UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-QSB



(Mark One)

[X]

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

For the quarterly period ended December 31, 2006

[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ________________ to _______________

333-88837

(Commission file number)



POP N GO, INC.

(Exact name of small business issuer as specified in its charter)



|                                  |                    
|--------------------------------- | -------------------
|Delaware                          | 95-4603172         
|(State or other jurisdiction      | (IRS Employer      
|of incorporation or organization) | Identification No.)
|                                  |                    

12429 East Putnam Street, Whittier, California 90602

(Address of principal executive offices)



(562) 945-9351

(Issuers telephone number)



N/A

(Former name, former address and former fiscal year, if changed since last report)



Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X ]   No [  ]

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



APPLICABLE ONLY TO CORPORATE ISSUERS:



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: As of  February 12, 2007 -- 265,750,425 shares of common stock

________________



Transitional Small Business Disclosure Format:   Yes [   ]   No [X ]





1



POP N GO, INC.



Index



|         |                                                                |             
|-------- | -------------------------------------------------------------- | ------------
|         |                                                                | Page 
Number
|         |                                                                |             
|PART I.  | FINANCIAL INFORMATION                                          | 3           
|         |                                                                |             
|Item 1.  | Consolidated Financial Statements (unaudited)                  | 3           
|         |                                                                |             
|         | Consolidated Balance Sheet as of December 31, 2006 (unaudited) | 4           
|         |                                                                |             
|         | Consolidated Statements of Operations for the                  |             
|         | three months ended December 31, 2006 and 2005 (unaudited)      | 5           
|         |                                                                |             
|         | Consolidated Statements of Cash Flows for the                  |             
|         | three months ended December 31, 2006 and 2005 (unaudited)      | 6           
|         |                                                                |             
|         | Notes to Consolidated Financial Statements (unaudited)         | 8           
|         |                                                                |             
|Item 2.  | Managements Discussion and Analysis or Plan of Operations     | 19          
|         |                                                                |             
|Item 3.  | Controls and Procedures                                        | 23          
|         |                                                                |             
|PART II. | OTHER INFORMATION                                              | 24          
|         |                                                                |             
|Item 1.  | Legal Proceedings                                              | 24          
|         |                                                                |             
|Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds    | 24          
|         |                                                                |             
|Item 3.  | Defaults Upon Senior Securities                                | 24          
|         |                                                                |             
|Item 4.  | Submission of Matters to a Vote of Security Holders            | 24          
|         |                                                                |             
|Item 5.  | Other Information                                              | 24          
|         |                                                                |             
|Item 6.  | Exhibits                                                       | 24          
|         |                                                                |             
|         | SIGNATURES                                                     | 24          
|         |                                                                |             







2





PART I. FINANCIAL INFORMATION



ITEM 1.

FINANCIAL STATEMENTS

POP N GO, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET



|                                            |                                                    |                                                       |   |              |              |          |             
|------------------------------------------- | -------------------------------------------------- | ----------------------------------------------------- | - | ------------ | ------------ | -------- | ------------
|                                            |                                                    |                                                       |   |              |              |          | December 31,
|                                            |                                                    |                                                       |   |              |              |          | 2006        
|                                            |                                                    |                                                       |   |              |              |          | (unaudited) 
|ASSETS                                      |                                                    |                                                      
|                                            |                                                    |                                                       |   |              |              |          |             
|CURRENT ASSETS                              |                                                    |                                                       |   |             
|                                            | Cash and cash equivalents                          |                                                       |   | $            | 425,640     
|                                            | Accounts receivable, net of allowance of $230      |                                                       |   |              | 12,037      
|                                            | Inventory                                          |                                                       |   |              |              | 168,929 
|                                            | Prepaid expenses and other current assets          |                                                       |   |              | 97,414      
|                                            |                                                    |                                                       |   |              |              |          |             
|TOTAL CURRENT ASSETS                        |                                                    |                                                       |   | 704,020     
|                                            |                                                    |                                                       |   |              |              |          |             
|NOTE RECEIVABLE                             |                                                    |                                                       |   | 146,023     
|RENTAL INVENTORY, net                       |                                                    |                                                       |   | 18,291      
|FURNITURE AND EQUIPMENT, net                |                                                    |                                                       |   | 10,231      
|                                            |                                                    |                                                       |   |              |              |          |             
|TOTAL ASSETS                                |                                                    |                                                       |   | $            | 878,565     
|                                            |                                                    |                                                       |   |              |              |          |             
|                                            |                                                    |                                                       |   |              |              |          |             
|LIABILITIES AND STOCKHOLDERS' DEFICIT       |                                                    |                                                      
|                                            |                                                    |                                                       |   |              |              |          |             
|CURRENT LIABILITIES                         |                                                    |                                                       |   |             
|                                            | Accounts payable                                   |                                                       |   | $            | 627,514     
|                                            | Accrued liabilities                                |                                                       |   |              | 732,861     
|                                            | Consulting payable - related parties               |                                                       |   |              | 378,866     
|                                            | Debenture interest payable                         |                                                       |   |              | 2,222,372   
|                                            | Accrued payroll and payroll taxes                  |                                                       |   |              | 161,437     
|                                            | Customer deposits                                  |                                                       |   |              | 31,855      
|                                            | Loan payable - related party                       |                                                       |   |              | 240,000     
|                                            | Short-term note payable                            |                                                       |   |              | 829,200     
|                                            | Convertible debt, net                              |                                                       |   |              | 6,489,173   
|                                            | Warrant liability                                  |                                                       |   |              | 3,589,839   
|                                            | Accrued derivative liability                       |                                                       |   |              | 1,728,626   
|                                            |                                                    |                                                       |   |              |              |          |             
|TOTAL CURRENT LIABILITIES                   |                                                    |                                                       |   | 17,031,743  
|                                            |                                                    |                                                       |   |              |              |          |             
|LONG-TERM CONVERTIBLE DEBT, net             |                                                    |                                                       |   | 344,787     
|                                            |                                                    |                                                       |   |              |              |          |             
|TOTAL LIABILITIES                           |                                                    |                                                       |   | 17,376,530  
|                                            |                                                    |                                                       |   |              |              |          |             
|STOCKHOLDERS' DEFICIT                       |                                                    |                                                       |   |             
|                                            | Common stock; $0.001 par value; 900,000,000 shares |                                                       |   |              |             
|                                            |                                                    | authorized; 262,625,425 shares issued and outstanding |   |              | 262,625     
|                                            | Additional paid-in capital                         |                                                       |   |              | 18,172,024  
|                                            | Prepaid consulting                                 |                                                       |   |              | (47,171)    
|                                            | Shares to be issued as deposit                     |                                                       |   |              |              | (52,000)
|                                            | Accumulated deficit                                |                                                       |   |              | (34,833,443)
|                                            |                                                    |                                                       |   |              |              |          |             
|TOTAL STOCKHOLDERS' DEFICIT                 |                                                    |                                                       |   | (16,497,965)
|TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |                                                    |                                                       | $ | 878,565     





