Celexus 10Q 2008 Q4 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

S QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

£ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number:000-52069

I-LEVEL MEDIA GROUP INCORPORATED
(Exact name of small business issuer as specified in its charter)

Nevada		98-0466350
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Suite 5B - 98 Liu He Road Shanghai, People's Republic of China		200001
(Address of principal executive offices)		(Zip Code)


+8621 5301 8935
Issuer'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 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 S 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. See the definitions of "large accelerated filer," "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer£	Accelerated filer£
Non-accelerated filer£ (Do not check if a smaller reporting company)	Smaller reporting companyS

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ NoS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.59,352,383 shares of common stock as of May 16, 2008.

I-LEVEL MEDIA GROUP INCORPORATED

Quarterly Report On Form 10-Q
For The Quarterly Period Ended
March 31, 2008

INDEX

PART I - FINANCIAL INFORMATION			3
	Item 1.	Financial Statements	3
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
	Item 4.	Controls and Procedures	20
PART II - OTHER INFORMATION			21
	Item 1.	Legal Proceedings	21
	Item 1A.	Risk Factors	21
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
	Item 3.	Defaults Upon Senior Securities	32
	Item 4.	Submission of Matters to a Vote of Securities Holders	32
	Item 5.	Other Information	32
	Item 6.	Exhibits	32

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this quarterly report include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of copper, availability of funds, government regulations, permitting, common share prices, operating costs, capital costs, outcomes of ore reserve development, recoveries and other factors. Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect" , "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our annual report on Form 10-KSB for the year ended December 31, 2007, this quarterly report on Form 10-Q, and, from time to time, in other reports that we file with the Securities and Exchange Commission (the "SEC"). These factors may cause our actual results to differ materially from any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

- 2 -

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The following unaudited interim consolidated financial statements of i-Level Media Group Incorporated (sometimes referred to as "we", "us" or "our Company") are included in this quarterly report on Form 10-Q:

	Page
Consolidated Balance Sheets	4
Consolidated Statements of Operations	5
Consolidated Statements of Cash Flows	6
Notes to the Consolidated Financial Statements	7

- 3 -

i-level Media Group Incorporated
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in US dollars)
(unaudited)

	March 31, 2008 $	December 31, 2007 $

Assets

Current Assets

Cash and equivalents	2,386	455,751
Accounts receivable	39,739	19,774
Prepaid expenses and other current assets	443,350	576,410

Total Current Assets	485,475	1,051,935

Property and Equipment (Note 3)	1,166,129	1,190,591

Total Assets	1,651,604	2,242,526


Liabilities and Stockholders' (Deficit) Equity

Current Liabilities

Accounts payable and accrued liabilities (Note 4)	515,165	570,935
Short-term loans (Note 5)	207,863	102,166
Current portion of capital lease obligation (Note 3)	2,595	2,482

Total Current Liabilities	725,623	675,583

Capital Lease Obligation (Note 3)	2,003	2,459

Total Liabilities	727,626	678,042


Nature of Operations and Continuance of Business (Note 1)
Commitments (Note 11)


Stockholders' Equity

Common Stock, (Notes 7 and 8) 1,025,000,000 shares authorized, $0.001 par value 59,352,382 and 59,202,382 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively	59,352	59,202

Additional Paid-in Capital	4,647,559	4,511,726

Other Comprehensive Income	130,829	44,595

Deficit Accumulated During the Development Stage	(3,913,762)	(3,051,039)

Total Stockholders' Equity	923,978	1,564,484

Total Liabilities and Stockholders' Equity	1,651,604	2,242,526

(The Accompanying Notes are an Integral Part of These Financial Statements)

- 4 -

i-level Media Group Incorporated
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in US dollars)

(unaudited)

	Accumulated From May 23, 2005 (Date of Inception) to March 31,	For the Three Months Ended March 31,	For the Three Months Ended March 31,
	2008	2008	2007
	$	$	$

Revenue	238,508	54,273	641

Direct Costs	(1,779,010)	(330,105)	(195,178)

Loss Before Operating Expenses	(1,540,502)	(275,832)	(194,537)

Operating Expenses

Research and development	67,902	-	-
General and administrative	1,886,259	478,822	134,519
Stock-based compensation	376,944	105,983	-

Total Expenses	2,331,105	584,805	134,519

Loss from Operations	(3,871,607)	(860,637)	(329,056)

Other expenses
Interest expense	(42,155)	(2,085)	(16,771)

Net Loss for the Period	(3,913,762)	(862,722)	(345,827)

Net Loss Per Share - Basic and Diluted		.01	(.01)

Weighted Average Number of Shares Outstanding - Basic and Diluted		59,350,000	52,647,000

(The Accompanying Notes are an Integral Part of These Financial Statements)

- 5 -

i-level Media Group Incorporated
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(unaudited)

	For the Three Months Ended March 31,	For the Three Months Ended March 31,
	2008	2007
	$	$


Operating Activities


Net loss	(862,722)	(345,827)


Adjustments to reconcile net loss to cash


Depreciation	77,766	36,534

Stock-based compensation	105,983	-
Stock issued for services	149,280	-

Change in operating assets and liabilities


Accounts receivable	(19,965)	-
Prepaid expenses and other current assets	(16,220)	(126,772)
Accounts payable and accrued liabilities	(25,771)	(131,555)


Net Cash Used in Operating Activities	(591,649)	(567,620)


Investing Activities



Purchase of property and equipment	(911)	(352,662)

Net Cash to Investing Activities	(911)	(352,662)


Financing Activities


Repayment of capital lease obligations	(578)	-
Proceeds from issuance of common stock	-	1,300,000
Proceeds from issuance of short-term debt	101,056	200,000
Repayment of short-term debt	-	(125,251)


Net Cash Provided by Financing Activities	100,478	1,374,749


Effect of Exchange Rate Changes	38,568	(4,124)


Increase (Decrease) in Cash	(453,514)	450,343


Cash - Beginning of Period	455,751	121,654


Cash - End of Period	2,237	571,997


Supplemental Disclosures:
Interest paid	-	18,955
Income taxes paid	-	-


Non-cash Financing and Investing Activities:
Assumption of liabilities in reverse merger	-	(237,140)
Settlement of debt with shares	30,000	809,501

(The Accompanying Notes are an Integral Part of These Financial Statements)

- 6 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

1. Nature of Operations and Continuance of Business

The Company was incorporated in the State of Nevada on August 23, 2005 under the name Jackson Ventures, Inc. The Company's initial operations included the acquisition and exploration of mineral resources. Management has changed its primary business to that of developing and operating a proprietary digital media network service in the transportation segment of the outdoor advertising market in China. On January 29, 2007 the Company entered into a Share Exchange Agreement to acquire the business of i-Level Media Systems Limited ("i-Level Systems"), a limited liability Company incorporated on May 23, 2003 under the International Business Act of the British Virgin Islands. I-Level Systems owns 100% of i-Level SoftComm (Shanghai) Company Ltd. ("i-Level SoftComm"), a wholly foreign owned enterprise formed under the laws of the People's Republic of China (the "PRC") on August 12, 2004. i-Level SoftComm is a development stage company that is devoting substantially all of its efforts to establishin g a new business in the PRC, which involves selling out-of-home video advertising timeslots on its network of flat-panel video advertising display units installed in taxis. The acquisition of i-Level Systems was completed on March 20, 2007 and the Company now trades on the OTCBB under the symbol "ILVL". On February 23, 2007 the Company's name was changed from Jackson Ventures, Inc. to i-Level Media Group Incorporated. The total purchase price for all issued and outstanding shares of i-Level Systems was satisfied by the issuance of 27,000,000 shares of post-forward split restricted common stock of the Company. See Note 7 for full disclosure of this transaction and related financing transactions. The Company is, effective March 20, 2007, a Development Stage Company, as defined by Statement of Financial Accounting Standard ("SFAS") No.7 "Accounting and Reporting for Development Stage Enterprises". As control of the Company transferred to the shareholders of i-Level Systems on March 20, 2007 this acquisition was considered a recapitalization of i-Level Systems. The acquisition was accounted for using reverse merger accounting rules whereby the historical consolidated operations of i-Level Systems constitute the reported numbers prior to March 20, 2007 and the combined operations of the Company and i-Level Systems are reported from March 20, 2007 forward.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company had not generated revenues since inception and currently has generated minimal revenues from operating its digital media network service in China. The Company has not paid dividends, and is unlikely to pay dividends in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing in excess of the private placement referred to in Note 7 to continue expanding its business operations and attain profitable operations. As at March 31, 2008, the Company had a working capital deficit of $240,148 and had accumulated losses of $3,913,762 since inception. Since inception, the Company has funded operations through the issuance of capital stock and related party loans. Management's plan is to continue raising additional funds through future equity financings until it achieves profitable operations from its digital media network service. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

