**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


Washington,
      DC 20549




**FORM
      10-QSB**




**[X]
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES**




**EXCHANGE
      ACT OF 1934**




For
      the
      quarterly period ended March 31, 2007




**[
      ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES**




**EXCHANGE
      ACT OF 1934**




For
      the
      transition period from: ____________ to ____________




*Commission
      file number: 33-55254-26*




**POWERLINX,
      INC.**




(exact
      name of registrant as specified in its charter)





NEVADA
            50-0006815(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)








10901-A
                Roosevelt Blvd., Suite 200, ST.PETERSBURG, FL
            33716(Address
                of principal executive offices)
            (Zip
                Code)





(727)
      866-7440


(Registrant's
      telephone number, including area code)







Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15d of the Securities and Exchange Act of 1934 during
      the
      preceding 12 months (or 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. [X] Yes [ ] No




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of
      the
      Exchange Act).




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




The
      number of shares outstanding of Registrant's Common Stock, as of May 18, 2007:
      5,760,927







POWERLINX,
      INC.





INDEX





Part
      I -
      FINANCIAL INFORMATION





Item
                  1.Financial Statements.Condensed
                  Financial Statements
              
              Page
                  No.Condensed
                  Consolidated Balance Sheets As of March 31, 2007 (unaudited) and
                  December
                  31, 2006
              
              
              F
                  - 1Condensed
                  Consolidated Statement of Operations For the three months ended
                  March 31,
                  2007 and 2006 (unaudited)
              
              
              F
                  - 2Condensed
                  Consolidated Statement of Cash Flows For the three months ended
                  March 31,
                  2007 and 2006 (unaudited)
              
              
              F
                  - 3Notes
                  to Condensed Consolidated Financial Statements
              
              
              F
                  - 5Item
                  2. Management’s Discussion and Analysis or Plan of
                  Operations
              
              
              4Item
                  3.Controls and Procedures
              
              
              8Item
                  3A (T).Controls and Procedures
              
              
              8Part
                  II - OTHER INFORMATIONItem
                  1. Legal Proceedings
              
              
              9Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds
              
              
              9Item
                  3. Defaults Upon Senior Securities
              
              
              10Item
                  4. Submission of Matters to a Vote of Security Holders
              
              
              10Item
                  5. Other Information
              
              
              10Item
                  6. Exhibits
              
              
              10Signatures
              
              
              11






2


**PART
      I - FINANCIAL INFORMATION**




**Item
      1. Financial Statements**




The
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with the instructions to Form 10-QSB pursuant to the rules and
      regulations of the Securities and Exchange Commission and, therefore, do not
      include all information and footnotes necessary for a complete presentation
      of
      our consolidated financial position, results of operations, cash flows, and
      stockholders' deficit in conformity with generally accepted accounting
      principles. In the opinion of management, all adjustments considered necessary
      for a fair presentation of the results of operations and financial position
      have
      been included and all such adjustments are of a normal recurring nature.
      Operating results for the three months ended March 31, 2007 are not necessarily
      indicative of the results that can be expected for the year ending December
      31,
      2007.




As
      used
      in this Quarterly Report on Form 10-QSB (the “Quarterly Report”), the terms
      "we", "us", "our", the “Company,” and “PowerLinx” mean PowerLinx, Inc., unless
      otherwise indicated.




3
 **POWERLINX,
      INC.**


**CONSENSED
      CONSOLIDATED BALANCE SHEETS**






March
                31,
            
            December
                31,2007
            
            2006(Unaudited)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            
            
            
            $
            37,642
            
            $
            100,679Accounts
                receivable, net
            
            
            
            
            
            247,076
            
            
            89,721Investments
            
            
            
            
            
            17,387
            
            
            17,210Employee
                advances
            
            
            
            
            
            49,925
            
            
            40,485Inventories
            
            
            
            
            
            593,459
            
            
            684,296Prepaid
                expenses and other current assets
            
            
            
            
            
            33,173
            
            
            49,975Deferred
                financing costs
            
            
            
            
            
            54,562
            
            
            74,917Total
                current assets
            
            
            
            
            
            1,033,224
            
            
            1,057,283Intangible
                assets, net
            
            
            
            
            
            346,722
            
            
            377,290Deposits
            
            
            
            
            
            18,976
            
            
            18,976Property
                and equipment, net
            
            117,115
            
            
            137,638Total
                assets
            
            
            
            
            $
            1,516,037
            
            $
            1,591,187LIABILIITIES
                & STOCKHOLDERS' DEFICITCurrent
                liabilities:Accounts
                payable
            
            
            
            
            $
            697,316
            
            $
            647,009Accrued
                expenses
            
            
            
            
            
            639,318
            
            
            164,703Accrued
                severance payable
            
            
            
            
            
            25,500
            
            
            34,500Notes
                payable
            
            
            
            
            
            807,059
            
            
            308,824Liabilities
                of discontinued operations
            
            
            
            
            
            46,902
            
            
            40,754Convertible
                Debentures
            
            
            
            
            
            482,203
            
            
            271,292Derivative
                liability
            
            
            
            
            
            1,249,605
            
            
            3,206,121Total
                current liabilities
            
            
            
            
            
            3,947,903
            
            
            4,673,203Commitments
                and contingencies (Note 9)
            
            -
            
            
            -Stockholders's
                deficit:Series
                A convertible preferred stock, $1.00 par value;
            
            
            
            
            
            -
            
            
            -authorized
                30,000,000, none issued and outstandingCommon
                stock, $.001 par value, authorized 50,000,000
            
            
            
            
            
            5,287
            
            
            5,182shares;
                issued (5,287,355 - 2007; 5,182,321 - 2006)outstanding
                (5,277,883 - 2006; 5,172,849 -2006)Additional
                paid-in capital
            
            
            
            
            
            26,110,821
            
            
            26,004,958Treasury
                stock, at cost, 9,472 shares
            
            
            
            
            
            (287,757
            )
            
            (287,757
            )Accumulated
                deficit
            
            
            
            
            
            (28,260,217
            )
            
            (28,804,399
            )Total
                stockholderss' deficit
            
            
            
            
            
            (2,431,866
            )
            
            (3,082,016
            )Total
                liabilities and stockholders' deficit
            
            
            
            
            $
            1,516,037
            
            $
            1,591,187







The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




F-1


**POWERLINX,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


(Unaudited)








Three
                Months Ended March 31,2007
            
            
            2006Net
                revenue
            
            $
            402,233
            
            $
            211,585Cost
                of goods sold
            
            
            214,712
            
            
            127,080Gross
                Profit
            
            
            187,521
            
            
            84,505Operating
                expenses:Salaries
                and wages
            
            
            309,897
            
            
            289,318Professional
                and consulting fees
            
            
            134,152
            
            
            349,030Depreciation
                and amortization
            
            
            51,091
            
            
            108,798Research
                and development
            
            
            130,330
            
            
            132,207Advertising
                and promotions
            
            
            34,305
            
            
            54,396Rent
                and utilities
            
            
            44,939
            
            
            52,007Travel
                and entertainment
            
            
            44,583
            
            
            38,397Other
                expenses
            
            
            84,964
            
            
            126,540Total
                operating expenses
            
            
            834,261
            
            
            1,150,693Loss
                from operations
            
            
            (646,740
            )
            
            (1,066,188
            )Interest
                expense
            
            
            (689,818
            )
            
            (69,463
            )Other
                income
            
            
            137
            
            
            2,564Loss
                on extinguishment of debt
            
            
            (75,913
            )
            
            (1,502,286
            )Derivative
                gain
            
            
            1,956,516
            
            
            450,973Net
                income (loss)
            
            $
            544,182
            
            $
            (2,184,400
            )Income
                (loss) per common share,basic
                and diluted:
            
            $
            0.10
            
            $
            (0.48
            )Weighted
                average common sharesoutstanding,
                basic and diluted:
            
            
            5,265,405
            
            
            4,577,917






The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




F-2


**POWERLINX,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


(Unaudited)




Three
                Months EndedMarch
                31,2007
            
            2006Cash
                flows from operating activities:Net
                income (loss)
            
            $
            544,182
            
            $
            (2,184,400
            )Adjustments
                to reconcile net income (loss) to net cash flowsfrom
                operating activities:Stock-based
                compensation
            
            
            8,609
            
            
            86,924Amortization
            
            
            30,568
            
            
            86,417Accretion
                of debt discount
            
            
            237,349
            
            
            51,078Loss
                on debt extinquishment
            
            
            75,913
            
            
            1,502,286Derivative
                gain
            
            
            (1,956,516
            )
            
            (450,973
            )Depreciation
            
            
            20,523
            
            
            22,381Derivative
                expense
            
            
            15,363
            
            
            -Provision
                for bad debt
            
            
            -
            
            
            31,921Changes
                in operating assets and liabilitiesAccounts
                receivable
            
            
            (157,355
            )
            
            1,782Investments
            
            
            (177
            )
            
            -Employee
                advances
            
            
            (9,440
            )
            
