.00 for 10 trading days during any 20 consecutive trading days, the Company may elect to call the warrants, provided that, the shares underlying such warrants are registered pursuant to a registration statement.

The Company agreed to prepare and file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock sold in the private placement on or prior to 30 days following the closing date. If the registration statement is not filed within such time, the Company must pay liquidated damages to the investors equal to 1% of the dollar amount of their investment for each calendar month or portion thereof that the registration statement is not filed, up to a maximum of 10%. Also, if the registration statement is not declared effective within 120 days following the closing date, the Company must pay liquidated damages to the investors equal to 1% of the dollar amount of their investment for each calendar month or portion thereof that the registration statement is declared effective, up to a maximum of 10%. The Company failed to fulfill its obligations to timely file the Registration Statement and keep it effective and owes approximately $254 in liquidated damages to the investors, this amount has been accrued and included in accrued expenses and registration rights liquidated damages.

Merriman Curhan Ford & Co. and Brimberg & Co., financial advisors and registered broker-dealers, acted as placement agents for the sale of the Company's common stock. In connection with the closing we paid the placement agents a cash fee of an aggregate $930. In addition, the Company issued to the placement agents 326,757 warrants to purchase shares of our common stock with an exercise price of $3.00 per share exercisable for a period of five years and were valued under the Black-Scholes-Merton method as $383. In connection with the November 2006 Financing, we received net proceeds of $14,493 after payment of placement agent fees of $930, legal fees and expenses of $72, and escrow agent fees of $5.

On November 21, 2006, we issued 100,000 shares of common stock in full and final settlement of the milestones detailed in the Undercover Media Purchase Agreement. The shares were valued at $260, based on the closing trading value of the shares on the previous day of $2.60. The value of these shares was recorded as an intangible asset.

On January 25, 2007, we entered into an agreement with News Corporation (“News Corp”). The Agreement provides for the issuance of 2,000,000 shares of our common stock upon execution of the Agreement, which were to be held in escrow and released to News Corp on January 1, 2008, if the average monthly revenues from News Corp and its affiliates for the three month period ended December 31, 2007 is not less than the revenue from News Corp and its affiliates for the one month period ending December 31, 2006 (the “Revenue Target”). On February 7, 2008, we released the 2,000,000 shares of our common stock to News Corp for meeting the Revenue Target. The shares were valued at $0.17 per share or $340, and that amount was recorded as sales and marketing expense on December 31, 2007.

F-21

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(13) Stock Issuances (Continued)

We also agreed to issue an additional 2,000,000 shares of our common stock to News Corp if within three years of the date of the Agreement the average monthly revenue from News Corp and its affiliates for any consecutive three month period equals at least six times the Revenue Target. Further, we agreed that if the foregoing is not timely achieved, we shall issue to News Corp warrants to purchase 2,000,000 shares of our common stock which shall be exercisable for a term of two years at a price of $2.70. The exercise price of the warrants will be subject to customary anti-dilution protection for stock splits, recapitalizations, stock dividends and the like.

We have granted News Corp piggy-back registration rights in connection with the shares issuable pursuant to the Agreement.

On May 4, 2007, we entered into a securities purchase agreement pursuant to which the Company sold an aggregate of 10,000,000 shares of our common stock and warrants to purchase an additional 3,000,000 shares of our common stock to accredited investors resulting in gross proceeds of $25,000. The offering closed on May 10, 2007. The unit price of the common stock and corresponding warrant was $2.50. The warrants have an exercise price of $4.50 per share and a term of five years. The warrants were valued under the Black-Scholes method as $5,117. At any time at which the market price of our Common Stock exceeds $6.00 for 10 trading days during any 20 consecutive trading days, we may elect to call the warrants, provided that, the shares underlying such warrants are registered pursuant to a registration statement. We agreed to prepare and file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock sold in the private placement on or prior to 30 days following the closing date. If the registration statement is not filed within such time, the Company must pay liquidated damages to the investors equal to 1% of the dollar amount of their investment for each calendar month or portion thereof that the registration statement is not filed, up to a maximum of 10%. The registration statement was filed on June 11, 2007. Also, if the registration statement is not declared effective within 120 days following the closing date, the Company must pay liquidated damages to the investors equal to 1% of the dollar amount of their investment for each calendar month or portion thereof that the registration statement is declared effective, up to a maximum of 10%, which increases to 18% if the registration statement is not declared effective within two years following the closing date. The registration statement was declared effective on August 14, 2007. Merriman Curhan Ford & Co. and Brimberg & Co., registered broker-dealers, acted as placement agents for the sale of the Company’s common stock. In connection with the May 2007 Financing, we received net proceeds of $23,875 after payment of placement agent fees of $1,000, legal fees and expenses of $120, and escrow agent fees of $5.

In 2007, the Company failed to fulfill its obligations to keep the registration statements effective related to the August 23, 2005, October 20, 2005 and December 28, 2005 private placements and owes approximately $393 in liquidated damages to these investors. This amount has been accrued and is included in accrued expenses and registration rights liquidated damages.

F-22

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(13) Stock Option Plan

On November 16, 2006 our Board of Directors of ROO Group, Inc. increased the number of shares which may be issued under the 2004 Stock Option Plan to an aggregate of 8,000,000 shares of common stock.

On April 3, 2007 our Board of Directors of ROO Group, Inc. increased the number of shares which may be issued under the 2004 Stock Option Plan to an aggregate of 12,000,000 shares of common stock.

The Plan is administered by the Board of Directors of ROO Group (the "Board") or by a committee to which administration of the Plan, or of part of the Plan, may be delegated by the Board (in either case, the "Administrator"). Options granted under the Plan are not generally transferable by the optionee except by will, the laws of descent and distribution or pursuant to a qualified domestic relations order, and are exercisable during the lifetime of the optionee only by such optionee. Options granted under the Plan vest in such increments as is determined by the Administrator. To the extent that options are vested, they must be exercised within a maximum of three months of the end of optionee's status as an employee, director or consultant, or within a maximum of 12 months after such optionee's termination by death or disability, but in no event later than the expiration of the option term. The exercise price of all stock options granted under the Plan shall be determined by the Administrator. With respect to any participant who owns stock possessing more than 10% of the voting power of all classes of ROO Group's outstanding capital stock, the exercise price of any incentive stock option granted must equal at least 110% of the fair market value on the grant date.

