UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarter ended March 31, 2007 |
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
M POWER ENTERTAINMENT, INC.
(Name of small business issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
76-0513297
(I.R.S. Employer Identification No.)
2602 Yorktown Place
Houston, Texas 77056
(Address of principal executive office)
832-284-4276
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
As of May 08, 2007, there were 212,867,688 shares of common stock, $0.001 par value, outstanding.
Transitional Small Business Disclosure Format (Check one).
Yes o No x
M POWER ENTERTAINMENT, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2007
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PART I. | FINANCIAL INFORMATION | |
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| Item 1. | Financial Statements | |
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| Item 2. | | 8 |
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| Item 3. | | 11 |
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PART II. | OTHER INFORMATION | |
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| Item 1. | | 12 |
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| Item 2. | | 12 |
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| Item 3. | | 14 |
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| Item 4. | | 14 |
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| CERTIFICATIONS | 14 |
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| 14 |
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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| BALANCE SHEETS | | | | | | | |
| | | | | | | |
| | | | March 31, | | | December 31, | |
| | | | 2007 | | | 2006 | |
| | | | (unaudited) | | | (audited) | |
| ASSETS | | | | | | | |
| CURRENT ASSETS | | | | | | | |
| Cash | | $ | 597,110 | | $ | 728,393 | |
| Prepaid Insurance | | | 8,045 | | | 14,809 | |
| OTHER ASSETS | | | | | | | |
| Deferred Financing Costs, net of accumulated amortization of $139,550 and $96,439, respectively | | | 268,580 | | | 295,191 | |
| Deposits | | | 4,800 | | | 4,800 | |
| Fixed Assets, net of accumulated depreciation of $1,244 and $1105, respectively | | | 4,305 | | | 4,444 | |
| TOTAL ASSETS | | $ | 882,840 | | $ | 1,047,637 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | |
| | | | | | | | |
| CURRENT LIABILITIES | | | | | | | |
| Accounts payable - trade | | $ | 77,436 | | $ | 51,512 | |
| Accounts payable - related parties | | | - | | | - | |
| Accrued expenses | | | 864,296 | | | 826,781 | |
| Accrued expenses - related parties | | | - | | | - | |
| Notes Payable | | | 162,388 | | | 157,798 | |
| Convertible Debenture Derivative Liability | | | 3,446,830 | | | 4,157,382 | |
| Total Current Liabilities | | | 4,550,950 | | | 5,193,473 | |
| | | | | | | | |
| LONG TERM LIABILITIES | | | | | | | |
| Convertible Debentures 6%, net of discount of $2,039,508 and $1,851,000, respectively | | | 151,775 | | | 129,297 | |
| Total Long Term Liabilities | | | 151,775 | | | 129,297 | |
| | | | | | | | |
| TOTAL LIABILITIES | | | 4,702,726 | | | 5,322,770 | |
| | | | | | | | |
| STOCKHOLDERS' DEFICIT | | | | | | | |
| Series D Preferred Stock, $0.001 par value per share; 1,000 shares authorized 1,000 and 0 shares issued, respectively | | | 1 | | | 1 | |
| Common Stock, $0.001 par value per share; 1,000,000,000 shares authorized; 169,637,688 and 75,497,688 shares issued and outstanding, respectively | | | 169,638 | | | 75,498 | |
| Additional Paid-In Capital | | | 61,537,739 | | | 61,398,052 | |
| Accumulated Deficit | | | (65,527,263) | | | (65,748,684) | |
| Total Stockholders' Deficit | | | (3,819,885 | ) | | (4,275,133 | ) |
| | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 882,840 | | $ | 1,047,637 | |
| | | | | | | | |
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS
|
| STATEMENTS OF OPERATIONS |
| (unaudited) |
| | | Three Months March 31, |
| | | | 2007 | | | 2006 | |
| OPERATING EXPENSES | | | | | | | |
| Depreciation and amortization | | $ | 139 | | $ | 139 | |
| Compensation expense | | | 130,000 | | | 808,776 | |
| Professional fees | | | 107,913 | | | 45,888 | |
| General and administrative | | | 45,556 | | | 485,743 | |
| Total operating expense | | | 283,608 | | | 1,340,546 | |
| | | | | | | | |
| LOSS FROM OPERATIONS | | | (283,608 | ) | | (1,340,546 | ) |
| | | | | | | | |
| OTHER INCOME (EXPENSES) | | | | | | | |
| Interest expense and loan discount fee | | | (160,590 | ) | | (14,277 | ) |
| Gain/(Loss) on derivative liability | | | 665,619 | | | | |
| Total other income (expenses) | | | 505,029 | | | (14,277 | ) |
| | | | | | | | |
| NET INCOME (LOSS) | | $ | 221,421 | | $ | (1,354,823 | ) |
| | | | | | | | |
| | | | | | | | |
| BASIC INCOME ( LOSS) PER SHARE | | $ | 0.01 | | $ | (0.03 | ) |
| | | | | | | | |
| DILUTED (LOSS) PER SHARE | | $ | (0.00 | ) | $ | (0.03 | ) |
| | | | | | | | |
| BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | | | 28,509,978 | | | 49,668,101 | |
| | | | | | | | |
| DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | | | 2,885,652,835 | | | 49,668,101 | |
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS
|
| STATEMENTS OF CASH FLOW |
| (unaudited) |
| | Three Months Ended March 31, |
| | | | 2007 | | | 2006 | |
| CASH FLOWS FROM OPERATING ACTIVITES | | | | | | | |
| Net income (loss) | | $ | 221,421 | | | (1,354,815 | ) |
| Adjustments To Reconcile Net Income (Loss) To Cash | | | | | | | |
| (Used In) Operating Activities | | | | | | | |
| Depreciation and Amortization Expense | | | 139 | | | 139 | |
| Common Stock And Warrants Issued For Services | | | | | | 1,190,687 | |
| Gain/(Loss) On Derivative | | | (665,619 | ) | | | |
| Interest And Loan Disc Fees | | | 160,590 | | | | |
| Cancellation of Stock issued for services | | | (29,000 | ) | | | |
| Changes In Operating Assets And Liabilities: | | | - | | | | |
| Other Current Assets | | | 6,764 | | | | |
| Accounts Payable And Accrued Expenses | | | 25,922 | | | 87,411 | |
| Accounts Payable And Accrued Expenses Related Party | | | - | | | 1,294 | |
| | | | | | | | |
Net Cash Used In Operating Activities | | | (279,783 | ) | | (75,284 | ) |
| | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | |
Net Cash Used In Investing Activities | | | - | | | - | |
| | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | |
| Proceeds From Issuance Of New Debt | | | 148,500 | | | | |
| - | | | | | | | |
Net Cash Provided By Financing Activities | | | 148,500 | | | - | |
| - | | | | | | | |
| | | | | | | | |
| NET INCREASE (DECREASE) IN CASH | | | (131,283 | ) | | (75,284 | ) |
| | | | | | | | |
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | | | 728,393 | | | 75,928 | |
| | | | | | | | |
| CASH AND CASH EQUIVALENTS, END OF PERIOD | | $ | 597,110 | | $ | 644 | |
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NON CASH INVESTING AND FINANCING | | | | | | | |
| Conversion of Derivative Liability | | | 111,044 | | | - | |
| Conversion of Note Payable into Equity | | | 52,894 | | | - | |
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SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS
Notes to Financial Statements
March 31, 2007
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying interim consolidated financial statements of M Power Entertainment, Inc., have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in M Power's latest Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements that would substantially duplicate the disclosure contained in the audited consolidated financial statements for the most recent fiscal year, 2006, as reported in Form 10-KSB, have been omitted.
Recent 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”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. The Company does not anticipate the adoption of SFAS No. 159 will have a material impact on its consolidated financial statements.
Note 2 - Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
NOTE 3 - CONVERTIBLE DEBENTURES AND DERIVATIVE LIABILITIES
On March 30, 2007, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with New Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC (collectively, the “Investors”). Under the terms of the Securities Purchase Agreement, the Investors purchased an aggregate of (i) $165,000 in callable convertible secured notes (the “Notes”) and (ii) warrants to purchase 1,500,000 shares of our common stock (the “Warrants”).
The Notes carry an interest rate of 8% and a maturity date of March 30, 2010. The notes are convertible into our common shares at the Applicable Percentage of the average of the lowest three (3) trading prices for our shares of common stock during the twenty (20) trading day period prior to conversion. The “Applicable Percentage” means 50%; provided, however, that the Applicable Percentage shall be increased to (i) 55% in the event that a Registration Statement is filed within thirty days of the closing and (ii) 60% in the event that the Registration Statement becomes effective within one hundred and twenty days from the Closing.
The Company has an option to prepay the Notes in the event that no event of default exists, there are a sufficient number of shares available for conversion of the Notes and the market price is at or below $.05 per share. In addition, in the event that the average daily price of the common stock, as reported by the reporting service, for each day of the month ending on any determination date is below $.05, the Company may prepay a portion of the outstanding principal amount of the Notes equal to 101% of the principal amount hereof divided by thirty-six (36) plus one month’s interest. Exercise of this option will stay all conversions for the following month. The full principal amount of the Notes is due upon default under the terms of Notes. In addition, the Company has granted the investors a security interest in substantially all of its assets and intellectual property as well as registration rights.
The Company simultaneously issued to the Investors seven year warrants to purchase 1,500,000 shares of common stock at an exercise price of $.0016.
The Investors have contractually agreed to restrict their ability to convert the Notes and exercise the Warrants and receive shares of the Company’s common stock such that the number of shares of the Company’s common stock held by them and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company’s common stock.
M Power evaluated the convertible debentures and the warrants under SFAS 133 "Accounting for Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock". M Power determined the convertible debentures contained an embedded derivative for the conversion option and the warrants qualified as free standing derivatives. The conversion option allows for an indeterminate number of shares to potentially be issued upon conversion. This results in M Power being unable to determine with certainty they will have enough shares available to settle any and all outstanding common stock equivalent instruments. M Power would be required to obtain shareholder approval to increase the number of authorized shares needed to share settle those contracts. Because increasing the number of shares authorized is outside of M Power's control, this results in these instruments being classified as liabilities under EITF 00-19 and derivatives under SFAS 133.
The carrying value of the note at March 31, 2007 was determined as follows:
| Face value of notes | $ | 2,092,403 |
| Less: Discount for fair value of derivatives | $ | 1,940,627 |
| Carrying value at March 31, 2007 | $ | 151,776 |
The fair values and changes in the derivative liabilities are as follows:
| | | Inception | | March 31,2007 | | Gain/(Loss) |
| Embedded derivative | $ | 4,847,522 | $ | 3,437,001 | $ | 1,410,521 |
| Freestanding derivative | $ | 191,630 | $ | 9,829 | $ | 181,801 |
| Fair value of derivatives in excess of proceeds at inception | $ | | $ | | $ | (926,703) |
| Totals | $ | 5,039,152 | $ | 3,446,830 | $ | 665,619 |
The warrants were valued using the Black Scholes pricing model. The variables used in the valuation of these warrants were as follows:
| Volatility | 221% |
| Discount Rate | 4.88% |
| Term in years | 7 |
| Warrant Date | March 30,2007 |
| Exercise price | $0.0016 |
| Stock price | $0.0006 |
During 2007, M Power has issued 96,140,000 shares of its common stock to retire $52,894 of convertible notes.
