Myecheck (MYEC) 10-Q/A 2010 Q4 Quarterly report (amended)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

MYECHECK, INC.

(Exact Name of Registrant in its Charter)

Nevada	000-51977	N/A
(State or Other Jurisdiction of Incorporation)	Commission File No.	(IRS Employer Identification No.)

6026 Ladero Way

El Dorado Hills, CA 95762

(Address of Principal Executive Offices)(Zip Code)

(916) 222-4376

Registrant’s Telephone Number

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ý    No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨   No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨   No ý

As of November 22, 2010, there were 71,139,772 shares outstanding of the registrant’s common stock.

FORM 10-Q

TABLE OF CONTENTS

		Page
	PART I-FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited).	3
	Consolidated Balance Sheets (Unaudited)	4
	Consolidated Statements of Operations (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risks.	25
Item 4.	Controls and Procedures.	25
	PART II-OTHER INFORMATION
Item 1.	Legal Proceedings.	26
Item 1A.	Risk Factors.	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	26
Item 3.	Defaults Upon Senior Securities.	26
Item 4.	(Removed & Reserved).	26
Item 5.	Other Information.	26
Item 6.	Exhibits.	27

2

PART I

FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited).

Index

	Page
Consolidated Balance Sheets as of September 30, 2010 (Unaudited) and December 31, 2009	4
Consolidated Statements of Operations for the nine months ended September 30, 2010 and 2009 (Unaudited)	5
Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009 (Unaudited)	6
Notes to Consolidated Financial Statements for September 30, 2010 (Unaudited)	7-22

3

MyECheck, Inc. and Subsidiary

Consolidated Balance Sheets

	September 30, 2010			December 31,2009
	(Unaudited)
ASSETS
Current Assets
Cash	$	-		$	7,255
Accounts receivable		-			7,245
Prepaid expenses		-			3,112
Debt issue costs - net		1,710			1,358
Total Current Assets		1,710			18,970
Other Assets
Deposit		-			12,864
Total Assets	$	1,710		$	31,834
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Cash overdraft	$	376		$	-
Accounts payable and accrued expenses		401,047			220,270
Accrued compensation - related parties		449,237			198,969
Loans payable - related party		62,364			43,864
Loans payable - other		81,694			46,694
Derivative liabilities		160,980			116,672
Redeemable convertible note payable - net		-			18,027
Convertible note - net		21,507			-
Accrued settlement payable		-			46,750
Total Current Liabilities		1,177,205			691,246
Stockholders' Deficit
Common stock, $0.001 par value, 200,000,000 shares authorized
71,139,772 and 70,864,772 shares issued and outstanding, respectively		71,140			70,865
Additional paid in capital		3,491,072			2,623,835
Accumulated deficit		(4,737,708	)		(3,354,113	)
Total Stockholders' Deficit		(1,175,495	)		(659,412	)
Total Liabilities and Stockholders' Deficit	$	1,710		$	31,834

See accompanying notes to financial statements

4

MyECheck, Inc. and Subsidiary

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Processing Revenues	$	11,340		$	238,608		$	73,698		$	627,434
General and administrative		285,818			350,922			736,729			1,189,230
Loss from Operations		(274,478	)		(112,314	)		(663,031	)		(561,796	)
Other Expense
Derivative expense		-			-			63,282			79,044
Change in fair value of derivative liabilities		83,207			23,498			613,561			29,918
Interest expense		14,612			10,256			43,721			10,702
Total Other Expense - net		97,819			33,754			720,564			119,664
Net Loss	$	(372,297	)	$	(146,068	)	$	(1,383,595	)	$	(681,460	)
Net Loss Per Common Share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.02	)	$	(0.01	)
Weighted average number of common shares outstanding during the period - basic and diluted		71,139,772			70,714,722			71,049,113			70,251,769