            682Inventories
            
            
            90,837
            
            
            (58,041
            )Prepaid
                expenses and other current assets
            
            
            16,802
            
            
            79,350Deposits
            
            
            -
            
            
            (100
            )Accounts
                payable
            
            
            50,307
            
            
            (138,558
            )Accrued
                expenses
            
            
            474,615
            
            
            (160,030
            )Accrued
                severance payable
            
            
            (9,000
            )
            
            (39,000
            )Deferred
                revenue
            
            
            -
            
            
            3,495Liabilities
                of discontinued operation
            
            
            6,148
            
            
            (33,270
            )Net
                cash flows from operating activities
            
            
            (561,272
            )
            
            (1,198,056
            )Cash
                flows from investing activities:Purchase
                of property and equipment
            
            
            -
            
            
            -Net
                cash flows from investing activities
            
            
            -
            
            
            -Cash
                flows from financing activities:Proceeds
                from sales of common stock, net ofcosts
                of $19,730
            
            
            -
            
            
            177,074Proceeds
                from convertible debentures, net
            
            
            -
            
            
            -costs
                of $82,000
            
            
            -
            
            
            3,018,000Repayment
                of related party debt
            
            
            -
            
            
            (31,000
            )Proceeds
                from notes payable
            
            
            500,000
            
            
            75,000Repayment
                of notes payable
            
            
            (1,765
            )
            
            (3,530
            )Net
                cash flows from financing activities
            
            
            498,235
            
            
            3,235,544Net
                change in cash and cash equivalents
            
            
            (63,037
            )
            
            2,037,488Cash
                and cash equivalents at beginning of period
            
            
            100,679
            
            
            255,293Cash
                and cash equivalents at end of period
            
            $
            37,642
            
            $
            2,292,781







The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




F-3


**POWERLINX,
      INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED**


(Unaudited)





NON-CASH
      INVESTING AND FINANCING ACTIVITIES


For
                  the three months ended March
                  31,2007
              
              2006Issuance
                  of common stock for liabilities
              
              $
              -
              
              $
              $
                  150,069Issuance
                  of common stock for financing fees
              
              $
              -
              
              $
              $11,855Conversion
                  of notes payable to convertible debentures
              
              $
              -
              
              $
              $1,373,933Conversion
                  of convertible debentures to common stock
              
              $
              97,359
              
              $
              -Warrants
                  reclassified as derivatives (See Note 8)
              
              $
              -
              
              $
              (144,780
              )Issuance
                  of common stock for interest
              
              $
              3,609
              
              $
              -OTHER
                  CASH FLOW INFORMATIONCash
                  paid for income taxes
              
              $
              -
              
              $
              -Cash
                  paid for interest
              
              $
              -
              
              $
              2,633






The
      accompanying notes are an integral part of these condensed consolidated
      financial statements.




F-4




**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**




1.
      Basis
      of presentation and significant accounting policies:




The
      accompanying condensed consolidated financial statements have been prepared
      in
      accordance with generally accepted accounting principles for interim financial
      information and with the instructions to Form 10-QSB and Rule 10-01 of
      Regulation S-B. Accordingly, they do not contain all of the information and
      footnotes required by generally accepted accounting principles for complete
      financial statements




In
      the
      opinion of management, the accompanying condensed consolidated financial
      statements reflect all adjustments (consisting only of normal recurring
      adjustments) considered necessary for a fair presentation of PowerLinx, Inc.'s
      (the "Company") financial position and the results of its operations and its
      cash flows for the three months ended March 31, 2007 and 2006. These condensed
      consolidated financial statements should be read in conjunction with the
      Company's audited 2006 consolidated financial statements, including the notes
      thereto, and the other information set forth in the Company's Annual Report
      on
      Form 10-K, for the year ended December 31, 2006. Operating results for the
      three
      month period ended March 31, 2007, are not necessarily indicative of the results
      that can be expected for a full fiscal year.





Income
      (Loss) Per Share:




Income
      (loss) per share (“EPS”) in is computed by dividing the net loss applicable to
      common stockholders by the weighted average common shares outstanding without
      including any potentially dilutive securities. Diluted EPS is computed by
      dividing the net loss applicable to common stockholders for the period by the
      weighted average common shares outstanding plus, when their effect is dilutive,
      common stock equivalents.




Potentially
      dilutive securities, which have been excluded from the determination of diluted
      EPS because their effect would be anti-dilutive, are as follows:






Three
                    Months Ended
                March
                  31,
              (unaudited)2007
            
            2006Shares
                Underlying Converible Debentures (See Note 7)
            
            
            3,521,642
            
            
            3,622,618Warrants
            
            
            2,004,443
            
            
            2,027,745Options
            
            
            134,116
            
            
            190,631Total
                potentially dilutive shares excluded:
            
            
            5,660,201
            
            
            5,840,994








Financial
      instruments:





Financial
      instruments at March 31, 2007 and 2006 consist of cash and cash equivalents,
      accounts receivable, trade payables, accrued expenses, derivative liabilities,
      notes payable and convertible debentures. As of March 31, 2007 and 2006 the
      fair
      values of cash and cash equivalents, accounts receivable, trade payables,
      accrued expenses approximated their respective carrying values, due to their
      relative current maturities. The estimated fair value of notes payable
      approximated $807,000 at March 31, 2007, based upon the present value of cash
      flows. The estimated fair value of convertible debentures approximated
      $4,587,474 at March 31, 2007, based upon the present value of cash
      flows.





The
      Company generally does not use derivative financial instruments to hedge
      exposures to cash-flow risks or market-risks that may affect the fair values
      of
      its financial instruments. However, certain other financial instruments, such
      as
      warrants and embedded conversion features that are indexed to the Company’s
      common stock, are classified as liabilities when either (a) the holder possesses
      rights to net-cash settlement or (b) physical or net-share settlement is not
      within the control of the Company. In such instances, net-cash settlement is
      assumed for financial accounting and reporting, even when the terms of the
      underlying contracts do not provide for net-cash settlement. Such financial
      instruments are initially recorded at fair value and subsequently adjusted
      to
      fair value at the close of each reporting period.





The
      caption Derivative Financial Instruments consists of (i) the fair values
      associated with derivative features embedded in the Convertible Debentures,
      (ii)
      the fair values of the detachable warrants issued in connection with the
      Convertible Debentures and (iii) the fair values of other warrants and
      convertible instruments where share-settlement is presumed not to be in the
      Company’s control. (See Note 8)





Concentrations:




Accounts
      receivable are concentrated in the Security and DC Transportation products
      segments and credit losses have been within management's expectations. Although
      the Company serves a large and varied group of customers, two customer accounted
      for 26% of the Company’s
      total net revenues, and 33% of the DC Transportation products segment net
      revenues for the three months ended March 31, 2007. For the three months ended
      March 31, 2006, one customer accounted for 50% of the Company’s total net
      revenues, and 44% of the DC Transportation products segment net
      revenues.


Unrecognized
        tax benefits:
 
 The
        Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
        Uncertainty in Income Taxes, an Interpretation of FASB Statement No.109” (“FIN
        48”) on January 1, 2007.  As a result of the implementation of FIN 48, the
        Company has not recognized any liability for unrecognized tax benefits. The
        Company’s review indicates that any unrecognized tax benefits would not create a
        material liability but would merely reduce the net operating loss deferred
        tax
        asset which has been fully
        reserved for with a 100% valuation allowance.  Management
        believes there should be no significant change in the total unrecognized
        tax
        benefits over the next twelve-month period. It is not anticipated that any
        of
        the total unrecognized tax benefits, if recognized, would materially affect
        the
        effective tax rate. The
        Company recognizes interest and penalties related to uncertain tax positions
        in
        income tax expense.  As of March 31, 2007, the Company has not accrued
        any interest or penalties related to uncertain tax
        positions.


F-5


**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**




2.
      Liquidity and management's plans:







The
      accompanying condensed consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. However, the Company
      has incurred losses from operations of $646,740 and $1,066,188 during the three
      months ended March 31, 2007 and 2006, respectively. In addition, during those
      periods, the Company has used cash of $561,272 and $1,198,056 respectively,
      in
      its operating activities and has a stockholders' deficit at March 31, 2007.
      These conditions raise substantial doubt about the Company's ability to continue
      as a going concern.





The
      Company has allocated significant resources to the development of new power
      line
      technologies and products that will be available for sale and/or licensing
      during the second or third quarters of fiscal year 2007. The Company’s ability
      to continue will be dependent upon achieving profitable operations through
      the
      licensing and sales of these new technologies and products.




The
      Company’s ability to continue as a going concern is dependent upon (i) raising
      additional capital to fund operations (ii) the further development of the
      Security, DC Transportation, and new Audio products segments, and (iii)
      ultimately the achievement of profitable operations. During the three months
      ended March 31, 2007, the Company secured financing of $500,000 in the form
      of
      short-term notes payable from its primary financial partner. While the proceeds
      of this financing did mitigate the Company’s liquidity difficulties for the
      three months ended March 31, 2007, additional funding will be required to fund
      the launch of the Company’s new power line products and technologies, and to
      fund operations through December 31, 2007, or until it can achieve
      profitability. The ability of the Company to sustain its operations for a
      reasonable period without further financing cannot be assured and the condensed
      consolidated financial statements do not include any adjustments that might
      arise as a result of this uncertainty.