- 7 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

2. Summary of Significant Accounting Policies

a) Presentation and Consolidation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company's fiscal year-end is December 31. These consolidated financial statements include the financial statements of the Company and i-Level Media Systems Limited, a limited liability Company incorporated under the International Business Act of the British Virgin Islands. I-Level Media Systems Limited owns 100% of i-Level SoftComm (Shanghai) Company Ltd and i-Level Media (Beijing) Co. Ltd, which are wholly foreign owned enterprises ("WOFE") formed under the laws of the People's Republic of China. All material inter-company balances and transactions have been eliminated on consolidation. The statement of operations prior to March 20, 2007 include the consolidated accounts of i-Level Media Systems Limited and i-Level Softcomm (Shanghai) Company Ltd only.

b) Use of Estimates

The preparation of financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to allowances for doubtful accounts, stock-based compensation, deferred income tax asset valuations and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company's es timates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

c) Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

d) Property and Equipment

Equipment is comprised of flat-panel video advertising display units and office equipment and is presented at cost less accumulated depreciation and impairment, if any. Depreciation is provided to write-off the cost of equipment over their estimated useful lives after taking into account their estimated residual value, using the straight-line method, over five years after 10% residual value.

e) Long-lived Assets

In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.

- 8 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

2. Summary of Significant Accounting Policies (continued)

e) Long-lived Assets (continued)

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable or exceeds fair value.

f) Basic and Diluted Net Earnings (Loss) Per Share

The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. Diluted loss per share is equal to basic loss per share as the Company does not have any dilutive instruments. The only potentially dilutive common shares are warrants as described in Notes 10 and 11.

g) Comprehensive Loss

The Company utilizes SFAS No. 130, "Reporting Comprehensive Income". This statement establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. The Company's only item that represents comprehensive income (loss) is the exchange rate effect of translating its PRC subsidiaries from Renminbi into US dollars.

h) Financial Instruments

The fair value of financial instruments, which include cash, accounts receivable, accounts payable and accrued liabilities, short-term loans and capital lease obligations were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

i) Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition in Financial Statements."The Company accounts for revenue as a principal using the guidance in EITF 99-19, "Reporting Revenue Gross as a Principal vs. Net as an Agent. Revenue represents the invoiced values of service, net of business taxes. The Company's revenue is derived from sales of out-of-home video advertising timeslots and is recognised rateably over the period in which advertisements are displayed. Accordingly, revenue is recognised when all four of the following criteria are met: (i) pervasive evidence that an arrangement exists; (ii) delivery of the service has occurred; (iii) the price of the services is both fixed and determinable; and (iv) collection of the resulting receivable is reasonably assured.

The Company also recognizes revenue from barter transactions. In accordance with EITF 99-17, "Accounting for Advertising Barter Transactions" the Company records media advertising revenue at the fair value of similar cash-based advertising revenue and the corresponding cost is charged to operations.

- 9 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

2. Summary of Significant Accounting Policies (continued)

j) Foreign Currency Translation

The functional and reporting currency of the Company is the United States dollar ("US dollar"). Monetary assets and liabilities denominated in currencies other than the US dollar are translated into the US dollar at the rates of exchange ruling at the balance sheet date. Transactions in currencies other than the US dollar during the year converted into US dollar at the applicable rates of exchange prevailing at the first day of the month transactions occurred. Transaction gains and losses are recognized in the statement of operations. The financial records of the Company's PRC subsidiary are maintained in its local currency, the Renminbi ("RMB"), which is its functional currency. Assets and liabilities are translated at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenues, expenses, and gains and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustme nts and are shown as a separate component of other comprehensive income (loss) in the statement of stockholders' equity.

k) Significant Risks and Uncertainties

The Company's management believes that changes in any of the following areas could have a material adverse effect on the Company's future financial position, results of operations or cash flows: the Company's limited operating history; advances and trends in new technologies and industry standards; competition from other competitors; regulatory or other PRC related factors; risks associated with the Company's ability to attract and retain employees necessary to support its growth; risks associated with the Company's growth strategies; and general risks associated with the advertising industry.

l) Stock-based Compensation

The Company records stock based compensation in accordance with SFAS No. 123R, "Share-Based Payments," which requires the measurement and recognition of compensation expense, based on estimated fair values, for all share-based awards, made to employees and directors, including stock options. In March 2005, the U.S. Securities and Exchange Commission ("SEC" ) issued Staff Accounting Bulletin ("SAB" ) No. 107 relating to SFAS No. 123R. The Company applied the provisions of SAB No. 107 in its adoption of SFAS No. 123R.

SFAS No. 123R requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company's stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company's expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviour. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite vesting period.

m) Interim Financial Statements

These interim unaudited consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.

- 10 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

2. Summary of Significant Accounting Policies (continued)

n) Recently Issued Accounting Pronouncements

In March 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No. 161,"Disclosures about Derivative Instruments and Hedging Activities - an amendment to FASB Statement No. 133". SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. Entities are required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (c) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (Revised) "Business Combinations". SFAS 141 (Revised) establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired business. The statement also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance will become effective for the fiscal year beginning after December 15, 2008. The management is in the process of evaluating the impact SFAS 141 (Revised) will have on the Company's financial statements upon adoption.

In December 2007, the FASB issued SFAS No. 160 "Non-controlling Interests in Consolidated Financial Statements - an amendment of ARB No. 51". SFAS 160 establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance will become effective for the fiscal year beginning after December 15, 2008. The management is in the process of evaluating the impact SFAS 160 will have on the Company's financial statements upon adoption.

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. However, the amendment to SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities" applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, "Fair Value Measurements". The Company has not early adopted SFAS No. 159 and is c urrently considering the effect of this pronouncement.

- 11 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

3. Property and Equipment

Property and equipment is comprised of the following:

	March 31, 2008	December 31, 2007
	$	$

Flat-panel video advertising display units	1,525,880	1,459,574
Office equipment	24,633	22,691
Leasehold improvements	62,495	59,779
Equipment under capital lease	9,859	9,430
Low-value consumption goods	17,713	16,944


	1,640,580	1,568,418
Less: Accumulated depreciation	(438,837)	(361,071)
Exchange translation difference	(35,614)	(16,756)

Net Carrying Value	1,166,129	1,190,591

Obligation under Capital Lease

Future minimum lease payments for an obligation under a capital lease as at March 31, 2008 are as follows:

	$

2008	1,982
2009	2,595
2010	348


	4,925
Amount representing interest	327


	4,598

Current portion	2,595


	2,003

4. Accounts Payable and Accrued Liabilities


	March 31, 2008 $	December 31, 2007 $

Accounts payable	131,956	88,020
Accrued expenses	314,550	444,403
Accrued interest	8,159	8,313
Accrued wages to senior officers	38,000	15,200
Accrued directors remuneration	22,500	15,000


	515,165	570,935

- 12 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

5. Short-term Debt

On September 24, 2007 a loan of 750,000 Renminbi ($106,807) was loaned by a company controlled by a director of the Company. This loan bears interest at 8% per annum and is secured by the assets of the Company and a personal guarantee from the President of the Company. The loan plus accrued interest was repayable on November 8, 2007. The Company has received confirmation that this loan will not be demanded until the Company secures adequate financing.

In March, 2008 a loan of $101,056 was provided to the Company's subsidiary in the PRC. This loan is unsecured, non-interest bearing and due on demand.

6. Related Party Transactions

The Company records transactions of commercial substance with related parties at fair value as determined with management.

