UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

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THE SCO GROUP, INC.

     

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TO THE STOCKHOLDERS OF THE SCO GROUP, INC.:

     The annual meeting of the stockholders (the “Annual Meeting”) of The SCO Group, Inc. (the “Company”) will be held at the Provo Marriott Hotel, located at 101 West 100 North in Provo, Utah on Wednesday, April 23, 2008. The Annual Meeting will convene at 11:00 a.m., Mountain Time, to consider and take action on the following proposals:

	(1)		to elect seven members to the Board of Directors to serve until the next annual meeting of the Company or until their successors have been appointed and are qualified;
	(2)		to ratify the selection of Tanner LC as the independent registered public accounting firm of the Company for the year ending October 31, 2008; and
	(3)		to transact such other business as may properly come before the meeting.

     ONLY OWNERS OF RECORD OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK AS OF THE CLOSE OF BUSINESS ON FEBRUARY 26, 2008 (THE “RECORD DATE”) WILL BE ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING. EACH SHARE OF COMMON STOCK IS ENTITLED TO ONE VOTE.

     The Company’s Proxy Statement is attached hereto. Financial and other information concerning the Company is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2007.

     THE ATTENDANCE AT AND/OR VOTE OF EACH STOCKHOLDER AT THE ANNUAL MEETING IS IMPORTANT, AND EACH STOCKHOLDER IS ENCOURAGED TO ATTEND. TO ASSURE THAT YOUR VOTE IS COUNTED, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.

Lindon, Utah
Dated: February 28, 2008

     This Proxy Statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors (the “Board of Directors” or the “Board”) of The SCO Group, Inc., a Delaware corporation (the “Company”), for use at the annual meeting of the stockholders (the “Annual Meeting”) to be held at the Provo Marriott Hotel, located at 101 West 100 North in Provo, Utah at 11:00 a.m., Mountain Time, on Wednesday, April 23, 2008. Unless the context otherwise requires, when used herein, the terms “we,” “us,” “our,” “The SCO Group,” or the “Company” refers to The SCO Group, Inc. and its subsidiaries.

     THIS PROXY STATEMENT, THE NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND FORM OF PROXY ARE FIRST BEING MAILED TO STOCKHOLDERS ON OR ABOUT MARCH 25, 2008.

     At the Annual Meeting, the stockholders of the Company will be asked to vote on two proposals. Proposal 1 is the annual election of seven directors to serve on our Board of Directors and Proposal 2 is to ratify the selection of Tanner LC as the independent registered public accounting firm for the Company for the year ending October 31, 2008.

     A proxy for use at the Annual Meeting is enclosed. Any stockholder who executes and delivers such proxy has the right to revoke it any time before it is exercised by delivering to the Secretary of the Company an instrument revoking it or a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. Subject to revocation, the proxy holders will vote all shares represented by a properly executed proxy received in time for the Annual Meeting in accordance with the instructions on the proxy. If no instruction is specified with respect to a matter to be acted upon, the shares represented by the proxy will be voted FOR the proposal in accordance with the recommendation of the Board of Directors.

     The expenses of preparing, assembling, printing and mailing this Proxy Statement and the materials used in the solicitation of proxies will be borne by the Company. Proxies will be solicited through the mail and may be solicited by our officers, directors and employees in person or by telephone. They will not receive additional compensation for this effort. We do not anticipate paying any compensation to any other party for the solicitation of proxies, but may reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to beneficial owners.

     February 26, 2008 has been fixed as the record date (the “Record Date”) for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. As of the Record Date, 21,588,885 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), were issued and outstanding. Each outstanding share of Common Stock will be entitled to one vote. The Common Stock will vote as a single class with respect to all matters submitted to a vote of the stockholders at the Annual Meeting.

     The holders of a majority of the shares of the Common Stock outstanding on the Record Date, present in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting and at any adjournment or postponement thereof. Any abstentions and broker non-votes will be deemed as present for purposes of determining a quorum at the Annual Meeting. A “broker non-vote” occurs when a bank, broker or other holder of record holding shares for a beneficial owner does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. The election of directors and the ratification of Proposal 2 will require the affirmative vote of a majority of the common stock having voting power present in person or represented by proxy at the Annual Meeting and entitled to vote. In determining whether each director and Proposal 2 has received the requisite number of affirmative votes, abstentions will be counted as shares entitled to vote and will have the same effect as a vote against such director and against Proposal 2. Broker non-votes, however, will be treated as not entitled to vote for purposes of determining the election of directors and the approval of Proposal 2 and will not be counted as votes for or against Proposal 2.