Under SFAS No. 123(R) the fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year Ended December 31, 2007			Year Ended December 31, 2006
Expected life (in years)		4.78			2.77
Risk-free interest rate		4.54	%		4.74	%
Volatility		89	%		96	%
Dividend yield		0	%		0	%

A summary of the status of stock option awards as of December 31, 2007 and changes during the year then ended is presented below:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Intrinsic Value
Outstanding at December 31, 2005		1,783,050		$	2.00
Granted		4,284,500			2.36
Exercised		—			—
Cancelled, expired, or forfeited		(419,695	)		2.23
Outstanding at December 31, 2006		5,647,855			2.25
Granted		4,110,000			3.77
Exercised		—			—
Cancelled, expired, or forfeited		(3,277,271	)		2.28
Outstanding at December 31, 2007		6,480,584			3.20		3.84	$	0
Exercisable at December 31, 2007		3,207,140			2.75		3.20		0

The weighted-average grant-date fair value of option awards granted during the years ended December 31, 2007 and 2006 was $2.25 and $1.39, respectively. There have been no options exercised from inception through December 31, 2007.

F-23

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(15) Segment Reporting

We derive our revenue from two operating segments. These operating segments are presented on a worldwide basis and include: Online Digital Media and Advertising Agency.

Online Digital Media operations span all aspects from website creation and supply of technology, to content and delivery of static and video assets, online property development and management as well as monetizing video through advertising sales.

Advertising Agency operations represent varied forms of media and services which comprise and support client campaigns. These operations include direct marketing, incentive programs, internal communications, customer relationship management, brand planning, sales promotion, creative, brand identity, sponsorships, on-line marketing, new media, media planning, media buying and packaging.

As a result of the continued growth and the changing nature of our business, we believe it is now necessary to disclose our operations on a segment by segment basis. Although the Advertising Agency segment operations are greater than just traditional media, it has been decided that its activities are significantly different from the pure online activities of our Online Digital Media segment. As our operations continue to evolve, we will continue to regularly review the business to determine if there is a need to make changes to the reported segments.

In accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”, all prior period information has been reported to conform to the new segment presentation. The following table provides revenue and segment income (loss) from operations for each of the segments. Segment income (loss) from operations, as shown below, is the performance measure used by management to assess segment performance and excludes the effects of: stock-based compensation, amortization of intangible assets and corporate expenses. Corporate expenses consist of those costs not directly attributable to a segment, and include: salaries and benefits for the Company’s corporate executives, corporate governance costs, fees for professional service providers including audit, legal, tax, insurance, and, other corporate expenses.

	Year ended
	December 31,
	2007			2006
Revenue:
Online Digital Media	$	9,525		$	5,361
Advertising Agency Business		4,404			4,407
Corporate		-			-
Total revenue	$	13,929		$	9,768

Operating (loss):
Online Digital Media	$	(21,920	)	$	(10,271	)
Advertising Agency Business		(57	)		(524	)
Corporate		(12,261	)		(4,120	)
Total operating (loss) income	$	(34,238	)	$	(14,915	)

	December 31,
	2007
Assets:
Online Digital Media	$	5,049
Advertising Agency Business		1,887
Corporate		11,179
Total assets	$	18,115

F-24

ROO GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in Thousands, Except Share and Per Share Data)

(16) Subsequent Events

We announced on March 17, 2008 that we intend to exercise our right to complete the purchase of our 51% owned Sputnik subsidiary, and that an agreement had been reached in principle to acquire the remaining 49% of Sputnik. The full integration of the Companies will include a consolidation of products and creative services to address current and future client needs.

(17) Subsequent Events (Unaudited) Occurring After the Date of the Report of the Independent Registered Public Accounting Firm

On March 31, 2008 we announced that the Company had executed definitive share purchase agreements with certain Sputnik shareholders. We expect to effect the purchase of the remaining Sputnik shares during the quarter ending June 30, 2008. As currently contemplated, the total consideration will be approximately $4.6 million of which net cash to be paid by us to the Sputnik shareholders to affect this purchase is to be approximately $4 million. Although we are optimistic that we will complete the purchase of Sputnik according to the key terms and conditions outlined in the Sputnik MOU, there is no guarantee that the Sputnik purchase will indeed close, that it will close in the form outlined in the Sputnik MOU or that it will close during the quarter ended June 30, 2008.

On March 30, 2008, the Company reached negotiated settlements with Robert Petty and Robin Smyth, restructuring their respective employment agreements, each of which involved one-time cash severance payments. In exchange for entering into new below-market, "at will" employment agreements, Messrs. Petty and Smyth will receive upfront cash settlements of $675 and $275 respectively, as well as an aggregate of 8.65 million fully vested warrants to purchase the Company's common stock, at a strike price equal to $0.133 per share (representing the 3-day weighted average of closing price of the Company's common stock prior to and including March 28, 2008). These warrants will become exercisable in 1/12 increments on a monthly basis starting six months from March 30, 2008. Mr. Smyth's restructured employment agreement involves certain cash and warrant- based incentives which can be earned-in over a period of 3 years based on ongoing service to the Company. As part of their respective settlements, Messrs. Petty and Smyth agreed to vote their preferred shares according to the Company's designation.

On March 30, 2008, our board of directors and shareholders holding a majority of our voting stock approved the filing of an amendment to our Articles of Incorporation to reduce our authorized preferred stock from 20,000,000 to 10,000,000. Also, a majority of the holders of our Series A Preferred Stock have approved the filing of an amendment to the Company's Certificate of Designation of the Series A Preferred Stock to provide for the automatic conversion of the outstanding shares of Series A Preferred Stock into 400,000 shares of common stock. The conversion of the Series A Preferred Stock into common stock shall be conditional upon the effectuation of the amendment to the Company's Articles of Incorporation to reduce the authorized preferred stock from 20,000,000 to 10,000,000. Upon the effectuation of the foregoing, the preferred class of stock will be eliminated.