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







4





POP N GO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS





|                                       |                                                                 |             |           |             |          |                           |        |             
|-------------------------------------- | --------------------------------------------------------------- | ----------- | --------- | ----------- | -------- | ------------------------- | ------ | ------------
|                                       |                                                                 |             |           |             |          | Three Month Periods Ended
|                                       |                                                                 |             |           |             |          | December 31,              |        | December 31,
|                                       |                                                                 |             |           |             |          | 2006                      |        | 2005        
|                                       |                                                                 |             |           |             |          | (unaudited)               |        | (unaudited) 
|SALES                                  |                                                                 |             |           |             |          |                           |       
|                                       | Equipment sales                                                 |             |           | $           | 7,595    | $                         | 12,658
|                                       | Revenue share income                                            |             |           |             | 21,911   |                           | 17,712
|                                       |                                                                 |             |           |             |          |                           |        |             
|TOTAL SALES                            |                                                                 |             |           | 29,506      |          | 30,370                   
|                                       |                                                                 |             |           |             |          |                           |        |             
|COST OF GOODS SOLD                     |                                                                 |             |           |             |          |                          
|                                       | Cost of goods sold equipment                                    |             |           | 2,969       |          | 13,836                   
|                                       | Cost of goods sold revenue share income                         |             | 9,556     |             | 5,426   
|                                       |                                                                 |             |           |             |          |                           |        |             
|TOTAL COST OF REVENUES                 |                                                                 |             | 12,525    |             | 19,262  
|                                       |                                                                 |             |           |             |          |                           |        |             
|GROSS PROFIT                           |                                                                 |             |           | 16,981      |          | 11,108                   
|                                       |                                                                 |             |           |             |          |                           |        |             
|OPERATING EXPENSES                     |                                                                 |             |           |             |          |                          
|                                       | Selling, general and administrative                             |             |           | 814,281     |          | 522,136                  
|TOTAL OPERATING EXPENSES               |                                                                 |             | 814,281   |             | 522,136 
|                                       |                                                                 |             |           |             |          |                           |        |             
|LOSS FROM OPERATIONS                   |                                                                 |             |           | (797,300)   |          | (511,028)                
|                                       |                                                                 |             |           |             |          |                           |        |             
|OTHER INCOME (EXPENSES):               |                                                                 |             |           |             |         
|                                       | Interest expense and financing costs                            |             |           | (683,399)   |          | (2,899,187)              
|                                       | Amortization of beneficial conversion feature and debt discount |             | (618,481) |             | (97,719)
|                                       | Change in fair value of warrant and derivative liabilities      |             | (421,294) |             | 959,995 
|                                       | Other                                                           |             |           |             |          | 3,523                     |        | (8,780)     
|                                       |                                                                 |             |           |             |          |                           |        |             
|TOTAL OTHER EXPENSE                    |                                                                 |             |           | (1,719,651) |          | (2,045,691)              
|                                       |                                                                 |             |           |             |          |                           |        |             
|LOSS BEFORE PROVISION FOR INCOME TAXES |                                                                 | (2,516,951) |           | (2,556,719)
|                                       |                                                                 |             |           |             |          |                           |        |             

|PROVISION FOR INCOME TAXES         |                                        |   | 800         |   | -          
|---------------------------------- | -------------------------------------- | - | ----------- | - | -----------
|                                   |                                        |   |             |   |            
|                                   |                                        |   |             |   |            
|NET LOSS                           |                                        |   |             | $ | (2,517,751)
|                                   |                                        |   |             |   |            
|                                   |                                        |   |             |   |            
|LOSS PER SHARE - BASIC AND DILUTED |                                        | $ | (0.01)      | $ | (0.02)     
|                                   |                                        |   |             |   |            
|WEIGHTED AVERAGE COMMON EQUIVALENT |                                        |   |             |  
|                                   | SHARES OUTSTANDING - BASIC AND DILUTED |   | 229,113,492 |   | 154,825,447



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







5





POP N GO, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             |                           |  |             
|------------------------------------- | -------------------------------------------- | ----------------------------------------- | ------------------------------------------------------------------------ |  | --------- | ------- | --------- | ----------- | --------- | ----------- | ------------------------- |  | ------------
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             | Three Month Periods Ended
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             | December 31,              |  | December 31,
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             | 2006                      |  | 2005        
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             | (unaudited)               |  | (unaudited) 
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                              |                                           |                                                                          |  |           |        
|                                      | Net loss                                     |                                           |                                                                          |  |           |         | $         | (2,517,751) | $         | (2,556,719)
|                                      | Adjustment to reconcile net loss to net cash |                                           |                                                                          |  |           |         |          
|                                      |                                              | used in operating activities:             |                                                                          |  |           |         |           |             |           |            
|                                      |                                              |                                           | Depreciation and amortization                                            |  |           |         |           | 1,319       |           | 2,164      
|                                      |                                              |                                           | Amortization of beneficial conversion feature and debt discounts         |  | 618,481   |         | 97,719   
|                                      |                                              |                                           | Amortization of deferred finders fees                                    |  |           |         |           | 347,925     |           | -          
|                                      |                                              |                                           | Shares issued (to be issued) for loan incentive/services/debt settlement |  | 150,000   |         | 251,175  
|                                      |                                              |                                           | Change in fair value of warrant and derivative liabilities               |  |           | 421,294 |           | (959,995)  
|                                      |                                              |                                           | Amortization of prepaid consulting fees                                  |  |           |         | 25,202    |             | 50,574   
|                                      |                                              |                                           | Non-cash financing charge                                                |  |           |         |           | -           |           | 2,579,963  
|                                      | Changes in operating assets and liabilities: |                                           |                                                                          |  |           |         |          
|                                      | (Increase) decrease in:                      |                                           |                                                                          |  |           |         |           |             |          
|                                      |                                              | Accounts receivable                       |                                                                          |  |           |         |           | (5,662)     |           | 2,471      
|                                      |                                              | Inventory                                 |                                                                          |  |           |         |           |             | (133,589) |             | -                        
|                                      |                                              | Prepaid expenses and other current assets |                                                                          |  |           | 2,706   |           | 69,214     
|                                      | Increase (decrease) in:                      |                                           |                                                                          |  |           |         |           |             |          
|                                      |                                              | Accounts payable                          |                                                                          |  |           |         |           | 12,484      |           | (133,974)  
|                                      |                                              | Accrued liabilities                       |                                                                          |  |           |         |           | (14,553)    |           | 3,098      
|                                      |                                              | Accrued consulting - related party        |                                                                          |  |           |         | 30,885    |             | (27,030) 
|                                      |                                              | Debenture interest payable                |                                                                          |  |           |         |           | 147,871     |           | 153,952    
|                                      |                                              | Accrued payroll and payroll taxes         |                                                                          |  |           |         | 6,898     |             | (14,514) 
|                                      |                                              | Customer deposits                         |                                                                          |  |           |         |           | -           |           | (500)      
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             |                           |  |             
|Net cash used in operating activities |                                              |                                           |                                                                          |  | (906,490) |         | (482,402)
|                                      |                                              |                                           |                                                                          |  |           |         |           |             |           |             |                           |  |             