     On September 14, 2007, The SCO Group, Inc. and its wholly owned subsidiary, SCO Operations, Inc. (the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Debtors’ Chapter 11 cases are being jointly administered under Case Nos. 07-11337 and 07-11338. On February 13, 2008, the Company entered into a Memorandum of Understanding (the “MOU”) with Stephen Norris Capital Partners, LLC (“SNCP”), a Delaware limited liability company, whereby SNCP will provide up to $100 million to finance a plan of reorganization for the Company. As part of the financing, SNCP will buy a controlling interest in the Company, and take it private. As a result, the Company will shortly be filing a plan to emerge from Chapter 11 of the United States Bankruptcy Code in 2008. The Board of Directors of the Company has unanimously determined that this financing and plan of reorganization is in the best long-term interests of the Company and its subsidiaries, as well as its customers, shareholders, creditors and employees. The MOU is subject to, among other conditions, Bankruptcy Court approval and on February 14, 2008, the Company filed a motion seeking such approval.

     At the Annual Meeting, seven directors are to be elected to serve until the next annual meeting of stockholders or until a successor for such director is elected and qualified, or until the death, resignation, or removal of such director. It is intended that the proxies will be voted for the seven nominees named below for election to the Company’s Board of Directors unless authority to vote for any such nominee is withheld. Each of the nominees is currently a director of the Company. Each person nominated for election has agreed to serve if elected, and the Board of Directors has no reason to believe that any nominee will be unavailable or will decline to serve. In the event, however, that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who is designated by the current Board of Directors to fill the vacancy. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” the nominees named below.

     The names of the nominees, their ages and their respective business backgrounds are set forth below.

     Certain information with respect to the nominees is set forth below:

     Ralph J. Yarro III has served as the Chairman of our Board of Directors since August 1998. Mr. Yarro has served as President and Chief Executive Officer of ThinkAtomic, Inc., a high-tech development and venture group, since 2005. Mr. Yarro has also served as the Chairman of the Board of Trustees and President of The CP80 Foundation, a 501(c)(4) non-profit organization dedicated to the protection of children, families and businesses from the constant threat of internet pornography, since 2005. Mr. Yarro previously served as the President and Chief Executive Officer of The Canopy Group, Inc., a management and resource company (“Canopy”), from August 1998 to December 2004. Mr. Yarro also served as a director of Canopy from August 1998 to March 2005. Mr. Yarro holds a B.A. degree in Political Science from Brigham Young University.

     R. Duff Thompson has served as a member of the Board of Directors since May 2001. Mr. Thompson has served as a Managing General Partner of EsNet, Ltd., an investment group that is active in both technology and real estate ventures, from 1996 to the present. From June 1994 to January 1996, Mr. Thompson served as Senior Vice President of the Corporate Development Group of Novell, Inc. Prior to that time, he served as Executive Vice President and General Counsel for WordPerfect Corporation, and before joining WordPerfect Corporation in 1986, he was a partner with the Salt Lake City law firm of Callister, Nebeker & McCullough. Mr. Thompson holds a B.S. degree in Economics, a masters degree in Business Administration and a J.D. degree, all from Brigham Young University.

     Darcy G. Mott has served as a member of the Board of Directors since March 2002. Mr. Mott has served as Senior Vice President and Chief Financial Office of HealthEquity, Inc., a Healthcare Financial Services company, since March 1, 2007. Mr. Mott previously served as an independent investor and business consultant from December 2004 to February 2007 and as a part-time employee of ThinkAtomic, Inc., a high-tech development venture group, from July 2006 to February 2007. Mr. Mott previously served as Vice President, Treasurer and Chief Financial Officer of Canopy from May 1999 to December 2004. Mr. Mott is a certified public accountant and holds a B.S. degree in Accounting from Brigham Young University.

     Darl C. McBride has served as our President and Chief Executive Officer and as a member of the Board of Directors since June 2002. Before joining our company, Mr. McBride was the president of Franklin Covey Co.’s online planning business from May 2000 to May 2002. From April 1999 to May 2000, Mr. McBride was the CEO of Pointserve. From November 1997 to August 1998, Mr. McBride was the Chairman, President and CEO of SBI. From February 1996 to October 1997, Mr. McBride served as the Senior Vice President of IKON Office Solutions. From 1988 to 1996, Mr. McBride held several positions at Novell, Inc. and concluded his service as Vice President and General Manager of Novell’s Embedded Systems Division (NEST). Mr. McBride holds a B.S. degree from Brigham Young University and received a masters degree in Labor & Industrial Relations from the University of Illinois at Urbana-Champaign.

     Daniel W. Campbell has served as a member of our Board of Directors since November 2003. Mr. Campbell has served as a Managing General Partner of EsNet, Ltd., an investment group that is active in both technology and real estate ventures, from July 1994 to the present. From 1992 to July 1994, Mr. Campbell worked at WordPerfect Corporation as Senior Vice President and Chief Financial Officer. Prior to that, Mr. Campbell was a partner with Price Waterhouse, an international accounting firm. Mr. Campbell also serves as the lead independent director of Nu Skin Enterprises, Inc., where he is the Chairman of the Audit Committee. Mr. Campbell received an Accounting degree from Brigham Young University in 1979.