F-25

ROO GROUP, INC.

Mr. Robert Petty

228 East 45^th Street, 8^th Floor

New York, NY 10017

Re: Separation Agreement and Release

Dear Robert:

This Separation Agreement and Release (this “Agreement”) sets forth the terms governing your separation from ROO Group, Inc. (together with its subsidiaries and affiliates, the “Company”).

The Company and you hereby agree as follows:

1. Your employment by the Company pursuant to that certain employment agreement dated as of November 1, 2004 (together with any amendments thereto, the “Employment Agreement”), shall terminate effective March 26, 2008 (the “Effective Date”) and, except as otherwise herein provided, your Employment Agreement thereupon shall be of no further force and effect.

2. Notwithstanding anything to the contrary contained in your Employment Agreement and except as otherwise provided in Paragraph 3 below, you agree that the compensation you have received from the Company on or prior to the Effective Date of this Agreement represents all of the compensation you are entitled to receive from the Company under your Employment Agreement or otherwise. For avoidance of doubt, you unequivocally surrender any rights to any compensation that may or may not have been due to you in the past, including but not limited to any lacking 401-K contributions to be paid on your behalf by the Company.

3. A. In exchange for your release and other promises under this Agreement and subject to Paragraph 4 below, you shall receive from the Company, within eight (8) days after the Effective Date hereof, (i) a lump-sum payment in the sum of Six Hundred Seventy-Five Thousand Dollars (US$675,000), to be allocated as mutually agreed between severance and relocation expenses (in aggregate, the “Cash Payment”), less applicable tax withholding and deductions, and (ii) fully vested warrants (the “Warrants”) granting you the right to purchase up to 7,000,000 common shares in the Company at an exercise price equal to the 3-day trailing weighted average closing price per share as of the Effective Date (the “Exercise Price”). The Cash Payment may be paid to you in Dubai, UAE provided your residency visa in that jurisdiction has been approved by the local authorities at the time of such payment (and may also be deferred by you until such time as this residency visa is approved), and the Company will make best efforts to facilitate you to obtain a Dubai residency visa. The Warrants shall be exercisable in one-twelfth (1/12^th) increments during the period commencing six (6) months after the Effective Date and ending on the first (1^st) anniversary date thereafter, provided however that if the Company experiences a change of control (as defined in the Company’s current 2008 Employee Stock Option Plan), the Warrants shall immediately become fully exercisable. You shall have piggyback registration rights with respect to the Warrants, subject to underwriter cut-back in the case of an underwritten offering. In the event the Company, on behalf of any selling shareholder (other than selling shareholders who purchased stock in a private placement offering who were granted registration rights), proposes to file a registration statement for the registration of the sale of common stock, the Company shall include the Warrants (if exercised) and the Warrants or the shares underlying the Warrants in such registration statement. The Company shall make best efforts to register the shares underlying the Warrants in the most timely fashion possible. The Warrants may be transferred to a third-party with the Company’s prior written consent, and such consent shall not be unreasonably withheld.

B. Notwithstanding anything in this Agreement to the contrary, the Warrants shall expire if not exercised within four (4) years of the Effective Date (the “Expiration Date”). Warrants may be exercised at any time prior to the Expiration Date (the “Exercise Date”) upon (i) surrender to the Company of the Warrants, together with the form of election to purchase properly completed and executed by you, and (ii) payment to the Company of the Exercise Price for each share of common stock issuable upon exercise of such Warrants. The Exercise Price may be paid (i) in cash or by certified or official bank check or by wire transfer to an account designated by the Company for such purpose (a “Cash Exercise”), or (ii) without the payment of cash, by reducing the number of shares of common stock that would be obtainable upon the exercise of a Warrant and payment of the Exercise Price in cash so as to yield a number of shares of common stock upon the exercise of such Warrant equal to the product of (a) the number of shares of common stock for which such Warrant is exercisable as of the Exercise Date (if the Exercise Price were being paid in cash) and (b) the Cashless Exercise Ratio (as defined below). An exercise of a Warrant in accordance with clause (ii) of the immediately preceding sentence is herein called a “Cashless Exercise.” In the event of a Cashless Exercise, the Company shall purchase from you such number of Warrants as would have entitled you to receive the excess of the number of shares of common stock deliverable upon a Cash Exercise over the number of shares of common stock deliverable upon a Cashless Exercise, for a purchase price equal to the Exercise Price multiplied by the excess of the number of shares of common stock purchasable upon a Cash Exercise over the number of shares of common stock purchasable upon a Cashless Exercise. Upon surrender of a Warrant Certificate representing more than one Warrant in connection with your option to elect a Cashless Exercise, the number of shares of common stock deliverable upon a Cashless Exercise shall be equal to the number of shares of common stock issuable upon the exercise of Warrants that you specify are to be exercised pursuant to a Cashless Exercise multiplied by the Cashless Exercise Ratio. Upon surrender of the Warrants and payment of the Exercise Price in accordance with this Agreement, the Company shall issue shares of common stock of the Company for each Warrant, subject to adjustment as described herein. In the case of a Cashless Exercise, the Company shall deliver to you a certificate setting forth the Cashless Exercise Ratio. For purposes hereof, the term “Cashless Exercise Ratio” means a fraction, the numerator of which is the excess of the current market value per share of common stock on the Exercise Date over the Exercise Price per share as of the Exercise Date and the denominator of which is the current market value per share of common stock on the Exercise Date, where current market value per share is defined as the 3-day trailing weighted average closing price per share as of the Exercise Date.

4. Additionally, the Company shall indemnify you, up to the total sum of Two Hundred Twenty-Five Thousand Dollars (US$225,000), against any liability or expense you may incur (including reasonable attorney’s fees and court costs) excluding any expenses actually paid to date by the company in connection with the pending lawsuit filed by Royce Ritchie, Midnight Bay Holdings Pty Ltd., and Royce Ritchie and Associates Pty, Ltd., in the Supreme Court of Victoria, Proceeding No. 10567 of 2006. Such indemnification shall be held in escrow by the Company for a period of up to one (1) year from the Effective Date.

