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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarter ended March 31, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
M Power Entertainment, Inc.
(Name of small business issuer in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
76-0513297
(I.R.S. Employer
Identification No.)
2602 Yorktown Place
Houston, Texas 77056
(Address of principal executive office)
(212)731-2310
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of March 31, 2006, there were 52,997,688 shares of common stock, $0.001 par
value, outstanding.
Transitional Small Business Disclosure Format (Check one). Yes [ ] No [X]
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M POWER ENTERTAINMENT, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2006
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
as of March 31, 2006 and December 31, 2005 3
Consolidated Statements of Expenses
for the Three Months Ended March 31, 2006 and 2005 4
Consolidated Statements of Cash Flow
for the Three Months Ended March 31, 2006 and 2005 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Controls and Procedures 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits 11
SIGNATURES 15
CERTIFICATIONS 16
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
M POWER ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2006 2005
------------- -------------
ASSETS
CURRENT ASSETS
Cash $ 644 $ 75,928
OTHER ASSETS
Deposits 4,000 4,000
Fixed Assets, net of accumulated
depreciation of $689 and $550, respectively 4,860 4,999
------------- -------------
TOTAL ASSETS $ 9,504 $ 84,927
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable - trade $ 285,564 $ 189,692
Accounts payable - related parties 20,000 19,306
Accrued expenses 891,503 899,964
Accrued expenses - related parties 17,249 16,649
Notes payable 107,000 107,000
Notes payable - related parties - -
------------- -------------
Total current liabilities 1,321,316 1,232,611
------------- -------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' DEFICIT
Series D preferred stock, $0.001 par
value per share; 1,000 shares authorized;
1,000 and 0 shares issued at March 31,
2006 and December 31, 2005, respectively 1 -
Common stock, $0.001 par value per share;
275,000,000 shares authorized; 52,997,688
and 42,657,688 shares issued and outstanding
at March 31, 2006 and December 31, 2005,
respectively 52,998 42,658
Additional paid-in capital 61,274,096 60,093,751
Accumulated deficit (62,638,907) (61,284,093)
------------- -------------
Total stockholders' deficit (1,311,812) (1,147,684)
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 9,504 $ 84,927
============= =============
3
M POWER ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF EXPENSES
(Unaudited)
Three Months Ended March 31,
---------------------------
2006 2005
------------- -------------
OPERATING EXPENSES
Depreciation and amortization expense $ 139 $ 462
Compensation expense 762,977 -
Payroll expenses - 63,500
Professional fees 510,883 526,293
General and administrative 66,615 33,374
------------- -------------
LOSS FROM OPERATIONS (1,340,614) (623,629)
------------- -------------
Interest expense and loan discount fees (14,201) (22,408)
------------- -------------
NET LOSS $ (1,354,815) $ (646,037)
============= =============
NET LOSS PER SHARE - Basic and Diluted $ (.03) $ (0.51)
============= =============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 49,668,101 1,262,720
============= =============
4
M POWER ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
Three Months Ended March 31,
----------------------------
2006 2005
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,354,815) $ (646,037)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization expense 139 462
Common stock and warrants issued for services 1,190,687 386,765
Changes in operating assets and liabilities
Accounts receivable - 183,104
Other assets - 3,473
Accounts payable and accrued expenses 87,411 (46,125)
Accounts payable and accrued expenses
- related party 1,294 6,669
------------- -------------
Net cash used in operating activities (75,284) (111,689)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Disposition of fixed assets - 2,091
------------- -------------
Net cash provided by investing activities - 2,091
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on notes payable - 143,000
Repayments of notes payable - related party - (52,460)
------------- -------------
Net cash provided by financing activities - 90,540
------------- -------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (75,284) (19,058)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 75,928 54,096
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 644 $ 35,038
============= =============
Supplemental Information
Interest paid $ - $ -
Income taxes paid $ - $ -
5
M Power Entertainment, Inc.