3.
      Segment information:





The
      Company operates in three identifiable industry segments. The Marine Products
      Segment markets and sells underwater video cameras, lighting and accessories
      principally to retail sporting goods businesses throughout the United States.
      The Security Products Segment develops, markets, licenses, and sells proprietary
      power line video security devices and consumer electronic products; to
      retailers, governmental agencies, commercial businesses, and original equipment
      manufacturers, throughout the United States. The DC Transportation Products
      Segment develops power line rear vision systems and sources a full line of
      accident avoidance products for all classes of vehicles in the transportation
      industry. The products are sold to fleets, bodybuilders, distributors and
      original equipment manufacturers throughout the United States. The Company's
      facilities and other assets are not distinguished among the identifiable
      segments. Other financial information about the Company's segments is as
      follows:





Three
                months ended March 31, 2007Security
            
            Marine
            
            DC
                TransProducts
            
            Products
            
            Products
            
            TotalNet
                revenue
            
            $
            36,762
            
            $
            57,736
            
            $
            307,735
            
            $
            402,233Cost
                of sales
            
            $
            27,269
            
            $
            33,576
            
            $
            153,867
            
            $
            214,712Gross
                profit
            
            $
            9,493
            
            $
            24,160
            
            $
            153,868
            
            $
            187,521Research
                and development:Stock
                based
            
            $
            -
            
            
            
            
            
            
            
            $
            -Other
            
            $
            123,813
            
            $
            6,517
            
            $
            -
            
            $
            130,330Total
                R & D
            
            $
            123,813
            
            $
            6,517
            
            $
            -
            
            $
            130,330







F-6


**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**







Three
                months ended March 31, 2006Security
            
            Marine
            
            DC
                TransProducts
            
            Products
            
            Products
            
            TotalNet
                revenue
            
            $
            9,552
            
            $
            59,386
            
            $
            142,647
            
            $
            211,585Cost
                of sales
            
            $
            8,119
            
            $
            36,225
            
            $
            82,736
            
            $
            127,080Gross
                profit
            
            $
            1,433
            
            $
            23,161
            
            $
            59,911
            
            $
            84,505Research
                and development:Stock
                based
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Other
            
            $
            103,122
            
            $
            1,320
            
            $
            27,765
            
            $
            132,207Total
                R & D
            
            $
            103,122
            
            $
            1,320
            
            $
            27,765
            
            $
            132,207







4.
      Inventories:




Inventories
      consisted of the following:





March
                31,
            
            December
                31,2007
            
            2006Component
                Parts
            
            $
            214,685
            
            $
            236,481Finished
                Goods
            
            $
            378,774
            
            $
            447,815$
            593,459
            
            $
            684,296







5.
      Intangible assets:




Intangible
      assets consist of the following:





March
                31,2007
            
            December
                31,(unaudited)
            
            2006Patents
            
            $
            2,318,961
            
            $
            2,318,961Software
                license agreement
            
            
            461,360
            
            
            461,360Trademark
            
            
            93,925
            
            
            93,924Acumulated
                amortization
            
            
            (2,527,524
            )
            
            (2,496,955
            )$
            346,722
            
            $
            377,290












6.
      Notes
      Payable:





As
      of
      March 31, 2007, the Company had three outstanding short-term unsecured
      promissory notes, aggregating $800,000 in principal, and a remaining balance
      of
      $7,059 on a 17 month unsecured note held by an individual from whom the Company
      purchased office equipment. The notes payable mature as follows:


Balance
            
            
            
            MaturityMarch
                31, 2007
            
            
            
            Date$
            300,000
            
            
            (1)
            
            
            October
                28, 2006300,000
            
            
            (1)
            
            
            February
                28, 2007200,000
            
            
            (1)
            
            
            May
                5, 20077,059
            
            
            (2)
            
            
            July
                15, 2007Total
            
            $
            807,059







F-7


**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**







(1)
      Each
      note bears an annual interest rate of 8% with interest due and payable upon
      the
      maturity date and reverts to an 18% default interest rate for any principal
      and
      interest outstanding after the maturity date.  As of March 31, 2007, the
      principal balances of all promissory notes remained outstanding and the Company
      is currently negotiating a waiver and term extension with the note holder (See
      Subsequent Events, Note 10). Unpaid interest of $33,006 and $11,866 as of March
      31, 2007 and December 31, 2006, respectively, is included in accrued expenses
      in
      the accompanying condensed consolidated balance sheets.





(2)
      Note
      is a non-interest bearing with payments in the amount of $1,765 due and payable
      each month.







7.
      Convertible Debentures





On
      March
      16, 2006, the Company entered into a Securities Purchase Agreement (the
      "Purchase Agreement"), with several accredited investors (collectively the
      "Purchasers"), under which the Company agreed to issue and sell to the
      Purchasers in a private placement up to $4,473,933 aggregate principal amount
      of
      8% Convertible Debentures, due March 22, 2008 (the "Convertible Debentures")
      and
      detachable warrants to purchase 1,841,335 shares of common stock (the
      "Warrants") for proceeds of $3,100,000 and $1,373,933 of pre-existing notes
      and
      accrued interest (the "Proceeds"). Financing costs amounted to $82,000. On
      March
      23, 2006 the Company issued $4,073,933 face value of the Convertible Debentures
      for cash of $2,700,000 and the pre-existing notes. On March 27, 2006 and March
      29, 2006, the Company issued $250,000 and $150,000, respectively, of Convertible
      Debentures for cash.





The
      Purchasers received registration rights related to the common shares underlying
      the conversion feature of the Convertible Debentures and the Warrants. The
      Registration Rights include requirements for filing, effectiveness, continued
      effectiveness and continued listing over the term of the outstanding
      instruments. The Registration Rights Agreement provides for monthly liquidating
      damages of up to 2.0% for failure to achieve or maintain effectiveness and
      listing. In addition, the Convertible Debentures provide for a mandatory
      redemption of 120% of outstanding face value for defaults under the Debenture
      and Registration Rights Agreements.





During
      the quarter ending March 31, 2007, $117,873 face value of the debenture was
      converted into 95,444 shares of the Company’s common stock. The Company
      recognized a loss on extinguishment of $75,914 in conjunction with those
      conversions.





8.0%
      Convertible Debentures, Warrants and Other Derivatives :





The
      carrying value of the Company’s 8.0%, Face Value $4,473,933 Convertible
      Debentures amounted to $459,674 at March 31, 2007. Amortization of the debt
      discount, included in interest expense, amounted to $196,631 for the three
      months ended March 31, 2007.





The
      Convertible Debenture Financings included registration rights and certain other
      terms and conditions related to share settlement of the embedded conversion
      features and the warrants that the Company has determined are not within its
      control. In addition, certain features associated with the financings, such
      as
      variable redemption rates afforded the Purchasers render the number of shares
      issuable to be indeterminate. These instruments and derivative elements are
      carried at their fair values in the accompanying condensed consolidated balance
      sheets.





Derivative
      liabilities consist of the following at March 31, 2007:





Embedded
                derivative instruments
            
            $
            232,813Freestanding
                derivatives (warrants)
            
            
            1,012,936Other
                derivative financial instruments (1)
            
            
            3,856$
            1,249,605





(1)
            Other
                derivative financial instruments represent the fair values of warrants
                and
                other convertible instruments that were reclassified from stockholders’
                equity when, in connection with the Convertible Debenture Financings,
                the
                Company determined that it no longer had sufficient authorized and
                unissued shares to settle all of its instruments. The balance in
                the table
                above represents the fair value at March 31,
                2007.




The
      following tabular presentation reflects the number of common shares into which
      the aforementioned derivatives are indexed at March 31, 2007:





Common
                shares indexed:Embedded
                derivative instruments
            
            
            4,158,048Freestanding
                derivatives (warrants)
            
            
            1,883,761Other
                derivative financial instruments
            
            
            120,6826,162,491





Income
      (expense) for the three months ended March 31, 2007 associated with adjustments
      recorded to reflect the aforementioned derivatives at fair value amounted to
      $1,956,516.


F-8


**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**







Fair
      value considerations for derivative financial instruments as of March 31,
      2007 :





Freestanding
      derivative instruments, consisting of the Warrants and reclassified derivative
      instruments that arose from the Convertible Debenture Financing are valued
      using
      the Black-Scholes-Merton valuation methodology because that model embodies
      all
      of the relevant assumptions that address the features underlying these
      instruments. Significant assumptions included in this model as of March 31,
      2007
      are as follows:





OtherInstrument
            Warrants
            DerivativesExercise
                prices
            $2.375
            $5.00--$25.00Term
                (years)
            4.00
            1.0—8.75Volatility
            141%
            135.65%--136.87%Risk-free
                rate
            4.58%
            4.58%





Embedded
      derivative instruments consist of multiple individual features (conversion
      features, redemption features, and registration rights) that were embedded
      in
      the Convertible Debentures. The Company evaluated all significant features
      of
      the hybrid instruments and, where required under current accounting standards,
      bifurcated features for separate report classification. These features were,
      as
      attributable to each Debenture, aggregated into one compound derivative
      financial instrument for financial reporting purposes. These compound embedded
      derivative instruments are valued using the Flexible Monte Carlo methodology
      because that model embodies certain relevant assumptions (including, but not
      limited to, interest rate risk, credit risk, and Company-controlled/mandatory
      redemption features) that are necessary to value these complex
      derivatives.