6





|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                                           |  |         |         |          |        
|------------------------------------------------- | --------------------------------------------------------- |  | ------- | ------- | -------- | -------
|                                                  |                                                           |  |         |         |          |        
|                                                  | Issuance of notes receivable                              |  |         |         |          |        
|                                                  | Proceeds from sale of rental equipment                    |  |         |         |          | 7,168  
|                                                  | Payments for furniture and equipment and rental equipment |  |         | (583)   |          | -      
|                                                  |                                                           |  |         |         |          |        
|Net cash used in investing activities             |                                                           |  |         |         | (32,415) |        
|                                                  |                                                           |  |         |         |          |        
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                                           |  |         |         |          |        
|                                                  | Proceeds from sale of convertible debentures, net         |  |         |         | 652,878  |        
|                                                  | Payment of convertible debentures and notes payable       |  |         |         | (39,790) |        
|                                                  |                                                           |  |         |         |          |        
|Net cash provided by financing activities         |                                                           |  |         |         | 613,088  |        
|                                                  |                                                           |  |         |         |          |        
|NET INCREASE (DECREASE) IN CASH AND               |                                                           |  |         |         |          |        
|                                                  | CASH EQUIVALENTS                                          |  |         |         |          |        
|                                                  |                                                           |  |         |         |          |        
|CASH AND CASH EQUIVALENTS, Beginning of period    |                                                           |  | 751,457 |         | 1,696   
|                                                  |                                                           |  |         |         |          |        
|CASH AND CASH EQUIVALENTS, End of period          |                                                           |  | $       | 425,640 | $        | 725,200
|                                                  |                                                           |  |         |         |          |        
|                                                  |                                                           |  |         |         |          |        
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |                                                           |  |         |        
|                                                  | Interest paid                                             |  |         |         |          |        
|                                                  | Income taxes paid                                         |  |         |         |          |        



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





SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During the three months ended December 31, 2006, the Company (1) issued 18,750,050 shares of common stock for the conversion debt (including accrued interest) of $470,424; (2) issued 2,000,000 shares of common stock valued at $52,000 for a deposit on the MRI acquisition; (3) issued 17,700,028 shares valued at $526,918 that the Company had previously committed to issue.

During the three months ended December 31, 2005, the Company (1) issued 8,899,225 shares of common stock for the conversion of $186,475 in debt; (2) issued 1,100,000 shares of common stock valued at $30,800 for a debt settlement; (3) issued 23,895,000 shares valued at $445,966 that the Company had previously committed to issue.



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







7



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)







NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited consolidated financial statements have been prepared by Pop N Go, Inc. (the Company), pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes for the year ended September 30, 2006 included in the Companys Annual Report on Form 10-KSB.  The results of the three months ended December 31, 2006 are not necessarily indicative of the results to be expected for the full year ending September 30, 2007.

Principles of Consolidation

The Companys consolidated financial statements include the accounts of the Pop N Go, Inc. and its wholly-owned subsidiaries, Nuts To Go, Inc and Branax, LLC. All inter-company balances and transactions have been eliminated.

Revenue Recognition

The Company recognizes its revenue in accordance with the Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements (SAB 104). The Company is recognizing revenue from two sources; sale of equipment and the owner operated revenue share program. Equipment sales are recognized when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectibility is reasonably assured. Revenues from the revenue sharing program are recognized upon monthly collections of proceeds from the machines. Generally, the Company extends credit to its customers and does not require collateral. The Company performs ongoing credit evaluations of its customers and historic credit losses have been within managements expectations.

Stock-based compensation

The Company accounts for its stock-based compensation in accordance with SFAS No. 123R, Share-Based Payment, an Amendment of FASB Statement No. 123. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees and non-employees.

Net Loss per Share

Net loss per share is calculated in accordance with Statement of Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128). Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Weighted average number of shares used to compute basic and diluted loss per share is the same in these financial statements since the effect of dilutive securities is anti-dilutive.  At December 31, 2006, the Company had 131,328,500 warrants outstanding that were anti-dilutive.  In addition, the Company has convertible debentures that could be converted into 378,096,625 shares of the Companys common stock.



8



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)





Accounts Receivable

Accounts receivable consist primarily of amounts due from customers. The Company has provided for an allowance in the aggregate of $230 at December 31, 2006 for accounts it considers uncollectible. Management believes this to be sufficient to account for all uncollectible accounts.

Inventories

Inventories consist of small parts and supplies to be used in the manufacturing process of machines held for resale, work in process, and finished goods. Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method.

Prepaid Consulting

Prepaid consulting relates to amounts paid to consultants with the Companys common stock.  The value of the consulting services is being expensed over the terms of the consulting agreements.

Customer Deposits

As of December 31, 2006, customers had paid deposits totaling $31,855 to the Company for machines which had not been delivered as of that date. Revenue on the sale of these machines will be recognized when the equipment is shipped.

Impairment or disposal of long-lived assets

In August 2001, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (FAS 144). FAS 144 clarifies the accounting for the impairment of long-lived assets and for long-lived assets to be disposed of, including the disposal of business segments and major lines of business. The Company has implemented FAS 144 for this fiscal year. Long-lived assets are reviewed when facts and circumstances indicate that the carrying value of the asset may not be recoverable. When necessary, impaired assets are written down to estimated fair value based on the best information available. Estimated fair value is generally based on either appraised value or measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates.

Advertising

The Company expenses advertising costs as incurred. Advertising expenses for the three months ended December 31, 2006 and 2005 were insignificant.

Fair Value of Financial Instruments

For certain of the Companys financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, intangible assets, other assets, short-term notes payable, loan payable - related party, convertible debt, accounts payable, accrued liabilities, and customer deposits, the carrying amounts approximate fair value due to their short maturities.

Income Taxes

The Company utilizes SFAS No. 109, Accounting for Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.



9



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)







Issuance of shares for service

The Company accounts for the issuance of equity instruments to acquire goods and services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably measurable.

Comprehensive Loss

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. The provisions of this statement had no impact on the accompanying consolidated financial statements.

Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



Risk Concentrations

Substantially all of the Companys revenue is generated from the sale of one product. The loss of, or an economic event related to this product, most likely would have a substantial impact on the Companys revenue.

The Company maintains cash balances at a financial institution in California. Accounts at this institution are insured by the Federal Deposit Insurance Corporation up to $100,000. As of December 31, 2006 the Company had amounts in bank accounts in excess of FDIC insurance limit.

Segment Reporting

Statement of Financial Accounting Standards No. 131 (SFAS 131), Disclosure About Segments of an Enterprise and Related Information requires use of the management approach model for segment reporting. The management approach model is based on the way a companys management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Currently, SFAS 131 has no effect on the Companys consolidated financial statements as substantially all of the Companys operations are conducted in one industry segment during the period ended December 31, 2006.

Reclassifications

For comparative purposes, prior periods consolidated financial statements have been reclassified to conform to report classifications of the current period.

Recently Issued Accounting Pronouncements

In February 2006, FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments. SFAS No. 155 amends SFAS No 133, Accounting for Derivative Instruments and Hedging Activities, and SFAF No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.  SFAS No. 155, permits fair value remeasurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument.  This statement is effective for all financial instruments acquired or issued after the beginning of the Companys first fiscal year that begins after September 15, 2006.  The Company is in the process of evaluating the impact of this pronouncement on its financial statements.



10



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)





In March 2006 FASB issued SFAS 156 Accounting for Servicing of Financial Assets this Statement amends FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, with respect to the accounting for separately recognized servicing assets and servicing liabilities. This Statement:



1.

Requires an entity to recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract.

2.

Requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable.

3.

Permits an entity to choose Amortization method or  Fair value measurement method for each class of separately recognized servicing assets and servicing liabilities:

4.

At its initial adoption, permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities under Statement 115, provided that the available-for-sale securities are identified in some manner as offsetting the entitys exposure to changes in fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value.

5.

Requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional disclosures for all separately recognized servicing assets and servicing liabilities.