     Omar T. Leeman has served as a member of our Board of Directors since June 2005. Mr. Leeman has served as Vice President of Sales at CrimeCog Technologies, Inc. since January 2008. Previously, Mr. Leeman served as the Executive Vice President of Sales, Marketing and Training for AccessData Corp. from May 2006 to December 2007. Mr. Leeman also serves as a director for AccessData. In 2002, Mr. Leeman founded Pinebrook Management Group, LLC. From January 2001 to April 2002, Mr. Leeman was President, CEO, and Chairman of the Board of Talk2 Technology, Inc. From February 1983 to January 2001 Mr. Leeman worked at MCI Telecommunications, Inc. where he held several management positions, including President, MCI Business Markets. He also worked as a Regional Vice President at NEC America Inc., and held management positions at OC Tanner Company and Xerox Corporation. Mr. Leeman received a B.S. degree in Business Administration from the University of Hawaii. Mr. Leeman previously served on the Board of Directors of Telegea, Inc.

     J. Kent Millington has served as a member of our Board of Directors since June 2005. Mr. Millington is currently a business consultant and President of IPDevPro, a company specializing in evaluation and commercialization of intellectual property. He was President and Chief Executive Officer of AccessData Corp. from January to December 2007, where he oversaw a turn around and brought in significant new equity capital and management. Mr. Millington served as Entrepreneur in Residence at Utah Valley State College (“UVSC”) from August 2004 to May 2007, where he taught courses in entrepreneurship and new venture finance. Prior to joining UVSC, Mr. Millington was a Vice President for Verio, Inc., a subsidiary of NTT Communications from January 1998 to July 2004. From October 1996 to December 1997 he was President of Internet Servers Inc., a web hosting start-up that was sold to Verio in December 1997. Mr. Millington holds a B.A. degree in History from the University of Utah, an MBA from Brigham Young University, and a Doctor of Business Administration from California Coast University.

     The Board of Directors of the Company consists of seven directors. Directors are elected at each annual meeting of stockholders to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. There are no family relationships among any of the Company’s directors, officers or key employees.

     We have adopted a code of conduct and ethics that applies to all employees, including employees of our subsidiaries, as well as each member of our Board of Directors. The code of ethics is available at our website at www.sco.com.

     We intend to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this code of ethics by posting such information on our website, at the address specified above.

     The Board of Directors has determined each of the following directors to be an “independent director” as such term is defined in Marketplace Rule 4200(a)(15) of the National Association of Securities Dealers (the “NASD”): Ralph J. Yarro, III, R. Duff Thompson, Darcy G. Mott, Daniel W. Campbell, Omar T. Leeman, and J. Kent Millington. Although our common stock is no longer listed on The Nasdaq Stock Market, we continue to use the independence standards of The Nasdaq Stock Market to determine the independence of our directors.

     In this proxy statement, these directors are referred to individually as an “Independent Director” and collectively as the “Independent Directors.” The Independent Directors intend to meet in executive sessions at which only Independent Directors will be present in conjunction with each regularly scheduled meeting of the Board of Directors.

     During the year ended October 31, 2007, the Company’s Board of Directors met 32 times and all Board members attended at least 75 percent of the meetings of the Board and at least 75 percent of the meetings of any of the Board committees on which they served. The Board of Directors and its committees also passed various written consents during the year ended October 31, 2007.

     Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at the Company’s Annual Meeting of Stockholders, it encourages directors to attend and historically more than a majority have done so. For example, at the 2007 Annual Meeting, seven members of the Board of Directors were in attendance.

     The Board of Directors has formed the following committees: Audit Committee, Compensation Committee, Nominations Committee, and Litigation Oversight Committee. A copy of each of the Audit Committee Charter, the Compensation Committee Charter and the Nominations Committee Charter are available on our website at www.sco.com/company.

     Audit Committee. The Audit Committee, which held nine meetings during the year ended October 31, 2007, assists the Board in the oversight of our financial statements, legal compliance, qualifications of independent auditors, and engagement and oversight of our independent auditors. The Audit Committee acts pursuant to a written charter adopted by the Board. The members of the Audit Committee are Messrs. Campbell (Committee Chair), Mott and Millington. The Audit Committee has determined that Messrs. Campbell, Mott and Millington are Audit Committee financial experts as such term is defined in Regulation S-K promulgated by the Securities and Exchange Commission. All members of the Audit Committee are Independent Directors.

     Compensation Committee. The Compensation Committee, which held six meetings during the year ended October 31, 2007, recommends, reviews and oversees the salaries and benefits for the Company’s Chief Executive Officer and other executive officers. The Compensation Committee also administers the Company’s employee stock option plans and other employee compensation plans. The Compensation Committee acts pursuant to a written charter adopted by the Board. The members of the Compensation Committee are Messrs. Millington (Committee Chair), Thompson and Leeman. All members of the Compensation Committee are Independent Directors.