See accompanying notes to financial statements

5

MyECheck, Inc. and Subsidiary

Consolidated Statements of Cash Flows

Unaudited

	Nine Months Ended September 30,
	2010			2009
Cash Flows from Operating Activities:
Net loss	$	(1,383,595	)	$	(681,460	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Amortization of debt discount		38,481
Amortization of debt issue costs		2,648			9,934
Derivative expense		63,282			79,044
Change in fair value of derivative liabilities		613,561			29,918
Share based payments		138,226			402,077
Loss on accounts payable settlement		-			52,818
Changes in operating assets and liabilities:					-
(Increase) Decrease in:
Accounts receivable		7,245			5,783
Prepaid expenses		3,112			(10,661	)
Forfeiture of rent deposit		12,864			-
Increase in:
Accounts payable and accrued expenses		180,777			39,864
Accrued compensation - related parties		250,268			79,325
Net Cash Provided By (Used in) Operating Activities		(73,131	)		6,642
Cash Flows from Financing Activities:
Cash overdraft		376			-
Cash paid as debt issue costs		(3,000	)		(2,800	)
Proceeds from loan payable - related parties		42,500			10,000
Repayments of loans payable - related party		(24,000	)		(5,000	)
Proceeds from convertible		50,000			35,000
Net Cash Provided by Financing Activities		65,876			37,200
Net Increase or (Decrease) in Cash		(7,255	)		43,842
Cash at Beginning of Period		7,255			23,999
Cash at End of Period	$	-		$	67,841
Supplemental Disclosure of Cash Flow Information
Cash Paid for:
Taxes	$	-		$	-
Interest	$	-		$	-
Supplemental Disclosure of Non Cash Investing and Financing Activities
Reclassification of derivative liabilities	$	682,536		$	-
Derivative liability and debt discount arising in connection with issuance of convertible note	$	50,000		$	35,000
Stock issued to settle law suit and accounts payable	$	46,750		$	86,772
Conversion of convertible note to note payable	$	35,000		$	-
Issuance of stock for future services	$	-		$	68,000

See accompanying notes to financial statements

6

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Note 1 Basis of Presentation, and Nature of Operations

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

The financial information as of December 31, 2009 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended December 31, 2009.

Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the period ended September 30, 2010 are not necessarily indicative of results for the full fiscal year.

Nature of Operations

The Company provides the following services:

(A) Electronic Check Processing

Provided to merchants who transact business over the internet allowing them to process checks electronically from their customers.

(B) Financial Verification

Provided to merchants to check the status of their customer’s bank account in order to provide greater assurance that the check will clear.

7

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

(C) Guarantee Services

Guarantee services provide the merchant with guaranteed payment on any returned items for a fee on all items processed as a means to insure guaranteed payment for products sold or services rendered.

Note 2 Summary of Significant Accounting Policies

Principles of Consolidation

All significant intercompany accounts and balances have been eliminated in consolidation.

Risks and Uncertainties

The Company operates in an industry that is subject to intense competition and rapid technological change and is in a state of fluctuation as a result of the credit crisis occurring in the United States.  The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, and regulatory risks including the potential risk of business failure.  Also, see Note 3 regarding going concern matters.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Such estimates and assumptions impact, among others, the following: the fair value of warrants granted, estimates of the probability and potential magnitude of contingent liabilities and the valuation allowance for deferred tax assets due to continuing operating losses.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

8

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Fair Value of Financial Instruments

Disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value.  For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation.

Concentrations

The following are concentrations associated with the Company’s operations:

(A) Accounts Receivable

Customer	September 30, 2010			December 31, 2009
A		0	%		85	%
B		0	%		12	%

(B) Revenues

	Nine Months Ending			Nine Months Ending
Customer	September 30, 2010			September 30, 2009
A		57	%		81	%
B		24	%		16	%

Debt Issue Costs and Debt Discount

The Company has paid debt issue costs in connection with raising funds through the issuance of convertible debt.  These costs are amortized over the life of the debt to interest expense (see Note 4).

Beneficial Conversion Feature

For convertible debt issued in 2009, the convertible feature (See Note 4) indicated a rate of conversion that was below market value, however, the Company did not record a "beneficial conversion feature" ("BCF"), since this instrument was determined to be a derivative financial instrument.

If the Company were to record a beneficial conversion feature, the relative fair value of the beneficial conversion feature would be recorded as a discount from the face amount of the respective debt instrument. The discount would be amortized to interest expense over the life of the debt.

9

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Derivative Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

Revenue Recognition

The Company records revenue when all of the following have occurred; (1) persuasive evidence of an arrangement exists, (2) product delivery has occurred, (3) the sales price to the customer is fixed or determinable, and (4) collectability is reasonably assured.

The Company earns revenue from services, which has included the following:  electronic check processing, financial verification, identity verification and check guarantee services. The services are performed under the terms of a contract with a customer, which states the services to be utilized and the terms and fixed price for all services under contract.  The price of these services may be a fixed fee per transaction and/or a percentage of the transaction processed depending on the service.

Revenue from electronic check processing is derived from fees collected from merchants to convert merchant customer check data into an electronic image of a paper draft, which allows the Company to deposit the funds to the merchant’s bank through image clearing with the Federal Reserve on behalf of the bank.  The Company recognizes the revenue related to electronic check processing fees when the services are performed.