NOTE 4 - COMMITMENTS AND CONTINGENCIES
A) Litigation
Texas Workforce Commission. On February 10, 2000, the Texas Workforce Commission placed an administrative lien on us in the amount of $109,024 in connection with a claim for unpaid compensation by our former employees.
Marathon Oil Company. A default judgment was taken against us in favor of Marathon Oil Company on August 31, 1999 in the amount of $326,943 representing past and future rentals under a lease agreement, together with $7,500 in attorney's fees and post judgment interest at 10% per annum until paid. Credit towards the judgment was ordered for sale of personal property by the Sheriff or Constable. We believe the personal property sold for approximately $28,000. To the extent that the property was leased during the unexpired term, it is possible that there would be a mitigation of the damages claim in our favor. We believe that some or all of the space was subsequently rented approximately 90 days later. The remaining $306,443 has been accrued in our financial statements under the heading "accrued expenses."
Awalt Group, Inc. Awalt Group, Inc. commenced litigation against MPE in January 2004 in the United States District Court, Southern District of Texas, Houston Division (Cause No. H-03-5832). This case relates to advertising and promotional services rendered prior to July, 1999. The Plaintiff is requesting $77,189 for actual amounts invoiced and $10,000 in attorney’s fees. Per their invoices, these are for services rendered from May 26, 1998 through June 15, 1999. We filed an answer and are defending the lawsuit under Section 16.004 of the Texas Civil Practice and Remedies Code, i.e., we believe that the statute of limitations has tolled the claim. The case was dismissed by the Federal court in 2005 for lack of diversity, but the plaintiffs re-filed in state court alleging a sworn account in the amount of $78,294 plus costs, interest and attorney fees. We have filed an Answer asserting our statute of limitations defense. On August 10, 2005, we filed a Motion for Summary Judgment based on the limitations defense and set it for hearing to be held on September 2, 2005. The court in the Awalt case ruled in our favor on our Motion for Summary Judgment and signed a Take Nothing Judgment in our favor on November 1, 2005. The Awalt Group has appealed that decision to the Fourteenth Court of Appeals in Houston, Texas where it is now pending. Both sides have filed their briefs and it was set on the submission docket in the Court of Appeals for the end of February, 2007. There has been no ruling by the Court of Appeals as of this date.
Deanna S. Slater. On August 31, 2006, Deanna S. Slater, an independent contractor formerly with M Power Entertainment, Inc., brought suit in County Civil Court at Law Number Four in Harris County, Texas, Docket Number 872,560, alleging breach of contract, quantum meruit, promissory estoppel and for attorney’s fees. She has filed her Second Amended Petition alleging actual damages of at least $35,785 in late January and has now dropped the claims for quantum meruit and promissory estoppel. The pre-lawsuit demand was for payment of $15,785.25. There was a trial date set for April 30, 2007, but this trial date has been rescheduled for July 30, 2007. The company has not accrued any amount on the financial statements for this potential liability.
We are not aware of other claims or assessments, other than as described above, which may have a material adverse impact on our financial position or results of operations.
B) Consulting Agreements
On April 1, 2007, The Company entered into a consulting services agreement with Justin McCormack of Pacific Palisades, California. Mr. McCormack’s engagement is for the purpose of initiating brand development of eDOORWAYS and creation of the media platform, and will be paid $15,000 per month for his services. The period covered by this agreement is from April 1, 2007, through August 1, 2007.
M Power entered into a contract with speakTECH, a software development firm, on April 19, 2007. The terms of this contract cover a seven week period beginning April 19, 2007 and continues for seven weeks, or until the project is completed. speakTECH will develop the eDOORWAYS prototype during this 7 week period. The total amount of the contractual commitment is $101,380, payable in increments dependent upon completion of stages of the product.
Studio Number One has been engaged by M Power to design the logo brand ID for eDOORWAYS. This contract was signed on May 3, 2007 and the total commitment is $22,000, of which $11,000 was paid at signing and the balance to be paid upon completion of the project.
NOTE 5 - COMMON STOCK
Investors exercised their conversion rights for 96,140,000 shares of M Power's common stock, par value $.001, at the conversion prices ranging from $0.0024 to $0.001926 which reduced the convertible debentures by $52,894 and the derivative liability by $111,044
NOTE 7 - SUBSEQUENT EVENTS
On April 1, 2007, The Company entered into a consulting services agreement with Justin McCormack of Pacific Palisades, California. Mr. McCormack’s engagement is for the purpose of initiating brand development of eDOORWAYS and creation of the media platform, and will be paid $15,000 per month for his services. The period covered by this agreement is from April 1, 2007, through August 1, 2007.
M Power entered into a contract with speakTECH, a software development firm, on April 19, 2007. The terms of this contract cover a seven week period beginning April 19, 2007 and continues for seven weeks, or until the project is completed. speakTECH will develop the eDOORWAYS prototype during this seven week period. The total amount of the contractual commitment is $101,380, payable in increments dependent upon completion of stages of the product.
Studio Number One has been engaged by M Power to design the logo brand ID for eDOORWAYS. This contract was signed on May 3, 2007 and the total commitment is $22,000, of which $11,000 was paid at signing and the balance to be paid upon completion of the project.
For the period April 1, 2007 to May 7, 2007 M Power issued 43,230,000 shares of its common stock to retire $7,467 of convertible notes.