This Statement is effective as of the beginning of the Companys first fiscal year that begins after September 15, 2006. Management believes that this statement will not have a significant impact on the consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. This statement clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures on fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. Management has not determined the effect, if any, of the adoption of this statement will have on the financial statements.



In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans−−an amendment of FASB Statements No. 87, 88, 106, and 132(R)". One objective of this standard is to make it easier for investors, employees, retirees and other parties to understand and assess an employer's financial position and its ability to fulfill the obligations under its benefit plans. SFAS No. 158 requires employers to fully recognize in their financial statements the obligations associated with single−employer defined benefit pension plans, retiree healthcare plans, and other postretirement plans. SFAS No. 158 requires an employer to fully recognize in its statement of financial position the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. This Statement also requires an employer to measure the funded status of a plan as of the date of its year−end statement of financial position, with limited exceptions. SFAS No. 158 requires an entity to recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS No. 87. This Statement requires an entity to disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. The Company is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures for fiscal years ending after December 15, 2006. Management believes that this statement will not have a significant impact on the financial statements.



11



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)





NOTE 2 - GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the consolidated financial statements, during the three months ended December 31, 2006, the Company incurred net losses of $2,517,751.  In addition, the Company had a negative cash flow in operating activities amounting $906,490 in the three months ended December 31, 2006, and the Companys accumulated deficit was $34,833,443 as of December 31, 2006.  In addition, the Companys cash flow requirements have been met by issuing convertible debentures, and much of the Companys debt is currently in default. Assurance cannot be given that this source of financing will continue to be available to the Company and demand for the Companys equity instruments will be sufficient to meet its capital needs. If the Company is unable to generate profits and unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.  The consolidated financial statements do not include any adjustments relating to the recoverability and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Companys continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to retain its current financing, to obtain additional financing, and ultimately to attain profitability.

The Company has started to have its popcorn machines manufactured in Shanghai, China which will result in a significant cost savings and increase production capacity to 1,000 machines per month. The new requirement for healthy snacks in many school districts has resulted in a significant increase in demand for the Companys hot air popcorn vending machines.  The Company is also testing its machines with an international foodservice provider in corporate cafeterias and with a national drugstore chain. The Company expects the nationwide trend toward healthy eating to play a major role in driving the demand for its popcorn machines.



NOTE 3 - SHORT-TERM NOTES PAYABLE

Short-term notes payable at December 31, 2006 consisted of the following:



|                                                                                                                                                                       |   |        
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------
|                                                                                                                                                                       |   |        
|Note payable dated May 2, 2000, bearing interest at 12% per annum and due in January 2001.  This note payable is currently in default.                                 | $ | 222,192
|Note payable dated June 26, 2001, bearing interest at 20% per annum and due June 26, 2002.  This note payable is currently in default.                                 |   | 50,000 
|Note payable dated July 5, 2001, bearing interest at 15% per annum and due in September 2001.  This note payable is currently in default.                              |   | 8,076  
|Note payable dated April 3, 2000 assumed in acquisition of Branax, bearing interest at 12% per annum and due in July 2000.  This note payable is currently in default. |   | 15,000 



12



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)





|                                                                                                                                                                             |  |       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|Note payable dated December 29, 1998 assumed in acquisition of Branax, bearing interest at 7% per annum and due in March 1999.  This note payable is currently in default.   |  | 28,083
|Note payable dated December 18, 2000 assumed in acquisition of Branax, bearing interest at 8% per annum and due in January 2002.  This note payable is currently in default. |  | 3,000 
|Note payable dated April 24, 2002, bearing no interest and due in September 2002.  This note payable is currently in default.                                                |  | 8,000 
|Note payable dated December 12, 2002, bearing interest of $1,500 due at maturity in April 1, 2007.                                                                           |  | 29409 
|Note payable dated December 2, 2002, bearing interest of $2,000 due at maturity in February 2003. This note payable is currently in default.                                 |  | 10,000
|Note payable dated December 16, 2002, bearing interest of $8,250 due at maturity in May 2003.  This note payable is currently in default.                                    |  | 25,000
|Notes payable dated Dec.19, Oct. 7, Oct. 28, 2002, bearing interest of $4,000 due at maturity in May and July 2003.  These notes payable are currently in default.           |  | 28,540

|                                                                                                                                                                                                     |  |       
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------
|Note payable dated January 23, 2003, bearing interest of $3,000 plus $1,950 for 60 day renewal, due in June 2003.  This note payable is currently in default.                                        |  | 15,000
|Note payable dated Dec 18, 2002 and Feb 13, 2003, bearing interest of $5,000 plus $3,250 for 60 day renewal and $4,000, respectively, due in May 2003. These notes payable are currently in default. |  | 45,000
|Note payable dated June 1, 2003, bearing interest at 10%, due in December 2003. This note payable is currently in default.                                                                           |  | 15,327
|Note payable dated December 9, 2003, bearing interest of $5,000 plus $5,000 for a 90 day renewal due June 2004.This note payable is currently in default.                                            |  | 30,000
|Note payable dated December 17, 2003, bearing interest of $2,500 due in March 16, 2004.  This note payable is currently in default.                                                                  |  | 15,000
|Note payable dated December 18, 2003, bearing interest of $5,000 Plus $5,000 for a 90 day renewal due June 2004.  This note payable is currently in default.                                         |  | 29,340



13



|                                                                                                                                                                                                                         |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | -------
|Note payable dated December 24, 2003, bearing interest of $5,000 due March 23, 2004.  This note payable is currently in default.                                                                                         |   | 30,000 
|Note payable dated January 29, 2004, bearing interest of $2,500 plus $2,500 for a 90 day renewal due July 2004.  This note payable is currently in default.                                                              |   | 13,475 
|Note payable dated February 25, 2004, April 27, 2004 and June 8, bearing interest of $5,000, $1,250 and $2,500 due August 2004, July 2004 and October 2004, respectively.  These note payables are currently in default. |   | 37,500 
|Note payable dated March 11, 2004 and May 7, 2004, bearing interest of $1,250 and $1,250, due June 2004 and July 2004, respectively.  These note payables are currently in default.                                      |   | 11,658 
|Note payable dated March 28, 2004, bearing interest of $2,500 plus $2,500 for a 90 day renewal, due September 24, 204.  This note payable is currently in default.                                                       |   | 14,730 
|Note payable dated August 21, 2006, bearing interest at 15% per annum.                                                                                                                                                   |   | 82,336 
|Note payable, bearing interest of 15%                                                                                                                                                                                    |   | 28,784 
|Note payable dated January 1, 2006, bearing interest of 15%, due December 31, 2006.                                                                                                                                      |   | 33,750 
|                                                                                                                                                                                                                         | $ | 829,200

The Company recorded an interest of $31,782 and $46,739,on the notes payable for the three month periods ended December 31, 2006 and 2005, respectively.