Notes to Consolidated Financial Statements
March 31, 2006
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of M
Power Entertainment, Inc., have been prepared in accordance with accounting
principles generally accepted in the United States of America and the rules of
the Securities and Exchange Commission and should be read in conjunction with
the audited consolidated financial statements and notes thereto contained in M
Power's latest Annual Report filed with the SEC on Form 10-KSB. In the opinion
of management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for interim periods are not necessarily indicative of
the results to be expected for the full year. Notes to the consolidated
financial statements that would substantially duplicate the disclosure
contained in the audited consolidated financial statements for the most recent
fiscal year, 2005, as reported in Form 10-KSB, have been omitted.
NOTE 2 - PREFERRED STOCK
On January 20, 2006, M Power authorized and issued One Thousand (1,000) shares
of Series D Preferred Stock to CEO Gary Kimmons. These shares have the same
dividend rights as the common stock of M Power and gives Mr. Kimmons the right
to vote on all shareholder matters equal to fifty-one (51%) percent of the
total vote. These shares of stock were issued for services and are valued at
$762,976.
NOTE 3 - COMMON STOCK
During first quarter of 2006, M Power issued 10,340,000 shares of common
stock in payment for services valued at $427,710 to various consultants. The
issuance had been previously authorized by the Board of Directors.
NOTE 4 - SUBSEQUENT EVENTS
On April 18, 2006, M Power completed a financing agreement for up to
$2,000,000 with private investors. M Power received the first of three
traunches of the funding which are expected to be completed over the course of
the next several months. The first traunch of funding was in the amount of
$700,000. M Power will be issuing to the Investors secured convertible
debentures totaling $2,000,000 with a 6% interest rate and a maturity date of
April 18, 2009, as these traunches are received. The debentures are
convertible into common shares at a discount (using the "Applicable
Percentage") of the average of the lowest three (3) trading prices during the
twenty (20) trading day period prior to conversion. The Applicable Percentage
means 50%; provided, however, that the Applicable Percentage shall be
increased to (i) 55% in the event that a Registration Statement is filed
within thirty days of the closing and (ii) 60% in the event that the
Registration Statement becomes effective within one hundred and twenty days
from the Closing. M Power simultaneously issued to the private investors
seven year warrants to purchase 6,000,000 warrants at an exercise price of
$0.10. M Power is in the process of evaluating the instruments under SFAS 133
and EITF 00-19 for consideration of derivative accounting.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis compares our results of operations for
the three months ended March 31, 2006 to the same period in 2005. This
discussion and analysis should be read in conjunction with our consolidated
condensed financial statements and related notes thereto included elsewhere in
this report and our Form 10-KSB for the year ended December 31, 2005.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-QSB contains forward-looking statements, including,
without limitation, statements concerning possible or assumed future results
of operations and those preceded by, followed by or that include the words
"believes," "could," "expects," "intends" "anticipates," or similar
expressions. Our actual results could differ materially from these anticipated
in the forward-looking statements for many reasons including the risks
described in our 10-KSB for the period ended December 31, 2005 and elsewhere
in this report. Although we believe the expectations reflected in the
forward-looking statements are reasonable, they relate only to events as of
the date on which the statements are made, and our future results, levels of
activity, performance or achievements may not meet these expectations. We do
not intend to update any of the forward-looking statements after the date of
this document to conform these statements to actual results or to changes in
our expectations, except as required by law.
Overview
- --------
On April 18, 2006, M Power completed a financing agreement for up to
$2,000,000 with private investors. M Power received the first of three
traunches of the funding which are expected to be completed over the course of
the next several months. The first traunch of funding was in the amount of
$700,000. M Power will be issuing to the Investors secured convertible
debentures totaling $2,000,000 with a 6% interest rate and a maturity date of
April 18, 2009, as these traunches are received.
Twelve Month Plan of Operations - M Power
- -----------------------------------------
During the next 12 months, we will direct our resources to the development of
the Doorways web portal. In order to achieve this goal, we will divest
ourselves of any subsidiaries or other corporate relationships that do not
directly support or complement the Doorways portal strategy and its
development. We will enter into strategic alliances, form joint ventures
and/or acquire interests in companies whose products and services integrate
into the Doorways portal as technical, design, and audio/visual content
components, assist storefront customers to design and implement their Doorways
presences, and provide us with revenue contributions.