The following discussion and analysis compares our results of operations for the three months ended March 31, 2007 to the same period in 2006. This discussion and analysis should be read in conjunction with our condensed financial statements and related notes included elsewhere in this report, and our Form 10-KSB for the year ended December 31, 2006.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements, including, without limitation, statements concerning possible or assumed future results of operations and those preceded by, followed by or that include the words "believes," "could," "expects," "intends" "anticipates," "will", or similar expressions. Our actual results could differ materially from these anticipated in the forward-looking statements for many reasons including the risks described in our 10-KSB for the period ended December 31, 2006 and elsewhere in this report. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and our future results, levels of activity, performance or achievements may not meet these expectations. We do not intend to update any of the forward-looking statements after the date of this document to conform these statements to actual results.
Overview
On March 30, 2007 (the “Issuance Date”), we entered into a Securities Purchase Agreement with AJW Capital Partners, LLC, AJW Offshore, Ltd., AJW Qualified Partners, LLC and New Millennium Capital Partners II, LLC (the “Investors”), whereby the Investors purchased an aggregate of (i) $165,000 in Callable Secured Convertible Notes (the “Notes”) and (ii) warrants to purchase 1,500,000 shares of our common stock (the “Warrants”).
Under the Securities Purchase Agreement, we are obligated to pay all costs and expenses incurred by us in connection with the negotiation, preparation and delivery of the transaction documents, as well as the costs associated with registering the common shares underlying the Notes being offered in this Prospectus.
M Power evaluated the convertible debentures and the warrants under SFAS 133 "Accounting for Derivatives" and EITF 00-19 "Accounting for Derivative Financial Instruments Indexed to and Potentially Settled in a Company's Own Stock,” M Power determined the convertible debentures contained an embedded derivative for the conversion option and the warrants qualified as free standing derivatives. The conversion option allows for an indeterminate number of shares to potentially be issued upon conversion. This results in M Power being unable to determine with certainty they will have enough shares available to settle any and all outstanding common stock equivalent instruments. M Power would be required to obtain shareholder approval to increase the number of authorized shares needed to share settle those contracts. Because increasing the number of shares authorized is outside of M Power's control, this results in these instruments being classified as liabilities under EITF 00-19 and derivatives under SFAS 133.
On April 1, 2007, The Company entered into a consulting services agreement with Justin McCormack of Pacific Palisades, California. Mr. McCormack’s engagement is for the purpose of initiating brand development of eDOORWAYS and creation of the media platform, and will be paid $15,000 per month for his services. The period covered by this agreement is from April 1, 2007, through August 1, 2007.
M Power entered into a contract with speakTECH, a software development firm, on April 19, 2007. The terms of this contract cover a seven week period beginning April 19, 2007 and continue for seven weeks, or until the project is completed. speakTECH will develop the eDOORWAYS prototype during this 7 week period. The total amount of the contractual commitment is $101,380, payable in increments dependent upon completion of stages of the product.
Studio Number One has been engaged by M Power to design the logo brand ID for eDOORWAYS. This contract was signed on May 3, 2007 and the total commitment is $22,000, of which $11,000 was paid at signing and the balance to be paid upon completion of the project.
Twelve Month Plan of Operations
During the next 12 months, we will direct our resources to the development of the eDOORWAYS web portal. In order to achieve this goal, we have divested ourselves of relationships that did not directly support or complement the eDOORWAYS portal strategy and its development. We will continue to enter into strategic alliances, form joint ventures and acquire interests in companies whose products and services integrate into the
eDOORWAYS platform.
As the transition to the eDOORWAYS business model has proceeded, we have raised $2,165,000 in capital for the eDOORWAYS portal technology which will involve integrating existing technologies and creating a new platform to manage the technologies to make eDOORWAYS cohesive, friendly and informative. If the plan we have outlined is achieved within 12 months, we will have raised approximately $10 million for working capital, $3,000,000 of which to retire debt, $250,000 for technology demonstration prototype creation and the remainder to launch the product successfully in the marketplace.
The corporate relationships between us, subsidiaries, joint ventures and strategic alliances will be collaborative, but decentralized so that shared functions, such as accounting are efficient, but existing, successful operations will continue without significant adjustment. New operations will require significant management and professional resources.
Management's Discussion and Analysis
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in Item 1 of this Form 10-QSB. All information presented herein is based on our fiscal calendar.
There is an opportunity to be an active participant in the business-to-consumer Internet e-commerce marketplace. We are preparing our new portal initiative, eDOORWAYS, to be a leader in the next generation of "e-portals." We have coined the term "personalized lifestyle commerce" to describe a fundamental shift in emphasis toward true customer relationship building, sales and service within the context of the person's unique lifestyle orientation.
Our stated mission is to help people live life to the fullest by providing relevant, accessible help, guidance and support. Pursuant to this mission, we plan to pursue a technology initiative aimed at creating an advanced lifestyle information and entertainment portal that could change the way we seek help in managing our daily affairs. The initiative, eDOORWAYS, would offer a unique alternative to existing Internet search engines and portals such as Google and Yahoo by introducing a new "lifestyle" search metaphor coupled with an advanced "intelligent" user interface. Together, these innovations might provide expert guidance, assistance, and support to anyone seeking help - whether it's for home improvement, gardening, car repair, sports or numerous other popular lifestyle avocations.
Aggregating expert help into a specific context, or lifestyle, the eDOORWAYS portal would create the possibility for searchers to access additional, context-relevant information not readily available through current search mechanisms. eDOORWAYS would offer an enhanced media-rich form of interactivity and support for today's visually-oriented surfing community, and ultimately could serve as a platform for distributing entertainment content. eDOORWAYS could also serve as a central forum for new media e-commerce business-to-consumer product marketing, customer support and distribution.