NOTE 4- CONVERTIBLE DEBT

On November 16, 2005, the Company entered into a Securities Purchase Agreement with Cornell Capital Partners, LP (Cornell).  The terms of this agreement provide for the Company to issue up to $1,200,000 in convertible debentures to Cornell and to issue to Cornell a warrant to purchase 120,000,000 shares of the Companys common stock for $0.01 per shares.  The convertible debentures can be converted into shares of the Companys common stock at the option of Cornell at a conversion price of the lesser of $0.03 or 80% of the lowest closing bid price of the Companys common stock for the five trading days immediately preceding the conversion date.  On November 16, 2005, the Company issued a convertible debenture to Cornell in the amount of $700,000 and on December 21, 2005, the Company issued another convertible debenture to Cornell in the amount of $500,000. The Company received net proceeds of $638,049 under the secured convertible debentures.   The total net proceeds take into account estimated expenses in the amount of $80,000, the payment of $350,000 to Cornell for the repayment of the prior note issued to Cornell on February 9, 2005, accrued interest of $41,057 and $90,894 in structuring and commitment fees.  The convertible debentures are secured by substantially all of the Companys assets and accrue interest at 10% per annum.  Cornell has the ability to foreclose on the Companys assets if an event of default occurs pursuant to the underlying documents and is not remedied by the Company or waived by Cornell.  The secured convertible debentures are due on November 16, 2008.  Also, on November 16, 2005, the Company issued a warrant to Cornell to purchase 120,000,000 shares of the Companys common stock for $0.01 per share.  The warrant expires five years from the date of issuance.

Per EITF 00-19, paragraph 4, these convertible debentures do not meet the definition of a conventional convertible debt instrument since the debt is not convertible into a fixed number of shares.  The debt can be converted into common stock at a conversions price that is a percentage of the market price; therefore the number of shares that could be required to be delivered upon net-share settlement is essentially indeterminate.  Therefore, the convertible debenture is considered non-conventional, which means that the conversion feature must be bifurcated from the debt and shown as a separate derivative liability.  This beneficial conversion liability has been calculated to be $1,728,626 at December 31, 2006 and is shown as a current liability in the accompanying consolidated balance sheet.  In addition, since the convertible debenture is convertible into an indeterminate number of shares of common stock, it is assumed that the Company could never have enough authorized and unissued shares to settle the conversion of the warrants into common stock.  Therefore, the warrants issued in connection with this transaction and all other non-employee options and warrants have been reported as liability at December 31, 2006 in the accompanying balance sheet with an aggregate fair value of $3,589,839.  The value of the warrant was calculated using the Black-Scholes model using the following assumptions: Discount rate of 4.5%, volatility of 295% and expected term of .25 to 3.88 years.   The fair value of the beneficial conversion feature and the warrant liability will be adjusted to fair value each balance sheet date with the change being shown as a component of net loss.



14



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)







The fair value of the beneficial conversion feature and the warrants at the inception of these convertible debentures were $300,000 and $3,479,963, respectively.  The first $1,200,000 of these discounts has been shown as a discount to the convertible debentures which will be amortized over the term of the debentures and the excess of $2,579,963 has been shown as financing costs in the accompanying statement of operations during the quarterly period ended December 31, 2005.



Below is a rollforward of the convertible debentures outstanding at December 31, 2006:



|                              |   |          
|----------------------------- | - | ---------
|Balance at September 31, 2006 | $ | 8,481,537
|Additions                     |   | 814,169  
|Repayments                    |   | (9,000)  
|Converted to equity           |   | (287,500)
|Balance at December 31, 2006  | $ | 8,998,756
|                              |   |          



A summary of the convertible notes and related discounts is below:



|                             |            |            |            
|---------------------------- | ---------- | ---------- | -----------
|                             |            |            |            
|                             | Current    | Long-term  | Total      
|Gross convertible debentures | $7,823,756 | $1,175,000 | $8,998,756 
|Debt discounts               | (925,046)  | (751,414)  | (1,676,460)
|Deferred finders fee        | (409,537)  | (78,799)   | (488,336)  
|Net                          | $6,489,173 | $344,787   | $6,833,960 



NOTE 5 - STOCKHOLDERS’ DEFICIT

Common Stock

During the three months ended December 31, 2006, the Company issued:

·18,750,050 shares of common stock in exchange for debt (including accrued interest) totaling $470,424;

·  6,000,000 shares of common stock in exchange for services totaling $150,000;

·  2,000,000 shares of common stock for deposit on MRI acquisition

·  17,700,028 shares that the Company previously committed to issue.

Also, during the three months ended December 31, 2006, the Company recorded $214,714 for beneficial conversion feature on the convention convertible notes.



15



Stock Option Plan

The Company adopted the 1998 Non-Qualified Stock Option Plan (the 1998 Plan) on August 31, 1998. The purpose of the 1998 Plan is to promote the growth and profitability of the Company by enabling the Company to attract and retain the best available personnel for positions of substantial responsibility, to provide employees with an opportunity for investment in the Company, and to give employees an additional incentive to increase their efforts on behalf of the Company.

Each employee or consultant as determined by the Board of Directors of the Company is eligible to be considered for the grant of awards under the 1998 Plan.  The maximum number of shares of common stock that may be issued pursuant to awards granted under the 1998 Plan is 500,000.  Any shares of common stock subject to an award, which for any reason expires or terminates unexercised, are again available for issuance under the 1998 Plan.  Under the 1998 Plan, incentive stock options must not be less than the per share par or stated value of the shares on the date the stock options are granted, subject to certain provisions.

During the year ended September 30, 2004, 100,000 options were granted and these options expired on December 31, 2005. As of December 31, 2006, there were no options outstanding under this plan.

Stock Purchase Warrants



During the three months ended December 31, 2006, the Company issued a total of 1,650,000 warrants as loan incentives to purchase shares of the Companys common stock and for consulting services for $0.02- $0.04 per share. The value of the warrants of $6,327 was calculated using the Black-Scholes model using the following assumptions: Discount rate of 3.5%, volatility of 171% and expected term of one-quarter year to three years.

The following table summarizes information about the warrants outstanding at December 31, 2006:



|                                |  |              |                        | 
|------------------------------- |  | ------------ | ---------------------- | 
|                                |  |              |                        | 
|                                |  | Warrants     | Average Exercise Price | 
|Outstanding, September 30, 2004 |  | 28,217,500   | 0.05                   | 
|Granted in FY 2005              |  | 800,000      | 0.02                   | 
|Expired/Forfeited in FY 2005    |  | (15,912,500) | 0.05                   | 
|Outstanding, September 30, 2005 |  | 13,105,000   | 0.04                   | 
|Granted in FY 2006              |  | 124,810,000  | 0.01                   | 
|Expired/Forfeited in FY 2006    |  | (3,576,500)  | 0.02                   | 
|Outstanding, September 30, 2006 |  | 134,338,500  | 0.01                   | 
|Granted in FY 2007              |  | 1,650,000    | 0.02                   | 
|Expired/Forfeited in FY 2007    |  | (4,660,000)  | 0.02                   | 
|Outstanding, December 31, 2006  |  | 131,328,500  | $0.01                  | 



The intrinsic value of the outstanding warrants at December 31, 2006 was $2,289,600.



|                                            |            | 
|------------------------------------------- | ---------- | 
|                                            |            | 
|Weighted-Average Remaining Contractual Life | 3.75 Years | 



16



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)







|                                                        |            | 
|------------------------------------------------------- | ---------- | 
|Range of Exercise Prices                                | $0.010.05 | 
|Weighted-Average Exercise Price of Warrants Outstanding | $0.01      | 
|Weighted Average Exercise Price of Warrants Exercisable | $0.01      | 
|                                                        |            | 

NOTE 6  COMMITMENTS AND CONTINGENCIES

Litigation

A lawsuit was filed in the Circuit Court of Cook County Illinois on March 22, 2006.  The Company had a nonexclusive agreement for fees if the plaintiff found investors and fee was payable upon funding.  The Company was served on July 21, 2006 and filed during the week of January 15, 2007 a motion to dismiss the complaint for failure to state a cause of action.  The court date is set for March 2007 when the Company will contest the allegations in the complaint as there is no merit to plaintiff's claim per the Company's legal counsel's opinion.  Plaintiff is seeking $400,000 plus interest, attorney fees and court costs.