5. A. As the holder of six (6) million shares (the “Preferred Shares”) of the Company’s Series A Preferred Stock (the “Series A Stock”), and as the holder of 1,360,000 shares of the Company’s common stock (the “Common Shares”) and in consideration for the payments described in Paragraph 3 above, you irrevocably and unconditionally agree to vote all your Preferred Shares and Common Shares in favor of that certain resolution to amend the Company’s certificate of incorporation, a copy of which is annexed as Exhibit A hereto (the “Resolution”), and to take such other and further necessary and appropriate action as may be necessary to effectuate the Resolution. You understand and acknowledge that any breach by you of your agreement set forth in this paragraph will give rise to unquantifiable damages and that, accordingly, the Company may seek and obtain injunctive relief against you for breach or threatened breach of such agreement, and you hereby submit to personal jurisdiction by and in any court in New York County, New York, for the purposes of the Company obtaining such relief.

B As the holder of six (6) million shares (the “Preferred Shares”) of the Company’s Series A Preferred Stock (the “Series A Stock”), and in consideration for the payments described in Paragraph 3 above, you irrevocably and unconditionally agree to vote all your Preferred Shares in favor of that certain resolution to amend the Company’s Certificate of Designation of Series A Preferred Stock, a copy of which is annexed as Exhibit B hereto (the “Designation Resolution”), and to take such other and further necessary and appropriate action as may be necessary to effectuate the Designation Resolution. You understand and acknowledge that any breach by you of your agreement set forth in this paragraph will give rise to unquantifiable damages and that, accordingly, the Company may seek and obtain injunctive relief against you for breach or threatened breach of such agreement, and you hereby submit to personal jurisdiction by and in any court in New York County, New York, for the purposes of the Company obtaining such relief.

6. In consideration for the payments promised you in this Agreement and other good and valuable consideration the receipt of which is hereby acknowledged, you irrevocably and unconditionally release and discharge the Company, its subsidiaries, affiliates, predecessors, successors and assigns, and each of their respective past and present officers, directors, shareholders, agents, and employees, from any and all claims and liabilities of any kind, known or unknown, whether civil or administrative or otherwise in nature, which arose prior to the Effective Date hereof. The claims waived and discharged include, but are not limited to, all claims arising from or related to your employment and separation of employment, including without limitation:

a. claims for wrongful or unjust discharge, breach of contract, promissory estoppel, negligence, intentional infliction of emotional distress, defamation, libel, slander, breach of any implied covenant of good faith or fair dealing;

b. claims based on theories of contract or tort, whether based on common law or otherwise;

c. claims arising under the Title VII of the Civil Rights Act, Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, Family and Medical Leave Act, or any other federal, state or local law dealing with discrimination in employment; and

d. subject to Paragraph 3 above, claims for compensation, wages, bonuses, fringe benefits, vacation pay, severance pay, back pay, legal fees, costs, expenses or otherwise.

7. You agree not to bring any legal action against the Company for any claim waived and you represent and warrant that you have not filed any such claim to date. You agree that if you bring such legal action, it shall constitute a material breach of this Agreement.

8. You agree to terminate, completely and irrevocably, your current employment relationship with the Company (whether pursuant to your Employment Agreement or otherwise) and expressly waive and relinquish any claim for reinstatement or rehire on a preferential basis or otherwise. For avoidance of doubt, the Company is not requiring you to resign from your status as a Director of the Company at this time, though you agree to resign at any time in the future as a Director of the Company or any of its affiliates immediately upon request by the Company’s chief executive officer.

9. You agree that FOLLOWING THE TERMINATION OF YOUR EMPLOYMENT, YOU SHALL HONOR AND ABIDE BY THE CONTINUING TERMS OF ANY NONDISCLOSURE, NONINTERFERENCE, NONSOLICITATION, OR NONCOMPETITION AGREEMENTS YOU HAVE SIGNED WITH THE COMPANY, INCLUDING THOSE PROVISIONS SET FORTH IN YOUR EMPLOYMENT AGREEMENT.

10. The parties agree that, at your election, you may be hired back into the Company at any point immediately following the execution of this Agreement, in an “at will” sales position, which would carry a base compensation of US$120,000 per annum, participation in standard company sales incentive and bonus plan(s), and a commensurate options package to be no fewer than 120,000 options.

11. The parties acknowledge and agree that your obligations and undertakings as a shareholder of the Company hereunder are necessary and appropriate and in the best interests of the Company. Accordingly, the Company hereby agrees fully and unequivocally to indemnify you in perpetuity for any and all legal actions that may arise from your performing such obligations and undertakings, such indemnification to include the provision of defense counsel (of the Company’s choosing) and reimbursement of all reasonable costs incurred by you in connection with any such legal action. Such costs will either be paid directly by the Company or shall be reimbursed within seven (7) business days.

12. The parties shall (i) use their best efforts to maintain in strict confidence the existence of this Agreement, the contents and terms hereof and the consideration therefor; (ii) subject to the provisions of subsection (iii) below, take every reasonable precaution to prevent disclosure of any information contained herein to third parties and agree that there will be no publicity, directly or indirectly, concerning any such information, without the other party’s express written consent; and (iii) take every precaution to disclose information only to those attorneys, accountants, governmental entities and family members who have a reasonable need to know of such information, or in compliance with law. The above section notwithstanding, you acknowledge that the Company will be required to disclose certain information contained in this Agreement in public securities filings and press releases, and shall make such disclosure in its best reasoned judgment without any recourse or penalty.

13. Neither party shall knowingly vilify, disparage, slander or make disparaging or derogatory remarks, whether oral or written, about the other party, its business or business practices, or any of its past, present, or future officers, directors, shareholders, employees, agents, affiliates or clients.