     Nominations Committee. In February 2004, the Board created the Nominations Committee to oversee corporate governance and director nominations. The Nominations Committee held one meeting during the year ended October 31, 2007. Among its specific duties, the Nominations Committee makes recommendations to the Board of Directors about the size of the Board or any committee thereof, identifies and recommends candidates for the Board and committee membership, evaluates nominations received from stockholders, determines the compensation and benefits of all directors on the Board and develops and recommends to the Board corporate governance principles applicable to the Company. The Nominations Committee acts pursuant to a written charter adopted by the Board, which is available at the Company’s website at www.sco.com/company.

     The members of the Nominations Committee are Messrs. Leeman (Committee Chair), Yarro, and Campbell. All members of the Nominations Committee are Independent Directors.

     Litigation Oversight Committee. In April 2004, the Board created the Litigation Oversight Committee to oversee the IBM, Novell and other litigation matters. The Litigation Oversight Committee held meetings as necessary during the year ended October 31, 2007 and provided regular updates to the full Board of Directors. The members of the Litigation Oversight Committee are Messrs. Thompson (Committee Chair), Mott and Yarro. All members of the Litigation Oversight Committee are Independent Directors.

     As indicated above, the Nominations Committee of the Board of Directors oversees the director nomination process pursuant to its charter and the Director Nominations Policy (the “Nominations Policy”) adopted by the Nominations Committee.

     Minimum Criteria for Board Members. Each candidate to serve on the Board of Directors (a “Candidate”) must possess at least the following specific minimum qualifications.

	•		Each Candidate shall be prepared to represent the best interests of all of the Company’s stockholders and not just one particular constituency.
	•		Each Candidate shall be an individual who has demonstrated integrity and ethics in his/her personal and professional life and has established a record of professional accomplishment in his/her chosen field.
	•		No Candidate, or family member (as defined in NASD rules), or affiliate or associate (each as defined in Rule 405 under the Securities Act of 1933, as amended) of a Candidate, shall have any material personal, financial or professional interest in any present or reasonably foreseeable potential competitor of the Company.
	•		Each Candidate shall be prepared to participate fully in Board activities, including active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board and the committee(s) of which he or she is a member, and not have other personal or professional commitments that would, in the Nominations Committee’s sole judgment, interfere with or limit his or her ability to do so.

     Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominations Committee may consider such other factors as it may deem appropriate, which may include, without limitation, judgment, skill, diversity, experience with businesses and organizations of comparable size to the Company, the interplay of a Candidate’s experience with the experience of other directors and the extent to which a Candidate would be a desirable addition to the Board and any committees of the Board.

     Process for Identifying and Evaluating Candidates. The Nominations Committee is responsible to identify and evaluate Candidates for Board membership and select or recommend to the Board nominees to stand for election. The Nominations Committee will consider all Candidates recommended by the Company’s Qualified Stockholders (as defined below) in accordance with the procedures set forth below under the caption “Nominees Recommended by Qualified Stockholders.” The Committee may also consider Candidates proposed by management, but it is not obligated to do so. The Nominations Committee will evaluate all Candidates, including incumbent directors, based on the same criteria as described above. All Candidates (whether identified internally or by a Qualified Stockholder) who, after evaluation, are then selected by or recommended by the Nominations Committee and approved by the Board, will be included in the Company’s recommended slate of director nominees in its proxy statement.

     General Nomination Right of All Stockholders. Any stockholder of the Company may nominate one or more persons for election as a director of the Company at an annual meeting of stockholders if the stockholder complies with the notice, information and consent provisions contained in the Company’s Amended and Restated Bylaws. In order for a stockholder’s director nomination to be timely, the stockholder must deliver written notice to the Company’s secretary not less than 120 days prior to any meeting of stockholders called for the election of directors. Such notification shall contain the written consent of each proposed nominee to serve as a director if so elected and all other information required in Article II, Section 11 of the Company’s Amended and Restated Bylaws

regarding each proposed nominee and as to each person, acting alone or as part of a group, who participates or is expected to participate in making such nomination or in organizing, directing or financing such nomination or solicitation of proxies to vote for the nominee or nominees.

     The procedures described under the caption “Nominees Recommended by Qualified Stockholders” are meant to establish an additional means by which certain stockholders may participate in the Company’s process for identifying and evaluating Candidates by making recommendations to the Nominations Committee. Such procedures are not meant to replace or limit the Company’s stockholders’ general nomination rights in any way.

     Nominees Recommended by Qualified Stockholders. In addition to those Candidates identified through the Company’s internal processes, in accordance with the Nominations Policy, the Nominations Committee will evaluate a Candidate proposed by any single stockholder or group of stockholders who have beneficially owned more than five percent of the common stock of the Company for at least one year (and will hold the required number of shares through the Annual Meeting) and that satisfies the notice, information and consent provisions in the Nominations Policy (a “Qualified Stockholder”).