There currently is no place for consumers to go on the Internet to obtain practical, relevant and complete help solving their daily lifestyle problems. Many believe that we've lost the type of one-on-one, highly personalized service many of us remember from the '50's and '60's. Large corporations are searching for the best way to leverage the Internet, reach consumers at a one-to-one level, engage them, close sales, and build a longstanding relationship. In view of these factors, there is an opportunity for a company to become an active participant in the business-to-consumer Internet e-commerce marketplace. We have set our sights on becoming that company.
To serve this opportunity, it will be necessary to create a portal that offers unprecedented personalized service and support to consumers with lifestyle needs, problems and issues. It must also provide the kind of platform that businesses can use to deliver such a service. Whoever accomplishes this task could become a significant forum for commerce on the Internet, competing in a market which is estimated to have grown to $170 billion in 2006 according to eMarketer in a report dated May, 2005 on E-Commerce in the US: Retail Trends.
While there are currently no competitors known to offer Internet services similar to those contemplated by our eDOORWAYS portal, there are significant portal and search engine service providers with extensive resources that they can bring to bear, should they decide to compete with our initiative. Among these are Amazon.com, America Online, Yahoo, Google and approximately 200 other entities of lesser stature in the e-commerce marketplace.
To further differentiate ourselves and eDOORWAYS from these and other established competitors, we believe that it will be imperative for us to:
. Create eDOORWAYS to be a warm, friendly and convenient place for
consumers
. Emphasize relationship building and servitude; and
. Become the complete resource for a broad range of lifestyles and avocations.
eDOORWAYS Description and Overview
When created, eDOORWAYS will serve as a next-generation Internet portal offering consumers an opportunity to gain new, comprehensive and immersive experiences with a chosen lifestyle (i.e., motorcycling, sailing, rock climbing, home improvement, gardening, etc.) eDOORWAYS will also serve as a forum for specialized problem solving related to lifestyle issues, and potentially for sales transactions stemming from solutions offered by businesses to their new customers. In addition, consumers desiring to increase their knowledge or skills related to a lifestyle aspect (i.e., how to lay tiles; build a roof; how to sew, etc.) will be able to access relevant training. eDOORWAYS characteristics will be:
. A business-to-consumer e-commerce marketplace;
. Specialized Intelligent Performance Support (IPS);
. Intelligent querying (searches);
. Aggregated data acquisition, management and storage; and
. Intelligent Training Support (ITS).
The following example offers an experience that a consumer might have while using eDOORWAYS services:
eDOORWAYS Service Example
As an example of how the eDOORWAYS portal might work, imagine that your hot water heater in your home is not working correctly. Unfortunately, troubleshooting malfunctioning hot water heaters is not your area of expertise. To garner the information you need, you enter the eDOORWAYS web portal on your laptop computer. In eDOORWAYS, you are escorted to the Home Improvement lifestyle area, where subject matter experts representing home improvement product and service vendors offer to lend a hand. You select a local vendor who introduces John, the hot water heater troubleshooting expert. With John's knowledgeable guidance and support, you gain the expertise necessary to diagnose the nature of the problem - a worn out coil. John offers to have a new one sent over immediately from their store down the street, or they can have it waiting for you to pick up. However, you decide that maybe its time for a new and larger 75 gallon heater. John points you to their water heater manufacturer's representative, who assists you in making a purchase choice. Shortly thereafter, the new heater is on its way to your home.
While this is an example of how eDOORWAYS might help solve a home improvement problem, the concept of "lending a helping expert hand" to assist you in your moment of need is potentially applicable to all lifestyles and avocations. In each case, the service will be entirely free to consumers - we will be paid by vendors in the form of a percentage of each sales transaction.
Possible Benefits to eDOORWAYS Users
1. Serves as a user-friendly environment for today’s visually-oriented surfers, emphasizing a sense of personalized "human" connectivity, simplicity of interaction, ease of information access and availability of experts who can help solve consumer problems.
2. Offer surfers context-relevant information previously unavailable through current search mechanisms; surfers are offered new perspectives about lifestyles they would never have thought to ask about.
3. Provides consumers with context-specific expertise for solving practical daily problems related to health, the home, family, etc.
4. Serves as a resource for lifestyle education and personal improvement.
Possible Benefits for Participating Businesses
1. Offers emerging companies an opportunity to compete with the market-share leaders in their industry, and grow their revenues without a significant investment in physical infrastructure.
2. Offers market-share leaders a unique, affordable opportunity to attract additional new customers and more importantly, an avenue to cement a long-term relationship with existing customers by making services available every day, all year long.
3. Serves as a new platform for business commerce, delivering targeted prospects (consumers) to vendors. Offers vendors a forum for demonstrating credibility and an avenue for closing the prospective customer.
4. Provides an environment for customer relationship management and targeted marketing. Creates an avenue for personalized engagement and relationship building.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2007 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2006.
There were no revenues for the three months ended March 31, 2007 or 2006.
We had operating expenses of $283,608 for the three months ended March 31, 2007 compared to $1,340,546 for the comparative period of 2006. The primary reason for this decrease was due to the reduction in equity compensation to various consultants for services and professional fees.
We had interest expense of $160,590 during the three months ended March 31, 2007 as compared to $14,277 for the comparative period of 2006. The interest was accrued on our unpaid accounts payable, accrued expenses and notes payable. The increase in interest expenses was the result of the issuance of the 6% convertible debentures in 2006, and the 8% convertible debentures on March 30, 2007.