Executive Services Agreements (the "ES Agreements") have been entered into with the CEO and President of the Company and the Secretary of the Company. Effective March 20, 2007, each are paid a total of $5,000 per month for their services, for a term of eighteen months. Included in accrued liabilities is $19,000 owing to each senior officer for salaries.

See Note 5 for a related party loan of 750,000 Renminbi ($106,807) from a director of the Company.

7. Acquisition of i-Level Systems and Related Financing Transactions

On January 29, 2007, the Company entered into a Share Exchange Agreement (the "SEA") to acquire the business of i-level Media Systems Limited ("i-level Systems"), a company incorporated under the laws of the International Business Act of the British Virgin Islands. The closing of the SEA occurred on March 20, 2007 and the total purchase price for all issued and outstanding shares of i-level Systems has been satisfied by the issuance of an aggregate of 27,000,000 shares of post-forward split restricted common stock of the Company. Additional terms of the SEA include the Company's agreement to:

a) advance, by way of a secured loan or loans (collectively, the "Loan") to i-level Systems, an aggregate principal sum of up to $2,000,000; $500,000 of which (the "Initial Loan") was advanced prior to the effective date of the SEA and an additional maximum amount of $1,500,000, to be secured through a private placement as noted in (c) below, was to be advanced prior to the closing of the SEA.

Pursuant to the terms of the SEA each Initial Loan Lender had the right, exercisable until the close of business on the date of maturity of the Initial Loan, to convert any principal sum or any other sum owing under the Initial Loan to such Lender into post-forward split units of the Company (each a "Loan Unit") at an agreed settlement price of $0.10 per Loan Unit, with each Loan Unit being comprised of one post-forward split common share and one-quarter of one post-forward split non-transferable share purchase warrant, and with each such whole Loan Unit warrant being exercisable for a period of six months from the date of issuance of the Loan Units at an exercise price of $0.50 per warrant common share.

On closing of the SEA the $500,000 Initial Loan was converted into 5,000,000 post-forward split units at $0.10 per unit for cash proceeds of $500,000.

b) on closing of the SEA, the Company completed a debt conversion private placement for 1,031,668 post-forward split common shares at $0.30 per share to settle $309,501 of debt for i-level Systems.

- 13 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

7. Acquisition of i-Level Systems and Related Financing Transactions (continued)

c) raise, by way of a private placement of common shares or units (each a "Unit") of the Company (the "Private Placement"), a minimum of $1,000,000 and a maximum of $5,000,000 at a subscription price of not less than $0.50 per post-forward split Unit, with each Unit being comprised of not greater than one post-forward split common share and one-half of one post-forward split non-transferable share purchase warrant, and with each such whole warrant being exercisable for not greater than one additional common share for a period of nine months from the date of issuance of the Units at an exercise price of not less than $1.00 per Unit.

During January 1, 2007 through March 26, 2007 the Company received subscriptions for 2,600,000 post-forward split units at $0.50 per unit for cash proceeds of $1,300,000. Each unit is comprised of one post-forward split common share and one-half of one post-forward split non-transferable share purchase warrant. 1,300,000 warrants are exercisable into one additional common share at an exercise price of $1.00 per share unit expiring December 20, 2007.

The Company received a short-term loan of $200,000 on March 22, 2007 without interest or fixed terms of repayment. This loan was settled on April 18, 2007 by the Company issuing 400,000 private placement units at $0.50 per unit as described above.

d( cause not less than 41,000,000 founders' common shares to be returned to treasury and cancelled at or prior to the closing of the SEA.

A total of 41,000,000 founders' common shares have been returned to treasury and cancelled pursuant to the SEA.

8. Common Stock

The Company paid $35,000 and issued 150,000 restricted common shares, valued at $30,000, to settle an accrued liability of $65,000 as at December 31, 2007.

- 14 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

9. Stock Options

Effective August 31, 2007, the Company adopted a Stock Option Plan allowing for the direct award of stock or granting of stock options to directors, officers, employees and consultants to acquire up to a total of 10,000,000 shares of common stock.

	Number of Shares	Weighted Average Exercise Price $	Weighted-Average Remaining Contractual Term in Years	Aggregate Intrinsic Value

Outstanding, December 31, 2007	3,890,000	0.32	5.65	-
Granted	-	-	-	-
Exercised	-	-	-	-
Expired	-	-	-	-

Outstanding, March 31, 2008	3,890,000	0.32	5.42	-

Exercisable, December 31, 2007	1,472,500	0.32	5.42	-

Pursuant to this Stock Option Plan, also on August 31, 2007 the Company granted a total of 2,000,000 stock options to two senior officers and directors of the Company exercisable at $0.32 per share being the market price at the time the stock options were granted and expiring on August 31, 2013. 500,000 options vested upon grant and 500,000 vest every six months thereafter.

The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model. The fair value of the above stock options was $0.2593 per option granted for a total stock-based compensation of $518,600. A total of $64,825 of stock-based compensation was charged to operations during the quarter ended March 31, 2008 and a total of $237,692 will be charged to operations of future periods. The following weighted average assumptions were used:

	Expected dividend yield		0%
	Expected volatility		101%
	Expected life (in years)		6.0
	Risk-free interest rate		4.23%

Pursuant to the Stock Option Plan, also on August 31, 2007 the Company granted 1,890,000 stock options to certain directors and employees of the Company exercisable at $0.32 per share being the market price at the time the stock options were granted and expiring on August 31, 2009. These options vest 25% every six months after date of grant. 472,500 of these options vested on February 29, 2008.

- 15 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

9. Stock Options (Continued)

The fair value of each option grant was estimated on the date of the grant using the Black-Scholes option pricing model. The fair value of the above stock options was $0.1742 per option granted for a total stock-based compensation of $329,267. A total of $41,158 of stock-based compensation was charged to operations during the quarter ended March 31, 2008 and $233,232 will be charged to operations of future periods. The following weighted average assumptions were used:

	Expected dividend yield		0%
	Expected volatility		101%
	Expected life (in years)		2.0
	Risk-free interest rate		4.23%

	Number of Options	Weighted Average Grant-Date Fair Value

Non-vested at December 31, 2007	3,390,000	$0.32

Vested	(1,472,500)	$0.32

Non-vested at December 31, 2007	1,917,500	$0.32

Stock option vesting periods:

	August 31, 2008	972,500
	February 28, 2009	972,500
	August 31, 2009	472,500

		1,917,500

10. Warrants Outstanding

# of Warrants	Exercise Price	Expiry Date



1,250,000	$0.30	December 28, 2009

- 16 -

i-Level Media Group Incorporated
(A Development Stage Company)
Notes to the Consolidated Financial Statements
March 31, 2008
(Unaudited)

11. Commitments

On November 20, 2007, the Company entered into a Letter of Engagement dated for reference November 8, 2007, with Investor Relations International ("IRI"). Pursuant to the terms of the Letter of Engagement, the Company has agreed to retain IRI as an investor relations consultant to the Company that will provide various investor relations services to and for the Company, in consideration for: 1) a $18,000 monthly retainer; and 2) 2,000,000 shares of restricted Company stock. The initial term of the Letter of Engagement was for a twelve-month period. The first tranche of 1,000,000 restricted common shares was issued upon signing of the Letter of Engagement, and the second tranche of 1,000,000 shares was due February 18, 2008. The first tranche of 1,000,000 restricted shares was issued on November 20, 2008 having a fair market value of $172,500. The Company gave notice of termination to cancel this Letter Agreement and will not issue the second tranche of shares. During the three months ended March 31, 2008 a total of $149,280 was charged to operations being the unexpired prepaid amount.

12. Economic Dependence

The Company currently buys all of its flat panel display units, a major operating asset of the Company, from one supplier. Also, the supplier is responsible for the maintenance of these flat panel display units. Although these display units were tailor-made by the supplier for the purpose of the Company, management believes that other suppliers could provide similar assets and services on comparable terms. A change in suppliers and service providers, however, may cause delay in the operation and a possible loss of revenue, which would affect operating results adversely.

- 17 -

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

The following discussion of our financial condition, changes in financial condition and results of operations for the three months ended March 31, 2008 and 2007 should be read in conjunction with our unaudited interim consolidated financial statements and related notes for the three months ended March 31, 2008 and 2007. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth below under the heading "Risk Factors".