Revenue from financial verification is derived from fees collected from merchants to process requests to validate financial verifications to an outside service provider under contract with the Company.  This revenue is recognized when the transaction is processed, since the Company has no further obligations.

10

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Revenue from check guarantee services is derived from fees collected from merchants to process transaction to an outside service provider under contract with the Company.  This revenue is recognized when the transaction is processed, since the Company has no further obligations.

Earnings per Share

In accordance with accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share,”  basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period.  Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period.

The Company had the following potential common stock equivalents at September 30, 2010:

Convertible debt – face amount of $50,000, conversion price of $0.012	4,166,666
Common stock options exercisable	2,779,167
Total common stock equivalents	6,945,833

The Company had the following potential common stock equivalents at September 30, 2009:

Convertible debt – face amount of $35,000, conversion price of $0.07	500,000
Common stock options exercisable	2,585,417
Total common stock equivalents	3,085,417

Since the Company reflected a net loss in 2010 and 2009, respectively, the effect of considering any common stock equivalents, if outstanding, would have been anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented.

Share-based payments

Generally, all forms of share-based payments, including stock option grants, warrants, restricted stock grants and stock appreciation rights are measured at their fair value on the awards’ grant date, based on the estimated number of awards that are ultimately expected to vest. Share-based compensation awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded in cost of goods sold or general and administrative expense in the consolidated statement of operations, depending on the nature of the services provided.

11

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 amends ASC 820, “ Fair Value Measurements” ("ASC 820") to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of  significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s consolidated financial position or results of operations.

Note 3 Going Concern

As reflected in the accompanying unaudited consolidated financial statements, the Company has a net loss of $1,383,595 and net cash used in operations of $73,131 for the nine months ended September 30, 2010, and had a working capital deficit of $1,175,495 and a stockholders’ deficit of $1,175,495 at September 30, 2010.

The ability of the Company to continue as a going concern is dependent on Management's plans, which include the raising of capital through debt and/or equity markets.  The Company will require additional funding during the next twelve months to finance the growth of its current and expected operations and achieve strategic objectives. Additionally, the Company will need to continually generate revenues through its current business operations in order to generate enough cash flow to fund operations through 2009.  The Company is also dependent on maintaining their positive approval status with the Federal Reserve.  If the Company were to lose this approval, their ability to provide services would be affected negatively.  The Company is also dependent on bank sponsorship when processing transactions directly with the Federal Reserve.  If the Company were to lose bank sponsorship, their ability to provide services would be affected negatively. On January 29, 2010, the Company’s sponsoring bank was closed by the Federal Deposit Insurance Corporation (FDIC).  The new bank acquiring the old bank from the FDIC obtained all rights to accept or reject former contracts.  The new bank elected to reject the Company’s agreement with the old bank.  The Company is in the process of moving its customers to one of its other processing banks.

12

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

The Company believes its current available cash, along with anticipated revenues, may be insufficient to meet its cash needs for the near future.  There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

Note 4 Convertible Debt, Debt Discount, Debt Issue Costs and Fair Value Measurement of Derivative Financial Instruments

(A) June 26, 2009 Convertible Debt

(1) Terms

On June 26, 2009, the Company issued redeemable convertible debt totaling $35,000.  The Company paid $2,800 in debt issue costs and received net proceeds of $32,200.  The note was due on June 26, 2010, and is in default.  The note bears interest at 8% and is unsecured.

(2) Conversion

(a) The debt is convertible based upon 60% of the average of the three lowest closing bid prices within the prior fifteen trading day period.  The conversion option may be exercised in the event of default or in whole or part at the option of the holder of the note prior to the debt’s maturity.  If any portion of the principal and/or interest are not paid within 10 days of when it is due (beginning June 26, 2010), the discount multiplier used to determine the conversion price decreases 1% for each period of 10 business days that any portion of the amount due remains unpaid by the Company for all conversions thereafter.

(b) If the average price per share (as computed above based upon a 60% discount) of the Company’s stock is below $0.10, the Company has the right to prepay the portion of the Debenture that the Holder elected to convert, plus any unpaid interest, at 150% of such amount.  The Company has the option with written notice to the Holder to prepay the note at 150% of the principal amount and accrued interest to the date of payment.

13

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

(c) If conversion is held up by a third party or the Company cannot convert the note into common stock, all amounts are accelerated for payment and redeemable in cash at a price of 175% of principal plus all unpaid accrued interest to date.

(d) If the note goes into default, the holder may elect to cancel any outstanding conversion notice and declare all amounts due and payable in cash at a price of 150% of principal plus all unpaid accrued interest to date.