NOTE 7 - RELATED PARTY TRANSACTIONS

Loan payable  related party: At December 31, 2006, the Company owed a shareholder of the Company $240,000 under a loan payable agreement.  The loan bears interest at 10% per annum and was due September 2001 and is currently in default. During the three months ended December 31, 2006, the company recorded imputed interest at 12%.



The Company entered into a Consultant Agreement with Calblue, Inc. on October 1, 2006.   Melvin Wyman, president of Calblue, was appointed as Chief Executive Officer and President and Chairman of the Board of Directors for Pop N Go.  Calblues tenure is for a three-year term, and will automatically renew on October 1, 2009 unless the parties agree, in writing, to terminate or change the Agreement.  Calblue's compensation during the three-year term is $150,000, $180,000, $240,000, respectively, payable on a monthly basis. There is a $1,500 month allowance for insurance during term of agreement.   Calblue was awarded $25,000 and 4,000,000 shares of restricted common stock (valued at $100,000) issuable upon the execution of a final employment agreement between consultant and the Company.  Additionally, a performance bonus will be determined by incremental quarterly increase in the market capitalization of the company stock.  The parties agreed to use $5 million as the baseline market cap for quarter one beginning October 1, 2006.  Consultant will be paid an amount equal to 2% of each succeeding quarterly market cap increase.  Payment will be made in cash or stock at the option of Calblue.

The Company also has accrued consulting to another shareholder of the Company. At December 31, 2006, total accrued consulting expenses to shareholders amounts to $378,866.

NOTE 8 - SEGMENT INFORMATION

Prior to October 1, 2002, the Company operated under two business units which had separate management and reporting infra-structures that offered different products and services. The business units had been aggregated into two reportable segments (machine sales and flavorings).  During the three months ended December 31, 2006 or 2005, the Company did not operate flavoring segment.

The Company operates domestically as well as internationally.  The Company sells its machines to various countries including Australia, and others in North America, Europe, Asia and South America.  The Company operates its revenue sharing program at this time domestically and currently has no long lived assets outside of the United States.

NOTE 9  ACQUISITION OF MICROWAVE ROASTERS, INC.

On April 4, 2006, the Company entered into a stock purchase agreement with Microwave Roasters, Inc. ("MRI"), an Alabama company, whereby the Company would acquire 51% of MRI's common stock for $580,000 in cash and notes plus 2,000,000 shares of the Company's restricted common stock. In connection with the foregoing transaction, the Company, MRI and certain shareholders of MRI executed a Shareholders Agreement dated April 5, 2006. On May 22, 2006, the Company and MRI entered into an amended stock purchase agreement whereby the closing date of the transactions contemplated under the stock purchase agreement was changed to June 1, 2006.  The agreement was further modified whereby the Company would only acquire 49% of MRI's common stock.  This transaction with MRI has not yet closed.  The Company issued 2,000,000 shares at fair market value of $52,000 to MRI during the three month period ended December 31, 2006, as an acquisition deposit. The Company has a note receivable of $146,023 from MRI for advances made.



17



POP N GO, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005

(UNAUDITED)





NOTE 10 - SUBSEQUENT EVENTS



Subsequent to December 31, 2006, 3,125,000 shares of restricted stock was issued for an incremental conversion of $50,000 by Cornell Capital Partners, LLC.



Subsequent to December 31, 2006, the Company sold 500,000 shares of restricted stock at $0.02 per share.



Subsequent to December 31, 2006, the Company raised $347,500 in convertible debentures.  The debentures all have $0.02 conversion rate and bear interest between 12-18%.



Subsequent to December 31, 2006, the Company issued 1,150,000 warrants  that have an exercise rate of $0.02 and all expire December 31, 2007.



Subsequent to December 31, 2006, the Company renewed its Investor Relations Contract with a commitment to issue 500,000 shares of restricted stock as well as $2,000 a month compensation.



Subsequent to December 31, 2006, the Company received the complete shipment of 200 machines that were manufactured in Shanghai, China.







18





ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Introduction-Forward Looking Statements

Forward-Looking Statements and Associated Risks.This Report contains forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, (e) our anticipated needs for working capital, (f) our lack of operational experience, and (g) the benefits related to ownership of our common stock.  Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words may, should, expect, anticipate, estimate, believe, intend, or project or the negative of these words or other variations on these words or comparable terminology.  These forward-looking statements are based largely on our companys expectations and are subject to a number of risks and uncertainties, including those described in Business Risk Factors of our Form 10-K for the year ended September 30, 2006. Actual results could differ materially from these forward-looking statements as a result of changes in trends in the economy and our companys industry, demand for our products, competition, reductions in the availability of financing and availability of raw materials, and other factors. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Report will in fact occur as projected.Any forward-looking statement speaks only as of the date on which such statement is made, and Pop N Go, Inc.  undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

Overview

Pop N Go, Inc. (the Company) was organized in October of 1996, for the purpose of conducting a business in the development, manufacturing, marketing and distribution of a new line of specialty food service and food vending machine equipment and related food products.  Revenue streams are anticipated to be generated in the future from (1) the sale of the Pop N Go vending machines; and (2) the operation of Company-owned revenue share machines, and which are typically located in schools, airports, shopping malls, retail stores and high traffic public locations.  The owner or operator and we share the revenue generated by Company-owned machines.  Our personnel provide maintenance and collection services for revenue sharing machines.

Going Concern

Our independent auditor, Kabani & Co has expressed substantial doubt as to the Companys ability to continue as a going concern for the year ended September 30, 2006 based on significant operating losses that the Company has incurred and the fact that the Company is currently in default on 37% of its convertible debentures and 90% of the short-term note payables. The Company owes delinquent payroll taxes of $155,729, which accrued prior to September 2002.

The Company has increased marketing activities to help generate sales sufficient to meet its cash flow obligations.

Management intends to continue to raise additional financing through private equity or debt financing to pay down Company debt and/or reduce the cost of debt service.

We have a working capital deficit of $15,667,477 at December 31, 2006, which means that our current liabilities exceeded our current assets on December 31, 2006 by that amount.

Assurances cannot be given that financing through private placements will continue to be available or will be sufficient to meet our capital needs.  If we are unable to generate profits and unable to continue to obtain financing to meet our working capital requirements, we may have to curtail our business sharply or cease business altogether.



19







Managements Strategy

We continually evaluate opportunities to improve popcorn machine models and assess the marketplace to capitalize on new business opportunities. The fundamental strategy is to launch a program to place our patented machines in schools, colleges and other major institutional facilities, including airports, hospitals and corporate cafeterias.  We are also engaged in a revenue sharing program which allows major food service operators to quickly incorporate our machines into their systems without any capital expenditures and with minimal space and labor requirements.

The Company has started to have its popcorn machines manufactured in Shanghai, China which will result in a significant cost savings and increase production capacity to 1,000 machines per month. The new requirement for healthy snacks in many school districts has resulted in a significant increase in demand for the Companys hot air popcorn vending machines.   The Company expects the nationwide trend toward healthy eating to play a major role in driving the demand for its popcorn machines.