Overview

On March 20, 2007, we acquired all of the issued and outstanding shares of i-Level Media Systems, which, through its wholly-owned subsidiary, i-level SoftCom, is engaged in the business of selling out-of-home video advertising time slots on a net work of flat-panel video advertising display units ("ADUs") installed in taxis operated in China. The business of i-level SoftCom constitutes our primary business since the date of the acquisition of i-level Media Systems. Prior to this acquisition, we were engaged in the acquisition and exploration of mineral properties, however, we allowed our mineral claims to lapse as we were unable to substantiate any mineral deposit on our properties. Accordingly, the financial information presented below may not be comparable from period to period.

The acquisition of i-Level Media Systems represented a change in control of our company. For accounting purposes, this change in control constitutes a re-capitalization of i-Level Media Systems, and is accounted for as a reverse merger whereby the legal acquiror, i-Level Media Group Incorporated, is treated as the acquired entity, and the legal subsidiary, i-Level Media Systems, is treated as the acquiring company with the continuing operations. Accordingly, the historical financial information of i-level Media Systems constitutes the Company's historical financial information prior to March 20, 2007 and the combined operations of the Company and i-level Media Systems are reported from March 20, 2007 forward.

Plan of Operations

We have only recently begun commercial operations and have earned minimal revenue to date and, accordingly, are considered a development stage company. The research, development and testing, including proof of concept of the technology and media operations, was completed in 2006. Several advertising campaigns consisting of various formats of content have been sold thus far. We intend to focus on selling advertising space on our proprietary i-level mobile media advertising network in China for the near to medium term and will look to expand into sales of products and services relating to the operation of digital media networks to third parties in the medium to long term.

Our plan of operations for the next twelve months is to:

invest approximately $840,000 to purchase approximately 3,200 ADUs to use in extending our taxi media network;

recruit additional persons experienced in the media industry in the areas of finance, sales and marketing, and content development and licensing;

market our taxi media network to advertisers in Shanghai and Beijing using our internal team of advertising sales specialists;

extend our operation base to other major media markets in China by negotiating media concessions with taxi operators in other Chinese cities.

- 18 -

We cannot, with certainty, say how our operations will develop over the next 12 months. Our operational development is dependent on a number of factors, including the availability of working capital, personnel, the development of sales contracts and the development of network capabilities.

Over the next twelve months, we will incur the following costs, at a minimum:

Category of Expenditure	Amount
Network equipment purchases:	$840,000
General and administrative expenses:	$240,000
Professional fees and expenses, regulatory expenses:	$180,000
Taxi media lease:	$850,000
Personnel costs in China:	$340,000
Service and maintenance fees on network:	$500,000
Miscellaneous and unallocated:	$190,000
Total:	$3,140,000

We had cash and cash equivalents of $2,386 and a working capital deficit of $240,148 at March 31, 2008. We will require additional funding for anticipated costs of developing our business during the next twelve months. We anticipate that the additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our projects and other working capital requirements.

Subsequent to the twelve month period following the date of this report, we will be required to obtain additional financing in order to continue to pursue our business plan. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our business plan going forward. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining equity financing to fund our business plan, there is no assurance that we will obtain the funding necessary to pursue our plan over the long-term.

Results of Operations

	Accumulated From May 23, 2003 (Date of Inception) to March 31,	For the Three Months Ended March 31,	For the Three Months Ended March 31,
	2008	2008	2007
	$	$	$

Revenue	238,508	54,273	641
Direct Costs	(1,779,010)	(330,105)	(195,178)
Loss Before Operating Expenses	(1,540,502)	(275,832)	(194,537)
Operating Expenses
Research and development	67,902	-	-
General and administrative	1,886,259	478,822	134,519
Stock-based compensation	376,944	105,983	-
Total Expenses	2,331,105	584,805	134,519
Loss from Operations	(3,871,607)	(860,637)	(329,056)
Other expenses
Interest expense	(42,155)	(2,085)	(16,771)
Net Loss for the Period	(3,913,762)	(862,722)	(345,827)

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

We had revenues of $54,273 for the three months ended March 31, 2008, as compared to $641 for the three months ended March 31, 2007 from the sale of advertisements on our ADUs. We had direct costs of $330,105 for the three months ended March 31, 2008, compared to $195,178 for the three months ended March 31, 2007. As a result, our loss before operating expenses was $275,832 for the three months ended March 31, 2008, compared to $194,537 for the three months ended March 31, 2007. Our direct costs are comprised of media concession fees and service and maintenance costs related to the operation of our media network. The increase in these expenses is directly related to the increase in the number of ADUs we have in operation.

- 19 -

We had operating expenses of $584,805 for the three months ended March 31, 2008, as compared to $134,519 for the three months ended March 31, 2007. Our operating expenses for the three months ended March 31, 2008 consisted of general and administrative expenses of $478,822 and stock-based compensation of $105,983 paid to our officers. Our operating expenses for the three months ended March 31, 2008 consisted of general and administrative expenses of $134,519. The increase in our general and administrative expenses was largely as a result of our increased operations between these two periods.

Our net loss for the three months ended March 31, 2008 was $862,722, as compared to $345,827 for the three months ended March 31, 2007.

Liquidity and Capital Resources

We had cash and cash equivalents of $2,386 and a working capital deficit of $240,148 at March 31, 2008, as compared to cash and cash equivalents of $455,751 and working capital of $376,352 at December 31, 2007.

We completed private placements in November and December, 2007 in the aggregate amount of approximately $800,000. However, we presently do not have sufficient funds to fund our operations for more than the next three months. Accordingly, we will require additional financing to enable us to pay our planned expenses for the next twelve months and pursue our plan of operations. There can be no assurance that we will be able to obtain the required financing, on terms acceptable to us or at all.

Cash Used in Operating Activities

Net cash used in operating activities was $591,649 for the three months ended March 31, 2008, as compared with $567,620 for the three months ended March 31, 2007. The increase in cash used in operating activities during the three months ended March 31, 2008 is due primarily to our increased direct costs and administrative expenses during this period.

We have applied cash generated from our financing activities to fund our operations.

Cash from Financing Activities

We have funded our business to date primarily from sales of our common stock. During the three months ended March 31, 2008, we obtained net cash of $100,478 from financing activities ($101,056 from the issuance of short-term debt, offset by $578 for repayment of capital lease obligations), as compared to $1,374,749 for the three months ended March 31, 2007 ($1,300,000 from proceeds of the issuance of common stock and $200,000 from proceeds from issuance of short-term debt, offset by $125,251 for repayment of short-term debt).

- 20 -

Cash to Investing Activities

We spent $911 in investing activities during the three months ended March 31, 2008, as compared to $352,662 for the three months ended March 31, 2007 (due primarily to our purchase of ADUs during this period).

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to continue to pursue our plan of operations. For these reasons our auditors stated in their report included with our annual report for the year ended December 31, 2007 that they have substantial doubt we will be able to continue as a going concern.

Future Financings

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned expansion and activities.

Off-Balance Sheet Arrangements

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, which individually or in the aggregate is material to our investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our Chief Executive Officer, Aidan Sullivan, and our Principal Financial Officer, Don Chen, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report, and in their opinion our disclosure controls and procedures were effective.

No Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

- 21 -

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We currently are not a party to any material legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.

Item 1A. Risk Factors

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this report, including our financial statements and related notes, before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. As a result, the trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.

Risk Factors

Risks Relating Generally to Our Operations

We may need additional capital and we may not be able to obtain it, which could adversely affect our liquidity and financial position.

We had cash and cash equivalents of $2,386 and a working capital deficit of $240,148 at March 31, 2008. We will require additional funding to pursue our plan of operations for the next twelve months. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.

Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

investors' perception of, and demand for, securities of alternative advertising media companies;

conditions of the U.S. and other capital markets in which we may seek to raise funds;

our future results of operations, financial condition and cash flows;

Chinese governmental regulation of foreign investment in advertising services companies in China;

economic, political and other conditions in China; and

Chinese governmental policies relating to foreign currency borrowings.