On or before the 4th business day following the receipt of debt proceeds, June 30, 2009, the Company was required to file a Form 8-K announcing this debt transaction.  Since the Company did not file an 8-K within this time period, the discount multiplier used to determine the conversion price decreases by 1% for each period of 5 business days that the 8-K is not filed by the Company following the June 30th due date.  The Company did not file an 8-K by June 30, 2009 and sought a waiver from the Holder for this penalty.  On November 9, 2009, the debt holder waived the condition to file the 8-K.  As a result, the Company remeasured the derivative financial instrument using a fixed discount multiplier of 60%.

(B) April 26, 2010 Convertible Debt

(1) Terms

On April 26, 2010, the Company issued executed a convertible note for $50,000.  The Company paid $3,000 in debt issue costs and received net proceeds of $47,000.  The note has a term of one year and bears interest at 8%, default interest rate of 22%, and is unsecured.

(2) Conversion

The debt is convertible based upon 55% of the average of the three lowest closing prices within the prior ten trading day period.  The conversion option may be exercised in the event of default or in whole or part at the option of the holder of the note prior to the debt’s maturity.

Additionally, the note contains a ratchet provision. The Company determined under   ASC 815, that the embedded conversion feature (if offering of common stock is at no consideration or at a price that is lower than the effective conversion price on the date shares are offered for sale, than a ratchet down of effective exercise price to price per share offered for common stock would be used to determine additional shares to be issued).  The Company has determined that this ratchet provision indicates that these shares, if issued, are not indexed to the Company’s own stock and, therefore, is an embedded derivative financial liability, which requires bifurcation and to be separately accounted for. At each reporting period, the Company will mark this derivative financial instrument to fair value.

14

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

(C) Derivative Financial Instruments

The Company identified a variable conversion feature embedded within its convertible notes (see above). Additionally, the Company has determined that under ASC 815-40-15, an anti-dilution provision in the form of a ratchet provision existed.

In connection with the convertible note dated April 26, 2009 that expired on June 26, 2010, the Company determined that the associated derivatives ceased to exist since the note had reached its maturity date.  As a result, the Company adjusted the fair value of the related derivative liabilities by reclassifying $682,536 to additional paid in capital.

(1) Derivative Liability Summary

The Company has determined that features such as the embedded conversion option and ratchet provision are factors that would require fair value accounting as a derivative liability. At each reporting period, the Company marks these derivative financial instruments to fair value. As a result of the application of ASC 815-40-15, the fair value of the conversion features and warrants are summarized as follow:

Derivative liability balance at December 31, 2009	$	116,672
Fair value at the commitment date for convertible note issued in 2010		113,283
Reclassification of derivative liability to additional paid		(682,536	)
Fair value mark to market adjustment at September 30, 2010		613,561
Derivative liability balance at September 30, 2010	$	160,980

(2) Management Assumptions – Day 1 and Mark to Market

The Company measured the fair value of its derivative liabilities on the following dates:

(a) Reclassification Date (transfer to additional paid in capital) – June 26, 2010

(b) Commitment Date – April 26, 2010

(c) Mark to market Date – September 30, 2010 (only for April 26, 2010 note)

15

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Fair value was based upon the use of a Black-Scholes Option Pricing model, using the following management assumptions:

Expected dividends		0	%
Expected volatility		395.41% - 450	%
Expected term: conversion feature	1 year
Risk free interest rate		0.19% - 0.47	%

(3) Derivative Expense

The Company recorded a derivative expense of $63,282 on April 26, 2010 (commitment date) in connection with the amount of the fair value of the derivative liability which was in excess of the face amount of the note.

Fair value of liability – April 26, 2010	$	113,282
Face amount of debt allocated to debt discount		(50,000	)
Derivative expense	$	63,282

(D) Debt Discount

In connection with the Company’s issuance of convertible notes on June 26, 2009 and April 26, 2010, the fair value of these derivative liabilities on the commitment date exceeded the face amount of the note.  As a result, the amount equal to the face amount of the note was recorded as a debt discount with the difference recorded to derivative expense.

(1) June 26, 2009 Convertible Debt

On the commitment date, the Company recorded a debt discount of $35,000. The discount was amortized to interest expense in full as of June 26, 2010. For the three and nine months ended September 30, 2010 and 2009, the Company recorded amortization of $0, $16,973, $8,892 and $9,205, respectively.

(2) April 26, 2010 Convertible Debt

On the commitment date, the Company recorded a debt discount of $50,000. For the three and nine months ended September 30, 2010 and 2009, the Company recorded amortization of $13,150, $21,507, $0 and $0, respectively.