Significant
      terms and assumptions included in this model as of March 31, 2007 are as
      follows:





Conversion
                price
            
            $
            1.235Actual
                term (years)
            
            
            2.0Equivalent
                term (years)
            
            
            1.0Equivalent
                volatility
            
            
            136.87
            %Equivalent
                risk-adjusted interest rate
            
            
            17.44
            %Equivalent
                risk-adjusted yield rate
            
            
            92.62%
                - 107.24
            %





Equivalent
      amounts reflect the net results of multiple modeling simulations that the Monte
      Carlo Simulation methodology applies to underlying assumptions.





As
      of
      March 31, 2007 and December 31, 2006, the Company was in default under the
      terms
      of the Purchase Agreement and the Debentures issued on March 22, 2006. The
      terms
      of the Purchase Agreement and the Debenture required that the Company generate
      gross profit in excess of $300,000 per month on average during the period from
      October 1, 2006 to December 31, 2006. Under the default provisions; upon the
      Company delivering an Event of Default Notice to Purchasers (Debenture holders)
      or the Purchasers becoming aware of an Event of Default, the Purchasers may
      require the Company to redeem all or any portion of their Debenture by
      delivering an “Event of Default Redemption Notice” to the Company. At that time
      the Company would be required to redeem the requested portion of the debenture
      at a redemption value calculated in accordance with the default provisions
      in
      the March 22, 2006 Securities Purchase Agreement, to be no less than 120% of
      the
      principal amount requested to be redeemed. At March 31, 2007, the Company had
      not negotiated a form of a Waiver Agreement with the Purchasers covering the
      Company’s inability to meet this covenant. The Company has not received an
“Event of Default Redemption Notice” from any Purchaser and is currently engaged
      in negotiating with the Purchasers in order to enter into a waiver agreement
      covering the aforementioned default.




Because
      the Company was in default as of March 31, 2007 and December 31, 2006, and
      while
      under default, may receive an “Event of Default Redemption Notice” at any time;
      the liabilities associated with the Debentures on the accompanying condensed
      consolidated balance sheets, as presented, have been reclassified from long-term
      to current liabilities.





In
      accordance with the terms of the March 22, 2006 Convertible Debenture and
      Securities Purchase Agreement, interest on the convertible debentures is due
      annually. The interest for the first year was due on March 21, 2007 at a stated
      rate of 8% if paid in cash, or 10% if paid in common stock, at the Company’s
      discretion. The Company intends to pay the interest in common stock and during
      the three month period ended March 31, 2007, recorded interest expense of
      $427,722 associated with the shares due to debenture holders. The amount
      represents 346,333 shares valued at $1.235 per share in accordance with the
      aforementioned financing agreements.




F-9


**POWERLINX,
      INC.**


**NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **FOR
        THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**
 **(UNAUDITED)**
  8.
        Stockholders' deficit:




**2007
      Common Stock Issuances:**




During
      the three months ended March 31, 2007, the Company issued 6,667 shares of common
      stock to a consultant for marketing services rendered during the period. The
      shares were valued at $5,000 based on the closing market price of the Company's
      common stock on the date of issuance. The shares were registered on Form S-8
      filed with the Securities and Exchange Commission on September 29,
      2006.




During
      the three months ended March 31, 2007, the Company issued 2,923 shares of common
      stock to a debenture holder as payment for interest. The shares were valued
      at
      $3,609, or 1.235 per share, in accordance with the fixed conversion rate as
      set
      forth in the March 22, 2006 Convertible Debenture and Securities Purchase
      Agreement (See Note 7). The shares were registered on Form SB-2 as filed with
      the Securities and Exchange Commission, effective October 4, 2006.




During
      the three months ended March 31, 2007, the Company issued 95,444 shares of
      common stock to debenture holders for conversion of debentures. The shares
      were
      valued at $117,873 or 1.235 per share, in accordance with the fixed conversion
      rate as set forth in the March 22, 2006 Convertible Debenture and Securities
      Purchase Agreement (See Note 7). The shares were registered on Form SB-2 as
      filed with the Securities and Exchange Commission, effective October 4,
      2006.




9.
      Commitments and contingencies:





Material
      Commitments:





On
      March
      15, 2007, the Company signed a two year Consulting Agreement (the “Agreement”)
      with a consulting company (the “Consultant”) hired to assist the Company in
      areas of strategic business planning, financial advisory, and investor and
      public relations services; and specifically to design and implement an investor
      and public relations program designed to make the investing public knowledgeable
      about the benefits of stock ownership in the Company. Under the Agreement,
      the
      Company agreed to pay the Consultant three thousand dollars ($3,000.00) per
      month, payable on the 15th of each month, commencing on the date of the
      agreement, and 440,000 shares of the Company’s common stock restricted for a
      year under Rule-144 of the Act (the “Shares”); as total and complete
      consideration for the services to be provided by the Consultant to the Company.
      Under the Agreement, as amended, the Consultant will commence earning Shares
      on
      May 1, 2007, earning one-twelfth (1/12) of the total Shares to be issued under
      the Agreement each month, for twelve consecutive months. The issuance of Shares
      shall occur in four equal periodic installments over the course of twelve (12)
      months, on the last day of each three month earning period as follows; 110,000
      Shares on July 31, 2007, 110,000 Shares on October 31, 2007, 110,000 on January
      31, 2008, and 110,000 on April 30, 2008. Either party may terminate the
      agreement upon a sixty (60) day written notice. In the event of termination,
      the
“Termination Date” will be the 60 th day
      after the written termination notice is properly delivered in accordance with
      the terms of the Agreement. Any cash or Shares earned by the Consultant up
      to
      the Terminate Date will be pro-rated to the day, based on a 360 day calendar
      year.








On
      April
      30, 2007, the Company executed an amendment to the original April 2, 2004 lease
      agreement for office space it leases in Concord, California where its research
      and development operation resides. The amendment extends the lease for an
      additional year, commencing May 1, 2007 through April 30, 2008. The total
      commitment due under the amendment equals $24,203, payable in equal monthly
      installments of $2,017.





The
      Company leases its office and warehouse facilities under non-cancellable leases.
      Minimum lease payments under the non-cancellable operating leases as of March
      31, 2007 are as follows:




R
                  & D Office
              
              CorporateLease
              
              Office
                  LeaseConcord,
                  CA
              
              St.
                  Petersburg, FL
              
              TotalYears
                  ending March 31,2008
              
              $
              24,203
              
              $
              86,557
              
              $
              110,7602009
              
              
              2,017
              
              
              89,985
              
              
              92,0022010
              
              
              -
              
              
              93,413
              
              
              93,4132011
              
              
              -
              
              
              96,841
              
              
              96,8412012
              
              
              -
              
              
              49,706
              
              
              49,706$
              26,220
              
              $
              416,502
              
              $
              442,722


The
      Company recorded rent expense of $30,420 and $38,617 under non-cancellable
      leases for the three months ended March 31, 2007 and 2006,
      respectively.




F-10


**POWERLINX,
      INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**FOR
      THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006**


**(UNAUDITED)**





Litigation,
      claims and assessment:




*Reed
      Elsevier, Inc.*





On
      April
      26, 2007 the Company learned that a default judgment had been entered against
      it
      on August 1, 2006 in the Circuit Court of the 6 th Judicial
      Circuit of Pinellas County, Florida, in the amount of $20,192; to the plaintiff
      Reed Elsevier, Inc. The obligation is associated with a commitment made in
      December of 2004, by a former officer of the Company, for floor space at a
      trade
      show in March of 2005, at which the Company did not attend. The Company has
      retained counsel to negotiate a resolution to the matter. The Company recorded
      a
      liability in the amount of $22,203, including post judgment interest, which
      is
      included in accrued expenses in the accompanying March 31, 2007 condensed
      consolidated balance sheet.





*Guestlinx,
      LLC*




On
      May
      19, 2006 the Company learned that a default judgment had been entered against
      it
      on May 3, 2006 in the Superior Court of California, Orange County, in the amount
      of $90,561, to the plaintiff Guestlinx, LLC. The obligation is associated with
      the Hotel/MDU product segment, the operations of which were discontinued in
      April of 2005. The judgment was granted based on an action filed by Guestlinx,
      LLC on November 2, 2005. We had no prior knowledge of the action and believe
      it
      was never properly served. We retained counsel in California, and on August
      4,
      2006 were successful in having the judgment set aside for improper service.
      We
      had previously recorded a liability associated with this dispute in the amount
      of $46,352. On December 8, 2006, we negotiated a settlement and release
      agreement at a mandatory settlement conference, in the amount of $52,500. We
      remitted $16,250 toward the settlement amount on December 15, 2006, and the
      remaining balance of $36,250 was recorded as an accrued liability at December
      31, 2006. Under the agreement, we were required to pay the remaining
      balance by February 15, 2007, but were unable to do so. The agreement provides
      for the plaintiff to receive a stipulated judgment in the amount of $60,000
      (less amounts remitted) if we are in default of the agreement. On April 18
      2007,
      the plaintiff filed for and received the default judgment and the Company’s
      counsel is currently working with the plaintiff on a revised payment schedule.
      The Company increased the aforementioned liability in the amount of $7,500
      to
      account for the additional obligation incurred under the stipulated judgment.
      The amounts are included in accrued expenses in the accompanying March 31,
      2007
      and December 31, 2006 condensed consolidated balance sheets.