14. Regardless whether you are employed by the Company, you agree to provide the Company with assistance concerning any dispute, investigation, or litigation concerning your activities related to the Company or as to which you have knowledge.

15. You agree that if asked to do so by the Company’s chief executive officer, you shall immediately return to the Company all of the Company’s property in your possession including: (i) customer and prospect lists or information regarding clients; (ii) client confidential information or documents; (iii) working papers or work papers of the Company; (iv) financial and accounting information; (v) price lists; (vi) manuals, handbooks, policies and procedures books; (vii) telephone, computer, hand-held computing device, keys, and parking cards; and (viii) all tangible and intangible property belonging to the Company or relating to your employment with the Company.

16. You acknowledge and agree that:

a. The payments described in Paragraph 3 are payments to which you would not have been entitled had you not signed this Agreement, and the promises made by the Company in this Agreement constitute sufficient consideration and value for you to sign this Agreement.

b. You have voluntarily and knowingly signed this Agreement with full understanding of its terms and meaning;

c. This Agreement shall in no way be deemed an admission of liability on the part of the Company in any manner whatsoever.

d. You have had the opportunity to consult with an attorney of your choice;

e. You have been given at least twenty-one (21) days to consider this Agreement;

f. The Company has advised you that you may revoke this Agreement within seven (7) days after signing it; and

g. The Agreement shall be enforceable immediately without further action by either party upon expiration of the revocation period.

17. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of law.

18. In the event that any provision or term of this Agreement, or any provision of the Employment Agreement that survives the Effective Date of this Agreement, is held to be invalid, void or unenforceable for any reason the remainder of the Agreement shall remain in full force and effect as if such invalid, void or unenforceable provision or term was not contained in this Agreement.

19. This Agreement shall be binding on and shall inure to the benefit of your heirs, executors, administrators, representatives, successors and assigns and the successors in interest and assigns of the Company. Neither party may assign any of his or its rights or duties hereunder, except with the written consent of the other.

20. This Agreement contains the entire agreement between you and the Company and supersedes and cancels any prior agreement or understanding between the parties on the subjects covered herein and no agreements, representations or statements of either party not contained in this Agreement shall bind that party. You represent that you have not relied on any statements or promises, written or oral, that are not included in this Agreement. This Agreement can be modified only in writing signed by all parties hereto.

21. This Agreement may be executed in multiple counterparts, the combination of which shall constitute one (1) original and complete agreement. The signatures required for execution of this Agreement may be provided by facsimile transmission, and such facsimile signatures shall have the same force and effect as originals and shall constitute effective, binding agreements on the part of the signer. All counterparts shall be exchanged promptly between the parties.

If this Agreement is acceptable to you, please return a signed original to me no later than ____________, 2008.

Very truly yours,

ROO GROUP, INC.

By: /s/ Kaleil Isaza Tuzman

Name: Kaleil Isaza Tuzman

Title:Chief Executive Officer

ACCEPTED AND AGREED TO:

/s/ Robert Petty

Robert Petty

March 30, 2008

Date

		Page
	PART I
Item 1.	Description of Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	17
Item 4.	Submission of Matters to a Vote of Security Holders	17

	PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	18
Item 6.	Selected Financial Data	18
Item 7.	Management’s Discussion and Analysis or Plan of Operation	19
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks
Item 8.	Financial Statements	25
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A.	Controls and Procedures	25
Item 9B.	Other Information	26

	PART III
Item 10.	Directors, Executive Officers, Promoters and Control Persons;
	Compliance With Section 16(a) of the Exchange Act	26
Item 11.	Executive Compensation	29
Item 12.	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters	32
Item 13.	Certain Relationship and Related Transactions	36
Item 14.	Principal Accountant Fees and Services	37
Item 15.	Exhibits	38

SIGNATURES		43

	·	Establishing and maintaining broad market acceptance of our products and services and converting that acceptance into direct and indirect sources of revenue;

	·	Establishing and maintaining adoption of our technology on a wide variety of platforms and devices;

	·	Timely and successfully developing new products, product features and services and increasing the functionality and features of existing products and services;

	·	Developing services and products that result in high degrees of customer satisfaction and high levels of customer usage;

	·	Successfully responding to competition, including competition from emerging technologies and solutions; and

	·	Developing and maintaining strategic relationships to enhance the distribution, features, content and utility of our products and services.

	·	Identifying, attracting and retaining talented technical and creative services staff at reasonable market compensation rates in the markets in which we employ.

	•	That a broker or dealer approve a person's account for transactions in penny stocks; and

	•	The broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased

	•	Obtain financial information and investment experience objectives of the person; and

	•	Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

	•	Sets forth the basis on which the broker or dealer made the suitability determination; and

	•	That the broker or dealer received a signed, written agreement from the investor prior to the transaction.

	Fiscal 2007				Fiscal 2006				Fiscal 2005
Quarter Ended	High		Low		High		Low		High (1)		Low (1)
March 31	$	4.49	$	2.42	$	3.65	$	2.35	$	4.00	$	2.50
June 30	$	3.19	$	1.84	$	3.76	$	1.95	$	3.00	$	2.00
September 30	$	2.18	$	0.55	$	3.43	$	1.35	$	2.50	$	0.50
December 31	$	1.18	$	0.14	$	3.42	$	1.35	$	4.20	$	0.60

Name	Age	Position
Kaleil Isaza Tuzman	36	Chief Executive Officer and Chairman of the Board of Directors
Robert Petty	43	Vice-Chairman of the Board of Directors
Kamal El-Tayara	37	Director
Daniel Hart	34	Director
Lars Kroijer	36	Director
Robin Smyth	54	Chief Financial Officer and Director
Wayne Walker	48	Director