     In order to be considered by the Nominations Committee for an upcoming annual meeting of stockholders, a notice from a Qualified Stockholder regarding a potential Candidate must be submitted to the Corporate Secretary who will forward such information to the Nominations Committee not less than 120 calendar days before the anniversary of the date of the Company’s proxy statement released to stockholders in connection with the previous year’s annual meeting. If the Company changes its annual meeting date by more than 30 days from year to year, the notice must be received by the Nominations Committee no later than the close of business on the 10th day following the day on which notice of the date of the upcoming annual meeting is publicly disclosed.

     Any Candidate proposed by a Qualified Stockholder must be independent of the Qualified Stockholder in all respects as determined by the Nominations Committee or by applicable law. Any Candidate submitted by a Qualified Stockholder must also meet the definition of an “independent director” under NASD rules.

     The compensation and benefits for service as a member of the Board of Directors is determined by the Compensation Committee and the Board. Directors employed by us or one of our subsidiaries are not compensated for service on the Board or on any Committee of the Board. Until September 2007, our non-employee directors received $25,000 for each year of service as a director plus an additional $5,000 per year for each committee of the Board on which such non-employee directors served. Additionally, the chairpersons of each of the Compensation Committee and the Nominations Committee received an additional $5,000 per year and the chairpersons of each of the Audit Committee and the Litigation Oversight Committee received an additional $10,000 per year. Non-employee directors also received stock option awards under our stock option plans, which awards included an initial option to purchase 45,000 shares of common stock upon joining the Board as a director and thereafter each non-employee director who continued to serve on the Board automatically received an annual grant of an option to acquire 15,000 shares upon his or her election at the annual meeting. Beginning in September 2007, we began awarding our non-employee directors 10,000 options per quarter in lieu of any cash compensation; including for their service on the Board and for serving on any of our committees. In addition, Board members are reimbursed for expenses incurred in connection with attendance at Board and committee meetings.

     The following table sets forth a summary of the compensation we paid to our non-employee directors (and former non-employee directors) in 2007.

     Each of our non-employee directors (and former non-employee directors) owned the following number of stock options as of October 31, 2007.

     Historically, the Company has not adopted a formal process for stockholder communications with the Board. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe our responsiveness to stockholder communications to the Board has been excellent.

     The Board of Directors unanimously recommends that the stockholders of the Company vote FOR the election of all the nominees listed above.

     The Company is asking the stockholders to ratify the selection of Tanner LC (“Tanner”) as the Company’s independent registered public accounting firm for the year ending October 31, 2008. The affirmative vote of a majority of the common stock having voting power present in person or represented by proxy and entitled to vote will be required to ratify the selection of Tanner.

     In the event the stockholders fail to ratify the appointment, the Audit Committee of the Board of Directors will consider it as a direction to select other auditors for the subsequent year. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting

firm at any time during the year if the Audit Committee determines that such change would be in the best interests of the Company and its stockholders.

     Representatives of Tanner will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

     The following table presents fees for professional services rendered by Tanner for the years ended October 31, 2007 and 2006 (in thousands):

     The Audit Committee approved all audit, audit-related and tax services performed by our independent registered public accounting firm during the years presented. Additionally, the Audit Committee Chair has the authority to pre-approve audit, audit-related and tax fees, which approval is ratified by the full Audit Committee at the next scheduled meeting. The Audit Committee has determined that the fees paid to Tanner are compatible with maintaining Tanner’s independence as the Company’s auditors.

     The Audit Committee, which consists of Messrs. Campbell, Mott and Millington, is responsible for, among other things:

	•		reviewing the Company’s annual financial statements, the audit report and other relevant financial reports,
	•		reviewing the internal financial reports prepared by management,
	•		recommending engagement of the Company’s independent registered public accounting firm,
	•		approving the services performed by the independent registered public accounting firm,
	•		meeting with the independent registered public accounting firm and reviewing with them the results of their audit, and
	•		reviewing and evaluating the Company’s systems of internal controls.

     The Audit Committee acts pursuant to a written charter adopted by the Board and all members of our Audit Committee are “independent” as defined under Rule 4350(d)(2) of the NASD listing standards. In addition, the Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements with its

management and has discussed with the Company’s independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees).

     The Audit Committee has received the written disclosures and the letter from the Company’s independent registered public accounting firm required by Independence Standards Board Standard No. 1 (adopted by the Public Company Accounting Oversight Board (PCAOB)).

     The Audit Committee has also considered whether the provision of non-audit services provided by Tanner to the Company is compatible with maintaining its independence and has discussed with the auditors such auditors’ independence.

     Based on its review, the Audit Committee recommended to the Board of Directors that the audited financial statements for the Company’s year ended October 31, 2007 be included in the Company’s Annual Report on Form 10-K for its year ended October 31, 2007, which was filed on January 29, 2008.

     The Board of Directors unanimously recommends that the stockholders of the Company vote FOR the ratification of Tanner LC as the Company’s independent registered public accounting firm.