10.
      Subsequent Events:





On
      May
      14, 2007, the Company received $50,000 in cash from its primary finance partner,
      the proceeds of which are included in a note payable that consolidates all
      outstanding notes payable with this finance partner. The Company issued a new
      consolidated note payable in the amount of $898,661which includes the following;
      the retirement of the September 14, 2006 note payable in the principal amount
      of
      $300,000, the retirement of the January 29, 2007 note payable in the principal
      amount of $300,000, the retirement of the March 21, 2007 note payable in the
      amount of $200,000, all accrued interest (including default rate interest of
      18%) on the three aforementioned notes, and $50,000 in new proceeds received
      on
      May 14, 2007. The note is due on July 13, 2007, with principal and interest
      due
      and payable upon maturity. The note bears an 8% interest rate and an 18% default
      interest rate for all principal amounts outstanding beyond the maturity
      date.


F-11





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




**Cautionary
      Statement Regarding Forward-Looking Statements**




You
      should read the following discussion and analysis in conjunction with the
      Financial Statements and related Notes contained elsewhere in this Quarterly
      Report on Form 10-QSB (the "Report"). The information in this Report is not
      a
      complete description of our business or the risks associated with an investment
      in our common stock. We urge you to carefully review and consider the various
      disclosures made by us in this Report and in our other reports filed with the
      SEC, including our Annual Report on Form 10-K for the year ended December 31,
      2006.




**The
      section entitled "Risk Factors" set forth in our Annual Report on Form 10-K
      for
      the year ended December 31, 2006 and similar types of discussions in other
      SEC
      filings discuss some of the important risks that may affect our business,
      results of operations and financial condition.**




Some
      of
      those risks are as follows:




·
            Our
                business depends on the protection of our intellectual property and
                may
                suffer if we are unable to adequately protect our intellectual
                property.




·
            Our
                stock price can be extremely
                volatile.




You
      should carefully consider those risks, in addition to the other information
      in
      this Report and in our other filings with the SEC, before deciding to invest
      in
      our Company or to maintain or decrease your investment.




This
      Report may contain forward-looking @ statements within the meaning of Section
      17A of the Securities Exchange Act of 1933, as amended, and Section 21E of
      the
      Securities Exchange Act, as amended. Examples of forward-looking statements
      include, but are not limited to: (a) projections of our revenues, capital
      expenditures, growth, prospects, dividends, capital structure and other
      financial matters; (b) statements of our plans and objectives; (c) statements
      of
      our future economic performance; (d) statements of assumptions underlying other
      statements and statements about us and our business relating to the future;
      and
      (e) any statements using the words "believes," "budget," "target,"
      "goal," "anticipate," "expect," "plan," "outlook,"
      "objective," "may," "project," "intend," "estimate," or similar
      expressions. These statements are only predictions. These statements are not
      guarantees of future performance and are subject to certain risks, uncertainties
      and assumptions that are difficult to predict.




We
      believe it is important to communicate our expectations. However, there may
      be
      events in the future that we are not able to accurately predict or over which
      we
      have no control. Our actual results and the timing of certain events could
      differ materially from those anticipated in these forward-looking statements
      as
      a result of certain factors.




**OVERVIEW**




Our
      current products, and products and technologies under development, are based
      on
      our proprietary analog and digital power line communication technology (PLC).
      Our PLC technology has been developed to transmit voice, video, audio and data
      either individually, or in combination. PLC transmission can take place over
      power lines, twisted pair wires and coaxial cables in AC and DC power
      environments, through any power grid. We also develop, manufacture and market
      underwater video cameras, lights and accessories for the marine, commercial
      and
      consumer retail markets.





Through
      fiscal year ended December 31, 2006 and the three months ended March 31, 2007,
      our power line products have been sold successfully into primarily two markets;
      security and transportation. Our single analog camera, “SecureView”, is
      currently being sold to Home Shopping Network and Sam’s Club and has been the
      primary source of revenue in this segment. The Company will expand its product
      line in the security / video surveillance market segment in 2007 with the
      introduction of a molt-camera analog security system and a digital IP Netcam.





We
      believe our new IP Netcam is a perfect way to remotely monitor either a home
      or
      small business from a different location using a PC. The IP Netcam uses your
      home’s electrical wiring as a “digital pipeline” to deliver streaming video from
      up to 8 individual cameras around your home or business. Each camera is actually
      a sophisticated “video server” that configures itself automatically within your
      PC. Simply plug the camera into any electrical wall outlet, plug the companion
      receiver into any electrical outlet, and connect the base to your network or
      cable modem. Once connected, your cameras are available in a secure network
      available only to authorized users. Market statistics show that The IP Camera
      market is expected to grow by 20% annually, with projected segment sales of
      $649
      million by 2009. We have found in this marketplace that internet users want
      to
      monitor their homes and businesses remotely. In fact, 56% want remote monitoring
      of home and business webcams, 45% want to manage home security via a PC, and
      47%
      want network cameras for home security.





In
      our
      transportation products segment, in addition to power-line rear vision systems,
      we have continued to upgrade and expand our product offerings and now carry
      a
      full line of accident avoidance products including hard wired vision systems,
      DVRs, and GPS for tracking and directions.


4


For
      the
      three months ended March 31, 2007, we were able to improve our operating results
      significantly compared to the same period ended March 31, 2006. Net revenues
      of
      $402,200 for the three months ended March 31, 2007 increased 90% compared to
      net
      revenues for the same period ended March 31, 2006. Operating expenses of
      $834,300 for the three months ended March 31, 2007 decreased 27% compared to
      operating expenses for the same period ended March 31, 2006. Loss from
      operations of $646,700 for the three months ended March 31, 2007 decreased
      39%
      compared to the same period ended March 31, 2006.





The
      primary reason for the increase in net revenues was the increased sales volume
      from our transportation division. Net revenues in the transportation division
      increased 116%, to $307,700 for the three months ended March 31, 2007, from
      $142,600 for the same period ended March 31, 2006. The growth in this segment
      was driven primarily by two factors. First, the industry has an extremely
      lengthy sales cycle, and the efforts made by our sale personnel during 2006,
      and
      targeted trade show participation during the same year, has resulted in the
      acquisition of new customers and distributors that have been in our sales
“pipeline”. Second, we have continued to expand and upgrade our product line
      allowing us to gain incremental revenues from existing customers who may have
      in
      the past purchased certain systems and components from competing
      suppliers.





As
      previously announced, we will launch a new product segment in 2007; the Audio
      Segment, with the introduction of three products which transmit audio over
      the
      power line. In the Audio Segment, our business plan is focused on leveraging
      our
      proprietary technologies, and to deliver the next generation of power line
      communication products aimed at the wireless audio market. Our target market
      will be the home-based user and small office user. Our research has concluded
      that some of the fastest growing areas of the consumer market can benefit from
      our technology. The home audio sales market will be approximately $6 billion
      in
      2007, largely driven by the portable audio market. The portable audio market
      includes Apple Computer Inc.'s iPod player and Microsoft Corp.'s recently
      launched Zune player, as well as other MP3-format audio players. Sales of
      portable audio players will account for 90 percent of all audio sales in 2007,
      with an estimated 41 million portable audio players being shipped, compared
      to
      the 34 million players shipped in 2006. The research conclusively shows that
      the
      popularity of digital music stored on PC's, Mac's, Apple’s iPod®, and MP3
      players has led to an increased demand by consumers to play stored music
      anywhere in their home or office.





In
      the
      multi-billion dollar home theatre market, we have found that a large number
      of
      consumers have cited two main reasons of dissatisfaction with their home theatre
      systems: 1) there were too many wires that had to be connected to make the
      system work as advertised; and 2) many of the wires were exposed due to the
      distance of the system components from the system base. Because of these two
      reasons, a large number of home theatre systems do not have the rear speakers
      hooked up at all, resulting in less than expected performance of the system.
      This lack of overall performance is a problem not only for consumers, but for
      manufacturers as well.





**1)**  **Tune
      Dog** **TM** :
      This is
      an iPod/MP3 accessory, complete with audio speakers, which will allow the user
      to send music wirelessly to any room in their home from an iPod®, MP3 player, or
      PC, using only existing electrical wiring.