We cannot assume that financing will be available in amounts or on terms acceptable to us, if at all. Our failure to raise additional funds could have a material adverse effect on our business and financial condition.

Raising additional funds by issuing securities may cause dilution to existing stockholders or restrict our operations.

We may raise additional funds through public or private equity offerings or debt financings. To the extent that we raise additional capital by issuing equity securities, our existing stockholders' ownership will be diluted. Any debt financing we enter into may involve covenants that restrict our operations. These restrictive covenants may include limitations on additional borrowing, specific restrictions on the use of our assets, as well as prohibitions on our ability to create liens, pay dividends, redeem our stock or make investments.

- 22 -

We have a limited operating history, which may make it difficult for you to evaluate our business and prospects.

We began our current business operations in September 2004. Accordingly, we have a very limited operating history for our current operations upon which you can evaluate the viability and sustainability of our business and its acceptance by advertisers and consumers. It is also difficult to evaluate the viability of our use of audiovisual advertising displays in taxis as a business model because we do not have sufficient experience to address the risks frequently encountered by early stage companies using new forms of advertising media and entering new and rapidly evolving markets. These circumstances may make it difficult for you to evaluate our business and prospects.

Our financial statements have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated revenues since inception and currently have generated minimal revenues from operating our digital media network service in China. The continuation of our company as a going concern is dependent upon our ability to obtain necessary equity financing to continue expanding our business operations and attain profitable operations. As a March 31, 2008, we had a working capital deficit of $240,148 and had accumulated losses of $3,913,762 since inception. These factors raise substantial doubt regarding our ability to continue as a going concern.

Our senior management and employees have worked together for a short period of time, which may make it difficult for you to evaluate their effectiveness and ability to address challenges.

Due to our limited operating history and recent additions to our management team, certain of our senior management and employees have worked together at our company for only a relatively short period of time. As a result of these circumstances, it may be difficult for you to evaluate the effectiveness of our senior management and other key employees and their ability to address future challenges to our business.

If advertisers or the viewing public do not accept, or lose interest in, digital media advertising networks, our revenues may be negatively affected and our business may not expand or be successful.

The market for out-of-home television advertising networks in China is relatively new and its potential is uncertain. We compete for advertising spending with many forms of more established advertising media. Our success depends on the acceptance of our out-of-home digital display advertising network by advertisers and their continuing interest in this medium as a component of their advertising strategies. Our success also depends on the viewing public continuing to be receptive towards our advertising network. Advertisers may elect not to use our services if they believe that consumers are not receptive to our network or that our network does not provide sufficient value as an effective advertising medium. Likewise, if consumers find some element of our network, such as the audio feature, to be disruptive or intrusive, taxi operators may decide not to place our flat-panel displays in their vehicles and advertisers may view our network as a less attractive advertising medium compar ed to other alternatives. In that event, advertisers may determine to reduce their spending on our advertising network. If a substantial number of advertisers lose interest in advertising on our advertising network for these or other reasons, we will be unable to generate sufficient revenues and cash flow to operate our business, and our business, results of operations and financial condition could be materially adversely affected.

We derive a substantial majority of our revenues from the provision of advertising services, and advertising is particularly sensitive to changes in economic conditions and advertising trends.

Demand for our advertising time slots, and the resulting advertising spending by our clients, is particularly sensitive to changes in general economic conditions and advertising spending typically decreases during periods of economic downturn. Advertisers may reduce the money they spend to advertise on our network for a number of reasons, including:

- 23 -

a general decline in economic conditions;

a decline in economic conditions in the particular cities where we conduct business;

a decision to shift advertising expenditures to other available advertising media; or

a decline in advertising spending in general.

A decrease in demand for advertising media in general and for our advertising services in particular would materially and adversely affect our business, financial condition, results of operations and cash flows.

A substantial majority of our revenues are currently concentrated Shanghai. If this city experiences an event negatively affecting its advertising industry, our advertising network, and our ability to generate adequate cash flow, would be materially and adversely affected.

If Shanghai experiences an event negatively affecting its advertising industry, such as a serious economic downturn, a moratorium on the number of taxi licenses that would have the effect of materially limiting the supply of taxis in which we can place our ADUs or similar changes in government policy or a natural disaster, our business, financial condition, results of operations and cash flows would be materially and adversely affected.

Our quarterly operating results are difficult to predict and may fluctuate significantly from period to period in the future.

Our quarterly operating results are difficult to predict and may fluctuate significantly from period to period based on the seasonality of consumer spending and corresponding advertising trends in China. In addition, advertising spending generally tends to decrease during January and February each year due to the Chinese Lunar New Year holiday. We also experience a slight decrease in revenues during the hot summer months of July and August each year, when there is a relative slowdown in overall commercial activity in urban areas in China. As a result, you may not be able to rely on period to period comparisons of our operating results as an indication of our future performance. If our revenues for a particular quarter are lower than we expect, we may be unable to reduce our operating expenses for that quarter by a corresponding amount, which would harm our operating results for that quarter relative to our operating results from other quarters.

Our failure to maintain existing relationships or obtain new relationships with taxi operators that allow us to place our ADUS in their vehicles would harm our business and prospects.

Our ability to generate revenues from advertising sales depends largely upon our ability to provide a large network of ADUs placed in desirable taxi fleets. This, in turn, requires that we develop and maintain business relationships with taxi operators from which we rent space for our ADUs. We have entered into one significant display placement agreement with a taxi operator to operate up to 4,000 ADUs in the city of Shanghai until March 31, 2011. We have also entered into display placement agreements with a taxi operator to operate a total of up to 3,200 ADUs in the city of Beijing until 2015. Although these display placement agreements give us the right to renew the agreements on terms no less favorable than those offered by competing bidders, we may not be able to maintain our relationship with these taxi operators on satisfactory terms, or at all. If we fail to maintain our relationships with these taxi operators or if we fail to establish and maintain other significant relati onships with taxi operators to place our ADUs in their vehicles, advertisers may find advertising on our network unattractive and may not wish to purchase advertising time slots on our network, which would cause our revenues to decline and our business and prospects to deteriorate.

We may not be able to successfully expand our advertising network into new regions or diversify our network into new advertising channels, which could harm or reverse our growth potential and our ability to increase our revenues or even result in a decrease in revenues, which could materially adversely affect our business and financial results.

- 24 -

If we are unable to obtain or retain desirable placement locations for our ADUs on commercially advantageous terms, we could have difficulty maintaining or expanding our network, our operating margins and earnings could decrease and our results of operations could be materially and adversely affected.

Our direct costs, which include lease payments to taxi operators under our ADU placement agreements, maintenance and monitoring fees and other associated costs, comprise a significant portion of our cost of revenues. In the future, we may need to increase our expenditures on our ADU placement agreements to obtain new and desirable locations, to renew existing locations and to secure favorable exclusivity and renewal terms. In addition, lessors of space for ADUs may charge increasingly higher display location lease fees, or demand other compensation arrangements, such as profit sharing. If we are unable to pass increased location costs on to our advertising clients through rate increases, our operating margins and earnings could decrease and our results of operations, financial conditions and cash flow could be materially and adversely affected.

When our advertising network reaches saturation in the cities where we operate, we may be unable to grow our revenue base or to satisfy all of our advertisers' needs, which could hamper our ability to generate higher levels of revenues over time.

Where demand for our time slots by advertisers is high, our network may reach saturation, meaning we cannot sell additional advertising time slots for that week's cycle. When our network reaches saturation in any particular city, we will be forced to lengthen our advertising cycle to accommodate additional advertisers or to increase our advertising rates to increase our revenues in our existing cities of operation. However, advertisers may be unwilling to accept rate increases or the placement of their advertisement on a longer time cycle that gives their advertisement less exposure each day. If we are unable to increase the duration of our advertising cycle in cities that reach saturation, or if we are unable to pass through rate increases to our advertising clients in those cities, we may be unable to grow our revenue base or to satisfy all of our advertisers' needs, which could hamper our ability to generate higher levels of revenues over time and materially adversely affect our results of operations, financial condition and cash flows.

If the market supply of desirable taxi fleets diminishes or ceases to expand, we may be unable to expand our network into locations advertising clients find desirable, which could decrease the value of our network to advertisers.