Our net income was $221,421 during the three months ended March 31, 2007 compared to a loss of $1,354,823 incurred in the comparable period of 2006. This increase in net income was due to a reduction in professional fees and general and administrative costs in 2007, and also a gain from changes in the derivative liability on the convertible debentures.
Liquidity
During the three months ended March 31, 2007, we used cash of $279,783 in our operations compared to using $75,284 in the comparative quarter of 2006. We had cash on hand of $ 597,110 as of March 31, 2007 and $644 at March 31, 2006. As reflected in the accompanying financial statements, the Company has a loss from operations of $283,608, a negative cash flow from operations of $279,783, a working capital deficiency of $3,945,795 and has a stockholders deficiency of $3,819,885. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. The Company currently does not have enough cash to continue operations for the next twelve months.
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the "Certifying Officers") maintain a system of disclosure controls and procedures that are designed to provide reasonable assurances that information, which is required to be disclosed, is accumulated and communicated to management, timely. Based upon the foregoing, our Chief Executive Officer concluded that, as of March 31, 2007, our disclosure controls and procedures were adequate to ensure that the information required to be disclosed in the Company's Exchange Act reports was recorded, processed, summarized and reported on a timely basis.
We are continually taking actions to identify, evaluate, and implement additional measures to improve our internal control over financial reporting. Our management and directors will continue to work with our auditors and other outside advisors to ensure that our disclosure controls and procedures are adequate and effective.
(b) Changes in internal controls.
Our Certifying Officers have indicated that there were no changes in our internal controls or other factors that could affect such controls during the three months ending March 31, 2007.
PART II - OTHER INFORMATION.
Texas Workforce Commission. On February 10, 2000, the Texas Workforce Commission placed an administrative lien on us in the amount of $109,024 in connection with a claim for unpaid compensation by our former employees.
Marathon Oil Company. A default judgment was taken against us in favor of Marathon Oil Company on August 31, 1999 in the amount of $326,943 representing past and future rentals under a lease agreement, together with $7,500 in attorney's fees and post judgment interest at 10% per annum until Paid. Credit towards the judgment was ordered for sale of personal property by the Sheriff or Constable. We believe the personal property sold for approximately $28,000. To the extent that the property was leased during the unexpired term, it is possible that there would be a mitigation of the damages claim in our favor. We believe that some or all of the space was subsequently rented approximately 90 days later. The remaining $306,443 has been accrued in our financial statements under the heading "accrued expenses."
Awalt Group, Inc. Awalt Group, Inc. commenced litigation against MPE in January 2004 in the United States District Court, Southern District of Texas, Houston Division (Cause No. H-03-5832). This case relates to advertising and promotional services rendered prior to July, 1999. The Plaintiff is requesting $77,189 for actual amounts invoiced and $10,000 in attorney’s fees. Per their invoices, these are for services rendered from May 26, 1998 through June 15, 1999. We filed an answer and are defending the lawsuit under Section 16.004 of the Texas Civil Practice and Remedies Code, i.e., we believe that the statute of limitations has tolled the claim. The case was dismissed by the Federal court in 2005 for lack of diversity, but the plaintiffs re-filed in state court alleging a sworn account in the amount of $78,294 plus costs, interest and attorney fees. We have filed an Answer asserting our statute of limitations defense. On August 10, 2005, we filed a Motion for Summary Judgment based on the limitations defense and set it for hearing to be held on September 2, 2005. The court in the Awalt case ruled in our favor on our Motion for Summary Judgment and signed a Take Nothing Judgment in our favor on November 1, 2005. The Awalt Group has appealed that decision to the Fourteenth Court of Appeals in Houston, Texas where it is now pending. Both sides have filed their briefs and it was set on the submission docket in the Court of Appeals for the end of February, 2007. There has been no ruling by the Court of Appeals as of this date.
Deanna S. Slater. On August 31, 2006, Deanna S. Slater, an independent contractor formerly with M Power Entertainment, Inc., brought suit in County Civil Court at Law Number Four in Harris County, Texas, Docket Number 872,560, alleging breach of contract, quantum meruit, promissory estoppel and for attorney’s fees. She has filed her Second Amended Petition alleging actual damages of at least $35,785 in late January and has now dropped the claims for quantum meruit and promissory estoppel. The pre-lawsuit demand was for payment of $15,785.25. There was a trial date set for April 30, 2007, but this trial date has been rescheduled for July 30, 2007. The company has not accrued any amounts on the financial statements for this potential liability.
We are not aware of other claims or assessments, other than as described above, which may have a material adverse impact on our financial position or results of operations.
Recent Sales of Unregistered Securities
As of March 31, 2007, we issued 96,140,000 shares of our common stock to our convertible debentures holders which reduced the principle of the convertible debentures by $52,984. Our shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933. No commissions were paid for the issuance of such shares.