16

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

(3) Debt Discount Summary

Gross debt discount – December 31, 2009	$	35,000
Debt discount recorded - 2010		50,000
Total Gross debt discount – September 30, 2010		85,000
Debt discount – accumulated amortization – December 31, 2009		18,027
Amortization of debt discount - 2010		38,481
Total Debt discount – accumulated amortization – September 30, 2010		56,508
Unamortized debt – September 30, 2010	$	28,492

(E) Debt Issue Costs

(1) June 26, 2009 Convertible Debt

In connection with the issuance of the $35,000 convertible note, the Company paid debt-offering costs of $2,800. These debt issue costs were amortized to interest expense in full as of June 26, 2010. For the three and nine months ended September 30, 2010 and 2009, the Company recorded amortization of $668, $1,358, $31 and $31, respectively.

(2) April 26, 2010 Convertible Debt

In connection with the issuance of the $50,000 convertible note, the Company paid debt-offering costs of $3,000. These debt issue costs are being amortized to interest expense. For the three and nine months ended September 30, 2010, the Company recorded amortization of $756, $1,290, respectively.

(3) Debt Issue Cost Summary

Debt issue costs – net – December 31, 2009	$	1,358
Debt issue costs paid - 2010		3,000
Amortization of debt issue costs - 2010		(2,648	)
Debt issue costs – net – September 30, 2010	$	1,710

17

MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Note 5 Fair Value

The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on the Company's assessment of the assumptions that market participants would use in pricing the asset or liability.

The following are the major categories of liabilities measured at fair value on a nonrecurring basis during the nine months ended September 30, 2010 and the year ended December 31, 2009, using quoted prices in active markets for identical liabilities (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

	Level 1: Quoted Prices in Active Markets for Identical Liabilities		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at September 30, 2010
Derivative Liabilities	$	-	$	160,980	$	-	$	160,980
Total	$	-	$	160,980	$	-	$	160,980

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MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

	Level 1: Quoted Prices in Active Markets for Identical Liabilities		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at December 31, 2009
Derivative Liabilities	$	-	$	116,672	$	-	$	116,672
Total	$	-	$	116,672	$	-	$	116,672

Note 6 Loans Payable – Related Parties and other

(A) Chief Technical Officer

During 2010, the Company received advances from its Chief Technical Officer totaling $20,000. The Company also repaid $14,000 during 2010 to this individual. The advances were non-interest bearing, unsecured and due 180 days from issuance.

On July 26, 2010, the Company received an advance of $10,000.  The advance is unsecured and due on January 26, 2011. The Company is required to repay $10,300 (inclusive of 6% interest).

On August 20, 2010, and under the same terms as the original advances, this individual advanced $7,500. The advance was non-interest bearing, unsecured and due on demand.

On October 1, 2010, and under the same terms as the original advances, this individual advanced $5,000. The advance was non-interest bearing, unsecured and due on demand.

(B) Chief Executive Officer

In May 2010, $10,000 was repaid to the CEO.

(C) Shareholder Advance

In August 2010, a major shareholder advanced the Company $5,000, the advance was non-interest bearing, unsecured and due on demand.

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MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

Note 7 Stockholders’ Deficit

(A) Stock Issuances

On March 31, 2010, the Company issued 275,000 shares of common stock to settle a law suit, having a fair value of $46,750 ($0.17/share), based upon the quoted closing trading price.

(B) Stock Option Grants

The following is a summary of the Company’s stock option activity:

	Options			Weighted Average Exercise Price
Outstanding – December 31, 2008
Granted		7,300,000		$	0.13
Exercised		-		$	-
Forfeited		-		$	-
Outstanding – December 31, 2009		7,300,000		$	0.13
Granted		7,300,000		$	0.13
Exercised		-		$	-
Forfeited		(2,700,000	)	$	0.13
Outstanding – September 30, 2010		4,600,000		$	0.13
Exercisable – September 30, 2010		2,779,167		$	0.13
Weighted average fair value of optionsgranted during the three months ended September 30, 2010	$	-		$	-
Weighted average fair value of optionsexercisable at  September 30, 2010	$	361,292		$	0.13

Options Outstanding
Range of exercise price		Number Outstanding		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$	0.13		4,600,000	6.11 years	$	0.13

Options Exercisable
Range of exercise price		Number Exercisable		Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price
$	0.13		2,779,167	6.11 years	$	0.13

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MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

At September 30, 2010 and December 31, 2009, the total intrinsic value of options outstanding was $0 and $0, respectively.

At September 30, 2010 and December 31, 2009, the total intrinsic value of options exercisable was $0 and $0, respectively.