Advertisers place a premium on having their advertisements displayed in the most commercially desirable locations, which we believe includes taxis frequented by more affluent consumer groups in China's major urban areas. As some of China's cities have undergone development and expansion for several decades while others are still at an early stage of development, the supply of desirable taxi fleets varies considerably from region to region. In more developed cities, it may be difficult to increase the number of desirable locations in our network because most such locations have already been occupied either by us or by our competitors. In recently developing cities, the supply of desirable locations may be small and the pace of economic development and taxi fleet expansion levels may not provide a steadily increasing supply of desirable commercial locations. If, as a result of these possibilities, we are unable to increase the placement of our network into commercial locations that a dvertisers find desirable, we may be unable to expand our client base, sell advertising time slots on our network or increase the rates we charge for time slots, which could decrease the value of our network to advertisers, which could materially adversely affect our business, financial condition and results.

If we are unable to attract advertisers to purchase advertising time on our network, we will be unable to maintain or increase our advertising fees and the demand for time on our network, which could negatively affect our ability to grow revenues.

- 25 -

The fees we can charge advertisers for time slots on our network depend on the size and quality of our network and the demand by advertisers for advertising time on our network. Advertisers choose to advertise on our network in part based on the size of our network and the desirability of the locations where we have placed our ADUs as well as the quality of the services we offer. If we fail to maintain or increase the number of taxis and ADUs in our network, diversify advertising channels in our network or solidify our brand name and reputation as a quality provider of advertising services, advertisers may be unwilling to purchase time on our network or to pay the levels of advertising fees we require to remain profitable. Our failure to attract advertisers to purchase time on our network will reduce demand for time slots on our network and the number of time slots we are able to sell, which could necessitate lowering the fees we charge for advertising time on our network and could negativ ely affect our ability to increase revenues, as well as our results of operations, financial condition and cash flows.

Failure to manage our growth could strain our management, operational and other resources, which could materially and adversely affect our business and growth potential.

We have been rapidly expanding, and plan to continue to rapidly expand, our operations in China. We must continue to expand our operations to meet the demands of advertisers for larger and more diverse network coverage and the demands of current and future taxi operators for installing and configuring ADUs in our existing and future commercial locations. This expansion has resulted, and will continue to result, in substantial demands on our management resources. It has also increased our need for a reliable supply of ADUs for our network which are manufactured by a third-party contract assembler according to our specifications. To manage our growth, we must develop and improve our existing administrative and operational systems and our financial and management controls, and we must further expand, train and manage our work force. Any failure to efficiently manage our expansion may materially and adversely affect our business and future growth, which could materially adversely affe ct our financial results and condition.

We depend on the leadership and services of Aidan Sullivan, who is our President and Chief Executive Officer and our largest shareholder, and our business and growth prospects may be severely disrupted if we lose his services.

Our future success is dependent upon the continued service of Aidan Sullivan, our CEO and largest shareholder. We rely on his industry expertise and experience in our business operations and, in particular, his business vision, management skills and working relationships with our employees, many of our clients and taxi operators. We do not maintain key-man life insurance for Mr. Sullivan. If he was unable or unwilling to continue in his present position, we may not be able to replace him easily or at all. As a result, our business and growth prospects may be severely disrupted if we lose his services.

If we do not continue to expand and maintain an effective sales and marketing team it will cause short-term disruptions of our operations, restrict our sales efforts and negatively affect our advertising service revenue.

We market our advertising services directly to advertisers and to advertising agencies. As we only commenced our current sales and marketing operations in 2006, many of our sales and marketing personnel have only worked for us for a short period of time. We depend on our marketing staff to explain our service offerings to our existing and potential clients and to cover a large number of clients in a wide variety of industries. We will need to further increase the size of our sales and marketing staff if our business continues to grow. We may face difficulties in hiring, retaining or motivating sales and marketing personnel, which would cause short-term disruptions of our operations, restrict our sales efforts and negatively affect our advertising service revenue, which could materially adversely affect our financial results and condition.

If we are unable to adapt to changing advertising trends and the technology needs of advertisers and consumers, we will not be able to compete effectively and we will be unable to increase or maintain our revenues which may materially and adversely affect our business prospects and revenues.

- 26 -

The market for out-of-home advertising requires us to continuously identify new advertising trends and the technology needs of advertisers and consumers, which may require us to develop new features and enhancements for our advertising network. We currently distribute advertisements on our advertising network through compact flash memory cards that are manually installed in our ADUs each week. In the future, subject to relevant Chinese laws and regulations, we may use other technology, such as cable or broadband networking, advanced audio technologies and high-definition panel technology. We may be required to incur development and acquisition costs in order to keep pace with new technology needs but we may not have the financial resources necessary to fund and implement future technological innovations or to replace obsolete technology. Furthermore, we may fail to respond to these changing technology needs. For example, if the use of wireless or broadband networking capabilities on our ad vertising network becomes a commercially viable alternative and meets all applicable Chinese legal and regulatory requirements, and we fail to implement such changes on our network or fail to do so in a timely manner, our competitors or future entrants into the market who do take advantage of such initiatives could gain a competitive advantage over us. If we cannot succeed in defining, developing and introducing new features on a timely and cost-effective basis, advertiser demand for our advertising network may decrease and we may not be able to compete effectively or attract advertising clients, which would have a material and adverse effect on our business, results of operations, financial condition and cash flows.

We may be subject to, and may expend significant resources in defending against, government actions and civil suits based on the content and services we provide through our out-of-home television advertising network.

Chinese advertising laws and regulations require advertisers, advertising operators and advertising distributors, including businesses such as ours, to ensure that the content of the advertisements they prepare or distribute are fair and accurate and are in full compliance with applicable law. Violation of these laws or regulations may result in penalties, including fines, confiscation of advertising fees, orders to cease dissemination of the advertisements and orders to publish an advertisement correcting the misleading information. In circumstances involving serious violations, the Chinese government may revoke a violator's license for advertising business operations.

As an out-of-home advertising service provider, we are obligated under laws and regulations in China to monitor the advertising content that is shown on our network for compliance with applicable law. In general, the advertisements shown on our network have previously been broadcast over public television networks and have been subjected to internal review and verification of such networks. We are still separately required to independently review and verify these advertisements for content compliance before displaying the advertisements. In addition, where a special government review is required for certain product advertisements before broadcasting, we are separately obligated to confirm that such review has been performed and approval has been obtained. We employ qualified advertising inspectors who are trained to review advertising content for compliance with relevant Chinese laws and regulations. In addition, for advertising content related to certain types of products and services, su ch as alcohol, cosmetics, pharmaceuticals and medical procedures, we and our distributors are required to confirm that the advertisers have obtained requisite government approvals including the advertiser's operating qualifications, proof of quality inspection of the advertised products, government pre-approval of the contents of the advertisement and filing with the local authorities. We endeavor to comply with such requirements, including by requesting relevant documents from the advertisers. However, we cannot assure you that each advertisement an advertising client or agency provides to us and which we include in our weekly advertising cycle is in compliance with relevant Chinese advertising laws and regulations or that the supporting documentation and government approvals provided to us by our advertising clients in connection with certain advertising content are complete; nor can we assure you that the advertisements that our regional distributors have procured for broadcasting on our network have rece ived required approval from the relevant local supervisory bodies or are content compliant.

Moreover, civil claims may be filed against us for fraud, defamation, subversion, negligence, copyright or trademark infringement or other violations due to the nature and content of the information displayed on our network. If consumers find the content displayed on our network to be offensive, taxi operators may seek to hold us responsible for any consumer claims or may terminate their relationships with us.

In addition, if the security of our content management system is breached through the placement of unauthorized Compact Flash cards in our ADUs and unauthorized images, text or audio sounds are displayed on our network, viewers or the Chinese government may find these images, text or audio sounds to be offensive, which may subject us to civil liability or government censure despite our efforts to ensure the security of our content management system. Any such event may also damage our reputation. If our advertising viewers do not believe our content is reliable or accurate, our business model may become less appealing to viewers in China and our advertising clients may be less willing to place advertisements on our network.