Name & Principal Position	Year		Salary ($ )		Bonus ($ )		Stock Awards ($ )			Option Awards ($ )	Non-Equity Incentive Plan Compensation ($ )	Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($ )	All Other Compensation ($ )		Total ($ )
Robert Petty (1)		2007	$	344,500											$	344,500
Chief Executive Officer		2006	$	310,766											$	310,766
President and Chairman of the Board		2005	$	253,846			$	600,000	(4)						$	853,846
Robin Smyth (2)		2007	$	250,000	$	150,000									$	400,000
Chief Financial Officer		2006	$	207,164											$	207,164
Secretary, Treasurer, Principal Accounting Officer		2005	$	152,307			$	150,000	(5)				$	5,000	$	307,307
Lou Kerner (3)		2007	$	124,359	$	75,000									$	199,359
Former Chief Financial Officer and Former Principal Accounting Officer		2006	$	16,025	$	25,000									$	41,025

(a)	(b)		(c)			(d)		(e)

Name	Number of Securities Underlying Options/ SARs Granted (#)		% of Total Options/ SARs Granted to Employees in Fiscal Year			Exercise or Base Price ($/Sh)		Expiration Date
Robert Petty		1,250,000		30	%	$	4.5		Mar.	2013
Robin Smyth		400,000		10	%	$	4.5		Mar.	2013
Robert Petty		600,000		14	%	$	2.2		Nov.	2010
Robin Smyth		450,000		11	%	$	2.2		Nov.	2010
Lou Kerner		500,000		12	%	$	2.2		Nov.	2010
Doug Chertok		100,000		2	%	$	2.1		Jun	2008
Doug Chertok		350,000		8	%	$	2.2		Nov.	2010
Stephen Palley		100,000		2	%	$	4.5		May	2013
Simon Bax		100,000		2	%	$	4.5		May	2013
Scott Ackerman		100,000		2	%	$	4.5		May	2013

Name and Address of Beneficial Owner	Common Stock Beneficially Owned (1)			Percentage of Common Stock (1)			Series A Preferred Stock Beneficially Owned (2)		Percentage of Series A Preferred Stock			Percentage of Total Vote (1) (2)
KIT Capital, Ltd. P.O Box 112888 Dubai, UAE		777,778(3	)		1.96	%		0		0			0.56	%

Robin Smyth		535,413(4	)		1.36	%		1,500,000		15	%		11.15	%

Robert Petty		2,389,587(5	)		5.98	%		6,000,000		60	%		44.65	%

Wayne Walker		0			0			0		0			0

Kamal El-Tayara		0			0			0		0			0

Lars Kroijer		0			0			0		0			0

Cobble Creek Consulting, Inc.
445 Central Ave.
Cedarhurst, NY 11516		40,000	(6)		< 1	%		1,000,000		10	%		7.23	%

Rubin Irrevocable Family Trust
25 Highland Blvd.
Dix Hills, NY 11746		60,000	(7)		< 1	%		1,000,000		10	%		7.24	%

Paul Tudor Jones, II
c/o Tudor Investment Corp.
1275 King street
Greenwich, CT 06831		4,216,216	(9)		9.77	%		0		0			2.95	%

Ashford Capital Partners, L.P
One Walkers Mill Rd.
Wilmington, DE 19807		2,596,157	(10)		6.25	%		0		0			1.83	%

News Corporation
1211 Avenue of the Americas, 8^thFl.
New York, NY 10017		2,000,000			4.89	%		0		0			1.42	%

Wellington Trust Company, NA
75 State Street
Boston, MA 02169		2,363,700	(11)		5.72	%		0		0			1.67	%

Wellington Management Company, LLP
75 State Street
Boston, NA		5,294,700	(12)		11.97	%		0		0			3.67	%


All Directors and Executive Officers as a Group (3 persons)		3,702,778			9.30	%		7,500,000		75	%		56.36	%

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)
	(a)		(b)		(c)
Equity compensation plans approved by security holders		-0-		-0-		-0-

Equity compensation plans not approved by security holders		6,480,584	$	3.20		5,519,416

Total

Options Issued Under 2004 Stock Option Plan
			Exercise		Date		Vest		Expiration
	Quantity		Price		Granted		Date		Date
Robert Petty		520,000	$	2.00		August 23,2005		August 23,2005		August 23, 2007
Robin Smyth		260,000	$	2.00		August 23, 2005		August 23, 2005		August 23, 2007
Robert Petty		600,000	$	2.20		November 16, 2006		November 16, 2008		November 16, 2010
Robin Smyth		450,000	$	2.20		November 16, 2006		November 16, 2008		November 16, 2010
Robert Petty		1,250,000	$	4.50		March 6, 2007		March 6, 2011		March 6, 2013
Robin Smyth		400,000	$	4.50		March 6, 2007		March 6, 2011		March 6, 2013
Lou Kerner		500,000	$	2.20		November 16, 2006		November 16, 2008		November 16, 2010
Other Staff		110,000	$	2.00		August 23, 2005		August 23, 2005		August 23, 2010
Other Staff		611,000	$	2.00		August 23, 2005		August 23, 2007		August 23, 2010
Other Staff		200,000	$	2.45		February 15, 2006		February 15, 2008		February 15, 2010
Other Staff		545,000	$	3.00		May 1, 2006		May 1, 2008		May 1, 2010
Other Staff		60,000	$	2.00		June 1, 2006		June 1, 2008		June 1, 2010
Other Staff		226,000	$	2.40		September 29, 2006		September 29, 2008		September 29, 2010
Other Staff		1,073,000	$	2.40		November 28, 2006		November 28, 2008		November 28, 2010
Other Staff		50,000	$	3.05		December 31, 2006		December 31, 2008		December 31, 2010
Other Staff		110,000	$	2.75		January 10, 2007		January 10, 2011		January 10. 2011
Other Staff		250,000	$	2.89		January 30, 2007		January 30, 2008		January 30. 2013
Other Staff		750,000	$	4.50		March 6, 2007		March 6, 2011		March 6, 2013
Other Staff		900,000	$	2.89		March 30, 2007		March 30, 2011		March 30, 2013
Other Staff		100,000	$	3.00		March 30, 2007		March 30, 2011		March 30, 2013
Other Staff		50,000	$	2.76		April 30, 2007		April 30, 2011		April 30, 2013