At June 30, 2010, several stock option holders had their services terminated due to the decline of the business operations, as a result, all of these individuals unvested options expired.

The following summarizes the activity of the Company’s stock options that have not vested for the nine months ended September 30, 2010 and December 31, 2009:

	Options			Weighted Average Grant Date Fair Value
Outstanding – December 31, 2008
Granted		7,300,000		$	0.12
Vested		(3,041,667	)		0.12
Cancelled or forfeited		-			-
Outstanding – December 31, 2009		4,258,333		$	0.12
Granted		-			-
Vested		(1,200,000	)		0.12
Cancelled or forfeited		(1,237,500	)		0.12
Outstanding – September 30, 2010		1,820,833		$	0.12

(B) Stock Option Grants

Total unrecognized share-based compensation expense from non-vested stock options at September 30, 2010 was $216,900, which is expected to be recognized over a weighted average period of 1.61 years.

Note 8 Commitments and Contingencies

(A) Litigations, claims and assessments

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims, other than disclosed below; that they believe will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.

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MyEcheck, Inc. And Subsidiary

Notes to Consolidated Financial Statements

September 30, 2010

(Unaudited)

During 2005, a lawsuit was filed against the Company in the State of California, claiming the Company was using the technology created by the plaintiff. On March 31, 2010, the Company settled the case with the plaintiff with a payment of 275,000 shares of the Company’s stock.  The stock was valued at $46,750 ($0.17/share), based upon the quoted closing trading price. Since the potential loss on settlement existed at December 31, 2009, the Company accrued the settlement as the amount was known prior to the issuance of these financial statements.

In April 2010, the Company’s Chief Executive Officer (“Plaintiff”) filed a lawsuit against Check Savers, LLC (“Defendant”) on behalf of the Company in connection with US Patent Number 7,389,913 “Method and Apparatus for Online Check Processing”. Defendant was served with process, including a copy of the Complaint. Defendant failed to answer the Complaint, plead or otherwise defend this action. In addition, Defendant failed to appear personally or by representative. On August 13, 2010, Plaintiff filed a Motion for Entry of Default and the Clerk entered a default judgment against Defendant on August 16, 2010.

On October 12, 2010, The United States District Court has entered an order granting a judgment in favor of the Company’s Chief Executive Officer against Checksavers.  Specifically, the Court declared “that the document attached as Exhibit A to the Complaint does not constitute an assignment or transfer to Defendant Check Savers, LLC of any right to U.S. Patent No. 7,389,913 (the “913 Patent”) and that Plaintiff has not assigned any rights to the ‘913 Patent to Defendant Check Savers, LLC.”

In May 2010, MyECheck received a summons and complaint in a Federal Court case entitled Tangiers Investors v. MyECheck, Inc. This action is in connection with the $35,000 convertible debenture issued in June 2009 and due June 2010. MyECheck answered the complaint in federal court on June 2, 2010.  Due to the recent decrease in Company revenue, MyECheck has been unable to repay the debenture. On August 20, 2010, MyECheck has presented Plaintiff with a settlement proposal whereby the balance of the Principal and Interest can be paid off with 6 equal monthly installments starting in October 2010 and ending March 2011.  On November 8, 2010, MyECheck settled the lawsuit in federal court with Tangiers Investors regarding the convertible debenture.  The settlement terms require the repayment of the principal amount of $35,000, plus interest and attorney fees for a total obligation of $47,857 to be paid in 6 equal monthly payments starting in December 2010.  The settlement was secured by 7,692,308 shares of company stock to be used as collateral, the pledged stock will be returned once the obligation is paid, or may be sold in the event of a default of the settlement agreement.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the United States Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements (collectively the “Filings”) and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed with the SEC, relating to the Company’s industry, the Company’s operations and results of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this report.

Critical Accounting Policies

In December of 2001, the SEC requested that all registrants discuss their most “critical accounting policies” in management’s discussion and analysis of financial condition and results of operations. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of the company’s financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

See note 2 “Summary of Significant Accounting Policies” in the Notes to the Unaudited Condensed Consolidated Financial Statements and our current report on Form 10-Q for the period ended September 30, 2010, for discussion of significant accounting policies, recent accounting pronouncements and their effect, if any, on the Company.

Results of Operations

Nine Months Ended September 30, 2010 and 2009.

MyECheck currently has limited revenues. The Company will rely on outside investment capital to supply cash until the time, if any, that its operations are profitable and cash flow positive. There can be no assurance that MyECheck will generate positive cash flow and there can be no assurances as to the level of revenues, if any, MyECheck may actually achieve from its operations.