As the transition to the Doorways business model proceeds, we will raise 3
kinds of capital: 1) working capital to pay for professional services,
evaluations, audits, and other normal corporate expenses and to provide
accounting, reporting, capital access and other administrative efficiencies to
the subsidiaries, joint ventures, and strategic alliances 2) acquisition and
growth capital to acquire or form and grow subsidiaries, joint ventures and
strategic alliances that fit Doorways' requirements, and 3) development
capital for the Doorways portal technology which will involve integrating
existing technologies and creating a new platform to manage the technologies
to make Doorways cohesive, friendly, and informative. If the plan as outlined
is achieved within 12 months, we will have raised approximately $2 million for
working capital, $500,000 for technology demonstration prototype creation, and
$20 million for technology development. Acquisitions, joint ventures, and
strategic alliances are anticipated to require approximately $30 million of
investment capital.
The corporate relationships between us, subsidiaries, joint ventures and
strategic alliances will be collaborative, but decentralized so that shared
functions, such as accounting are efficient, but existing, successful
operations will continue without significant adjustment. New operations will
require significant management and professional resources.
7
Management's Discussion and Analysis
- ------------------------------------
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto included in Item 7 of this Form 10-KSB.
All information presented herein is based on our fiscal calendar.
M Power Entertainment is creating a lifestyle information/entertainment portal
named "Doorways" designed to offer an enhanced form of interactivity and
support for today's visually-oriented web surfing community.
It is our intention to pursue a strategy focusing on the company's expertise
in software technology development and its existing intellectual property.
Pursuant to this objective, M Power Entertainment is developing technology to
support the creation of a lifestyle information/entertainment portal named
"Doorways" designed to offer an enhanced form of interactivity and support for
today's visually-oriented web surfing community. "Doorways" could offer a
wide range of businesses a unique opportunity to present their products and
services to a broader market. The "storefronts" they establish on "Doorways"
will be predicated on the concept that they are bringing relevant expert
assistance to consumers at their critical moment of need. This will give our
business clients a chance to build clientele and strengthen their brand by
engaging consumers through service and support. In doing so, our sponsoring
companies will have a new way to not only retain current customers, but also
reach potential new customers, close the sale, and build a long-standing
relationship.
We will use "Doorways" to sell and distribute entertainment content - a $1.9
trillion market according to PricewaterhouseCoopers LLP, as reported by
EchoOnLine in an article dated October 14, 2005. We intend to acquire
technical and entertainment production companies who can assist us with
"Doorways" development and will use it to create and sell entertainment
content.
"It is our opinion that the losses incurred during fiscal 2005, while
significant, must be viewed within the total context of the Company's growth
and development. The losses associated with 2005 are primarily attributable
to our attempt to acquire and capitalize privately-held entertainment
companies. While we have been successful in attracting and signing
acquisition documents with several entities, including RS Entertainment,
Corazong and Howarth, we have encountered difficulty securing capital to grow
them. We attribute this problem, in part, to a capital market that did not
understand or feel that it could support our entertainment-based acquisition
strategy. In addition, asset valuations and audits were never completed,
making it impossible to secure funds leveraging the companies' assets or net
revenues.
We believe that management is solving this problem by retargeting our business
strategy and focusing on our original core competency, which is our
demonstrated ability to produce and distribute software for the Internet and
merchandising. However, while we are refocusing our energy on Internet
software technology development and marketing, we will continue to pursue our
aggressive M&A strategy, searching for and bringing in successful technology
and audio/visual production entities that can drive revenues and also support
our "Doorways" technology initiative. In so doing, the experience and
reputation we have gained with our entertainment M&A initiative in 2005 has
proven to be extremely valuable, and has helped set the stage for our 2006
business activities.
We are very encouraged by the positive response we are receiving from key
industry participants in the Internet technology, marketing, and
product/service branding arenas. We now believe that our business objective
is extremely targeted and that it has been refined and improved to reflect the
demands of the market we are in."
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED MARCH 31, 2006 AS COMPARED TO THE THREE MONTHS ENDED MARCH
31, 2005.
There were no revenues for March 31, 2006 or 2005.