     The following table presents information regarding the current executive officers of the Company:

     Set forth below is the business background of each of our executive officers. Information on the business background of Darl C. McBride is set forth above under the caption “Election of Directors.”

     Kenneth R. Nielsen has served as interim Chief Financial Officer since October 1, 2007. Prior to joining the Company, Mr. Nielsen was Chief Financial Officer of Forward Foods, LLC, a manufacturer and marketer of high protein snack, energy and meal replacement bars, from April 2007 to August 2007. From June 2001 to March 2007, Mr. Nielsen served as Corporate Controller of Mrs. Fields’ Companies, Inc., a retailer of cookies and baked goods. From August 2000 to June 2001, Mr. Nielsen was the Director of Financial Operations of Echopass, a provider of advanced IP-based call and contact center solutions. From 1999 to 2000, Mr. Nielsen was a Senior Manager at Ernst & Young LLP. Mr. Nielsen is a certified public accountant and holds a B.A. degree in Accounting from Weber State University and an M.B.A. from Brigham Young University.

     Jeff F. Hunsaker has served as President and Chief Operating Officer of SCO Operations since December 2007. Prior to that, he served as Senior Vice President and General Manager of SCO’s mobile business since May 2006. From August 2005 to April 2006 he served as the Senior Vice President of Worldwide Sales. Prior to that, Mr. Hunsaker served as the Senior Vice President and General Manager of the UNIX Division, from January 2004 to July 2005. From February 2003 to December 2003, Mr. Hunsaker served as Senior Vice President of Worldwide Sales and Marketing for the Company and prior to that Mr. Hunsaker served as Vice President and General Manager, Americas Division, from January 2000 to January 2003. Upon joining the Company, Mr. Hunsaker had worked for several high-tech companies from 1989 through 2000, in a senior sales or marketing role including WordPerfect Corporation, Novell Inc., Corel Corporation and Baan Corporation. Mr. Hunsaker holds a B.S. degree in Business Finance from Utah State University.

     Ryan E. Tibbitts joined the Company in June 2003 as General Counsel and became the Corporate Secretary in September 2003. Mr. Tibbitts is responsible for all legal aspects of the Company’s worldwide operations. Prior to joining the Company, Mr. Tibbitts worked as General Counsel at Center 7, Inc. from October 2001 to August 2003 and at Lineo, Inc. from January 2001 to September 2001. Mr. Tibbitts worked in private practice with a law firm in Utah from 1985 until 2001. Mr. Tibbitts is a member of the Utah State Bar and American Bar Association and received his J.D. and B.S. degrees from Brigham Young University.

     The following discussion and analysis provides information regarding our executive compensation objectives and principles, procedures, practices and decisions, and is provided to help give perspective to the numbers and narratives that follow in the tables in this section. This discussion will focus on the Company’s objectives, principles, practices and decisions with regards to the compensation of Darl C. McBride, Bert B. Young, Kenneth R. Nielsen, Sandeep Gupta, Jeff F. Hunsaker, Ryan E. Tibbitts and Chris Sontag, our named executive officers (“Named Executive Officers”). A discussion of our directors’ compensation is set forth above under “Director Compensation”.

     The compensation policy for our Chief Executive Officer and other executive officers is to provide compensation opportunities that are based upon our financial performance, their contribution to that performance, their personal performance, and that are competitive enough to attract and retain highly skilled individuals.

     We believe that compensation paid to our executive officers should be closely aligned with our performance and the performance of each individual executive officer on both a short-term and a long-term basis, should be based upon the value each executive officer provides to our company, and should be designed to assist us in attracting and retaining the best possible executive talent, which we believe is critical to our long-term success. To attain our executive compensation objectives and implement the underlying compensation principles, we follow the procedures described below.

     Role of the Compensation Committee. It is the duty of the Compensation Committee to review and recommend to the entire Board of Directors for approval the salary, bonus and equity compensation of our Chief Executive Officer. In addition, the Compensation Committee reviews and recommends the general compensation policies for our other executive officers, after receiving recommendations from our Chief Executive Officer. The Compensation Committee also reviews and recommends to the entire Board of Directors discretionary option grants for our Chief Executive Officer, other executive officers and employees in accordance with the 1999 Stock Option Plan and the 2002 and 2004 Omnibus Stock Incentive Plans.

     The Compensation Committee believes that the compensation program for our Chief Executive Officer should reflect our performance and the value created for our stockholders. In addition, the compensation program for the Chief Executive Officer should support our short-term and long-term strategic goals and values and should reward our Chief Executive Officer for his contribution to our success. We are engaged in a very competitive industry, and our success depends, in part, upon our ability to retain our executive officers.

     Compensation Consultant. We have not retained the services of a compensation consultant.