For the nine months ended September 30, 2010, the Company reported revenue from operations of $73,698 compared to $627,434 reported for the same period in 2009, such decrease was related to the failure of First Regional Bank. The net loss for the nine months ended September 30, 2010,was $1,383,595 compared to an operating loss of $681,460 for the same period in 2009.

The Company commenced revenue generating operations with clients on September 30, 2007. The Company’s first priority is to reestablish its banking relationships as it primary bank was closed on January 29, 2010, by Federal Deposit Insurance Corporation (FDIC). The new bank acquiring the old bank from the FDIC obtained all rights to accept or reject former contracts. The new bank elected to reject the Company’s agreement with the old bank. The Company has been working with potential new bank relationships to re-establish services.

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The general and administrative expenses associated with the Company’s operations primarily due to non-cash expenses related to stock based compensation of $138,226 legal and professional fees of $181,077 and salaries of $268,593 for the nine months ended September 30, 2010 compared to stock base compensation of $344,077, loss on accounts payable settlement of approximately $52,818 and legal and professional fees of $155,764 for the nine months ended September 30, 2009.

Other non-cash expenses were attributed to recognition of derivative expense and the change in fair value of derivative liabilities were $676,843.

Liquidity and Capital Resources

As of September 30, 2010, MyECheck had bank overdraft of $376. MyECheck is currently operating cash flow negative and will require future infusion of capital. Company has used bridge financing from officers and is working on short term convertible debt to bridge the short term cash requirements until revenues are sufficient to cover operating expenses. Management believes that the combination of revenue from operations and the proceeds from outside investment will be sufficient to fund operations, however there can be no assurance that revenues will be earned or that the expected investments will materialize.

Net cash provided by financing activities was $65,876 for the nine months ended September 30, 2010, compared to $37,200 of net cash provided by financing activities for the nine months ended September 30, 2009. The net cash provided by financing activities for the nine months ended September 30, 2010, resulted from proceeds net of issue cost of $47,000 convertible debt financed with investor and net cash provided by shareholder loans net of advances repaid was $18,500. The net cash provided by financing activities for the nine months ended September 30, 2009, resulted from net proceeds from convertible debt of $32,200. 

There are currently no commitments for capital expenditures.

There are currently no guarantees or other off balance sheet arrangements.

Our continued operations will depend on whether we are able to raise additional funds through various potential sources, such as equity and debt financing. Such additional funds may not become available on acceptable terms and there can be no assurance that any additional funding that we do obtain will be sufficient to meet our needs in the long term. We will continue to fund operations from cash on hand and through revenues previously described. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs long term.

Going Concern Consideration

As reflected in the accompanying consolidated financial statements, the Company has a net loss of $1,383,595 and net cash used in operations of $73,131 for the nine months ended September 30, 2010, and at September 30, 2010, had a working capital deficit of $1,175,495 and a stockholders’ deficit of $1,175,495 at September 30, 2010.

The ability of the Company to continue as a going concern is dependent on Management’s plans, which include the raising of capital through debt and/or equity markets. The Company will require additional funding during the next twelve months to finance the growth of its current and expected operations and achieve strategic objectives. Additionally, the Company will need to continually generate revenues through its current business operations in order to generate enough cash flow to fund operations through 2010. The Company is also dependent on maintaining their positive approval status with the Federal Reserve. If the Company were to lose this approval, their ability to provide services would be affected negatively. The Company is also dependent on bank sponsorship when processing transactions directly with the Federal Reserve. If the Company were to lose bank sponsorship, their ability to provide services would be affected negatively. On January 29, 2010, the Company’s sponsoring bank was closed by the Federal Deposit Insurance Corporation (FDIC). The new bank acquiring the old bank from the FDIC obtained all rights to accept or reject former contracts. The new bank elected to reject the Company’s agreement with the old bank. The Company is in the process of establishing and settling up working relationships with other processing banks. 

The Company believes its current available cash, along with anticipated revenues, may be insufficient to meet its cash needs for the near future. There can be no assurance that financing will be available in amounts or terms acceptable to the Company, if at all.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.

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Recent Accounting Announcements

In January of 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements (“ASU 2010-06”) . ASU 2010-06 amends ASC 820, “Fair Value Measurements” (“ASC 820”)  to require a number of additional disclosures regarding fair value measurements. The amended guidance requires entities to disclose the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers, the reasons for any transfers in or out of Level 3, and information in the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. The ASU also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The amended guidance was effective for financial periods beginning after December 15, 2009, except the requirement to disclose Level 3 transactions on a gross basis, which becomes effective for financial periods beginning after December 15, 2010. ASU 2010-06 did not have a significant effect on the Company’s consolidated financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We do not hold any derivative instruments and do not engage in any hedging activities.