**2)
      Audio Everywhere** **TM**  :
      This
      accessory is targeted at existing home entertainment systems and component
      stereo systems, and it will allow a stereo tuner to send audio through a home’s
      existing electrical wiring. Speakers can then be connected to the receiver
      for
      digital-quality music anywhere in the home with no additional wires, cables,
      antennas, or radio frequency (RF) equipment.





**3)
      Rear Speakers DIY Install Kit** **TM** :
      This
      accessory is targeted at new and existing home entertainment systems, with
      surround sound. Potential licensing partners have told us that 75 to 80% of
      rear
      surround sound speakers are either never connected or located on the front
      wall
      with the audio source because users find it to difficult hide the wires to
      the
      rear speakers. Our Rear Speakers DIY Install Kit TM enables
      the user to use the existing electrical wires in their home to transmit to
      the
      rear speakers as part of the overall home theatre experience.





The
      2007
      launch of our new audio and video products is the culmination of almost two
      years of intensive and focused research and development efforts and we believe
      these products are well branded, and well positioned for success in the markets
      we have targeted. During February 2007, the complete product specifications
      for
      the audio products were sent to several potential manufacturers in Asia for
      quoting and we intend to begin the manufacturing of an initial production run
      after a manufacturer is chosen.





Also
      during the quarter ended March 31, 2007, we signed twelve manufacturers’
representative groups to sell our new products upon their introduction, and
      have
      identified a distributor to sell and market our products in Europe when
      resources are available for our entrance into overseas markets.





We
      were
      able to borrow funds from our primary finance partner during the three months
      ended March 31, 2007 (See Liquidity & Capital Resources); however,
      additional funding will be required to fund the launch of our new power line
      products and technologies, and to fund operations through December 31, 2007,
      or
      until we achieve profitability. We are currently evaluating various funding
      alternatives available.


5


**RESULTS
      OF OPERATIONS**




See
      Note
      3 to the condensed consolidated financial statements for additional segment
      reporting.




**THREE
      MONTHS ENDED MARCH 31, 2007 AND MARCH 31, 2006**




NET
      REVENUE: Net revenue increased 90% from $211,585 for the three months ended
      March 31, 2006 to $402,233 for the three months ended March 31, 2007. Marine
      product segment sales were $57,736 or 14% of total revenues for the three months
      ended March 31, 2007 compared to $59,386, or 28% of total revenues, for the
      three months ended March 31, 2006. Overall, marine product sales decreased
      $1,650, or 3%. Security product segment sales were $36,762 or 9% of total
      revenues for the three months ended March 31, 2007 compared to $9,552, or 5%
      of
      total revenues, for the three months ended March 31, 2006. Overall, security
      product sales increased $27,210, or 295%. DC Transportation product segment
      sales were $307,735, or 77% of total revenues for the three months ended March
      31, 2007 compared to $142,647, or 67% of total revenues for the three months
      ended March 31, 2006. Overall, DC Transportation product sales increased
      $165,088, or 116%. The decrease in net revenues for the marine product segment
      was due to a general decrease in consumer attendance at regional boat shows.
      The
      increase in net revenues for the security product segment was due primarily
      to a
      re-focusing on catalog distributors. The increase in net revenues for the DC
      transportation product segment was due to a continual expansion and upgrading
      of
      the product line, and the acquisition of new customers from leads developed
      by
      sales personnel and trade show attendances in prior periods.




COST
      OF
      GOODS SOLD: Cost of goods sold increased 69% from $127,080 for the three months
      ended March 31, 2006 to $214,712 for the three months ended March 31, 2007.
      As a
      percentage of net revenue, cost of goods sold decreased to 53% for the three
      months ended March 31, 2007 from 60% for the three months ended March 31, 2006.
      Cost of goods sold for the marine products segment decreased $2,649 or 7%,
      from
      $36,225 for the three months ended March 31, 2006 to $33,576 for the same period
      ended in 2007. As a percentage of net revenue, cost of goods sold for the marine
      product segment decreased from 61% for the three months ended March 31, 2006
      to
      58% for same period ended in 2007. Cost of goods sold for the security products
      segment increased $19,150 or 236%, from $8,119 for the three months ended March
      31, 2006 to $27,269 for the same period ended in 2007. As a percentage of
      revenue, cost of goods sold for the security product segment decreased from
      85%
      for the three months ended March 31, 2006 to 74% for same period ended in 2007.
      Cost of goods sold for the DC Transportation product segment increased $71,131
      or 86% from $82,736 for the three months ended March 31, 2006 to $153,867 for
      the same period ended in 2007. As a percentage of net revenue, cost of goods
      sold for the DC Transportation product segment decreased from 58% for the three
      months ended March 31, 2006 to 50% for same period ended in 2007.




The
      decrease in the cost of goods sold as a percentage of net revenues for the
      marine products segment was driven primarily by direct to consumer internet
      sales where pricing approximates full retail. The decrease in the cost of goods
      sold as a percentage of net revenues for the security products segment was
      due
      to an increase in the average sales prices during the period. The decrease
      in
      the cost of goods sold as a percentage of net revenues for the DC Transportation
      product segment was due to improved component pricing on both existing and
      new
      product offerings.





GROSS
      PROFIT MARGIN: Gross profits on sales for the three months ended March 31,
      2007
      amounted to $187,521 or 47% of net revenues, compared to $84,505, or 40% of
      net
      revenues, for the three months ended March 31, 2006. The marine products segment
      contributed $24,160 and $23,161 of the total gross profit for the three months
      ended March 31, 2007 and 2006, respectively. The security products segment
      contributed $9,493 and $1,433 of the total gross profit for the three months
      ended March 31, 2007 and 2006, respectively. The DC Transportation products
      segment contributed $153,868 and $59,911 of the total gross profit for the
      three
      months ended March 31, 2007 and 2006, respectively. The gross profit percentage
      for the marine products segment increased from 39% for the three months ended
      March 31, 2006 to 42% for the three months ended March 31, 2007. The gross
      profit percentage for the security products segment increased from 15% for
      the
      three months ended March 31, 2006 to 26% for the three months ended March 31,
      2007. The gross profit percentage for the DC Transportation products segment
      increased from 42% for the three months ended March 31, 2006 to 50% for the
      three months ended March 31, 2007.





The
      increase in the gross profit as a percentage of net revenues for the marine
      products segment was driven primarily by direct to consumer internet sales
      where
      pricing approximates full retail. The increase in the gross profit as a
      percentage of net revenues for the security products segment was due to an
      increase in the average sales prices during the period. The increase in the
      gross profit as a percentage of net revenues for the DC Transportation product
      segment was due to improved component pricing on both existing and new product
      offerings.





SALARIES
      AND WAGES: Salaries and Wages increased 7% from $289,318 for the three months
      ended March 31, 2006 to $309,897 for the three months ended March 31, 2007.
      The
      increase was due to the accrual of executive management bonuses related to
      employment contracts. Salary and Wages is comprised of employee wages, benefits,
      taxes, and stock compensation. During the three months ended March 31, 2007,
      there was no stock-based compensation issued to employees.





PROFESSIONAL
      & CONSULTING FEES: Professional and consulting fees decreased 62% from
      $349,030 for the three months ended March 31, 2006 to $134,152 for the three
      months ended March 31, 2007. The decrease was primarily due to a reduction
      in
      legal fees and Board of Director compensation. Professional and consulting
      fees
      include fees paid to attorneys, accountants, Directors, and business
      consultants.


6


DEPRECIATION
      AND AMORTIZATION EXPENSE: Depreciation and amortization decreased 53% from
      $108,798 for the three months ended March 31, 2006 to $51,091 for the three
      months ended March 31, 2007. The decrease was attributable to a reduction in
      amortization expense as certain intangible assets were fully amortized as of
      March 31, 2007.





RESEARCH
      & DEVELOPMENT: Research and development expense decreased 1% from $132,207
      for the three months ended March 31, 2006, to $130,330 for the three months
      ended March 31, 2007. Expenditures were within budgeted amounts with only a
      nominal change for the periods presented. Research and development costs consist
      of all expenditures related to the improvement and development of the Company's
      current product line, new product development, and engineering consulting fees
      associated with licensed technology. Currently, substantially all of our
      research and development costs and efforts are dedicated to the development
      of
      our Security (both analog and digital), Audio, and DC Transportation product
      segments. For the three months ended March 31, 2007, of the total Research
&
Development expenditures, $123,813 or 95% was related to the security &
audio products segment and $6,517 or 5%, was related to the DC Transportation
      products segment. The cost of our research and development activities is borne
      directly by the Company; no amounts are borne by our customers, nor are any
      contracts for customer funded research and development currently anticipated.
      The Company plans to continue funding the security, audio and DC transportation
      product segments for the next several years.





ADVERTISING
      AND PROMOTIONS: Advertising and promotions decreased 37% from $54,396 for the
      three months ended March 31, 2006 to $34,305 for the three months ended March
      31, 2007. The decrease was due directly to a reduction in overall advertising
      and a focus on trade show attendance. The amount also includes portions of
      postage, printing, and travel that are attributable to advertising and
      promotions.