Type | Date | Shares per conversion notice | Conversion Price | Principle Converted |
| AJWO | 01/04/07 | 442,875 | 0.000676 | $ 299.38 |
| AJWO | 01/08/07 | 442,875 | 0.000676 | $ 299.38 |
| AJWO | 01/10/07 | 442,875 | 0.000660 | $ 292.30 |
| AJWO | 01/12/07 | 442,875 | 0.000700 | $ 310.01 |
| AJWO | 01/16/07 | 442,875 | 0.000700 | $ 310.01 |
| AJWO | 01/18/07 | 590,500 | 0.000690 | $ 407.45 |
| AJWO | 01/22/07 | 590,500 | 0.000690 | $ 407.45 |
| AJWO | 01/24/07 | 2,320,665 | 0.000690 | $ 1,601.26 |
| AJWO | 01/26/07 | 2,320,665 | 0.000690 | $ 1,601.26 |
| AJWO | 01/30/07 | 2,320,665 | 0.000680 | $ 1,578.05 |
| AJWO | 02/01/07 | 2,320,665 | 0.000700 | $ 1,624.47 |
| AJWO | 02/05/07 | 2,320,665 | 0.000700 | $ 1,624.47 |
| AJWO | 02/08/07 | 2,320,665 | 0.000672 | $ 1,559.49 |
| AJWO | 02/09/07 | 2,320,665 | 0.000650 | $ 1,508.43 |
| AJWO | 02/13/07 | 2,320,665 | 0.000650 | $ 1,508.43 |
| AJWO | 02/15/07 | 2,320,665 | 0.000650 | $ 1,508.43 |
| AJWO | 02/20/07 | 2,320,665 | 0.000648 | $ 1,503.79 |
| AJWO | 02/23/07 | 2,320,665 | 0.000624 | $ 1,448.09 |
| AJWO | 02/27/07 | 2,320,665 | 0.000600 | $ 1,392.40 |
| AJWO | 03/01/07 | 2,320,665 | 0.000600 | $ 1,392.40 |
| AJWO | 03/05/07 | 2,320,665 | 0.000600 | $ 1,392.40 |
| AJWO | 03/06/07 | 2,320,665 | 0.000600 | $ 1,392.40 |
| AJWO | 03/08/07 | 2,320,665 | 0.000600 | $ 1,392.40 |
| AJWO | 03/13/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/16/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/20/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/22/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/26/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/28/07 | 2,320,665 | 0.000300 | $ 696.20 |
| AJWO | 03/30/07 | 2,320,665 | 0.000300 | $ 696.20 |
| | | 56,770,670 | | $ 31,227.54 |
| | | | | |
| AJWP | 01/04/07 | 83,250 | 0.000676 | $ 56.28 |
| AJWP | 01/08/07 | 83,250 | 0.000676 | $ 56.28 |
| AJWP | 01/10/07 | 83,250 | 0.000660 | $ 54.95 |
| AJWP | 01/12/07 | 83,250 | 0.000700 | $ 58.28 |
| AJWP | 01/16/07 | 83,250 | 0.000700 | $ 58.28 |
| AJWP | 01/18/07 | 111,000 | 0.000690 | $ 76.59 |
| AJWP | 01/22/07 | 111,000 | 0.000690 | $ 76.59 |
| AJWP | 01/24/07 | 436,230 | 0.000690 | $ 301.00 |
| AJWP | 01/26/07 | 436,230 | 0.000690 | $ 301.00 |
| AJWP | 01/30/07 | 436,230 | 0.000680 | $ 296.64 |
| AJWP | 02/01/07 | 436,230 | 0.000700 | $ 305.36 |
| AJWP | 02/05/07 | 436,230 | 0.000700 | $ 305.36 |
| AJWP | 02/08/07 | 436,230 | 0.000672 | $ 293.15 |
| AJWP | 02/09/07 | 436,230 | 0.000675 | $ 294.46 |
| AJWP | 02/13/07 | 436,230 | 0.000650 | $ 283.55 |
| AJWP | 02/15/07 | 436,230 | 0.000650 | $ 283.55 |
| AJWP | 02/20/07 | 436,230 | 0.000648 | $ 282.68 |
| AJWP | 02/23/07 | 436,230 | 0.000624 | $ 272.21 |
| AJWP | 02/27/07 | 436,230 | 0.000600 | $ 261.74 |
| AJWP | 03/01/07 | 436,230 | 0.000600 | $ 261.74 |
| AJWP | 03/05/07 | 436,230 | 0.000600 | $ 261.74 |
| AJWP | 03/06/07 | 436,230 | 0.000600 | $ 261.74 |
| AJWP | 03/08/07 | 436,230 | 0.000600 | $ 261.74 |
| AJWP | 03/13/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/16/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/20/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/22/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/26/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/28/07 | 436,230 | 0.000300 | $ 130.87 |
| AJWP | 03/30/07 | 436,230 | 0.000300 | $ 130.87 |
| | | 10,671,540 | | $ 5,880.94 |
| | | | | |
| AJWQP | 01/04/07 | 213,750 | 0.000676 | $ 144.50 |
| AJWQP | 01/08/07 | 213,750 | 0.000676 | $ 144.50 |
| AJWQP | 01/10/07 | 213,750 | 0.000660 | $ 141.08 |
| AJWQP | 01/12/07 | 213,750 | 0.000700 | $ 149.63 |
| AJWQP | 01/16/07 | 213,750 | 0.000700 | $ 149.63 |
| AJWQP | 01/18/07 | 285,000 | 0.000690 | $ 196.65 |
| AJWQP | 01/22/07 | 285,000 | 0.000690 | $ 196.65 |
| AJWQP | 01/24/07 | 1,120,050 | 0.000690 | $ 772.83 |
| AJWQP | 01/26/07 | 1,120,050 | 0.000690 | $ 772.83 |
| AJWQP | 01/30/07 | 1,120,050 | 0.000680 | $ 761.63 |
| AJWQP | 02/01/07 | 1,120,050 | 0.000700 | $ 784.04 |
| AJWQP | 02/05/07 | 1,120,050 | 0.000700 | $ 784.04 |
| AJWQP | 02/08/07 | 1,120,050 | 0.000672 | $ 752.67 |
| AJWQP | 02/09/07 | 1,120,050 | 0.000650 | $ 728.03 |
| AJWQP | 02/13/07 | 1,120,050 | 0.000650 | $ 728.03 |
| AJWQP | 02/15/07 | 1,120,050 | 0.000650 | $ 728.03 |
| AJWQP | 02/20/07 | 1,120,050 | 0.000648 | $ 725.79 |
| AJWQP | 02/23/07 | 1,120,050 | 0.000624 | $ 698.91 |
| AJWQP | 02/27/07 | 1,120,050 | 0.000600 | $ 672.03 |
| AJWQP | 03/01/07 | 1,120,050 | 0.000600 | $ 672.03 |
| AJWQP | 03/05/07 | 1,120,050 | 0.000600 | $ 672.03 |
| AJWQP | 03/06/07 | 1,120,050 | 0.000600 | $ 672.03 |
| AJWQP | 03/08/07 | 1,120,050 | 0.000600 | $ 672.03 |