We had operating expenses of $1,354,815 during the quarter ending March 31,
2006 compared to $623,629 for the comparative quarter of 2005, which resulted
in an increase in operating expenses of $731,186.
8
There was interest expense of $14,201 during the three months ended March 31,
2006 as compared to $22,408 for the quarter ended March 31, 2005. The interest
is accrued on our unpaid accounts payable, accrued expenses, and notes
payable. The decrease in interest expense was the result of us negotiating
settlements to release portions of our debts.
Our net loss was $1,354,815 during the three months ended March 31, 2006
compared to a net loss of $646,037, incurred in the first three months of
2005.
Liquidity
- ---------
During the three months ended March 31, 2006, we used cash of $75,284 in our
operations compared to using $ 111,689 in the comparative quarter of 2005. We
had cash on hand of $ 644 as of March 31, 2006 and $ 35,038 at March 31, 2005.
Item 3. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the
"Certifying Officers") maintain a system of disclosure controls and procedures
that are designed to provide reasonable assurances that information, which is
required to be disclosed, is accumulated and communicated to management,
timely. . Based upon the foregoing, our Chief Executive Officer concluded
that, as of March 31, 2006, our disclosure controls and procedures were not
effective to ensure that the information required to be disclosed in the
Company's Exchange Act reports was recorded, processed, summarized and
reported on a timely basis.
In connection with the completion of its work on the interim period ended
March 31, 2006, Malone & Bailey, PC identified deficiencies in our disclosure
controls related to the failure to record the value of preferred stock issued
for services and disclosure controls relating to such transactions.. The
adjustments to these accounts and the footnote disclosure deficiencies were
detected and have been appropriately recorded and disclosed in the Form
10-QSB. We are in the process of improving our disclosure controls by
training our new bookkeeper in an effort to remediate these deficiencies.
Additional effort is needed to fully remedy these deficiencies and we are
continuing our efforts to improve and strengthen our disclosure control
processes and procedures. Our management and directors will continue to work
with our auditors and other outside advisors to ensure that our disclosure
controls and procedures are adequate and effective.
(b) Changes in internal controls.
Our Certifying Officers have indicated that there were no changes in our
internal controls or other factors that could affect such controls during the
three months ending March 31, 2006 and there were no such control actions
taken during the three months ending March 31, 2006.
PART II - OTHER INFORMATION.
Item 1. Legal Proceedings.
Texas Workforce Commission. On February 10, 2000, the Texas Workforce
Commission placed an administrative lien on us in the amount of $109,024 in
connection with a claim for unpaid compensation by our former employees.
Awalt Group, Inc. Awalt Group, Inc. commenced litigation against us in
January 2004 in the United States District Court, Southern District of Texas,
Houston Division (Cause No. H-03-5832). This case relates to advertising and
promotional services rendered prior to July, 1999. The Plaintiff is
requesting $77,189 for actual amounts invoiced and $10,000 in attorney's fees.
Per their invoices, these are for services rendered from May 26, 1998 through
June 15, 1999. We filed an answer and are defending the lawsuit under Section
16.004 of the Texas Civil Practice and Remedies Code, i.e., we believe that
the statute of limitations has tolled the claim. The case was dismissed by
the Federal court in 2005 for lack of diversity, but the plaintiffs re-filed
in state court alleging a sworn account in the amount of $78,294 plus costs,
interest and attorney fees. We have filed an Answer asserting our statute of
limitations defense. On August 10,
9
2005 we filed a Motion for Summary Judgment based on the limitations defense
and set it for hearing to be held on September 2, 2005. The court in the
Awalt case ruled in our favor on my Motion for Summary Judgment and signed a
Take Nothing Judgment in our favor on November 1, 2005. The Awalt Group has
appealed that decision to the Fourteenth Court of Appeals in Houston, Texas
where it is now pending. The Court of Appeals on its own Motion in late
February suspended the briefing deadline by 60 days and ordered both parties
to mediation. The Court of Appeals required us to mediate and mediation
occurred on April, 5, 2006 in accordance with that order and was unsuccessful.
The Appellate briefing is due on May 12, 2006. The Appellee's briefing is due
on June 6, 2006.