Results of Operations

Three Months Ended December 31, 2006 Compared To The Three Months Ended December 31, 2005

The Company incurred a net loss of $2,517,751 for the three months ended December 31, 2006 as compared to a net loss of $2,556,719 for the three months ended December 31, 2005.  This loss represents a loss from operations of $797,300 and $511,028 for the three months ended December 31, 2006 and 2005, respectively.  The net loss also includes other expenses of  $1,719,651 and $2,045,691 for the three months ended December 31, 2006 and 2005, respectively.

Total equipment sales for the three months ended December 31, 2006 were $7,595 as compared to $12,658 for the three months ended December 31, 2005. This represents a decrease of 40%.  The Companys focus is on expanding the marketing of the revenue share program and to reduce marketing efforts for the outright sale of popcorn machines.

Total cost of goods sold for equipment sales was $2,969 (39.1% of sales) and $13,836 (109.3% of sales) for the three months ended December 31, 2006 and 2005.

Total revenue share income for the three months ended December 31, 2006 was $21,911 as compared to $17,712 for the three months ended December 31, 2005.  This represents an increase in revenue share income of 23.7% over the three months ended December 31, 2005.  This increase was primarily due to the Company continuing to test schools and other venues that will maximize revenue sharing sales.

Total cost of goods sold for revenue share income for the three months ended December 31, 2006 was $9,556 (43.6% of sales) as compared to $5,426 (30.6% of sales) for the three months ended December 31, 2005.  This increase was due to an increase in the cost of consumables and maintaining machines as more machines were deployed during the period.

Total operating expenses consist primarily of general and administrative expenses.  For the three months ended December 31, 2006, total general and administrative expenses were $814,281 as compared to $522,136 for the three months ended December 31, 2005.  This represents a 56% increase over the same period in the prior three months.  This increase was primarily due to higher overhead expenses.

Interest and financing cost and beneficial conversion feature expenses decreased from $2,996,906 for the three months ended December 31, 2005 to $1,301,880 for three months ended December 31, 2006, which represents a 56.6% decrease.  The Company also recorded other expense of $421,294 for the three months ended December 31, 2006 related to the change in the fair value of our warrant and derivative liabilities.  These liabilities principally relates to the fair value of the warrants issued in connection with the secured convertible debentures issued to Cornell Capital Partners, LP and the beneficial conversion feature embedded in the convertible debt.



Liquidity and Capital Resources

As of December 31, 2006, we had cash and cash equivalents of $425,640 as compared to cash and cash equivalents of $725,200 as of December 31, 2005.  At December 31, 2006, we had a working capital deficiency (total current liabilities in excess of total current assets) of ($16,327,723) as compared to a working capital deficiency (total current liabilities in excess of current assets) of ($10,998,316) as of December 31, 2005.  This increase in working capital deficiency was due to the additional issuance of convertible debentures and short-term notes.



20





Net cash used in operating activities was $906,490 for three months ended December 31, 2006, as compared to the net cash of $482,402 used in operating activities for the three months ended December 31, 2005.

As shown in the consolidated financial statements, during the three months ended December 31, 2006, the Company incurred net losses of $2,517,751.  In addition, the Company had a negative cash flow in operating activities amounting $906,490 in the three months ended December 31, 2006, and the Companys accumulated deficit was $34,833,443 as of December 31, 2006.  In addition, the Companys cash flow requirements have been met by issuing convertible debentures, and much of the Companys debt is currently in default. Assurance cannot be given that this source of financing will continue to be available to the Company and demand for the Companys equity instruments will be sufficient to meet its capital needs. If the Company is unable to generate profits and unable to continue to obtain financing for its working capital requirements, it may have to curtail its business sharply or cease business altogether.

During the three months ended December 31, 2006, the Company issued:

·18,750,050 shares of common stock in exchange for debt totaling $470,424;

·  6,000,000 shares of common stock in exchange for services totaling $150,000;

·  2,000,000 shares of common stock for deposit on MRI acquisition

·  17,700,028 shares that the Company previously committed to issue.

On November 16, 2005, we entered into a Securities Purchase Agreement pursuant to which we sold to Cornell Capital Partners, LP convertible debentures in the aggregate principal amount of $1,200,000 pursuant to the terms of the secured convertible debentures and related financing agreements.  The November 2005 secured convertible debentures in the principal amount of $1,200,000 consolidated prior convertible debentures and promissory notes issued to Cornell Capital Partners, LP, and included new additional convertible debentures, as described below.  On February 9, 2005, we issued to Cornell Capital Partners a promissory note in the principal amount of $350,000, which accrued interest at 12% per annum (the  February 2005 Note ).  The February 2005 Note was issued to consolidate the following: (i) a 5% convertible debenture in the original principal amount of $70,000 issued on May 17, 2004; (ii) a 5% convertible debenture in the original principal amount of $70,000 issued on July 22, 2004; (iii) a 5% convertible debenture in the original principal amount of $60,000 issued on September 13, 2004, and (iv) a November 24, 2004, 12% promissory note in the original principal amount of $150,000.  On November 16 2005, the principal amount of the February 2005 Note plus accrued and unpaid interest was $350,000 in principal plus $41,057.  On November 16, 2005, pursuant to the Securities Purchase Agreement, we surrendered the February 2005 Note for conversion into the convertible debentures and purchased additional convertible debentures for the total purchase price of $1,200,000.

Out of the total principal amount of $1,200,000, we received gross proceeds of $700,000 in November 2005 and $500,000 on December 21, 2005.  We received net proceeds of $638,049 under the secured convertible debentures.   The total net proceeds take into account estimated expenses in the amount of $80,000, the payment of $350,000 to Cornell Capital Partners, LP for the repayment of the prior note issued to Cornell Capital Partners, LP on February 9, 2005, accrued interest of $41,057 and $90,894 in structuring and commitment fees.  The convertible debentures are secured by substantially all of our assets and accrue interest at 10% per annum.  The secured convertible debentures are due on November 16, 2008. Cornell Capital Partners, LP is entitled, at its option, to convert and sell all or any part of the principal amount of the convertible debentures, plus any and all accrued interest, into shares of common stock at a price equal to the lesser of (i) $0.03 and (ii) eighty percent (80%) of the lowest volume weighted average price of the common stock during the five (5) trading days immediately preceding the date of conversion as quoted by Bloomberg, LP.



We currently have $8,998,756 of outstanding convertible debentures, which includes convertible debentures issued to various private investors and the secured convertible debenture issued to Cornell Capital Partners, LP. Of those debentures, $3,320,008, or 37% of the total convertible debentures, is in default.

Note Receivable

On December 31, 2006, we have a receivable on a promissory note, amounting $146,023. The note bears an interest rate of 10% per annum.



21





Convertible Debentures and Promissory Notes

We are attempting to become current on our obligations by converting the debentures and promissory notes to common stock and issuing long-term promissory notes. We currently have $8,998,756 of outstanding convertible debentures, which includes convertible debentures issued to various private investors and the secured convertible debenture issued to Cornell Capital Partners, LP. Of those debentures, $3,347,208, or 37% of the total convertible debentures, is in default. We also have short term notes in the amount of $829,200. We are in default on a significant majority of these notes and in addition we are also in default on a promissory note we issued to Branax, LLC in the amount of $240,000. We have been in discussions with holders of a majority of these obligations, and have requested renewals by offering a conversation rate more acceptable with today's market value. We have not yet been able to bring these obligations current, and the repayment obligations under the defaulted debentures and notes can be accelerated at any time by the holders of the notes.