Exhibit Number		Description

2.1		Agreement and Plan of Merger dated as of December 2, 2003 by and among Virilitec Industries, Inc., ROO Media Corporation, VRLT Acquisition Corp., and Jacob Roth and Bella Roth (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on December 18, 2003)

2.2		Stock Purchase Agreement dated as of March 11, 2004 by and among the Company and the shareholders of Reality Group Pty Ltd (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on May 17, 2004)

2.3		Asset Purchase Agreement dated as of May 26, 2004 by and among the Company, Undercover Holdings Pty Ltd. and Undercover Media Pty Ltd. (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on June 16, 2004)

2.4		Stock Purchase Agreement dated as of September 10, 2004 by and among the Company and Avenue Group, Inc. in connection with the purchase of common stock of Bickhams Media, Inc. (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 22, 2004)

2.5		Stock Purchase Agreement dated as of November 1, 2004 by and between Bickhams Media, Inc., ROO Group, Inc., and Daniel and Vardit Aharonoff (Incorporated by reference to Form 8-K/A, filed with the Securities and Exchange Commission on November 5, 2004)

2.6		Amendment No. 1 dated October 28, 2005 to Stock Purchase Agreement among ROO Group, Inc. and the shareholders of Reality Group Pty Ltd. (Incorporated by reference to Form 8-K/A, filed with the Securities and Exchange Commission on November 2, 2005)

2.7		Share Purchase Agreement dated October 28, 2005 by and among Roo Broadcasting Limited and the Sellers thereto (Incorporated by reference to Form 8-K/A, filed with the Securities and Exchange Commission on November 2, 2005)

3.1		Certificate of Incorporation of Virilitec Industries, Inc. (Incorporated by reference to Form 10-SB (File No. 000-25659), filed with the Securities and Exchange Commission on March 29, 1999)

3.2		Certificate of Amendment of Certificate of Incorporation of Virilitec Industries, Inc. filed with the State of Delaware on October 31, 2003 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

3.3		Certificate of Amendment to the Amended Certificate of Incorporation of Virilitec Industries, Inc. filed with the State of Delaware on February 18, 2004 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

3.4		Certificate of Designation, Powers, Preferences and Rights of Series A Preferred Stock, filed with the State of Delaware on March 9, 2005 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on March 14, 2005)

3.5		Certificate of Designation, Powers, Preferences and Rights of Series A Preferred Stock, filed with the State of Delaware on March 9, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on March 14, 2005)

3.6		Amendment to the Certificate of Designation, Powers, Preferences and Rights of Series A Preferred Stock, filed with the State of Delaware on September 30, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 4, 2005)

3.7*		Certificate of Amendment to Amended Certificate of Incorporation, effective as of October 3, 2005

3.8		Bylaws (Incorporated by reference to Form 10-SB (File No. 000-25659), filed with the Securities and Exchange Commission on March 29, 1999)

4.1		Stock Purchase Warrant issued to to AJW Offshore, Ltd., dated September 10, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 16, 2004)

4.2		Stock Purchase Warrant issued to AJW Qualified Partners, LLC, dated September 10, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 16, 2004)

4.3		Stock Purchase Warrant issued to AJW Partners, LLC, dated September 10, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 16, 2004)

4.4		Stock Purchase Warrant issued to New Millennium Capital Partners II, LLC, dated September 10, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 16, 2004)

4.5		Stock Purchase Warrant issued to to AJW Offshore, Ltd., dated November 23, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on November 30, 2004)
4.6		Stock Purchase Warrant issued to AJW Qualified Partners, LLC, dated November 23, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on November 30, 2004)

4.7		Stock Purchase Warrant issued to AJW Partners, LLC, dated November 23, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on November 30, 2004)

4.8		Stock Purchase Warrant issued to New Millennium Capital Partners II, LLC, dated November 23, 2004 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on November 30, 2004)

4.9		Stock Purchase Warrant issued to to AJW Offshore, Ltd., dated February 3, 2005 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on February 15, 2005)

4.10		Stock Purchase Warrant issued to AJW Qualified Partners, LLC, dated February 3, 2005 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on February 15, 2005)

4.11		Stock Purchase Warrant issued to New Millennium Capital Partners II, LLC, dated February 3, 2005 (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on February 15, 2005)

4.12		Promissory Note in the principal amount of $1,100,000 issued to Robert Petty (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2005)

4.13		Stock Purchase Warrant issued to AJW Offshore, Ltd., dated July 18, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

4.14		Stock Purchase Warrant issued to AJW Qualified Partners, LLC, dated July 18, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

4.15		Stock Purchase Warrant issued to AJW Partners, LLC, dated July 18, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

4.16		Stock Purchase Warrant issued to New Millennium Capital Partners II, LLC, dated July 18, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

4.17		Form of placement agent warrant in connection with August 2005 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2005)

4.18		Form of placement agent warrant in connection with October 2005 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005)

4.19		Form of investor warrant in connection with December 2005 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)

4.20		Form of placement agent warrant in connection with December 2005 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)

4.21		Form of investor warrant in connection with August 2006 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 28, 2006)

4.22		Form of warrant in connection with November 2006 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 20, 2006)

4.23		Form of warrant in connection with May 2007 Equity Financing (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 10, 2007)

5.1		Opinion and Consent of Sichenzia Ross Friedman Ference LLP (Incorporated by reference to the Company’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 11, 2007)

10.1		Employment Agreement with Robert Petty dated April 1, 2004 (Incorporated by reference to Form 10-QSB, filed with the Securities and Exchange Commission on August 16, 2004)

10.2		Employment Agreement with Robin Smyth dated April 1, 2004 (Incorporated by reference to Form 10-QSB, filed with the Securities and Exchange Commission on August 16, 2004)

10.3		Employment Agreement with Robert Petty dated November 1, 2004 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

10.4		Employment Agreement with Robin Smyth dated November 1, 2004 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

10.5		Sublease dated April 1, 2005 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on June 13, 2005)

10.6		AT&T Intelligent Content Distribution Service Agreement dated August 16, 2001 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