11500 Northwest, L.P. 11500 Northwest, L.P. commenced litigation against us
on October 31, 2003 in the 11th Judicial District Court for Harris County,
Texas (Cause No. 2003-60705). This case relates to a breach of a lease
agreement allegedly entered into on or about March 5, 1999 for certain office
space we never occupied. Plaintiff is requesting past due rents of an
unspecified amount, broker's commission of $21,806, and tenant improvements of
$51,439, attorney's fees, costs, and prejudgment interest. We defended the
lawsuit, denied breach of the alleged lease agreement and further defended the
claim for past due rents under Section 16.004 of the Texas Civil Practice &
Remedies Code, i.e. we believe that the statute of limitations has tolled some
or all of the claims. The case was tried on May 12, 2005. The Court ruled in
our favor in the 11500 Northwest, LP case stating that the statute of
limitations did apply in this case and a Take Nothing Judgment has been signed
by the Court on January 18, 2006. 11500 Northwest, LP filed a Motion for a
New Trial on February 3, 2006. The Motion for New Trial was not granted and
became overruled as a matter of law after seventy five days. The required
Notice of Appeal to invoke appellate jurisdiction was not filed by 11500
Northwest, LP on or before April 18, 2006 and therefore this case is now
final.
Marathon Oil Company. A default judgment was taken against us in favor of
Marathon Oil Company on August 31, 1999 in the amount of $326,943 representing
past and future rentals under a lease agreement, together with $7,500 in
attorney's fees and post judgment interest at 10% per annum until paid.
Credit towards the judgment was ordered for sale of personal property by the
Sheriff or Constable. We believe the personal property sold for approximately
$28,000. To the extent that the property was leased during the unexpired
term, it is possible that there would be a mitigation of the damages claim in
our favor. We believe that some or all of the space was subsequently rented
approximately 90 days later. The remaining $306,443 has been accrued in our
financial statements under the heading "accrued expenses."
A lawsuit was filed by Julie Maranto, the former owner of Texas Source Group,
Inc. ("TSG") against us, Texas Source Group, Inc. and Gary Kimmons as CEO. The
cause of action from the pleadings appears to be breach of contract relating
to her employment agreement against TSG, breach of contract, statutory fraud,
breach of fiduciary duty, common law fraud and negligent misrepresentation
against GKI. Damages have not been specified. We filed a Counterclaim for
Rescission to unwind the transaction entered into effective August 19, 2004
based of material misrepresentation of material facts and fraud. Based on
preliminary discovery, we believe that a favorable outcome of this case for
GKI, now M Power, will be reached. The Maranto case has been settled through
mediation and settlement documents have been executed.
We are not aware of other claims or assessments, other than as described
above, which may have a material adverse impact on our financial position or
results of operations.
Item 2. Changes in Securities.
Preferred Shares Issued
- -----------------------
On January 20, 2006 the Board of Directors unanimously adopted a resolution
providing for the issuance of a series of One Thousand (1,000) shares of
Series D Preferred Stock to Gary Kimmons. These shares have the same dividend
rights as the common stock of the company and gives Mr. Kimmons the right to
vote on all shareholder matters equal to fifty-one (51%) percent of the total
vote. These shares were issued for services and were valued at $762,976.
Recent Sales of Unregistered Securities
- ---------------------------------------
In the three months ended March 31, 2006, we issued 10,340,000 post-split
shares of our common stock to various consultants for consulting services
rendered to the Company. The securities were registered under Regulation S-8.
The party to whom the shares were issued received information concerning the
Company. No underwriters were involved in the transactions and no commissions
were paid.
10
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of our securities holders during the first
quarter of our fiscal year.