RENT
      AND
      UTILITIES: Rent and utilities decreased 14% from $52,007 for the three months
      ended, March 31, 2006 to $44,939 for the three months ended, March 31, 2007.
      The
      decrease is due to the consolidation of the Company’s office and warehouse
      facilities to new office and warehouse space effective July 1, 2006. The Company
      leases approximately 6,850 square feet of combined office and warehouse space
      in
      St. Petersburg, Florida, under a non-cancellable lease through September of
      2011. The Company also leases approximately 2400 square feet of office space
      in
      California, under a one year lease, which houses its research and development
      operations. Rent and utilities includes office rent, warehouse rent, storage,
      telephone, and utilities.





TRAVEL
      & ENTERTAINMENT EXPENSE: Travel & entertainment expense increased 16%
      from $38,397 for the three months ended March 31, 2006 to $44,583 for the three
      months ended March 31, 2007. The increase was attributed to increased travel
      by
      officers and employees related to attendance at various industry trade shows
      for
      both the Security and DC Transportation product segments. Travel &
entertainment expenses include normal expenses associated with traveling
      including, but not limited to; airfare, auto rental, parking & tolls, hotels
& lodging, taxis, meals, and entertainment.





OTHER
      EXPENSES: Other expenses decreased 33% from $126,540 for the three months ended
      March 31, 2006 to $84,964 for the three months ended March 31, 2007. The
      decrease was due to a decrease in the Company’s Director and Officers insurance
      premiums and a reduction telemarketing services that were previously outsourced.
      Other expenses include travel, supplies, property taxes, insurance, financing
      fees, bank charges, provision for doubtful accounts, postage & delivery, and
      various other expenses that are classified as miscellaneous.





NON-OPERATING
      INCOME (EXPENSE) ITEMS: Non-operating income (expense) decreased 233% from
      $(1,118,212) for the three months ended March 31, 2006 to $1,190,922 for the
      three months ended March 31, 2007. Components of non-operating expenses are
      as
      follows:




·
            Interest
                expense increased 893% to $(689,818) for the three months ended March
                31,
                2007 from $(69,463) for the three months ended March 31, 2006. The
                current
                period interest expense includes ($211,615) of amortization of debt
                discount on the Convertible Debentures, $(427,722) of interest due
                to
                Convertible Debenture holders, and $(24,748) of interest associated
                with
                notes payable outstanding during the period. The Company records
                amortization using the effective interest method and, accordingly,
                interest expense associated with these debentures will increase as
                the
                carrying value increases.




·
            Other
                income decreased 95% to $137 for the three months ended March 31,
                2007,
                from $2,564 for the three months ended March 31, 2006. Current period
                income of $15,500 is related primarily to proceeds received in conjunction
                with the settlement of a lawsuit in 2006, offset by derivative expense
                of
                $15,363 associated with the conversion of debentures (See Note 7).
                Amounts
                also include interest earned on cash balances held by the Company
                throughout the period.




·
            Loss
                of extinguishment of debt decreased 95% to $(75,913) for the three
                months
                ended March 31, 2007, from $(1,502,286) for the three months ended
                March
                31, 2006. The amounts are recorded in connection with our debenture
                financing where we allocated the fair value of instruments issued
                in
                connection with the financing to the proceeds and the debt relieved
                on a
                relative fair value basis. This calculation resulted in a loss on
                extinguishment associated with the relieved
                indebtedness.




·
            Derivative
                gain increased 334% to $1,956,516 for the three months ended March
                31,
                2007, from $450,973 for the three months ended March 31, 2006. Derivative
                gain arises from fair value adjustments to our derivative financial
                instruments. These instruments consist of freestanding warrants and
                embedded conversion features associated with the Debenture offering.
                We
                will continue to incur fair value adjustments to these instruments
                until
                such instruments are converted, exercised or reclassified to stockholders'
                equity. Future fair value adjustments require the use of subjective
                estimates. However, the principal drive of our valuation model is
                the
                Company's trading common stock. Accordingly, future volatility in
                the
                trading market price may result in significant changes in fair value
                that
                are required to be recorded as adjustments in
                income.


7




**LIQUIDITY
      & CAPITAL RESOURCES**





The
      accompanying condensed consolidated financial statements have been prepared
      assuming that the Company will continue as a going concern. However, the Company
      has incurred losses from operations of $646,740 and $1,066,188 during the three
      months ended March 31, 2007 and 2006, respectively. In addition, during those
      periods, the Company has used cash of $561,272 and $1,198,056 respectively,
      in
      its operating activities and has a stockholders' deficit at March 31, 2007.
      These conditions raise substantial doubt about the Company's ability to continue
      as a going concern.





The
      Company has allocated significant resources to the development of new power
      line
      technologies and products that will be available for sale and/or licensing
      during the second or third quarters of fiscal year 2007. The Company’s ability
      to continue will be dependent upon achieving profitable operations through
      the
      licensing and sales of these new technologies and products.




The
      Company’s ability to continue as a going concern is dependent upon (i) raising
      additional capital to fund operations (ii) the further development of the
      Security, DC Transportation, and new Audio products segments, and (iii)
      ultimately the achievement of profitable operations. During the three months
      ended March 31, 2007, the Company secured financing of $500,000 in the form
      of
      short-term notes payable from its primary financial partner. While the proceeds
      of this financing did mitigate the Company’s liquidity difficulties for the
      three months ended March 31, 2007, additional funding will be required to fund
      the launch of the Company’s new power line products and technologies, and to
      fund operations through December 31, 2007, or until it can achieve
      profitability. The ability of the Company to sustain its operations for a
      reasonable period without further financing cannot be assured and the condensed
      consolidated financial statements do not include any adjustments that might
      arise as a result of this uncertainty. See “Subsequent Events” below for further
      discussion of liquidity.





During
      the three months ended March 31, 2007 the Company funded its losses from
      operations through the following vehicles:





·
            We
                borrowed $500,000 from our primary financial partner through the
                issuance
                of two separate unsecured promissory notes. We executed a promissory
                note
                on January 29, 2007 in the amount of $300,000. The note was due on
                February 28, 2007, and bears an 8% interest rate. On March 21, 2007,
                we
                executed a second promissory note in the amount of $200,000. The
                note was
                due on May 5, 2007, and bears an 8% interest rate. Interest on each
                of
                these notes was due and payable upon the maturity dates. In addition,
                both
                notes revert to an 18% default rate for any principal and interest
                outstanding after the maturity date. Currently, both notes remain
                outstanding, and the Company is negotiating a term extension with
                the note
                holder, for each of the aforementioned notes (See subsequent
                events).





**Material
      Commitments:**





See
      Note
      9 in the accompanying condensed consolidated financial statements.





**Subsequent
      Events:**





On
      May
      14, 2007, the Company received $50,000 in cash from its primary finance partner,
      the proceeds of which are included in a note payable that consolidates all
      outstanding notes payable with this finance partner. The Company issued a new
      consolidated note payable in the amount of $898,661which includes the following;
      the retirement of the September 14, 2006 note payable in the principal amount
      of
      $300,000, the retirement of the January 29, 2007 note payable in the principal
      amount of $300,000, the retirement of the March 21, 2007 note payable in the
      amount of $200,000, all accrued interest (including default rate interest of
      18%) on the three aforementioned notes, and $50,000 in new proceeds received
      on
      May 14, 2007. The note is due on July 13, 2007, with principal and interest
      due
      and payable upon maturity. The note bears an 8% interest rate and an 18% default
      interest rate for all principal amounts outstanding beyond the maturity
      date.




**Item
      3.** **Controls
      and Procedures**





(a)
      Evaluation of Disclosure Controls and Procedures




Based
      on
      an evaluation of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended)
      required by paragraph (b) of Rule 13a-15 or Rule 15d-15, as of March 31, 2007,
      our Chief Executive Officer and Chief Financial Officer, have concluded that
      our
      disclosure controls and procedures were effective in ensuring that information
      required to be disclosed by us in the reports that we file or submit under
      the
      Exchange Act is recorded, processed, summarized and reported within the time
      periods specified in the Commission's rules and forms. Our Chief Executive
      Officer and Chief Financial Officer, also concluded that, as of March 31, 2007,
      our disclosure controls and procedures were effective in ensuring that
      information required to be disclosed by us in the reports that we file or submit
      under the Exchange Act is accumulated and communicated to our management,
      including our Chief Executive Officer and Chief Financial Officer, to allow
      timely decisions regarding required disclosure.




*Limitations
      on the Effective of Controls*


8





Our
      management does not expect that our disclosure controls or our internal controls
      over financial reporting will prevent all error and fraud. A control system,
      no
      matter how well conceived and operated, can provide only reasonable, but no
      absolute, assurance that the objectives of a control system are met.
 Further, any control system reflects limitations on resources, and the
      benefits of a control system must be considered relative to its costs.
 These limitations also include the realities that judgments in
      decision-making can be faulty and that breakdowns can occur because of simple
      error or mistake. Additionally, controls can be circumvented by the individual
      acts of some persons, by collusion of two or more people or by management
      override of a control. A design of a control system is also based upon certain
      assumptions about potential future conditions; over time, controls may become
      inadequate because of changes in conditions, or the degree of compliance with
      the policies or procedures may deteriorate.  Because of the inherent
      limitations in a cost-effective control system, misstatements due to error
      or
      fraud may occur and may not be detected.