     Our executive compensation objectives and principles are implemented through the use of the following elements of compensation, each discussed more fully below:

	•		Base Salary
	•		Bonuses
	•		Stock-Based Compensation
	•		Other Benefits

     In addition to benefits broadly available to our employees, the Chief Executive Officer and other executive officer’s compensation packages are comprised of three elements: (i) base salary that is competitive with the market and reflects individual performance; (ii) quarterly and annual performance awards tied to the Company’s attainment of financial and management performance objectives; and (iii) long-term stock-based incentive awards designed to strengthen the mutuality of interests between the Chief Executive Officer, other executive officers and our stockholders. The Compensation Committee and Board of Directors have reserved the ability to exercise discretion in applying entirely different factors, such as different measures of financial performance, for future fiscal years.

     Base Salary. The Compensation Committee approved the salaries of all of our executive officers for fiscal year 2007. Salary decisions concerning these officers were based upon a variety of considerations consistent with the compensation philosophy stated above. In reviewing and setting the total compensation of our Chief Executive Officer for the year ended October 31, 2007, the Compensation Committee sought to make that compensation competitive, while at the same time assuring that a significant percentage of compensation was tied to our

performance. The Company did not adjust the base salary for the Chief Executive Officer as a result of our cash constraints. Consequently, the base salary for Darl McBride, our Chief Executive Officer, remained unchanged at $265,000 for the fiscal year ended October 31, 2007. The base salary level for the other executive officers was established for the year ended October 31, 2007 on the basis of the following factors: personal performance and experience and the estimated salary levels in effect for similar positions. The Compensation Committee reviews the other executive officers’ base salaries periodically and makes adjustments accordingly. We did not benchmark the salaries of our executive officers against the salaries of other companies.

     Bonuses. Each Named Executive Officer is eligible to receive quarterly and annual performance-based bonuses by participating in either the Employee Incentive Bonus Program or the Sales Compensation Plan, both as described below. These bonuses are intended to motivate participating executives to achieve both short-term and long-term strategic and financial objectives. Mr. McBride received bonus payments of $144,691 for the year ended October 31, 2007 as a result of the attainment of personal management performance objectives, which included, but were not limited to establishing new business channels and partnerships for mobile technologies, launching new digital mobile services, and leading our operations to preserve and maximize cash resources. During the year ended October 31, 2007, our other Named Executive Officers collectively received bonus payments of $186,756 (excluding the discretionary bonus of $84,408 paid to Mr. Tibbitts as described below), based on the personal attainment of their management performance objectives and/or achieving a certain level of sales. The Compensation Committee adjusted the performance goals for the fourth quarter for Messrs. McBride, Tibbitts and Hunsaker, because of unforeseen changes to our business, including our bankruptcy filing. The Compensation Committee then awarded bonuses to these individuals that were based upon the adjusted performance goals, which adjusted performance goals were, in the opinion of the Compensation Committee, more indicative of such officer’s actual performance. In addition, in recognition of the significant contributions Mr. Tibbitts has made to our company, the Board also approved a discretionary bonus of $50,000, net of taxes, to be paid to Mr. Tibbitts. The total bonus amount equaled $84,408. Mr. Young, our former Chief Financial Officer, received a transition fee of $60,000 for continuing to assist us for a period of time after he resigned.

     Employee Incentive Bonus Program. The Employee Incentive Bonus Program (the “Bonus Program”) is designed (i) to reward achievement of specific revenue and operating objectives, (ii) align employee, company and stockholder interests, and (iii) improve morale of the employees. For fiscal 2007, Darl McBride, Ryan Tibbitts and Bert Young participated in the Bonus Program. Jeff Hunsaker and Sandeep Gupta participated in the Bonus Program for part of the year and the sales compensation plan for part of the year.

     The Bonus Program is approved annually by the Compensation Committee and is administered by our Chief Executive Officer, Chief Financial Officer and the Director of Human Resources (the “Management Incentive Committee”). The Management Incentive Committee is responsible for setting the performance objectives and administering the Bonus Program, provided that the Compensation Committee sets the performance objectives of the Chief Executive Officer, and the Chief Executive Officer approves the performance objectives of the other members of the Management Incentive Committee. The Bonus Program covers all regular employees, except employees who are covered by sales commission or other incentive-eligible programs.

     The bonus pool is comprised of three components: (1) 40% related to revenue, (2) 40% related to operating performance, and (3) 20% related to personal objectives. We establish an executive and employee incentive program each year, pursuant to which certain executives and employees may earn quarterly bonuses based upon our performance. In the first quarter of each year, our compensation committee identifies the plan’s participants for the year and establishes an objective formula by which the amount, if any, of the plan’s bonus pool will be determined. This formula is based upon quarterly revenues and quarterly operating loss before provision for income taxes. The bonus pool is subject to a 200% cap for director level and below, and is not subject to a cap for vice presidents, executives and officers.