10.7		Network Services Agreement with Speedera Networks, Inc. dated June 1, 2004 (Incorporated by reference to Form SB-2 (File No. 333-120605), filed with the Securities and Exchange Commission on November 18, 2004)

10.8		Securities Purchase Agreement, dated September 10, 2004, by and among ROO Group, Inc. and AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on September 16, 2004)

10.9		Letter agreement dated May 12, 2005 between the Company, AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 12, 2005)

10.10		Note Purchase Agreement made as of May 18, 2005 by and between ROO Group, Inc. and Robert Petty (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2005)

10.11		Registration Rights Agreement made as of May 18, 2005 by and among Robert Petty, ROO Group, Inc. and the purchasers listed on Schedule I thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 24, 2005)
10.12		Securities Purchase Agreement, dated July 18, 2005, by and among ROO Group, Inc. and AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

10.13		Registration Rights Agreement, dated as of July 18, 2005, by and among ROO Group, Inc. and AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 22, 2005)

10.14		Omnibus Consent and Waiver dated August 18, 2005 between ROO Group, Inc., AJW Offshore, Ltd., AJW Qualified Partners, LLC, AJW Partners, LLC and New Millennium Capital Partners II, LLC (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 24, 2005)

10.15		Common Stock Purchase Agreement dated August 19, 2005 among ROO Group, Inc. and the purchasers listed on Exhibit A thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2005)

10.16		Registration Rights Agreement dated August 19, 2005 among ROO Group, Inc. and the purchasers listed on Schedule 1 thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2005)

10.17		Escrow Agreement dated August 19, 2005 among ROO Group, Inc., the purchasers signatory thereto and Kramer Levin Naftalis & Frankel LLP (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 25, 2005)

10.18		Common Stock Purchase Agreement dated October 20, 2005 among ROO Group, Inc. and the purchasers listed on Exhibit A thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005)

10.19		Registration Rights Agreement dated October 20, 2005 among ROO Group, Inc. and the purchasers listed on Schedule 1 thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005)

10.20		Escrow Agreement dated October 20, 2005 among ROO Group, Inc., the purchasers signatory thereto and Kramer Levin Naftalis & Frankel LLP (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on October 26, 2005)

10.21		Common Stock Purchase Agreement dated December 28, 2005 among ROO Group, Inc. and the purchasers listed on Exhibit A thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)

10.22		Escrow Agreement dated December 28, 2005 among ROO Group, Inc., the purchasers signatory thereto and Kramer Levin Naftalis & Frankel LLP (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)

10.23		Registration Rights Agreement dated December 28, 2005 among ROO Group, Inc. and the purchasers listed on Schedule 1 thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 30, 2005)

10.24		Securities Purchase Agreement dated August 18, 2006 among ROO Group, Inc. and the purchasers listed on Exhibit A thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 24, 2006)

10.25		Escrow Agreement dated August 18, 2006 among ROO Group, Inc., the purchasers signatory thereto and Savvian LLC and Sichenzia Ross Friedman Ference LLP (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on August 24, 2006)

10.26		Securities Purchase Agreement dated November 14, 2006 among ROO Group, Inc. and the Purchasers listed on Exhibit A thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 20, 2006)

10.27		Escrow Agreement dated November 14, 2006 among ROO Group, Inc., the purchasers signatory thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on November 20, 2006)

10.28		Securities Purchase Agreement dated May 4, 2007 among ROO Group, Inc., the purchasers signatory thereto (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 10, 2007)

10.29		Escrow Agreement dated May 4, 2007 among ROO Group, Inc., the purchasers signatory (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on May 10, 2007)

10.30		Asset Purchase Agreement dated July 12, 2007 by and among ROO HD, Inc., Wurld Media, Inc., Gregory Kerber, and Kirk Feathers (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on July 18, 2007)
10.31		Agreement dated January 25, 2007 by and among ROO Group, Inc. and News Corporation (Incorporated by reference to the Company’s Form 8-K/A filed with the Securities and Exchange Commission on July 26, 2007)

10.32		Executive Management Agreement between ROO Group, Inc. and KIT Capital Limited dated December 18, 2007 (Incorporated by reference to the Company’s Form 8-K filed with the Securities and Exchange Commission on December 26, 2007)

10.33*		ROO Group, Inc. 2008 Incentive Stock Plan

10.34*		Separation Agreement and Release between ROO Group, Inc. and Robert Petty dated as of March 30, 2008

10.35		Separation Agreement and Release between ROO Group, Inc. and Robin Smyth dated as of March 30, 2008


16.1		Letter of Mark Cohen, C.P.A. dated February 1, 2004 on change in certifying accountant (Incorporated by reference to Form 8-K, filed with the Securities and Exchange Commission on February 6, 2004)

16.2		Letter of Mark Cohen, C.P.A. dated March 12, 2004 on change in certifying accountant (Incorporated by reference to Form 8-K/A, filed with the Securities and Exchange Commission on March 15, 2004)

21.1*		Subsidiaries of the Company

23.1*		Consent of Moore Stephens, P.C.

31.1*		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

31.2*		Certification by Interim Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

32.1*		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2*		Certification by Interim Chief Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

	ROO GROUP, INC.

By:	/s/ Kaleil Isaza Tuzman
	Kaleil Isaza Tuzman
	Chief Executive Officer
	and Chairman of the Board

By:	/s/ Robin Smyth
	Robin Smyth
	Chief Financial Officer and Principal Accounting Officer

Signature	Title	Date

/s/ Kaleil Isaza Tuzman	Chief Executive Officer and	April 1, 2008
Kaleil Isaza Tuzman	Chairman of the Board

/s/ Robert Petty	Director	April 1, 2008
Robert Petty

/s/ Kamal El-Tayara	Director	April 1, 2008
Kamal El-Tayara

/s/ Robin Smyth	Chief Financial Officer, Principal	April 1, 2008
Robin Smyth	Accounting Officer and Director

/s/ Wayne Walker	Director	April 1, 2008
Wayne Walker

	/s/ Moore Stephens, P.C.
	MOORE STPHENS, P.C.
	Certified Public Accountants