(b)
      Changes in Internal Controls




There
      were no changes in our internal controls over financial reporting that could
      significantly, or are reasonably likely to materially affect, our affect
      internal controls over financial reporting that occurred during the our fiscal
      quarter ended March 31, 2007.




**PART
      II OTHER INFORMATION**




**Item
      1. Legal Proceedings**





Litigation,
      claims and assessment:




*Reed
      Elsevier, Inc.*





On
      April
      26, 2007 the Company learned that a default judgment had been entered against
      it
      on August 1, 2006 in the Circuit Court of the 6 th Judicial
      Circuit of Pinellas County, Florida, in the amount of $20,192; to the plaintiff
      Reed Elsevier, Inc. The obligation is associated with a commitment made in
      December of 2004, by a former officer of the Company, for floor space at a
      trade
      show in March of 2005, at which the Company did not attend. The Company has
      retained counsel to negotiate a resolution to the matter. The Company recorded
      a
      liability in the amount of $22,203, including post judgment interest, which
      is
      included in accrued expenses in the accompanying March 31, 2007 condensed
      consolidated balance sheet.





*Guestlinx,
      LLC*




On
      May
      19, 2006 we learned that a default judgment had been entered against us on
      May
      3, 2006 in the Superior Court of California, Orange County, in the amount of
      $90,561, to the plaintiff Guestlinx, LLC. The obligation is associated with
      the
      Hotel/MDU product segment, the operations of which were discontinued in April
      of
      2005. The judgment was granted based on an action filed by Guestlinx, LLC on
      November 2, 2005. We had no prior knowledge of the action and believe it was
      never properly served. We retained counsel in California, and on August 4,
      2006
      were successful in having the judgment set aside for improper service. We had
      previously recorded a liability associated with this dispute in the amount
      of
      $46,352. On December 8, 2006, we negotiated a settlement and release agreement
      at a mandatory settlement conference, in the amount of $52,500. We remitted
      $16,250 toward the settlement amount on December 15, 2006, and the remaining
      balance of $36,250 was recorded as an accrued liability at December 31,
      2006. Under the agreement, we were required to pay the remaining balance by
      February 15, 2007, but were unable to do so. The agreement provides for the
      plaintiff to receive a stipulated judgment in the amount of $60,000 (less
      amounts remitted) if we are in default of the agreement.  On April 18 2007,
      the plaintiff filed for and received the default judgment and the Company’s
      counsel is currently working with the plaintiff on a revised payment schedule.
      The Company increased the aforementioned liability in the amount of $7,500
      to
      account for the additional obligation incurred under the stipulated judgment.
      The amounts are included in accrued expenses in the accompanying March 31,
      2007
      and December 31, 2006 condensed consolidated balance sheets.




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




During
      the three months ended March 31, 2007, the Company issued 6,667 shares of common
      stock to a consultant for marketing services rendered during the period. The
      shares were valued at $5,000 based on the closing market price of the Company's
      common stock on the date of issuance. The shares were registered on Form S-8
      filed with the Securities and Exchange Commission on September 29,
      2006.




During
      the three months ended March 31, 2007, the Company issued 2,923 shares of common
      stock to a debenture holder as payment for interest. The shares were valued
      at
      $3,609, or 1.235 per share, in accordance with the fixed conversion rate as
      set
      forth in the March 22, 2006 Convertible Debenture and Securities Purchase
      Agreement (See Note 7). The shares were registered on Form SB-2 as filed with
      the Securities and Exchange Commission, effective October 4, 2006.




During
      the three months ended March 31, 2007, the Company issued 95,444 shares of
      common stock to debenture holders for conversion of debentures. The shares
      were
      valued at $117,873 or 1.235 per share, in accordance with the fixed conversion
      rate as set forth in the March 22, 2006 Convertible Debenture and Securities
      Purchase Agreement (See Note 7). The shares were registered on Form SB-2 as
      filed with the Securities and Exchange Commission, effective October 4,
      2006.


9


**Item
      3. Defaults Upon Senior Securities.**





As
      of
      March 31, 2007 and December 31, 2006, the Company was in default under the
      terms
      of the Purchase Agreement and the Debentures issued on March 22, 2006. The
      terms
      of the Purchase Agreement and the Debenture required that the Company generate
      gross profit in excess of $300,000 per month on average during the period from
      October 1, 2006 to December 31, 2006. Under the default provisions; upon the
      Company delivering an Event of Default Notice to Purchasers (Debenture holders)
      or the Purchasers becoming aware of an Event of Default, the Purchasers may
      require the Company to redeem all or any portion of their Debenture by
      delivering an “Event of Default Redemption Notice” to the Company. At that time
      the Company would be required to redeem the requested portion of the debenture
      at a redemption value calculated in accordance with the default provisions
      in
      the March 22, 2006 Securities Purchase Agreement, to be no less than 120% of
      the
      principal amount requested to be redeemed. At March 31, 2007, the Company had
      not negotiated a form of a Waiver Agreement with the Purchasers covering the
      Company’s inability to meet this covenant. The Company has not received an
“Event of Default Redemption Notice” from any Purchaser and is currently engaged
      in negotiating with the Purchasers in order to enter into a waiver agreement
      covering the aforementioned default.




Because
      the Company was in default as of March 31, 2007 and December 31, 2006, and
      while
      under default, may receive an “Event of Default Redemption Notice” at any time;
      the liabilities associated with the Debentures on the accompanying condensed
      consolidated balance sheets, as presented, have been reclassified from long-term
      to current liabilities.




**Item
      4. Submission of Matters to a Vote of Security Holders.**




None.




**Item
      5. Other Information.**




(a)  None.





(b)  No
      material changes to the procedures by which security holders may recommend
      nominees to our board of directors occurred or implemented since our last
      periodic filing, our Annual Report filed on Form 10-K for the fiscal year ended
      December 31, 2006.




**Item
      6. Exhibits**




**Exhibit
                No.**
            **Description**3(i).1
            Articles
                of Restatement of the Articles of Incorporation of PowerLinx, Inc.,
                dated
                February 25, 2003. (Incorporated by reference to Annual Report for
                the
                fiscal year ended December 31, 2001, filed with the SEC on Form 10KSB/A.
                on January 16, 2003)3(i).2
            Amendment
                to the Articles of Incorporation increasing authorized Common Stock
                from
                250,000,000 to shares. (Incorporated by reference to current report
                filed
                on Form 8-K with the Securities and Exchange Commission on 400,000,000,
                March 22, 2006).3(i).3
            Amendment
                to the Articles of Incorporation changing the Company's name from
                Seaview
                Video Technology, Inc. to PowerLinx, Inc. (Incorporated by reference
                to
                current report filed on Form 8-K with the Securities and Exchange
                Commission on March 16, 2004).3(i).4
            Certificate
                of Amendment filed with the Secretary of State of Nevada on August
                9,
                2006, amending the Company’s Articles of Incorporation to increase the
                Company’s authorized common stock from 8,000,000 50,000,000 shares.
                (Incorporated by reference to the Company’s Registration Statement filed
                on Form SB-2 with the Securities and Exchange Commission on September
                9,
                2006).3(ii).1
            Bylaws
                of the Company. (Incorporated by reference to annual report filed
                on Form
                10-KSB with the Securities and ExchangeCommission
                on April 15, 2005).4.1
            Certificate
                of designation of Series A Preferred Stock (Incorporated by reference
                to
                our current report filed on Form10KSB
                wit h the Securities and Exchange Commission on March 16,
                2004).31.1*
            Certification
                of Michael Tomlinson, Chief Executive Officer, dated June 20, 2006,
                pursuant to Rule 13a-14(a) of theSecurities
                Exchange Act of 1934, as amended.  (Filed
                herewith).31.2*
            Certification
                of Douglas Bauer, Chief Financial Officer, dated June 20, 2006, pursuant
                to Rule 13a-14(a) of the SecuritiesExchange
                Act of 1934, as amended.  (Filed herewith).32.1*
            Statement
                of Michael Tomlinson, Chief Executive Officer, dated June 20, 2006,
                pursuant to Rule 13(a)-14(b) of the Securities Exchange Act of 1934,
                as
                amended. (Filed herewith).32.2*
            Statement
                of Douglas Bauer, Chief Financial Officer, dated June 20, 2006, pursuant
                to Rule 13(a)-14(b) of the Securities Exchange Act of 1934, as amended.
                (Filed herewith).


10


**SIGNATURES**




Pursuant
      to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
      1934, the Registrant has duly caused this report to be signed on its behalf
      by
      the undersigned, thereunto duly authorized.





**POWERLINX
                INC.**Date:
            May
                21, 2007
            By:
            */s/
                Michael Tomlinson*
              
              Michael
                TomlinsonChief
                  Executive OfficerBy:
            */s/
                Douglas Bauer*
              
              Douglas
                BauerChief
                Financial Officer (and Acting Principal Accounting
                Officer)








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