- 27 -

As a result, our business, financial condition, results of operations and cash flows would be materially adversely affected.

We may be subject to intellectual property infringement claims, which may force us to incur substantial legal expenses and, if determined adversely against us, may materially disrupt our business.

We cannot be certain that our ADUs or other aspects of our business do not or will not infringe upon patents, copyrights or other intellectual property rights held by third parties. We may become subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of our business. If we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives. In addition, we may incur substantial expenses in defending against these third party infringement claims, regardless of their merit. Successful infringement or licensing claims against us may result in substantial monetary liabilities, which may materially and adversely disrupt our business, and affect our results of operations and financial condition.

We face significant competition, and if we do not compete successfully against new and existing competitors, we may lose our market share, and our profitability may be adversely affected.

Our primary competitors are other advertising companies that operate out-of-home digital media advertising networks in China. We compete for advertising clients primarily on the basis of network size and coverage, location, price, the range of services that we offer and our brand name. We also face competition from other out-of-home network operators for access to the most desirable locations in cities in China. Individual taxi operators may also decide to install and operate their ADUs on a small scale. We also compete for overall advertising spending with other alternative advertising media companies, such as Internet, street furniture, billboard and public transport advertising companies, and with traditional advertising media, such as newspapers, television, magazines and radio.

In the future, we may also face competition from new entrants into the out-of-home digital media advertising sector. Our sector is characterized by relatively low fixed costs and, as is customary in the advertising industry, we do not have exclusive arrangements with our advertising clients. These two factors present potential entrants to our sector of the advertising sector with relatively low entry barriers.

Increased competition could reduce our operating margins and profitability and result in a loss of market share. Some of our existing and potential competitors may have competitive advantages, such as significantly greater financial, marketing or other resources and may be able to mimic and adopt our business model. Moreover, increased competition will provide advertisers with a wider range of media and advertising service alternatives, which could lead to lower prices and decreased revenues, gross margins and profits. We cannot assure you that we will be able to successfully compete against new or existing competitors.

Any business disruption or litigation we experience might result in our incurring substantial costs and the diversion of resources.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products and do not, to our knowledge, offer business liability insurance that is applicable to our business model. While business disruption insurance is available to a limited extent in China, we have determined that the risks of disruption, cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for us to have such insurance. As a result we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Any business disruption or litigation may result in our incurring substantial costs and the diversion of resources, which would materially adversely affect our results of operations and financial condition.

- 28 -

Risks Relating to Regulation of Our Business and to Our Structure

If the Chinese government finds that the agreements that establish the structure for operating our business in China do not comply with Chinese governmental restrictions on foreign investment in the advertising industry, we could be subject to severe penalties.

Substantially all of our operations are conducted through i-level SoftComm, our wholly-owned operating subsidiary in China. Regulations in China currently limit foreign ownership of companies that provide advertising services to 70% and require any foreign entities that invest in the advertising services industry to have at least two years of direct operations in the advertising industry outside of China. In order to comply with regulations in China related to foreign ownership of companies engaged in advertising, i-level SoftComm currently conducts its advertising services through a third party advertising agency which has all the necessary licenses and permits for providing advertising services in China. i-level SoftComm expects that it will qualify for its own license to conduct advertising services directly by September, 2007, since such qualification depends in part on the length of time that it will have been active in China at the time it applies for the license. In the m eantime, our advertising business is currently provided through our contractual arrangements with our limited media partner, Sky-Media Group. Sky-Media Group holds the requisite licenses to provide advertising services in China. We have been and are expected to continue to be dependent on Sky-Media Group to operate our advertising business until i-level Softcomm obtains the necessary licenses and permits to do so directly.

If we are found to be in violation of any existing or future Chinese laws or regulations or fail to obtain or maintain any of the required permits or approvals, the relevant Chinese regulatory authorities, including the State Administration of Industry and Commerce, or SAIC, which regulates advertising companies, would have broad discretion in dealing with such violations, including:

revoking the business and operating licenses of our subsidiaries and affiliates in China;

discontinuing or restricting our the operations of our subsidiaries and affiliates in China;

imposing conditions or requirements with which we or our subsidiaries and affiliates in China may not be able to comply;

requiring us or our subsidiaries and affiliates in China to restructure the relevant ownership structure or operations; or

restricting or prohibiting our use of the proceeds of this offering to finance our business and operations in China.

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business, as well as our results of operations, financial condition and cash flows.

Our business operations may be affected by legislative or regulatory changes.

There are no existing Chinese laws or regulations that specifically define or regulate out-of-home digital media advertising. It has been reported that the relevant Chinese government authorities are currently considering adopting new regulations governing out-of-home digital media advertising. We cannot predict the timing and effects of such new regulations. Changes in laws and regulations governing the content of out-of-home advertising, our business licenses or otherwise affecting our business in China may materially and adversely affect our business, results of operations and financial condition.

- 29 -

Risks Relating to the People's Republic of China.

Substantially all of our assets are located in China and substantially all of our revenues are derived from our operations in China. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in China.

The Chinese economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. While the Chinese economy has experienced significant growth in the past two decades, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. Moreover, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

The economic, political and social conditions in China, as well as Chinese governmental policies, could affect the financial markets in China and our liquidity and access to capital and our ability to operate our business.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although the Chinese government has implemented measures since the late 1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China are still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Since late 2003, the Chinese government implemented a number of measures, such as raising bank reser ves against deposit rates to place additional limitations on the ability of commercial banks to make loans and raise interest rates, in order to slow down certain segments of China's economy which it believed to be overheating. These actions, as well as future actions and policies of the Chinese government, could materially affect our liquidity and access to capital and our ability to effectively operate our business.

The Chinese legal system embodies uncertainties which could limit the legal protections available to you and us.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. In 1979, the Chinese government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation since that time has significantly enhanced the protections afforded to various forms of foreign investment in China. Our operating subsidiary in China, i-level SoftComm, is a wholly foreign-owned enterprise which is an enterprise incorporated in China and wholly-owned by foreign investors. i-level SoftComm is subject to laws and regulations applicable to foreign investment in China in general and laws and regulations applicable to wholly foreign-owned enterprises in particular. However, these laws, regulations and legal requirements change frequently, and their interpretation and enforcement involve uncertainties. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since Chinese administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. For example, these uncertainties may impede our ability to enforce the contracts we have entered into with Sky-Media Group. In addition, such uncertainties, including the inability to enforce our contracts, could materially and adversely affect our business and operation. In addition, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Chinese legal system, particularly with regard to the advertising industry, incl uding the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us.

- 30 -

Restrictions on currency exchange may limit our ability to utilize our revenues effectively.

Substantially all of our revenues and operating expenses are denominated in Renminbi (or yuan, the currency of China). The Renminbi is currently convertible under the "current account", which includes dividends, trade and service-related foreign exchange transactions, but not under the "capital account", which includes foreign direct investment and loans. Currently, i-level SoftComm may purchase foreign exchange for settlement of "current account transactions", including payment of dividends to us, without the approval of the State Administration of Foreign Exchange. However, we cannot assure you that the relevant Chinese governmental authorities will not limit or eliminate our ability to purchase foreign currencies in the future. Since a significant amount of our future revenues will be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our ability to utilize revenues generated in Renminbi to fund any business activities outside China, if any, or expenditures denominated in foreign currencies. Foreign exchange transactions under the capital account are still subject to limitations and require approvals from, or registration with, the State Administration of Foreign Exchange and other relevant Chinese governmental authorities. This could affect i-level SoftComm's ability to obtain foreign exchange through debt or equity financing, including by means of loans or capital contributions from us, which could materially adversely affect our business and financial results.

Fluctuations in exchange rates could result in foreign currency exchange losses.

Because our earnings and cash and cash equivalent assets are denominated in Renminbi and the net proceeds from our private placements have been denominated in U.S. dollars, fluctuations in exchange rates between U.S. dollars and Renminbi will affect the relative purchasing power of the proceeds from this private placement and our balance sheet and earnings per share in U.S. dollars. In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. For example, due to the recent devaluation of the U.S. dollar against the euro and several other currencies, the Chinese government has indicated that it may be re-evaluating its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Fluctuations in the exchange rate will also affect the relative value of any dividend we may issue which will be exchanged into U.S. dollars as well as the earnings from and the value of any U.S. dollar-denominated investments we make in the future.

Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to successfully hedge our exposure at all. In addition, our currency exchange losses may be magnified by Chinese exchange control regulations that restrict our ability to convert Renminbi into foreign currency. As a result, our financial results could be materially adversely affected.

Any future outbreak of severe acute respiratory syndrome in China, or similar adverse public health developments, may severely disrupt our business and operations.

From December 2002 to June 2003, China and certain other countries experienced an outbreak of a new and highly contagious form of atypical pneumonia now known as severe acute respiratory syndrome, or SARS. On July 5, 2003, the World Health Organization declared that the SARS outbreak had been contained. Since September 2003, however, a number of isolated new cases of SARS have been reported, most recently in central China in April 2004. During May and June of 2003, many businesses in China were closed by the Chinese government to prevent transmission of SARS. A new outbreak of SARS may result in health or other government authorities requiring the closure of our offices or other businesses, including office buildings, retail stores and other commercial venues, which comprise the primary locations where we provide our advertising services. Any recurrence of the SARS outbreak, or a development of a similar health hazard in China, may deter people from congregating in public plac es, including a range of commercial locations such as office buildings and retail stores. Such occurrences would severely impact the value of our out-of-home television advertising network to advertisers, significantly reduce the advertising time purchased by advertisers and severely disrupt our business and operations, and materially adversely affect our financial results.

- 31 -

Certain Risks Relating to i-level Media Group

i-level Media Systems is a British Virgin Islands company and, because judicial precedent regarding the rights of shareholders is more limited under British Virgin Islands law than under U.S. law, you may have less protection of your shareholder rights than you would under U.S. law.

i-level Media Systems' corporate affairs are governed by our amended and restated memorandum and articles of association of the British Virgin Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of i-level Media Systems' directors to us under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands. Our rights as the shareholder of i-level Media Systems and the fiduciary responsibilities of its directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws than the United States.

As a result of all of the above, we may have more difficulty in protecting our interests as the sole shareholder of i-level Media Systems in the face of actions taken by management or members of the board of directors than would public shareholders of a U.S. company.

Certain judgments obtained against us by our shareholders may not be enforceable.

i-level Media Systems is a British Virgin Islands company and substantially all of its assets are located outside of the United States. All of i-level Media Systems' current operations are conducted in the China. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, most of whom are not resident in the United States and the substantial majority of whose assets are located outside of the United States. In addition, there is uncertainty as to whether the courts of the British Virgin Islands or the People's Re public of China would recognize or enforce judgments of United States courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In addition, there is uncertainty as to whether such British Virgin Islands or Chinese courts would be competent to hear original actions brought in the British Virgin Islands or in China against us or such persons predicated upon the securities laws of the United States or any state.

Risks Relating to Our Common Stock

Our stock is a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations and FINRA's sales practice requirements, which may limit a stockholder's ability to buy and sell our stock.

Our common stock is subject to the "Penny Stock" Rules of the SEC, which will make transactions in our common stock cumbersome and may reduce the value of an investment in our common stock.

- 32 -

Our common stock is quoted on the OTC Bulletin Board, which is generally considered to be a less efficient market than markets such as NASDAQ or the national exchanges, and which may cause difficulty in conducting trades and difficulty in obtaining future financing. Further, our securities are subject to the "penny stock rules" adopted pursuant to Section 15(g) of theSecurities Exchange Act of 1934, as amended. The penny stock rules apply generally to companies whose common stock trades at less than $5.00 per share, subject to certain limited exemptions. Such rules require, among other things, that brokers who trade "penny stock" to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade "penny stock" because of t he requirements of the "penny stock rules" and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that we remain subject to the "penny stock rules" for any significant period, there may develop an adverse impact on the market, if any, for our securities. Because our securities are subject to the "penny stock rules", investors will find it more difficult to dispose of our securities. Further, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies and (iii) to obtain needed capital.

In addition to the "penny stock" rules promulgated by the SEC, the Financial Industry Regulatory Authority ("FINRA") has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

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

We did not sell any equity securities during the period covered by this report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Securities Holders

None.

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No.	Description of Exhibit
3.1⁽¹⁾	Articles of Incorporation.
3.2⁽⁴⁾	Articles of Merger (pursuant to which the Company's Articles of Incorporation were amended to change the Company's name to "i-level Media Group Incorporated").
3.3⁽¹⁾	Bylaws.
10.1⁽²⁾	Share Exchange Agreement among the Company, the i-level Shareholders and i-level Media Systems Limited, dated for reference effective on January 29, 2007.
10.2⁽³⁾	Executive Services Agreement among the Company, i-level Media Systems Limited and Aidan Sullivan, dated March 20, 2007.
10.3⁽³⁾	Executive Services Agreement among the Company, i-level Media Systems Limited and Ian Sullivan, dated March 20, 2007.

- 33 -

Exhibit No.	Description of Exhibit
10.4⁽³⁾	Service Agreement between i-level Media Group Ltd. and Smartwin Technology Ltd. dated April 1, 2005.
10.5⁽⁴⁾	Form of $0.10 Unit for Debt Private Placement Subscription Agreement.
10.6⁽⁴⁾	Form of $0.30 Share for Debt Private Placement Subscription Agreement.
10.7⁽⁴⁾	Form of $0.50 Unit Private Placement Subscription Agreement.
10.8⁽⁴⁾	Form of $0.70 Share Private Placement Subscription Agreement.
10.9⁽⁴⁾	Collaboration Contract between i-level SoftComm and Shanghai Jinjiang Auto Services Co., Ltd., dated December 2004 (and addendum thereto dated February 2005).
10.10⁽⁴⁾	Co-operation Contract between i-level SoftComm and Smartwin Technology (Shanghai) Ltd.
10.11⁽⁴⁾	Memorandum of Understanding between i-level SoftComm and Beijing Northern Taxi Co., Ltd.
10.12⁽⁴⁾	Corporate Development Consulting Services Agreement between the Company and Pacific Investor Relations Corp., dated for reference April 1, 2007.
10.13⁽⁵⁾	Letter of Engagement between the Company and Investor Relations International dated November 8, 2007.
10.14⁽⁶⁾	Securities Purchase Agreement dated December 28, 2007 between the Company and the Selling Shareholders.
10.15⁽⁶⁾	Registration Rights Agreement dated December 28, 2007 between the Company and the Selling Shareholders.
10.16⁽⁶⁾	Form of Warrant Certificate.
10.17⁽⁶⁾	2007 Stock Incentive Plan.
21.1	Subsidiaries of the Company:
	Name of Subsidiary i-level Media Systems Limited i-level SoftComm (Shanghai) Company Ltd i-level Media (Beijing) Co. Ltd.	Jurisdiction of Incorporation British Virgin Islands People's Republic of China People's Republic of China	Percentage Ownership 100% 100% (through i-level Media Systems) 100% (through i-level Media Systems)
31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350

(1)     Incorporated by reference from our Registration Statement on Form SB-2 as filed with the SEC on March 17, 2006.
(2)     Incorporated by reference from our Current Report on Form 8-K as filed with the SEC on February 6, 2007.
(3)     Incorporated by reference from our Current Report on Form 8-K as filed with the SEC on March 21, 2007.
(4)     Incorporated by reference from our Registration Statement on Form SB-2 as filed with the SEC on July 9, 2007.
(5)     Incorporated by reference from our Current Report on Form 8-K as filed with the SEC on November 27, 2007.
(6)     Incorporated by reference from our Registration Statement on Form S-1 as filed with the SEC on March 6, 2008.

- 34 -

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

I-LEVEL MEDIA GROUP INCORPORATED

By:          "Aidan Sullivan"
                Aidan Sullivan
                Executive Chairman, President, Chief Executive Officer, Principal Executive Officer and a director

Date: May 20, 2008

By:          "Don Chen"
                Don Chen
                Treasurer, Chief Financial Officer and Principal Accounting Officer

Date: May 20, 2008

- 35 -

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. sophomore Good

Celexus (CXUS) 10-Q2008 Q4 Quarterly report

Content analysis