     Our Compensation Committee established the following targets for the fiscal 2007 quarterly bonus pool (dollars in thousands):

     The revenue and operating performance targets will not be funded unless the revenue and operating performance targets are attained at 100%. The personal objectives components will pay out each quarter based on the percentage of individual achievement. The amount payable to any employee will depend on a percentage of such employee’s annual base salary. The applicable percentages of annual base salary for all employees are established on an annual basis by the Compensation Committee. For executive officers, there is no maximum amount that they may earn pursuant to the Bonus Program. The components of the Bonus Program outlined above serve as criteria to help the Compensation Committee determine what bonuses to pay to the executive officers. However, the Compensation Committee has the discretion to award bonuses even if this criteria is not met, and the Compensation Committee exercised this discretion to award bonuses for the fourth quarter even though the pre-established performance goal for operating loss was not met. The Compensation Committee adjusted the performance goals for the fourth quarter as described above.

     Sales Compensation Plan. The sales compensation plan is a quarterly incentive based plan. All sales representatives in the UNIX business are eligible to participate in the sales compensation plan. For commission compensation, there is one quota containing Product, SES/SWIM, Engineering Services, Support, Professional Services, IP Compliance Licensing, and other UNIX products (“UNIX business”). There is also one quota containing Me Inc. products and services, Shout, Edgeclick and other new revenue opportunities (“New business”). The quota and credit relief for both the UNIX business and New business is based on revenue recognition for all products and services. The sales compensation plan is rolled out quarterly to the sales field to ensure that the objectives and deliverables outlined for traction with new mobility products is being attained. For fiscal 2007, Chris Sontag participated in the Sales Compensation Plan; and Jeff Hunsaker and Sandeep Gupta participated in the Bonus Program for part of the year and the Sales Compensation Plan for part of the year.

     Stock-Based Compensation. We do not have any policies for allocating compensation between long-term and currently paid out compensation or between cash and non-cash compensation or among different forms of non-cash compensation. However, the Compensation Committee sets the number of shares subject to each option grant for each executive officer at a level intended to create a meaningful opportunity for stock ownership based on (i) the executive’s current position with the Company, (ii) the base salary associated with the position, and (iii) the executive’s personal performance in recent periods. The Compensation Committee also takes into account the executive’s existing holdings of our common stock and the number of vested and unvested option shares exercisable by the executive in order to maintain an appropriate level of equity incentive to keep the executives’ interests aligned with our stockholders. Although we do not have any formal policy for determining the amount of stock options or the timing of our stock option grants, we have historically granted stock options at regularly scheduled board meetings to high-performing employees (i) in recognition of their individual achievements and contributions to our company, and (ii) in anticipation of their future service and achievements. Mr. McBride received an option to purchase 100,000 shares of our common stock at an exercise price of $2.30 per share during the year ended October 31, 2007. This option vests over four years, although vesting accelerates upon a change in control of the Company. This award was determined based upon Mr. McBride’s current equity holdings in the Company and related vesting to maintain alignment of his interests with the interests of our stockholders. During the year ended October 31, 2007, the Compensation Committee recommended and the full Board of Directors approved stock options to purchase a total of 335,000 shares of our common stock to the other Named Executive Officers at an exercise price of $2.30 per share, which options also accelerate upon a change in control of the Company.

     Other Benefits. Our Named Executive Officers receive the same benefits that are available to all other full-time employees, including the payment of health, dental, life and disability insurance premiums.

     Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly held companies for compensation paid to certain of their executive officers, to the extent that compensation exceeds $1,000,000 per covered officer in any fiscal year. The limitation applies only to compensation which is not considered to be performance-based. Non-performance based compensation paid to our executive officers for the year ended October 31, 2007 did not exceed the $1,000,000 limit per officer, and the Compensation Committee does not anticipate that the non-performance based compensation to be paid to our executive officers for the year ending October 31, 2008 will exceed that limit. The Company’s 1999 Stock Option Plan and the 2002 and 2004 Omnibus Stock Incentive Plans have been structured so that any compensation deemed paid in connection with the exercise of option grants made under those plans with an exercise price equal to the fair market value of the options shares on the grant date will qualify as performance-based compensation which will not be subject to the $1,000,000 limitation. Because it is unlikely that the cash compensation payable to any of our executive officers in the foreseeable future will approach the $1,000,000 limit, the Compensation Committee has decided at this time not to take any action to limit or restructure the elements of cash compensation payable to our executive officers. The Compensation Committee will reconsider this decision should the individual non-performance based cash compensation of any executive officer ever approach the $1,000,000 level.

     The Compensation Committee has reviewed the foregoing Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and discussed the Compensation Discussion and Analysis with the Company’s management. Based on such review and discussions with management, the Compensation Committee recommended to the Board that the foregoing Compensation Discussion and Analysis be included in this Proxy Statement.

     The following table shows information regarding the compensation earned during the fiscal year ended October 31, 2007 by our Named Executive Officers. We have not entered into any employment agreements with our executive officers. For a discussion of the compensation of our directors, see “Director Compensation” described in Proposal 1 above.