Item 5. Subsequent Events
On April 18, 2006, M Power completed a financing agreement for up to
$2,000,000 with private investors. M Power received the first of three
traunches of the funding which are expected to be completed over the course of
the next several months. The first traunch of funding was in the amount of
$700,000. M Power will be issuing to the Investors secured convertible
debentures totaling $2,000,000 with a 6% interest rate and a maturity date of
April 18, 2009, as these traunches are received. The debentures are
convertible into common shares at a discount (using the "Applicable
Percentage") of the average of the lowest three (3) trading prices during the
twenty (20) trading day period prior to conversion. The Applicable Percentage
means 50%; provided, however, that the Applicable Percentage shall be
increased to (i) 55% in the event that a Registration Statement is filed
within thirty days of the closing and (ii) 60% in the event that the
Registration Statement becomes effective within one hundred and twenty days
from the Closing. M Power simultaneously issued to the private investors
seven year warrants to purchase 6,000,000 warrants at an exercise price of
$0.10. M Power is in the process of evaluating the instruments under SFAS 133
and EITF 00-19 for consideration of derivative accounting.
Item 6. Exhibits
List of Exhiits attached or incorporated by reference pursuant to Item 601 of
Regulation SB.
2.1 Corporate Reorganization Agreement between the Company and Julie
Maranto, dated August 13, 2004 (included as Exhibit 2.1 to the Form 8-K
filed August 19, 2004, and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation, dated August 11, 1995
(included as Exhibit 3.(i) to the Form 10-SB12G filed January 24, 1997,
and incorporated herein by reference).
3.2 Amended and Restated Bylaws, dated August 11, 1995 (included as Exhibit
3.(ii) to the Form 10-SB12G filed January 24, 1997, and incorporated
herein by reference).
3.3 Certificate of Amendment to the Certificate of Incorporation (included
as Exhibit 3.3 to the Form 10-KSB filed September 14, 1998, and
incorporated herein by reference).
3.4 Certificate of Amendment to the Certificate of Incorporation (included
as Exhibit 3.(i) to the Form 10-QSB filed May 5, 2003, and incorporated
herein by reference).
3.5 Certificate of Amendment to the Certificate of Incorporation (included
as exhibit 3.1 to the Current Report of Form 8-K on May 19, 2005, and
incorporated herein by reference).
4.1 Registration Rights Agreement between the Company and Benchmark
Consulting Inc., dated May 30, 2003 (included as Exhibit 10.37 to the
Form 10-QSB filed August 18, 2003, and incorporated herein by
reference).
11
4.2 Warrant Agreement between the Company and Benchmark Consulting Inc.,
dated May 30, 2003 (included as Exhibit 10.38 to the Form 10-QSB filed
August 18, 2003, and incorporated herein by reference).
4.3 Amended and Restated Certificate of Designation for Series B Convertible
Preferred Stock, dated March 2, 2005 (included as Exhibit 4.1 to the
Form 8-K filed March 10, 2005, and incorporated herein by reference).
4.4 Certificate of Designation for Series C Convertible Preferred Stock,
dated April 1, 2005 (included as Exhibit 4.1 to the Form 8-K filed April
13, 2005, and incorporated herein by reference).
4.5 Certificate of Designation of Series of Preferred Stock (included as
Exhibit 3.1 to Form 8-K filed January 25, 2006 and incorporated herein
by reference)
10.1 Promissory Note between the Company and BDO Seidman LLP, dated June 2,
2002 (included as Exhibit 10.22 to the Form 8-K filed November 6, 2002,
and incorporated herein by reference).
10.2 Non-Employee Directors and Consultants Retainer Stock Plan for the Year
2003, dated April 1, 2003 (included as Exhibit 4.2 to the Form S-8 filed
May 12, 2003, and incorporated herein by reference).
10.3 2004 Stock Option Plan (included as Exhibit 4.1 to the Form S-8 filed
April 5, 2004, and incorporated herein by reference).
10.4 Consulting Agreement between the Company and Deanna Slater, dated May
14, 2004 (included as Exhibit 10.68 to the Form 10-QSB filed May 19,
2004, and incorporated herein by reference).
10.5 Referral Fee Agreement between the Company and Shay Kronfeld, dated
July 23, 2004 (included as Exhibit 10.23 to the Form 10-QSB filed
November 22, 2004, and incorporated herein by reference).
10.6 Sublease Agreement between the Company and 432 Group, LLC, dated October
1, 2004 (included as Exhibit 10.25 to the Form 10-QSB filed November 22,
2004, and incorporated herein by reference).