In December 2005, the shareholders approved an increase in authorized shares from 300,000,000 to 900,000,000 which gives the Company the opportunity to convert our debentures and promissory notes to common stock of the Company.  We expect to issue new long-term debt to refinance that portion of our debt that we do not convert to equity.  Our ability to service any new long term notes will be dependent on our ability to successfully execute our business plan.  There is no assurance that we will be able to make timely payments on any debt instruments that we issue in the future.

We issued a promissory note to Branax, LLC for $240,000 in connection with our acquisition of Branax in July 2001.  Our default on this promissory note could result in litigation between Pop N Go and the former shareholders of Branax.  If such litigation were to occur we would be forced to expend significant time, money and other resources that could otherwise be used to advance our business operations.  If forced to defend Pop N GO in such litigation, management could have to curtail or even cease operations.

Branax, LLC

On July 6, 2001, pursuant to an agreement to purchase membership interests, Pop N Go, through our newly formed, wholly owned subsidiary, POPN Acquisition Corp, acquired 100% of the membership interests of Branax, LLC.  Branax produces Flixstix, the first flavoring for popcorn to be offered in individual servings. Branax has been attempting to develop partnering programs with major food manufacturers. Although there was a successful program with one major customer, the delay in developing significant revenues from Branax has resulted in the decision to write off goodwill.

We believe that Branax has several opportunities for significantly expanding its sales which could be enhanced with the inflow of investment capital into Pop N Go during 2006.  We believe the capital would enable Branax to develop the specialized packaging and product mix required by these significant customers. There is no assurance such capital will be available, or on what terms.

We are currently in default on a promissory note in the original principal amount of $240,000 that we issued to purchase Branax, LLC and such default could have legal ramifications.

Microwave Roasters, Inc .

On September 15, 2006, the Company into an Amended and Restated Agreement to Purchase Stock (the  Amended Stock Purchase Agreement ), with Microwave Roasters, Inc., an Alabama company ( MRI ).  Pursuant to the Amended Stock Purchase Agreement, the Company and MRI mutually agreed to the Company acquiring forty-nine percent (49%) of MRIs common stock for $580,000 in cash and notes and 2,000,000 shares of the Companys restricted common stock.  The Company and MRI have not closed the transaction as the date of the filing of the Quartely Report on Form 10-QSB. The Company issued 2,000,000 shares at fair market value of $52,000 to MRI during the three month period ended December 31, 2006, as an acquisition deposit.



Critical Accounting Policies

Our discussion and analysis of our financial conditions and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.  The preparations of financial statements require management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and disclosures on the date of the financial statements.  On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition.  The Company uses authoritative pronouncements, historical experience and other assumptions as the basis for making judgments.  Actual results could differ from those estimates.  The Company believes that the following critical accounting policies affect our more significant judgments and estimates in the preparation of our consolidated financial statements.



22





Rental inventory is amortized to an estimated salvage value over an estimated useful life of seven years.  Used equipment inventory is sold as used and the un-amortized cost is charged to cost of sales.  The Company amortizes the cost of rental inventory using the straight-line method designed to approximate the rate of revenue recognition.  The Company believes that our amortization rates, salvage values, and useful lives are appropriate in our existing operating environment.



The Company recognizes revenues at the time products are shipped. Revenue streams are generated from (1) the sale of the Pop N Go vending machines; and (2) the operation of Company owned revenue share machines, which are owned by the Company, and are typically located in retail stores, shopping malls and high traffic locations.  The owner or operator and the Company share the revenue generated by Company owned machines. Company personnel provide maintenance and collection services for revenue sharing machines. It is estimated that up to 80% of the Companys machines will be operated on a revenue sharing program. There is of course no assurance that the Company will be successful or will realize profits from its activities.



The Company assesses the fair value and recoverability of our long-lived assets, including goodwill, whenever events and circumstances indicate the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition.  In doing so, the Company makes assumptions and estimates regarding future cash flows and other factors to make our determination.  The fair value of our long-lived assets and goodwill is dependent upon the forecasted performance of our business, changes in the industry, the market valuation of our common stock and the overall economic environment.  When the Company determines that the carrying value of its long- lived assets and goodwill may not be recoverable, the Company measures any impairment based upon the excess of the carrying value that exceeds the estimated fair value of the assets.   If the Company does not meet its operating forecasts or if the market value of its common stock declines significantly, the Company may record impairment charges as needed

Off-Balance Sheet Arrangements

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

Item 3.  Controls and Procedures



(a)

Evaluation Of Disclosure Controls And Procedures

Pop N Gos Principal Executive Officer/Principle Accounting and Financial Officer (one person), after evaluating the effectiveness of Pop N Gos disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the  Exchange Act )) as of the end of the period covered by this Report, have concluded that as of such date, Pop N Go disclosure controls and procedures were adequate and effective to ensure that material information relating to Pop N Go that is required to be disclosed by Pop N Go in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and accumulated and communicated to Pop N Gos management, including its Principal Executive Officer/Principal Accounting and Financial Officer (one person), to allow timely decisions regarding required disclosure.

(b)

Changes In Internal Controls Over Financial Reporting

In connection with the evaluation of Pop N Gos internal controls during the Companys last fiscal quarter, Pop N Gos Principal Executive Officer/Principal Accounting Officer (one person) have determined that there are no changes to Pop N Gos internal controls over financial reporting that have materially affected, or are reasonably likely to materially effect, the Companys internal controls over financial reporting.





23





PART II

ITEM 1.  LEGAL PROCEEDINGS

A lawsuit was filed in the Circuit Court of Cook County Illinois on March 22, 2006.  The Company had a nonexclusive agreement for fees if the plaintiff found investors and fee was payable upon funding.  The Company was served on July 21, 2006 and filed during the week of January 15, 2007 a motion to dismiss the complaint for failure to state a cause of action.  The court date is set for March 2007 when the Company will contest the allegations in the complaint as there is no merit to plaintiffs claim per the Companys legal counsels opinion.  Plaintiff is seeking $400,000 plus interest, attorney fees and court costs.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

We are in default in the repayment of principal on approximately $3,347,208 or 37% of our convertible debentures and are in default in the repayment of principal on approximately 90% of our short-term notes.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS

(a) The following exhibits are filed as part of this filing:

|           |                                                                                                                                                                                    |  |                  
|---------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------
|Exhibit No | Description                                                                                                                                                                        |  | Location         
|           |                                                                                                                                                                                    |  |                  
|31.1       | Certification by Chief Executive Officer and Principal Accounting Officer pursuant to 15 U.S.C. Section 7241, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |  | Provided herewith
|           |                                                                                                                                                                                    |  |                  
|32.1       | Certification by Chief Executive Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | Provided herewith
|           |                                                                                                                                                                                    |  |                  





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed in its behalf by the undersigned, thereunto duly authorized.

|                 |                             |                  
|---------------- | --------------------------- | -----------------
|POP N GO, INC.   |                             |                  
|                 |                             |                  
|/s/ Melvin Wyman |                             |                  
|Melvin Wyman     | Chief Executive Officer and | February 14, 2007
|                 | Sole Director               |                  
|                 |                             |                  





24