| AJWQP | 03/13/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/16/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/20/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/22/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/26/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/28/07 | 1,120,050 | 0.000300 | $ 336.02 |
| AJWQP | 03/30/07 | 1,120,050 | 0.000300 | $ 336.02 |
| | | 27,399,900 | | $ 15,071.72 |
| | | | | |
| NMCP | 01/04/07 | 10,125 | 0.000676 | $ 6.84 |
| NMCP | 01/08/07 | 10,125 | 0.000676 | $ 6.84 |
| NMCP | 01/10/07 | 10,125 | 0.000660 | $ 6.68 |
| NMCP | 01/12/07 | 10,125 | 0.000700 | $ 7.09 |
| NMCP | 01/16/07 | 10,125 | 0.000700 | $ 7.09 |
| NMCP | 01/18/07 | 13,500 | 0.000690 | $ 9.32 |
| NMCP | 01/22/07 | 13,500 | 0.000690 | $ 9.32 |
| NMCP | 01/24/07 | 53,055 | 0.000690 | $ 36.61 |
| NMCP | 01/26/07 | 53,055 | 0.000690 | $ 36.61 |
| NMCP | 01/30/07 | 53,055 | 0.000680 | $ 36.08 |
| NMCP | 02/01/07 | 53,055 | 0.000700 | $ 37.14 |
| NMCP | 02/05/07 | 53,055 | 0.000700 | $ 37.14 |
| NMCP | 02/08/07 | 53,055 | 0.000672 | $ 35.65 |
| NMCP | 02/09/07 | 53,055 | 0.000650 | $ 34.49 |
| NMCP | 02/13/07 | 53,055 | 0.000650 | $ 34.49 |
| NMCP | 02/15/07 | 53,055 | 0.000650 | $ 34.49 |
| NMCP | 02/20/07 | 53,055 | 0.000648 | $ 34.38 |
| NMCP | 02/23/07 | 53,055 | 0.000624 | $ 33.11 |
| NMCP | 02/27/07 | 53,055 | 0.000600 | $ 31.83 |
| NMCP | 03/01/07 | 53,055 | 0.000600 | $ 31.83 |
| NMCP | 03/05/07 | 53,055 | 0.000600 | $ 31.83 |
| NMCP | 03/06/07 | 53,055 | 0.000600 | $ 31.83 |
| NMCP | 03/08/07 | 53,055 | 0.000600 | $ 31.83 |
| NMCP | 03/13/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/16/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/20/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/22/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/26/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/28/07 | 53,055 | 0.000300 | $ 15.92 |
| NMCP | 03/30/07 | 53,055 | 0.000300 | $ 15.92 |
| | | 1,297,890 | | $ 713.92 |
| | | | | |
| | | 96,140,000 | | $ 52,894 |
The above issuance of shares of our common stock qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance of such shares by us did not involve a public offering. The holders were sophisticated investors and had access to information normally provided in a prospectus regarding us. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered.
M Power Entertainment and certain investors entered into a Securities Purchase Agreement dated as of March 26, 2007 providing for the issuance of 8% Callable Secured Convertible Notes in the aggregate principal amount of $165,000 and warrants to purchase an aggregate of 1,500,000 shares of the Company’s Common Stock for the aggregate consideration of $165,000. Funding of the $165,000 was completed on March 30, 2007.
SUBSEQUENT EVENTS
On April 1, 2007, The Company entered into a consulting services agreement with Justin McCormack of Pacific Palisades, California. Mr. McCormack’s engagement is for the purpose of initiating brand development of eDOORWAYS and creation of the media platform, and will be paid $15,000 per month for his services. The period covered by this agreement is from April 1, 2007, through August 1, 2007.
M Power entered into a contract with speakTECH, a software development firm, on April 19, 2007. The terms of this contract cover a seven week period beginning April 19, 2007 and continue for seven weeks, or until the project is completed. speakTECH will develop the eDOORWAYS prototype during this 7 week period. The total amount of the contractual commitment is $101,380, payable in increments dependent upon completion of stages of the product.
Studio Number One has been engaged by M Power to design the logo brand ID for eDOORWAYS. This contract was signed on May 3, 2007 and the total commitment is $22,000, of which $11,000 was paid at signing and the balance to be paid upon completion of the project.
List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation SB.
10.1 Non-employee director agreement with Lance Kimmons appointing him to the Board on January 1, 2007. (Filed with Form 10-KSB on April 2, 2007 and incorporated herein by reference).
10-2 Consulting Agreement between the Company and speakTECH dated April 19, 2007. (Filed herewith).
10-3 Consulting Agreement between Justin McCormack dated April 1, 2007. (Filed herewith).
10-4 Consulting Agreement with Studio Number One dated May 3, 2007. (Filed herewith).
31.1 Certification of the Chief Executive Officer/Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith).
Dated: May 15, 2007
By____________________________________
Gary F. Kimmons
President, Chief Executive Office and
Chief Financial Officer