10.7 Letter re: Agreement to retain Rubenstein Investor Relations, Inc.,
dated September 15, 2004 (included as Exhibit 99.2 to the Form 8-K filed
September 27, 2004, and incorporated herein by reference).
10.8 Referral Fee Agreement between the Company and Wade Brooks, dated August
30, 2004 (included as Exhibit 10.27 to the Form 10-QSB filed November
22, 2004, and incorporated herein by reference).
10.9 Referral Fee Agreement between the Company and Barry Bergman, dated
September 9, 2004 (included as Exhibit 10.28 to the Form 10-QSB filed
November 22, 2004, and incorporated herein by reference).
10.10 Referral Fee Agreement between the Company and Hantman & Associates
and/or Robert Hantman, dated August 27, 2004 (included as Exhibit 10.29
to the Form 10-QSB filed November 22, 2004, and incorporated herein by
reference).
10.11 Amended 2004 Stock Option Plan (included as Exhibit 4.1 to the Form S-8
filed December 28, 2004, and incorporated herein by reference).
10.12 Consulting Agreement between the Company and Alan Howarth, dated May 18,
2005 (included as Exhibit 10.80 to the Form 10QSB for June 30, 2005 and
filed on August 22, 2005 and incorporated herein by reference).
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10.13 Purchase Agreement between the Company and Alan Howarth, Gordon Jones,
Gary Kimmons, and Sheila Testa, dated May 25, 2005 (included as Exhibit
10.81 to the Form 10QSB for June 30, 2005 and filed on August 22, 2005
and incorporated herein by reference).
10.14 Purchase Agreement between the Company and Sunil Nariani, dated May 31,
2005 (included as Exhibit 10.82 to the Form 10QSB for June 30, 2005 and
filed on August 22, 2005 and incorporated herein by reference).
10.15 Consulting Services Agreement between the Company and Ronald C. Rogers,
dated July 13, 2005 (included as Exhibit 10.83 to the Form 10QSB for
June 30, 2005 and filed on August 22, 2005 and incorporated herein by
reference).
10.16 Consulting Services Agreement between the Company and William R.
Slaughter, dated July 13, 2005 (included as Exhibit 10.84 to the Form
10QSB for June 30, 2005 and filed on August 22, 2005 and incorporated
herein by reference).
10.17 Consulting Services Agreement between the Company and Mark Laisure,
dated May 15, 2005 (included as Exhibit 10.85 to the Form 10QSB for June
30, 2005 and filed on August 22, 2005 and incorporated herein by
reference).
10.18 Consulting Services Agreement between the Company and Sheila Testa dated
May 15 2005 (Filed with Form 10-KSB on April 20, 2006 as Exhibit 10.18,
and incorporated herein by reference)
10.19 Consulting Services Agreement between the Company and Bill Macdonald
dated June 16, 2005 (Filed with Form 10-KSB on April 20, 2006 as Exhibit
10.19 and incorporated herein by reference)
10.20 Investment Banking Agreement between the Company and Santa Fe Capital
dated August 19, 2005 (Filed with Form 10-KSB on April 20, 2006 as
Exhibit 10.20 and incorporated herein by reference)
10.21 Consulting Services Agreement between the Company and Sharon Shayner
dated September 9, 2005 (Filed with Form 10-KSB on April 20, 2006 as
Exhibit 10.21 and incorporated herein by reference)
10.22 Consulting Services Agreement between the Company and Meir Duke dated
September 9, 2005 (Filed with Form 10-KSB on April 20, 2006 as Exhibit
10.22 and incorporated herein by reference)
10.23 Amended 2004 Stock Option Plan (included as Exhibit 4.1 to the Form S-8
filed September 1, 2005, and incorporated herein by reference).
10.24 Investor Relations Agreement between the Company and Prestige
Procurement and Networking Services dated October 28, 2005 (Filed with
Form 10-KSB on April 20, 2006 as Exhibit 10.24 and incorporated herein
by reference)
10.25 Consulting Services Agreement between the Company and Sheila Testa dated
November 16, 2005 (Filed with Form 10-KSB on April 20, 2006 as Exhibit
10.25 and incorporated herein by reference)
10.26 Purchase Agreement between the Company and Steven Reuther and Samuel
Mauro, dated November 21, 2005 (included as Exhibit 2.1 to the Form 8-K
filed December 15, 2005, and incorporated herein by reference).