Item 4. Controls and Procedures.

(a) Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of September 30, 2010. In making this assessment, our Chief Executive Officer and Chief Financial Officer used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on this evaluation, Our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2010, our internal control over financial reporting was ineffective.

(b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

Other than as set forth below and as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the U.S. Securities and Exchange Commission on April 15, 2010, we are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

On March 20, 2009, a civil lawsuit was filed in Hillsborough County, Florida Circuit Court by CheckSavers LLC and Paul Linehan. The lawsuit alleged that CheckSavers was granted certain rights to US Patent 7,389,913 “Method and Apparatus for Online Check Processing” by Mr. Starrs, CEO of MyECheck, Inc (the “Patent”). CheckSavers LLC had entered into a Reseller Agreement with MyECheck, however no rights to exploit the Patent were granted.

The case was continued until March of 2010, when the Plaintiff withdrew the lawsuit. There was a considerable amount of legal work performed to prepare for trial and a legal liability was incurred in the amount of $60,817.48.

Because MyECheck is the sole licensee of the Patent, is the only entity authorized to use the technology, is earning money from the use of the technology and the Company relies on the Patent for intellectual property protection, it is in the best interest of MyECheck to ensure that the Patent is defended and protected. Therefore, the board of directors has approved the payment of the liability for the legal expenses associated with this matter. Mr. Starrs (“Plaintiff”) has subsequently filed a claim against CheckSavers and Mr. Linehan (“Defendant”) in Federal court.

On April 26, 2010, the Defendant and Check Savers, LLC (“CheckSavers”), was served with process, including a copy of the Complaint.  Defendant has failed to answer the Complaint, plead or otherwise defend this action.  In addition, Defendant has failed to appear personally or by representative.  On August 13, 2010, Plaintiff filed a Motion for Entry of Default and the Clerk entered a default against Defendant on August 16, 2010.

On August 20, 2010, Plaintiff filed another Motion seeking a declaratory judgment against Defendant concerning a certain document presented by Defendant in the CheckSavers original action, in which CheckSavers fraudulently claimed that certain rights to the patent were granted to CheckSavers.  The final disposition of this action is still pending as of August 23, 2010.

On October 12, 2010, The United States District Court has entered an order granting a judgment in favor of Edward Starrs against Checksavers.  Specifically, the Court declared “that the document attached as Exhibit A to the Complaint does not constitute an assignment or transfer to Defendant Check Savers, LLC of any right to U.S. Patent No. 7,389,913 (the “913 Patent”) and that Plaintiff has not assigned any rights to the ‘913 Patent to Defendant Check Savers, LLC.”

In May 2010, MyECheck received a summons and complaint in a Federal Court case entitled Tangiers Investors v. MyECheck, Inc. This action is in connection with the $35,000 convertible debenture issued June 2009 and due June 2010. MyECheck answered the complaint in federal court on June 2, 2010.

Due to the recent decrease in Company revenue, MyECheck has been unable to repay the debenture. On August 20, 2010, MyECheck has presented Plaintiff with a settlement proposal whereby the balance of the Principal and Interest can be paid off with 6 equal monthly installments starting in October 2010 and ending March 2011. As of August 23, 2010 the Company has not received a response to the proposed settlement offer.

On November 8, 2010, MyECheck settled the lawsuit in federal court with Tangiers Investors regarding the convertible debenture.  The settlement terms require the repayment of the principal amount borrowed from Tangiers of $35,000, plus interest and attorney fees for a total obligation of $47,857.50 to be paid in 6 equal monthly payments starting in December 2010.  The settlement was secured by 7,692,308 shares of company stock to be used as collateral, the pledged stock will be returned once the obligation is paid, or may be sold in the event of a default of the settlement agreement.

Item 1A. Risk Factors.

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on April 15, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of Equity Securities and Use of Proceeds during the period ended September 30, 2010.

Item 3. Defaults Upon Senior Securities.

There has been no default in the payment of principal, interest, sinking or purchase fund installment, or any other material default, with respect to any indebtedness of the Company.

Item 4. (Removed & Reserved).

Item 5. Other Information.

There is no other information required to be disclosed under this item which was not previously disclosed.

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Item 6.Exhibits.

(a) Exhibits

Exhibit No.	Description
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

November 24, 2010	MYECHECK, INC.
	/s/ Edward R. Starrs
	Edward R. Starrs
	Chief Executive Officer

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