10.27 Employment Agreement between the Company and Tropical Printing LLC. and
Steven Reuther, dated November 22, 2005 (Filed with Form 10-KSB on April
20, 2006 as Exhibit 10.27 and incorporated herein by reference)
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10.28 Employment Agreement between the Company and Tropical Printing LLC. and
Samuel Mauro, dated November 22, 2005 (Filed with Form 10-KSB on April
20, 2006 as Exhibit 10.28 and incorporated herein by reference)
10.29 Non-Employee Director Agreement between the Company and Dick Meador,
dated December 31, 2005 (Filed with Form 10-KSB on April 20, 2006 as
Exhibit 10.29 and incorporated herein by reference)
10.30 Agency Agreement between the Company and Steven Reuther, dated December
13, 2005 (Filed with Form 10-KSB on April 20, 2006 as Exhibit 10.30 and
incorporated herein by reference)
10.31 Repurchase Agreement between the Company and Steven Reuther and Samuel
Mauro, dated March 10, 2006. (Filed Herewith)
10.32 Callable Secured Note between the Company and AJW Partners LLC., dated
April 18,2006. (Filed Herewith)
10.33 Callable Secured Note between the Company and AJW Offshore LTD., dated
April 18,2006. (Filed Herewith)
10.34 Callable Secured Note between the Company and AJW Qualified Partners,
LLC, dated April 18, 2006 (Filed Herewith)
10.35 Callable Secured Note between the Company and New Millennium Capital
Partners II, LLC., dated April 18, 2006. (Filed Herewith)
10.36 Stock Purchase Warrant between the Company and AJW Partners LLC., dated
April 18, 2006. (Filed Herewith)
10.37 Stock Purchase Warrant between the Company and AJW Offshore LTD., dated
April 18, 2006. (Filed Herewith)
10.38 Stock Purchase Warrant between the Company and AJW Qualified Partners,
LLC., dated April 18, 2006. (Filed Herewith)
10.39 Stock Purchase Warrant between the Company and New Millennium Capital
Partners II, LLC., dated April 18, 2006. (Filed Herewith)
10.40 Security Agreement between the Company and AJW Qualified Partners, LLC.,
AJW Offshore LTD., AJW Partners, LLC. and New Millennium Capital
Partners II, LLC., dated April 18, 2006. (Filed Herewith)
10.41 Intellectual Property Security Agreement between the Company and
AJW Qualified Partners, LLC., AJW Offshore LTD., AJW Partners, LLC. and
New Millennium Capital Partners II, LLC., dated April 18, 2006. (Filed
Herewith)
10.42 Registration Rights Agreement between the Company and AJW Qualified
Partners, LLC., AJW Offshore LTD., AJW Partners, LLC. and New Millennium
Capital Partners II, LLC., dated April 18, 2006. (Filed Herewith)
10.43 Securities Purchase Agreement between the Company and AJW Qualified
Partners, LLC., AJW Offshore LTD., AJW Partners, LLC. and New Millennium
Capital Partners II, LLC., dated April 18, 2006. (Filed Herewith)
10.44 Stock Purchase Warrant between the Company and E-Lionheart Associates,
LLC/ DBA Fairhills Capital dated April 18, 2006. (Filed Herewith)
10.45 Structuring Agreement between the Company and Lionheart Associates,
LLC/ DBA Fairhills Capital dated March 6, 2006. (Filed Herewith)
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10.46 Consulting Agreement between the Company and Lisa Fincher dated January
11, 2006. (Filed Herewith)
10.47 Consulting Agreement between the Company and D. Scott Elliott dated
January 11, 2006. (Filed Herewith)
21.1 List of Subsidiaries (Filed Form 10-KSB/A1 on April 21, 2006 and
incorporated herein by reference)
31.1 Certification of the Chief Executive Officer/Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed
herewith)
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed
herewith)
Dated: May 16, 2006 /s/ Gary F. Kimmons
By____________________________________
Gary F. Kimmons
President, Chief Executive Office and
Chief Financial Officer
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